When on October 11, 2011, the Obama Administration claimed that
the Iranian Revolutionary Guard Corps-Qods Force (IRGC-QF) had attempted
to kill Saudi Arabia’s ambassador to the US, many commentators
expressed skepticism. Why would IRGC-QF, supposedly a professional
organization, hire a used-car salesman, with a dubious background, to
carry out such a delicate task on the US soil, knowing full well that if
the plot is uncovered, there would be severe consequences for Iran? Why
would those involved in the plot converse on the phone, knowing full
well that such phone calls might be monitored? Why would they wire money
for the plot via a foreign bank to a US bank, knowing full well that
Iran is under severe US financial sanctions and any transaction
originating from Iran will be scrutinized? These and a number of other
anomalies made the story hard to believe.
Indeed the story was so
bizarre that in announcing the case FBI Director Robert Mueller
stated
that it “reads like the pages of a Hollywood script” (
Reuters, October
11, 2011). Others, of course, saw it more as a Keystone Kops script.
The comical nature of the case made it appear so implausible that
President Obama became defensive when he was asked about the issue in a
press conference
on October 13, 2011. In answering the question, Obama referred to the
Attorney General’s “specific set of facts” and stated: “those facts are
there for all to see. And we would not be bringing forward a case
unless we knew exactly how to support all the allegations that are
contained in the indictment.”
Even though comical, it is difficult, at least in the short run, to
prove or disprove the US allegation against Iran. After all, when
invading Iraq in 2003 the US government showed a set of evidence that at
first was hard to disprove. It was only later that the set of evidence
was shown to be fabricated.
In the absence of evidence to prove or disprove the US allegation,
one might approach the issue from a different angle. If the plot was
somehow concocted by the US—for example, the used-car salesman was
entrapped—what was the US motivation? This question is much easier to
answer.
On the same day that the US Attorney General and FBI Director went
public with the alleged plot, the Department of Treasury issued a
press release
announcing the “designation” of not only the used-car salesman but four
“senior” IRGC-QF officers connected to the plot. Among the four
individuals was IRGC-QF commander
Qasem Soleimani. As the press release stated, the
Treasury Department had designated Soleimani twice before, once for
“his relationship to the IRGC” and again for his connection to “human
rights abuses in Syria.”
Soleimani’s name was also mentioned as a “key
person” involved in “nuclear or ballistic missile activities” in the
United Nations Security Council
Resolution 1747,
issued on March 24, 2007. In addition, on June 23, 2011, the European
council had announced that it is banning travel and freezing the assets
of some Syrian individuals and companies and targeting three commanders
of IRGC for supporting the Syrian government. Among these was Qasem
Soleimani. Thus, it appears that the US was connecting a high profile
character, such as Soleimani, to the assassination plot in order to make
the case more significant and ominous. But why was the Treasury
Department involved in what appeared to be a criminal case in the first
place?
There was a partial answer to the above question in the Treasury
Department’s announcement. The press release quoted David S. Cohen,
Under Secretary for Terrorism and Financial Intelligence, as saying:
“Iran once again has used the Qods Force and the international financial
system to pursue an act of international terrorism, this time aimed
against a Saudi diplomat. . . The financial transactions at the heart of
this plot lay bare the risk that banks and other institutions face in
doing business with Iran.” In his press conference on October 13, 2011,
President Obama also gave a hint as to why the Department of Treasury
was involved in dealing with the alleged terror plot and what the US
intended to do about it. He stated that we will “apply the toughest
sanctions [against Iran] and continue to mobilize the international
community to make sure that Iran is further and further isolated and
that it pays a price for this kind of behavior.”
A more specific answer became available on October 13, 2011, when
Cohen gave his testimony before the Senate Banking Committee. Cohen
announced that the Department of Treasury is “weighing more sanctions
against Iran’s
central bank to tighten the
financial screws and deepen the country’s estrangement from the
international financial community” (Reuters, October 13, 2011). After
this testimony, many news sources correctly realized that the US
Treasury Department was intent to use the alleged plot to sanction
Iran’s Central Bank or Bank Markazi. Some also realized that such a
sanction might paralyze the Iranian economy, since Bank Markazi is the
bank of banks in Iran, and sanctioning it is equivalent to immobilizing
the US Federal Reserve System. Indeed, one AFP headline on October 14,
2011, read “US mulls Iran ‘sanction of mass destruction’”.
