If you are able to donate $100 or more for our Annual Fund Drive, your donation will be matched by another generous CounterPuncher! These are tough times. Regardless of the political rhetoric bantered about the airwaves, the recession hasn’t ended for most of us. We know that money is tight for many of you. But we also know that tens of thousands of daily readers of CounterPunch depend on us to slice through the smokescreen and tell it like is. Please, donate if you can!
When on October 11, 2011, the Obama Administration claimed that the Iranian Revolutionary Guard Corps-Qods Force (IRGC-QF) had attempted to kill Saudi Arabia’s ambassador to the US, many commentators expressed skepticism. Why would IRGC-QF, supposedly a professional organization, hire a used-car salesman, with a dubious background, to carry out such a delicate task on the US soil, knowing full well that if the plot is uncovered, there would be severe consequences for Iran? Why would those involved in the plot converse on the phone, knowing full well that such phone calls might be monitored? Why would they wire money for the plot via a foreign bank to a US bank, knowing full well that Iran is under severe US financial sanctions and any transaction originating from Iran will be scrutinized? These and a number of other anomalies made the story hard to believe. Indeed the story was so bizarre that in announcing the case FBI Director Robert Mueller stated that it “reads like the pages of a Hollywood script” (Reuters, October 11, 2011). Others, of course, saw it more as a Keystone Kops script.
The comical nature of the case made it appear so implausible that President Obama became defensive when he was asked about the issue in a press conference on October 13, 2011. In answering the question, Obama referred to the Attorney General’s “specific set of facts” and stated: “those facts are there for all to see. And we would not be bringing forward a case unless we knew exactly how to support all the allegations that are contained in the indictment.”
Even though comical, it is difficult, at least in the short run, to prove or disprove the US allegation against Iran. After all, when invading Iraq in 2003 the US government showed a set of evidence that at first was hard to disprove. It was only later that the set of evidence was shown to be fabricated.
In the absence of evidence to prove or disprove the US allegation, one might approach the issue from a different angle. If the plot was somehow concocted by the US—for example, the used-car salesman was entrapped—what was the US motivation? This question is much easier to answer.
On the same day that the US Attorney General and FBI Director went public with the alleged plot, the Department of Treasury issued a press release announcing the “designation” of not only the used-car salesman but four “senior” IRGC-QF officers connected to the plot. Among the four individuals was IRGC-QF commander Qasem Soleimani. As the press release stated, the Treasury Department had designated Soleimani twice before, once for “his relationship to the IRGC” and again for his connection to “human rights abuses in Syria.” Soleimani’s name was also mentioned as a “key person” involved in “nuclear or ballistic missile activities” in the United Nations Security Council Resolution 1747, issued on March 24, 2007. In addition, on June 23, 2011, the European council had announced that it is banning travel and freezing the assets of some Syrian individuals and companies and targeting three commanders of IRGC for supporting the Syrian government. Among these was Qasem Soleimani. Thus, it appears that the US was connecting a high profile character, such as Soleimani, to the assassination plot in order to make the case more significant and ominous. But why was the Treasury Department involved in what appeared to be a criminal case in the first place?
There was a partial answer to the above question in the Treasury Department’s announcement. The press release quoted David S. Cohen, Under Secretary for Terrorism and Financial Intelligence, as saying: “Iran once again has used the Qods Force and the international financial system to pursue an act of international terrorism, this time aimed against a Saudi diplomat. . . The financial transactions at the heart of this plot lay bare the risk that banks and other institutions face in doing business with Iran.” In his press conference on October 13, 2011, President Obama also gave a hint as to why the Department of Treasury was involved in dealing with the alleged terror plot and what the US intended to do about it. He stated that we will “apply the toughest sanctions [against Iran] and continue to mobilize the international community to make sure that Iran is further and further isolated and that it pays a price for this kind of behavior.”
A more specific answer became available on October 13, 2011, when Cohen gave his testimony before the Senate Banking Committee. Cohen announced that the Department of Treasury is “weighing more sanctions against Iran’s central bank to tighten the financial screws and deepen the country’s estrangement from the international financial community” (Reuters, October 13, 2011). After this testimony, many news sources correctly realized that the US Treasury Department was intent to use the alleged plot to sanction Iran’s Central Bank or Bank Markazi. Some also realized that such a sanction might paralyze the Iranian economy, since Bank Markazi is the bank of banks in Iran, and sanctioning it is equivalent to immobilizing the US Federal Reserve System. Indeed, one AFP headline on October 14, 2011, read “US mulls Iran ‘sanction of mass destruction’”. The news report correctly pointed out that after “three decades of blanket US sanctions against Iran, it has become received wisdom that the United States has few financial tools left to bend Iran’s will.” One of those tools, the report went on to say, was sanctioning “Bank Markazi—which sits at the center of Iran’s financial and energy interests.” The report quoted Avi Jorisch, a former advisor at the Treasury Department’s office of terrorism and financial intelligence, as saying: “Essentially financial institutions around the world would have to choose between doing business with the United States and with the central bank [of Iran].”
