U.S., EU eye risky move to cripple Iran finances

WASHINGTON - The United States and Europe are considering unprecedented punishment against Iran that could immediately cripple the country's financial lifeline. But it's an extreme option in the banking world that would come with its own costs.

The Obama administration wants Iran evicted from SWIFT, an independent financial clearinghouse that is crucial to the country's overseas oil sales. That would leapfrog the current slow-pressure campaign of sanctions aimed at persuading Iran to drop what the U.S. and its allies contend is a drive toward developing and building nuclear weapons. It also perhaps would buy time for the U.S. to persuade Israel not to launch a pre-emptive military strike on Iran this spring.

The last-resort financial effort suggests the U.S. and Europe are grasping for ways to show immediate results because economic sanctions have so far failed to force Iran back to nuclear talks

But such a penalty could send oil prices soaring when many of the world's economies are still frail. It also could hurt ordinary Iranians and undercut the reputation of SWIFT, a banking hub used by virtually every nation and corporation around the world. The organization's full name is the Society for Worldwide Interbank Financial Telecommunications.

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Meanwhile, Iran claimed new progress in its nuclear program. A semiofficial Iranian news outlet reported that the country started using new, fourth-generation domestically made centrifuges at its Natanz uranium enrichment site. Iran revealed several other nuclear advances, including the production of its first domestically engineered fuel rods, or plates, for the nuclear research reactor in Tehran.

But Western experts Wednesday morning cast doubt on Iran's claims that its centrifuges have reached the fourth-generation capabilities, saying that the Iranians have been struggling to reach second- or third-generation centrifuges. At any rate, the Iranians claim the centrifuges have a higher speed and production capacity.

There was also a report from Iran's state-controlled Press TV Wednesday that Iran was cutting oil exports to six European countries — the Netherlands, Spain, Italy, France, Greece and Portugal — in response to recent new European Union sanctions.

However, a spokesman for Iran's Oil Ministry denied the report, telling Reuters that "if such a decision is made, it will be announced by Iran's Supreme National Security Council."

Recent violence has also inflamed tensions between Iran and the West. Explosions in Bangkok on Tuesday — Israel's defense minister labeled them an "attempted terrorist attack" — came the day after Israel accused Iran of trying to kill its diplomats in India and Georgia. Those attacks followed the recent killings of Iranian scientists.

In the financial world, the United States can't order SWIFT to kick Iran out. But it has leverage in that it can punish the Brussels-based organization's board of directors. Talks are focused now on having Europe make the first move.

Short of total expulsion, Washington and representatives of several European nations are in talks over ways to restrict Iran's use of the banking consortium to collect oil profits.

The Obama administration is divided over whether the possible gain is worth the risk in trying to threaten SWIFT into kicking out a member country, in part because of concern that it would set back the global financial recovery. Iran remains a global financial player despite years of banking sanctions, and blocking it from using the respected transfer system would be a black mark like no other.

More than 40 Iranian banks and institutions use SWIFT to process financial transactions, and losing access to that flow of international funds could badly damage the Islamic republic's economy. It would also probably hurt average Iranians more than the welter of existing banking sanctions already in place since prices for household goods would rise while the value of Iranian currency would drop.

Lawyers for SWIFT are holding meetings in Washington. People familiar with the talks say a compromise is possible in which SWIFT would voluntarily bar or restrict Iranian transfers.

But if SWIFT fails to act on its own, the U.S. expects Europe to require it to terminate services for Iranian banks, one Obama administration official said.

David Cohen, the Treasury Department's undersecretary for terrorism and financial intelligence, delivered that message to European Union officials in Brussels earlier this month, said the official, who was not authorized to speak publicly and thus spoke only on the condition of anonymity.

Mark Dubowitz, a sanctions expert advising the White House on Iran, said the Obama administration is having detailed discussions on the merits and consequences of forcing SWIFT to block Iranian transactions.

Some in the administration also prefer to give time for new sanctions on Iran's Central Bank, officially enforced starting just this month, to take hold before layering on a round of even more draconian penalties.

SWIFT was involved in a separate controversy when it was revealed in 2006 that it had skirted the EU's strict privacy laws after the Sept. 11, 2001, attacks by transferring millions of pieces of personal information from its U.S. offices to American authorities as part of the US Terrorist Finance Tracking Program.

"It is an essential cog in the wheel, if not the wheel itself, in international financial transactions and trade," said David Aufhauser, former general counsel at the Treasury Department who worked with SWIFT to set up that information transfer.

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[AlecWest]

A few years ago, ABC News did a special report on Iran's culture. It's largely a youth culture where the majority of citizens are educated and under the age of 30. And in the special, it became quite clear that most of these under-30 citizens want nothing to do with theocratic control over their lives. The most recent evidence of this was the disputed 2009 election and the massive protests that followed.

Point is, the ruling Islamic theocrats (and their handpicked political leaders) seem to have the voice of this dissent so strangled we never hear it in the world media. But, it's there nonetheless.

If there is indeed some sort of covert attempt by the U.S. and Israel to destabilize Iran by assassinating nuclear scientists or infecting their computers with viruses and worms, I put it to them that they are targeting the wrong target(s). They need to be targeting the ruling mullahs and their more western-appearing henchmen (like Ahmadinejad). If these people were eliminated, the control over dissent would evaporate - and opposition leaders who prefer democratic reform would emerge (as the Iranian people would most likely prefer).

