Continued Outcry Over Plans to Give Iran Access to US Dollar

Agence France-Presse quoted Mark Dubowitz of the Foundation for Defense of Democracies as saying that it seems clear, based on recent statements from such figures as Treasury Secretary Jack Lew, that the Obama administration plans to give Iran surreptitious access to the US dollar.

The Tower observed that these indicators stand in contrast to numerous assurances that the administration had given to reporters and critics both before and after the conclusion of the July 14 nuclear agreement. Republican Senators Marco Rubio and Mark Kirk wrote a letter to Secretary Lew detailing these assurances, which they described as explaining that Iran would not be allowed “direct or indirect access to the US financial system.”

The letter went on to reiterate the concerns shared by these and numerous other American legislators, that doing business with the Islamic Republic would effectively constitute the US government allowing money to end up in the hands of a state that would likely use many of those funds for the sponsorship of terror, for increase of repressive domestic infrastructure, or other illicit ends.

AFP notes that Secretary Lew justified the administration’s latest moves by suggesting that the “overuse of sanctions could undermine our leadership position within the global economy.” While the United States has held back from direct economic interactions with the Islamic Republic even in the wake of sanctions relief, a number of European economies have proven eager to reenter the Iranian market. At the same time, Iran has steadily expanded its oil exports to Asian markets, which purchases more oil in February than any month over the previous two years.

But at the same time that the expansion of Iranian trade relations around the globe have stoked concerns about the US falling behind, the continued enforcement of sanctions not lifted by the nuclear agreement has been a major factor in slowing down Iran’s acquisition of new foreign investment and expanded access to the global banking system.

International banks have been wary of carrying out transactions for the Islamic Republic, out of fear that they could face future sanctions enforcement by the US government. But that same government’s moves to give Iran “indirect access” to the US dollar may help to alleviate some of those concerns.

At issue in the current controversy is the practice of “U-turn transactions,” which the Treasury Department banned in 2008 but now appears to be moving to reinstitute. It is these transactions that Dubowitz characterizes as clearly giving Iran access to the US dollar, although the Fayette Advocate provides a different description for the practice, saying that American financial institutions would only process transactions that neither began nor ended with dollars.

But this distinction is unlikely to assuage any of the concerns of the Obama administration’s critics. The Tower quotes Dubowitz as saying that the loophole is a sort of “bait and switch” and that in any event the administration is going “above and beyond what is required by the nuclear deal,” in the interest of helping Iran to recover economically.

Regardless of the ultimate form of the transactions that Iran enters into with US-based businesses, most Republican and some Democratic congressmen will see the end result the same. A number of those senators wrote on Wednesday of the administration’s moves, “Any such efforts would benefit Iran’s financiers of global terrorism, human rights abuses, and ballistic missile threats while also ignoring the Treasury Department’s finding under Section 311 the USA Patriot Act that Iran’s entire financial sector is a jurisdiction of primary money laundering concern, and undermining ongoing calls by the Financial Action Task Force (FATF) for countermeasures to protect worldwide financial sectors from Iran’s terrorist financing.”