What was missing from the above reports, however, was the history of the attempt by the US to sanction the Central Bank of Iran. Also missing, was the host of characters and institutions behind the attempt. Below, I will provide a brief account of the missing pieces.
After decades of sanctioning Iran and not bringing about the intended “regime change,” the neoconservatives, Israeli lobby groups and their conduits in the US government came up with a novel idea: sanctioning the Central Bank of Iran. In late May and early June of 2008, two resolutions were introduced in the House and Senate, which effectively called, among other things, for a US blockade of Iran and sanctioning of Bank Markazi. The American Israel Public Affairs Committee (AIPAC) summarized the two resolutions on its website under “Stop Iran’s Nuclear Program” and called for action:
Members of the House and Senate have introduced resolutions (H. Con. Res. 362 and S. Res. 580) calling on the administration to focus on the urgency of the Iranian nuclear threat and to impose tougher sanctions on Tehran. The resolutions, introduced in the House by Reps. Gary Ackerman (D-NY) and Mike Pence (R-IN) and in the Senate by Sens. Evan Bayh (D-IN) and John Thune (R-SD), urge the president to sanction Iran’s Central Bank and other international banks and energy companies investing in the country. They also demand that the United States lead an international effort to increase pressure on Iran by curtailing Iran’s ability to import refined petroleum products. Please urge your representatives to cosponsor this critical resolution.
The Bush Administration, however, realized that the rest of the world would not go along with sanctioning Iran’s Central Bank. Instead, the Administration relied on the Treasury Department to sanction major banks in Iran and prepare the ground for sanctioning Bank Markazi at some later date. Stuart Levey, the Treasury Department’s Under Secretary for Terrorism and Financial Intelligence, who was well known for his connection to Israeli lobby groups and his personal war against Iran, was given the task . Levey did succeed, and under his tenure, which lasted well into the Obama Administration, major banks in Iran were sanctioned. Yet, the neoconservatives, Israeli lobby groups and their conduits in the US government wanted more.
Sanctioning Bank Markazi became a campaign issue in the 2008 presidential election. As I mentioned in my pre-election essay, “What the Future has in Store for Iran,” in spring of 2008 John McCain, who was being advised by the neoconservatives, delivered a speech at the AIPAC conference in which he mentioned sanctioning Bank Markazi. “Central Bank of Iran,” McCain stated, “aids in Iran’s terrorism and weapons proliferation.”
He further stated that the Europeans “can help by imposing targeted sanctions that will impose a heavy cost on the regime’s leaders, including the denial of visas and freezing of assets; as a further measure to contain and deter Iran, the United States should impose financial sanctions on the Central Bank of Iran which aids in Iran’s terrorism and weapons proliferation. We must apply the full force of law to prevent business dealings with Iran’s Revolutionary Guard Corps.”
The push to sanction the Central Bank of Iran continued during the campaign season, and just prior to the presidential election of 2008 Senator Charles Schumer pressed the Bush Administration to impose financial sanctions on Bank Markazi (AP, November 6, 2008). Yet, the Bush Administration remained unconvinced that other countries would go along with the sanction and left the matter to be handled by the next administration. Stuart Levey, who stayed in his post in the Obama Administration, continued to lead the sanction campaign against the financial sector of Iran and waited for an opportunity to sanction Bank Markazi. Once he left office in March of 2011, the campaign was carried on by Levey’s deputy, David S. Cohen.
On August 8, 2011, the Wall Street Journal reported that more “than 90 U.S. senators signed a letter to President Barack Obama pressing him to sanction Iran’s central bank, with some threatening legislation to force the move, an outcome that would represent a stark escalation in tensions between the two countries.” This, as the report noted, would be a drastic action, a “nuclear option” that if implemented, “could potentially freeze Iran out of the global financial system and make it nearly impossible for Tehran to clear billions of dollars in oil sales.” The letter, as the report stated, was co-sponsored by Senators Mark Kirk and Charles Schumer. It told the President:
We must do more to increase the economic pressure on the regime. In our view, the United States should embark on a comprehensive strategy to pressure Iran’s financial system by imposing sanctions on the Central Bank of Iran (CBI), or Bank Markazi. If our key allies are willing to join, we believe this step can be even more effective.
