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  The price of everyday goods increased significantly in Iran, putting pressure on an already unsettled populace. In July 2010, a two-week strike in Tehran and elsewhere within the country resulted when the government attempted to increase taxes on merchants, partly as a result of revenue constriction due to sanctions.26 On January 6, 2012, in an interview on National Public Radio, an Iranian writer, Hooman Majd, reported that sanctions were impacting Iranian’s daily lives: “Yeah, absolutely. [Y]ou feel them because . . . the price of goods goes up. The thing that you bought yesterday at a store—for example, an Oral B toothbrush, . . . or toothpaste—is suddenly not available in Tehran, because the sanctions have prevented the importers from bringing them in. But also, the price of goods in general, including even domestically-made goods and domestic products such as fruit, vegetables and stuff like that, have been rising almost on a daily basis. And people are feeling that.”27

  In October 2012, a major strike from currency traders and bazaar merchants followed the precipitous fall of the rial’s value. Protesters hurled stones at banks and government buildings, with pressure building internally within the regime to forestall a new crisis and support the rial. This pressure on internal prices and Iranian’s budgets may also be having an effect on Iranians’ views of the value of the nuclear program. In July 2012, an Iranian television station conducted a live, televised poll of viewers about sanctions and the Iranian nuclear program. The commentary about the poll was that it appeared slanted in favor of registering popular support of the nuclear program in defiance of Western sanctions. The Iranian state TV station abruptly terminated the telecast when more than 60 percent of those polled stated they would prefer to abandon the nuclear program if that would end the sanctions.

  The Iranian government has tried to downplay the effects of the financial pressure campaign, dismissing the effects and reiterating that such steps will not dissuade Iran from acquiring nuclear capabilities. On January 23, 2011, after talks in Istanbul stalemated, Ahmadinejad said, “You cannot make Iran back down an inch from its course as it is now a nuclear state.”28 On March 21, 2001, Ayatollah Ali Khamenei said, “The sanctions which the enemies of the Iranian nation have imposed have been undertaken with the intention of inflicting a blow to our country’s advancement, prevent it from realising the outcome of its steady efforts. Of course, their intention will not materialize.”29

  The Iranians have no doubt made efforts to adapt. On October 29, 2011, National Iranian Oil Company deputy Mohsen Qamsari said that Iran had “reached new agreements for receiving money for Iran’s oil exports” and that “Iran’s central bank has different and diversified ways and methods for receiving its money from selling oil to India.”30 Iran has been developing bartering agreements and cash payments as a way of circumventing the use of dollars or banks.

  But the reality of the effects has been reflected in the Iranian economy and even in what its leaders have sometimes admitted, regardless of their stated defiance. On May 12, 2011, a UN Security Council report found that Iran had attempted “circumvention of sanctions across all areas,” but that Iranian businesses were nevertheless “increasingly cut off from international financial markets.”31 On February 16, 2011, in a television interview, Ahmadinejad claimed that UN sanctions on Iran’s nuclear program had not affected the regime’s economy, adding that they “may have caused prices to increase in a few cases, but they will decrease in the near future.” Putting a positive spin on the sanctions, he said the sanctions were actually beneficial because they had allowed Iran to “attain self-sufficiency in many areas.”32 He followed this statement up on November 1, 2011, however, by admitting, “Our banks cannot make international transactions anymore.”33 In the face of the October 2012 economic riots, Ahmadinejad blamed the United States for causing the distress for the Iranian people and for waging an unprecedented, sophisticated “hidden war” against the Iranian economy.

  The financial constriction campaign was working. Levey was confident that the initiative had regained momentum and would be successful, but after six years in the same intense job working for two different presidents and three different Treasury secretaries, he made the decision to leave his post. It was a sensitive moment in the campaign against Iran because Levey had become the face of the financial assault. The Iranians knew who he was and followed his every move. Banks watched for his approaching footsteps. Foreign leaders were often infuriated by Levey’s presence or public comments. But they all knew and respected him. In a bilateral meeting between Secretary Clinton and British Foreign Minister David Miliband, Clinton introduced Levey as part of her delegation. Miliband stopped the conversation and asked, “Which one is he? I’ve heard about him but never met him.” He was known in London and around the world, and his departure in the midst of pressuring Iran was a significant moment with potential pitfalls.

  On January 24, 2011, Treasury announced Levey’s resignation. Secretary Geithner noted that the change would have “no effect on policy.”34 It was perhaps a testament to Levey’s reputation that the response from Mohammad Nahavandian, the president of Iran’s Chamber of Commerce, was that Stuart Levey’s resignation was “good news” for Iran.35

  Levey would continue to push against the Iranians until his last day on the job. February 2011 saw a flurry of designations and actions against Iranian entities. The Treasury Department was continuing its assault to isolate Iranian entities of concern. But perhaps Levey saved the best for last.

  In the winter of 2011, Libya was consumed by civil war. After four decades of tyranny, Muammar el-Qaddafi battled his own people for the survival of his regime—and it was beginning to look like he might be toppled.

