Tuesday, 3 June 2014

Yet again, the US pisses off another country

Why is it that I, an incorrigible Americophile, am ranting against the US every month in this column ? I have long admired the US, the society, the culture and, especially, the economics.  I continue to be an unabashed admirer of so much in the US. and yet readers of this blog could easily mistake me for a "burn the US flag" extremist, considering the number of times I am criticising US policy and action in recent posts.

Take the case of BNP, the French bank. Like so many banks before it, it has been caught up in investigations by the US on money laundering. The crime committed by the bank is that it routed transactions to Iran, Cuba and Sudan covering them up. Standard Chartered had a similar problem and I blogged about it here. Now it is BNP's turn. 

The problem is not the act itself (although I will question even that later). BNP admits fault, is prepared to pay a fine etc etc. The problem is the quantum of the fine - $ 10 billion - the largest fine in the history of the world and dwarfs even the BP fine for the oil spill ($4 bn) . That's a ridiculous quantum of fine, by any standards. The French are mightily pissed off. The French finance minister has termed it completely unreasonable and a diplomatic row has broken out. Obama visits Paris in 2 days and Hollande is going to raise this with all puffed up anger. This is another instance of US unilateralism. Yes, by the strict letter of the law, they can act unilaterally. A more rational way would have been to involve the French government and "negotiate" a deal. This is what happens in international diplomacy - if the shoe was on the other foot, the US would have done exactly that. In a global world, showing a finger at the French will  simply mean retaliation. General Electric can now kiss goodbye to any chance of acquiring Alstom.

Quite aside from the fine, my problem has always been the US attempt to impose its will on the world, through any means possible. There isn't any evidence that BNP actually laundered money of criminals or terrorists. What they did was do transactions with Iran, Sudan and Cuba, which is against US law sure, but is a matter of foreign policy. There is no United Nations embargo against trading with these countries - it is simply US policy. Take Cuba. Is there any rationale today for the US embargo ?? Just because the US's  nose was punched in the Bay of Pigs in 1961, is there any moral justification for an embargo 50 years later. Why should the world dutifully follow and refuse to shake hands with the Cubans. So the US dictates what is a crime and what isn't and the rest of the world simply has to follow.

Yes, I know the argument, the US is simply imposing its law on its land and every foreigner must comply. But  international finance flows simply do not exist in any place. The US dollar is a global currency and it is easiest to route all transactions through the US - that's all. The transaction is not taking place in the US, the parties are non US - all that has happened is the the funds have flow in and flown out, probably on the same date simply because that was the most convenient thing to do. For that a $ 10 bn fine ? When financial mayhem is unleashed on the world by US banks, there is a bailout. For this there is a $ 10 bn fine.

It has long been my belief that the truly powerful rarely display their power noisily, if ever. They don't need to.  In the coming world order, especially economically, the US will not be a "superpower". It may be the first amongst equals - that's all. If every other "power" acted like the US is doing today, it will cause considerable harm to the US itself . In its own self interest, the US should behave like a parent and not like a maniacal school teacher.

I wish there was something - anything - that the US would do which can make me gush in praise. I wait in vain. If this is the lot of an Americophile, imagine where the true "burn the US flag" idiot would stand.


Sriram Khé said...

"The crime committed by the bank is that it routed transactions to Iran, Cuba and Sudan covering them up."

Ahem, other than that, Mrs. Lincoln, how was the play? ;)

BNP systematically stripped the identifying info in order to transact them via the US, and the systematic stripping of the info was because the US laws disallowed those kinds of transactions.

Intentional breaking of the law deserves the punishment. "C'est la vie" is something the BNP folks know well ;)

Ramesh said...

Mmmm - You miss the point entirely. Yes, the law was "broken" and yes you will punish, BUT

consider whether the law is reasonably applied to foreigners, whether the law is not an imposition of US foreign policy on the world and whether there is not blatant discrimination between the law as imposed on US banks and the law as imposed on foreign banks.

You can, of course, go this way, but wait for the day when China will impose similar "sanctions" on US entities. Will you accept the "law of the land" without a squeak ? Why should Germany not impose a fine of $ 10 bn on Google for sharing data of German citizens with the US government in violation of European privacy laws ?

Sriram Khé said...

Oh yeah, absolutely, if the German people have resolved that electronic privacy violations are illegal and if a Google breaks that law, well, yes, the company ought to be punished. If the Chinese have laws for businesses to comply with when operating within their country and if a company breaks that law, I say that the punishment will be fitting.

It is not a question of whether or not I agree with those laws. It is a question of people being able to decide for themselves on what they want. (In the case of China, people can't make those decisions, which is why I am way less a supporter of whatever the Chinese government decides.) Thus, for instance, while I disagree with India's restrictions against foreign retailers like WalMart, Indians have every right to decide whether or not they want such laws.

I do not see any reason at all why business interests should triumph over the interests of a nation-state. There is absolutely no reason why commerce should reign supreme. Such an exalted view of global commerce is worse than worshiping a god and declaring that whatever that god supposedly said wins.

Ramesh said...

@Sriram - Consider this response from Felix Salmon in the FT - mirrors exactly my view.

Sriram Khé said...

Ok, how about this commentary, via Project Syndicate:

Ramesh said...

@Sriram - We'll never agree on the. The article precisely makes the point I am making - that this is simply an instrument on foreign policy that the US imposes on the world. I consider that abominable. You consider it acceptable. We'll have to leave it at that - its a fundamental disagreement.

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