Stuart A. Levey

Stuart A. Levey (born 1963) has served as the Under Secretary for Terrorism and Financial Intelligence (a post that previously did not exist) since 21 July 2004. He has been dubbed the 'father of the North Korean atomic bomb' because of his engineering of a sanctions policy which pushed North Korea to go nuclear. His primary target howere is Iran. According to the Washington Post, Levey, 'has a strong hand in many of President Bush's top foreign policy and national security initiatives, from counterterrorism to money laundering to weapons of mass destruction. He is the senior Treasury official overseeing a classified program that taps a global database of confidential financial records in search of terrorist transactions.'

Background

Under Obama he also served briefly as the as Acting Treasury Secretary until Obama nominee Timothy Geithner was confirmed to the post. He studied at Harvard, and his thesis advisor was Martin Peretz. He also spent a year studying at Jerusalem's Hebrew University, where he wrote an undergraduate thesis on the extremist Rabbi Meir Kahane, the founder of Kach.

Israel Lobby connections

By his own admission Levey 'welcomes submissions' from Israel lobby groups like Foundation for the Defense of Democracies. His former analyst Jonathan Schanzer is now the vice president of FDD. He has been honoured by the American Jewish Committee with the organization's 2009 'Public Service Award'. 'We were absolutely delighted when the Obama administration chose to ask him to stay in office,' says David Harris, executive director of the AJC. According to Kampeas:

Before joining the Bush administration in 2001, Levey was in law practice for 11 years at the Washington firm Miller, Cassidy, Larroca & Lewin, where he worked with Nathan Lewin, well known for his work on behalf of Jewish groups.

Office of Terrorism and Financial Intelligence (OTFI)

Levey serves as the director of the US Treasury Department's Office of Terrorism and Financial Intelligence (OTFI) which emerged after 9/11 as an extension of the Treasury Department's money-laundering investigative activities. Its powers were expanded under Section 311 of the Patriot Act which gave the Treasury Department the power to sanction uncooperative foreign financial institutions in matters of tracking terrorist financing by cutting them off from the US financial system. OTFI exploited the powers given it to evolve into an important instrument of American foreign policy and the Bush administration used its expanded mandate and powers as a powerful and arbitrary instrument of unilateral power beyond international challenge or congressional oversight. It was soon wielded by Levey against Iran and North Korea. Asia specialist Peter Lee writes:

Significantly, its targets were not Iranian and North Korean banks - which were already barred from dealings with US corporations under US law. Instead, the genuine object of OTFI's threats were the financial institutions of American allies - allies that, for reasons of principle, greed or strategic necessity, had not seen fit to impose the same national sanctions on Tehran and Pyongyang that had been imposed by the United States.

Levey has travelled the globe threatening local banks, including in places such as Mongolia, Bulgaria and Macau for taking Iranian and North Korean deposits. In September 2005, in Macau, he caused the collapse of Banco Delta Asia after announcing that it was investigating BDA as a "bank of money laundering concern" for accepting North Korean deposits. This caused a runon the bank leading to its take over by Macau authorities and a freezing of North Korean assets.

Mentors

According to the Washington Post, Levey's mentors include

• Larry D. Thompson
• Laurence H. Silberman
• John C. Danforth
• Martin Peretz

Target Iran

Levey has been a leading figure inside the government pushing for sanctions against Iran. According to Ron Kampeas of JTA, Levey was 'given a big stick when the Bush administration made him the first under secretary of the Treasury for terrorism and financial intelligence.' Levey, according to Kampeas's flattering portrait, 'has made the office into a tool that has effectively squeezed Iran and North Korea and hindered the ambitions of terrorist groups.' During a 16 June 2010 press conference at the White House in which Levey announced a new set of sanctions against Iran, Tim Geithner introduced him thus:

Stuart has been the chief architect of our strategy to impose growing financial costs on Iran for its continued defiance and he has played a major leadership role on this issue internationally.

According to the New York Times, 'he has managed to persuade the U.S. government to back his project' which mandates :mobiliz[ing] the private sector, starting with the world’s banks, to join the effort to sanction Iran. His idea was to prevent a country reliant on global trade...from being able to do business outside its borders. One convert, Condoleezza Rice, would later tell the New York Times:

The private sector has proved “quicker to respond” than governments, Rice said. “This really relies on the kind of self-interest — to protect their reputation and protect their investment.”

Persuading Rice

According to the New York Times,

In February 2006, his colleagues in the Treasury Department persuaded Secretary of State Condoleezza Rice to let him travel with her to the Middle East, and he hoped to make his pitch at some point along the way. He waited, stop after stop...Finally, on the way home, he was summoned to Rice’s private cabin to lay out his seven-point proposal...

Levey’s idea was to press banks not to do business with Iran until it complied with international standards. Rice bought in. “She was thrilled,” Levey wrote in an e-mail message to his staff from the plane. “She especially liked options 1, 2, 6 and, if necessary, 7. . . . Truly, this one hour made the whole trip worthwhile.”

Sanctioning Israel's enemies

Part of Levey's efforts have been devoted to using US intelligence and influence to financially strangling Israel's regional foes. New York Times reports:

Levey has since made more than 80 foreign visits of his own to talk to more than five dozen banks. Several countries required multiple trips to reassure suspicious (or just annoyed) governments about American intentions — and then to persuade the banks. Levey offered specifics. U.S. intelligence, he told them, had traced $50 million transmitted by Iran’s Bank Saderat through a London subsidiary to a charity affiliated with Hezbollah in Lebanon. Saderat, which has 3,400 offices worldwide, is Iran’s equivalent of Citibank. Its Lebanon branch, Levey said, also supposedly sent millions of dollars to Palestinian extremists.

