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)
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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
“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.
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The Iran sanctions have officially been cast. These are the most biting sanctions ever imposed, and in November they ratchet up to yet another level. Anyone doing business with Iran will NOT be doing business with the United States. I am asking for WORLD PEACE, nothing less!
— Donald J. Trump (@realDonaldTrump) August 7, 2018
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 action 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.
This supports my argument that Donald Trump is the greatest thing to happen for the rest of the world. The US has been weaponizing the SWIFT system for a long time, which really picked up pace under Obama, in which the US has been prosecuting and fining foreign banks and other organizations, for “crimes” that have nothing to do with the USA by claiming jurisdiction just because money passed through the SWIFT system. Case in point is the crackdown on FIFA, the world football (I refuse to use the ugly American term “soccer”) organization. Yes, FIFA officials were clearly involved in corruption, but none of it took place on US soil, so what business was it of America? Money merely passed through SWIFT. Which means that all the penalty money went to the USA instead of the actual countries involved. The Iran issue is just another example of US financial hegemony.
Then there are Trump’s irrational and vindictive sanctions right and left. In the short term they’re hurting the world economy, but in the long term, the USA will suffer the most. And I will shed crocodile tears for America the big fat bully.
The fact that world leaders were coming in their trousers over His Holiness Saint Obama made them cower, and allowed the USA to get away with financial murder, even as Obama turned up the juice (FATCA being the prime evidence). But world leaders’ justified disgust with Trump has finally helped turn the tide. Governments are finally waking up to US financial imperialism and doing something about it. China with its CIPS alternative to SWIFT for international RMB payments, as well as the Asia Infrastructure Investment Bank. Russia, too, setting up SWIFT alternatives. And now this German proposal.
One day I think we’ll all look back and praise Trump for exposing the American beast for what it really is.
Maybe, just maybe, things will get so bad under Trump that other countries will start to accept asylum applications from US citizens like myself who need a quicker way to obtain an alternative citizenship.
Barbara: I agree, and I’ve thought as much from the start. Although I am a Democrat, and cannot associate with the current GOP, I knew full well that we had been backstabbed by Democrats. It was also always very apparent that business as usual, Obama then Clinton, would have slowly continued to put the EU to sleep (the “Saint Obama” situation you describe, and I did vote for him twice). The transatlantic partnership would have rumbled along, with the EU digesting US law and having to import US food that was not wanted by the EU population, as well as having to accept arbitration in favor of large companies. It is truly fascinating that Trump has shaken the EU quite a bit and that he might end up stimulating defense spending, protecting the EU from toxic US imports, slowing creeping influence of the US legal system in Europe, and, as this post shows, perhaps stimulating Europe to take some independence regarding banking.
Regarding FIFA, indeed, my question was always WTF is the US doing here? You are entirely correct, excellent example. It has always bugged me that from Al Capone to Manafort, they catch people using an impossibly complex net of obscure regulations, rather than focusing on the real crimes, if any.
And so, indeed, Trump will perhaps Make America Weak and Isolated (MAWI) and therefore give us all some breathing room. Now if the GOP could just retain the house and get on with voting the end of CBT, that’d be dandy.
@Barbara
Music to the ears.
I was wondering how much more financial bullying and abuse the rest of the world would take from the US before they did something about it. I hope the EU can acheive full agreement to the proposal. My one regret is that the UK could be left out of any EU swift system if a hard Brexit happens and they are stuck with their ‘special relationship’
This is a great post describing what is really the new “form” (no pun intended) of warfare in the 21st Century. War is now carried on through:
– sanctions
– the weaponization of the dollar and the weaponization of U.S. citizenship
– tariffs
– one sided treaties (including the FATCA IGAs – if you believe these are treaties)
I have been thinking that a smart money manager could/should create a “Sanctions Fund” which would be for the purpose of identifying the companies most helped or hurt by U.S. sanctions.
Thanks for this Patricia. This is no walk in the park but it’s a beginning. I hope it’s nit just a threat tactic and is truly an awakening.
I happen to completely support Trump on his Iran stance. The only way to peacefully pressure these genocidal religious nutjobs is to apply as much economic sanctions as possible.
However I also believe the US is a major bully in this regard and has completely abused its power for many years. This well precedes Trump (i.e. FATCA was Obama’s baby, despite his fake reputation of being a friendly globalist) Trump is simply laying bare this fact and waking the world up to it. Now the world realizes that as long as the US theoretically wields these enormous powers, any leader can be elected and decide to use them and there will be nothing to do.
The US should have quietly and responsibly maintained these controls while treating the rest of the world with respect. Instead people like Obama and Trump decided to abuse it to the extreme and eventually the US – and the world – will lose out bigly
Sorry that my comment above focused only on the German proposal and not on Patricia’s rousing call to arms, which is so eloquently and passionately put. I strongly agree that the wind seems to be gradually shifting in a direction we’ve long waited for. I think we are all in a position to help by pointing out to our home governments about how attitudes toward the US are changing, and to encourage them to stop being afraid of the Big Bad Wolf.
