Will Trump’s Iran sanctions be weaker than Obama’s?

The intelligence community’s rationale for allowing Iran to remain part of SWIFT is that it allows them to track Iran’s finances internationally.

By ERIC R. MANDEL
Updated: OCTOBER 13, 2018 22:26
US PRESIDENT Barack Obama leaves after delivering a statement on Iran at the White House in Washington in 2016. (photo credit: REUTERS)
US PRESIDENT Barack Obama leaves after delivering a statement on Iran at the White House in Washington in 2016.
(photo credit: REUTERS)
Last spring President Trump withdrew from the 2015 Iran Nuclear Deal (JCPOA). He re-imposed sanctions on the revolutionary Islamist regime that had previously been given tens of billions of dollars in economic relief and was reintegrated within the international banking community. The sanctions come into full effect on November 4.
President Trump has been unwavering in his criticism of the JCPOA, claiming the deal didn’t deliver any of its promised benefits – moderating Iran’s expansionist ambitions, restraining its missile development or terrorist sponsorship, improving its human rights record – while it continued threatening American allies in the region.
But is it possible that members of the president’s own administration could convince him to soften the impact of the re-imposition of sanctions on Iran? Surprisingly, the answer is yes.
Much has to do with an internal fight within the administration between the intelligence community and Treasury on one side, and National Security Adviser John Bolton on the other.
The Treasury and the intelligence community are advocating for leniency on Iran and its European partners by allowing Iran to remain a part of the SWIFT international banking system, which allows Iranian banks to seamlessly exchange funds across the globe.
That the international community would even allow the world’s leading state sponsor of terror to be accepted in good standing in the world economic community is another story – one of naiveté, avarice and appeasement.
Bolstering Bolton on the other side are Trump’s years-long statements about imposing maximum economic pressure on Iran to create conditions for a better deal. Sixteen senators this summer warned Treasury about the dangers of excluding SWIFT sanctions.
Which brings us back to whether President Trump will re-impose a softer version of Obama-era sanctions on Iran by not incorporating SWIFT.
According to the Washington Free Beacon, “During the Obama era, SWIFT disconnected Iran due to sanctions threats... SWIFT leaders were in DC last week holding meetings with Trump administration officials to ensure that Iran retains access to the international banking system,” strengthening the Iranian economy and their European trading partners.
The intelligence community’s rationale for allowing Iran to remain part of SWIFT is that it allows them to track Iran’s finances internationally, providing vital intelligence, and if SWIFT is sanctioned it would weaken their ability to follow other bad international actors like Russian oligarchs.
This is not a strong argument, as Iran’s most egregious transactions will not enter the transparent SWIFT system. Iran and Hezbollah fuel the American opioid epidemic with a billion dollars a year of money-laundered profits that are outside the SWIFT system. In addition, as long as SWIFT only blocks transactions with Iran, the intelligence agencies can continue to monitor all other worldwide transactions.
WITH IRAN’S economy already reeling, some critics of re-imposing SWIFT sanctions fear Iran could become more dangerous and unpredictable, with claims that it could impede the flow of oil, gas and commerce in both Bab-el-Mandeb and the Strait of Hormuz, at the entrance to the Red Sea and Persian Gulf, respectively.
Iranian-supported Yemeni Houthis have already attacked two Saudi tankers this year in Bab-el-Mandeb. However, China’s dependence on Iranian oil transported through the Strait of Hormuz, combined with Iran’s desire to strengthen relations with China, make that threat less likely.
But the most challenging threat against imposing SWIFT sanctions is from President Trump’s own Treasury Department under Steve Mnuchin, which is working overtime to help Iran remain in SWIFT. Mr. Mnuchin’s perspective is shaped by his Wall Street background, which sees any interference in global trading systems as a threat to the worldwide economic order, especially with the Europeans not on board this time around. They argue that Iran’s economy is already in tatters and that SWIFT sanctions would cause more harm than good.
The reality is that if Iran is allowed to remain in SWIFT, the much-promised maximum economic sanctions of the Trump presidency will be a hollow threat. If the goal is to further starve the Iranian economy – making its support of worldwide terrorism, hidden nuclear activities, human rights abuses, and missile development more painful to continue – then the benefit of including SWIFT outweighs the arguments against including SWIFT transactions.
According to Josh Rogin in The Washington Post, “There’s another great argument for cutting Iranian banks off SWIFT: It would hamper Iran’s ability to finance the Assad regime in Syria, Hezbollah, Hamas... SWIFT’s own bylaws require it to prevent illegal financial activities – such as funding terrorism.”
Before the Iran agreement was implemented there was bipartisan consensus on imposing sanctions on Iran for its clandestine nuclear program.
However, after the agreement went into effect in 2016, any new sanctions on Iran were treated as a direct threat to president Obama’s legacy achievement, despite the administration’s promise that all non-nuclear sanctions were on the table. The issue has unfortunately become a political one, not what it should be, a discussion of what is in America’s best interest.
This month America unveiled its first new counter-terrorism report in seven years. Tops on the list was the Iranian threat. America’s national security interest is to rein in Iran. Without including SWIFT, that interest is undermined.
As President Trump’s Iran envoy Brian Hook said, “If talking to Iran kindly worked, we wouldn’t be in this position... we need to restore deterrence.”
The writer is the director of the Middle East Political Information Network (MEPIN) and regularly briefs members of the Senate and House and their foreign policy advisers.