Obama to target Iran banks

Eli Lake:

The Obama administration, having failed in its first year to reach an entente with Iran, will toughen U.S. policy by applying unprecedented pressures on that regime as it continues its quest to become a nuclear power.

Nonetheless, President Obama for now is ruling out an aerial bombing campaign against Iranian nuclear facilities and is choosing instead to further isolate Iran from the international financial system.

The first target likely will be Iran's banks. Building on steps taken during the second term of the George W. Bush presidency, the Treasury Department likely will designate Iran's central bank as a terrorist-supporting entity.

In 2005, Mr. Bush issued Executive Order 13382 to bar financial entities involved in nuclear proliferation from the U.S. financial and commercial system. The Treasury Department has designated 15 Iranian banks since 2007, a Treasury spokesman said Tuesday.

"The Iranian central bank is implicated in promoting the regime's proliferation efforts and terrorist activities throughout the region. Given the sensitive nature of this institution's activities, it would be a logical target of the Treasury Department designation efforts," said Avi Jorisch, a former policy adviser on terrorist financing at the Treasury Department and the author of "Tainted Money."

However, White House spokesman Tommy Vietor said that "even as we move toward the pressure track, the door to engagement is still open."

Other prospects include trying to persuade European Union banks to bar transactions with Iran in euros.

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I will be surprised if the Euros have the back bone to bar transactions with Iran. Still the banking restrictions have worked as they did against the North Koreans when they were using a bank to launder their counterfeit US currency. Iran has been working deals with Venezuela and Ecuador to skirt these banking restrictions and I doubt that Obama has the stomach to take them on too.