Jim Sinclair, ages ago, told us that the moment the Obama administration threatened the Swiss with SWIFT expulsion over opening up its vaunted banking privacy rules was the equivalent of a nuclear first strike.
Previous to this threat SWIFT was as unknown to most people as the most arcane aspects of particle physics. It was the means by which money magically moved around the world. Without it modern finance and trade couldn’t exist and politicization of it was anathema because of that.
SWIFT is just code. It’s just a communications protocol. Code is easy to write. It can be copied, altered, secured and rewritten on the fly. It is not, in any way, a moat around any business.
In fact, until a few years ago, SWIFT had no competition. And, one could argue, and in fact Sinclair did at the time, SWIFT needs no competition. This is why SWIFT expulsion was such a big deal for anyone threatened with it. The idea that anyone would ever use it as a weapon to enforce domestic policy and as a tool of diplomacy and hybrid war was unthinkable because it would begin a financial arms race no one should want to pursue.
The fact that the Obama administration politicized SWIFT when it did ended an era of international finance. The world financial system ended any illusions it had over who was in charge and who dictated what terms.
The problem with that is once you go there, there’s no going back, which was Sinclair’s point over a decade ago.
Threatening Switzerland with SWIFT expulsion wasn’t a sign of strength, however, it was a sign of weakness. Only weak people bully their friends into submission. It showed that the U.S. had no leverage over than the Swiss other than SWIFT, a clear sign of desperation.
And that’s what the U.S. did when it pushed the big red ‘history eraser’ button.
The Swiss knuckled under. Its vaunted banking privacy is now a part of history.
Iran, however, in 2012, facing a similar threat from Obama, didn’t knuckle under and forced Obama to make good on his threat. Once you uncork the nuclear weapon you can’t threaten with lesser weapons, they have no sway. This is a lesson Donald Trump would learn the hard way since 2018.
The example made of Iran and the sweeping sanctions Obama put on Russia for daring to stop the taking of Ukraine by NATO finally prompted both Russia and China into real action to create alternatives to SWIFT. It is, after all, like Sinclair said, just code.
Three years later Iran used real nuclear weapons to force Obama back to the negotiating table and reinstate its position in the global financial system by acceding to the JCPOA. This agreement was pushed by the EU and Russia and rejected by the U.S. political establishment. Obama could only agree to it through executive order. It was never ratified by Congress, which is how Donald Trump pulled the U.S. out of the JCPOA in May 2018.
And it’s clear today the pivot away from pressuring Iran to isolating Russia is the plan for The Davos Crowd.
SWIFT expulsion from late 2012 to 2015 was terrible for Iran and Iranians, but it also made them stronger and harder. When Trump pushed the SWIFT button again abrogating the JCPOA at the behest of Israeli Prime Minister Benjamin Netanyahu and then National Security Advisor John Bolton and the results were the same.
With the JCPOA gone and Iran made a pariah the Iranian rial imploded, inflation soared but it also strengthened the hand of the conservative ‘mullahs’ and undermined the moderates led by President Hassan Rouhani. The humanitarian toll on Iran was horrific and only further undermined the U.S.’s position as a legitimate power.
Trump went much further than Obama, introducing sanctions which were meant to end all Iranian oil exports, an economic blockade the likes of which the world hadn’t seen since the lead up to Japan’s attack on Pearl Harbor in 1941. He openly threatened all of the U.S.’s allies with sanctions if they did business with Iran.
Given the attempt being made today by the World Economic Forum and its main arm, the EU, to destroy the U.S. from both within and without, it’s clear Trump saw the JCPOA as the thing he could use to pull back on the reins of that strategy. So, I understand why he did it, but in the bigger picture all he did was continue Obama’s weakness.
The problem for Trump by then Iran wasn’t alone. It had a few more friends to assist it evading sanctions. It wasn’t just Turkey laundering oil money through its banks as gold deposits or India buying oil for grain and washing machines.
It was China straight up buying Iranian oil directly with yuan.
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