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Iran Contradicts Itself Regarding Access to US Financial System

This web site speculates that this contradiction may indicate that the plan fell afoul of domestic Iranian politics before being implemented. This leaves some doubt as to whether implementation will go forward after all. But if it does it is possible that it could provide the world community with an opportunity to do business in Iran without further exacerbating American lawmakers’ concerns about the prospect of the Obama administration granting Iran access to the US financial system.

This has remained a topic of great controversy in the US Congress, where Republican legislators and some Democratic supporters argue that a change in rules regarding Iranian transactions in US banks would effectively give away the last bits of leverage remaining after a nuclear deal that many of those same legislators regard as a giveaway to Tehran.

One of the strongest voices of opposition to the Iran nuclear deal has been that of Arkansas Republican Senator Tom Cotton; and this has naturally extended to issue of “dollarizing” Iran’s foreign payments. Cotton believes that despite assurances to the contrary, the Obama administration is planning to allow this procedure and to provide broader Iranian access to US banking institutions.

In response, he recently moved to block Obama’s appointment of Adam Szubin to the position of Undersecretary of the Treasury for Terrorism and Financial Crime, according to the Weekly Standard. This move serves not as a commentary on Szubin’s fitness for the job, but rather to call attention to Treasury policies and urge congressional action to forestall Iranian access to the US financial system.

Interestingly, the New York Times reported on Thursday that Iranian Foreign Minister Mohammad Javad Zarif had denied that Tehran is even pursuing this access. His remarks to this effect could, however, be regarded as self-contradictory insofar as he simultaneously emphasized the regime’s insistence that the United States expand upon implementation of the July 14 nuclear agreement by encouraging international banks and European businesses to openly do business with the Islamic Republic.

Such encouragement appears to be a difficult proposition if it does not involve some sort of meaningful linkage of the Iranian and American financial systems. Currently, US sanctions remain in place on Iran related to its human rights violations and support for terrorism. These prevent banks from carrying out transactions with Iran that involve the US dollar. It is understood that most international banks have been reluctant to resume any business with Iran for fear of opening themselves up to enforcement of these sanctions.

This has been the subject of recurring talking points by Iranian Supreme Leader Ali Khamenei in recent weeks. He has accused the US of violating the spirit of the nuclear agreement that traded relief from economic sanctions for constraints on Iran’s nuclear program. However, Khamenei has simultaneously spearheaded policies that many in the West similarly regard as violations of the spirit of the deal. These include accelerating the Iranian ballistic missile program and testing missiles that are capable of carrying a nuclear warhead. A UN Security Council resolution that accompanied the implementation of the nuclear deal called upon the Islamic Republic to avoid testing or other work on such missiles.

Khamenei’s rhetoric regarding global banking transactions and his rhetoric regarding Iranian missiles seem at odds in the sense that the former demands support for the nuclear agreement whereas the latter appears to deliberately undermine it. However, the two positions seem much more consistent if one assumes that the supreme leader’s focus is not on supporting or weakening the agreement, but rather on promoting tensions between the US and Iran.

Since the Islamic Revolution and the hostage crisis at the American embassy in Tehran, the Iranian regime has consistently portrayed itself as a bulwark against Western influence in the Middle East, and a global leader of political Islam. Many analysts have observed the Khamenei and other hardliners likely regard the nuclear agreement as a necessary step toward economic recovery, but also as something that weakens the regime’s closely held image.

Many of the same analysts have observed that Khamenei appears to have taken a number of steps to counteract this latter effect, for instance by ordering his officials to not negotiate with the West over anything other than the nuclear deal after it was concluded. These policies have been accompanied by references to economic, political, and cultural “infiltration” of the Islamic Republic.

Such warnings reflect the domestic politics that the International Campaign believes may be interfering with the Paymentwall plan to open up the Iranian market to more foreign transactions. It points out that in the event that the plan goes forward, various domestic entities, many of them affiliated with the government, “will be forced to deal with a new form of competition that could wipe them out.”

Within this context, Zarif’s contradictory claims may be sincere, indicating that regime officials and their affiliates in the private sector do not want free exchanges between the Iranian and American financial systems, but do want the economic effects of such exchanges.

On one hand, Paymentwall may contribute to such a situation by presenting an alternative to the traditional international banking system. But on the other hand, it may allow Iranian citizens and independent businesses to undertake transactions with Western entities while bypassing the monopolies and government-affiliated businesses that would otherwise remain as the only commercial options.