EU move severs more than 30 Iranian banks from vital financial hub
Prime Minister Benjamin Netanyahu praised the decision to cut Iran off from global commerce on Thursday, following an announcement by SWIFT, the company handling international financial transactions, that it was severing ties with the Islamic Republic.
A similar response came from the White House, where spokesperson Jay Carney was quoted as saying that Iran had to pay for its refusal to comply with international demands.
According to Jerusalem sources, Netanyahu advocated the move during his recent visit to the US and Canada.
Finance Minister Yuval Steinitz also praised the decision, calling it “A dramatic tightening of financial sanctions on Iran.”
“A modern economy cannot function without transfer services and under an ever tightening financial siege,” added Steinitz.
The action represents a further ratcheting of pressure meant to discourage Tehran from developing nuclear weapons.
Israel has been advocating more crippling sanctions against Iran, warning that time is running out on thwarting the nuclear drive by non-military means. In the Knesset on Wednesday, Netanyahu hinted at a possible Israeli military strike, by drawing parallels between the Iranian threat and Israel’s resort to military action to destroy Saddam Hussein’s reactor at Osirak in 1981.
Earlier Thursday, in an interview with Danish television, Iran’s Foreign Minister Ali Akbar Salehi warned that Israel would be finished if it dared strike at his country’s nuclear facilities. “If Israel ever, ever makes this mistake,” he said, ” that will set the time for the end of Israel.”
The Society for Worldwide Interbank Financial Telecommunication, or SWIFT, is a banking hub crucial to oil, financial transactions and other trades.
Because of its reach, SWIFT’s decision to cut off some 30 Iranian banks and subsidiaries could hinder not only banking but also the country’s lucrative crude oil industry and possibly hurt Iranian households that depend on remittances from relatives living abroad.
“Disconnecting banks is an extraordinary and unprecedented step for SWIFT,” said Lazaro Campos, chief executive of the company. “It is a direct result of international and multilateral action to intensify financial sanctions against Iran.”
In a statement, the company said the EU decision to impose sanctions “prohibits companies such as SWIFT to continue to provide specialized financial messaging services to EU-sanctioned banks” and “forces SWIFT to take action.”
There was no immediate reaction from the Iranian government or the banks involved. Not all Iranian banks are subject to EU sanctions.
Though Thursday’s move adds no new sanctions, it is intended to maximize the impact of the EU sanctions that have already been approved.
“It’s tightening the noose,” said Ali Ansari, an expert on the Middle East at the London-based Chatham House think tank.
“I think it will just reinforce what’s already been happening.” And that, he said, is increasing isolation and difficulty in conducting trade and commerce.
In a statement, the European Council — comprised of the government leaders of the 27 European Union countries — said it had “developed the application” of its restrictive measures against Iran.
“In this context, the Council agreed that no specialized financial messaging shall be provided to those persons and entities subject to an asset freeze,” the statement said.
In addition to sanctioning various officials and freezing the assets of certain companies, the European Union plans to institute an embargo on the import of Iranian oil in July — an attempt to choke off funding for Iran’s nuclear program.
The EU sanctions are aimed at forcing Iran to demonstrate to the international community that it is not trying to develop nuclear weapons. Iran says that its nuclear program is for peaceful purposes only, but officials in many other countries — including Israel — believe otherwise.
SWIFT and similar services facilitate not only large financial transactions, but small ones as well, raising the question of whether the EU directive could have unintended consequences.
Numerous Iranians, including opponents of the current regime, live abroad and many may use these financial transaction services to send small amounts of money to their families back home on a regular basis.