While many people have expressed concern about Iran’s ability to produce a nuclear weapon under the new deal, few people have recognized the fact that Iran will now have renewed access to the Society for Worldwide Interbank Financial Telecommunication or SWIFT.
Writing at Foreign Policy, Jonathan Schanzer and Mark Dubowitz recently pointed out that under the terms of the deal, Iran regains entry to SWIFT and a windfall of cash:
“SWIFT, the Society for Worldwide Interbank Financial Telecommunication, is the electronic bloodstream of the global financial system. It is a member-owned cooperative comprising the most powerful financial institutions in the world, which allows more than 10,800 financial companies worldwide to communicate securely. It’s hard to find a bank that doesn’t use SWIFT to communicate with other banks — unless, of course, you’ve lived in Iran for the past few years.
SWIFT disconnected 15 Iranian banks from its system in 2012 after coming under pressure from both the United States and the European Union at the height of the effort to curb Iran’s nuclear ambitions. It was a major blow to Tehran. Sure, it was how Iran sold oil, but it was also how Iranian banks moved money. According to SWIFT’s annual review, Iranian financial institutions used SWIFT more than 2 million times in 2010. These transactions, according to the Wall Street Journal, amounted to $35 billion in trade with Europe alone.
SWIFT is now poised to let those 15 banned Iranian banks, including the Central Bank of Iran, back in. But the move is controversial, to put it mildly. The system is subject to EU laws and international banking standards, which are unambiguous about terrorism finance. Deal or no deal, Iran remains a threat because of its past financing of terrorist networks.”
The writers point out that Obama mentioned Iran’s previous support for terror networks in his press conference last week, which makes this aspect of the deal all the more baffling. They then lay out the timeline of events which brought us to this point:
“De-SWIFTing” Iran did not happen without controversy. But under congressional pressure, Obama administration and EU officials eventually agreed to take the step in mid-2012. Around the same time, the White House began its back channel nuclear negotiations with Iran. This was no coincidence: Cut off from the formal financial sector, Iran was desperate for a way back in. The Obama administration saw this as an opportunity. Secret talks led to public negotiations in October 2013 and the announcement of an interim agreement one month later.
So long as the Iranians continued to engage in dialogue, the P5+1 world powers agreed to provide sanctions relief. Direct sanctions relief under the Joint Plan of Action, the interim deal signed in November 2013, yielded the Iranian regime a total of $11.9 billion from frozen oil revenues, allowing the country to replenish its dwindling foreign exchange reserves. This contributed to a modest economic recovery in 2014 and 2015, but the pressure from sanctions remained, and Iran’s economy remained stymied.
“Without SWIFT, there was nowhere to spend [the sanctions relief],” one U.S. government official told us in April. “The Iranians have been complaining to us throughout the JPOA process that sanctions relief means little without the ability to bank.”
With access to SWIFT, Iran’s pursuit of a nuclear weapon almost pales in comparison, at least in the short term, since millions of dollars could flow from Iran to terror networks:
“In plain English, SWIFT is putting the onus on the EU to assume the burden of the decision of whether Iran will be reintegrated into its system. So, upon “Implementation Day” — when the International Atomic Energy Agency verifies that Iran has fulfilled the implementation of specified nuclear measures — the EU will be obliged to order SWIFT to readmit Iran’s banks.
While Iran’s readmission to SWIFT is underway, Iranian banks will also get a boost from a provision in the agreement that calls for the United States to delist the Central Bank of Iran. This is no small matter. In 2011, invoking Section 311 of the Patriot Act, the U.S. Treasury took the extraordinary step of designating the entire “
Islamic Republic of Iran [as] a jurisdiction of primary money laundering concern.” The Treasury cited Iran’s “support for terrorism,” “pursuit of weapons of mass destruction,” and “deceptive financial practices” as reasons for the action. It specifically targeted Iran’s Central Bank and made it clear that the entire country’s financial system posed “illicit finance risks for the global financial system.”
Finally, Schanzer and Dubowitz point out the size of the finances in question and note that responsibility for keeping track of these dollars is going to fall largely on Europe:
“To make matters worse, the agreement just reached in Vienna grants more than $100 billion in cash to Iran, which could flow to the coffers of terrorist groups and rogue actors like Hezbollah, Hamas, Palestinian Islamic Jihad, the Houthis, and Syrian President Bashar al-Assad’s regime in Damascus. At the president’s press conference on Wednesday, Obama dismissed this fear, claiming the money would not be a “game-changer” for Iran. It’s hard to understand his logic: This infusion of cash will relieve budgetary constraints for a country already spending at least $6 billion annually to support Assad. For a country with only $20 billion in fully accessible foreign exchange reserves prior to November 2013, this is hugely significant.
More importantly, the relaxed banking standards will grant the Iranian regime the ability to move its money anywhere in the world. With EU sanctions also set to be lifted on Iran’s Islamic Revolutionary Guard Corps, major IRGC companies and banks, and the Quds Force, the IRGC’s extraterritorial terrorist arm, Europe will become an economic free zone for Iran’s terrorist activity.”
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