Report: US gov't shutdown may undermine pressure on Iran

Daily Beast reports some 90% of Treasury Department workers in charge of monitoring illicit Iranian activities furloughed. Expert: If the lights are not on, then the Iranians will engage in massive sanctions busting

Yitzhak Benhorin|Published: 10.03.13 , 10:11

WASHINGTON - The US government shutdown, which has entered its third day, may undermine the enforcement of sanctions imposed on Iran, The Daily Beast reported Thursday, citing administration officials, lawmakers, and experts.

The American news website said the Treasury Department has furloughed approximately 90% of the employees in its Office of Terrorist Financing and Intelligence (TFI), which is responsible for the monitoring of illicit activities and enforcement of sanctions related to several countries, including Iran, Syria, and North Korea. The drastic scaling down of personnel working on those activities comes just as the Obama administration is engaging in its first set of diplomatic negotiations with the new Iranian government, led by President Hassan Rohani.

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The Daily Beast further reported that a subsection of TFI, the Office of Foreign Asset Control (OFAC), which implements the US government’s financial sanctions, has been forced to furlough nearly all its staff due to the lapse in congressional funding.

“As a result, OFAC is unable to sustain its core functions of: issuing new sanctions designations against those enabling the governments of Iran and Syria as well as terrorist organizations, WMD proliferators, narcotics cartels, and transnational organized crime groups; investigating and penalizing sanctions violations; issuing licenses to authorize humanitarian and other important activities that might otherwise be barred by sanctions; and issuing new sanctions prohibitions and guidance,” a Treasury Department spokesman said.

Mark Dubowitz, executive director of the Foundation for the Defense of Democracies, told The Daily Beast that Iran could capitalize on the lack of monitoring and sanctions enforcement to replenish its coffers and advance its nuclear program while no one is looking.

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“If the lights are not on, then the Iranians will engage in massive sanctions busting to try to replenish their dwindling foreign exchange reserves,” he said. “If you don’t have the resources to investigate, identify, and designate the tens of billions of dollars of Iranian regime assets, then you’ve extended the economic runway of the Iranian regime and increased the likelihood that they could reach nuclear breakout sooner rather than later.”

On Wednesday the State Department said a prolonged US federal government shutdown could delay military assistance to Israel and other American allies.

"The State Department's ability to provide military assistance to Israel and other allies in the time frame that is expected and customary could be hindered, depending on the length of the shutdown," State Department deputy spokeswoman Marie Harf told a news briefing.

President Barack Obama met with Republican and Democratic leaders in Congress on Wednesday to try to break a budget deadlock that has shut wide swaths of the federal government, but there was no breakthrough and both sides blamed each other.

After more than an hour of talks, House of Representatives Speaker John Boehner said Obama refused to negotiate, while House Democratic Leader Nancy Pelosi and Senate Majority Leader Harry Reid accused Republicans of trying to hold the president hostage over Obamacare.

Reid said Obama told Republicans "he will not stand" for their tactics. The White House later issued a statement saying that Obama remains hopeful that "common sense will prevail."

There was little to encourage hope for a quick solution to the two-day-old shutdown and hundreds of thousands of federal employees remained off the job without pay.

Leaders of the Republican-controlled House of Representatives and the Democratic-led Senate offered token concessions that were quickly dismissed by the other side. Obama, meanwhile, scaled back a long-planned trip to Asia.

Republicans have tried to tie continued government funding to measures that would undercut Obama's signature healthcare law. Obama and his Democrats say that is a non-starter.