Germany's largest bank, Deutsche Bank, recently announced that it will soon cease doing business with Iran. The action follows a similar move by Germany's second largest bank, Commerzbank. Both firms state that they are withdrawing from Iran because operations there are uneconomical, denying they were caving to political pressures.
Over the past year, U.S. Treasury officials have been meeting with representatives of governments and private institutions in Europe, Asia, and the Middle East to discuss the risks of conducting business with Iran. They have cited Iran's nuclear proliferation activities and its sponsorship of terrorism. Financial institutions in Switzerland, Britain, and Japan have also decided to cut ties to Iran.
U.S. State Department spokesman Sean McCormack says these actions have been "significant":
"Countries are reducing their export credits to Iran. And more importantly, you're seeing important international financial institutions, banks, investment houses, looking twice at whether or not they are going to do business in Iran and do business with Iranian entities."
Mr. McCormack says the reason is that these financial institutions value their reputation:
"And if you have an institution that is involving itself even unwittingly in illicit transactions with Iranian entities, their international reputation suffers, therefore their business suffers. So they are taking business decisions that they are. . . .either not going to involve themselves as heavily, or at all, in doing business with Iran."
U.S. Secretary of State Condoleezza Rice says this is contributing to Iran's isolation. She says, "We have to bring pressure on that regime to change its policies."
The United Nations Security Council has passed two resolutions imposing sanctions on Iran because Tehran has refused to suspend uranium enrichment and reprocessing. Once Iran complies with its Nuclear Non-Proliferation Treaty obligations, the Security Council will be able to suspend those sanctions and the Iranian people will reap the benefits of the incentives package that the United States, France, Germany, the European Union, Russia, and China have collectively offered Tehran on its civilian nuclear program, as well as in the fields of transportation, medicine and agriculture. Until Iran changes its ways, the international community must consider additional measures to pressure Iran to stop ignoring its nuclear responsibilities.