Obama’s flawed sanctions chief ends Arab trip

David S. Cohen, a former Clinton lawyer who Pres. Obama entrusted with a sanctions regime that is supposed to provide for the nuclear containment of Iran, is wrapping up a four-day trip to Saudi Arabia and Bahrain.

The State Department says that Mr. Cohen was conferring with officials in those countries about sanctions against the Central Bank of Iran and against Bashar al-Assad’s regime in Syria.

Surprisingly, although Bahrain shockingly has no legal means of freezing assets in its own country, there is no indication that Mr. Cohen addressed this shortcoming with officials in Manama.

Mr. Cohen has consistently misled the American public about the level of Saudi cooperation in combating terrorist financing.  Consequently, it will be difficult to judge the truthfulness of whatever statements are released at the conclusion of this trip.

Moreover, after Mr. Cohen back-stabbed U.S. Sen. Bob Menendez (D-NJ) during backdoor negotiations on Iran sanctions, one wonders what would make Arab officials trust Mr. Cohen.

Seeking cooperation on sanctions is a good objective, but sending a flawed messenger indicates Pres. Obama’s lack of seriousness about sanctions against Syria and Iran.

Obama flunkies doublecross Senate on sanctions

Sen. Bob Menendez (D-NJ) wanted a tougher set of sanctions against Iran, particularly against the Central Bank of Iran and any foreign banks still doing business with it.  Pres. Obama’s underlings objected, saying it would restrict oil sales by Iran and increase the international price of oil, damage the world economic recovery, and turn off our allies who supposedly (contrary to all recent evidence) support a slower approaching to sanctions tightening.  But the underlings claimed that they shared the same goal as Sen. Menendez, and would work with him to develop a compromise acceptable to the White House.

So people like David S. Cohen, Treasury undersecretary for terrorism and financial intelligence, worked diligently over the last couple weeks to water down the amendment to the defense authorization bill that Menendez and Republican Sen. Ron Kirk jointly proposed.  Once Obama’s Treasury and State officials had forced a significant number of exceptions, waivers, and escape clauses into the amendment, Sen. Menendez thought the legislation was ready for bipartisan support in the Senate and support by the Obama administration.

Suddenly, during a Senate foreign relations committee hearing on Dec. 1, the Obama bureaucrats pulled the rug out from under Sen. Menendez, and came out against even the watered down financial sanctions.  The video from an impassioned Sen. Menendez is a must-watch for insight into how this administration behaves:

Immediately after Sen. Menendez finished his remarks about the bureaucrats “vitiating” the amendment, Sen. John Kerry quipped that they didn’t vitiate it, they villified it.  With that, the Obama flunkies had succeeded in alienating Senate Democrats on this matter, who then defied the White House and joined with Republicans to approve the amendment by a vote of 100 to zero.

The president will veto the bill over an unrelated matter, further delaying stronger sanctions.

Meanwhile, allies who supposedly want to move slower, like France, are pushing for a blanket oil embargo on Iran.  The officials at Treasury constantly try to convince the public that Iran faces enormous pressure from existing sanctions, and Mr. Cohen always trots out some graph depicting the falling market value of the Iranian rial against the U.S. dollar.  Sir, if a nuclear bomb lands on Tel Aviv, will you still be lecturing us on the great job Treasury did at weakening the Iranian rial?

Iran permits al Qaeda money pipeline

Iran lets money, arms, and men flow from the Gulf to Asia

Iran is permitting al Qaeda operatives to use their territory as a pipeline between Gulf donors and Afghani and Pakistani jihadists.  The Treasury Department is, somewhat surprisingly, actually calling Iran out for its behavior and sanctioning six al Qaeda operatives in Iran.  From the Financial Times on July 28:

US charges Iran with al-Qaeda links

By Anna Fifield in Washington

The US government has accused Iran of allowing al-Qaeda operatives to funnel a “significant” amount of money through its territory to the group’s leaders in Pakistan and Afghanistan, making the strongest allegation yet of a link between Tehran and the terrorist network.

The Treasury Department on Thursday imposed sanctions on six men that it says are operating through Iran as part of a “critical funding and facilitation network for al-Qaeda”.

