France Cool to U.S. Pressure to Cut Bank Ties to Iran
Celestine Bohlen, Bloomberg:
France, whose lenders account for 24 percent of bank loans to Iran, may reject a U.S. campaign to sever financial ties with the Middle Eastern nation. ``We generally prefer measures that are decided in the framework of the United Nations, or the European Union,'' said Jean Baptiste Mattei, a spokesman for the French Foreign Ministry. ``We have never liked unilateral sanctions.'' READ MORE
Stuart Levey, the U.S. Treasury's undersecretary for terrorism and financial intelligence, is touring Europe this week to persuade government and business leaders in France, U.K., Switzerland and Italy to help crack down on funds used by Iran and other countries to support terrorism and nuclear proliferation.
His trip comes as European and Iranian diplomats meet to head off a potentially divisive debate at the UN Security Council over U.S.-sought sanctions against Iran if it doesn't suspend its nuclear program.
The U.S. has had unilateral sanctions against Iran since 1995. Since last year, Levey has spearheaded a wider campaign to make foreign companies and banks with operations in the U.S. comply with U.S. rules against doing business with institutions and countries that support terrorism, or engage in illegal activities such as money laundering.
Iran, North Korea
The campaign has targeted North Korea and Iran, two of the three countries listed by President George W. Bush as members of the so-called ``axis of evil.'' Last week, Levey announced that Bank Saderat, one of Iran's biggest state-owned lenders, would be blocked from doing business with the American institutions.
``There is a responsibility for financial officials, be they governmental or private sector, to take steps to protect themselves from the risks posed by Iran's behavior, the risk of WMD proliferation and terrorism,'' Levey said in an interview in London on Sept. 11.
Earlier this year, several European banks, including Zurich-based UBS AG and Credit Suisse Group, and Standard Chartered of the U.K., restricted activities in Iran -- cutting off ties to clients or not accepting new customers.
``It was a pure business decision,'' said Serge Steiner, a spokesman for UBS, citing the cost of compliance with international banking regulations that require banks to ``know your customer.''
London-based Standard Chartered Bank decided not to sign up new clients in Iran ``in view of U.S. and other regulations regarding Iran,'' said Matthew Chan, a spokesman at the bank.
No French bank has publicly disclosed restrictions on business in Iran. French banks in 2005 accounted for $5.9 billion of the $25.4 billion in loans made to Iran by lenders reporting to the Bank for International Settlements based in Berne, Switzerland.
``France has a very robust and strong relationship with Iran, which serves as one of the pillars of the Iranian regime,'' said Adam Pener, chief operation officer of the Washington-based Conflict Securities Advisory Group Inc., which tracks companies' connections to state-funded terrorist groups.
BNP Paribas SA and Frankfurt Commerzbank AG in 2002 managed the Iranian government's first foreign bond sale since the 1979 Islamic revolution, raising 875 million euros ($1.1 billion), according to Commerzbank's Web site.
BNP Paribas officials met with Levey this morning in Paris and will have a statement later today, Jonathan Mullen, a spokesman said.
French business leaders like Thierry Desmarest, chief executive officer of Total SA, Europe's third biggest oil company, have echoed the French government's line, saying they would honor international, not U.S. sanctions.
Total has a 30 percent stake in a $2 billion project to ship gas from Iran. The company is now in final negotiations with the Iranian government on the project.
``In the first half of next year, we'll have to check what the relationship is between the international community and Iran,'' Desmarest said at a presentation in London on Sept. 6. ``If there is no decision made at the French level, the EU level or UN level which would prevent us, we'd expect to launch the project sometime in the first half of next year.''
Levey is meeting officials at the French Finance Ministry and Foreign Ministry to discuss Iran and the broader issue of international cooperation to block funding of illegal traffic in nuclear weapons.
``It is a very complicated issue,'' said Mattei. `We do want to hear the American ideas, to get more precise information.''
The U.S. has said it is ready to impose sanctions against Iran, starting with minor restrictions like blocking travel by Iranian officials to Western countries.
It is trying to persuade other countries to join its efforts to make Iran pay a price for not complying with an Aug. 31 UN deadline to suspend its uranium enrichment program.
In the absence of UN sanctions, the Bush administration has shown a preference for targeted financial isolation, a technique which it has also applied against North Korea.
``It is clearly something that the Bush administration sees as one of their successes in non-proliferation,'' said George Perkovich, vice president for studies in global security at the Carnegie Endowment for International Peace, based in Washington D.C. ``They like doing stuff that gets the bad guys, by stopping the supply of money.''
To contact the reporter on this story: Celestine Bohlen in Paris at email@example.com