The United States Senate early this morning sent a strong message to the European Union (EU) on Iran, unanimously passing an amendment supporting efforts to block Iran's access to its foreign exchange reserves and limit the ability of designated Iranian entities like the Central Bank of Iran to conduct transactions in euros. The amendment to the Budget Resolution, sponsored by Sen. Mark Kirk (R-Ill.) and Sen. Joe Manchin (D-W.Va.), follows a bipartisan letter sent last month by 36 senators to the EU urging the Council to take immediate action to cut off Iran's access to the euro.
The Iranian Government maintains bank accounts around the world filled with foreign exchange reserves, the majority of which are held in euros. Reports indicate that Iran uses its euro reserves to circumvent the total impact of American and European sanctions by converting its foreign-held euros into local currencies in order to finance imports and stabilize the country's budget.
"Closing the euro loophole in our sanctions policy is critical in our efforts to prevent Iran from acquiring a nuclear weapons capability," Sen. Kirk said. "The U.S. Senate has spoken and now the European Union needs to act."
On February 25, 2013, 36 Senators, including majorities of both the Senate Foreign Relations and Banking Committees, signed a letter authored by Sen. Kirk and Sen. Jeanne Shaheen (D-N.H.) letter to the EU urging the Council to take immediate action to close the "euro loophole" in our sanctions policy. On March 7, 2013, Sen. Kirk pressed Treasury Under Secretary David Cohen on the issue. Cohen told Sen. Kirk, "We will continue to press the [European Central Bank] to take what we think is the right step here, which is to cut off euro clearing or to apply to euro clearing the same set of restrictive measures that the EU has on any Iranian business."
Other Senators sponsoring the measure included: Robert Menendez (D-N.J.), Tim Johnson (D-S.D.), Dean Heller (R-Nev.), Marco Rubio (R-Fla.), Ben Cardin (D-Md.), Bob Casey (D-Pa.), Jeff Merkley (D-Ore.), and Chris Coons (D-Del.).
In 2011, Senator Kirk co-authored the Menendez-Kirk amendment, which imposed sanctions on the Central Bank of Iran and led to unprecedented economic pressure inside Iran. In 2012, Kirk authored an amendment to impose sanctions on the financial messaging providers servicing designated Iranian banks, which ultimately led the European Union to order the Society for Worldwide Interbank Financial Telecommunication (SWIFT) to disconnect such banks. Last December, the Senator again co-authored a Menendez-Kirk amendment to the FY13 National Defense Authorization Act, which blacklisted whole sectors of the Iranian economy and prohibited the sale or delivery of raw, semi-finished and precious metals to Iran. On March 6, Senator Kirk released a video titled "Before its Too Late" to highlight the urgent need for further congressional action to prevent Iran from acquiring a nuclear weapons capability.