How Europe Can Pressure Iran

By Michael Jacobson

My colleague Patrick Clawson and I had a piece in today's Wall Street Journal Europe on how the Europeans, and in particular the British, could ramp up the financial pressure against Iran.

The U.S. ratcheted up the financial pressure against Tehran last week, unilaterally slapping sanctions on Iran's powerful Islamic Revolutionary Guard Corp, three state-owned banks, and a number of key officials for their involvement in the regime's terrorist financing and WMD-related activities. Realizing the leverage that American financial markets give Washington, senior U.S. Treasury officials have been telling global financial institutions in the last couple of years that doing business with Iran could do great harm to their reputation and complicate their access to the U.S. market. As a result, a number of global institutions -- including Switzerland's UBS and Credit Suisse and Germany's Commerzbank and Deutsche Bank -- have either terminated or dramatically reduced business with Iran.

There are limits to this unilateral strategy, though. Companies and financial institutions that do not operate in the U.S. may be willing to ignore Washington's warnings. But being cut off from New York and the world's other leading financial capital, London, is a risk not too many of these firms would be willing to take. Few could afford to relocate to a smaller financial hub and miss out on the opportunities only the City of London or New York could offer just to continue doing business with Iran.

To read the rest of the piece, click here

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