Tensions Rise Over Granting Iran Access to U.S. Dollar

Treasury Department officials are moving to reassure Congress that Iran will not be granted access to U.S. financial markets following comments by top Obama administration officials suggesting such a plan was under consideration, according to correspondence obtained by the Washington Free Beacon and conversations with congressional sources.

The administration had promised Congress that Iran would not be granted access U.S. financial markets as a result of the recently implemented nuclear agreement. However, top officials from the State Department had recently discussed the possibility of granting Iran unprecedented access to U.S. dollars when conducting foreign transactions.

The statements triggered a backlash from lawmakers in both parties, necessitating what some described as a cleanup campaign by top Treasury officials.

The interagency tension is coming to light as Obama administration officials have sparred over a recent decision to avoid classifying Iranian ballistic missile tests as a violation of the United Nations resolution governing the nuclear deal, which the Free Beacon reported on Tuesday.

Asked by senior congressional officials last week to explain the discrepancy in the administration’s statements over the dollar issue, the Treasury Department vowed that Iran would not be granted access to the dollar, according to a copy of the exchange obtained by the Free Beacon.

“We aren’t planning on allowing access to the U.S. financial system or making sure that Iran gets U.S. dollars,” the Treasury Department wrote. “We aren’t planning on issuing the general licenses [to foreign banks] that have been described” in media reports.

However, officials will instruct foreign banks on how to release billions of dollars in frozen assets to Iran that have been freed up as a result of the nuclear agreement.

“We will continue to work with banks to make sure they know what is allowed pursuant to the relief that Iran received but also, more importantly, what is still prohibited,” the Treasury Department said. “Those prohibitions are extensive as all of the sanctions except the nuclear sanctions are still in effect, including the secondary sanctions on” the Iranian Revolutionary Guard Corps.

The Treasury Department was pressed to explain whether it would issue licenses to business entities that would facilitate currently-sanctioned transactions with Iran.

“I can’t flatly say that [Office of Foreign Assets Control, or OFAC] won’t be issuing any licenses,” the department said. “As a matter of regular business OFAC issues licenses for otherwise prohibited activity. For example, as part of the [nuclear deal] civilian aircraft parts might be sold and would require a license.”

Frustration among lawmakers over the conflict between the State Department and Treasury Department had already spilled out into the open.

“I’ve actually talked to administration officials who don’t know where those rumors [about U.S. dollar access] are coming from and are somewhat disconcerted by it,” Sen. Bob Corker (R., Tenn.), the chair of the Senate Foreign Relations Committee, said last week. “I talked to [senior Treasury Department official] Adam Szubin last night, who was very reassuring that we are doing nothing to accommodate dollar transactions.”

However, that morning Secretary of State John Kerry had appeared on television and stated that Iran “absolutely” deserves access to the U.S. banking system.

A State Department official who was not authorized to speak on record denied that the administration is at odds with its stance.

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“President Obama, Secretary Kerry, Treasury Secretary Lew, and Acting Treasury Under Secretary Szubin have all spoken very clearly on this, including ‎remarks Szubin made at the Foundation for Defense of Democracies Washington Forum today,” the official said. “We are all on the exact same page.”

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