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U.S. may ban insurers of Iran’s cargo

Bob Moon Sep 29, 2009

U.S. may ban insurers of Iran’s cargo

Bob Moon Sep 29, 2009


Kai Ryssdal: Iran’s nuclear ambitions will be topic A later this week at an international conference in Geneva. Economic sanctions will surely be discussed.

But the Obama administration is working up new ways to disrupt the Iranian economy. One would blacklist global insurance companies and freeze their U.S. assets if they cover cargo headed for Iran. Here’s our senior business correspondent Bob Moon.

BOB MOON: Despite existing sanctions, Iran has been able to ship goods through third parties, using trading hubs in Dubai, Hong Kong and elsewhere. Iranians can still buy smuggled Levi’s, Apple laptops and other American brands. And Iran has been able to maintain its critical gasoline imports.

Researcher Cliff Kupchan watches the region for the Eurasia Group. He says a ban on shipping insurance is a sanction that’s never been tried anywhere before.

CLIFF KUPCHAN: It would actually be a very clever way at increasing the noose around Iran’s economic activity with the world.

Smaller independent shippers might be willing to take on the risk of shipping to Iran for the right price. But the insurance ban would block the most expensive cargo. So says Pieter Van Tol, a New York lawyer who represents insurance firms.

PIETER VAN TOL: If you’re one of the major shipping companies, or you’re being asked to take over major amounts of shipments to Iran, it would be foolhardy for you to go forward without insurance, because it’s a risky part of the world and you could end up having a total loss.

The Eurasia Group’s Cliff Kupchan says the move would hit what might be Iran’s biggest achilles heel.

CLIFF KUPCHAN: One of the great ironies of the Islamic Republic is that, while they’re one of the world’s largest producers and exporters of oil, they need to import 40 percent of their gasoline.

Still, he cautions Chinese or other so-called “shadow” insurers might step in to fill the void. And even without that, Kupchan doubts the move would get results.

KUPCHAN: They are dogged in their pursuit of a nuclear program, and it’s my view that they would put the Iranian population through a tremendous amount of economic punishment before they would begin to begin to change their nuclear policy.

Bills targeting insurers of Iranian shipments are already pending in Congress. But officials say the U.S. could also press for tighter global enforcement of existing U.N. resolutions.

I’m Bob Moon for Marketplace.

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