For example, those living in Europe could write their representatives and say, “I’m a resident/citizen of this country who is also a US citizen and I support the EU forming its own independent alternative to SWIFT.” The underlying message: even our own Americans support the idea. This might in a small way strengthen their resolve.
“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.”
Yes we need “support from our entire population for each and every effort that will contribute to the end of this miserable situation”, and that effort should include speaking with a unified voice to anyone who will help, regardless of which party they are affiliated with. We don’t have the luxury of partisanship, which homelanders and US lawmakers seem to be intent on destroying themselves with.
Thanks for this important post, Patricia. “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.
Our issue (sadly) was not deemed to be of sufficient importance for Europe et al. to have already considered the action suggested here by Mr. Maas. But we can certainly benefit from any action taken now in this direction. If they can make this happen it will be extremely good for us.
Nicely done Tricia. Sometimes the only way turds like FATCA and unwarranted sanctions, lying under the rock of US hegemony, will get exposed and deposed is if the rock is so blatantly covered in the slime of US exceptionalism you just have to kick it away in disgust. Kudos to the German FM for at least considering to give that rock a SWIFT kick.
@ Sam
I disagree with your attitude towards Iran. It’s a sovereign nation which has not attacked, invaded or occupied another country in 200 years. It has, however, rightfully defended itself against attack and generously come to the aid of another sovereign nation (upon invitation) in its valiant battle against proxy terrorism.
Yes, people must commit to supporting the overall principle that the U.S. Government cannot impose worldwide taxation on people who are tax residents of other countries and do not live in the United States.
Too many people are satisfied ONLY if their particular issues has been resolved.
http://jamaica-gleaner.com/article/news/20180827/dayle-blair-paul-manafort-verdict-us-citizens-and-green-card-holders-worldwide
There’s a comments section in that link, I suggest Brokers use it and particularly as it suggests the IRS is going to be prosecuting resident citizens of other nations which may scare the casual reader in to compliance, the last thing most should consider.
@nervousinvestor/Mike
I put the link in Media/Blogs. So far, only John Richardson’s comment is there. Mine didn’t make it past moderation and one I saw earlier is now gone………..
Any comment pointing out that the residents and citizens of other nations should not go running to the author, a certain Dayle Blair who is a tax lawyer and CPA do not make it past moderation, unless you’re as subtle as John has been.
https://www.politico.eu/article/angela-merkel-quashes-german-foreign-minister-heiko-maas-anti-american-dream/
Seems US clout continues to be sufficient to bully the world and Angel Merkel puts her foreign minister back in his place. Nevertheless, good to hear the rumblings, hopefully just a start. But of course partisans of US control over the world financial system will always put it in terms of the struggle against terrorism, pedophilia, tax evasion and money laundering.
According to the FT (back in March, “Global Banking is not an American Fiefdom”),
“the Belgium-based utility is under European jurisdiction, and says it only takes direction from Brussels.”
Of course, it’s data that enables effective control (as opposed to control on paper).
The EU-US Terrorist Finance Tracking System would presumably apply to any EU payments system in the same way it applies to SWIFT. (https://www.swift.com/about-us/swift-and-data)
“Macron hits out at US isolationism and says EU unity more important than
Airstrip OneUK relations post-Brexit”https://www.telegraph.co.uk/news/2018/08/27/macron-hits-us-isolationism-says-close-eu-relationship-important/
Speaking at Ms Merkel more than Ms May, by the sound of it. (IMO)
French companies have historically good relationships with Iran, and had started to work there again before backing away because of the US embargo. I also believe hurting the irony people economically is not helpful at all politically. Poverty have always drawn extremists more than affluence.
But would a new European payments system be a solution?
Perhaps the EU could declare Iran an honorary member of SEPA.
“Iran switches from dollar to euro for official reporting currency“
https://www.reuters.com/article/us-iran-currency-euro/iran-switches-from-dollar-to-euro-for-official-reporting-currency-idUSKBN1HP25W
That was back in April.
Readers here might want to follow some of the big time Iran hawks on TWITTER. The are awfully similar to the FATCA compliance condors except they are even more obnoxious.
Below are two big time Iran extraterritorial sanctions hawks.
https://twitter.com/mdubowitz
https://twitter.com/rich_goldberg
@ Tim Smyth
I feel disgusted even taking a slight peek at those twits. This happens when I read the scare-mongering of FATCA compliance condors too. I don’t feel obliged to forgive any of them either because this is NOT a case of “for they know not what they do”. They know people were/are/will be harmed but they shrug and say it’s only collateral damage.