The designation was also a direct hit at the theocratic regime in Iran, said David Cohen, the Treasury’s undersecretary for terrorism and financial intelligence.

“Our sense is that this network is operating through Iranian territory with the knowledge of and at least the acquiescence of the Iranian authorities,” Mr Cohen said. “They are not operating in secret. It is pursuant to an agreement.”

The Treasury targeted Ezedin Abdel Aziz Khalil, a senior al-Qaeda facilitator who it said has been living and operating in Iran since 2005 under an agreement between the network and the Tehran regime.

It said that the Iranian authorities were allowing Mr Khalil to move both money and recruits from across the Middle East through Iran to Pakistan. He required each operative to deliver $10,000 to al-Qaeda in Pakistan, it said.

The Treasury also designated five others who were linked to former al-Qaeda leader Osama bin Laden or to al-Qaeda in Iraq, or who had helped deliver money or extremists to the network’s base in Pakistan.

Cohen adds Iran sanctions to get promoted

According to The Cable, David Cohen’s nomination to become Treasury’s new undersecretary for terrorism and financial intelligence is “back on track.”

Cohen’s nomination had been delayed because of concerns about the Obama administration’s lack of tenacity in enforcing anti-Iran sanctions laws.  Cohen, a former Clinton lawyer with little understanding of terrorist financing methods, responded to the delay by jumping through whatever hoops the Senate created in order to get confirmed.

This included the recent addition of sanctions against ten companies tied to Iran’s nefarious state shipping firm (IRISL) and a designation against Venezuela’s state oil company for selling gasoline to Iran.

But going after IRISL and Chavez wasn’t enough. 

It took sanctions against Iran Air and Tidewater Middle East, Iran’s major airline and port operator, to make Cohen’s final sale to the Senate.  Once those designations were announced, Sen. Ron Kirk wrote:

I applaud Acting Under Secretary David Cohen for moving decisively to designate Iran Air and a major Iranian port operator responsible for facilitating Iran’s illicit transfer of weapons and other proliferation activities. Both designations will significantly restrict shipping to and from Iran and put even more pressure on the Iranian economy.  Under Secretary Cohen has proven himself to be a worthy successor to former Under Secretary Levey. He has my confidence.

Political horse trading is what it is, but Mr. Cohen is still an unwise selection for the post for reasons discussed here.  A positive outcome of the whole seedy transaction is that the sanctions regime, which even Democrat Senator Bob Menendez called a “paper tiger,” has become stronger.

However, the enterprising Avi Jorisch recently noted that the sanctions “are not working” partly because of the large number of loopholes in the sanctions regime against Iranian banks that are involved with funding Iran’s nuclear program.  Specifically, Europe allows pre-existing bank relationships to continue, and only prohibits new ones.  Jorisch explains:

Unfortunately, many banks continue to do business with Tehran’s illicit financial industry, and this undermines the sanctions effort. Many of Iran’s designated banks, including those named by the United Nations and the European Union, have a number of branches in countries such as China, Russia, Italy, South Korea, France, Iraq, Lebanon, the United Arab Emirates, among others. Indeed, some of America’s closest allies have publicly claimed their support for sanctions, while at the same time, allowed the Iranian regime free access to hard currency and the international financial sector.

Quietly, European policymakers have said that designated branches can continue to operate in their jurisdictions as long as the transactions relate to contracts signed prior to the UN designation. No new business is allowed, not even “getting new phone lines.” Yet in practice, this loophole allows Iranian banks to maintain their business licenses in Europe, and continue to operate as they did before. In other words, as long as Iran signed a contract with a European company the day before UN sanctions were enacted, European officials are willing to look the other way.

Perhaps the Senate should have held out until these loopholes were shored up as well.

Chavez to Obama: no more talking, we’re still selling

The Islamic “Republic” of Iran can be thought of as a thin layer of scum atop a giant pond of oil. But Iran cannot refine itself out of a brown paper bag. Consequently, it must rely on imports to fuel their freight trucks, military equipment, and cars.

