"The system was blinking red." --The 9/11 Commission Report

WASHINGTON -- New York County District Attorney Robert Morgenthau left his home turf and came to the nation's capital on Tuesday to sound the alarm about a "blossoming relationship" between Iran and Venezuela. Comparing the situation to the lead up to the 1962 Cuban missile crisis, Morgenthau warned of growing threats--involving missiles, nuclear ventures and terrorist training--that Iran and Venezuela are now cultivating, together, "in our backyard."

"Axis of unity" is the label that Iran's President Mahmoud Ahmadinejad and Venezuela's President Hugo Chavez have themselves chosen for their alliance. The rise of this partnership, according to Morgenthau, dates from Ahmadinejad's election as president of Iran in 2005. At that point, said Morgenthau, what had been relatively routine ties between the two countries "changed dramatically."

Over the past four years, the two despotic rulers have exchanged multiple visits, struck extensive military and business deals between their two countries, supported each other in cultivating policies and practices hostile to the U.S. and introduced each other to like-minded actors in their respective regions of Latin America and the Middle East.

Morgenthau cited reports that Iran has been building and running mysterious factories in parts of Venezuela so remote that they lack such basic amenities as restaurants and grocery stores. He added that since 2006, Iran has been embedding advisers with the Venezuelan military--which has thrown out its old U.S. army field manual and replaced it with instructions in asymmetric warfare as taught to Iran's Revolutionary Guard Corps and Iranian-backed terrorist groups Hezbollah and Hamas.

Iran has also opened a bank in Venezuela, the Banco Internacional de Desarrollo, or BID. With Iran already under a long list of U.S. sanctions, as well as under a number of targeted sanctions by the United Nations, the U.S. Treasury last October added the BID to its blacklist. But Venezuela itself is under no broad sanctions. Its banks enjoy access to the U.S. financial system. Morgenthau warned that this is a "perfect" sanctions-busting setup for Venezuela to help Iran process dollar-denominated purchases of materials needed for making missiles, nuclear weapons and roadside bombs.

Morgenthau highlighted two investigations, publicly announced by his office this past year, that have uncovered "a pervasive system of deceitful and fraudulent practices employed by Iranian entities to move money all over the world without detection."

One of these investigations, for which Morgenthau said further results may be announced within the next 30 days, already led to a deferred prosecution agreement this January. In that instance, a British bank, Lloyd's TSB, agreed to $350 million in fines and forfeitures for stripping out details that would have identified as illegal more than $300 million worth of Iranian transactions running through the U.S. financial system. Another investigation led to the indictment this spring of a Chinese company, LIMMT, and its manager, Li Fang Wei, for using aliases and shell companies to get around U.S. sanctions meant to block payments involved in "shipment of banned missile, nuclear and so-called dual-use materials to subsidiaries of the Iranian Defense Industries Organization."

Morgenthau warned that "based on information developed by my office, the Iranians with the help of Venezuela are now engaged in similar economic and proliferation sanctions-busting schemes."

The most chilling line in Morgenthau's talk is hypothetical. But set amid a wealth of detail about mysterious factories, disturbing shipments, covert illicit finance and shared interests of "two of the world's most dangerous regimes"--by which he meant Iran and Venezuela--it sounds like no idle comment. Morgenthau noted that Venezuela's location "Is ideal for building and storing weapons of mass destruction far away from Middle Eastern states threatened by Iran's ambition and from the eyes of the international community."

This is a different picture from the congeniality implied by President Barack Obama's handshake with Chavez in April at a Summit of the Americas.

So why is Morgenthau going out on a limb to sound the alarm? He's no Republican cowboy. He's a Democrat, whose credentials include a ringing endorsement of President Obama's pick of Supreme Court Justice Sonia Sotomayor when he testified at her confirmation hearings in July. Now 90 years old, still spry, but planning to retire at the end of December, Morgenthau as New York District Attorney has spent 34 years pounding one of America's most vital law enforcement beats.

