|Sanctions matter: Iranian chickens [Image Source]|
The British policy of appeasing Nazi Germany became less tenable when the Bank of England in March 1939 secretly transferred gold reserves it was holding for Czechoslovakia to Hitler's central bank soon after his troops conquered the country. When the transfer became public, the British bankers claimed they had no choice: The Germans had the Czech gold, even if it was gained by force and would fuel the Nazi war effort. Today, finance is conducted digitally, not by moving gold bars from country to country. This makes it possible—so long as banks cooperate—to impose economic sanctions on belligerents like Iran, with its clandestine efforts to acquire nuclear weapons. And this is why there is outrage if sanctions are evaded.His comments are triggered by what happened a few days ago in New York City. Allegations were made that one of the largest British banks, Standard Chartered,
became a "rogue institution" that "schemed" with Iran to cover up illegal transactions, leaving the "U.S. financial system vulnerable to terrorists."Crovitz quotes an unnamed Standard Chartered executive director, explaining his company's actions in technical Wall Street language:
"You f---ing Americans. Who are you to tell us, the rest of the world, that we're not going to deal with Iranians?"WSJ uses its own, somewhat more conventional terms, to explain what was done here:
Standard Chartered bankers inserted "No name given" in the required message field in order to hide the names of Iranian customers... Standard Chartered will have to explain to regulators its alleged "wire stripping," a practice that deleted the names of Iranian banks from the digital records of U.S. dollar wire transfers... Financial sanctions may not work either, but it's not up to bankers to decide whether they like the policy. Just as the Bank of England's reputation suffered by appeasing Hitler, any bank that helps Iran's nuclear ambitions by undermining sanctions deserves all the harm done to its reputation.As to how effective economic sanctions against Iran can be, consider "Tehran’s very fowl summer", a short but illuminating analysis from MacLeans, the Canadian business magazine. It describes how Iranian television has been recruited to warn ordinary citizens in that country of what it calls "a new taboo": the eating of chicken.
Tehran’s police chief Esmail Ahmadi Moghaddam urged networks not to show anyone consuming chicken, lest the images inflame class tensions and lead to violence. “Certain people witnessing this class gap between the rich and the poor might grab a knife and think they will get their fair share from the wealthy,” he said. Ahmadi Moghaddam’s warning comes amid a countrywide chicken shortage, with prices for remaining birds soaring beyond the reach of many consumers. The crisis has been blamed on a combination of economic mismanagement and international sanctions, which make it difficult to do even legitimate business with Iran. At least one ship full of chicken feed reportedly left Iran earlier this year without unloading its cargo because it couldn’t get paid... [A US-based expert says that] because Iran uses its banks to disguise transactions that might violate laws regarding money laundering and financing terrorism, other financial institutions are leery about doing business with them... Iran is increasingly being isolated from the international financial system.Israeli Iran-expert Meir Javedanfar, writing for Bloomberg ["Iran’s Big Crisis: The Price of Chicken"] says Iran's chicken meat prices have tripled since last year.
UPDATE: Late tonight, Israel time (Monday), Standard Chartered reportedly reached agreement [source] with at least some of the American regulators on its tail:
Aug. 14, 2012, 4:01 p.m. EDT
Standard Chartered to pay regulator $340M NEW YORK (MarketWatch) -- Standard Chartered PLC agreed to pay New York’s top banking regulator $340 million, averting a public showdown and ending a weeklong, trans-Atlantic regulatory drama. After a harried week of debate, the U.K.’s fifth-largest bank by assets reached a settlement with New York’s Department of Financial Services. The agreement came eight days after Benjamin M. Lawsky, the superintendent of the New York regulator, accused the bank of illegally scheming over a decade to hide more than 60,000 financial transactions totaling $250 billion for Iranian clients... Four other U.S. regulators that have been probing the bank’s actions weren’t part of the settlement. The U.S. Treasury Department, the Federal Reserve, the U.S. Department of Justice and the Manhattan District Attorney’s office have been negotiating with Standard Chartered since 2011 to reach a settlement over its Iran-related transactions. A settlement between Standard Chartered and the other U.S. regulators is likely “weeks away,” said a person close to the bank. Standard Chartered wanted to settle with all U.S. authorities as a group to assuage investors’ concerns about its exposure to future penalties, but the other regulators didn’t move quickly enough, said the person.