Eye on Iran: HSBC Hits Out At US Advice To Engage With Iran

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Forbes: "In an opinion piece in the Wall Street Journal, one of the world's largest banks has criticised the US government for encouraging non-US financial institutions to start working with Iran. 'Washington is pushing non-US banks to do what it is still illegal for American banks to do. This is a very odd position for the US government to be taking,' wrote Stuart Levey, chief legal officer of HSBC and a former undersecretary for terrorism and financial intelligence at the US Treasury Department. 'HSBC has no intention of doing any new business involving Iran.' The article was written following a meeting that US Secretary of State John Kerry held in London on May 12 with large European banks. Treasury and State Department officials at the meeting tried to persuade the banks that doing business with Iran would not lead to reprisals from the US... In recent weeks, US Treasury officials have been visiting European firms to try and offer some comfort as to what they can or cannot do under the US sanctions that are still in place, but according to Ellie Geranmayeh, a policy fellow at the European Council on Foreign Relations, 'these have fallen short of what a lot of people have expected.' Kerry's latest remarks don't seem to have changed that... 'The US Treasury Department's designation of Iran, including its central bank and financial institutions, as a primary money-laundering concern also still stands,' noted Leavy, in his opinion piece. 'Mr. Kerry wants non-US banks to do business with Iran without a US repudiation of its prior statements about the associated financial-crime risks. There are no assurances as to how such activity would subsequently be viewed by US regulatory and law-enforcement authorities.'" http://t.uani.com/1Wv0wES
Politico: "U.S. Secretary of State John Kerry met European bankers in London Thursday to urge them to get past 'misinterpretations or mere rumors' about sanctions and return to doing business with Iran... But at least one of the banks present, Société Générale, said the meeting didn't change its position. 'Given the remaining uncertainties, Société Générale has no plans at this stage to resume its commercial activities with Iran. Differences between European and US systems generate significant operating risks for financial establishments.' Significant opposition to doing business with Iran also remains in the U.S. On Wednesday, United Against Nuclear Iran, an advocacy group founded by former senior U.S. diplomats, warned that Kerry's mission is misguided. 'Just because Iran is broadcasting that it is open for business does not mean it is smart or legal business,' said UANI Chairman Sen. Joseph I. Lieberman and CEO Ambassador Mark D. Wallace." http://t.uani.com/1VVHnvT
AP: "The Obama administration's calls for restoring global business ties with Iran are falling flat in Europe, where risk-averse banks told U.S. Secretary of State John Kerry on Thursday that they don't believe they can do business in the Islamic Republic without triggering U.S. sanctions... 'We want to make it clear that legitimate business, which is clear under the definition of the agreement, is available to banks,' Kerry said after an unusual meeting in London with top financiers. 'As long as they do their normal due diligence and know who they're dealing with, they're not going to be held to some undefined and inappropriate standard here.' ... 'We will not accept any new clients who reside in Iran, or which are an entity owned or controlled by a person there,' said Standard Chartered. 'Nor will we undertake any new transactions involving Iran or any party in Iran.' The London-based bank settled with New York regulators in 2012 for $340 million after being accused of scheming with the Iranian government to launder billions of dollars. Deutsche Bank acknowledged 'increased expectations on the banking sector' to facilitate business with Iran due to eased sanctions, while noting that other U.S. and European Union penalties are in place. 'Therefore, Deutsche Bank continues to generally restrict business connected to Iran,' the bank said in a statement. Deutsche Bank declined to answer questions about what exceptions, if any, it would entertain. For a bank's lawyers and compliance officers, that's a recipe for heartburn. Iran and its Revolutionary Guard are notorious for using front companies and opaque financial transactions to circumvent sanctions. Foreign governments, banks and other companies want written clarification from the U.S. Treasury Department - essentially a guarantee they won't be punished. But Washington is reluctant to do that, not wanting to appear to be softening its firm penalties for non-nuclear behavior... Ross Denton, a London-based sanctions and international compliance expert at the law firm Baker & McKenzie, said it's impossible for banks to accurately determine with whom in Iran they're really dealing because the country is so isolated from the modern financial system. Major global accounting and risk-management firms don't operate there, putting banks at risk of unwittingly violating sanctions. 'The problem is not where you can see it,' Denton said. 'It is where you can't.'" http://t.uani.com/1rJPAXF
