The Cable

Congress prepares to go after all Iranian banks

Coming soon from the Congress that brought you the sanctions against the Central Bank of Iran: new legislation to sanction every single Iranian bank.

Members of both the House and Senate from both parties are moving forward soon with legislation that would expand financial sanctions against Iran to include all Iranian financial institutions -- whether government-affiliated, private, inside Iran, or controlled abroad. According to multiple congressional aides who previewed the legislation for The Cable, this would effectively cut off every Iranian financial institution from the international community -- subjecting any bank that conducts transactions with an Iranian bank or holds money for an Iranian bank to risk losing its own access to the U.S. market.

Currently, only the 18 Iranian banks designated by the U.S. Treasury Department and the Central Bank of Iran are subject to such sanctions -- leaving more than 25 banks free to conduct business with the international community, which the legislations' sponsors see as a major hole in U.S. policy. According to congressional aides involved with the legislation's development, the ban on all Iranian banks would contain a humanitarian exemption, the oil exemptions built into the Menendez-Kirk amendment passed into law last December, and would provide the president with the authority to issue a national security waiver.

The legislation, being developed by the office of Senator Mark Kirk (R-IL) in coordination with other offices, including Rep. Brad Sherman (D-CA) and House Foreign Affairs Chairwoman Ileana Ros-Lehtinen (R-FL), may be offered as early as next week as an amendment to the new Senate Iran sanctions bill that was approved by the Senate Banking Committee last month.

"This would really be a one-two punch combination if Congress extended sanctions to all Iranian financial institutions," one aide involved in the legislation told The Cable. "When you land a clear blow to a boxer's chin, you don't back off and wait to see if he'll fall -- you throw another punch and make sure he does."

Mark Dubowitz, executive director of the Foundation for the Defense of Democracies, a conservative policy organization in Washington, told The Cable that the new measures were necessary to prevent the Iranian regime from simply changing its banking tactics to focus on banks not yet sanctioned.

"Money is like water; it searches for cracks in a foundation exploiting even hairline cracks that provide an entry point," he said. "Existing cracks in sanctions laws are leaving entry points to the global financial system for scores of unsanctioned Iranian financial institutions. This allows the Iranian regime to shift its transactions to those still allowed access and to freely move money through the global financial system."

The full text of the new language is here.

Iran sanctions are extremely popular on Capitol Hill these days. After the Obama administration initially opposed the Kirk-Menendez amendment to sanction the Central Bank of Iran, the Senate added that legislation to the fiscal 2012 defense authorization bill by a vote of 100-0.

Meanwhile, the European Union's high representative for foreign affairs, Catherine Ashton, replied positively via letter today to Iran's Feb. 14 letter on resuming nuclear talks with the P5+1 countries, which included the five permanent members of the U.N. Security Council plus Germany.

According to Ashton's letter, the international community is willing to resume talks with Iran. Those discussions would have to focus on Iran's nuclear program, but initial steps could focus on confidence-building measures between the two sides.

"Looking forward to a sustained aimed at producing concrete results and in order not to repeat the experience of Istanbul, I would propose that we resume our talks at a mutually convenient date and venue as soon as possible," she wrote.

The Cable

Obama administration moves to aid Syrian opposition

The Obama administration is moving to provide direct assistance to the internal opposition in Syria for the first time, marking a shift in U.S. policy toward a more aggressive plan to help oust President Bashar al-Assad.

Last week, a group of senior Obama administration officials met to finalize a package of options for aiding both the internal and external Syrian opposition, to include providing direct humanitarian and communications assistance to the Syrian opposition, two administration officials confirmed to The Cable. This meeting of what's known as the Deputies Committee of the National Security Council set forth a new and assertive strategy for expanding U.S. engagement with Syrian activists and providing them with the means to organize themselves, but stops short of providing any direct military assistance to the armed opposition.

For now, riskier options, such as creating a no-fly zone in Syria, using U.S. military force there, or engaging directly with the Free Syrian Army, are all still off the table. But the administration has decided not to oppose, either in public or in private, the arming of the rebels by other countries, the officials said.

"These moves are going to invest the U.S. in a much deeper sense with the opposition," one administration official said. "U.S. policy is now aligned with enabling the opposition to overthrow the Assad regime. This codifies a significant change in our Syria policy."

The package of options will be debated by cabinet-level officials at what's known as a Principals Committee meeting as early as this afternoon, the two officials said. The principals could endorse the entire package or make some changes, the officials said, although the package does have the consensus of the interagency coming out of last week's Deputies Committee meeting.

