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Israel and the United States are scheduled to hold talks this week on ways of stepping up the pressure on Iran using economic sanctions. The measures will target companies and banks involved with Iranian businesses that have ties to Tehran's nuclear program or provide assistance to Hezbollah and Palestinian militant organizations.

U.S. Treasury Under Secretary for Terrorism and Financial Intelligence Stuart Levey, is due in Israel today for talks on tightening the economic boycott on Iran. He will meet with senior figures of the Mossad, the Foreign Ministry, including Foreign Minister Tzipi Livni, the National Security Council, and the Atomic Energy Commission.

Prime Minister Ehud Olmert informed the Bush Administration recently that he intended to appoint an official who will focus exclusively on the economic effort against Iran. As a result, the Forum for Preventive Diplomacy, headed by Mossad chief Meir Dagan, was bolstered with economic experts.

The Israeli officials will hear today updates on the American efforts to convince European and other firms to avoid doing business with Iran.

Israel in turn will offer the visiting U.S. officials assistance in identifying firms that work with Iran and the trail of Iranian funding to nuclear and terrorist activities.

Levey believes that imposing a boycott on the banking and trading system of Iran would be much more effective than sanctions. It would not require long diplomatic efforts or complex legislation. It would be sufficient for the administration to announce that a company or a bank is on a black list, and they are immediately cut off from the American financial system, are unable to trade in dollars or make deals with banks in the U.S.

In an interview with the Washington Post, Levey said that Section 311 added to the Patriot Act several years ago, "has been more powerful than many thought possible." Section 311 authorizes the Treasury to mark a foreign financial institution a "primary money laundering concern," effectively choking it off from the U.S. financial system.

Levey's boss, Deputy Treasury Secretary Robert Kimmitt said that the boycott on banks is particularly effective because of the effects of globalization, which link all financial institutions in the world to the same network.

"As banks do their risk-reward analysis, they must now take into account the very serious risk of doing business in Iran, and what the risks would be if they were found to be part of a terrorist or proliferation transaction," says Kimmitt.

The first Iranian bank to be blacklisted was Bank Saderat, which is owned by the Iranian government and which was accused of transferring $50 million to Hamas since 2001.

In January 2007, Bank Sepah was also blacklisted and accused of transfering funds for Iran's ballistic missile projects.

In recent months Levey and other American officials held talks with bank managers and finance ministers around the world, warning them of the possible implications of doing business with Iran.

Our goal, Levey says, is "to create an internal debate about whether these policies [of defiance] make sense. And that's happening in Iran. People with business sense realize that this conduct makes it hard to continue normal business relationships."