U.S.-Iran Relations
Fars (Iran): "Commander of the Islamic Revolution Guards Corps Navy Rear Admiral Ali Fadavi underlined that Iran considers no country in the world as a threat but the United States. 'We don't see any enemy but the Americans, and its instance is the (hostile) official remarks of the US officials and the trend of their actions' in the past years, Fadavi said, addressing the foreign military attachés in Tehran on Wednesday. He said the US is the only country which is ready to trample on other country's interests to meet its own interests, but meantime stressed that the Americans are no more powerful like the past. 'The world nations can confidently resist against the US bullying and what is against their interests,' Fadavi added." http://t.uani.com/1OrC8MT
WSJ: "The U.S. Navy officer in charge of 10 American sailors who were detained by Iranian authorities earlier this year was dismissed from his post by officials who cited a loss of confidence in his ability to command. Cmdr. Eric Rasch had been relieved of his duties after a preliminary investigation into the Jan. 12 incident, in which 10 sailors crossed into Iranian waters in the Persian Gulf, the Navy said in a statement. The incident sparked an international fracas that came during sensitive negotiations between Washington and Tehran over the Iranian nuclear program and prompted puzzlement among military officials in the U.S. over how the crew could have made such a mistake. Cmdr. Rasch was the head of the U.S. Navy's Coastal Riverine Squadron 3 when its sailors ended up in Iranian captivity. He has been temporarily reassigned to another squadron, the Navy Expeditionary Combat Command said in the statement Thursday... The American sailors were moving two 50-foot riverine boats from Kuwait to Bahrain when they veered into Iranian territorial waters near Iran's Farsi Island, contrary to the course that had been charted. Iranian authorities seized the U.S. servicemen for about 15 hours before returning them to American custody." http://t.uani.com/24VKedn
Congressional Action
The Hill: "Rep. John Ratcliffe (R-Texas) on Thursday introduced a bill that would force the White House to sanction seven Iranians recently indicted for a series of coordinated cyberattacks against the U.S. financial sector and for infiltrating a New York dam. 'Just talking about the need to fight back against malicious cyber actors isn't enough,' said the chairman of the Homeland Security subcommittee on cybersecurity. 'The administration must follow through with forceful action that shows we mean business when it comes to defending our critical infrastructure and protecting Americans' personal information,' Ratcliffe added. The measure pushes the administration to use a 2015 executive order that authorized the Treasury Department to sanction individuals who engage in cyberattacks against the United States. The indictment, unsealed in March, directly ties the seven alleged hackers to the Iranian government, claiming they were employed by computer security firms working on behalf of Tehran... Sen. Mike Rounds (R-S.D.) introduced a Senate version of the bill last month." http://t.uani.com/1TSGAZ2
AP: "The White House locked horns on Thursday with a House committee chairman over whether a senior aide should testify before Congress about his role in crafting President Barack Obama's public relations campaign in favor of the Iran nuclear deal. White House spokesman Josh Earnest did not rule out the possibility that deputy national security adviser Ben Rhodes would testify before the House oversight committee at a Tuesday hearing on 'White House narratives on the Iran deal.' But Earnest tried to brush off the request from Chairman Jason Chaffetz by casting the Utah Republican's hearing as political theater and challenging the GOP case against the agreement. 'I think there are some people who have some explaining to do when it comes to the wildly false accusations that they made about the Iran deal. And it's not the administration. It's Republicans who are demonstrably wrong when it comes to the Iran deal,' Earnest said, accusing several Republican lawmakers, including Sen. Tom Cotton, R-Ark., of being 'wildly misinformed, mistaken or lying' when they made claims about the deal's economic benefits for Tehran. Chaffetz responded to Earnest on Twitter. 'Dear @PressSec , @SenTomCotton will testify if @rhodes44 is man enough to show. Let's discuss the truth,' he wrote." http://t.uani.com/24VOEAX
Business Risk
