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Collateral Damage: U.S. Sanctions Aimed at Russia Strike Western European Allies

By Diana Johnstone | CounterPunch | July 28, 2017

Do they know what they are doing? When the U.S. Congress adopts draconian sanctions aimed mainly at disempowering President Trump and ruling out any move to improve relations with Russia, do they realize that the measures amount to a declaration of economic war against their dear European “friends”?

Whether they know or not, they obviously don’t care. U.S. politicians view the rest of the world as America’s hinterland, to be exploited, abused and ignored with impunity.

The Bill H.R. 3364 “Countering America’s Adversaries Through Sanctions Act” was adopted on July 25 by all but three members of the House of Representatives. An earlier version was adopted by all but two Senators. Final passage at veto-overturning proportions is a certainty.

This congressional temper tantrum flails in all directions. The main casualties are likely to be America’s dear beloved European allies, notably Germany and France. Who also sometimes happen to be competitors, but such crass considerations don’t matter in the sacred halls of the U.S. Congress, totally devoted to upholding universal morality.

Economic “Soft Power” Hits Hard

Under U.S. sanctions, any EU nation doing business with Russia may find itself in deep trouble. In particular, the latest bill targets companies involved in financing Nord Stream 2, a pipeline designed to provide Germany with much needed natural gas from Russia.

By the way, just to help out, American companies will gladly sell their own fracked natural gas to their German friends, at much higher prices.

That is only one way in which the bill would subject European banks and enterprises to crippling restrictions, lawsuits and gigantic fines.

While the U.S. preaches “free competition”, it constantly takes measures to prevent free competition at the international level.

Following the July 2015 deal ensuring that Iran could not develop nuclear weapons, international sanctions were lifted, but the United States retained its own previous ones. Since then, any foreign bank or enterprise contemplating trade with Iran is apt to receive a letter from a New York group calling itself “United Against Nuclear Iran” which warns that “there remain serious legal, political, financial and reputational risks associated with doing business in Iran, particularly in sectors of the Iranian economy such as oil and gas”. The risks cited include billions of dollars of (U.S.) fines, surveillance by “a myriad of regulatory agencies”, personal danger, deficiency of insurance coverage, cyber insecurity, loss of more lucrative business, harm to corporate reputation and a drop in shareholder value.

The United States gets away with this gangster behavior because over the years it has developed a vast, obscure legalistic maze, able to impose its will on the “free world” economy thanks to the omnipresence of the dollar, unrivaled intelligence gathering and just plain intimidation.

European leaders reacted indignantly to the latest sanctions. The German foreign ministry said it was “unacceptable for the United States to use possible sanctions as an instrument to serve the interest of U.S. industry”. The French foreign ministry denounced the “extraterritoriality” of the U.S. legislation as unlawful, and announced that “To protect ourselves against the extraterritorial effects of US legislation, we will have to work on adjusting our French and European laws”.

In fact, bitter resentment of arrogant U.S. imposition of its own laws on others has been growing in France, and was the object of a serious parliamentary report delivered to the French National Assembly foreign affairs and finance committees last October 5, on the subject of “the extraterritoriality of American legislation”.

Extraterritoriality

The chairman of the commission of enquiry, long-time Paris representative Pierre Lellouche, summed up the situation as follows:

“The facts are very simple. We are confronted with an extremely dense wall of American legislation whose precise intention is to use the law to serve the purposes of the economic and political imperium with the idea of gaining economic and strategic advantages. As always in the United States, that imperium, that normative bulldozer operates in the name of the best intentions in the world since the United States considers itself a ‘benevolent power’, that is a country that can only do good.”

Always in the name of “the fight against corruption” or “the fight against terrorism”, the United States righteously pursues anything legally called a “U.S. person”, which under strange American law can refer to any entity doing business in the land of the free, whether by having an American subsidiary, or being listed on the New York stock exchange, or using a U.S.-based server, or even by simply trading in dollars, which is something that no large international enterprise can avoid.

In 2014, France’s leading bank, BNP-Paribas, agreed to pay a whopping fine of nearly nine billion dollars, basically for having used dollar transfers in deals with countries under U.S. sanctions. The transactions were perfectly legal under French law. But because they dealt in dollars, payments transited by way of the United States, where diligent computer experts could find the needle in the haystack. European banks are faced with the choice between prosecution, which entails all sorts of restrictions and punishments before a verdict is reached, or else, counseled by expensive U.S. corporate lawyers, and entering into the obscure “plea bargain” culture of the U.S. judicial system, unfamiliar to Europeans. Just like the poor wretch accused of robbing a convenience store, the lawyers urge the huge European enterprises to plead guilty in order to escape much worse consequences.

