Time for Switzerland to End Irresponsible Business with Iran

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For the past two years, members of the international community have worked closely together to pressure Iran to halt its pursuit of nuclear weapons. In particular, the United States and the European Union have enacted increasingly tough sanctions, which have sent Iran's currency -- the rial -- plummeting by some 80 percent. Unfortunately, one important banking center in Europe has consistently undermined these efforts by refusing to adopt the very sanctions that have had the most impact -- Switzerland. It is time for Switzerland to start behaving like a responsible member of the international community and enact the same measures that have been adopted by its European neighbors and international allies.

Unlike its EU neighbors, Switzerland (which is not a member) has refused to sanction Iran's central bank, despite knowing its fundamental role in funneling money directly into the hands of Iran's Islamic Revolutionary Guard Corps (IRGC). It's as if the Swiss are unaware that the IRGC is a terrorist organization, responsible for commanding Iran's nuclear and terrorist activities, and guilty of egregious human rights abuses inside Iran.

Switzerland has also refused to join its EU neighbors in adopting a ban on imports of Iranian oil, despite the demonstrable evidence that the oil embargo by the West has significantly curtailed Iran's ability to access hard currency to fund its nefarious activities. This allowed Geneva-based oil trader Vitol to buy 2 million barrels of fuel oil from Iran in August 2012 and profit from its sale to Chinese traders.

The end result of all this is that the Iranian regime maintains access to an important trade and financial center, and capital to fund its nuclear and terrorist activities. This is unacceptable, and what is particularly galling is that Switzerland is quick to take the moral high ground in situations when its economic interests are not at stake. Switzerland was more than happy to replicate, for example, the full-range of sanctions imposed against Libya and Syria.

What makes Iran different? The answer is simple: Libya and Syria have a limited market for machinery, banking and luxury goods. Switzerland's so-called "neutrality" in this context is little more than thinly-veiled cover to allow its companies to act with impunity when it comes to business with Iran.

Ceresola, for example, a tunneling technology firm, signed a contract worth over €1 billion in 2010 with the Rahab Engineering Establishment, a known IRGC entity. The same year, Credit Suisse was fined $536 million for egregious banking violations, instructing employees not to "mention the name of the Iranian bank in payment orders."

Luxury good powerhouses Richemont, Swatch Group and Rolex continue to export their merchandise to Iran's elite while knowing that only those affiliated with the regime can afford them. According to recent data, Swiss exports to Iran constituted 311 million Swiss Francs ($330.99 million) in the first 8 months of 2012. Alas, Libya and Syria have no such lucrative markets.

Sanctioned Iranian entities have also set up shop through front companies in Switzerland. Petro Suisse Intertrade Company, for example, is an Iranian oil firm active in Switzerland that was sanctioned nearly a year ago by the U.S. because the Iran's National Oil Company was using it to evade sanctions on its oil companies. Similarly, the Naftiran Intertrade Company is under both U.S. and EU sanctions and has been described as a virtual "offshore arm of the National Iranian Oil Company."

Swiss officials defend themselves by arguing that, broadly speaking, they support those sanctions imposed by the United Nations. Closer scrutiny, however, suggests even that isn't true. In March 2013, it was revealed that Swiss commodity traders Glencore and Trafigura had engaged in barter arrangements over the past year with Iranian Aluminum Company (Iralco) that provided Iralco thousands of tons of alumina in exchange for a lesser amount of aluminum metal. At the same time, Iralco has provided aluminum for Iran's nuclear program through a contract with UN-sanctioned Iran Centrifuge Technology Co. (TESA), which is a subsidiary of the blacklisted Atomic Energy Organization of Iran (AEOI). So much for Swiss neutrality.

Despite their track record of helping Iran skirt sanctions, some of these Swiss companies continue to increase their presence in the U.S. For example, Vitol signed an agreement with Texas-based DKRW Advanced Fuels LLC to develop a coal conversion plant in Wyoming, a project that may receive significant public subsidies. Companies like Vitol should not reap the benefits of U.S. resources and taxpayer dollars until Switzerland stiffens its lax posture on Iran sanctions.

It is time to accurately characterize Switzerland's behavior for what it is -- economically opportunistic hypocrisy. While it takes the moral high ground in places where it has little to no commercial interests, it just offers excuses when it comes to Iran.

In a recent press interview, Swiss Foreign Minister Didier Burkhalter remarked that Switzerland would not join the U.S. and EU in enacting tough sanctions against Iran, because they veered toward "regime change." Perhaps Mr. Burkhalter does not realize that the best way to actually avoid a military confrontation and resolve the nuclear standoff with Iran is for the international community to maintain a united front to persuade Iran to leave the perilous path it is currently on. As for now, however, Switzerland is an outlier and its actions continue to bestow legitimacy upon and enrich the ruling mullahs in Iran. In doing so, it is actively undermining the best hope to achieve a diplomatic and peaceful solution to the Iranian nuclear crisis. Now is the time for Switzerland to stop counteracting the will of the international community, and end its irresponsible policies toward Iran.

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