What this legendary DA has discovered about growing ties between Iran and Venezuela has evidently left him so concerned that he specifically asked for a Washington venue to deliver his public briefing on the subject. He spoke at a lunch at the Brookings Institution, hosted by a think-tank program called Global Financial Integrity, and The American Interest magazine. The full text of his remarks is now posted on his office's Web site.

Morgenthau noted that his office and other law enforcement agencies "can play a small but important role" in trying to stop the flow of illicit funds, which he called "the lifeblood" of Iran's nuclear and weapons programs. But he also spelled out that "Law enforcement in the U.S. alone is not enough to counter the threat effectively."

That sounds like a plea to federal authorities, all the way up to President Obama, to get serious about stopping the rise of the Iranian-Venezuelan "axis of unity." If this is to be tried via sanctions, then the going has evidently been far too slow and erratic. Morgenthau did not make a direct call for broad sanctions on Venezuela, but he certainly made a terrific case for doing so before the clock strikes midnight.

While Morgenthau was speaking in Washington, Chavez was continuing an 11-day tour that further underscores Venezuela's fast-growing role as a hub in Latin America for interests deeply hostile to the U.S.

This included Chavez's stopover last weekend in Iran; this was his eighth visit there since Ahmadinejad became president. This time, making no secret of a shared interest in nuclear technology, the two tyrants declared their intention of setting up an Iranian-Venezuelan "nuclear village."

And while the U.S. administration has been pondering options such as more stringent efforts to squeeze Iran's regime by way of sanctions on its imported gasoline, Venezuela and Iran have been forging ahead on ways to counter such measures. From Iran, Chavez announced a deal in which Venezuela later this fall would start exporting 20,000 barrels of gasoline per day to Iran.

Other trouble-making states on Chavez's current itinerary have been Syria, Libya, Algeria, Belarus and Russia. There is a carnival atmosphere to much of this, including Chavez's pit stop in Venice earlier this week to tread the red carpet and fist-bump film director Oliver Stone, at the opening of Stone's new movie South of the Border. This is a documentary that glorifies Chavez as a champion of the downtrodden. Its premiere in Italy coincided with a fresh crackdown on the media in Venezuela, where Chavez has been transforming his sway into a presidency-for-life.

Chavez is also expected to turn up in New York later this month at the annual opening of the United Nations General Assembly. He's scheduled to speak on Thursday, Sept. 24, the day after Obama and Ahmadinejad are due to take the stage. Chavez's appearance will come on the same day that Obama plans to chair a special summit meeting of the U.N. Security Council, devoted to nuclear nonproliferation and nuclear disarmament. According to an Aug. 4 statement by U.S. Ambassador to the U.N. Susan Rice, this heads-of-state meeting will not focus on any specific countries. But it's a good bet that plenty of preparatory wheeling and dealing is going on behind the scenes. Is Washington pressing for any constraints on Venezuela?

In his speech on Tuesday, Morgenthau flashed a signal straight to Obama. Gentle in his phrasing, but clear in his warning, Morgenthau noted that "the diplomatic overture" of Obama's April handshake with Chavez "is not a reason to assume a diminished threat from our neighbor to the south." Morgenthau concluded that "the Iranian nuclear and long-range missile threats and creeping Iranian influence in the Western Hemisphere cannot be overlooked," and "the world must no longer assume that Chavez is bluffing when he speaks."

When the seasoned New York DA, just a few months short of retirement, seeks out a stage in Washington to deliver this warning as a parting gift to his country, the system--to borrow the lingo of The 9/11 Commission Report--is blinking red. If President Obama and his national security team choose to ignore this flashing neon sign, they will not be able to claim later that they weren't warned.

- Claudia Rosett, a journalist-in-residence with the Foundation for Defense of Democracies, writes a weekly column on foreign affairs for Forbes.

Source: Forbes