The administration is planning to greatly expand its interactions with the external Syrian opposition, led by the Syrian National Council, as well as with internal opposition bodies to include Syrian NGOs, the Local Coordinating Councils, and the Revolutionary Councils that are increasingly becoming the de facto representation of the Syrian opposition. The Free Syrian Army works with these councils, but the administration is not ready to engage the armed rebels directly out of concern that they are still somewhat unaccountable and may have contacts with extremist elements.

As part of the new outreach, the State Department and USAID have been tasked with devising a plan to speed humanitarian and communications assistance to the internal Syrian civilian opposition, working through State's Middle East Partnership Initiative (MEPI) office. There is no concrete plan yet as to how to get the goods into Syria if the Assad regime doesn't grant access to affected areas.

"We're leaving State and USAID to work that out. That's the million-dollar question. We're working on that now," the official explained.

Meanwhile, the administration wants to bolster the new defense committee established by the SNC last week, hoping to solidify that body's prominence as the contact point for coordinating military and technical assistance to the rebels, if a decision is taken later to move in that direction. The FSA has rejected the SNC's defense committee as being part of its chain of command, but for now the Obama administration sees the SNC as a more credible organization with which to explore options to potentially provide military aid.

"The prevailing narrative is enabling the transition while keeping options open for reaching out to the armed opposition," the administration official said. "There is recognition that lethal assistance to the opposition may be necessary, but not at this time."

At last month's initial Friends of Syria meeting in Tunis, Saudi Foreign Minister Saud al-Faisal said that arming the Syrian rebels was "an excellent idea," though there are conflicting reports as to whether and to what extent Saudi weapons and cash were already flowing into the country.

In preparation for the next Friends of Syria meeting in Turkey later this month, the Obama administration has decided not to openly oppose direct military assistance to the rebels as long as it comes from another country, not the United States, one of the administration officials said.

"The decision has been made at the next Friends of Syria meeting to not oppose any proposals to arm the FSA and we're not going to publicly or privately message on that," the official said. "We're not going to publicly or privately tell the Friends of Syria not to do this."

Inside the administration, there is still a consensus that U.S. military intervention in Syria is not wise at this time and there are still voices expressing hope that political transition could take place in Syria without all out civil war.

"It's more about what could be accomplished by intervening. So many questions haven't been answered," another administration official said, expressing the widespread internal uneasiness about involving the U.S. military in yet another war in the Middle East. "There's a chance we could get embroiled in a conflict. What does that do to our preparedness for other contingencies?"

Some in the administration still hold out hope that the Russians can be persuaded to play a more helpful role in Syria. But two officials confirmed that Russian arms deliveries to Syria are ongoing and one administration official said that the latest shipment included large amounts of advanced anti-aircraft missile systems, which are meant to help Syria repel any attempt to establish a no-fly zone.

"What that says is that the Russians are doubling down on Assad. They're preparing for the next step, which is the internationalization of the conflict," one administration official said.

For the critics of Obama's Syria policy, these moves represent a step in the right direction but still fall short of what is needed for the United States to halt the violence.

"I am encouraged the Obama administration is exploring steps to provide direct assistance to Syrians inside their country, but the incremental measures reportedly under consideration still do not come to grips with the fundamental reality in Syria, which is that Bashar al-Assad, equipped and resupplied by Iran and Russia, is now waging an outright war against the Syrian people, who are outmatched, outgunned, and urgently in need of decisive international intervention," Sen. Joseph Lieberman (I-CT) told The Cable today.

Lieberman, along with Sens. John McCain (R-AZ) and Lindsey Graham (R-SC) came out Monday in favor of a U.S.-led intervention in Syria to begin immediately.

"To me this should begin with medical and military assistance for the opposition, including tactical intelligence and weapons, and ultimately should include targeted airstrikes against Assad's bases and forces," Lieberman said. "The United States should help organize such support for the Syrian opposition, but it should be international and include our concerned allies in the Arab League, the GCC, NATO, and the EU."

Lieberman, McCain, and Graham will all have a chance to question the administration on these new moves Wednesday when the Senate Armed Services Committee holds a hearing with Defense Secretary Leon Panetta and Joints Chiefs Chairman Gen. Martin Dempsey.

NSC spokesman Tommy Vietor declined to comment on the administration's internal deliberations.

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