As part of its campaign to bankrupt certain foreign arms programs, the United States recently sanctioned several entities from Syria and Iran, including the fifth-largest Iranian state-owned bank, Bank Sepah.
In June 2005, President George W. Bush authorized the Department of the Treasury in Executive Order 13382 to freeze the U.S. assets of foreign entities suspected of spreading or supporting the development of unconventional arms and ballistic missile programs. (See ACT, September 2005. ) The order bars U.S. citizens, companies, and institutions from doing business or facilitating transactions with sanctioned entities, a term that encapsulates individuals, private companies, or government agencies. Other foreign entities that do business with those already sanctioned risk being penalized as well.
The Treasury Department added nine entities to the executive order’s sanctions roster in three separate announcements in January and February. A trio of Syrian entities was penalized Jan. 4: the Higher Institute of Applied Science and Technology, the Electronics Institute, and the National Standards and Calibration Laboratory. All three were identified as subordinates of the Syrian Scientific Studies and Research Center, which the Treasury Department previously sanctioned for alleged biological and chemical weapons activities.
In addition to sanctioning Bank Sepah Jan. 9, the Treasury Department imposed sanctions on the bank’s chairman and director, Ahmad Derakhshandeh, and a wholly owned subsidiary based in the United Kingdom, Bank Sepah International. Stuart Levey, treasury undersecretary for terrorism and financial intelligence, described Bank Sepah that day as “the financial linchpin” of Iran’s missile acquisition efforts.
Three Iranian entities—the Kalaye Electric Company, the Kavoshyar Company, and the Pioneer Energy Industries Company—each affiliated with Iran’s Atomic Energy Organization, were sanctioned Feb. 16. The U.S. government charges that the Iranian nuclear program is dedicated to producing weapons, not energy, as Tehran asserts.
Washington is urging other capitals to similarly penalize the Iranian entities, citing obligations imposed by UN Security Council Resolution 1737. Passed last December in response to Iran’s failure to comply with previous council demands, the resolution mandates that countries freeze the financial assets of and deny financial assistance to entities identified by the United Nations as “involved in Iran’s nuclear and ballistic missile programs.” (See ACT, January/February 2007. ) Kalaye Electric Company is named as such in an annex to Resolution 1737.
Senior Treasury officials claim they are seeing results. Levey asserted Jan. 9 that “many leading financial institutions have either scaled back dramatically or even terminated their Iran-related business entirely.” Treasury Department spokesperson Molly Millerwise declined Feb. 20 to provide specifics, but she said that Treasury officials have met with “institutions throughout Europe, Asia, and the Middle East.” One institution publicly cutting ties with Iran is the European banking giant UBS, which has offices in more than 50 countries.
The January and February sanctions raise the number of penalized entities under the U.S. executive order to three dozen. Iranian entities (13) and North Korean entities (11) account for two-thirds of the total, while China and Syria have four entities apiece on the Treasury sanctions roll. Millerwise said the department cannot legally disclose the total value of frozen assets.