US Treasury Undersecretary: Sanctions to hit Iran hard

Sigal Mandelker Photo: David Azagury, US Embassy
Sigal Mandelker Photo: David Azagury, US Embassy

Sigal Mandelker tells "Globes" how the US is increasing pressure on the "world's main terrorist regime."

"Our expectation is that because of our sanctions, oil purchases by foreign authorities from Iran will be going significantly down," US Undersecretary of the Treasury for Terrorism and Financial Intelligence Sigal Mandelker has told "Globes."

Mandelker is visiting Israel as part of a delegation headed by US Secretary of the Treasury Steven Mnuchin, and is holding meetings here on fintech and digital currencies. In the press statements issued today by Prime Minister Benjamin Netanyahu and Mnuchin, the prime minister referred to the massive work now being done in Washington for the imposition of sanctions and economic pressure on Tehran since the US exited the nuclear agreement. "Our focus in the discussion will be on increasing the pressure on the world's main terrorist regime, the aggressor regime in Tehran," Netanyahu said today.

Mandelker is in the forefront of current US economic activity against Iran. She is leading the difficult campaign of implementing and applying the financial sanctions against Iran, collecting intelligence about infrastructure companies, investment companies, and banks, and is tying up the loose ends in halting financing for terrorism.

The agency she heads, Office of Terrorism and Financial Intelligence, was founded in 2004 as a branch of the US Department of the Treasury. 700 federal professional employees work under Mandelker in tracking capital or tangible assets and stopping the use by terrorist organizations of the return on these assets and the transfer of funds through the international financial systems. Whether semi-military terrorist organizations or state terrorism is involved, as in the case of Iran, Mandelker's office is trying to put a stop to money laundering, halt the transfer of funds, and especially focus on terrorist organizations threatening civilians all over the world. Another part of her work concerns the challenge of the worldwide drug cartels.

The second and supplementary stage of restoring the sanctions against Iran will become effective on November 4. In an exclusive interview, Mandelker tells "Globes" that her office is seeing significant results and damage to black market trading in rials, the Iranian currency.

In May 2018, President Trump announced he was canceling the US part in the nuclear agreement with Iran (the JCPOA agreement signed by the US, Russia, China, Germany, the UK, France, and Iran). Trump declared that the US would reinstitute the sanctions against Iran that were in effect until the agreement was signed in 2015. The first part of the sanctions was reinstituted on August 6, 2018. These sanctions banned or severely restricted the purchase of US dollars by the Iranian government and restricted trade in metals, including told, aluminum, and steel. Restrictions were also imposed on trade in rials. The US also imposed high customs duties on vehicles, airplanes, and transportation and banned imports of carpets and other products.

The second part of reinstituting sanctions, which was set in advance for November 4, dis designed to be much more severe, including the energy sector. Everyone expects to see steep declines, because Iran's economy is dependent on purchases of oil by Europe, China, and India.

Between Aug 6 and the next step of the sanctions on November, how do you assess results? Are we seeing changes already inside Iran?

Mandelker: “Among other things, you can take a look at the black market of the Iranian rial. There is a very big change over the last number of months…as against the dollar. Our expectation is that because of our sanctions, the authorities' oil purchases from Iran will be going significantly down.”

European countries, which opposed the US withdrawal from the agreement, have established a mechanism for carrying out transactions with Iran by commercial concerns, so that the economic damage to them will be stopped.

“An indicator to what is happening in Europe comes from the companies that are exiting Iran in droves. Companies have a clear understanding of which market is more important to them. Also, they understand the difficulties of doing business in Iran in a country where there is no transparency that does not have anti-money laundering laws that are up to global standards. Those companies don’t want to find out that unbeknownst them they are doing business with the IRGC. It is very difficult from them to know whether they may be working with the IRGC or other elements of the Iranian regime. There is also a clear understanding in Europe and elsewhere that the US is very serious when we talk about aggressively enforcing our sanctions."

Sending children to fight in Syria

A few days ago, the US Department of the Treasure, headed by Mandelker's office, announced the supplementary measures: major sanctions against the Basij, a semi-military organization in Iran with 12 million members, the voluntary nature of whose membership is dubious. Basij recruits civilians, including children and teenagers, as soldiers in the Revolutionary Guards. It is also the arm that operates the training camps and sends soldiers, including teenagers and boys, to the front. The international community and Israelis are familiar with the Basij for recruiting children and sending them to die as "martyrs" to clear mine fields in the Iran-Iraq war. The Basij was also probably involved in attacking the demonstrators in Iran against the regime following the 2009 elections.

Mandelker told "Globes" that the US had clear evidence that Basij was currently sending children and teenagers, some Iranian and some Afghan, to battles being conducted in Syria by Iran.

Is this the first time that the US is imposing sanctions against this organization?

"The Basij is an organization that was previously sanctioned under our Human Rights authorities. This time it is very different in several respects. Number one, this is the first time that we are designating them under our terrorism authority. Also, previously when it was designated, the broad financial infrastructure that supports the Basij network was not specifically designated.

"The issue with the child soldiers - is that the Basij for some time now, it is a paramilitary force and they have been recruiting child soldiers for many years: Iranian and Afghans. They have been sending them to Syria to do their fighting." ״Here again, it is a network that is supported by a massive financial infrastructure that has ties all over the world and some of that money is being used to recruit, train and send child-soldiers to Syria where they get killed. It is an atrocity. It exposes the humanitarian consequences of doing business with these kind of entities in Iran."

Stopping SWIFT transfers

One of the issues on the agenda of the US Department of the Treasury is stopping money transfers to organizations connected to the Revolutionary Guards through the SWIFT global money transfer clearance system. "Globes" reported several months ago that Mnuchim was in no hurry to block Iranian use of SWIFT, as happened in 2012 (at that time, it followed pressure from Congress). Following the nuclear agreement, Iran was put back into the SWIFT system in 2016.

It can be assumed that today, when Mnuchin is in Jerusalem, this question is also on the agenda in his talks with Netanyahu. An administration source told "Globes" that the US would make sure that the sanctions would be enforced "whether the money is transferred to Iran through SWIFT or in any other way. If forbidden transactions with the Iranians are conducted through SWIFT or by any other means, we will make sure that the sanctions will be actively applied to them."

Another issue on the agenda that has not been officially addressed is the sensitive situation in recent weeks involving bilateral relations between the US and Saudi Arabia, following the murder of journalist Jamal Khashoggi. The next stage of the sanctions against Iran, which is designed to damage it severely, is not designed to directly affect the international energy market, but the US always relies on Saudi Arabia for help in this context, and in view of the problems created for Washington with respect to the Saudi Arabian royal house, destabilizing the energy market within Iran is likely to have additional consequences.

Published by Globes, Israel business news - - on October 21, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

Sigal Mandelker Photo: David Azagury, US Embassy
Sigal Mandelker Photo: David Azagury, US Embassy
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018