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U.S./World

'Financial equivalent of United Nations' may ban Iran

| Saturday, Feb. 18, 2012

BRUSSELS -- An international banking clearinghouse crucial to Iran's oil sales said on Friday that it is preparing to discontinue services to Iranian financial institutions, an unprecedented and potentially devastating blow to Tehran as the West ramps up a campaign to stop its nuclear program.

The statement by the Society for Worldwide Interbank Financial Telecommunication, known as SWIFT, suggests that the European Union -- under pressure from Washington -- is close to approving regulations that will require the Brussels-based hub to evict Iranian institutions from its ranks.

"If SWIFT follows through on its public commitment to ban Iranian banks, it could sever the Iranian regime's financial lifeline," said Mark Dubowitz, an Iran sanctions expert advising the Obama administration. "It would also be a significant political embarrassment for the regime: Iran would be the first country in SWIFT's history to be expelled from what is the financial equivalent of the United Nations."

Getting Iranian financial institutions barred from SWIFT would leapfrog the slow-pressure campaign of sanctions aimed at getting Tehran to drop its desire for nuclear weapons. It also could help the United States persuade Israel not to open a pre-emptive military strike on Iran in the spring.

Established in 1973, the essential but little-known financial hub operates on trust and neutrality -- SWIFT accepts nearly all comers and does not judge the merits of the transactions passing through its secure message system. More than 40 Iranian banks and institutions use SWIFT to process financial transactions, and losing access to that flow of international funds could badly damage the Islamic republic's economy. It probably would hurt average Iranians more than the welter of existing banking sanctions in place because prices for household goods would rise while the value of Iranian currency would drop.

Some American lawmakers have been pushing for sanctions on SWIFT if it keeps up its services to Iran. SWIFT lawyers are planning a trip to Washington next week for meetings with Congress, and the announcement yesterday was widely seen as a way to head off that action.

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