Iran Video and Transcript: Top US Official Stuart Levey on Sanctions

Stuart Levey, Under Secretary for Terrorism and Financial Intelligence in the US Treasury, spoke for 50 minutes with Charlie Rose of the US Public Broadcasting Service on Wednesday about sanctions and economic pressure. The video is available on the Charlie Rose website.

Much of the discussion was about Washington's strategy and tactics and Levey's assessment of the economic and political effects on Tehran. Whether or not one agrees whether sanctions are working, or indeed whether it is the right approach to Iran, the interview is a revelation of how the Obama Administration has pursued the approach --- note Levey's "personal diplomacy" with dozens of trips to foreign governments, companies, and banks --- and its belief that the measures are working:

CHARLIE ROSE: How bad is their economy today?

STUART LEVEY: It’s interesting, because I think their economy is a lot worse than they try to present it as being.

CHARLIE ROSE: If you ask Ahmadinejad, it’s fine, we’re doing fine, and everybody is happy.

STUART LEVEY: Right, they want more sanctions.

(LAUGHTER)

CHARLIE ROSE: Clearly they don’t want sanctions.

STUART LEVEY: Clearly.

I think the key thing to look at in their economy are a couple things. The isolation from the financial system is very significant and it has an effect on lots of different aspects of ---

CHARLIE ROSE: They can’t get credit, they can’t get working partners, they can’t get a whole lot of stuff.

STUART LEVEY: Right. They can’t do normal transactions. And while they may be able to obtain -- they may be able to do certain transactions in cash or the informal financial system, they can’t run an economy like that.

They’re unable to attract investment, especially in their oil and gas industry. And this had been --- that effect has been accelerated by the sanctions over the summer both by the U.N. then by the EU, which has forbidden new investment in Iran’s energy sector, and then by unilateral sanctions from the United States Congress, which has imposed the possibility of sanctions for anyone who participates in the sector. So they’re unable to attract this investment.

Their oil production was already stagnating prior to this sanction because they were unable to attract investment. This is by their own admission. And then you add on top of it sanctions, and they’re unable to develop these oil and gas field which is their future. This is their primary economic enterprise in Iran.

TRANSCRIPT

CHARLIE ROSE: Stuart Levey is here. He is undersecretary for terrorism and financial intelligence at the Treasury Department. He has held that position since 2004 when President George W. Bush created it in the aftermath of 9/11.

He is one of very few senior Bush administration officials to be retained by President Obama. He oversees the office that makes it hard for terrorist networks in countries like Iran and North Korea to conduct business.

Treasury Secretary Tim Geithner has called him "the chief architect of the U.S. effort to cut Iran off from the international financial system."

I am very pleased to have with me here in Washington Stuart Levey.

Thank you for coming. It’s a pleasure to have you on the program.

STUART LEVEY: Well, thank you for having me Charlie.

CHARLIE ROSE: Let’s just start with this. Tell me what your job is.

STUART LEVEY: The title is sort of a mouthful. I’m the undersecretary for terrorism and financial intelligence. The job was created in 2004, and it’s my job to look at a whole variety of threats to the United States, whether they’re terrorist organizations, drug trafficking organizations, proliferation of weapons of mass destruction, rogue regimes, other challenges to the United States -- money laundering, and look at the networks that underlie those threats.

I develop especially the financial networks, try to develop the intelligence on those financial networks and then use that advantage point to both map out the network so we learn more about it, and pressure the target, whether it’s in any one of those examples.

And we have found that by focusing on the financial networks of these various threats that we’re able to both learn a tremendous amount about them --- financial intelligence is really quite reliable and actionable and concrete -- and that it is a real vulnerability that we can use to pressure them. We’ve seen that in a number of contexts.

CHARLIE ROSE: One of the things that you seem to have done which gets a fair amount of attention is appreciate the pressure that can be brought on the private sector on corporations that do business with a regime.

STUART LEVEY: Yes. Well, I think that’s exactly right. One thing that we have learned over time is that when you’re trying to generate pressure on a particular regime that is violating its international obligations, for example, like Iran and North Korea, that in order to make that pressure really work, you need not only a coalition of government bus you need a coalition of the private sector.

And by focusing on that private sector aspect and focusing in particular on things that will make the private sector work with you, we can dramatically increase our success.

To be more specific about it, it usually means focusing on particular bad conduct by the target. So in the case of Iran or North Korea, we focus on their nuclear program, their missile program, in Iran’s case, their support for terrorism.

And we expose it and we bring that to the attention not only of governments, but we bring it to the attention of the private sector, particularly financial institutions that are very sensitive to their reputational concerns. And we find that when we do that, they will work with us and amplify the effect of our sanctions.

CHARLIE ROSE: This would include banks, this would include oil companies, this would include a range of businesses that have a relationship?

STUART LEVEY: It would. But I have to say that the financial institutions are perhaps the most sensitive. And a lot of it depends on the financial services industries which is maybe why ---

CHARLIE ROSE: You can shut that down and the company is in trouble. STUART LEVEY: Exactly. Exactly. If a country that we’re targeting --- like Iran in this case --- can’t getting access to financial services from banks around the world, then that has a dramatic ripple effect across its --- across a whole commercial sector. And that is exactly the effect that we’re seeing now in some respects with respect to Iran.

CHARLIE ROSE: So where do sanctions work?

STUART LEVEY: Well, look, this is a very important question, and nobody says it’s easy. And I’m not here to say or going anywhere to say that this kind of thing is easy.

What I can say is that sanctions can help us create leverage for diplomacy so that we have a better chance of achieving peaceful diplomatic outcome.

And by focusing on the conduct that a regime like Iran is engaged in, we can bring pressure on the people who are engaged in it and have these ripple effects that we just talked about. That’s the first thing. And then generate the kind of discussion internally where they want to get out from under that pressure.

And that is the process by which we do obtain leverage, and I think that we are already obtaining leverage in the case of Iran.

Now, in the end, you have to admit that there’s a certain uncertainty here. I mean, there is a decision that their leaders will have to make. But what we are doing is making a very stark choice, presenting them with a very stark choice.

They can either proceed down the path that President Obama and the other allies have offered, which is one that offers integration and commercial and political integration back with the international community predicated on them living up to their international obligations, or they can continue down this path of increasing isolation and hardship.

And the more stark we make the choice, the better chance we have of achieving the leverage we need.

CHARLIE ROSE: So does the argument have merit that you are playing into their hands in part, that they will use this in order to build their own support internally, saying look at those bad Americans, what they’re trying to do to us?

STUART LEVEY: Look, there’s an argument that says that. I don’t think it’s an argument that’s ultimately persuasive because in this case, first of all, we don’t see the people of Iran rallying against the United States because of sanctions.

I think Iran right now is feeling a tremendous sense of isolation from the financial sector, from the banking sector in particular. If I look back and think about when we first started looking at Iran’s financial misconduct, and, as I said before, pointing out their illicit conduct to governments in the private sector around the world, when we first started doing that Iran had access to financial services from all the major financial institutions across Europe and Asia.

I look now and they essentially don’t have access to financial services from reputable banks anywhere. That has a tremendous impact on their commercial sector and ultimately the kind of ripple effect we’ve talked about.

And it’s precisely because the way Iran is reacting to the sanctions that I don’t think it will have that solidifying of power effect that you’ve talked about.

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