[Brian_M_SFO]

"It also perhaps would buy time for the U.S. to persuade Israel not to launch a pre-emptive military strike on Iran this spring."

This sort of thing perplexes me, as does the situation in Egypt, whose illegitimate military government is illegally detaining US citizens in an effort to "appear tough."

Egypt and Israel are both patron states of the United States, which receive billions of dollars a year in direct payments.

In both situations, the US should be the dominant partner, attaching continued funding to Israeli and Egyptian compliance with US wishes.

In Egypt's case, the US should inform Cairo that all aid payments will immediately and indefinitely cease if the US citizens detained are not released and allowed to leave within 24 hours.

In Israel's case, Jerusalem should be advised that any pre-emptive strike on any country in the region (including Iran) without explicit US permission will result in complete termination of all US aid payments and military/technical assistance to Israel.

[noloyalisti]

How about that the imperial United States and EU, owned and run by corrupt Wall Street Banksters moving to take action against a 3rd world nation with oil.

What a surprise. What a stunning turn of events. Stupid violent, primitive idiots.

[B_Erhart]

Everything points to a concerted effort to start a shooting conflict.
Motive? Hide the looting by the banksters? Channel whatever money left in western government coffers to military industrial complex parasites? Philosophical manifest destiny to bring some messiah/medhi/savior on the scene? All of the above?

War won't affect billions of poor people around the globe. It might send the middle class to a Amish subsistence existence as energy crunch puts them back to the 19th century.

Think tank manure shooters have been right about AfPak/Iraq debacles. Listening to them a wise policy?

Once war Rubicon crossed. ANYTHING can/will happen. Travesty is 85% of western societies DON'T have the ability to critically think.
Otherwise, Foxnews jabberwockies wouldn't be so believed with their - 'fair & balanced' drivel.

[sweetcakesmaria]

If the World wants to truly solve the problem of preventing Iran from producing Nuclear Weapons, They must start by somehow persuading Israel to get rid of their Nuclear arsenal and declare the Middle East to be a Nuclear free area. If the world continues to allow Israel to Maintain its Nuclear arsenal, Iran and other countries such as Egypt and Saudi Arabia will eventually arm themselves. These countries are eventually going to arm themselves because of the security that having Nuclear weapons provides.

[Ketwhat]

That gambit has been tried and found wanting. The Israelis showed-up at the conference last year and sat at the table with heads of Arab nations. The Persians no-showed.

[commenter777]

Do Iran's leaders not understand that there is no way in H that Israel and the US is going to let Iran get a nuclear bomb? They must realize that they are committing suicide if they do not relent on trying to acquire nuclear bomb capability. Isn't there a way to get thru to Iran's leadership that their quest for the bomb is totally futile no matter what?

[berlinfoto-2009]

If the media, and journalists had been allowed to do their proper job in the last fifty years, the United States would not be having economic recession today, that is a fact.
The United States has a unofficial system of social controls, hierarchical in construction and the payment to the individuals is mainly perks, they are allowed to commit crime, against the public with impunity. But it is a hodgepodge criminals snitches and police that all take part in the hierarchy, this system is what has managed to control the press.
This system of criminality is destroying the nation.
The system operates much like a fiefdom, and snitches or informants have the power of a land owning lord in a fiefdom or in serfdom.
If you pay attention to what I am saying, then maybe you will start to understand why, the United States has the largest prison population, of any nation in the entire world. For it gives the snitch a feeling of power every time he sends someone to jail, plus he gets paid money to do it.
Under this system deception is allowed, and the police will produce a production, as big as a Hollywood Blockbuster to arrest one individual. Believe you me, even you can be taken in with the existing system.

[ANYBODY_BUT_BARRY]

Sanctions are an act of war. Iran will get a bomb? Who cares? N. Korea has them? Pakistan has them, and they were harboring Osama? But if Iran gets one it's WW3? Lets get real people.

[imawombat]

This is economic terrorism at best, and like all terrorist acts of this magnitude, will be rewritten in the aftermath of our war with Iran to look like we tried to be peaceful when in fact we were the ones that deliberately drove down the inexorable path of violence. Israel has nuclear weapons, is unregulated and goes without sanction, and has a radical terrorist government - and yet Iran, surrounded by unfriendly "democratic" encampments, does not have the right to use nuclear power. We will continue this brutal, perverse, power-drunk madness until we destroy the planet, won't we?

[kcits]

@Deport_Beans
No Israel chooses to kill children when magnetic car bombs go off on narrow crowded streets. Still an act of terror, the label only changes because you want your friends to look good and those they oppose as evil.

[Sirensown]

You know if all those politicians had not stood by and watched Gore get robbed, soaring oil prices could be a minimal issue by now. Greed has made the US a hostage to keeping oil lines going.

Had the United States all those years ago, focussed on eco friendly energy instead of jumping into a bogus PR'd war, tailor made to make the Bush family and their friends plenty of money, it would be far better off as a country, it's resources would have been spent more wisely investing in the future rather than investing in order to line the pockets of the already wealthy. Bush did the United States so very wrong. Now generations to come are going to have to pay for it and right now, whether or not a tyrrant is forced to make way or not will be based on how badly the United States needs oil. I think this is sad.