Israel Matzav

Still banking on Iran

When Europe's foreign ministers meet next week to enact regulations for their new sanctions against Iran, all eyes will be on Germany, which continues to do banking business with the Islamist state, says Washington Times columnist Eli Lake.

In the past three weeks, Germany has taken steps to close some Iranian banks operating in the country, according to a senior German government official who spoke with The Washington Times on the condition of anonymity because of the sensitivity of the topic.

Meanwhile, an analysis of Iran's banking sector by former U.S. Treasury Department analyst Avi Jorisch found that five German banks continue to do business with Iranian entities that are designated by the most recent U.N. Security Council sanctions.

Mr. Jorisch also found that as of June 30, four major Iranian banks sanctioned by the Treasury Department or the U.N. Security Council continued to operate in Germany.

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On July 26, the European Union's foreign ministers will meet to discuss in detail new sanctions that could limit Iranian shipping lines and the insurance companies that underwrite Iranian exports.

"Concerning the activity of Iranian banks in Germany: Branches and subsidiaries of U.N.- and EU-designated Iranian banks are frozen and not operating," a senior German government official said in an interview this week.

The official added that, specifically, the Frankfurt branch of Iran's Bank Sepah [pictured. CiJ] is allowed to engage only in "activities related to the closure of its business, i.e. finishing its existing obligations. All the before-mentioned Iranian banks are submitted to strict monitoring; they cannot enter into any new business."

Bank Sepah has been implicated in both the procurement of nuclear technology and the financing of terrorist organizations, Mr. Jorisch said.

"The closure of Bank Sepah is an important and significant first step," Mr. Jorisch said. "But German authorities should shut down the designated Iranian branches operating in Germany and German financial institutions should cease providing financial services to designated Iranian banks."

In addition to Bank Sepah, Mr. Jorisch identified in his recent research Bank Melli and Bank Saderat as having branches in Hamburg and Frankfurt.

Requests for comment from the Frankfurt branch of Bank Sepah went unanswered.

In addition to Iranian banking, Germany's trade with Iran is big business.

German trade with Iran in the first four months of 2010 totaled $1.8 billion, according to the German-Iranian Chamber of Commerce in Hamburg. That figure increased by 20 percent from the same period in 2009.

This is why Congress put language in the US sanctions that allow foreign companies who do business with Iran to be penalized in the United States. But the US law has provisions that allow President Obama to waive the foreign company penalties for companies based in 'cooperating countries.' Will Obama decide that Germany is a 'cooperating country' and waive the sanctions? I haven't seen him bowing to German Prime Minister Angela Merkel yet, but I would bet that he will waive those sanctions.

Read the whole thing.

posted by Carl in Jerusalem @ 7:29 AM