As you know, the Iranian regime continues to pursue avenues to circumvent both U.S. and multilateral sanctions. In the banking sector, the Central Bank of Iran lies at the center of Iran’s circumvention strategy. In May, Under Secretary of the Treasury for Terrorism and Financial Intelligence David Cohen stated that “the activities of the Central Bank of Iran (CBI) have been, and continue to be, a focus of the Treasury Department. Treasury has noted previously that the CBI and Iranian commercial banks have requested that their names be removed from international payment messages to make it more difficult for intermediary financial institutions to determine the true parties to the transaction, and we remain concerned that the CBI may be facilitating transactions for sanctioned Iranian banks.”
The time has come to impose crippling sanctions on Iran’s financial system by cutting off the CBI. There is strong bipartisan support in Congress for the imposition of sanctions on the CBI. As recently as consideration of the FY10 National Defense Authorization Act, the Senate unanimously supported an amendment urging you to impose such sanctions. We urge you to strongly consider imposing U.S. sanctions against the CBI and to encourage key allies to join us in this important action.
According to the above report, in an interview Kirk stated that “he would introduce a law by year’s end to enforce sanctions on Bank Markazi if the White House doesn’t move independently.” The report quoted Kirk as saying: “The administration will face a choice of whether it wants to lead this effort or be forced to act.” It also quoted Schumer as saying: “It’s time for the administration to use the tools Congress has provided and choke off the money spigot.”
The pressure was on and Under Secretary David S. Cohen had to find a plot to push for sanctioning the Central Bank of Iran. The used-car salesman, hired by IRGC-QF to arrange for the assassination of Saudi Arabia’s ambassador, was just that plot. It was now time to bring on board the rest of the world.
Immediately after the alleged plot, US officials, particularly Under Secretary Cohen, were travelling around the world, trying to convince other countries, especially those that were reluctant to sanction Bank Markazi, that the plot was real. On October 14, 2011, Harakah Daily reported from Ankara that a “US team will travel to Turkey soon to brief Turkish authorities on what the US says a clumsy plot to assassinate the Saudi ambassador to the United States on American soil.” On October 21, AP reported that following the visit by two US officials to Turkey to “brief the country on evidence they have in the alleged plot,” Turkey’s foreign minister urged Iran to cooperate with the US. On October 24, 2011, the headline of a news item published by Radio Free Europe/Radio Liberty read: “Top U.S. Treasury Official [Cohen] in Europe for Talks on Sanctioning Iranian Central Bank.” After his stop in London, the report stated, Cohen will take his message to Berlin, Paris and Rome. On the same day, AP reported the same news and quoted Cohen as saying: “Iran needs to be held accountable for this plot. . . We are going to continue to look at those financial institutions that are involved with proliferation activity for Iran and continue to try to isolate them from the international financial sector.” According to the report Cohen added: “Any further sanctions would also be part of efforts to deter Iran from pursuing nuclear capabilities . . . and could target the country’s central bank.”
In sum, the bizarre story of the used-car salesman, Mexican drug cartel, and the Saudi Ambassador is inextricably linked to the US-Israeli desire to sanction Bank Markazi. It is expected that this “sanction of mass destruction,” or “nuclear option,” will do the trick and will help to paralyze the Iranian economy. Down the line, it is hoped, the shattered economy will create the right conditions for the overthrow of the “Iranian regime” and its replacement by a US-Israeli friendly government.
What a way to bring about regime change!
 On Levey’s connection to the Israeli lobby groups and the role that he played in sanctioning Iran in the Bush Administration see my book: The United States and Iran: Sanctions, Wars and the Policy of Dual Containment, Routledge, 2008.
Sasan Fayazmanesh is Professor Emeritus of Economics at California State University, Fresno. Sasan is a contributor to Hopeless: Barack Obama and the Politics of Illusions (forthcoming from AK Press.) He can be reached at: email@example.com
Exclusively in the new print issue of CounterPunch
One of the Greatest Descriptions of Farm Work Ever Written— Don’t miss Frank Bardacke’s marvelous account from the California fields. ALSO Linn Washington Jr. on the “Black Backlash Against Obama.”