The U.S. enacted CISADA last year to penalize entities that continue selling gasoline to Iran.  Enforcement of CISADA has been weak enough over the past year to prompt the U.S. Senate to delay the confirmation of David Cohen, Pres. Obama’s flawed nominee for undersecretary of sanctions and terrorist financing at the Treasury Department.

The threat of delayed confirmation may be all it took to get acting undersecretary Cohen off his duff and start identifying the gas vending vassals of Iran.  The Treasury Department announced that Petroleos de Venezuela sells to Iran, and eliminated preferences to it that the U.S. normally offers to oil exporters.

That hasn’t sat well with Venezuelan bullyboy Hugo Chavez.  In retaliation he is severing diplomatic relations with the U.S.  From the Examiner on Jun. 6:

Venezuela officially “froze” relations with the United States on Sunday according to a top diplomat from Hugo Chavez’s government. Venezuela is striking back after Washington levied sanctions against them for doing business with Iran – commerce the U.S. fears is financing Tehran’s nuclear program.

Venezuelan foreign minister Nicolas Maduroalso also indicated that reestablishing communications with the U.S. was “impossible”.

The U.S. imposed sanctions on Petroleos de Venezuela (PDVSA) last month because the state oil company delivered $50 million worth of refined petroleum products to Iran between December and March.

The sanctions bar PDVSA from any U.S. government contracts, taxpayer-subsidized import-export financing and export licenses for sensitive technology. Venezuelan companies can still sell oil to U.S. private corporations.

The U.S. also imposed penalties on Venezuela’s Military Industries Co. for violating the Iran, North Korea and Syria Nonproliferation Act which bans buying and selling of sensitive technology related to nuclear, chemical and/or biological weapons and ballistic missile systems.

Chavez has persisted to defend the Iranians, claiming their nuclear program is meant for peaceful applications such as generating electricity.

Advertisement Venezuela is one of America’s main suppliers of petroleum and the U.S. is the South American country’s chief oil buyer.

Energy Minister Rafael Ramirez hinted that Venezuela might reduce its dependence on sales to the U.S. by exporting more oil to China and other countries.

Though tensions between the two countries reached a zenith under Bush, Chavez hoped the relationship would change when Obama took office. Yet the U.S. and Venezuela have been without ambassadors in each other’s capitals since July 2010.

GOP doubts effectivness of Iran sanctions

Republicans are delaying the confirmation of Treasury flunky David Cohen until the Obama administration proves it’s serious about enforcing sanctions against Iran.

Somehow this article snuck by me.  We’ve been following the David Cohen Treasury nomination pretty closely, and observed that at least one prominent Senate Democrat expressed reservations about Cohen’s confirmation, but did not realize that seven GOP lawmakers also moved to hold up the confirmation until Treasury gives more enforcement oomph to CISADA, which among other things sanctions gasoline sales to Iran.

Certainly, the White House is giving private assurances to Cohen that it’s all just “politics” about Iran that’ll blow over in due course, and that Cohen shouldn’t take it personally.  However, one suspects that if Pres. Obama had selected a tougher operative with stronger credentials on Iran or on sanctions enforcement in general, this hold-up would have never taken place.

From Foreign Policy’s The Cable earlier this month:

Seven Republican senators are demanding that the Obama administration take tougher measures to punish banks still doing business in Iran, and they are threatening to stall the nomination of a top Treasury Department official unless they get their way.

The dispute between the White House and Congress revolves around implementation of the Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA) of 2010, the wide-ranging law signed into law last year. The Treasury Department issued a draft rule last week that lays out how it intends to implement a key provision of the law, which deals with Iran’s banking partners in countries around the world. And that rule raised the ire of seven GOP senators, who expected Treasury to enforce the law much more stringently.

The key provision, section 104(e), directs the administration to punish any international financial institutions still doing business with Iran by cutting them off from the U.S. financial system.

“We were extremely unhappy with the draft rule to implement section 104(e) of CISADA publish by the Treasury Department last week,” wrote Sens. Jon Kyl (R-AZ), Mark Kirk (R-IL), Roger Wicker (R-MS), David Vitter (R-LA), Jerry Moran (R-KS), Mike Crapo (R-ID), and Mike Johanns (R-NE), in a previously unreported letter sent Tuesday, and obtained by The Cable.

