Congress tells Kerry 'no deal' on giving Iran access to the dollar
Secretary John Kerry met with Iran’s foreign minister Javad Zarif on Tuesday about a nuclear deal, formally known as the Joint Comprehensive Plan of Action (JCPOA), that went into effect in January.
JCPOA calls for the gradual easing of some economic sanctions against Iran in exchange for a drawdown of its nuclear enrichment programs. Experts warn that the nuclear enrichment openly pursued by Iran could lead to a weapons program.
The talks come in response to recent complaints by Iranian leaders that the U.S. was not holding up its end of the bargain in the nuclear deal.
Some observers point to vague wording in the JCPOA that allowed U.S. officials to openly consider allowing dollar-based transactions from Iran. The sanction against dollar-based transactions is currently crippling the oil-rich country’s ability to do business outside its borders, as most international firms prefer to use U.S. currency for its relative stability.
Ryan, however, said the House would oppose any move to open up dollar-based transactions for the country that once was part of the “Axis of Evil” of the Bush administration.
“Instead of helping the regime get richer, the administration should hold it accountable for its continued ballistic missile tests, egregious human rights violations and support for terrorism,” Ryan said in a statement on Tuesday.
Ryan’s comments come in response to a press conference with Kerry on Tuesday, in which the secretary said he “worked on a number of key things” with Iranian officials.
“We’re both working at making sure that the … nuclear agreement is implemented in exactly the way that it was meant to be, and that all the parties to that agreement get the benefits that they are supposed to get out of the agreement,” Kerry told reporters on Tuesday.
The Secretary said he is scheduled to meet on Friday to “solidify” the terms of Tuesday’s talks during a signing of a UN Climate Agreement, but offered no details.
Ryan said in a statement that Kerry’s comments “left the door ajar, if not wide open,” to negotiating the access, which the administration in the past assured Congress it would not do, and which he said would provide an “unprecedented economic windfall” for Iran.
An unnamed official told the Associated Press in late March that the Obama Administration was interested in easing the sanctions on the U.S. dollar access. The leaked details suggest the U.S. would fund an offshore exchange facility that would not deal directly with Iranian banks, but would be authorized to change foreign currency to U.S. dollars for international transactions.
Eric Lorber of the Foundation for the Defense for Democracies offered an example of a Swiss car manufacturer selling its vehicles to Iran. Under the alleged new system, Iran would pay a European bank in Iranian rials, and the European bank would convert that money into euros before transmitting it to the U.S.-run facility to be converted to dollars. The dollars would be transmitted to a Swiss bank, where they would then be converted to francs and paid to the company.
Lorber said this system doesn’t eliminate the risk that a party would inadvertently do business with one of the specifically-sanctioned groups, such as the Islamic Revolutionary Guard Corps, which was instrumental in crushing early opposition to the Ayatollah's vision for the country in 1979.
The Revolutionary Guard is alleged by the U.S. Institute for Peace of funding its operations, in part, through various companies it owns within Iran. Banks or other financial institutions doing business with the Revolutionary Guard face sanctions, such as the freezing of assets.
“While foreign financial institutions may soon be allowed to conduct dollarized transactions for clients doing business in Iran, significant compliance risks will remain,” Lorber wrote.
Prior to 2008, Iran was able to conduct foreign business through “U-turn” transactions — transactions that begin and end in foreign banks, but pass briefly through a U.S. bank. Sanctions that year specifically banned U-turn transactions.
Even if the administration moves forward with plans to ease those sanctions, U.S.-dollar-based transactions from Iran could be blocked under a bill introduced Tuesday.
The U.S. Financial System Protection Act (H.R. 4992), introduced by the chairman of the House Foreign Affairs Committee, Rep. Ed Royce (R-California), specifically prevents “administrative” actions, such as a suspected “general license” from the U.S. Treasury Department, from being used to provide more relief to Iran than the humanitarian relief that is currently approved on a case-by-case basis.
“These sanctions should remain in place, as President Obama promised, until Iran changes its behavior,” Royce said in a statement on the bill’s introduction. “Iran’s supreme leader must not be allowed to seek ‘death to America’ with U.S. dollars in his pocket.”