Envoys from the Treasury Department have approached international banks and companies, reminding them of Iran's record of financing militant Islamic organizations such as Hamas, in the Palestinian territories, and Hezbollah, in Lebanon, through the banking system and its defiance of U.N. resolutions on nonproliferation, and warning that investing in such a country may not be a good business risk.
Simultaneously, the Justice Department reportedly has opened investigations of several banks to determine whether investments in Iran violated U.S. sanctions laws. In late 2005, Dutch bank ABN Amro agreed to pay $80 million in fines stemming in part from improper transactions with Iran through its subsidiary in Dubai, United Arab Emirates.
UBS Bank and Credit Suisse of Switzerland recently announced they were suspending most new business with Iran, and British-based HSBC said it would no longer accept dollar transactions from within Iran.
"Banks are constantly doing risk assessments about what kind of business they want to be involved in," Stuart Levey, Treasury undersecretary for terrorism and financial intelligence, said in a telephone interview.
"There's a lot out there suggesting that there's an element of coercion involved. But I think that for a lot of these executives, the main thing driving them is they really don't want to be involved in facilitating terrorism or proliferation or any other crime."
More than two decades of U.S. sanctions have had little effect on Iran's oil industry -- U.S.-based companies have been replaced, largely by Europeans. But this new attack on financing has rapidly started to dry up potential loans on dozens of projects, according to oil industry insiders in Tehran and the West.
One of them is reportedly the giant Azadegan oil field in southwestern Iran near the Iraqi border. Japan's INPEX Holdings Inc. in October pulled out of all but a 10% stake in the $2-billion project under U.S. pressure, and alternative financing from foreign banks has failed to materialize, said one source with close connections to the Iranian Oil Ministry.
"It has been very effective. Nobody is prepared to loan Iran anything on anything," said Fereidun Fesharaki, an energy advisor to the Iranian prime minister in the 1970s who now heads the FACTS Inc. petroleum consulting firm in Honolulu.
