U.S. Persuades Multinationals to Quit Iran

The U.N. Security Council has agreed to new sanctions against Iran, but the country faces a far tougher threat in an ambitious program by the U.S. Treasury Department to paint it as a corporate untouchable. In just the past two months, the U.S. government has persuaded multinationals such as Daimler, Caterpillar, and KPMG to pull out and banks from Europe to China to stop all transactions originating in Iran.

But such efforts risk punishing the good guys and propping up the bad. Past sanctions have narrowly targeted WMD proliferators and the regime's business allies; this corporate outreach doesn't make such distinctions. Limiting access to trade and global funds squeezes legitimate businesses, but may do the opposite for the government's powerful militia, the Islamic Revolutionary Guard Corps. According to an influential report by the RAND Corporation last year, the IRGC earns an estimated $12 billion in black-market sales, and controls dozens of secret jetties for smuggling. The report concludes that, by hurting private-sector competitors, comprehensive crackdowns could help the IRGC expand its "formal and illicit economic capabilities."