The letter was addressed to David Cohen, the acting undersecretary for terrorism and financial intelligence at the Treasury Department. Cohen took over for Stuart Levey, the previous sanctions chief at Treasury, who moved on to the Council on Foreign Relations last month after more than 4 years on the job.

The senators are threatening to hold up Cohen’s nomination if their demands regarding enforcement of the sanctions provisions aren’t met. Cohen had his confirmation hearing before the Senate Banking Committee on Tuesday and, afterwards, Kirk sent Treasury a list of follow-up questions he says must be answered before he’ll allow Cohen’s nomination to move forward.

“The acting undersecretary’s response to our letter and questions for the record will weigh heavily in any confirmation decision,” Kirk told The Cable.

Kirk also identified 44 international financial institutions servicing Iranian banks and 18 U.S. institutions that are working with those who do business inside Iran. He got this list from a 2010 report entitled “Iran’s Dirty Banking”, which sourced the information to the Banker’s Almanac…

Menendez suggests Cohen weakness

In a follow-up to this post about the confirmation hearings David Cohen, the nominee to be the Treasury Department’s undersecretary for terrorism and financial intelligence, Sen. Bob Menendez (D-N.J.) wants some reassurance that Cohen is committed fully to enforcing CISADA, a U.S. sanctions law against Iran.

When questioned about why more hadn’t been done to enforce the law, Cohen’s answer could be translated “we’re working on it.”  Froom Haaretz on May 5:

U.S. Treasury nears decision on expanding Iran sanctions

The law, aimed at curbing Iran’s nuclear program, effectively requires banks to choose between dealing with the U.S.-led financial system or to continue doing business with Iran.
By Reuters

The United States Treasury is close to a decision whether to blacklist more banks that appear to be defying sanctions against Iran, including an institution in Turkey, a senior Treasury official said on Tuesday.

David Cohen, nominated to be Treasury’s undersecretary for terrorism and financial crimes, told a U.S. Senate confirmation hearing that he will vigorously enforce the Comprehensive Iran Sanctions, Accountability and Disinvestment Act (CISADA)
 
The law, aimed at curbing Iran’s nuclear program, effectively requires banks to choose between dealing with the U.S.-led financial system or to continue doing business with Iran.

Members of the Senate Banking Committee questioned Cohen on why Treasury had not sanctioned any banks under CISADA, which was passed in July 2010 to enforce tougher UN sanctions against Iran.

“We are pursuing the leverage” against banks dealing with Iran, Cohen said. “Our first option is to get them to stop. Our second best option is to apply sanctions. Without getting into the details of any particular investigation, we are getting close to a decision point on several institutions,” Cohen did not name any of the banks, but said that one institution in Turkey was effectively violating the sanctions.

“We are committed to enforcing the law,” Cohen added. “Generically, we have a financial institution (in Turkey) that is not responsive to our overtures and it is engaged in activity that is sanctionable under CISADA. We will pursue that very vigorously.”

Senator Robert Menendez, a Democrat from New Jersey, said he was concerned that Treasury had not adequately enforced the CISADA law.

“I am seriously concerned that as one of the prime movers of that legislation, that a sanctions regime that ultimately goes largely unenforced or to low-level players, sends the message of a toothless tiger,” Menendez said.

He added that he wanted a sense that Cohen, who is now serving as acting undersecretary, would pursue sanctions under CISADA before he would support Cohen’s nomination.

Cohen gives bland testimony to Senate

David S. Cohen

The Senate Banking Committee has heard testimony from David S. Cohen, President Obama’s nominee to become the next undersecretary for terrorism and financial intelligence.

Cohen’s prepared statement was boilerplate and Senate video did not include any questions or answers from the nominee.

News reports indicate that Cohen hailed the death of Osama bin Laden as “tremendously important” because bin Laden was “a symbol that was helpful in raising money.”

