U.S. Treasury Secretary Henry Paulson says that certain countries are exploiting the global financial system to pursue dangerous policies. One of the worst of these "bad actors," he says, is Iran:
"It is well known that Iran is pursuing nuclear weapons in violation of international agreements and channeling hundreds of millions of dollars to terrorist groups."
Until recently, many governments, financial institutions, and private enterprises were unaware that Iran uses subterfuge to exploit the system. The U.S., says Mr. Paulson, developed a dossier catalogue describing the range of Iran's deceptive conduct:
"We explained how Iran uses front companies and other mechanisms that make it difficult, if not impossible, for businesses dealing with Iran to 'know their customer' or counterparty. We also explained how the Iranian regime uses its state-owned banks to pursue its missile procurement program and nuclear programs, as well as to fund terrorism."
Mr. Paulson says that today financial institutions are much more sensitive to the "substantial risks posed by doing business with Iran":
"Most of the world's top financial institutions have now dramatically reduced their Iranian business or stopped it altogether. For the most part, they are not legally required to take these steps but have decided, as a matter of prudence and integrity, that they do not want to be the bankers for such a regime."
Mr. Paulson says the United States now wants to highlight the destructive role played by Iran's Islamic Revolutionary Guard Corps, or I-R-G-C, a paramilitary arm of the regime:
"It has been directly involved in the planning and support of terrorist acts, as well as funding and training other terrorist groups to pursue the military objectives of the regime. . . . The I-R-G-C is so deeply entrenched in Iran's economy and commercial enterprises, it is increasingly likely that if you are doing business with Iran, you are somehow doing business with the I-R-G-C."
Financially isolating Iran's clerical regime imposes costs on the U.S. and its allies, says Treasury Secretary Paulson. But, he says, "It would be far less costly than a nuclear-armed Iran."