Alstom, a major multinational corporation whose railroad section produces France’s high speed trains, is a jewel of French industry. In 2014, under pressure from U.S. accusations of corruption (probably bribes to officials in a few developing countries), Alstom sold off its electricity branch to General Electric.

The underlying accusation is that such alleged “corruption” by foreign firms causes U.S. firms to lose markets. That is possible, but there is no practical reciprocity here. A whole range of U.S. intelligence agencies, able to spy on everyone’s private communications, are engaged in commercial espionage around the world. As an example, the Office of Foreign Assets Control, devoted to this task, operates with 200 employees on an annual budget of over $30 million. The comparable office in Paris employs five people.

This was the situation as of last October. The latest round of sanctions can only expose European banks and enterprises to even more severe consequences, especially concerning investments in the vital Nord Stream natural gas pipeline.

This bill is just the latest in a series of U.S. legislative measures tending to break down national legal sovereignty and create a globalized jurisdiction in which anyone can sue anyone else for anything, with ultimate investigative capacity and enforcement power held by the United States.

Wrecking the European Economy

Over a dozen European Banks (British, German, French, Dutch, Swiss) have run afoul of U.S. judicial moralizing, compared to only one U.S. bank: JP Morgan Chase.

The U.S. targets the European core countries, while its overwhelming influence in the northern rim – Poland, the Baltic States and Sweden – prevents the European Union from taking any measures (necessarily unanimous) contrary to U.S. interests.

By far the biggest catch in Uncle Sam’s financial fishing expedition is Deutsche Bank. As Pierre Lellouche warned during the final hearing of the extraterritorial hearings last October, U.S. pursuits against Deutsche Bank risk bringing down the whole European banking system. Although it had already paid hundreds of millions of dollars to the State of New York, Deutsche Bank was faced with a “fine of 14 billion dollars whereas it is worth only five and a half. … In other words, if this is carried out, we risk a domino effect, a major financial crisis in Europe.”

In short, U.S. sanctions amount to a sword of Damocles threatening the economies of the country’s main trading partners. This could be a Pyrrhic victory, or more simply, the blow that kills the goose that lays the golden eggs. But hurrah, America would be the winner in a field of ruins.

Former justice minister Elisabeth Guigou called the situation shocking, and noted that France had told the U.S. Embassy that the situation is “insupportable” and insisted that “we must be firm”.

Jacques Myard said that “American law is being used to gain markets and eliminate competitors. We should not be naïve and wake up to what is happening.”

This enquiry marked a step ahead in French awareness and resistance to a new form of “taxation without representation” exercised by the United States against its European satellites. The committee members all agreed that something must be done.

That was last October. In June, France held parliamentary elections. The commission chairman, Pierre Lellouche (Republican), the rapporteur Karine Berger (Socialist), Elisabeth Guigou (a leading Socialist) and Jacques Myard (Republican) all lost their seats to inexperienced newcomers recruited into President Emmanuel Macron’s République en marche party. The newcomers are having a hard time finding their way in parliamentary life and have no political memory, for instance of the Rapport on Extraterritoriality.

As for Macron, as minister of economics, in 2014 he went against earlier government rulings by approving the GE purchase of Alstom. He does not appear eager to do anything to anger the United States.

However, there are some things that are so blatantly unfair that they cannot go on forever.

Diana Johnstone is the author of Fools’ Crusade: Yugoslavia, NATO, and Western Delusions. Her new book is Queen of Chaos: the Misadventures of Hillary Clinton. She can be reached at diana.johnstone@wanadoo.fr

July 29, 2017 Posted by | Economics | , , , , , | Leave a comment

The Dangerous Liaisons of French Banks with the Israeli Occupation

CounterPunch News Service | April 6, 2017

Executive Summary

While the year 2017 marks the 50th anniversary of the Israeli occupation in the Occupied Palestinian Territories, the Israeli government’s colonization project in the West Bank and East Jerusalem has accelerated dramatically.

The very existence of Israeli settlements is illegal under international law. It is accompanied by numerous restrictions imposed on the Palestinian population, restrictions that violate their most fundamental rights and deprive them of the conditions that make a decent life possible.

