Israel Matzav

Iran trying to avoid sanctions by setting up banks in Muslim countries

Iran is seeking to avoid international sanctions against it by setting up banks in Muslim countries.

Two such banks have already been set up in Iraq. "The Iranians, we believe, are trying to set up operations in a number of places, and it's an indication that they can't do normal banking," a senior administration official said, speaking on the condition of anonymity because he was not authorized to talk publicly. "They want to buy banks and set up banks in various places where they believe they will be able to carry out business without the United States being able to impede it."

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The U.S. official said the Obama administration is aware of Iran's efforts in "a number of neighboring countries and not-so-neighboring countries."

In Iraq, an Iraqi official said, Tehran has established at least two banks in Baghdad, including one affiliated with Bank Melli, Iran's largest commercial bank. The U.N. Security Council listed Bank Melli in 2008 as being involved with Iran's nuclear activities, and the European Union has shut down all of its offices in Europe. Iran also has tried - without success - to establish commercial banks farther north in Iraq, in the Kurdistan region, the Iraqi official added.

Treasury officials have fanned out across the globe in recent weeks, visiting such countries as Azerbaijan, Turkey, the United Arab Emirates, Bahrain and Lebanon to bolster compliance with sanctions. Treasury and State Department officials have warned "local authorities of the risks of letting these operations take root," the U.S. official added.

Azerbaijan has a branch of Bank Melli in Baku, its capital, and last month Iran offered to create a joint bank for the two countries, according to Azeri news reports. In 2008, the U.S. Treasury Department alleged that Futurebank in Bahrain was controlled by Bank Melli, but it continues to operate there.

Iranian Finance Minister Shamseddin Hosseini told reporters in Washington this month that while "Iran has faced some trouble from sanctions," it has had few problems trading with other countries or securing hard currency.

"The world is big, and the people who are trading [with us] find ways to transfer money," Hosseini asserted. "When you block the stream of water, it goes another route."

Read the whole thing.

The question isn't whether the sanctions are having an effect on Iran. The question is whether they are having enough of an effect to slow or stop the nuclear program. At the moment, the answer to that question appears to be "no."

posted by Carl in Jerusalem @ 5:16 PM