William Katz:  Urgent Agenda

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IRANIAN THREAT – AT 9:28 A.M. ET:  We're constantly being told that sanctions against Iran are "working."  I wonder what that word means.  There appears no evidence that the sanctions are stopping the Iranian nuclear program.  And now we find that Iran is still attempting to get around those sanctions.  From The New York Times:

Despite onerous sanctions that have basically shut Iran out of the global financial system, the country is still finding some ways to bypass them, the Treasury Department said Thursday, describing what it called a small but “emerging threat” to the effectiveness of the sanctions effort.

Adam Szubin, director of the Treasury’s Office of Foreign Assets Control, which supervises American enforcement of the sanctions, said the Iranians were using private exchange houses and trading companies in other countries, masking transactions with fake identities and relying on the paperless practice known as hawala, common in parts of the Middle East and Asia, in which money is transferred informally and often illegally through trustworthy couriers.

Mr. Szubin’s office issued an advisory on Thursday aimed at informing American financial institutions about what it called Iranian evasion techniques to circumvent the sanctions, which have been greatly intensified partly in response to Iran’s disputed nuclear program. Iran says the program is for peaceful use, while Western nations and Israel suspect it is meant to develop the ability to make nuclear weapons.

The most vexing sanctions, from Iran’s viewpoint, are financial prohibitions that have blacklisted many Iranian banks, denied them access to international money and credit channels and severely restricted Iran’s ability to sell oil, the most important Iranian export. A new law signed by President Obama this month expands the sanctions to include shipping, shipbuilding and energy concerns, which are likely to hurt many Iranian industries, including construction, machinery and automaking.

In a conference call with reporters, Mr. Szubin described the sanctions as a large achievement that had left Iran “almost without recourse through ordinary banking channels.” At the same time, he said, “Iran is adapting.”

COMMENT:  That is the point.  Countries adapt to pressure.  We bombed Germany relentlessly in World War II, but the Germans learned to put manufacturing facilities underground.  In turn, the Germans placed enormous military pressure on the Soviet Union, which had a third-world economy.  But the Soviets learned to direct their economic resources toward the war effort, and enveloped the Nazi armies in the East. 

This may be crunch year for the Iranian nuclear program.  They may pass the point where stopping them may be almost impossible.  What will we do?  What will John Kerry and Chuck Hagel recommend?  Chilling, isn't it?

January 11, 2012