U.S. Sanctions with Teeth

[Washington Post] David Ignatius - A new variety of U.S. Treasury sanctions is having a potent effect in Iran. The new measures work thanks to the hidden power of globalization: Because all the circuits of the global financial system are inter-wired, the U.S. quarantine effectively extends to all major banks around the world. "As banks do their risk-reward analysis, they must now take into account the very serious risk of doing business in Iran, and what the risks would be if they were found to be part of a terrorist or proliferation transaction," says Deputy Treasury Secretary Robert Kimmitt. Top U.S. Treasury officials visited bankers and finance ministers around the world, warning them to be careful about their dealings with Iranian companies that might covertly be supporting terrorism or weapons proliferation. This was enough to convince most big foreign banks in Europe and Japan to back away from Iran. The new sanctions are toxic because they effectively limit a country's access to the global ATM. In that sense, they impose - at last - a real price on countries such as Iran that have blithely defied UN resolutions.

2007-02-28 01:00:00

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