Friday, November 1, 2013

Joe B Garza Explains Iran Financial Sanctions

Iran currently faces not only sanctions imposed by the United Nations, but also separate sanctions by a host of countries, including the United States and the nations of the European Union. Many of these sanctions are designed to thwart any trade in nuclear weapons on the part of Iran, but the U.S. and EU sanctions reach into a variety of other affairs, including the Iranian regime’s ability to conduct financial transactions. The Society for Worldwide Interbank Financial Telecommunications (SWIFT) is a global messaging hub that facilitates thousands of international financial transactions a day.

As of June 2013, roughly half of Iran’s 30 banks are on the EU sanctions list. SWIFT accordingly does not allow those banks to participate in its network. However, several Iranian banks have successfully challenged the sanctions in EU and British courts, arguing in part that the sanctions are based on vague allegations of support for Iran’s money-laundering and nuclear weapons programs. At least two of these banks, Mellat Bank and Bank Saderat, may press for compensation for the economic damages they suffered as a result of the sanctions.

To complicate matters, SWIFT (based in Belgium) has to tread carefully due to the nature of its mission. Neutrality is an essential trait for a system dealing with financial transactions; if one country believes it is being treated unfairly by another, that invites retaliation. The trust necessary to conduct financial transactions cannot function in an atmosphere of aggrieved parties retaliating against what they consider to be political attacks. Given the recent court rulings in favor of Iran, SWIFT is unlikely to blacklist the “good” banks until further legal developments, even though the U.S. supports such blacklisting.

Read More: (A) More by Joe Garza (B) More Political News

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