  The administration was debating whether to impose comprehensive sanctions against Libya. Qaddafi had survived in the tribal society of Libya through a combination of wanton cruelty and strategic largesse. Calling himself the “King of Kings,” Qaddafi used Libya’s lucrative oil revenues to pay for loyalty, enrich his family and tribe, and sprinkle support to African and other leaders around the world. He had survived because he had access to money to protect his rule and was willing to kill his enemies and rivals or send them into exile. As rebels brought the fight to him, he retained access to billions of dollars in assets that he could use to buy mercenaries and political loyalty. To weaken and topple Qaddafi, it was necessary to go after his money.

  Levey and Adam Szubin, the Harvard-trained lawyer and OFAC director, had prepared an executive order for a comprehensive sanctions regime against the Libyan state that would target and freeze the assets of its central bank, its sovereign wealth fund, and all of its state institutions with investments abroad. Ironically, Levey and Szubin, close friends dating back to their days together at the Department of Justice, had actually met Qaddafi in Libya. They had been part of a group of senior US officials visiting Qaddafi—usually in one of his Bedouin tents—to discuss a possible rapprochement between the two governments.

  The rapprochement led to Libya’s reintegration with the West after Libya gave up its WMD program in 2003. In the years that followed, the Libyans had invested in Europe and spread their money throughout the Western banking system. This made Libyan investments and institutions more vulnerable to sanctions than they would have been before its economic reintegration. Some estimates for the amounts Libyans held in various institutions and investments abroad topped $200 billion.

  The intent behind Levey’s executive order—like the freezing of Iraqi assets after Saddam Hussein had invaded Kuwait—was to keep the assets from bleeding away and falling outside the reach of US jurisdiction. If that happened, then the Libyan leader would have the opportunity to tap into reserves to buy allegiances internally and internationally and to pay for the defense of his regime with allied tribes and imported mercenaries. Even worse, as we had learned in the 2003 Saddam asset recovery effort, loose assets could also be used to spark and fuel a postregime insurgency.

  Time was of the essence. Qaddafi, his family, and their senior
advisers no doubt knew from past sanctions and the experience of recent years that their assets were in danger. They had been able to disentangle billions from the United States in the mid-1980s, to the consternation of American officials. But amid the tumult and fighting in Tripoli, Misrata, and Benghazi, they may not have realized how exposed they really were, or understood just how fast they needed to act. Treasury, however, did know, and wanted to act quickly before any assets disappeared from the Libyan accounts.

  But Treasury was split. The undersecretary for international affairs feared the action would create instability in the markets at a time of European banking unease. This argument—which had been replayed over and over within Treasury during past crises—carried additional weight in the wake of the most serious financial crisis since the Great Depression. It was a serious argument, but Levey pushed back. The administration was looking for options to affect the dynamics within Libya, and this was a way to hurt Qaddafi. This time, Levey won the argument, and Tim Geithner agreed to move forward with a recommendation to impose an asset freeze and comprehensive sanctions.

  Levey went to a principals meeting in the Situation Room that morning to take part in a discussion on Libya. He found no objections to the idea of sanctions or how they might work. Instead, there was deep interest in how much of Libya’s money could be frozen. The same question that arises all the time in the sanctions and policy world appeared again. How much money could be frozen and announced? It was a tangible, attractive metric. Before he walked over to the White House, Levey had gotten the latest update from his OFAC specialists, who had been in conversations with bank officials in New York and their lawyers. They anticipated that there was $100 million in Libyan assets subject to US jurisdiction.

  In the Situation Room, Levey told Tom Donilon and the others assembled that the Treasury expected to freeze about $100 million. This was not an insignificant amount and sounded like a solid figure, but those who were present knew it would not break Qaddafi’s financial back. The modest amount of assets anticipated might not have the desired strategic and psychological impact for which all were hoping amid the ongoing fighting in Libya, and it would not allow the administration to argue credibly that this would hasten Qaddafi’s demise.

  The immediate concern from the State Department was that American citizens remained in Libya and had yet to be evacuated. If sanctions were imposed, Qaddafi could retaliate by holding the Americans in Libya hostage—or worse. The decision was made to prepare the sanctions package but to hold off on launching them or announcing anything. The risk of asset flight did not outweigh the risk to American lives.

  Levey headed back to the Treasury Department knowing that this would be his last day on the job. His trajectory over the past decade had taken him from the Department of Justice to the Treasury Department and into the heart of power in two administrations that had been diametrically opposed politically and in their worldviews. But in this new world of financial warfare, there was apparent continuity, and Levey represented exactly that. When he got back to his office on the fourth floor, he read an email from Adam Szubin, his longtime friend, with an update on the amount of Libyan assets that might be subject to US asset freezes. The note was clear but shocking—the amount subject to US jurisdiction and potential freezing was likely $27 billion. To underscore the amount and avoid confusion, the email ended with, “Yes, that’s billion with a ‘B.’”