Reuters: "French bank Societe Generale said given 'remaining uncertainties' it had no plans to resume commercial activities with Iran, adding: 'Differences between European and U.S. systems generate significant operating risks for financial establishments'. Other banking and finance sources said uncertainty about the outcome of U.S. presidential elections in November heightened their reservations. A Reuters/Ipsos opinion poll released on Wednesday showed Republican Donald Trump pulling even with likely Democratic rival Hillary Clinton. 'What if Trump wins? Do you want to get involved with contracts now that perhaps in six months would be unenforceable?' a banking source following Iran said. 'There is a distinct reluctance to do anything among the banks.' ... Another source familiar with European banks' thinking said there was still little clarity on what trade could be done. 'The assurances given by Kerry are still vague and that goes for the whole U.S. approach - there is no letter of comfort for the banks,' the source told Reuters... Banks' fears are exacerbated by the differing tone of rhetoric between federal U.S. officials and State laws, many of which still ban pension groups and funds from investing in overseas companies that do business in Iran, Tom Stocker, a Pinsent Masons lawyer with expertise in trade sanctions, said." http://t.uani.com/1OrDMy1
Sanctions Relief
WSJ: "Glencore PLC and Vitol Group, the world's two largest independent oil traders, are close to signing a long-term deal to purchase Iranian crude, a top Iranian official said. The potential deal would mark the return of two of Iran's biggest oil trading partners before Western sanctions over the country's nuclear program were tightened in 2012... Iran and the two Swiss-based companies are close to reaching separate agreements with state-owned National Iranian Oil Co., said Mohsen Ghamsari, the company's director of international affairs, in an interview. Mr. Ghamsari said one of the main issues to iron out is that the state company wants to choose the destination of the crude that it sells Glencore and Vitol. It isn't unusual for Iran's state oil company-or those in other countries --to dictate where oil traders market their crude. In a separate interview, Iran's deputy oil minister Amir Hossein Zamaninia said Glencore and Vitol have purchased mostly oil products from Iran until now. Glencore-which trades large quantities of oil in addition to the copper, coal and other commodities it mines and sells-became the first Western company to load Iranian oil products since the end of sanctions, but the cargo was made of fuel oil, rather than more expensive crude. It has struggled to find financing for the crude purchase, according to an Iranian trader involved in the deal." http://t.uani.com/24VJXr2
Reuters: "Turkish investors will be allowed to build at least 10 hotels in Iran, a Turkish tourism ministry official said on Friday, as the two countries look to increase bilateral trade after international sanctions on Iran were lifted in January. The hotels would be built in Tehran, Isfahan, Shiraz, Tabriz and Mashhad, the official said, under the terms of an agreement with Iran signed during a Turkish delegation's visit to Tehran that started on Thursday. The agreement includes incentives for investment and allows more charter flights between the neighboring countries, he said." http://t.uani.com/1TC2sW0
Reuters: "India's state-run Mangalore Refinery and Petrochemicals Ltd currently owes about $2.6 billion to Iran and wants to settle the dues as soon as a payment mechanism is worked out, Managing Director H. Kumar said. The state-run refiner, which operates a 300,000 barrels per day (bpd) refinery in southern Karnataka state, is a key oil client of Iran. The central banks of India and Iran have reached an arrangement to use European banks to process pending oil payments to Tehran, oil minister Dharmendra Pradhan told Reuters last week." http://t.uani.com/1OnQm6G
U.S. Holocaust Memorial Museum: "In 2015, two Iranian cultural organizations announced a second Holocaust cartoon contest, expecting to receive entries from cartoonists in dozens of countries. Over 150 cartoons from this contest will be exhibited in Tehran beginning May 14, 2016. In an April 2016 interview published in the New Yorker, Iranian Foreign Minister Mohammad Javad Zarif tried to distance the government from the contest, asserting that it did not receive government support or endorsement, and that no official permission was necessary to hold it. In an April 29, 2016 statement, the Museum questioned these assertions, and called on Zarif and President Rouhani to denounce the contest. The following provides more detailed information on the contest and its connection to the Iranian government, based on a review of Iranian media sources." http://t.uani.com/1s5Ok0G
Syria Conflict
Reuters: "Top Hezbollah commander Mustafa Badreddine has been killed in an attack in Syria, the Lebanese Shi'ite group said on Friday, the biggest blow to the Iranian-backed organization since its military chief was killed in 2008. Badreddine, 55, was one of the highest ranking officials in the group, and was believed by the U.S. government to be responsible for Hezbollah's military operations in Syria, where it is fighting alongside Syrian President Bashar al-Assad. The killing of Badreddine, a brother-in-law of late Hezbollah military commander Imad Moughniyah, is the latest big loss sustained by Hezbollah and Iran in Syria despite Russian military intervention in support of Assad and his allies." http://t.uani.com/1WuWKLR
