Congress Goes to War With Treasury Department Over Saving Iranian Financial Access

Cruz bill gaining momentum as Iran hawks see Trump Treasury Dept. saving Iran's banks

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October 30, 2018

Congress is working to pass new legislation that would completely cut Iran's access to international financial systems amid criticism by Iran hawks that the Trump administration's Treasury Department is seeking to keep these financial lines open, a major concession to Tehran and European allies scrambling to save the landmark nuclear agreement.

U.S. officials familiar with Congress's effort to take the reins on tough new Iran sanctions ahead of a Nov. 4 snapback deadline have been battling with the Treasury Department over its efforts to allow Iran to remain connected to the SWIFT banking system, which facilitates cross-border transactions and has provided Iran with a key lifeline to the West.

Iran hawks on Capitol Hill are said to be frustrated over the Treasury Department's efforts, telling the Washington Free Beacon that some officials in the Trump administration are walking back the president's promise to reimpose a bevy of new sanctions on Iran that were lifted as part of the nuclear deal.

The Free Beacon first reported last week on the internal battle in the administration over the extent of sanctions and efforts by some European allies to pressure the United States into keeping Iran involved in the international marketplace.

While Trump and top officials such as National Security Adviser John Bolton have publicly advocated for a hardline on Iran, pressure from the Europeans appears to have worn down the Treasury Department, which first told the Free Beacon last week that Iran's connection to SWIFT could remain intact.

With frustrations mounting among Iran hawks in and outside of the administration, Sen. Ted Cruz (R., Texas) has stepped in with new legislation to mandate key sanctions on Iran remain intact.

Cruz's legislation would mandate Trump impose sanctions related to SWIFT, according to sources familiar with the legislation who told the Free Beacon it also would likely target the visas and assets of SWIFT board members that enable Iran to continue using the banking system.

Additionally, the bill provides Trump with expanded ways to target Iranian banks for their financing of global terror operations. This includes sanctions for helping Iran to develop a crypto-currency to evade U.S. sanctions. Iranian officials in recent months have suggested that is one avenue they might pursue.

Cruz's bill is already gaining traction, multiple congressional sources told the Free Beacon. This includes support from Sens. Marco Rubio (R., Fla.) and Tom Cotton (R., Ark.), both vocal supporters of a tough stance on Iran sanctions.

"To end the Iranian terrorist regime's ambitions for nuclear weapons once and for all, the Trump administration must not only restore all sanctions suspended by President Obama's flawed nuclear deal, but also impose additional, farther-reaching sanctions that truly maximize pressure against Iran's government," Rubio told the Free Beacon.

Sources familiar with Cruz's legislation said it would go further than the Trump Treasury Department appears willing to go, particularly on SWIFT, which includes two major American banks, JPMorgan and Citibank.

"President Trump told the Treasury Department to put maximum pressure on Iran, including the congressional sanctions around SWIFT," said one congressional staffer who works on Iran sanctions and is familiar with the Cruz legislation.

"If they refuse to implement the president's directive then Congress will have to ACT," the source said, Iran, banking, and sanctions touch so many different areas that something like the Cruz bill could and will be attached to just about everything."

A second congressional source familiar with the legislation said leaders on the Hill will not stand by and allow the Treasury Department to walk back Trump's promises on SWIFT and tough new sanctions.

"The president has made it clear he intends to implement a maximum pressure strategy against the Iranian regime," said the source. "Disconnecting Iranian banks from the SWIFT network is a crucial element of that approach. If administration officials attempt to create loopholes for the Iranians, then Congress will take action to ensure Iranian banks are cut off from SWIFT."

Treasury Department official's have promised they are taking a tough line on SWIFT, but have left the door open to allowing Iran to remain connected, a source of friction among Iran hawks.

"Treasury has made it very clear that we will continue to cut off bad Iranian actors, including designated banks, from accessing the international financial system in a number of different ways," a Treasury Department official recently told the Free Beacon. "We will also take action against those attempting to conduct prohibited transactions with sanctioned Iranian entities regardless of the mechanisms used."

However, the administration "will not comment specifically on any future sanctions on SWIFT or other entities."

The administration's decision to leave the door to SWIFT open for Iran contues to rankle those who have been working for years to see the sanctions pressure amped up on Iran following efforts by the Obama administration to increase global trade with Tehran.

"This is clearly a warning shot to Treasury: you do it or we will," said one veteran foreign policy hand who works on Iran issues. "If I'm advising the president and I have half a political brain, I'm seeing the writing on the wall here: either Trump can be a hero or he can look weaker than Obama. Why let anyone at Treasury or in the Deep State lead the president down the latter path?"