LINK: http://www.globalresearch.ca/index.php?context=va&aid=8429 If the US succeeds, an international quarantine on Iran's banks would disrupt Iran's financial linkages with the world by blocking its ability to process cross-border payments for goods and services exported and imported. Without those linkages Iran is unlikely to be able to engage in global trade and commerce. As 30% of Iran's GDP in 2005 was imports of goods and services and 20% was non-oil exports (World Bank and other data), a large chunk of Iran's economy would shrivel up. The repercussions will be painful and extend well beyond lost business and profits. For example, treating curable illnesses will become difficult. According to an Iranian health ministry official, Iran produces 95% of its own medicines but most pharmaceutical-related raw materials are imported. With a financial sanctions war declared, what happens next? There have been some hints. On February 25 the Wall Street Journal reported that Treasury was considering sanctioning Iran's central bank (known as Bank Markazi). "The central bank is the keystone of Iran's financial system and its principal remaining lifeline to the international banking system," explains the Journal. "U.S. sanctions against it could have a severe impact on Iranian trade if other nations in Europe and Asia choose to go along with them." In anticipation of future events, the Journal notes: "U.S. officials have begun trying to lay the groundwork for a move against the central bank in public statements and meetings with key allies." So look for the following to happen in the coming weeks: FinCEN will probably issue a Patriot Act Section 311 finding that Iran's central bank is a "primary laundering concern." The "deficiencies in Iran's AML/CFT" wording lifted from the FATF statement will be a key reason for that finding. The finding may be accompanied by a formal decision to cut off Iran's central bank from the US financial market, or such a decision could come later. Of course, an actual or threatened cut-off has no immediate financial implications for Iran since no Iranian-flagged bank is doing business in the US, except possibly to allow shipments from the US of humanitarian provisions of food and medicine, which, if they exist, probably terminate with the March 20 FinCEN announcement. But a Section 311 designation of Iran's central bank would have a powerful coercive effect on the world's banks. For any bank in Europe, Asia or anywhere else that goes near the central bank once the 311 blacklist is on, it would be the kiss of death for that bank's participation in the international banking community, as it was (and remains today) for BDA. Not only would that bank be barred from the US financial market, it would also be shunned by European and Japanese financial markets, as government and private banking officials in those markets are likely to cooperate with Washington's intensifying sanctions campaign. What about China, now one of the world's major financial centers (two Chinese banks ranked among the top 25 in The Banker's 2007 survey of world banks) and a major trading partner for Iran? China and Japan "were the top two recipients of exports from Iran, together accounting for more than one-quarter of Iran's exports in 2006," according to an analysis of International Monetary Fund (IMF) trading statistics contained in a December 2007 US Government Accountability Office (GAO) report on Washington's anti-Iran sanctions regime. On the import side, the GAO found that in 2006 "Germany and China were Iran's largest providers of imports, accounting for 23 percent of Iran's imports." Airtight global banking sanctions imposed on Iran would presumably make the financial administration of this trade next to impossible. Will China bend to US sanctions wishes? Early signs suggest the answer is yes. In December 2007 ArabianBusiness.com reported that Chinese banks were starting to decline to open letters of credit for Iranian traders. Asadollah Asgaroladi, head of the Iran-China chamber of commerce, was quoted as saying that China's banks did not explain the refusal but "if this trend continues it will harm the two countries' economic cooperation and trade exchange." In February, ArabianBusiness.com found that China's cutbacks in its banking business with Iran was affecting a joint automobile production arrangement. Such disruptions in the Chinese-Iranian banking relationship are minor. Meanwhile, Beijing keeps insisting that peaceful diplomacy with Iran is the best policy and that the only sanctions needed are those mandated under the three UN Security Council resolutions already on the books. Thus, to make China cooperate with Washington's unilateral banking sanctions, the US and the EU, reports the Financial Times, are apparently using a tag-team strategy. On February 12 the FT told readers that "the US believes that tighter EU sanctions will put pressure on other nations that do more business with Iran - China for example - to curb their activities." Therefore, explained an anonymous diplomat apparently from the US: "We will be pushing the EU to go further than the Security Council," a move intended, the diplomat said, to "gold plate" Security Council requirements. To explain this move the FT provided an example of "gold plating" from 2007, when the EU implemented UN Security Council resolutions 1737 and 1747 on Iran. In similar language to the current text on Banks Saderat and Melli, the UN had called for "vigilance and restraint" concerning the movements of individuals linked to Iran's nuclear and missile programmes and members of its Revolutionary Guard. But in implementing the resolutions, the EU subjected all the named individuals to a travel ban - a much tougher measure. Reading between the lines, the intention behind "gold plating" Security Council resolutions is to put pressure on China to bow to a more aggressive US-EU sanctions program. In the case of the most recent Security Council resolution on Iran, 1803, which put sanctions on two Iranian banks, FinCEN rolled two "gold plating" actions into one. It combined the Security Council's naming of the two banks with the October and February FATF statements to justify its March 20 warning to the world that Iran's entire banking system is a danger. Whether the EU will follow FinCEN's action, and how China will respond to any of this, remains to be seen. In short, the US has in effect declared war on Iran. No bombs need fall as long as the US strategy relies solely on financial sanctions. But if the US Section 311 designates Iran's central bank as a financial criminal, the impact will be the financial equivalent to the first bombs falling on Baghdad at the start of the US-UK invasion of Iraq in March 2003.