The news
report correctly pointed out that after “three decades of blanket US
sanctions against Iran, it has become received wisdom that the United
States has few financial tools left to bend Iran’s will.” One of those
tools, the report went on to say, was sanctioning “Bank Markazi—which
sits at the center of Iran’s financial and energy interests.” The report
quoted Avi Jorisch, a former advisor at the Treasury Department’s
office of terrorism and financial intelligence, as saying: “Essentially
financial institutions around the world would have to choose between
doing business with the United States and with the central bank [of
Iran].”
What was missing from the above reports, however, was the history of
the attempt by the US to sanction the Central Bank of Iran. Also
missing, was the host of characters and institutions behind the attempt.
Below, I will provide a brief account of the missing pieces.
After decades of sanctioning Iran and not bringing about the intended
“regime change,” the neoconservatives, Israeli lobby groups and their
conduits in the US government came up with a novel idea: sanctioning the
Central Bank of Iran. In late May and early June of 2008, two
resolutions were introduced in the House and Senate, which effectively
called, among other things, for a US blockade of Iran and sanctioning of
Bank Markazi. The American Israel Public Affairs Committee (AIPAC)
summarized the two resolutions on its website under “Stop Iran’s Nuclear
Program” and called for action:
Members of the House and Senate have introduced resolutions (H. Con.
Res. 362 and S. Res. 580) calling on the administration to focus on the
urgency of the Iranian nuclear threat and to impose tougher sanctions on
Tehran. The resolutions, introduced in the House by Reps. Gary Ackerman
(D-NY) and Mike Pence (R-IN) and in the Senate by Sens. Evan Bayh
(D-IN) and John Thune (R-SD), urge the president to sanction Iran’s Central Bank
and other international banks and energy companies investing in the
country. They also demand that the United States lead an international
effort to increase pressure on Iran by curtailing Iran’s ability to
import refined petroleum products. Please urge your representatives to
cosponsor this critical resolution.
The Bush Administration, however, realized that the rest of the world
would not go along with sanctioning Iran’s Central Bank. Instead, the
Administration relied on the Treasury Department to sanction major banks
in Iran and prepare the ground for sanctioning Bank Markazi at some
later date. Stuart Levey, the Treasury Department’s Under Secretary for
Terrorism and Financial Intelligence, who was well known for his
connection to Israeli lobby groups and his personal
war
against Iran, was given the task [1]. Levey did succeed, and under his
tenure, which lasted well into the Obama Administration, major banks in
Iran were sanctioned. Yet, the neoconservatives, Israeli lobby groups
and their conduits in the US government wanted more.
Sanctioning Bank Markazi became a campaign issue in the 2008 presidential election. As I mentioned in my pre-election essay, “
What the Future has in Store for Iran,”
in spring of 2008 John McCain, who was being advised by the
neoconservatives, delivered a speech at the AIPAC conference in which he
mentioned sanctioning Bank Markazi. “Central Bank of Iran,” McCain
stated, “aids in Iran’s terrorism and weapons proliferation.”
He further stated that the Europeans “can help by imposing targeted
sanctions that will impose a heavy cost on the regime’s leaders,
including the denial of visas and freezing of assets; as a further
measure to contain and deter Iran, the United States should impose
financial sanctions on the Central Bank of Iran which aids in Iran’s
terrorism and weapons proliferation. We must apply the full force of law
to prevent business dealings with Iran’s Revolutionary Guard Corps.”
The push to sanction the Central Bank of Iran continued during the
campaign season, and just prior to the presidential election of 2008
Senator Charles Schumer pressed the Bush Administration to impose
financial sanctions on Bank Markazi (AP, November 6, 2008). Yet, the
Bush Administration remained unconvinced that other countries would go
along with the sanction and left the matter to be handled by the next
administration. Stuart Levey, who stayed in his post in the Obama
Administration, continued to lead the sanction campaign against the
financial sector of Iran and waited for an opportunity to sanction Bank
Markazi. Once he left office in March of 2011, the campaign was carried
on by Levey’s deputy, David S. Cohen.
On August 8, 2011, the
Wall Street Journal reported that more “than 90 U.S. senators signed a
letter
to President Barack Obama pressing him to sanction Iran’s central bank,
with some threatening legislation to force the move, an outcome that
would represent a stark escalation in tensions between the two
countries.” This, as the report noted, would be a drastic action, a
“nuclear option” that if implemented, “could potentially freeze Iran out
of the global financial system and make it nearly impossible for Tehran
to clear billions of dollars in oil sales.”