True to form, Cohen praised his and Treasury’s inside-the-beltway efforts ”to identify the networks where the money is raised and money is moved into Pakistan, and it has really put a fair amount of pressure, financial pressure on al-Qaeda.”

Mr. Cohen, it is men like those from Navy SEAL Team 6 that is putting “a fair amount of pressure” on al-Qaeda.  One would think you might have acknowledged that in your prepared statement.

News coverage of the hearing was very limited, which is disappointing given the pivotal role that the TFI undersecretary plays in the U.S. sanctions regime against Iran.  This brief item comes to us from Bloomberg on May 3:

The death of Osama bin Laden is a “tremendously important step” because the al-Qaeda leader was a symbol who attracted funds for the terror group, a U.S. Treasury official said.

Bin Laden was “a symbol that was helpful in raising money,” David Cohen, the Obama administration’s nominee for Treasury undersecretary for terrorism and financial crimes, told the Senate Banking Committee today. “But our assessment is that it’s by no means the end of the road in terms of going after the financing.” Cohen, 47, has been assistant secretary for terrorist financing.

Cohen said the U.S. has been working with Gulf region governments “to identify the networks where the money is raised and money is moved into Pakistan, and it has really put a fair amount of pressure, financial pressure on al-Qaeda.”

Treasury Police and soldiers nab ISI financier

How long before self-congratulatory Treasury Department flunky David S. Cohen claims credit for the detention of an Article 4 jihadist financer in Iraq by a combined assault force of Kirkuk police, Iraqi soldiers, and U.S. forces?

The arrest of another piece of excrement from the Al Qaeda front group Islamic State of Iraq (ISI) is a testament to the sacrifice and hard work of the American soldiers and marines who have waged a successful counter-insurgency operation over the last several years, and to the Iraqi military and law enforcement that the U.S. has trained to follow in their steps.

Previously, Mr. Cohen has bragged that the financial weakening of Al Qaeda and its affiliates are “a direct result of the pressures the U.S. government has placed on terrorist money men.”  Some grit and guts in Kirkuk help prove him wrong.

From Aswat al-Iraq (hat tip Rantburg) on Apr. 25:

A combined force arrested seven wanted persons, including a financier for the so-called Islamic State of Iraq (ISI) group, in two operations in Kirkuk on Monday, a senior security official said.

“A force from the Kirkuk Districts Police Department and Iraqi army, backed by U.S. troops, arrested in accordance with Article 4 of the law on terrorism six wanted men members of the ISI, including a financier of the armed group, in the district of al-Huweija,” KDPD Director Brig…

“The first raid covered the villages of al-Hanaf and al-Gheraib, in the district of al-Abbasi, (80 km) southwest of Kirkuk, while the second covered Debij village, in the district of al-Touz, Salah al-Din province,” he said.

Meanwhile, a source from the Kirkuk-based Joint Coordination Center said an improvised explosive device went off near a military vehicle boarded by a JCC officer in Huweija, leaving a guard wounded and the vehicle damaged.

The oil-rich Kirkuk, a city of mixed Arab, Kurdish and Turkmen population, lies 250 km southwest of the Iraqi capital Baghdad.

Obama names fool to lead on terror finance, sanctions

"These books make me look smart"

The White House has announced that Stuart Levey, the Treasury Department’s Undersecretary for Terrorism and Financial Intelligence, will resign.  His replacement will be Democrat lawyer David S. Cohen, the current Assistant Secretary for Terrorist Financing.  Cohen doesn’t deserve his current job, much less a promotion.  The Republicans in the Senate need to resist and grill Cohen during confirmation hearings.  Here’s why:

1. Cohen has praised Treasury’s efforts at containing terrorist financing to Al Qaeda while failing to recognize the contribution of the U.S. military in the war against terrorism.  It is largely the military pursuit and elimination of insurgent and terrorist financiers and cell leaders that has pushed Al Qaeda closer to insolvency.  It has not been the men in navy blue suits inside the beltway. 
2. Cohen “is pleased with the contribution that Saudi Arabia” has made in combating the financing of terrorism.  Pleased?  Cohen’s statements on Saudi Arabia are for public show and border on outright lies.  His statements to more than one media outlet have been made to highlight a spirit of cooperation with the Muslim world and to paint a picture of Pres. Obama’s effectiveness at using “soft” power.  The reality is that Saudi cooperation in the financial war on terror is limited to public statements, meager proof, and multiple examples of Saudi duplicity.  Relatedly, Cohen has downplayed the role of the Middle East in international terrorist financing.  At a speech to the Washington Institute for Near East Policy, Cohen addressed terrorist financing problems in Mexico, North Korea, Africa, and getting slightly closer, Afghanistan and Pakistan.  He spoke some about Iran and Hezbollah, ignored Yemen, and left out Saudi Arabia’s role in funding Al Qaeda and the Taliban entirely.
3. Cohen supports Carl Levin’s dreadful incorporation transparency bill which would deepen the federalization of what has historically been a state role—the incorporation of businesses.  The bill would require additional disclosures by companies, additional paperwork by the state incorporation agencies, and would subject the states to turn over records on their businesses to Washington, D.C., and even to foreign countries upon request.  Contrary to what supporters say, the bill would not help expose the Iranian or terrorist shell companies of tomorrow—it is a bill designed to discourage foreign companies to offshore their revenues in the U.S. in the vein hope that foreign countries will reciprocate by helping the U.S. crackdown on its own tax deadbeats.  Cohen’s support for the bill was a deviation from the Treasury policy stated by another assistant secretary who testified under oath before Congress that no new laws are necessary to fight terrorist financing.  Cohen’s position also put him at odds with current FinCEN director Jim Freis, who has a less rigid approach toward beneficial ownership.  That makes Cohen the odd man out among the assistant secretaries he will be supervising if confirmed. 
4. More broadly speaking, sanctions are the last bow in Pres. Obama’s quiver against a nuclearizing Iran.  Either the Obama administration is or is not serious about enforcing those sanctions, about bringing more nations on board with those sanctions (particularly Europe and Russia), and about keeping the sanctions tight.  Letting the well-respected Levey go and selecting a lightweight like David Cohen suggests that Pres. Obama is no longer serious in this approach.  More menacingly, that suggests that the Obama administration no longer has a genuine plan for containing Iran’s nuclear ambitions.

Reuters reports that the announcement of Levey’s replacement “comes as the United States and its allies appear likely to make a push for stiffer sanctions on Iran… U.S. officials emphasized they did not think the staff change would stem the momentum for the drive to put the financial squeeze on Iran or to choke off access by militant groups to international sources of money.  ‘It will have no effect on policy, or on our ability to execute the president’s policy,’ U.S. Treasury Secretary Timothy Geithner said.”

Really, Tim?  But is it not informative that the question is being asked?

Clinton may designate Haqqani Network as terrorist organization

In an interview with BBC World Service on July 18, Secretary of State Hillary Clinton said the State Department is (finally) considering designating the virulently Islamist Haqqani Network in Pakistan as a terrorist entity:

The Haqqani Network is widely recognized as a threat to Pakistan, Afghanistan, and the U.S., and was involved with the Taliban in carrying out deadly attacks in Kabul earlier this summer.  Sen. Diane Feinstein (D-California) requested the designation back in May.  Sen. Carl Levin (D-Michigan) and Gen. Petraeus have made similar requests over the last two weeks.  If the State Department is ready to pull the trigger, it’s overdue but somewhat encouraging. 

The Haqqani Network has close ties to Al Qaeda and is probably funded by Pakistan’s spy service, the ISI.  Treasury official David S. Cohen has claimed that the U.S. is active in curtailing the network, but currently there are no financial sanctions, asset freezes, or restrictions on Americans doing business with Haqqani Network (other than a recent freeze of just one Haqqani Network’s members).  Recently, a reporter at a State Department press briefing asked Asst. Sec. Philip Crowley, “Don’t you think the delay in this [Haqqani designation] would help these organizations to have transfer of funds and even raise funds here in the U.S.?”  Crowley’s answer?  Spin and boilerplate.

Apparently our executive branch has taken this slow approach in order to retain warm relations with Pakistan.