Tag: Reserve Currency

German Foreign Minister Calls for an Independent EU “SWIFT” System

Update 27 August 2018

For anyone interested in more details about this development please see: here
and here
Hat tip to Tim Smyth

interesting: One of the factors irritating to the EU is the “repatriations of billions of dollars in profit from Europe by U.S. based tech giants” (Bloomberg) an outcome of course, from recent U.S. tax reform (TTFC)

*******

I have become fascinated by an ongoing development in Europe stemming from Trump’s actions against Iran. First, there is the United States pulling out of the Joint Comprehensive Plan of Action
JCPOA, (aka the Iran nuclear deal in which Iran promised to stop development of its nuclear program in return for a lessening of sanctions and increased trade relations). After the withdrawal, Trump issued harsh sanctions against Iran.

Over the last couple days, a number of expats have tweeted/posted a
condensed version of this story. I was curious know more about it.

On August 21, German Foreign Minister Heiko Maas wrote an editorial for the German paper, the Handsblatt. He called for a “balanced partnership” as counterweight to the US actions regarding Iran.

At first, this might seem completely unrelated to our situation however, one aspect of this “Balanced Partnership” may include an option for trading outside of the U.S. SWIFT system.

Maas said Europe needs a to set up EU payment systems independent of the United States if it wants to save the nuclear deal.
 

“That’s why it is indispensable that we strengthen European autonomy by creating payment channels that are independent of the United States, a European Monetary Fund and an independent SWIFT system,” Maas wrote. “Every day the deal is alive is better than the highly explosive crisis that would otherwise threaten the Middle East.”

One might wonder if anyone in the U.S. has bothered to realize what the effects of pulling out of the Iran deal are. For those who are not fortunate enough to have the Atlantic Ocean as a shield, the ramifications of uncontrolled Iranian development of a nuclear arsenal are dangerous and potentially life-threatening. Perhaps those who remember WWII or those engaged in recent Middle East conflicts can appreciate this. Doubtful for those in America, given the impenetrable shell of mind-numbing exceptionalism.
.

Further, the EU Foreign Affairs Minister, Federica Mogherini, has taken the bold step of encouraging companies to disregard Trump’s threats should they continue to do business with Iran. She said:

“it’s up to Europeans to decide who they trade with.”

How refreshing! The development of a spine against what is nothing less than another massive example of U.S. economic imperialism.

The EU has created a new law to protect European companies from the punitive measures the U.S. will take against those who dare to defy its will.

With the new rules European companies are granted the right to challenge US sanctions in European courts and seek
compensation from the U.S. government or American companies. In practice, this path promises to be cumbersome and
costly and even the Commission acknowledged that there is no precedent in such cases.

The blocking statute has never been implemented, although one was issued for the first time in 1996 in connection to economic
sanctions against Cuba and Iran. Back then, the threat was enough to persuade the US to suspend secondary sanctions.

“The threat was enough to persuade….” reminds one of how the world responded to #FATCA, no?

This development could be incredibly helpful to us in at least two ways. First, the oft-discussed demise of the US dollar as the world’s reserve currency would clearly aid governments in divesting themselves from #FATCA. While not a direct hit at #CBT, such a move would take the “sting” out of what has come about since the H.I.R.E. Act ( 2011 for most of us). At the very least, it might stop the ongoing damage Europeans with “U.S. taint” are experiencing with the closure of bank accounts, mortgages etc. While Canadians are not currently experiencing this, a blow to #FATCA would enable them to:

  • decide to remain under the radar far more comfortably
  • put a huge dent into the screaming scare-tactic commentary of the tax compliance
    community and hopefully, their outrageous fees as well

Secondly, such a move might empower these governments, to support the requests of their own #Americansabroad citizens whether they be accidentals, dual citizens of other countries with residence in those countries as well as those who have yet to file I-407 for their greencards.

This would also encourage more effort from earlier efforts in various countries as well as the newer ones.

Here is a comparision for BRICs-US. Can you imagine the combined effect of the BRICs & the EU’s financial independence from the U.S.? Don’t you wish these countries could have thought of this BEFORE the U.S. stuffed #FATCA down the world’s throat?

