The answer to the title of of this blog posting is a resounding: YES. Although we are in the early stages of what Wikileaks is referring to as Cablegate–the release of a quarter of a million cables sent from U.S. officials all over the world–we are already seeing a large number of cables pertaining to the development and evolution of U.S. economic sanctions policy, particularly in regards to Iran.

Although only a small number of cables have been released, I have already stumbled across some that pertain to U.S. sanctions. The most interesting of these was one dealing with the efficacy of U.S. sanctions against Iran.

The cable, dating from December 2008, describes that in a visit to Israel on 16-17 November, Treasury Under Secretary for Terrorism and Financial Intelligence, Stuart A. Levey, reassured Israeli officials that no momentum would be lost in US efforts to combat terrorist financing or to pressure Iran during the transition of the Obama Administration. In meetings with Foreign Minister Tzipi Livni, Mossad Director Meir Dagan, National Security Council Chairman Dani Arditi, and others, Levey emphasized the efficacy of U.S. designations against the Union of Good, the Islamic Republic of Iran Shipping Lines (IRISL), and the revocation of Iran’s “U-Turn” license. Mossad Chief Meir Dagan also informed Levey that sanctions were beginning to have a negative effect on Iran’s regime.

Furthermore, Israeli officials were keen to outline an “escalation” in programs by the Central Bank of Iran (“CBI”) that they believed posed a danger to the international financial system. Several key Israeli officials identified Reza Raei, Vice Governor of the CBI, as a key figure in masterminding new ways to help the Iranian commercial and banking sectors circumvent sanctions. Israeli intelligence indicated that the designated Iranian banks were circumventing sanctions by purchasing shares in investment funds as a way to escape the effects of the sanctions. Using these methods, Bank Melli and Bank Sepah had been able to fabricate a method of providing correspondent-like banking services to designated Iranian banks that find it increasingly difficult to deal in foreign currency. In response to this information Levey commented that any such investment fund or financial instrument could be listed as a derivative designation of Bank Melli if enough evidence could be shown linking the two organizations. Levey told Meir Dagan that he was in favor of pursuing a designation of Raei if Israeli allegations were accurate.

Most telling however, was the discussion on the efficacy of U.S. sanctions against Iran. Dagan told Levey that the economic problems Iran is experiencing as a result of sanctions are encouraging debate within the regime. He said that in order to preserve the revolution, some key figures have begun to consider the need for change.

This cable was important for two reasons: 1) it provides insight into the fact that others outside of the U.S. government believe U.S. economic sanctions to be working; and 2) it shows the role that other countries, particularly Israel, play in shaping U.S. sanctions policy. Encouraging from my perspective is that Levey showed a desire to verify information before acting, rather than taking Israeli allegations for accurate without any further fact checking. It is often heard that anonymous tips and hearsay evidence play into designation determinations. This is an unnerving proposition when one considers the harsh consequences an OFAC designation could have. It is good to hear that the modern architect of U.S. economic sanctions, Stuart Levey, is doing his homework before making decisions on designations.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC litigation. If you have any questions please contact him at 202-280-6370 at 202-351-6161 or ferrari@ferrari-legal.com.