The UN(1), the European Union(2) and the French government(3) have affirmed on numerous occasions and, most recently, in the major resolution of the UN Security Council of 23 December 2016: the Israeli settlements in the Occupied Palestinian Territories are not part of Israel as defined by the 1967 frontiers and are illegal under international law.

These settlements, “which do not cease to undermine a two state solution and to impose on the ground the reality of one state”(5), remain a major obstacle to any resolution of the conflict. The same Security Council resolution also requires [par. 5] that all states, ‘in their relevant dealings’, make a distinction between the territory of the state of Israel and the territories occupied since 1967.

The Israeli banking system constitutes an essential tool of the colonization project, and Israeli businesses contribute to the maintenance and development of the settlements. In this context, the principal French financial institutions, in continuing to support Israeli banks and businesses involved in the settlements, contribute indirectly to the maintenance and development of this illegal situation with respect to international law.

Five major French financial groups – BNP Paribas, Crédit Agricole, Société Générale, [the state-owned] Banque Populaire Caisse d’Epargne, AXA – manage financial holdings or hold shares in Israeli banks or businesses involved in financing settlements in the Occupied Palestinian Territories and which furnish services vital to the maintenance and development of the settlements – such as housing or factory construction, the provision of telecommunications connections or of surveillance equipment.

Added to that financial involvement, the four largest French banks – in this instance BNP Paribas, Société Générale, LCL (subsidiary of Crédit Agricole) and Natixis (investment bank subsidiary of BPCE) – have granted loans to the total of €288 million for the period 2004-2020 to the state enterprise Israel Electric Corporation (IEC) for a project for two gas-fired power plants(6), while IEC is providing electricity to the illegal settlements in the Occupied West Bank.

The French government is responsible at three levels:

1) Obligations under international law (the UN’s ‘protect, respect and remedy’ framework of its Guiding Principles, to not recognize as legitimate a situation created by a grave violation of international law, nor to aid or assist in the maintenance of this situation, and to cooperate to dismantle such situations).(7)

2) An obligation to protect against human rights violations by third parties, including businesses and banks.(8)

3) A particular obligation, as 20 per cent shareholder in Alstom [2004-06, 2014-], to apply rigorous controls when a business is state-owned or state-controlled, even when the state is a minority shareholder.(9) Alstom is the contractor for one of the two gas-fired power plants [partly financed by French banks], as noted above. [Siemens is the contractor for the other plant.]

The signatory organizations of this report have exhorted the French banks and insurance companies to conform to international principles in ceasing all financing of the Israeli colonization project. Numerous financial institutions, public and private, European and American, and pension funds(10) have already taken this step and have disengaged from Israeli entities which support the settlements, in contrast to the French financial institutions targeted in this report. To this day, no French bank has committed itself to cease financing entities which contribute to the development of settlements on Palestinian territory, despite unmistakable infringements on human rights, and in spite of undertakings with respect to human rights of the banks mentioned in this report and their adhesion to one or more directives on a voluntary basis.

The risks of new financing linked notably to the extension of the East Jerusalem light rail by Alstom(11), 20 per cent owned by the state itself, reinforces the urgency of strong commitments. It is not too late to act: the French banks must make commitments in conformity with international law and announce publicly the end of all financial support to entities that facilitate the maintenance and development of the illegal settlements in the Occupied Palestinian Territories.

The signatory organizations request:

To the French banks to:

* withdraw all financing, direct or indirect, from banks and Israeli businesses involved in the development of the settlements;

* commit themselves publicly to no longer finance such entities;

* develop a credible policy aiming to exclude from their operations all businesses involved with the settlements.

To the French state to:

* respect its international obligations, notably those resulting from violations of the imperatives of international law by Israel and those pertaining to the UN’s ‘protect, respect and remedy’ human rights framework.

* pursue all means to prevent any participation or investment of French businesses which contribute to Israeli colonization(12);

* implement the UN’s Guiding Principles with respect to businesses and human rights and to ensure that the corporations under its jurisdiction, including banks, do not prejudice the full realization of fundamental rights in France and abroad;

* supervise respect for the law relative to the duty of vigilance of parent and contracting companies.

* support, at the UN, the process for the elaboration of an international treaty on human rights and transnational corporations and other businesses.

Notes.

