A bombshell report released Wednesday by the majority staff of the Senate Homeland Security Permanent Subcommittee on Investigations revealed that the Obama administration secretly plotted to give Iran access to the U.S. financial system as a sweetener for the 2015 nuclear deal.
This effectively helped Iran evade sanctions that were not lifted as part of the JCPOA, as it is formally known. The report also details how Obama officials blatantly lied to Congress and the American people about this special arrangement.
The Senate report cites four occasions when Obama officials “publicly stated that Iranian access to the U.S. financial system was not part of the relief specified in the JCPOA,” detailed as follows:
First, on July 23, 2015, U.S. Treasury Secretary Jack Lew testified before the U.S. Senate Committee on Foreign Relations concerning the nature of the potential sanctions relief contained in the JCPOA. Secretary Lew stated that the JCPOA would “suspend nuclear-related secondary sanctions,” but that “a number of key sanctions will remain in place.” Specifically, Secretary Lew explained that “Iranian banks will not be able to clear U.S. dollars through New York, hold correspondent account relationships with U.S. financial institutions, or enter into financing arrangements with U.S. banks.” He further testified that “Iran, in other words, will continue to be denied access to the world’s largest financial and commercial market.”
Second, on August 5, 2015, Adam Szubin, the Acting Under Secretary of the Treasury for Terrorism and Financial Intelligence, testified before the U.S. Senate Committee on Banking, Housing, and Urban Affairs that “Iran will be denied access to the world’s most important market and unable to deal in the world’s most important currency,” referring to the U.S. financial system and the U.S. dollar. He also stated that “Iranian banks will not be able to clear U.S. dollars through New York, hold correspondent account relationships with U.S. financial institutions, or enter into financing arrangements with U.S. banks.”
Third, in testimony before the U.S. Senate Committee on Banking, Housing, and Urban Affairs on September 17, 2015, Mr. Szubin again assured lawmakers that “no Iranian banks can access the U.S. financial system, not to open an account, not to purchase a security, and not even to execute a dollarized transaction where a split–second’s worth of business is done in a New York clearing bank.”
Fourth, on September 16, 2015, Mr. Szubin gave a public address to the Washington Institute for Near East Policy where he discussed the sanctions that would remain after Implementation Day.
There, Mr. Szubin stated: “Iran will not be able to open bank accounts with U.S. banks, nor will Iran be able to access the U.S. banking sector, even for that momentary transaction to, what we call, dollarize a foreign payment. … That is not in the cards. That is not part of the relief offered under the JCPOA.”
Both Secretary Lew and Mr. Szubin testified that Iran would not have access to the U.S. financial system. This public testimony mirrored what OFAC and State Department officials told foreign financial institutions and other investors around the world, as detailed in the following section.
The Senate report goes on to discuss the “roadshows” held by Obama administration officials for foreign governments and investors, explaining how sanctions relief under the JCPOA would work. It was repeatedly stated in these roadshows that “the U.S. financial system remained off-limits for foreign financial institutions conducting business on behalf of Iran.”
“U.S. government officials repeated this particular advice – to not use the U.S. financial system for transactions involving Iran – multiple times to bankers and business development leaders in countries including Switzerland, England, and Germany,” the Senate report notes.
At the same time, the roadshows featured a good deal of nudging and winking to the effect that the Obama administration would not vigorously pursue violations that favored Iran. At one of the most important roadshows in London, a Treasury official said violations would be addressed with simple warning letters “95 percent of the time.”
Despite these assurances, the Obama plan to convert $5.7 billion in currency to U.S. dollars fell apart because the two American banks asked to handle the transaction refused the request.
“The Obama administration misled the American people and Congress because they were desperate to get a deal with Iran. Despite claims both before and after the Iran deal was completed that the U.S. financial system would remain off limits, the Obama administration issued a specific license allowing Iran to convert billions of dollars in assets using the U.S. financial system,” subcommittee chairman Sen. Rob Portman (R-OH) said on Wednesday.
Portman added that the report includes a number of transparency recommendations to “ensure these secret side deals never happen again.”
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