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36 Senators urge EU to eliminate loophole in Iran sanctions

Posted by Newsroom On February - 26 - 2013
 
Kirk-Shaheen letter calls on ECB to eliminate Iran’s access to foreign held euros
 
 
WASHINGTON, D.C. – As Iran continues its pursuit of a nuclear weapons capability, U.S. Senators Mark Kirk (R-IL) and Jeanne Shaheen (D-NH), along with 34 other U.S. Senators, yesterday asked the European Union (EU) to close a significant loophole in US-EU sanctions against Iran by severing Iran’s ability to access foreign held euros through the European Central Bank’s (ECB) Target2 settlement platform.  In their letter, the senators explain how Iran is able to circumvent current sanctions by using euro conversions to facilitate its imports, thereby freeing up funds to engage in illicit activities and further its goals to develop a nuclear weapon.
 
“We strongly urge you to take all necessary measures to immediately cut off Iran’s ability to use its foreign-held euros by prohibiting direct or indirect access to Target2 services by or on behalf of accounts owned or controlled by the Government of Iran or its affiliates,” the senators wrote.  “Such an action would be consistent with the ECB’s guidelines – which explicitly prohibit access to Target2 for entities engaged in “money-laundering and the financing of terrorism, proliferation-sensitive nuclear activities and the development of nuclear weapons delivery systems” – and would bring the EU into alignment with American policy vis-à-vis Iranian access to the dollar.”
 
The Shaheen-Kirk letter was signed by a majority of the Senate Foreign Relations and Banking Committees, which have oversight over US-EU relations and Iran sanctions, respectively.  Shaheen is former chair of the Foreign Relations Subcommittee on European Affairs. Kirk is a leading co-author of several pieces of recent Iran sanctions legislation and serves as the ranking member of the Banking Subcommittee on Security and International Trade and Finance.
 
The full list of signatories includes: Ayotte, Blunt, Boxer, Cardin, Casey, Collins, Coons, Cornyn, Crapo, Donnelly, Feinstein, Flake, Gillibrand, Graham, Hagan, Heitkamp, Heller, Johanns, Kirk, Manchin, Merkley, Moran, Murkowski, Murphy, Pryor, Reed, Risch, Rubio, Sessions, Schumer, Shaheen, Tester, Toomey, Vitter, Warren and Whitehouse.
 
The text of the letter available here and below:
 
February 25, 2013
 
His Excellency Herman Van Rompuy
President of the European Council
Rue de la Loi 175
B-1048 Brussels
 
CC:      Mario Draghi, President, European Central Bank
 
Dear President Van Rompuy:
 
The United States and the European Union (EU) share a common goal of preventing Iran from acquiring a nuclear weapons capability.  Together, we have implemented the most comprehensive sanctions regime against one country in history – imposing sanctions on the Central Bank of Iran, disconnecting Iranian banks from financial messaging services, prohibiting the supply of metals to Iran, enacting human rights sanctions and more.
 
But while American and European sanctions are hurting Iran’s economy – dramatically cutting oil revenues and devaluing the currency – the regime continues to flout its commitments under the Nuclear Non-Proliferation Treaty and refuses to halt its enrichment activities in compliance with multiple United Nations Security Council resolutions.  Time is not on our side.  As Iran improves its enrichment capabilities, the regime inches closer to an undetectable nuclear breakout capability.  That is why we are writing to request your immediate support in closing a significant loophole in US-EU sanctions policy.
 
As you know, financial institutions, companies and investors affiliated with the Iranian Government, including the Central Bank of Iran, maintain bank accounts around the world filled with euros.  Reports suggest that Iran uses these reserves to circumvent the total impact of American and European sanctions by converting its foreign-held euros into local currencies via the European Central Bank’s (ECB) Trans-European Automated Realtime Gross Settlement Express Transfer or “Target2” system.  We are concerned that these euro conversions in turn free up significant funds to finance Iranian imports, stabilize Iran’s monthly budget and allows the regime to continue to engage in sanctionable and illicit activities.
 
While we understand officials at the ECB want to take action to render Iran’s foreign-held euros non-functional, they are waiting for an order from the EU Council to proceed.  Therefore, we strongly urge you to take all necessary measures to immediately cut off Iran’s ability to use its foreign-held euros by prohibiting direct or indirect access to Target2 services by or on behalf of accounts owned or controlled by the Government of Iran or its affiliates.  Such an action would be consistent with the ECB’s guidelines – which explicitly prohibit access to Target2 for entities engaged in “money-laundering and the financing of terrorism, proliferation-sensitive nuclear activities and the development of nuclear weapons delivery systems” – and would bring the EU into alignment with American policy vis-à-vis Iranian access to the dollar.
 
Though we recognize and appreciate the narrow mandate by which the ECB operates and respect the independence of this institution, we believe we all have a role to play in ensuring that Iran does not obtain a nuclear weapon.  It is critical that the U.S. and Europe present a strong, unified front with respect to Iran’s nuclear program.  As we approach yet another round of low-level discussions with Iran in Kazakhstan next week, Iran is feeling the effects of international sanctions.  Yet it still refuses to engage in serious negotiations over its nuclear program.  We will need to maintain and increase pressure if diplomacy has a hope of succeeding.
 
Thank you for your time, your consideration, and your continued leadership in deepening our transatlantic ties.
 
Sincerely,
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