RUTHFULLY YOURS

By now, last summer’s nuclear deal between Iran and the P5+1 countries, including the United States, is widely understood to have been a windfall for the clerical regime in Tehran. The agreement, formally known as the Joint Comprehensive Plan of Action (JCPOA), netted the Islamic Republic some $100 billion in previously escrowed oil revenue, a sum roughly equivalent to a quarter of Iran’s annual economy.

That, however, now appears to be just the tip of the iceberg. Recent days have brought new revelations that the Obama administration is planning still more economic concessions to Iran’s ayatollahs. Specifically, the White House appears to be mulling the possibility of allowing Iran limited access to the U.S. financial system, as a sweetener for its continued compliance with the terms of the JCPOA.

That plan effectively reneges on promises made by the White House last summer in selling the nuclear deal to a skeptical Congress. Back in July, in testimony before the Senate Foreign Relations Committee, Treasury secretary Jack Lew waved away congressional worries that Iran’s regime might be unjustly enriched as a result of the JCPOA. Lew pledged that, regardless of the provisions of the new nuclear deal, the administration was committed to keeping existing, and extensive, trade restrictions in place.

“Iranian banks will not be able to clear U.S. dollars through New York, hold correspondent account relationships with U.S. financial institutions, or enter into financing arrangements with U.S. banks,” Lew promised. “Iran, in other words, will continue to be denied access to the world’s largest financial and commercial market.”

Now, however, the secretary and his colleagues are singing a decidedly different tune. “Since Iran has kept its end of the deal, it is our responsibility to uphold ours, in both letter and spirit,” Lew told an audience at the Carnegie Endowment for International Peace in Washington last week. The message was abundantly clear: For the administration, allowing Iran access to the U.S. market has become an article of good faith.

The practical implications are nothing short of ruinous. As Mark Dubowitz and Annie Fixler of the Foundation for Defense of Democracies have outlined, the administration’s plan is tantamount to an abandonment of the central premise of more than a decade’s worth of U.S. policy toward Iran: that “Iran’s financial sector is a threat to the integrity of the global financial system.” It would also potentially allow Iran’s tainted money to permeate U.S. financial institutions in a way that would fundamentally undermine the global sanctions regime, and ours.

But allowing Iran access to the U.S. financial system isn’t just bad policy; it’s also a potential violation of federal law. That’s because, under the provisions of the National Defense Authorization Act (2012), the White House is required to “block and prohibit” Iranian assets if they “come within the United States, or are or come within the possession or control of a United States person.” The White House’s new plan effectively does the opposite, putting it in conflict with established legislation.

Lawmakers have noted that the administration’s new initiative would fundamentally undermine one of the central pillars of post–September 11 counterterrorism law: the USA PATRIOT Act. Section 311 of the act flags Iran’s entire financial sector, a “jurisdiction of primary money laundering concern.” By doing so, the act serves notice to U.S. corporate entities and financial institutions of the economic hazards and potential consequences of doing business with Iran. Now, however, the administration appears willing to eviscerate that provision in the service of its Iran deal.

Perhaps that shouldn’t be surprising. For President Obama, the JCPOA represents a critical achievement and lies at the center of his administration’s foreign-policy legacy. It stands to reason that the White House believes it must be preserved at all costs. But it is only now becoming apparent that the price the president is willing to pay is nothing less than the integrity of U.S. sanctions.

— Ilan Berman is vice president of the American Foreign Policy Council in Washington, D.C.