Thursday, October 25, 2007

A Test of Sanctions

The sanctions that the Treasury Secretary will announce (with the Secretary of State) will make it illegal for any entity subject to U.S. jurisdiction to "knowingly provide material support or resources" to the Iranian groups and institutions so designated. It also mandates any U.S. bank or financial institution which knows it has funds that are related or connected to such groups to turn them over to the Treasury Department.

Iran doesn't do business directly with the U.S.--but the hope is that this increases pressure on Europeans and Asians who do to cut ties to Iranian businesses that are connected to the defense ministry, the Quds force, the revolutionary guards.

The test will be to see whether this happens, or whether foreign businesses doing business in Iran begin to route transactions outside of the U.S. A company that lists on the Hong Kong exchange and deals in non-U.S. currencies through non-U.S. financial institutions is pretty immune from U.S. pressure.

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