Human Rights
AFP: "More than 30 major European film organizations appealed to the Iranian government Thursday to grant clemency to a young director sentenced to 223 lashes there. Keywan Karimi, 30, ran into trouble with Iran's powerful Revolutionary Guards over a documentary he shot called 'Writing on the City' about graffiti in the capital Tehran. 'It is completely unacceptable that through the simple act of expressing his artistic and critical outlook, Karimi should be on the list of artists... whose freedom -- if not their life itself -- has been taken,' the groups said in an open letter to the Islamic Republic. Karimi spent 15 days in solitary confinement in 2013 and was accused of making 'propaganda against the regime' and 'insulting religious values'. But since then several other 'ridiculous' charges have been added including drinking alcohol, having extramarital affairs and making pornography, the avant-garde filmmaker told AFP last week. 'All I was doing was filming what was being written on the walls of Tehran,' said the young director, who comes from the country's Kurdish minority." http://t.uani.com/1OrCWRJ
Domestic Politics
Reuters: "Iran's parliament reconvenes in late May with dozens of greenhorn lawmakers who will hold the key to accelerating reforms to boost foreign investment and trade - but whether they make or break the modernization drive is hard to predict. Elected in February, the 290-seat assembly replaces one dominated by hardliners suspicious of detente with the West and who curbed pragmatist President Hassan Rouhani's plans to liberalize the economy and raise lackluster productivity. Pro-Rouhani candidates raised their representation and 60 percent of MPs are first-timers. Yet independent tallies suggest this will be the first parliament in more than 20 years without either a conservative or reformist majority, and the novices' allegiances may switch between Iran's many factions... Iran does not have rigid party affiliations and some election candidates were backed by both camps, while deal-making ahead of the opening of parliament on May 27 could see independent MPs throw in their lot with one side or the other. The contest to elect a speaker, one of parliament's first tasks, will be an early test." http://t.uani.com/1TSFIE1
Opinion & Analysis
Stuart Levey in WSJ: "U.S. Secretary of State John Kerry met Thursday in London with a group of European financial institutions for a discussion about 'Iranian banking matters.' The meeting, which followed repeated complaints by Iranian officials that they aren't getting the benefit of the bargain under the nuclear deal, was an effort by the State Department to persuade major non-U.S. banks that doing Iran-related business is not only permitted following the relaxation of Iran sanctions, but is actually encouraged. The irony will not be lost on these financial institutions. Most of them were similarly gathered almost 10 years ago by U.S. Treasury Secretary Henry Paulson to discuss Iranian banking matters, but that discussion focused on protecting the integrity of the global financial system against the risk posed by Iran. In the decade that followed, the George W. Bush and Obama administrations, as well as the U.K. and other governments, the European Union and the United Nations, all imposed extensive sanctions targeting Iran's illicit and deceptive conduct. Banks were briefed extensively and repeatedly by the U.S. Treasury Department on the details of Iran's conduct. The Financial Action Task Force (FATF), the global standard-setting body for anti-money-laundering and counterterrorist financing, warned about the financial-crime risks posed by Iran as a jurisdiction. The result: Iran became a financial pariah. No one has claimed that Iran has ceased to engage in much of the same conduct for which it was sanctioned, including actively supporting terrorism and building and testing ballistic missiles. But now Washington is pushing non-U.S. banks to do what it is still illegal for American banks to do. This is a very odd position for the U.S. government to be taking. On the one hand, Washington is continuing to prohibit American banks and companies from doing Iran-related business. In February, FATF reaffirmed its prior concerns about the 'serious threat' Iran poses to the international financial system, urging countries to apply effective countermeasures. The U.S. Treasury Department's designation of Iran, including its central bank and financial institutions, as a primary money-laundering concern also still stands. As part of that designation, Treasury determined that 'the international financial system [is] increasingly vulnerable to the risk that otherwise responsible financial institutions will unwittingly participate in Iran's illicit activities.' On the other hand, Mr. Kerry wants non-U.S. banks to do business with Iran without a U.S. repudiation of its prior statements about the associated financial-crime risks... Our decisions will be driven by the financial-crime risks and the underlying conduct. For these reasons, HSBC has no intention of doing any new business involving Iran. Governments can lift sanctions, but the private sector is still responsible for managing its own risk and no doubt will be held accountable if it falls short." http://t.uani.com/1OnQRxo
