A top U.S. Treasury Department official promised Congress his department would pressure the European Union to designate Hezbollah as a terrorist organization and force European banks to stop ongoing transactions with Iran.
Sen. Mark Kirk (R., Ill.) pressed Treasury undersecretary David Cohen to make the commitment during a Thursday hearing held by the Senate Banking Committee.
Cohen’s promise to get tough with the Europeans is being viewed as a victory for Kirk, who has pushed the EU to act on both issues.
Cohen’s assurance comes on the same day the EU was scheduled to hold a meeting about U.S. demands that it cut off Iran’s access to a central European financial system that has handled transactions on Iran’s behalf.
The financial transactions, which take place via a system known as Target2, flow through the European Central Bank (ECB). Kirk and 35 other U.S. senators petitioned the EU’s European Council last week to address the issue or face a new round of U.S. sanctions.
EU spokesman Michael Mann declined to discuss specifics of the meeting, telling the Washington Free Beacon in an email: "All I can say now is that the EU is seriously looking into that issue and will closely cooperate with its partners."
Treasury’s Cohen told lawmakers on the banking committee he too would push the Europeans to seal major loopholes in their Iran sanctions measures.
"We will continue to press the ECB to take what we think is the right step here, which is to cut off Euro clearing, … or to apply to Euro clearing the same set of restrictive measures that the EU has on any Iranian business," Cohen said.
"We have been working hard on this issue since the regulations that the EU adopted last December, as we read them, already address this issue," Cohen said, according to a transcript of his remarks.
The EU’s External Action Service (EEAS), a diplomatic corps that works on foreign affairs issues, was scheduled Thursday to review the U.S. Senate’s letter and consider what action to take.
It is unclear if the EEAS reached a final conclusion during the meeting. A spokesman did not respond to a Free Beacon request for comment.
U.S. lawmakers say that if the EU fails to close the loopholes, they are prepared to enact a tough new sanctions measure that would target financial institutions conducting euro transactions on Iran’s behalf.
"Let's hope they make the right decision at this meeting," Kirk said during the hearing.
"And if they don't we're going to continue pressing on this issue," Cohen responded.
Draft language of a new sanctions bill affecting Target2 transactions is currently circulating around Capitol Hill.
"Knocking Iran out of Target2 is particularly appropriate," following a deadly Hezbollah terrorist attack on Israeli civilians in Bulgaria last year, Kirk said.
Hezbollah, Iran’s top proxy, receives much of its funding from Europe.
"Since Hezbollah is basically a wholly owned subsidiary of the MOIS, the Iranian Intelligence Service, … we would lock up a lot of money from the Iranians by" cutting off access to Target2, Kirk said.
Cohen also promised Kirk he would push the Europeans to finally designate Hezbollah as a terrorist group, something the U.S. and Israel have done for years.
"The designation of Hezbollah following the determination by the Bulgarians that Hezbollah was responsible for that attack in Burgas" is a chief concern, Cohen said. "We are pressing the EU, pressing member states of the EU to get that done."
While Cohen declined "to predict what the EU will do," he said, "you can be sure that we're pressing them very, very hard to get that accomplished."
Published under: Congress , European Union , Financial Industry , Hezbollah , Iran , Mark Kirk , Middle East