Trump Officials, Congress Draw Battle Lines as Fight Over Iran Heats Up

Sources: Elements of Trump admin pushing to save Iran deal, outlast Trump

U.S. Capitol
Getty Images
February 21, 2019

Officials inside the Trump administration have been pursuing policies that would leave large parts of the nuclear deal with Iran in place, including limiting the amount of pressure placed on Tehran through financial and oil sanctions, according to multiple sources who spoke to the Washington Free Beacon about a growing inter-agency battle.

These policies, which include waivers enabling Iran's continued oil production as well as its access to the global economy, have generated much tension with other parts of the Trump administration known to favor a more hardline approach. It also has riled Iran hawks on Capitol Hill who are currently working on various sanctions packages to further cripple the Iranian regime.

The efforts by some within the administration to preserve the nuclear accord and keep it on life support during the Trump presidency has set the stage for a coming battle over U.S. policies to cripple the Iranian economy and choke its leadership.

It has become increasingly clear in recent months that some elements of the Trump administration have used back-channel talks with the Europeans and other allies aimed at ensuring the nuclear deal remains in place, despite the president's efforts otherwise, sources told the Free Beacon.

At least two pressing issues are likely to bring this fight to the forefront: The potential for the United States to grant more waivers to those who purchase Iranian crude oil and Tehran's continued funding of terrorist entities, including Hamas and Hezbollah.

This week, the Financial Action Task Force, or FATF, an inter-government body dedicated to cracking down on terror financing, is meeting in Paris where a top agenda item will be Iran's refusal to uphold a 2016 pact aimed at eliminating its financial support for terror groups and other illicit entities.

As the FATF body meets, a team of leading U.S. senators has petitioned the Treasury Department to ensure a range of penalties are reimposed on Tehran, according to a copy of that letter viewed by the Free Beacon.

Sens. Ted Cruz (R., Texas), Tom Cotton (R., Ark), Marco Rubio (R., Fla.), and Thom Tillis (R., N.C.) spearheaded the letter to the Treasury Department, urging officials to stop giving Iran a pass as it relates to FATF and the country's continued financing of terrorists.

"Use the voice and influence of the United States to ensure that the Financial Action Task Force (FATF) reimposes countermeasures against Iran," the senators told the Treasury Department, adding that such action is "necessary to counter Iranian illicit finance and protect the global banking system from toxic Iranian transactions."

FATF suspended its countermeasures against Iran in 2016, when the organization inked a deal with Tehran in which the regime committed to reforming its ways.

However, Iran has not upheld the agreed to plan, "and has recommitted to using its financial system to launder money and finance terrorist," according to the senators, who note that Tehran has already committed publicly to increasing its support to U.S.-designated terror groups like Hamas and Hezbollah.

"Two years is more than enough to establish that the Ayatollahs intend to do what they say, which is to continue using their financial system to fund terrorist groups committed to attacking and even eradicating us and our allies," the senators wrote. "The risk that such financing poses to the global financial system is unacceptable and must be countered."

Treasury Department officials declined to comment on the matter, only directing the Free Beacon to past comments affirming the administration's support for the 2016 FATF agreement with Iran.

This response has not played well with Iran hawks, both inside and outside of the administration.

"There are still lots of people inside the Trump administration who talk about preserving the framework of the Iran deal and reentering later, and they say the U.S. should calibrate its pressure to make sure Iran stays in the deal and lives up to its commitments," one veteran Iran hand familiar with the administration's debates about Iran told the Free Beacon.

"Of course the president already said those commitments are too weak, and he told them to tear up the whole deal, but they think they know better," the source said. "When the Treasury Department tells people they're trying to make Iran live up to its FATF commitments you can tell what side of the interagency battle they're on."

When asked about the letter and efforts on Capitol Hill to force the administration into taking a tougher line, a Cruz spokesperson told the Free Beacon that U.S. officials must work more closely together on efforts to isolate Iran.

"Sen. Cruz has been clear that Iranian terror financing, which the Iranians have committed to expanding, represents a clear and present threat to the global financial system that Americans rely on for our prosperity," the spokesperson said. "The Financial Action Task Force should take a first step toward reducing that threat by reimposing countermeasures on Iran, and then Congress and the administration must work together to reduce the threat further."

Cruz is expected to reintroduce legislation he sponsored in the last session of Congress that would further choke off Iran's illicit finance activities.

Outside experts also have criticized the FATF Iran agreement as lacking any teeth.

"The fact remains: Iran is the world's foremost state sponsor of terrorism. Checking bureaucratic boxes cannot change that," said Jonathan Schanzer, a former terrorism finance analyst at the Treasury Department who now serves as the senior vice president for research at the Foundation for Defense of Democracies.

"Put another way," Schanzer said, "there is a huge difference between putting in place a plan or even laws to combat terror finance and having the will or ability to do something meaningful about it."

Toby Dershowitz, a senior vice president for government relations at FDD who watches FATF issues, warned the European nations still seeking to do business with Iran should not be permitted to block FATF from imposing penalties on Iran.

"Some in Europe will push back for political reasons, seeking to somehow tie Iran's compliance with global anti-money laundering standards to staying in the nuclear deal," Dershowitz said. "Even if that happens, and countermeasures are deemed voluntary, it would be shocking if Iran is removed from FATF's blacklist of high-risk jurisdictions, which requires high level due diligence on the part of would-be traders. Any serious risk manager looking at Iran knows to think twice before jumping in with both feet."

Published under: Iran