Ted Cruz in NYT: "On Monday, the Iranian military's deputy chief of staff announced that the Islamic Republic had successfully tested yet another ballistic missile - this time, a high-precision midrange weapon with a reported reach of 2,000 kilometers, or 1,250 miles, and with a degree of accuracy that he claimed to be 'without any error.' If these statements are true, the entire Middle East, including Israel, is within the reach of the mullahs' missiles. It was not revealed if this missile had its genocidal intent actually inscribed on it, as other missiles recently tested by the Islamic Revolutionary Guards Corps have - with the inscription in Hebrew 'Israel should be erased from the map.' But it hardly matters. The mullahs' objectives are plain enough for anyone with eyes to see: The Iranian regime is continuing its determined march toward not only a nuclear weapon, but also the means to launch it, first against Israel and then against the United States. This reality makes all the more inexplicable President Obama's steadfast faith that, since the election of President Hassan Rouhani in 2013, Iran has been charting a 'more moderate course' to the detriment of the old-time hard-liners, and that Mr. Rouhani and his administration would be reliable partners in negotiations over Iran's nuclear program. To give credit where credit is due, the regime in Tehran has been frank and open about its continued hostility toward America and Israel. In the months since the Obama administration and the other permanent members of the United Nations Security Council plus Germany (the group commonly referred to as the 'P5 + 1') concluded the deal with Iran called the Joint Comprehensive Plan of Action, the Revolutionary Guards have tested at least four ballistic missiles. Flush with the $100 billion they claim to be getting in assets unfrozen under the deal, the mullahs have gone on a spending spree, finally purchasing, among other things, the Russian S-300 missile system, which is now being delivered to them. Who can forget the searing images of American sailors on their knees with guns pointed at their heads by our 'moderate' partners this past January? Just last week, in the course of receiving an official delegation from the Gaza-based militant movement Palestinian Islamic Jihad - which the State Department designated a terrorist group in 1997, for its efforts to destroy Israel - the supreme leader, Ayatollah Ali Khamenei, reiterated that the prime directive of the Islamic Republic remains, as it has been since 1979, to wage war against the United States and Israel. On Saturday, Iran's foreign minister, Mohammad Javad Zarif, that trusted counterpart to Secretary of State John Kerry, publicly affirmed to the Iranian Parliament that the same supreme leader who had just said doing harm to America and Israel was his key objective remains the ultimate arbiter of Iranian foreign policy. And as a final reminder of how the Islamic Republic conducts itself toward America, on Monday Amir Hekmati, a former United States Marine, sued the government of Iran for the brutal torture inflicted on him over the course of more than four years of arbitrary detention by Tehran. Enough. The mullahs' policy is, by their own admission, unchanged." http://t.uani.com/1rJRt6z
Andy Critchlow & George Hay in Reuters: "The United States really wants European banks to lend to Iran. Secretary of State John Kerry used a London meeting with financial institutions on Thursday to stress the scope for legitimate Iranian business, following the lifting of sanctions in January. Their likely reluctance to follow his advice says more about the state of banking than the state of Tehran. On the face of it, European banks have a huge opportunity in an economy with around $400 billion of GDP and the potential to grow 6 percent next year. While U.S. groups are still barred from transacting with Iranian clients, others can go to Tehran, set up a branch and start lending. They just have to make sure they don't do business in U.S. dollars, or lend to anyone on the Specially Designated Nationals (SDN) list of Iranians deemed to have undesirable or terrorist links. This is, of course, a huge caveat. The risks are massive. Iran comes a lowly 130th out of 168 in Transparency International's Corruption Perceptions Index. With lots of business likely to hinge on middlemen, the scope for lending to someone linked in some way to bribery or a SDN is high, and that would mean the European bank falling foul of American and British foreign bribery laws. For banks like BNP Paribas - fined $9 billion by U.S. authorities in 2014 for sanctions violations - the risks are fresh in the memory. Any Tehran-bound bank would have ensure no American staff deal with the client. Any involvement would also run the risk of annoying Iran's regional rival Saudi Arabia at a time when the latter is hiring banks for the initial public offering of the $2 trillion Saudi Aramco. Throw in the fact that the election of Donald Trump as president could mean a U.S. policy shift, and there's a watertight case for steering clear." http://t.uani.com/1rJR2sT
