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Cotton Speaks on the Senate Floor About Iranian Access to U.S. Financial Sector

April 7, 2016

When Obama administration officials sold the president's nuclear deal last summer to the American people, they were clearly sensitive to charges that they gave too much away.

They knew that giving Iran $100 billion dollars we could never get back in exchange for a mere temporary deal that expired in 10 to 15 years would be viewed with deep skepticism.

They knew that an inspection system that gives the ayatollahs a 24-day heads-up before an inspection would not pass the laugh test.

They knew that granting the ayatollahs massive sanctions relief while still allowing them to develop an industrial-scale nuclear enrichment program would invite accusations that the president was-to put it frankly-swindled.

So in their sales pitch, these administration officials sought to blunt these expected criticisms. They repeatedly stated that the United States would maintain certain tough sanctions even after the deal became effective.

They said the United States would hold the line on measures that punish and suppress Iran's non-nuclear malign activities.

And they emphatically stated that in no way would the U.S. economy be allowed to bolster an Iranian economy that is significantly controlled by the Iranian regime, tainted by illicit financing of terrorism, and used by the ayatollahs to fund domestic oppression and international aggression-including blowing up hundreds of American soldiers in Iraq with roadside bombs.

In particular, these administration officials were emphatic that the United States would never, ever, ever grant Iran access to the U.S. financial system and the U.S. dollar to facilitate Iran's trade in oil and other goods.

For instance, when testifying before the Senate Foreign Relations Committee in July, Treasury Secretary Jack Lew stated: "Iranian banks will not be able to clear U.S. dollars through New York, hold correspondent account relationships with U.S. financial institutions, or enter into financing arrangements with U.S. banks. Iran, in other words, will continue to be denied access to the world's largest financial and commercial market."

Likewise, Adam Szubin, the Acting Under Secretary for Terrorism and Financial Intelligence, echoed that sentiment, and was even more precise. In September, he stated: "Iran will not be able to open bank accounts with U.S. banks, nor will Iran be able to access the U.S. banking sector, even for that momentary transaction to, what we call, dollarize a foreign payment. ... That is not in the cards. That is not part of the relief offered under the JCPOA. So, the U.S. sanctions on Iran, which, of course, had their origins long before Iran had a nuclear program, will remain in place."

It's difficult to overstate the importance of these statements, uttered just a few months ago.

The U.S. dollar is the standard currency in which international trade is conducted. Because the ayatollahs can't deal in dollars, they haven't fully opened their economy to the world-thankfully. In addition, the U.S. financial system hasn't yet been tainted by Iran's terror financing, its external aggression, and its crackdown on domestic democratic dissent.

But now, a mere seven months into a 15-year agreement, the Obama administration is shedding the resolve its officials tried so hard to display before Congress. According to numerous reports, the administration intends to backtrack on the statements of Secretary Lew and Adam Szubin. It is looking for some way, somehow, to give Iran access to U.S. dollars to boost Iranian trade and investment.

I want to be very clear: if the president moves to grant Iran access to the U.S. dollar-whether directly or indirectly-there will be consequences.

If there is any statement, guidance, regulation, or executive action that opens the U.S. banking sector to Iran even a crack, the Senate will hold hearings with each official who assured the American people last summer that the ayatollahs would never access the dollar. We will explore whether they lied back then or whether they intend to resign in protest now.

If this policy change moves forward, I will dedicate myself to working with my colleagues to pass legislation blocking the change.

And if the Obama administration proceeds with this massive concession to the ayatollahs, every member of the Senate who voted to accept the Iranian deal will have to go home and explain why the U.S. economy is now complicit in Iran's financing of terrorist acts against Americans and American allies.

That the Obama administration would even consider allowing Iran access to the U.S. banking sector is extremely disconcerting. But it's not surprising. It follows a steady pattern that has become increasingly clear since the conclusion of the nuclear deal. Time and again, Iran provokes the United States, commits brazen acts to destabilize its neighbors, and threatens to undo the nuclear deal. And in response, the United States rushes to grant the ayatollahs more concessions in order to placate them.

Iran has tested ballistic missiles, captured U.S. sailors, and fueled conflicts in Syria and Yemen with fresh arms and troops-all while employing "Death to America" as a rallying cry. But in the face of Iran's continued aggression, the president has displayed only weakness. Instead of steeling himself for a fight with the ayatollahs, he has laid down and rolled over for them.

He has repeatedly refused to designate Iran's tests of ballistic missiles the violations of U.N. Security Council resolutions they so clearly are.

The president also agreed to send an additional $1.7 billion dollars to the ayatollahs, ostensibly to settle outstanding claims. For good measure, that $1.7 billion includes $1.3 billion in gratuitous interest payments.

The president granted clemency to seven convicted Iranian criminals and dismissed arrest warrants for 14 Iranian fugitives who faced charges for sanctions violations.

And now, the president may be on the verge of granting the largest concession yet: dollarizing Iran's international trade and declaring Iran truly "open for business."

We should call this for what it is: concession creep. In the same manner that no member of the Senate should trust Iran to abide by commitments it made in the Iranian nuclear deal, we can no longer trust the administration to hold fast to the specific concessions contained in the four corners of that deal. The ink is hardly dry on the deal and the president has already shown himself all too susceptible to the temptations of appeasement.

The ayatollahs reportedly have complained to U.S. officials that it's too hard to transact business without access to U.S. dollars. The answer to that should be: too bad. It should not be easy for the world's worst sponsor of terrorism to do business with the global economy. It should not be easy for industries dominated by the Iranian Revolutionary Guard Corps to trade in financial markets. International business leaders, directors, CEOs, and general counsels should not rush into Iran for fear of the grave reputational, financial, political, and legal consequences of doing business with an outlaw regime.

But the Iranians know that the Obama administration is desperate to preserve the nuclear deal. They hold the possibility of walking away from the agreement as a sword of Damocles over the president's head in order to extract concession after concession. They lord it over him in order to forestall any U.S. action that would meaningfully stop their regional aggression and campaign of terror.

So intense is President Obama's fear that the ayatollahs will rip up the Iran agreement that he has completely disfigured U.S. strategy in the Middle East to the point where adversaries are allies and allies are becoming adversaries.

This parade of concessions must stop, and it must stop now. The administration must fully implement all new sanctions passed by this Congress to punish Iran's development of ballistic missiles, its sponsorship of terrorism, and its human-rights abuses. It must work with our traditional allies in the Middle East to neutralize Iran's attempts to foment instability throughout the region. And the president should issue a very clear order that Iran will not be granted any direct or indirect access to the U.S. banking system and the dollar.