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EU to tighten screws on Tehran banks
Bank Melli, Iran's biggest commercial bank, is set to be banned from operating in the European Union under proposals in the final stages of discussion in Brussels.
- By Daniel Dombey, Financial Times
- Published: 23:39 May 16, 2008
Washington: Bank Melli, Iran's biggest commercial bank, is set to be banned from operating in the European Union under proposals in the final stages of discussion in Brussels.
At present, the bank operates branches in the City of London, France and Germany, so blunting American calls for other jurisdictions to break off ties with Iranian institutions, particularly in the Gulf. "It is important for the EU to come to agreement on stepping up financial pressure on Iranian banks as a means of demonstrating to the Iranian regi-me how seriously we take their nuclear proliferation," said a European diplomat.
But the time and effort it has taken to get agreement on the move, which comes after a year-long push by the US and its allies, highlight the problems Washington may face in its quest to win international support for tougher sanctions and so convince Tehran to rein in its nuclear programme.
"Many people around the world are looking to Europe on this issue," Stuart Levey, US treasury undersecretary, said. "What Europe does is quite important."
US effort
The US effort dates back to last summer, when negotiations began on a UN Security Council resolution that Washington and its allies wanted to prevent Melli and another Iranian bank, Bank Saderat, from doing business internationally.
In October, the Bush administration intensified its effort with unilateral sanctions against a number of Iranian institutions - including both Melli and Saderat - measures that Washington pushed other jurisdictions to emulate. "We call on responsible banks and companies around the world to terminate any business with Bank Melli, Bank Mellat [another Iranian bank], Bank Saderat, and all companies and entities of [Iran's] Islamic Revolutionary Guards Corps," Hank Paulson, US treasury secretary, said on that occasion.
However, Washington found itself caught in a "catch-22" when it pushed the UK, its closest ally, to close Melli and Saderat's operations in London. Britain said it could act only as part of a general EU decision and, within the EU, countries such as Germany, Austria, Spain and Italy called for a UN decision before they would proceed.
Seeking to break the impasse, the US, Britain and France finally won agreement on a UN Security Council resolution in March that merely called on member states to exercise "vigilance" over Iranian banks, especially Bank Melli and Bank Saderat, due to what it said was their link to Iran's nuclear programme.
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