I’ve been reading a book called “What We Say Goes – Conversations on U.S. Power in a Changing World,” by Noam Chomsky (2007). Chapter 6 – Invasions and Evasions – took place in Cambridge Massachusetts on February 2, 2007. In spite of the fact this Q & A predates FATCA and uses health reform and media reform as examples, I was struck by how well section this applies to what is happening to us now. So many are dissatisfied with R.O.’s TTFI proposal. People seem to expect a one-size-fits-all solution. At the beginning of our involvement with this, the phrase “It’s a marathon, not a sprint” was a sort of mantra. Part of that marathon is accepting that it will likely take a combination of a number of different solutions before it’s over.

Q. “I want to ask you about tinkerers versus overhaulers, reforms- cosmetic improvements and adjustments to the system – versus substantive structural change.”

A. “…..Tinkering, to borrow your word, is a preliminary to large-scale change. There can’t be large-scale structural change unless a very substantial part of the population is deeply committed to it. It’s going to have to come from the organized efforts of a dedicated population. That won’t happen and shouldn’t happen, unless people perceive that the reform efforts, the tinkering, are running into barriers that cannot be overcome without institutional change. Then you get pressure for institutional change. But short of that realization, there is no reason why people should take the risks, make the effort, or face the uncertainty and and the punishment that’s involved in serious change. That’s why every serious revolutionary is a reformist. If you’re a serious revolutionary, you don’t want a coup. You want changes to come from below, from the organized population.”

What is needed is support from our entire population for each and every effort that will contribute to the end of this miserable situation. I cannot imagine any of us saying to the Accidentals – “I’m sorry, but since your proposal won’t solve my specific problem, I will not help.” Or an accidental being indifferent to specifics involving duals. There may need to be more lawsuits and stronger movements within individual countries. We all have to be on board as a solid, unified group adjusting and adapting as the process moves on.

The U.S.government is already a huge, disorganized, dysfunctional mess.

We cannot afford to be the same. We have to be better than that.

Anti #FATCA BRIC nations building political clout and alliance

 

We all spend tons of time wondering what individual effort might bring down FATCA. Will the Congress come to its senses and pass the Meadows/Rand bills to repeal FATCA? Will Nigel Green & Jim Jatras achieve a lobbying miracle? Could it be possible that the Appellate Court will come up with a different finding than Judge Rose in the “Bopp” case? Or will the Canadians be successful in striking down their IGA with other countries deciding they will do the same? Will the Treasury Secretary indicate that #AmericansAbroad are exempt from FATCA? Or somehow Treasury changes its mind and allows for Same Country Exception?

To the best of my recollection, when the post below was published NONE of the actions mentioned above had started. If somebody had predicted any of them (never mind all of them), I expect we would have thought they were nuts. It has seemed so overwhelming and so hopeless from the start. Yet we fought back from the very beginning, starting simply at first; researching information and making decisions on our own terms, being unwilling to just follow blindly what we were told by the IRS, the compliance community and so on. Little by little groups began planning how to approach their ideas of taking the battle to the next level. Everyone should be proud that so much has been done under such dire circumstances, the expat grassroots movement is alive & well!

Of course, there are always other currents flowing alongside all that is happening and usually the best results are the ones that are not planned per sé but come about as the interplay of all the factors as they work themselves out. Clearly, one of the most powerful would be the demise of the U.S. as the world’s biggest bully, police officer and holder of the most powerful reserve currency. Of course many Western business/financial leaders dismiss this idea as pure folly. “Impossible“ they say. However, look at the bank collapses of 2008. Would financial officers not have reacted the same, “Impossible” ?

Did we not react the same when we first started out? Impossible ?

There is reason to believe the BRICS nations might well succeed at creating a system that can bypass what the U.S. currently “owns”; the USD as the world standard reserve currency.

This will be the first of a few posts regarding BRICS. We truly may be witnessing the fall of the American Empire and the rise of a new ruling entity.

*******

Originally posted on the RenounceUSCitizenship blog March 24, 2013

 

Earlier this year I wrote that “Peaceful resistance to FATCA will result in a new financial order“. An article by Geoffrey York of the Globe and Mail suggests this may be starting to happen.

