The Cable

Geithner: Levey’s departure won't affect policy

The Obama administration's top official for financial sanctions Stuart Levey will step down and be replaced by his deputy David Cohen at the Treasury Department.

Levey will resign next month and the administration will nominate Cohen to replace him next week, a senior administration official told The Cable. Levey has been serving as the under secretary for terrorism and financial intelligence since 2004; Cohen has been assistant secretary for terrorist financing since 2009. The Cable received e-mailed statements from several top Obama administration officials praising Levey's tenure and pledging that the drive will continue unabated to increase and enforce sanctions on Iran, North Korea, and groups that financially support violent extremist groups.

The resignation comes just as the latest round of talks between the P5+1 countries and Iran regarding its nuclear program seem to have sputtered and even Secretary of State Hillary Clinton has indicated more sanctions could be in the offing.

"It will have no effect on policy, or on our ability to execute the President's policy," said Treasury Secretary Timothy Geithner. "David came to Treasury with well established outside expertise and has worked at Stuart's side for the last two years."

Geither said that when the Obama administration took office, Levey had agreed to stay for six months but ended up staying for over two years.

"There's no perfect time for these things. But this is as good a time as any," said Geithner.

Geither called Levey "tremendously effective" and "the best mixture of toughness and creativity," and credited him with convincing a host of public and private actors to join the U.S. government's fight to name and shame organizations that help rogue states and non-government actors finance illicit activities.

For example, Levey's team was instrumental in convincing Japan and South Korea to take step to end their business with Iran's energy sector after President Obama signed new sanctions legislation last July. In 2006, Levey's team led the drive to publicly accuse Macau's Banco Delta Asia of doing laundering money for the North Korean regime.

"Every financial institution anywhere in the world needs to preserve its reputation for integrity in order to do business globally and especially in the U.S....Stuart has been able to use that reality as an incentive to get the private sector to move to reinforce our policies," he said.

White House counterterrorism advisor John Brennan said in a statement that Levey's work had directly degraded the capabilities of those who seek to do the U.S. harm.

"Stuart has helped save lives, and our country owes him a strong debt of gratitude," said Brennan. "While we will greatly miss Stuart's involvement in these ongoing efforts, we are very fortunate to have someone of David Cohen's caliber and in-depth experience to build upon Stuart's outstanding work."

National Security Advisor Tom Donilon said that Levey had elevated Treasury's role in the national security sphere and praised his work on devising and enforcing sanctions on Iran.

"Stuart designed and executed innovative financial strategies for targeting terrorists, proliferators, and other illicit actors, and built an international consensus around the use of targeted sanctions as an effective means of combating threats, pressuring regimes, and safeguarding the financial system," Donilon said.

The Wall Street Journal, which first reported Levey's departure, said that Levey had not yet decided what to do next. Here's how the paper described Levey's tenure:

The Ohio native traveled widely across Asia, the Middle East and Europe to press foreign governments and businesses to cut off their financial ties to Iranian and North Korean entities believed to be involved in weapons proliferation and terrorism. Since 2004, he has also built up Treasury's Office of Terrorism and Financial Intelligence into a major cog in the U.S. national-security apparatus, with more than 700 people involved in activities such as tracking illicit financing and approving export licenses for sensitive technologies.

Treasury officials now have a prominent seat in virtually every national-security debate.

Levey's work on Iran and North Korea sanctions also earned his praise today from Capitol Hill, where sanctions hawk Sen. Joseph Lieberman (I-CT) praised Levey's impact on the overall financial sanctions regime.

"Indeed, what David Petraeus has done for counterinsurgency warfare, Stuart Levey has done for economic warfare -- completely rewriting the book on the subject," Lieberman said.

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The Cable

The latest on the Palestinian U.N. resolution on settlements

The Palestine Liberation Organization, no longer willing to follow the Obama administration's diplomatic lead, is gambling that its latest drive for a U.N. Security Council resolution condemning Israeli settlements will put more pressure on both the Israeli government and the Obama administration.