The Treasury Department then started blacklisting Iran’s biggest banks, urging other nations to follow suit. In 2006, Saderat was barred from direct or indirect business with U.S. banks. In early 2007, the department sanctioned Bank Sepah for financing projects to develop missiles that could carry nuclear weapons. (Sepah, meaning “army,” was established with money from Iran’s military pension fund and is now associated with Revolutionary Guard projects.) The Treasury Department then blacklisted Bank Melli, Iran’s largest bank, for supposedly helping to finance defense industries under U.N. sanctions.

Focus on Dubai

In a 2008 profile Robin Wrgith noted that 'Levey has visited Dubai eight times' and that the 'ultimate success of Levey’s scheme — and the precedent it could set — depend heavily on Dubai.'

In its quest to be a global financial center, Dubai has pledged to honor U.N. sanctions...Of the 48 international, local and family banks in Dubai, all but a handful have cut off new business with Iranian banks cited in U.N. resolutions, said Hamad Buamim, director general of the Dubai Chamber of Commerce...The emirates have also set up a joint task force with the United States to sift through Iranian-run businesses in Dubai to uncover front companies for Iranian military, government or business entities sanctioned in U.N. resolutions, officials said. At least 30 have been shut down and dozens put on a watch list.

Visas and work permits for Iranians have dried up. “Registering a new company with an Iranian partnership is almost impossible,” said Hashempour, the Iranian Business Council vice president. When Iranian-run companies import goods, the wait in customs has gone from hours to days, even weeks. Passengers on hundreds of weekly flights between Iran and Dubai go through Terminal 2, where iris scans are taken — a practice not used at Terminal 1 for flights from Europe and the United States.

However, as Wright notes, not all of this is voluntary.

Several officials expressed frustration with American strong-arming. “Sometimes, yes, we feel that the United States is asking too much,” said Sultan bin Nasser al-Suwaidi, governor of the Central Bank.

Successes

Levey's sanctions have had an impact beyond US borders:

Actions against Iranian banks became a feature of Security Council sanctions resolutions, beginning in 2006. Last June, the European Union blacklisted Melli and froze its assets. Last month, Australia sanctioned Melli and Saderat, while the U.S. blacklisted the Export Development Bank of Iran, which it claimed had taken over many of Sepah’s accounts and provided services for missile programs. The Treasury Department is also scrutinizing Iran’s Central Bank and considering blacklisting it too, which could undermine not only the country’s banking system but also international support for the U.S. campaign...Big banks in Britain, France, Germany, Japan and Italy curbed business with Iran, even with longstanding clients...Even banks in Muslim countries, from Bahrain to Malaysia, have cut back their Iran business, bankers told me. Most surprising has been the shift by several Chinese banks...So far, more than 80 banks have curtailed business with Iran.

The New York Times presciently predicted that 'Whatever happens with the Bush administration’s diplomatic or intelligence efforts, this is the program most likely to be continued by the next administration because it has bipartisan support.' It also added:

And Levey is continuing to pick new battlefronts. In September, the Treasury Department sanctioned Iran’s national shipping company and affiliates in 10 countries for falsifying documents and for transporting cargo on behalf of entities tied to weapons of mass destruction by the United Nations. Treasury officials say the insurance industry is next.

Sanctions backfire

Iran

Wright notes that the sanctions strategy has the potential to backfire on the US:

The clampdown is uniting many disaffected Iranians around their government, just as they rallied when Saddam Hussein invaded in 1980, said Hashempour. Small-businesses owners have been hit hardest. Meanwhile the state, the Revolutionary Guard’s growing business empire and quasi-government foundations dominate up to 80 percent of business in Iran and are most able to weather the financial storm.

Also, Iranians are turning to alternative means of finance. Wright notes: 'Hawalas are making a big comeback among traders doing business with Iran.' He also adds that 'the biggest share of cargo now is Chinese. Economists and dhow captains told me Iranian trade is increasingly looking East.' Nor is the scepticism limited to Iranians. Wright adds:

Because Stuart Levey’s war may result in only limited victories, a growing array of voices — from a former general in the U.S. military’s Central Command to former Bush administration staff members — is calling on the next president to reach out to Iran in direct dialogue.

North Korea

In the case of North Korea, writes Asia specialist Peter Lee, the sanctions directly led to the country's decision to go nuclear.

Pressure & Threats

But his efforts have been resisted by businesses. According to the Washington Post in 2006, Levey was having 'difficulty persuading allies to sign on to a plan that will cost them in Iranian trade and oil.' There is also the suggestion of pressure. New York Times reports:

“They’re not happy with what’s happening,” a European diplomat told me. “They complain about U.S. pressure, but accept it. They hope it will pass soon.”

Though Treasury officials denied that foreign banks were warned that their access to the U.S. financial system was in peril if they didn’t cooperate on Iran, according to New York Times, 'Foreign bankers, however, insisted that threats were always implicit.'

SWIFT Controversy

Levey's single major brush with controversy was his role in accessing the database at SWIFT, the international grouping that coordinates interbank transactions. President George W. Bush authorized such access after the Sept. 11, 2001 attacks, and The New York Times revealed the U.S. Treasury's use of the access in 2006...The Belgium-based grouping objected, but the story -- unlike other revelations of Bush-era privacy incursions -- slipped out of sight.

Affiliations

• Office of Terrorism and Financial Intelligence (OTFI) - director
• American Jewish Committee - winner of the organization's 2009 Public Service Award

Staff

• Molly Millerwise Meiners - Levey's spokeswoman until 2009, now works as a spokeswoman for Citigroup.
• Jonathan Schanzer - Levey's analyst, now a vice president at the Foundation for the Defense of Democracies

Resources

External Resources

• Interview with Stuart Levey, Charlie Rose Show, 6 October 2010