@BarackObama explains how “nature of war has changed”. We have fewer horses and bayonets bc we have the US Treasury http://t.co/Gj43CePtYp
— U.S. Citizen Abroad (@USCitizenAbroad) June 14, 2014
Lawfare › Treasury’s War: The Unleashing of a New Era of Financial Warfare http://t.co/V3qoDWbuJw – #FATCA #FBAR and the #FATCASanction
— U.S. Citizen Abroad (@USCitizenAbroad) June 13, 2014
Deploying financial leverage against American enemies http://t.co/khzu9AAuzR via @washingtonpost – Welcome to #FATCA and the #FATCASanction
— U.S. Citizen Abroad (@USCitizenAbroad) June 13, 2014
The article referenced in the above tweet includes:
But he soon had an epiphany. The department may have “been stripped . . . to its core strengths,” but to reassert its relevance to national security, it could tap its unparalleled sway over the international financial system. The true value of Zarate’s book lies in explaining the difference between traditional sanctions and this new form of financial warfare. Instead of targeting terrorists and dictators directly by freezing accounts and levying sanctions, the department would aim for their banks. If Treasury could not fell the beasts alone, it could at least restrict their sustenance.
‘Treasury’s War: The Unleashing of a New Era of Financial Warfare’ by Juan ZarateTo do so, it would traffic in a new currency: reputation. As Zarate writes, after Sept. 11, banks “feared permitting even a whiff of illicit financial activity into their systems,” worried that an American investigation might tar their prestige or even lead to their expulsion from the U.S. banking system — a virtual death sentence. Treasury would harness that fear through Section 311 of the Patriot Act. Largely unused until 2003, it permitted the department to designate jurisdictions, banks, accounts and transactions as “primary money laundering” concerns.
The complete article is here.
The moral of the story is to avoid the U.S. dollar. Another example of the law of unintended consequences?
But is this approach helpful and effective? Does it always meet its objectives?
The following tweet references an interesting article in the The Economist magazine:
Banking and crime: Hitting at terrorists, hurting businesses | The Economist http://t.co/PJzF2pdCBv – Making it harder to track terrorism
— U.S. Citizen Abroad (@USCitizenAbroad) June 14, 2014
This fascinating and well written article includes:
Were all of this actually preventing terrorism it might be judged a fair trade-off. Yet—and this is the second problem with this approach—it seems likely to be ineffective or even counter-productive. Terrorism is not particularly expensive, and the money needed to finance it can travel by informal routes. In 2012 guards on the border between Nigeria and Niger arrested a man linked to Boko Haram, a Nigerian terror group, with €35,000 ($47,000) in his underpants: laughable, except that the group has killed around 1,500 people this year alone. Restrictions on banks will encourage terrorists to avoid the banking system. That may hinder rather than help the fight against terrorism. A former spy complains that it has become harder to piece together intelligence on terrorist networks now that the money flows within them are entirely illicit.
The moral of this story is to avoid banks. Could this be just one more example of the law of unintended consequences?
What the U.S. Government could learn from “The Godfather” – Don Carleone himself!
You keep your friends close and your enemies closer!
Hmmm …
So the Treasury started going down this path in order to make itself seem important?
Typical bureaucrat-think.
The United States has lost its will and ability to fight war on in a conventional manner, so economic terror is now the means of holding onto waning power. But without “boots on the ground” you cannot win a war. Iraq seems all but lost now: http://www.zerohedge.com/news/2014-06-13/gruesome-footage-isis-atrocities-reveals-al-qaeda-jihadists-will-stop-nothing
This reminds some people of the fall of Saigon. I have to admit that I see some points of resemblance. However, today’s economic situation is much worse and the Fall of Baghdad will show that the USA is no longer able or willing to enforce its will in the world. This is why instead of fight terrorists, the USA is terrorizing its own expats.
It would seem that the Treasury Department isn’t about to allow the State Department to put the kibosh on its efforts this time, no matter how many US citizens are forced to renounce US citizenship. Robert Stack’s denial that FATCA is causing the renunciations is evidence of that power struggle between State and Treasury. Pathetic.
I am fascinated by this and would like to read the book. (Where is the time? )
Very interesting to see how the US manages to find ways around its previous mode of enforcement, the military. Probably easier to get around the problems of public outcry against the violence involved in war, etc. However, it still seems to me that the ‘violence’ is not gone and as we all experience easily enough in our situation, this seems to be difficult to understand for those not readily affected by it.
As I know virtually nothing about economics, I admit readily I cannot really evaluate all this. But it seems odd to me that a nation with such a huge deficit, can wield so much power over the entire world. I have heard many times, that this debt system stays in place only so long as everyone remains convinced it works, or has faith in it. Sooner or later, something has to give, notwithstanding the fact that someday, the situation will be ripe for some wronged foe to decide to “stick it” to America once and for all. Guess that’s where replacement of the reserve currency is very likely to come into play.
It seems it is all always about only one thing, power. And humans seem incapable of utilizing it wisely.
We are the sacrificial victims of an inter-agency turf war.
With regard to the FATCA sanction or any other sanctions for that matter if a country wants to create a work around, it will do it. Sanctions may have an initial effect at the start but their effects begin to wane over time. FATCA will be no different. USD bypasses will grow and grow in future.
I is a sad commentary that I tell my friends “the greatest threat to US citizens living overseas – is the US government”
Does this story have a FATCA like ring to it?
http://news.sky.com/story/1283346/microsoft-fights-order-to-disclose-irish-emails
USG wants foreign data but Microsoft is fighting warrant. Microsoft says the USG should rely upon MLAT agreements rather than make technology companies become informers. Isn’t this the same situation the FFIs are in?
Should the IRS rely upon existing tax treaties instead?
Tricia, I did read the book Treasury’s War and have been planning on a post about it. It’s fascinating. In a a post-9811 world Treasury got gutted after the reorganization of federal agencies. They risked becoming irrelevant. So they became the gatherers of “financial intelligence” (banking info among other things) which they could then package as their “product” and leverage it in their turf wars with other agencies. Furthermore they learned that they didn’t even have to directly charge banks of wrongdoing – they could just make it known that such and such bank was a bad actor and cut them off from the US. It worked which meant that they could then go to the highest levels of the US government to tout their successes.
Most interesting to me were his final words. The author said that it is entirely possible that US will no longer have this kind of power in 10 years. And that’s one way I’ve always looked at FATCA – as an attempt by the US to set the tone for financial information-sharing while it still has the power to shape it. I’m sure they were aware that the OECD and the EU had plans already in the works and I still believe that this was an attempt to beat them. I have been told that this is a fantasy but what I read in Treasury’s War makes it, I think, a plausible hypothesis.
Let this be a warning: “A broke state with WMD is the most dangerous state in the world.” US has over 5000 nukes and is 17T in debt. #FATCA