Shutting Down Tehran

Kirk, Manchin introduce amendment to curtail Iranian access to European Central Bank

Sens. Manchin, Kirk / AP
March 21, 2013

Sens. Mark Kirk (R., Ill.) and Joe Manchin (D., W.Va.) on Thursday jointly introduced  an amendment aimed at cutting off Iran’s access to a European financial institution that has permitted Tehran to skirt Western economic sanctions.

The measure aims to force the European Union to cut off Tehran’s access to the European Central Bank (ECB), which allows Iran to conduct financial transactions in euros.

The loophole has allowed the cash-strapped Iranian regime easy access to money in Europe.

The EU has discussed cutting off Iran’s access to the ECB and its Target2 system, but has yet to take action despite months of pressure from U.S. officials.

The measure, which was attached as an amendment to the Senate budget proposal, appears to be a warning shot aimed at forcing the EU to quickly address the matter before Congress subjects it to sanctions.

"The Kirk amendment would support all efforts to block Iran from doing business in euros and from accessing its euro-dominated foreign exchange reserves," according to a description of the measure circulating on Capitol Hill.

"Iran’s ability to access the euro remains one of the largest loopholes in our Iran sanctions policy," the description states. "To prevent Iran from acquiring a nuclear weapons capability, we must close this ‘euro loophole.’"

The amendment would create a "deficit-neutral reserve fund to prevent Iran from directly or indirectly accessing the European Central Bank’s Target2 settlement platform and to block Iran’s access to its euro-denominated foreign exchange holdings," according to the measure, a copy of which was obtained by the Washington Free Beacon.

EU leaders met earlier this month to discuss U.S. demands that it cease all dealings with Iran. No concrete steps were taken regarding the ECB following that meeting.

EU spokesman Michael Mann declined to discuss specifics of the meeting when contacted earlier this month by the Free Beacon.

"All I can say now is that the EU is seriously looking into that issue and will closely cooperate with its partners," Mann said at the time.

Kirk and 35 other U.S. senators petitioned the EU’s European Council this month to address the issue or face a new round of U.S. sanctions. Treasury Department undersecretary David Cohen has also committed to pressing the Europeans on the issue.

Congress has readied legislation to target European banks should the EU fail to agree on a plan to close the loophole.

The draft measure would sanction any financial institution that is involved in or enabling Iranian transactions in euros or in other foreign currencies, according to draft legislation circulating on Capitol Hill.

The new Kirk-Manchin measure is expected to come to a vote Friday evening or early Saturday, according to Senate sources.