The U.S. administration, caught between its desire to bring the Palestinians back to the negotiating table and its reluctance to abandon Israel at the United Nations, has not officially decided what it will do if and when the Palestinian resolution ever comes up for a Security Council vote.

"I'm not going to speculate on how we might vote, but we've made very clear both our policy on settlements as well as our belief that action in the United Nations or any other forum is not particularly helpful," said State Department spokesman Mark Toner.

The resolution itself, which has 122 co-sponsors and the support of Security Council members Bosnia and Herzegovina, Brazil, Gabon, India, Nigeria and South Africa, is undergoing several rounds of revision in New York. The Cable has obtained a version of the resolution circulated among U.N. diplomats Jan. 18, which can be found here. Under this draft, the Security Council:

1. Reaffirms that the Israeli settlements established in the Palestinian Territory occupied since 1967, including East Jerusalem, are illegal and constitute a major obstacle to the achievement of a just, lasting and comprehensive peace;

2. Reiterates its demand that Israel, the occupying Power, immediately and completely ceases all settlement activities in the Occupied Palestinian Territory, including East Jerusalem, and that it fully respect all of its legal obligations in this regard;

3.  Calls upon both parties to act on the basis of international law and their previous agreements and obligations, including under the Roadmap, aimed, inter alia, at improving the situation on the ground, building confidence and creating the conditions necessary for promoting the peace process;

4. Calls upon all parties to continue, in the interest of the promotion of peace and security, with their negotiations on the final status issues in the Middle East peace process according to its agreed terms of reference and within the timeframe specified by the Quartet in its statement of 21 September 2010;

5. Urges in this regard the intensification of international and regional diplomatic efforts to support and invigorate the peace process towards the achievement of a comprehensive, just  and  lasting  peace  in  the  Middle  East.

The State Department tried and failed to convince the PLO to not bring up the resolution. U.S. officials asked Palestinian negotiator Saeb Erekat to delay bringing the resolution forward during his trip to Washington last week, the PLO's representative in Washington, Maen Rashid Areikat, told The Cable in an interview. Areikat said the Palestinians hope the United States will eventually come around to support the resolution, but that the PLO had no choice but to proceed.

"The Obama administration cannot tell us not to resort to the U.N. when the international community has failed to stop the illegal settlement activity by Israel which is changing things on the ground," Areikat said. "How long are we supposed to stand by with no results? [The administration] has to tell us what it is they intend to do to move towards a solution to this problem."

Areikat indicated that the Feb. 5 meeting in Munich of the Quartet, which is composed of the United States, the United Nations, the European Union, and Russia, could be an opportunity to head off a confrontation at the Security Council. However, he didn't say outright that the Palestinians would wait that long before calling for further action.

 "They're in no particular rush. They want to see if this can be used as leverage so the U.S. can come in with some other compromise," said Steve Clemons, foreign policy head of the New America Foundation.

But the Obama administration isn't yet ready to come out with a plan for revitalizing the stalled Israeli-Palestinian peace process, Clemons said.

"The administration has been working really hard to move Netanyahu on the settlements and to try to push Abbas into a position to sit down regardless of what was happening on settlements. But there seems to be complete gridlock," he said.

Clemons has been leading a drive among foreign policy professionals in Washington to convince the Obama administration not to veto the resolution.

"If the proposed resolution is consistent with existing and established US policies, then deploying a veto would severely undermine US credibility and interests, placing us firmly outside of the international consensus, and further diminishing our ability to mediate this conflict," read his letter to President Obama, which was signed by several other foreign policy professionals.

Daniel Levy, the co-director of the New America Foundation's Middle East Task Force, explained that Abbas is under intense pressure domestically to show strength vis-à-vis Israel, and absent a more aggressive plan from Washington, has no choice but to pursue international support for the Palestinian cause.

Meanwhile, the Israelis have no plans to stop settlement activity, regardless of what happens with the Security Council resolution. But like the Palestinians, they are also looking to Washington to chart the road ahead for the peace process.

"We're all in a kind of wait and see mode to see what the U.S. administration is planning to do," an Israel official said.