Iran Sanctions: Private Sector - UPDATE

In a testimony today at Senate Foreign Relations Committee, Stuart Levey, the top US Treasury Department official overseeing financial sanctions against Iran, spoke of Iranian vulnerabilities against private sector initiatives.

"Virtually all major financial institutions have either completely cut off or dramatically reduced their ties with Iran," said Levey. “Voluntary actions of the private sector amplify the effectiveness of government-imposed measures.”

Levy told the Senate committee that firms in the insurance, consulting, energy and manufacturing sectors were making decisions similar to banking institutions cutting off their ties with Iran.

The Foreign Relations committee was discussing accompanying unilateral sanctions against Iran beyond those imposed by the UN. The Congress is moving toward targeting American and non-American firms that sell goods, services or know-how to Iran’s energy sector, including insurance, financing and shipping companies. The centerpiece of the proposed new legislation is an effort to choke off Iran’s import of refined oil products, including gasoline.

Levey warned the senators, however, not to see these sanctions as a cure-all, considering Iran had braced itself for such sanctions for the past year or so. Oil-rich Iran lacks extensive domestic refining capabilities which leaves it heavily dependant on imports of gasoline, jet oil and other refined products to meet domestic demands

“This is a vulnerability and we think it's one that could be exploited,” said Levey. “It's not a silver bullet.”

The US officials believe that Iran has already decreased its dependence on gasoline imports to 25 percent of domestic consumption, instead of 40 percent a few years ago. However, that figure is still too high for comfort on the part of the Iranian leadership.

"We do know that the Iranian leadership is quite concerned," said Levey.

Source: AFP

Stuart Levey is the US Undersecretary of Treasury for Terrorism and Financial Intelligence.

UPDATE: US Congress passed Iran sanctions on Thursday 24 June by a vote of 408-8. Earlier in the day, the US Senate had passed the same bill by a vote of 99-0. President Obama is expected to sign the bill into law.