Treasury Department Official Says Efforts by Congress to Impose Extraterritorial Sanctions on U.S. Subsidiaries are Counterproductive
In a recent speech at the Washington Institute for Near East Policy, Deputy Treasury Secretary Robert M. Kimmitt said that efforts to encourage international support for public and private sector financial sanctions on Iran for pursuing nuclear and missile programs are working. He also called efforts by some members of Congress to impose sanctions on U.S. subsidiaries for doing business in Iran as counterproductive.With respect to actions by foreign governments, Kimmitt noted:
We have worked closely with our fellow finance ministries and central banks abroad to build consensus on these financial measures, and the effect has been striking: international partners who originally resisted the idea of applying sanctions on Iran have reversed this position and now support pressuring the Iranian regime to renounce its support for WMD proliferation and to comply with its international obligations.Kimmitt also indicated that efforts to engage the international financial sector are also showing results. Specifically, he said that:
Finally, Kimmitt criticized the current efforts by certain members of Congress to impose U.S. sanctions on subsidiaries of U.S. companies for doing business with Iran:
We have learned that the Swiss bank UBS cut off all dealings with Iran, and Credit Suisse and HSBC have also significantly limited their exposure to Iranian business. A number of other foreign banks are refusing to issue new letters of credit to Iranian businesses. According to the banks, these were business decisions, pure and simple - handling Iran's accounts was no longer good business. Multinational corporations have also held back from investing in Iran, including limiting investment in Iran's oil field development.
Members of Congress are considering a number of legislative options, including application of U.S. sanctions to the business activities of foreign subsidiaries of American companies; mandatory divestment from companies doing business with Iran; and having the government "name and shame" firms – both domestic and foreign -- that do business with Iran. While these proposals are certainly well intended, they could have significant counter-productive policy implications. Our shared goal is to pressure the Iranian regime to change its behavior, and the best way to achieve this objective is to keep the focus on illicit conduct and maintain as broad an international coalition as possible. Yet many of these proposed measures may be seen by our allies as extraterritorial U.S. Government action and could affect our ability to obtain their cooperation on mutual action with respect to Iran.