In Letter to Secretary Panetta, Secretary Geithner, Ros-Lehtinen Requests Details of Iran's Involvement in Iraq, Afghanistan
Asks What Obama Administration, Iraqi and Afghan Governments are Doing to Counter Tehran's Efforts
I am writing to raise concerns about Iranian attempts to circumvent U.S., European Union, and other bilateral and multilateral sanctions through use of the financial sectors of Iraq and Afghanistan, and about what the Administration is doing or considering doing to counter these efforts effectively.
As described in two New York Times articles over the past week, and on the heels of the recent Treasury designation of the Elaf Islamic Bank in Baghdad, the Iranian regime is trying to access the financial sectors of Iraq and Afghanistan, as well as the energy sector of Iraq, to provide Tehran with crucial foreign currency reserves at a time when sanctions are having an effect.
Reports indicate that the Elaf Islamic Bank is still allowed to participate in the Iraq Central Bank’s daily auction, at which commercial banks can sell Iraqi dinars and buy United States dollars. These auctions are a crucial pathway for Iranian access to the international financial system. As Iran seeks to bolster its reserves of dollars and other convertible foreign currency to stabilize its exchange rates and pay for imports, the Iraqi government reportedly not only allows companies and individuals to circumvent the sanctions but also does not enforce penalties for non-compliance.
Further, the status of joint Iraqi-Iranian oil fields raises potential sanctionable upstream activities, which are particularly concerning given reports that some Iranian oil is finding its way to Iraqi ports for export.
A similar potential challenge to sanctions implementation and enforcement exists with Afghanistan. Kabul and Kandahar are now reportedly being utilized as financial centers through which the Iranian regime can circumvent sanctions. According to press reports, Afghan money traders said they were told this month by American officials not to conduct business with Arian Bank, an Afghan bank owned by two Iranian banks, because the Iranian regime was using Arian to move cash in and out of Afghanistan. Given longstanding difficulties encountered by the U.S. and other responsible nations with Afghanistan’s widespread corruption and lack of financial controls, I am concerned not only that Afghanistan could be transformed into a mechanism used by the Iranian regime to circumvent sanctions, but that such an arrangement could inadvertently provide Tehran greater leverage over the Afghan government.
Accordingly, I would appreciate if you would provide the following information (which, given its potential sensitivity, may be transmitted in classified form):
- the overarching U.S. strategy to address these Iranian efforts to evade sanctions;
- what actions the U.S., our allies, and the Iraqi and Afghan governments are taking to counter such sanctions evasion;
- whether the Administration will condition security cooperation with Iraq and Afghanistan on such activities with the Iranian regime;
- which Iraqi and Afghan banks, or other financial institutions, maintain correspondent accounts with designated Iranian banks or their affiliates;
- a determination as to whether joint Iranian-Iraqi oil fields are sanctionable under the Iran Sanctions Act; and
- an analysis of the impact of Iran’s use of Iraqi and Afghan financial institutions on the effectiveness of bilateral and multilateral sanctions regimes.