Oct 26, 2018

With crippling sanctions set to resume next month, the Donald Trump administration is debating how far to go in cutting off Iran from the global financial system. Treasury Secretary Steve Mnuchin has told foreign governments that Washington is backing off its push to force the Belgium-based financial messaging network SWIFT to kick out sanctioned Iranian banks, the Wall Street Journal reports. Iran rejoined SWIFT as part of the nuclear deal in 2016 after it was kicked out in 2012 amid increased sanctions pressure from Washington.

Why it matters: The SWIFT question is part and parcel of the Trump administration’s upcoming oil sanctions, which would force other countries to cease importing Iranian petroleum. If the United States grants waivers to certain countries allowing them to continue Iranian oil imports, SWIFT would be integral to facilitating those transactions. That's why anti-Iran hard-liners in the US administration want to threaten SWIFT board members with sanctions should they enable Tehran to conduct financial transactions.

What’s next? The European Union is moving ahead with an alternative “special purpose vehicle” to facilitate transactions with Iran. The EU announced that it would be “symbolically” ready when US oil sanctions take effect on Nov. 4, but will not be operational until next year. Meanwhile, the United States is expanding the scope of sanctions on Iranian banks, with new penalties imposed this week on Parsian Bank for connections to the Islamic Revolutionary Guard Corps.

Know more: Read Bijan Khajehpour’s assessment of how well the EU’s planned special purpose vehicle would work as an alternative to SWIFT.

-Bryant Harris