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Obama Made the Right Call -- and Everyone Won

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Yesterday, President Barack Obama made the right call. The Department of Treasury announced a general license for aid to the earthquake victims in Iran. U.S. sanctions on Iran had prevented private U.S. aid organizations from sending crucial aid to the victims of the two earthquakes that shook northwestern Iran earlier last week. But with the issuance of the general license, these obstacles have been removed and the constraints on the American people's generosity and humanity have been lifted. It was a no-brainer, leaving everyone a winner.

Humanitarian decisions of this kind should not be taken hostage by politics or by conflicts between governments. In fact, despite the abysmal relations between the U.S. and Iran, Washington has on numerous occasions sent aid as well as rescue teams to Iran to help with relief work. And the Iranian government has often -- but not always -- accepted the help.

Last time was in late 2003, after a devastating earthquake hit the ancient city of Bam in Iran, killing more than 25,000 people. President George W. Bush -- who had earlier put Iran in the 'Axis of Evil' -- issued a general license and enabled the American people to send their support to the victims. Numerous U.S. aid organizations such as the American Red Cross, Mercy Corps and Relief International, as well as smaller Iranian-American charities such as Children of Persia and Child Foundation, sent teams to Bam to help in the aftermath of the earthquake.

President Bush's decision earned America significant respect and goodwill among the Iranian people. In their moment of need, humanity trumped politics.

Though Obama took a bit longer to issue a similar license, he nevertheless made the right call. The efforts of Iranian-American organizations to convince the administration to go beyond just the initial promise to expedite license applications were crucial. More than 3,000 letters were sent to the White House through the website of the National Iranian American Council. A coalition of Iranian-American groups came together and spoke with a unified voice on this issue through the leadership of the Iranian American Bar Association. And 14 lawmakers led by Dennis Kucinich weighed in on behalf of the earthquake victims with the White House.

One potential challenge remains, however, before the aid reaches the victims. In spite of an existing sanctions exemption for family remittances and humanitarian efforts, most U.S. banks refuse to transfer money to Iran -- even though it is legal. The reason is that the campaign by the Treasury Department to stigmatize dealings with Iranian banks has been so successful that most banks have decided to completely end all transactions with Iranian banks -- even the permissible transactions. There is also a business calculation here. If any transaction they undertake later turns out to have been impermissible, the banks will be slapped with massive fines. The cost of assessing the risks on a case-by-case basis outweighs the financial gain from conducting the transaction. Consequently, it's simply easier for the banks to cut all connections with Iranian banks and eliminate the risk of hefty fines.

Last week, NIAC contacted 15 major American banks to inquire whether they would conduct a permissible money transfer to Iran under the then-existing sanctions exemptions. Not surprisingly, twelve of them flat out said no. Two of them recounted all the red flags and obstacles, indicating that while it was possible, it was not probable that the funds would reach the intended recipients in Iran. The last bank suggested that it would be faster and safer to have a person fly to Iran with all of the cash (presumably in a suitcase)!

To avoid rendering Obama's general license meaningless, it is crucial that U.S. banks provide transfer services to the U.S. NGOs providing aid to the earthquake victims.

President Obama should be commended for making the right decision. Now it's the banks' turn to do so as well.

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