SWIFT, the financial messaging service that transfers money around the global system will be cutting off Iran’s Central Bank, according to Treasury Secretary Steven Mnuchin
‘I understand that SWIFT will be discontinuing service to the Central Bank of Iran and designated Iranian financial institutions,’ Mnuchin said in a tweet. ‘SWIFT is making the right decision to protect the integrity of the international financial system.’
The move is the latest in the US’ plans to exert economic pressure on Iran’s government so that it changes its behavior, observers say.
On Wednesday, Secretary of State Mike said that Iran’s ‘leadership has to make a decision that they want their people to eat. They have to make a decision that they want to use their wealth to import medicine, and not use their wealth to fund destabilizing activities in the region.’
On Monday, the Trump Administration re-imposed all sanctions against Iran that had been lifted while the nuclear agreement was under effect. The US also advised Swift to stop providing services to certain Iranians, treasury officials said. They made it clear they would be willing to force the matter in the event
I understand that SWIFT will be discontinuing service to the Central Bank of Iran and designated Iranian financial institutions. SWIFT is making the right decision to protect the integrity of the international financial system.— Steven Mnuchin (@stevenmnuchin1) November 8, 2018
Last week, Mnuchin had told reporters Swift Could face penalties if it failed to cut off designated institutions. ‘Swift could be subject to sanctions,…Swift is no different than any other entity.’
According to Mark Dubowitz, Chief executive of the Foundation for Defense of Democracies, the decision is targeted at reducing the government’s room to maneuver around sanctions, not to hurt the country’s people.
‘The removal of Iran’s central bank from Swift along with other Iranian banks implicated in terrorism, nuclear and missile proliferation, as well human rights abuses will cut the regime’s access to the global financial system,’ said Dubowitz. ‘This will reduce their options to barter trade or sanctions busting. Treasury, however, has left open humanitarian channels that the regime should use to deliver food, medicine, and other goods to the Iranian people.’
Swift put out a statement after the re-imposition of sanctions saying:
‘In keeping with our mission of supporting the resilience and integrity of the global financial system as a global and neutral service provider, SWIFT is suspending certain Iranian banks’ access to the messaging system,’ the statement said. ‘This step, while regrettable, has been taken in the interest of the stability and integrity of the wider global financial system. Our mission remains to be a global neutral messaging provider.’
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In 2015, while the Obama administration was preparing to engage in diplomatic talks, Swift also disconnected Iran’s Central Bank that time. The efforts led to a 2015 nuclear pact but observers say the Trump administration efforts aren’t likely to have the same success.
They point to the fact Iran has withstood economic pressure before and this time, they say, the US doesn’t have the full support of Europe and other countries.
‘This will create massive problems for Iran, but I don’t think it will paralyze them,’ said Trita Parsi, president of the National Iranian American Council. ‘I don’t think the end effect will be anywhere near the pressure Trump is talking about.’
Referring to the Obama administration’s campaign to pressure Tehran, Parsi said that ‘even back then, when the US had those pressures with international buy-in, that pressure wasn’t enough on its own to get a breakthrough in negotiations.’ He said he believes a US willingness to be flexible with Iran is what eventually led to negotiations.
‘That’s not to say the Iranians won’t be hurting,’ Parsi said. ‘They’ll be hurting, but I don’t see the Iranians capitulating to this.’