(1) Resolution adopted by the General Assembly on 11 December 2013: 68/82. Israeli settlements in the Occupied Palestinian Territory, including East Jerusalem, and the occupied Syrian Golan.

(2) Council of the European Union, Council Conclusions on the Middle East Peace Process, 18 January 2016.

(3) France Diplomatie, Israël/Territoires Palestiniens, Securité, 2 December 2016.

(4) UN Security Council, Resolution 2334, 23 December 2016.

(5) See Resolution 2334 preamble.

(6) Global Trade Review, Germans Back Israel Electric [Corporation], 23 February 2004.

(7) The document here cites Trading Away Peace: How Europe helps sustain illegal Israeli settlements, October 2012.

(8) According to the Guiding Principles 11 to 24 of the United Nations. Moreover, note Principle no.7: “Because the risk of gross human rights abuses is heightened in conflict-affected areas, States should help ensure that business enterprises operating in those contexts are not involved with such abuses, including by:(a) Engaging at the earliest stage possible with business enterprises to help them identify, prevent and mitigate the human rights-related risks of their activities and business relationships; [etc.]”.

(9) The Guiding Principles of the UN, and notably Principle no.4, regarding state-owned enterprises: “States should take additional steps to protect against human rights abuses by business enterprises that are owned or controlled by the State, or that receive substantial support and services from State agencies such as export credit agencies and official investment insurance or guarantee agencies, including, where appropriate, by requiring human rights due diligence. … Moreover, the closer a business enterprise is to the State, or the more it relies on statutory authority or taxpayer support, the stronger the State’s policy rationale becomes for ensuring that the enterprise respects human rights.” The UN’s ‘Working Group on the issue of human rights and transnational corporations and other business enterprises’ had its mandate extended in June 2014. The Working Group has equally highlighted the responsibility of states to take additional measures to guard against infringement on human rights by state-owned or state-controlled businesses.

(10) This is notably the case for the Norwegian government pension funds (2010), the Netherlands’ PGGM pension fund (2013), the Luxembourg FDC pension funds (2014), the Danish Danske Bank (2014) and German Deutsche Bank (2014) and the pension funds of the US Methodist Church (2016).

(11) Pertinent information became publicly available in June 2016, indicating that a commercial agreement had been signed between the Israeli government and the Israeli consortium Citypass and Alstom to extend the Jerusalem light rail network. Alstom and the French government have been contacted and advised by one of our organizations in June and September 2016, and have not denied the existence of this agreement. One might reasonably infer that this contract, of the order of €350 million, will require bank finance. [Resistance against French corporate involvement in this project has a long history.]

(12) In complementing the advice of the French Foreign Affairs Ministry, as per fn. (3).

§ From Le Liaison Dangereuses de Banques Françaises avec La Colonisation Israélienne, March 2017. The report was compiled under the auspices of the following NGOs: Al-Haq, AFPS, CCFD -Terre Solidaire, CGT, FIDH, Fair Finance France, LDH, and Union Syndicale Solidaires.

Translated by Evan Jones.

April 6, 2017 Posted by | Ethnic Cleansing, Racism, Zionism, Illegal Occupation | , , , , , , , | 1 Comment

Washington Forces France to Pay $800Mln for Violation of US Sanctions

Sputnik – 20.10.2015

French bank Credit Agricole was accused by Washington of dealing with countries under US embargo and processing financial transactions for Sudan, Cuba and Iran through the United States. Several bank employees responsible for the transactions have already been fired, media reported.

The bank agreed to pay $800 million in fines for the illegal financial transactions carried out in the period from 2003 to 2008 on the territory of the United States, AFP reported, referring to a source familiar with the situation.

According to previous estimations, the bank had to pay US $900 million, but the amount was reduced through the course of negotiations.

The agreement may be announced this week, the source said. The bank is expected to fully recognize its guilt in violating US laws which would help it to avoid any prosecution. According to the source, some of the bankers responsible for the offense have already been dismissed.

Last year, French bank BNP Paribas agreed to pay $8.97 billion fine for violation of the sanctions regime against Cuba, Sudan and Iran.

The difference in the amount of the fines arises from the fact that the financial transactions carried out by Credit Agricole were smaller and that the bank agreed to cooperate with the authorities in a quicker manner.

October 21, 2015 Posted by | Timeless or most popular, Wars for Israel | , , , , , | Leave a comment