Administration critics are slamming Secretary of State John Kerry’s globetrotting in recent weeks to drum up investment in Iran with international banking and business leaders, and say Tehran has a responsibility to clean up its financial act in order to attract investment on its own.
Kerry was in London Thursday to meet with heads of some of Europe’s biggest banks in an attempt to reassure them about doing business in Iran. The meeting is a response to Tehran’s complaints that they’re not reaping the financial benefits the U.S. and other world powers promised them in negotiations over the nuclear accord.
“We want to make it clear that legitimate business, which is clear under the definition of the agreement, is available to banks,” Kerry said. “As long as they do their normal due diligence and know who they’re dealing with, they’re not going to be held to some undefined and inappropriate standard here.”
Back at home, a bipartisan group of lawmakers spent the day railing about the Kerry’s efforts to reassure European banks that Iran is open for business. They said U.S. efforts should instead be focused on helping Iran separate its government financial activity from its money-laundering operations and support for terrorist activities in the region.
Lawmakers critical of the nuclear deal said companies will only be comfortable investing in Iran after they’re assured those investments won’t be used to support Hezbollah or help bolster the regime of Bashar Assad in Syria.
While Kerry was trying to drum up business for Iran in London, Rep. Ed Royce, R-Calif., who chairs the House Foreign Affairs Committee, held a hearing titled “Terrorism, Missiles and Corruption: The Risks of Economic Engagement with Iran.” Royce and several others argued that it’s impossible for Iran to separate its financial system from its terrorist activities because Tehran’s Islamic Revolutionary Guard Corps is considered “Iran’s most powerful economic actor.”
“International banks don’t want to unwittingly funnel money to Iran’s ballistic missile program, but any financial transaction with Iran risks funding Iran’s ongoing illicit activities,” he said.
The Democrats who showed up for the hearing also were strong opponents of the nuclear deal and said Kerry’s efforts to help spur investment in Iran is misguided.
“We’ve got to straighten out the difference between being pro-Iran deal and being pro-Iran,” said Rep. Brad Sherman, D-Calif. “What we should be talking about is to demand full compliance with the deal and ourselves not over-comply and give the Iranians more than they bargained for.”
Juan Zarate, the first-ever assistant Treasury secretary for terrorist financing and financial crimes during the George W. Bush administration and vocal opponent of the nuclear deal, made the point that the U.S. shouldn’t be in a position of “rehabilitating Iran.”
“We shouldn’t be sending delegations around the world explaining how to do business in Iran legitimately,” he said. “We shouldn’t be undercutting our authority by telling European and international businesses that they need not listen to the regulatory policy or other actions of the U.S. Treasury – quite the opposite. We should be reinforcing the effect and the reach and suasion of our authorities around the world.”
Most major banks in Europe and elsewhere are biding their time to discover what pitfalls investing in Iran carries with it, according to Elizabeth Rosenberg, a senior fellow at the Center for a New American Security.
During the Foreign Affairs Committee hearing, Rosenberg testified that U.S. policy-makers and their European counterparts should publicly identify Iran’s “self-imposed banking problems,” including its financial system’s involvement in funding terrorism.
“Doing so will make it clear to Iran and the global community that Iran bears significant responsibility for improving its own economic condition and that the removal of sanctions under the nuclear deal cannot independent deliver a windfall to Iran,” she said.
Reporters also pressed White House press secretary Josh Earnest about whether the Obama administration should be trying to promote business with Iran. Earnest responded that the administration wants “to fulfill our responsibility to international financial institutions” and provide specific guidance on what U.S. and international sanctions laws allow when it comes to doing business with Iran.
The U.S. in recent years has imposed heavy sanctions on international financial institutions that have been forced to pay big fines for trying to circumvent sanctions so European banks are naturally hesitant to engage until they know they are well within current law, he said.
Earnest also stressed that administration officials are trying to encourage Iran to do more to provide a “stable business climate” and attract investment on its own.
“If you are routinely testing ballistic missiles that violate United Nations sanctions that govern your ballistic missile program, well, that’s not going to inspire the confidence of business leaders that this is a safe place to do business,” he said. “If you are supporting terrorism around the world, that’s not going to be particularly persuasive to business leaders that Iran is a good place to make an investment. So there’s more that Iran can do.”
