It appears I have rattled some cages.
I recently appeared on RT to talk about how the United States weaponizes the dollar and wields it like a billy club to advance US foreign policy objectives. I specifically mentioned how the US can use the dollar-denominated SWIFT payment system as a tool and the threat that this kind of economic warfare poses to the US domestic economy.
A couple of days after the interview, I got a somewhat contentious email from Voice of America asking for my comment because they are “fact-checking” the web story RT published based on my interview. VoA is a US government-funded and operated media outlet.
The fact-checking arm of VoA (polygraph.info), asked if RT quoted me accurately. (They did.) The Polygraph reporter then stated, “We suspected there might be some inaccuracy because any expert on SWIFT would surely know that while the US has sought to influence it, it is primarily a European and European-based institution, which would of course limit the US’ ability to ‘use’ it as a weapon as the article states.”
SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication. The system enables financial institutions to send and receive information about financial transactions in a secure, standardized environment. Since the dollar serves as the world reserve currency, SWIFT facilitates the international dollar system.
SWIFT and dollar dominance give the US a great deal of leverage over other countries.
I didn’t respond to the Polygraph request because it’s clear that I am going to be cast in a bad light and my statements questioned. And I can tell you before they publish their article at least one fact they will present. They will tell you, “A U.S Treasury Department official confirmed to Polygraph.info that the US does not control who SWIFT removes from its system.”
I know VoA will say this because it already has. I pulled that line from a 2017 VoA fact-check on a story relating to SWIFT locking a Russian bank out of the payment system.
It is undeniable that SWIFT has been used to support US economic sanctions. A March 2019 article by Reuters reported on plans by Russian banks to “retain at least short-term access to the global financial system in the event that they are hit by fresh US sanctions.”
The two biggest threats to the banking sector in Russia are being cut off from the SWIFT banking messaging system and losing access to foreign currency, which they usually get from US banks via correspondent accounts.
A Bloomberg article in November 2018 reported on SWIFT blocking access to Iranian banks and the fear that the same policy could be used against other countries. Bloomberg cites SWIFT officials indicating that the US government put pressure on the payment system.
The US has ramped up sanctions targeting Iran’s energy and banking sectors as part of the Trump administration’s ‘maximum pressure’ campaign against the Islamic Republic. Swift has said its move is in the interest of keeping the global financial system stable after senior US officials said that it could be penalized if it authorizes payments between sanctioned entities. [Emphasis added]
Eurasia Review elaborated on the story, quoting US Treasury Secretary Steve Mnuchin who told reporters that SWIFT is no different than any other financial institution.
We have advised SWIFT that it must disconnect any Iranian financial institutions that we designate as soon as technologically feasible to avoid sanctions exposure.
So, despite what VoA and the Treasury Department claim, the US government clearly pressures SWIFT to serve as a foreign policy tool. It may be technically accurate to say the US government does not “control” SWIFT. But the US clearly applies political pressure on the institution and that pressure yields results. There is enough worry about this in other countries, including Russia and China, that there are verifiable and concerted efforts to find alternative outside of the dollar-denominated system.
The Treasury Department’s statement to VoA about its control over SWIFT feels a little like claims of Federal Reserve “independence” we get from government officials and central bankers pretending the Fed operates outside and above any kind of political pressure or influence. We all know that’s utter bullshit.
What about this assertion that SWIFT is primarily a European and European-based institution and that shields it from any kind of US influence?
It is true that the Belgium-based organization operates under EU law. But as the Eurasia Review article points out, SWIFT’s board includes executives from US banks subject to US laws, “allowing the administration to act against banks and regulators across the globe.”
Washington’s pressure has pushed Brussels to look at creating a SWIFT alternative. In August, German Foreign Minister Heiko Maas called on the European Union to set up an independent equivalent of the system.
If the EU maintained significant control over the SWIFT system, why did it feel the need to create a payment alternative to SWIFT in order to bypass US sanctions on Iran? Why didn’t the EU assert its influence on this “European-based” institution and insist that it allow transactions with Iran to continue unhindered?
The new payment system called INSTEX (Instrument in Support of Trade Exchanges) will allow France, Britain and Germany, along with other EU nations, to continue trade with Iran outside of the dollar-based SWIFT payment system. When EU foreign policy chief Federica Mogherini announced the plan, she said the new payment channel would allow companies to preserve oil and other business deals with Iran despite US sanctions.
The creation of an EU alternative to SWIFT gives you a pretty strong indication about who holds the biggest sway over SWIFT.
RT receives funding from the Russian government and there’s no question it has an editorial bias slanted toward Russian interests. But every major media organization has its bias. If you don’t think US corporate media like Fox News, CNN and the New York Times have an agenda heavily influenced by US “interests,” you live in a fantasyland.
The fact the VoA feels the need to “fact-check” the RT article based on my interview indicates that I have stumbled over a narrative the US government doesn’t want getting into the mainstream. That doesn’t make the narrative untrue.
The fact is the US uses the dollar as a foreign policy weapon. End of story.
Not only that, debt monetization by the Federal Reserve makes American interventionist wars possible. US wars since 2001 have cost each American taxpayer $23,000. if they had actually had to write a $1352.94 check to the Pentagon every year for the last 17 years, the foreign wars would have ended long ago. Thanks to the Fed, they don’t have to.
This economics of war and intervention undermine the US economy and makes it vulnerable. The US government has already run up more than $22 trillion in debt and counting. There is a limit to the amount of debt it can take on, and the central bank’s ability to effectively print money. At some point, the economic house of cards will collapse.
You may think the intervention and aggressive US foreign policy is necessary. Regardless, you need to count the cost. But the government doesn’t even want you to know a cost exists.
Reprinted with permission from the Tenth Amendment Center.
The Ron Paul Institute for Peace and Prosperity is a project of Dr. Paul’s Foundation for Rational Economics and Education (F.R.E.E.), founded in the 1970s as an educational organization. The Institute continues and expands Dr. Paul’s lifetime of public advocacy for a peaceful foreign policy and the protection of civil liberties at home. Visit http://www.ronpaulinstitute.org