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Treasury Official: Senate’s Iran Central Bank Sanctions ‘Risk Fracturing The International Coalition’ Against Iran

By Ali Gharib on December 1, 2011 at 6:26 pm

"Treasury Official: Senate’s Iran Central Bank Sanctions ‘Risk Fracturing The International Coalition’ Against Iran"

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The Obama administration, while wanting to apply additional pressure on Iran, came out today in a letter to a key Member of Congress and in a Congressional hearing with “strong opposition” to a Senate amendment to the Defense Department budget that would level hard-hitting sanctions against Iran’s Central Bank (CBI). The Kirk-Menendez amendment, named for the sponsoring Senators Mark Kirk (R-IL) and Bob Menendez (D-NJ), would bar any companies or central banks abroad that do business through Iran’s central bank from doing any business in the U.S. Kirk has said the legislation was designed to collapse Iran’s currency and expressed indifference to the suffering of ordinary Iranians as a result of doing so.

At a Senate Foreign Relations Committee hearing today, two administration officials pushed back against the Kirk-Menendez amendment, offering a critique that while they shared the goals that underly the bill — pressuring Iran — they feared consequences of the legislation might be counterproductive.

Under Secretary of the Treasury for Terrorism and Financial Intelligence David Cohen, who recently returned from a trip to Israel and the United Arab Emirates to work with U.S. allies in pressuring Iran, told the committee that the Kirk-Menendez amendment could shatter the international coalition that has been successful in slowing Iran’s nuclear progress:

COHEN: [It] risks fracturing the international coalition that has been built up over the last several years to bring pressure to bear on Iran, especially today in the aftermath of what has occurred in Tehran over the last several days, in the aftermath of the IAEA report, and in the growing sense of urgency internationally with respect to Iran’s nuclear program.

I think we have an opportunity to work cooperatively and collaboratively with our international partners to bring additional pressure to bear on Iran. The amendment, however, would focus the most powerful sanction that we have, the termination of access to the United States on the largest financial institutions and the central banks and some of our closest partners.

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Cohen said the “threat of coercion that is contained in the amendment” could alienate even close and cooperative allies like Japan and European countries. The administration believes, Cohen added, that cooperation and coordination can be better achieved “if we approach this issue through an effort to coordinate action voluntarily.”

Under Secretary of State for Political Affairs Wendy Sherman, who also appeared at the hearing, said the administration’s analysis concludes that “there is absolutely a risk that in fact the price of oil would go up, which would mean that Iran would in fact have more money to fuel its nuclear ambitions, not less.”

Also today, as committee chair Sen. John Kerry (D-MA) acknowledged, Treasury Secretary Timothy Geithner wrote a letter to Armed Services chair Sen. Carl Levin (D-MI) stating the administration’s “strong opposition to this amendment because, it its current form, it threatens to undermine the effective, carefully phased, and sustainable approach we have undertaken to build strong international pressure against Iran.”

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