14 June 2007
U.S. Allies Urged To Move Decisively Against Terrorism Financing
Political will, legal tools required, U.S. Treasury secretary says
Washington -- U.S. allies need to accelerate the use of financial sanctions to address terrorism and weapons proliferation, U.S. Treasury Secretary Henry Paulson says.
“Everyone acknowledges that we must find effective ways to deal with these threats, short of military measures. Yet other nations are not moving quickly enough to accomplish this goal,” Paulson said in a June 14 speech to the Council on Foreign Relations in New York.
He did not specify which countries have failed to act aggressively enough to counter terrorist threats.
Paulson outlined the U.S. campaign to cut off weapons proliferators, terrorists and money launderers from the global financial system and highlighted the campaign’s major achievements.
He also called on countries to muster their political will and upgrade their legal capabilities so that they can share responsibility for mutual security.
Paulson said U.S. allies need to enact legislative and regulatory changes that would enable better targeting of financial sanctions in the fight against global threats and facilitate coordination of actions with related multilateral efforts. He cited as needed measures criminalizing money laundering and terrorist financing and allowing finance ministries to access and use intelligence.
“These authorities may not deal a knock-out-punch, but they can and will produce results and change behavior,” Paulson said.
The treasury secretary said the United States always has sought multilateral actions because they have proven to be a potent and effective tool against drug cartels, rogue regimes and terrorist groups.
When the Treasury has made such efforts, the multilateral action has been quite successful, he said, citing as an example the isolation of North Korea from the global financial system.
A U.S.-led financial campaign also has discouraged some foreign investors and bankers from doing business with Iran, dealing a blow to the Iranian economy, he said. (See related article.)
However, this action is not likely to persuade Iran to stop its nuclear program, according to experts cited in a report published by the Council on Foreign Relations, an independent policy research group.
Nevertheless, the experience so far, Paulson said, puts the administration in a better position to discuss with allies broader measures against the Iranian regime.
“While the financial isolation of the entire regime may impose costs on our partners and on us, it would be far less costly than a nuclear-armed Iran,” Paulson said.
He disclosed that in 2006 the administration was trying to persuade another country to “take the lead” in action against Iranian state-owned Bank Sepah, engaged in proliferating missile technology. Ultimately, though, the United States decided to take unilateral action because that nation lacked the necessary legal authority and political will. (See related article.)
When other countries lack the political will to ostracize a targeted group or individual, the United States can act unilaterally, Paulson said. It can do it effectively, he said, because U.S. financial markets are key to the global financial system.
“We are the banker to the world,” Paulson said.
He said private banks and financial institutions are able to act faster than governments when presented with solid evidence of their clients’ wrongdoings or deceptive practices.
And Treasury’s designations make an impact beyond their formal, legal reach, Paulson said, as some banks around the world become more vigilant against suspicious clients and deals and others follow their lead, unwilling to risk their reputation.
A transcript of Paulson’s remarks and a related fact sheet are available on the Treasury Department Web site.
For more information on U.S. policies, see Arms Control and Non-Proliferation and Terrorist Financing.
(Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
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