Elliott Abrams in WashPost: "Hope springs eternal when it comes to human rights in Iran. The election in 2013 of President Hassan Rouhani, who replaced Mahmoud Ahmadinejad, was supposed to bring improvement. The purported victory of moderates in the recent legislative and Islamic clerics' Assembly of Experts elections was believed to be a positive development. The Iran nuclear deal was described as a setback for hard-liners that might lead to an opening to the world and some relaxation of conditions in Iran. But there has been no improvement in human rights, especially for the Bahais - whom the U.N. special rapporteur on freedom of religion or belief, Heiner Bielefeldt, called the 'most persecuted group in Iran.' Speaking in Geneva in March, Bielefeldt said, 'You will find in all areas of life, there is a systematic discrimination against the Bahais. It starts with kindergarten. Kindergarten staff are supposed to spot Bahais so they can be under special surveillance.' Persecution continues in elementary and secondary education, he added, and 'it would continue in higher education but Bahais are banned from university, and those Bahais who are discovered are removed.' This Saturday marks the eighth anniversary of the arrests of the Iranian Bahai leadership, called the Yaran. These were seven men and women who tended to spiritual and practical community needs (plus the group's secretary, who was arrested March 5, 2008) - and for that 'crime' received 20-year prison sentences. The actual charges against them included 'espionage for Israel,' 'insulting religious sanctities,' 'propaganda against the system' and 'corruption on earth.' Sadly, the situation of Iran's roughly 300,000 Bahais is no better today. In March, a report of the U.N.'s special rapporteur for human rights in Iran noted not only the general decline in respect for human rights but also the continued targeting of Bahais... The continuing and, in many ways, worsening persecution of this small and powerless group - less than one-half of 1 percent of Iran's population - is significant not only as a human rights matter. It is also a sharp reminder of the nature of the Iranian regime. There are of course many other reminders: for example, the two men who ran as reformers in 2009, Mehdi Karroubi and Mir Hossein Mousavi, marked their fifth year under house arrest in February. In 2016, Iran remains a repressive theocracy, quick to jail both political opponents and citizens whose religious beliefs the clerics find objectionable." http://t.uani.com/1X73kau
Yaroslav Trofimov in WSJ: "Walking from classroom to classroom at the Ahl ul Bayt Linguistic Center, which teaches Arabic and Islam, director Ahmed Tijani pointed at his students, a mixture of teens and young adults. 'This one is Shiite, these ones are also Shiite,' he said. 'And these ones, they are still Sunni.' Mr. Tijani, whose office in the Cameroonian capital is decorated with an Iranian flag and a poster of Iran's supreme leader, Ayatollah Ali Khamenei, was also once a Sunni Muslim. Then he made the life-changing choice of enrolling at a similar Iranian-funded academy in the coastal city of Douala. Since converting to Shiite Islam a decade ago, the 39-year-old educator has risen through the ranks, establishing this school in Yaoundé and even visiting Iran on a government-sponsored trip in 2012. 'There is a big difference between Shiite Islam and Sunni Islam,' he said. 'Only the Shiites are spreading the truth.' Such sectarian talk used to be exceedingly rare in much of Africa. So were actual Shiites. The few who could be found in Africa belonged to immigrant communities from Lebanon or the Indian subcontinent. Now, parts of the continent's Sunni Muslim heartland are living through the biggest wave of Sunni-to-Shiite conversions since many Sunni tribes of southern Iraq adopted Shiism in the 19th century... 'The core of the Saudi-Iranian confrontation over power and territory is in the Middle East. But West African Shiites are of symbolic value to Iran, for it to be able to say that its vision of Islam is expanding rather than shrinking. They give Iran more of a claim that they're able to speak for Muslims in the whole world,' said Vali Nasr, dean of the School of Advanced International Studies at Johns Hopkins University and author of a book on the Shiite revival." http://t.uani.com/1UYADfJ