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.