  This would be the largest single asset freeze in American history, coming at a critical time for Libya and American policy and standing in the region. It was too important an opportunity to miss. After taking a moment to reflect, Levey called over to Denis McDonough, the deputy national security adviser. “Denis, we have a bigger number,” he said. Levey then calmly explained the numbers, knowing what the impact would be on the other line. McDonough told him to get the sanctions ready and to send the package over as soon as possible for clearance. It was time to freeze those assets.

  Treasury sent a new executive order into the clearance process—one that by now was well worn and understood. There would be no objections or squabbling from other departments and agencies this time. Everyone knew what this action could mean, and the White House wanted this ready to go. The Treasury team did not know exactly what they had on their hands, but they realized they could be sitting on a historic asset freeze. More importantly, they had a clear shot at impacting the trajectory of the course of Libyan history—with the hopes of weakening Qaddafi quickly and saving lives.

  Levey said his tearful goodbyes late that afternoon—ending his six-year tenure at Treasury. Like any other departing employee, he turned in all his equipment and Treasury badges. After serving through two administrations, the face of the new Treasury was departing—with the Libya executive order yet to be signed, and Qaddafi’s assets yet to be frozen. Levey was still worried that the assets could slip through US hands, but he had done everything he could. The sanctions program was in good hands at OFAC, with Levey’s closest aide, Adam Szubin, running the day-to-day management of all the sanctions programs. Szubin and Treasury were poised to act as soon as the president signed the order. Levey decided to keep his cellphone in case someone needed to call him.

  Someone did. As Levey left the Treasury for the last time and began driving home, Tom Donilon, the national security adviser, called him. Donilon was about to go into the Oval Office to explain the Libya executive order to the president. The president wanted to sign it. Donilon wanted to review the details and make sure he understood how the order would work and what might ensue. Levey pulled off the road and gave his last briefing to the national security adviser. The steps discussed would help to topple Qaddafi.

  President Obama signed the order, and the Treasury sent out the order to banks to freeze all Libyan assets. Treasury launched its principal weapon against rogue actors—its ability to move the private sector to act. The lawyers and banks had been poised for this—following the informal, quiet conversations with OFAC and the Treasury over the previous days. They reacted quickly and went into overdrive, with lawyers working through the weekend to help their banking and financial clients find Libyan assets that might be in their systems. By the time Monday rolled around, it was clear that significant Libyan assets had been captured.

  The number was bigger than expected. On February 25, 2011, the Treasury announced that it had frozen $32 billion in Libyan assets. This was a stunning amount. The Treasury was ecstatic, as was the White House. The White House trumpeted the action as a blow to Qaddafi and a signal that the end was near for his regime. It would be harder for him to pay mercenaries, to dole out payments for tribal loyalty, and to hold out, if it was clear he was running out of money. The amount of assets frozen by the US Treasury would eventually rise to $37 billion—the most assets frozen under any country program. The international community followed suit by finding and freezing $50 billion more.36 Treasury had struck. Qaddafi could never have imagined that the Treasury officials he had met years before in his Bedouin tent would be the ones to squeeze his regime’s finances like this. His days were now numbered. Levey drove home a conquering hero in the world of financial warfare, his reputation secured as champion of Treasury’s centrality in national security.

  The Treasury team that remained behind knew what it was doing. The reins were handed over to David Cohen, the assistant secretary under Levey. Cohen had learned from Levey how to make his way to major capitals to apply political and financial pressure against the North Koreans, Iranians, and Al Qaeda. The remaining team, including Glaser, Poncy, and Szubin, remained as the engine of Treasury’s work.

  The Treasury road show would continue, with attempts to convince banks and governments all over the world—including in Turkey, India, Russia, and China—to cut off their relations with Iranian banks and sanctioned companies. The State Department continued to issue sanctions of its own, the European Union kept up its own restrictive measures, and Congress pushed the Treasury and State departments to be even more aggressive.
The pressure on Iran continued unabated from all quarters, and Iran’s central bank remained a focal point for pressure and debate within the US government.

  Fines and punishments continued to be meted out to banks that persisted in doing business with Iran. In August 2012, the New York bank examiner issued a report on Standard Chartered Bank’s dealings with Iran. Its practice of stripping wire transfers of any information that would identify Iranian entities in transactions, in particular, was called into question. The report quoted a Standard Chartered employee in London who wrote in an email, in response to an American colleague who had expressed concerns over the bank’s practices with the Iranians, “Who are you [Americans] to tell us, the rest of the world, that we’re not going to deal with Iranians?”37

  The reality was that in the new age of financial pressure and a global financial system, American demands and practices applied globally. If Standard Chartered wanted to do business in the United States, it had to comply with US law. Before a hearing about its license to operate banking facilities in New York, Standard Chartered agreed, on August 14, 2012, to pay a fine of $340 million to New York authorities. Standard Chartered would still be allowed to do business in New York, but it had been whipped publicly and a pound of flesh had been exacted. In December 2012, the British banking giant HSBC would be hit with a record fine of $1.9 billion for money-laundering and sanctions violations, including financial dealings with Iran. The financial community was on notice.