The article is well worth reading.  Note the following commentary and excerpts:

Continue reading “Anti #FATCA BRIC nations building political clout and alliance”

Principles of Treasury’s (reserve currency) War used by private plaintiffs – U.S. law determines who non-U.S. banks can do business with

 
I was reading an article this evening which reminded me I had never taken the time to really learn what was involved after World War II and the Bretton Woods. I need to trace back to a point before the IMF and the OECD were involved in developing globalization policy, especially when countries sign onto these rather than being the originators of the policies. At any rate, talk about procrastination, the post I had intended to read was put up 2 years ago! However, the more one delves into all the accompanying issues of complying with US tax and reporting requirements, etc, the more one comes into awareness of why the US (thinks) has the power to do what it does.

reposted from the renounceuscitizenship blog
 
Prologue a comment to a blog post from 2014 …
 

Mr Jatras:

Thanks for a great article. You have used FATCA as a particularly egregious example of the propensity of the President to either ignore law or make law himself. The Obama presidency is one characterized by a rogue President who does what he wants, when he wants and to whom he wants.

One interesting example is the recent 10 billion dollar fine which he personally levied against the French Bank BNP. This is described in “The Economist” as follows:

“WHAT is the appropriate penalty for a firm that abets genocide? Roughly a year’s profit and the sacking of a dozen employees, the American authorities concluded this week. At any rate, that is the punishment meted out to BNP Paribas, a French bank that pleaded guilty to helping the Sudanese government sell oil, clearing proceeds through New York in violation of American sanctions. At the time government-backed militias in the region of Darfur were massacring civilians by the tens of thousands.”

What’s interesting that the bank was fined NOT as a result of a direct act of Congress, but as a fine levied as Executive Order 13622, by President Obama himself, found here:

Interestingly, the U.S. is claiming jurisdiction over the French Bank on the basis that the bank was using U.S. dollars.

To put it simply we have a situation where:

1. President Obama decides to impose a 10 billion fine on a French Bank; and

2. He claims jurisdiction over the bank on the basis that the bank was using U.S. dollars.

Leaving aside the troubling issue of Obama acting as though he is a “law unto himself”, it is obvious that the U.S. can no longer be trusted enough for the USD to be the main reserve currency. The erosion of the status of the USD is well under way.

The threat of FATCA sanctions levied at non-U.S. banks will exacerbate that trend.

Thanks again for a great article!
 
How the U.S. uses the dollar as to regulate foreign banks by “its very nature benefit U.S. citizens

The above tweet references an article that is of interest because it demonstrates the extension of Treasury’s War to a private plaintiff. It demonstrates how (as per Cook v. Tait) the U.S. government “by its very nature benefits its citizens“.

In other words if:

1. U.S. law prohibits a non-U.S. bank from performing certain acts or dealing with certain people.

2. That bank performs an act that U.S. law prohibits

Then,

That bank is liable to a private “U.S. citizen” plaintiff for damages.

The article includes the following:

In a unanimous verdict late Monday, a federal jury agreed that Jordan-based Arab Bank violated U.S. anti-terrorism laws in conducting business with Hamas-linked “charities.”
 
Some Israelis refer to Arab Bank as the “Grand Central Station of terrorist financing.”

It is the first case that successfully employed the strategy of going after terrorists by suing a major bank that allegedly did business with them. More than 300 U.S. nationals were part of the landmark terrorism trial that began last month in New York.

Some Israelis refer to Arab Bank as the “Grand Central Station of terrorist financing.” The plaintiffs or their family members were injured or killed in terrorist attacks while visiting Israel between 2000 and 2005 during the second intifada or Palestinian uprising.

Arab Bank Accused of Helping Reward Hamas Suicide Bombers in Terrorism Case

 
In finding the bank guilty of violating anti-terrorism laws by providing material support to Hamas, jurors rejected Arab Bank’s key defense that it had no way to know some of its clients were using its accounts to provide payoffs for terrorist acts.
 
Nobody likes violence, but …

I suggest that there is a broader principle at play here. Can the U.S. government be permitted to regulate the conduct of foreign banks? In his book, “Treasury’s War“, Juan Zarate details how the U.S. government, rather than going after the “bad guys”, goes after those who do business with the “bad guys”.

The jurisdictional basis for the U.S. Government asserting jurisdiction over non-U.S. banks
 
Now, any “right thinking” person would wonder:

How can the U.S. government regulate foreign banks?

