What Can Obama Do?
Six nonmilitary ways the president can influence Iran.
Read more from Slate's coverage of the Iranian election and its aftermath.
Independent of the proposed legislation, 14 states have enacted divestment legislation, and six states have adopted a policy of divesting from Iran.
The indirect target of U.S.-based sanctions legislation is European companies who are feeding Iran's energy and technological infrastructure. President Obama is caught between the Iranian regime and an energy-starved Europe that wants to access Iran's oil fields and to sell sophisticated technology to the regime. Germany is Iran's largest EU trading partner, with about 4 billion euros worth of trade in 2008.
The disclosure that German energy and engineering giant Siemens, along with Finnish partner Nokia, delivered surveillance equipment to the Iranian regime—which it appears to have used to limit Internet, mobile phone, and Twitter use in Iran since June 12—is an unfolding scandal in Europe.
But the German Bundestag refuses to turn the economic screws on the more than 5,000 German firms active in Iran or to pass legislation to curtail its flourishing economic relationship with Tehran. That helps to explain why President Obama retained Stuart A. Levey—who as former President Bush's undersecretary for terrorism and financial intelligence was instrumental in twisting the arms of three German banks (Dresdner Bank, Commerz Bank, and Deutsche Bank) in 2007—to pull the plug on their operations in Iran.
President Obama could also increase the pressure on the Iranian regime by applying sanctions on the Central Bank of Iran. The United States has previously sanctioned the Melli, Mellat, Sepah, and Saderat banks, as well as the Export Development Bank of Iran, because of their support for nuclear proliferation and terrorism. Transactions from the affected banks have been absorbed by the Central Bank of Iran. If President Obama clamps down on the central bank's operations, it could bring Iran's financial system to a standstill. Foreign entities and businesses, which rely on the Central Bank, would be denied access to the U.S. financial system. When faced with a choice between doing business with Iran or with the United States, companies would sever ties with the Iranian regime.
Manhattan District Attorney Robert Morgenthau's office set the creative standard for local entities pursuing rogue banks that are channeling money to Iran. Morgenthau's office prosecuted Lloyds TSB Bank of London for unlawfully enabling Iran to wire several billion dollars to the United States. Lloyds paid a $350 million fine for its financial misconduct in allowing Iranian customers to pay vendors for oil production equipment and missile-based technology with U.S. dollars. The office is apparently investigating 10 other banks, located in "Western Europe, Eastern Europe, and the Far East," for alleged illegal ties to Iran.
The involvement of Revolutionary Guards in the brutal suppression of Iranian protesters allows President Obama to enforce Executive Order 13224 of 2007, which designated the Revolutionary Guards as "global terrorists." German political scientist Matthias Küntzel, a leading expert on German-Iranian economic relations, estimates that 80 percent of Iran's foreign commerce is controlled by the Revolutionary Guards. The full implementation and enforcement of Executive Order 13224 would allow Washington to impose harsh penalties on foreign companies engaged in trade with the Revolutionary Guards.
In other words, President Obama has enough latitude to modify Iran's behavior without resorting to military action. However, the Iranian nuclear clock is ticking, and a pressure-point sanctions strategy requires time. And time is President Obama's enemy.
Benjamin Weinthal is an investigate journalist in Berlin and a research fellow at the Foundation for Defense of Democracies.
Photograph of Mir Hossein Mousavi by Bulent Kilic/AFP/Getty Images.