The Bush administration may promulgate new sanctions against entities that do business with sanctioned firms suspected of trading in WMD or assisting terrorist groups around the world. Existing sanctions target the firms or entities themselves, but the new concept is to expand that ring one level outward to encompass anyone doing business with those firms:
The Bush administration is planning new measures that would target the U.S. assets of anyone conducting business with a handful of Iranian, North Korean and Syrian companies believed by Washington to be involved in weapons programs, administration officials said yesterday. …
But the draft executive order goes far beyond previous measures by threatening the U.S. assets of individuals or companies, including foreign banks, that do business with those on the list.
“If there is a bank in some European capital that is participating in working with one of the entities and that bank has some assets in the U.S., it is conceivable that some action could be taken to the bank’s assets here,” said one senior official with knowledge of the order’s details. Russian and Chinese companies in particular, which do enormous business with Iran and North Korea, could be more affected than others by the new strategy, officials said.
This move would eliminate the dodge used by traffickers in leveraging their relationships with legitimate financial institutions to launder cash and assets. It intends to take out a portion of the dual-use excuse as well, simply by declaring any work with these companies violates our anti-terror sanctions and risks a freeze on American assets. This order provides a strong economic incentive for global financial institutions to stop doing business with proliferators.
This strategy doesn’t come without risk, however. As Dafna Linzer reports, the vast majority of financial actions taken by the US in the aftermath of 9/11 went unchallenged due to excellent intelligence; most of those targeted wouldn’t dare show up in an American courtroom to reclaim frozen assets. That certainly wouldn’t be the case with the next level, which have legitimate interests and won’t fold up the tents to go on the lam. The US would have to produce the evidence in court to substantiate the claims, which might wind up harming intelligence operations.
The order sounds like a good idea, even as a tool rarely used but always at the ready. Its deterrent value would provide some needed leverage for greater cooperation in tracing money and assets back to terrorist operatives. Hopefully, it would rarely result in a court action but instead serve to remind financiers that terrorism doesn’t pay.