Us­ing fi­nan­cial sticks to con­trol Iran

The Pak Banker - - OPINION - Juan Zarate & Chip Poncy

As Congress con­sid­ers the Ira­nian nu­clear deal, it should also pre­pare a strat­egy to use U.S. fi­nan­cial and eco­nomic power ag­gres­sively against a broad ar­ray of Ira­nian threats. If the deal is adopted, the risks from an en­riched, em­bold­ened Iran will only grow. These risks should not be ac­cepted as an un­avoid­able cost of the deal.

Any un­wind­ing of sanc­tions and rein­te­gra­tion of the Ira­nian econ­omy will pro­vide Iran's Rev­o­lu­tion­ary Guard Corps , and its over­seas Quds Force - the de­fend­ers of the regime and ex­po­nents of the revo­lu­tion, with greater re­sources and ac­cess to global fi­nan­cial and com­mer­cial sys­tems.

The Rev­o­lu­tion­ary Guard and the rul­ing mul­lahs con­trol strate­gic el­e­ments of the Ira­nian econ­omy - the largest con­struc­tion com­pany, much of its telecom­mu­ni­ca­tions sec­tor and a large por­tion of the Tehran stock ex­change. They use the na­tion's banks, oil in­dus­try and other nodes of the econ­omy to profit per­son­ally, sup­port ter­ror­ism and pre­serve the regime. They ex­ert con­trol through bonyads, or paras­tatal fi­nan­cial en­ti­ties, and Supreme Leader Ay­a­tol­lah Ali Khamenei's vast fi­nan­cial net­work, EIKO (set to be delist- ed), worth tens of bil­lions of dol­lars.

There is se­ri­ous con­cern re­gard­ing the in­fu­sion of bil­lions of dol­lars into Iran im­me­di­ately, with more sanc­tions re­lief and in­vest­ment to fol­low. Fund­ing is likely to flow from Tehran to ter­ror­ist prox­ies from Beirut to Ye­men.

The deal's al­lowance for a nu­clear in­fra­struc­ture and re­search will cer­tainly not de­crease pro­lif­er­a­tion risks. Pro­lif­er­a­tion con­cerns, es­pe­cially given Iran's trade with rogue third coun­tries like North Korea and Syria, will ac­tu­ally in­crease. And the threat is likely to be ex­ac­er­bated with the lift­ing of the arms and bal­lis­tic mis­sile em­bar­goes, af­ter five and eight years, re­spec­tively. With more cap­i­tal and bet­ter tech­nol­ogy, Iran will con­tinue to ha­rass its en­e­mies with cy­ber at­tacks, as it has against Western banks, the Sands Casino and Saudi Aramco.

The regime will use its eco­nomic con­trol to bru­tally sup­press in­ter­nal op­po­si­tion, and con­cerns over hu­man­rights abuses and regime klep­toc­racy will grow. Ira­nian money laun­der­ing and il­licit fi­nanc­ing - specif­i­cally called out in­ter­na­tion­ally and sub­jected to U.S. reg­u­la­tory ac­tion - will per­sist. It will be harder to iden­tify sanc­tions eva­sion and even more dif­fi­cult to en­force with greater mar­ket en­thu­si­asm for do­ing busi­ness with Iran.

These risks must all be con­fronted us­ing the fi­nan­cial power that has dom­i­nated the post-9/11 pe­riod, es­pe­cially when mil­i­tary op­tions are not avail­able. The United States can­not watch these risks grow with­out "push­ing back" against Iran. Congress should put in place a new strat­egy, pre­serv­ing and strength­en­ing our abil­ity to con­front Iran's rogue ac­tiv­ity through the use of fi­nan­cial power. The strat­egy will suc­ceed if fo­cused on un­der­ly­ing Ira­nian con­duct and ac­cepted in­ter­na­tional prin­ci­ples.

We should adopt an eco­nomic con­stric­tion cam­paign fo­cus­ing on the Rev­o­lu­tion­ary Guard and core el­e­ments of the regime en­gaged in ter­ror­ist fi­nanc­ing, pro­lif­er­a­tion and pro­vid­ing sup­port to desta­bi­liz­ing prox­ies. This should in­clude sec­ondary sanc­tions against those do­ing busi­ness with des­ig­nated Ira­nian play­ers. We should tighten ex­port-con­trol en­force­ment, in­ter­dic­tions and fi­nan­cial re­stric­tions - in­clud­ing against rel­e­vant Ira­nian banks - and tar­get those en­gaged in pro­lif­er­a­tion fi­nance or sanc­tions eva­sion un­der Ex­ec­u­tive Or­ders 13382 and 13608, re­spec­tively.

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