How can the U.S. government imagine that it can impose FATCA on the world and use FATCA Sanctions as an instrument of foreign policy?
 
The answer is … It’s about the “reserve currency stupid!”
 


 
Once upon a time, Circa 1944, when the U.S. government had a reasonable “moral status, before law had become a substitute for morality, the Bretton Woods Conference made the U.S. dollar the world’s primary reserve currency.
 
A bit of history – once upon a time in “reserve currency land …
 
On of the 70th anniversary of the July 1, 1944 Bretton Woods conference – the landmark gathering that created the International Monetary Fund (IMF), the World Bank and later the World Trade Organization (WTO) – it’s hard to know whether it’s the best or worst of times for multilateralism.

Bottom line – On July 1, 1944 the U.S. dollar became the world’s primary reserve currency. Until it is replaced (which is coming) the U.S. dollar is and will be the oxygen of the financial system.

Countries need access to the U.S. dollar which allows the U.S. government to abuse that need. If you want to use our dollar, then you must do what we want! If you use our dollar and violate our laws, we will punish you.


 
@MiaChupacabra @USCitizenAbroad Here is a little exec order for the new President of France http://t.co/t9bp9q7zow
 
— BancdelAsteroideB612 (@BancB612) July 1, 2014
One of the most egregious examples of the U.S. abusing the status of the dollar as the primary reserve currency is the case of the French Bank PNB Paribas. This bank was subjected to a 9.9 billion dollar fine, by a U.S. law that allowed President Obama to be a “law unto himself”. In others words, the fine was effectively levied by Obama.
 

If you have this far in the post, you really need to read the “Economist article” which is referenced in the above tweet.

Of note is the following comment to the article:

America is playing a very dangerous game indeed.It currently has the “exorbitant privilege” of having the worlds reserve currency. The economic dominance that made this so is already declining. By running this sort of extortion racket it is making is more and more likely that the world will move to a different reserve currency – very likely an internationally agreed artificial currency. Then the USA will find that international trading carefully avoids any contamination with the USA. New big international banks will rise which deliberately decide not to have a US banking license.

America will rue the way it threw away its advantage.

A law made by Congress is bad enough, but an order made by President is unjustifiable. It’s not about the law, it’s about Executive Order 13622

On July 31, 2012, President Obama issued Executive Order (E.O.) 13622, “Authorizing Additional Sanctions with Respect to Iran.” The E.O. authorizes Treasury to impose new financial sanctions on foreign financial institutions found to have knowingly conducted or facilitated certain significant financial transactions with the National Iranian Oil Company (NIOC) or Naftiran Intertrade Company (NICO), or any entities owned, controlled by, or acting on behalf of NIOC or NICO, for the purchase or acquisition of petroleum, petroleum products, or petrochemical products from Iran. These entities would be prohibited from opening or maintaining correspondent or payable-through accounts in the U.S. In addition, the E.O. authorizes Treasury to block the property and interests in property of any person determined to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, NIOC, NICO, or the Central Bank of Iran, or the purchase or acquisition of U.S. bank notes or precious metals by the Government of Iran.

Because OFAC has not issued corresponding regulations including general licenses, a number of typically generally licensed activities if conducted with NIOC, NICO and the Central Bank of Iran can now result in sanctionable activity. For example, specific authorization is now needed from OFAC before any person provides mail or telecommunications services to NIOC, NICO, or the Central Bank of Iran. Additionally, any intellectual property claims involving these entities also must be specifically licensed by OFAC – as must the provision of legal services. While these changes again reshape the sanctions landscape with respect to Iran, companies cannot expect a lengthy compliance grace period. Companies must therefore act quickly to assess their current operations, including those of their foreign subsidiaries and affiliates, and develop immediate plans to bring themselves into compliance. Given the lack of corresponding regulations, when in doubt, it may be appropriate to file requests for guidance and specific authorizations.

Are You at Risk Under Dramatic Expansion of US Sanctions Against Iran and Syria?”

For the complete text of Executive Order 13622:

Executive Order 13622

And finally …

We now have proof that the “U.S. government by its very nature benefits its citizens.

Why?

Because if a foreign bank, does something the U.S. government doesn’t like, and a U.S. citizen believes he has been damaged by that act:

The U.S. citizen can sue the foreign bank!