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How The Swiss Are Making The Oil Embargo ‘No Big Deal’ For Iran

by F. Michael Maloof, Former Senior Security Policy Analyst in the Office of the U.S. Secretary of Defense, and Former Aide to Chairman of the Defense Policy Board of U.S. Department of Defense

April 26, 2012 (TSR) - The Swiss Foreign Ministry has dismissed the U.S.-led oil and financial industry embargoes against Iran and will allow the Iranian Central Bank to conduct business activities there despite Western concern over Iran’s nuclear development program.

It also will continue the import of Iranian oil, according to Rudolf Christen of the Swiss Federal Department of Foreign Affairs.

“The Swiss decision now to allow transactions by the Iranian Central Bank undermines the U.S.-driven financial sanctions,” according to Hague-based Heinrich Matthee. “Swiss-based actors will benefit from the decision.” Switzerland’s decision puts it at odds with other European countries.

Members of the European Union are slated to boycott Iranian oil beginning July 1 as a further tightening of sanctions due to Iran’s nuclear program, which Iran insists is for peaceful purposes. Switzerland is bound as a member of the United Nations to honor sanctions it has imposed. However, the U.N. never called for a boycott of either Iran’s oil or its central banking system.

Those sanctions were imposed by the U.S. and the E.U. While Switzerland isn’t a member of the E.U., it has in recent years gone along with E.U. sanctions in an effort to harmonize laws with its main trading partners. Meantime, the United States along with China, France, Germany, Russia and Great Britain recently met in Istanbul, Turkey, with Iranian officials in what was described as a positive exchange, with an agreement to continue discussions on May 23 in Baghdad, Iraq.

The Iranians have dusted off an older proposal for countries such as Turkey and Brazil to provide enriched uranium for its medical work and to fuel its reactors, as a compromise to deal with the standoff over Iran’s enrichment of uranium, which Tehran insists as a signatory to the Nuclear Non-Proliferation Treaty it has a right to do. If such an agreement, or something similar to it, can be reached, Tehran wants all sanctions lifted. Meantime, Iran has issued another warning that it will cut off oil exports to Europe if the E.U. doesn’t show what Iran’s Oil Minister Rostam Qassemi calls flexibility ahead of the second round of nuclear talks in May.

The Islamic republic already has cut some oil sales to Britain and France. At the same time, Iran is imposing a divide and conquer routine by pressuring such countries as Italy, Spain, Greece, Portugal and the Netherlands, which are very dependent on Iran’s oil, to protest the E.U.’s unilateral sanctions. Iran is under increasing risk of an attack from Israel or the U.S. if sanctions fail to move the process toward a compromise acceptable to the West.

As G2Bulletin previously reported, several countries, especially Russia, are concerned that Israel could launch a military strike by this summer if no agreement on the handling of enriched uranium with Iran is reached. Switzerland’s position on allowing Iran to use its financial system “allows space in the financial system for the payment of transactions,” Matthee said. In Switzerland, there are a number of companies in a position to help broker Iranian oil. They include Glencore International AG, Gunvor International BV, Vitol SA, Trafigura AG and Mercuria Energy Trading SA, which together broker some one-third of the world’s oil deals. The U.S. is expected to confront Switzerland on this issue in an effort to close this loophole in the U.S.-led sanctions.

Ironically, Switzerland has represented U.S. interests in Tehran since the 1979 Iranian revolution when the U.S. severed ties with the cleric-led Islamic regime upon the ouster of the U.S.-backed Shah Mohammad Reza Pahlavi. Switzerland’s decision, however, is consistent with its behavior in the face of previous sanctions, some going back to the days prior to World War II. According to John F. Ross in his book, “Neutrality and International Sanctions: Sweden, Switzerland,” the Swiss government will implement only those sanctions which do not damage Swiss interests.

Of sanctions Switzerland has recognized, Ross added that they were implemented only if they provided limited damage to those interests. This kind of attitude was prevalent following World War I when Switzerland began a limited role in sanctions to prevent Germany from rearming. Involved were multilateral efforts to deny Germany dual-use technologies which could be used to manufacture weapons again. As it turns out, neutral Switzerland actually was a conduit for Germany during World War II for the exchange of gold for currency to maintain the Third Reich’s war machine.

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AUTHOR: F. Michael Maloof

F. Michael Maloof is a former Senior Security Policy Analyst in the Office of the U.S. Secretary of Defense, Anti-Terrorism Specialist Team Leader and also served as Aide to Richard Perle, the former chairman of the Defense Policy Board of U.S. Department of Defense and Assistant Secretary of Defense for International Security Policy. He has nearly two decades of security, life safety, antiterrorism and risk mitigation experience; with extensive experience in the financial services sector, Federal and military institutions, and law enforcement.  He brings valuable expertise in physical security engineering, vulnerability assessments, threat/risk analysis, executive protection, investigations and security facility design to support and augment the Company’s national accounts program. His management experience includes strategic and tactical planning and oversight of physical security systems and staffing, while developing proactive countermeasures and internal controls for quality control, as well as robbery suppression, executive protection and security training. Maloof was instrumental in the development of crime prevention guidelines that were adopted by the FBI for advisement of other institutions. He also has significant antiterrorism/physical security experience gained while under the employ of the U.S. Department of Defense. An antiterrorism specialist and team leader, Maloof developed and initiated risk analysis and mitigation processes instrumental in protecting high-level federal institutions, worldwide.

One Response to How The Swiss Are Making The Oil Embargo ‘No Big Deal’ For Iran

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