The Political Conundrum!

In the first letter of its kind from an Iranian leader to an American president elect since the Iranian revolution, Iranian President Mahmoud Admedinejad congratulated President Elect Obama on his victory and called for an end to America's "war-oriented policies, occupation, bullying, deception and intimidation of nations and imposing discriminatory policies on them and international affairs, which have evoked hatred toward American leaders." Other Iranian officials have been more specific, calling for Obama to show goodwill by ending U.S. sanctions on Iran. That, however, is unlikely to happen.

Yesterday the Treasury department made clear there would be no change in direction (no U-turn, if you will) from the current policy of exposing -- and taking countermeasures against -- the involvement of Iranian banks in the regime's support for terrorist groups and nuclear and missile proliferation. Following the recommendation of the Financial Action Task Force (FATF) to strengthen measures to protect the financial sector from the risks posed to the international financial system by Iran, the Treasury revoked the "U-Turn" license under which Iran had previously been able to indirectly access the U.S. financial system to dollarize transactions.

Treasury also provided an updated fact sheet detailing Iran's misuse of the international financial system to support illicit activities.

As I argued in a recent lecture on the subject at the Emirati Center for Strategic Studies and Research (ECSSR) in Abu Dhabi, by exposing Iran's deceptive financial conduct in support of its illicit activity, the international community has made it clear that doing business with Iran is increasingly risky business.

The Obama administration, focused as it is on fully deploying an "all elements of national power" national security strategy, is likely to further develop the use of financial tools in the national security toolkit, not reduce them. One area to watch in the near future is the extrapolation of these tools beyond the financial sector to other sectors -- such as the insurance sector -- that provide other forms of "financial instruments" to Iran that may already fall under the existing language of UN Security Council Resolution 1737.