The letter, as the report
stated, was co-sponsored by Senators Mark Kirk and Charles Schumer. It
told the President:
We must do more to increase the economic pressure on the
regime. In our view, the United States should embark on a comprehensive
strategy to pressure Iran’s financial system by imposing sanctions on
the Central Bank of Iran (CBI), or Bank Markazi. If our key allies are
willing to join, we believe this step can be even more effective.
As you know, the Iranian regime continues to pursue avenues to
circumvent both U.S. and multilateral sanctions. In the banking sector,
the Central Bank of Iran lies at the center of Iran’s circumvention
strategy. In May, Under Secretary of the Treasury for Terrorism and
Financial Intelligence David Cohen stated that “the activities of the
Central Bank of Iran (CBI) have been, and continue to be, a focus of the
Treasury Department. Treasury has noted previously that the CBI and
Iranian commercial banks have requested that their names be removed from
international payment messages to make it more difficult for
intermediary financial institutions to determine the true parties to the
transaction, and we remain concerned that the CBI may be facilitating
transactions for sanctioned Iranian banks.”
The time has come to impose crippling sanctions on Iran’s financial
system by cutting off the CBI. There is strong bipartisan support in
Congress for the imposition of sanctions on the CBI. As recently as
consideration of the FY10 National Defense Authorization Act, the Senate
unanimously supported an amendment urging you to impose such sanctions.
We urge you to strongly consider imposing U.S. sanctions against the
CBI and to encourage key allies to join us in this important action.
According to the above report, in an interview Kirk stated that “he
would introduce a law by year’s end to enforce sanctions on Bank Markazi
if the White House doesn’t move independently.” The report quoted Kirk
as saying: “The administration will face a choice of whether it wants to
lead this effort or be forced to act.” It also quoted Schumer as
saying: “It’s time for the administration to use the tools Congress has
provided and choke off the money spigot.”
The pressure was on and Under Secretary David S. Cohen had to find a
plot to push for sanctioning the Central Bank of Iran. The used-car
salesman, hired by IRGC-QF to arrange for the assassination of Saudi
Arabia’s ambassador, was just that plot. It was now time to bring on
board the rest of the world.
Immediately after the alleged plot, US officials, particularly Under
Secretary Cohen, were travelling around the world, trying to convince
other countries, especially those that were reluctant to sanction Bank
Markazi, that the plot was real. On October 14, 2011,
Harakah Daily
reported from Ankara that a “US team will travel to Turkey soon to
brief Turkish authorities on what the US says a clumsy plot to
assassinate the Saudi ambassador to the United States on American soil.”
On October 21,
AP reported that following the visit by two US officials
to Turkey to “brief the country on evidence they have in the alleged
plot,” Turkey’s foreign minister urged Iran to cooperate with the US. On
October 24, 2011, the headline of a news item published by
Radio Free
Europe/Radio Liberty read: “Top U.S. Treasury Official [Cohen] in Europe
for Talks on Sanctioning Iranian Central Bank.” After his stop in
London, the report stated, Cohen will take his message to Berlin, Paris
and Rome. On the same day,
AP reported the same news and quoted Cohen as
saying: “Iran needs to be held accountable for this plot. . . We are
going to continue to look at those financial institutions that are
involved with proliferation activity for Iran and continue to try to
isolate them from the international financial sector.” According to the
report Cohen added: “Any further sanctions would also be part of efforts
to deter Iran from pursuing nuclear capabilities . . . and could target
the country’s
central bank.”
In sum, the bizarre story of the used-car salesman, Mexican drug
cartel, and the Saudi Ambassador is inextricably linked to the
US-Israeli desire to sanction Bank Markazi. It is expected that this
“sanction of mass destruction,” or “nuclear option,” will do the trick
and will help to paralyze the Iranian economy. Down the line, it is
hoped, the shattered economy will create the right conditions for the
overthrow of the “Iranian regime” and its replacement by a US-Israeli
friendly government.
What a way to bring about regime change!
Notes.
[1] On Levey’s connection to the Israeli lobby groups and the role
that he played in sanctioning Iran in the Bush Administration see my
book: The United States and Iran: Sanctions, Wars and the Policy of Dual Containment, Routledge, 2008.
