Swift Bank Veterans

In the last two weeks, the New York Times broke the story that, in the days after 9/11, the Bush administration had demanded and received unfettered access to the global system that sends bank transfers around the world. Since that black September, the US Central Intelligence Agency, the Federal Bureau of Investigation, and other assorted government agencies have been able to review money transfers, in theory, provided only that the payor or payee had a corporate affiliation with terror. The clearing house for international financial payments, known as SWIFT, is located is Brussels, but it has a US presence, and that link caused the cooperative—formally known as the Society for Worldwide Interbank Financial Telecommunication—secretly, and without telling its clients, to turn state’s evidence in the war on terror.

By its own account, the New York Times anguished before it decided to rat on the secret US government sting operation. The Times executive editor, Bill Keller, even went to the length of writing an open letter to his readers in which he explains and then defends the decision to publish “information about the government’s examination of international banking records.” His mea culpa is written in homespun language (“As the editor responsible for the difficult decision to publish that story, I’d like to offer a personal response.”) rather than in the sober monotones of a Times editorial. But before the ink was dry in Keller’s printer, the Bush administration had accused the Times—in its sound bites anyway—of acts that it believed were alien and seditious.

Both President Bush and Vice President Cheney used the same adjective, “disgraceful,” to denounce the Times’s decision to publish news of the SWIFT snooping. President Bush said: “Congress was briefed. And what we did was fully authorized under the law. And the disclosure of this program is disgraceful. We’re at war with a bunch of people who want to hurt the United States of America, and for people to leak that program, and for a newspaper to publish it, does great harm to the United States of America.” Vice President Cheney hummed the same tune (he said the program had been “successful in breaking up terrorist plots”) and other loyalists in the cabinet and the Congress implied that the Times had “given comfort” to America’s enemies. Representative Peter King thundered that the Times be investigated under the Espionage Act. But who knew prior to the administration’s outbursts that so-many jihadis in the war on terror were such faithful readers of the New York Times? From the accusatory language of the President and Vice President, you could almost draw the picture of terror cell members in places like Hamburg or Jakarta arguing over who gets the first crack at the Sunday magazine crossword or jumping on clues such as “Busted Brussels bank.”

For those of you wondering who or what SWIFT is, it’s useful to recall the banking era before there were standardized international wire transfers. From Venetian counting houses into the 1970s, banks needed to have accounts with each other to settle international payments. Or they needed a correspondent bank that worked with both of them. If a bank in Florence had a positive balance with another bank in Amsterdam, it could instruct the Dutch bank to advance money to one of its customers in Holland. Sometimes, if the Dutch bank had faith in the Florentines, it would advance money without proper collateral. But when there were doubts, the second bank waited for the funds to arrive from the first bank before paying out the cash. In those days foreign checks sent out “on collection” took about six weeks to clear, which, oddly, is still the case.

Beginning in the 1970s, all wire transfers were sent in a standardized SWIFT format, which provided the names and account numbers, and the amount to be transferred, from one bank to another. SWIFT did not ensure that either bank was good for the money, but as time passed admission to the SWIFT network did imply that the bank was creditworthy, and not flying by night. In effect, what SWIFT gave to the international banking system was an internal Western Union by which all members (effectively, most international banks) could communicate quickly and settle payments in all major currencies, not just US dollars.

One of the great modern ironies is that, if you travel to the United States, you are required to tell customs’ officials if you are physically carrying more than $10,000 in cash or if you have bought more than $400 in Greek souvenirs. At the same time, if you settle a foreign exchange transaction in US dollars, you might wire (via SWIFT) more than $1 billion from Europe to America, and no more have to explain the transaction than if you were buying a coffee at Starbucks. Nevertheless, the Bush administration saw September 11th as a chance to corner the markets in financial transparency, and thus tapped into a system that, on average, sends 11,034,472 messages a day. With about 4 billion telexes to sort through per year, what can’t the US discover about the global economy? Only a country with pretensions as grand as Rome’s would ever make the claim that it alone should supervise the world’s business. As the Emperor Caligula noted: “Let them hate us so long as they fear us.”

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American financial hegemony dates to the Bretton Woods conference in 1944, when the US dollars became the coin of the realm. Toward the end of the Second World War, the dollar was seen as the successor to the British pound as the world’s reserve currency, and other currencies generally established their value in relation to the greenback. In effect, the dollar became as good as gold—the US could print more when wealth was needed—and it was easy to send it around the world to settle trade and financial transactions. So long as the world continued to believe in the “full faith and credit” of the United States, financial markets would continue to trade and save in dollars. That indirectly allowed Washington to keep its supervisory eye on world’s financial system. By definition, any transfer made in the US dollars had to clear through a US bank, and that bank had either a federal or a state banking charter, putting it under the thumb of some government regulator.

About the time that the SWIFT system developed its banking worldwide web of telexes, however, the US dollar began to lose its luster as a reserve currency. In 1971, President Richard Nixon detached its gold backing, letting the dollar float against a basket of other currencies. The US also embarked on a long run of budget and trade deficits, and moved from being a creditor to a debtor nation. (In 1960, the national debt was $260 billion; in 1990 it had grown to $3.2 trillion.) The hangover effect of living off easy money weakened the value of the US dollar to the point that investors increasingly preferred to hold their savings in such currencies as the Japanese yen or, later, the European Euro. Over time, the US became just one of a number of reserve currencies—but one which continued to lose its value in international markets. The smart money managers—George Soros and Warren Buffet among them—made huge long-term bets on the dollar’s continuing decline, which was like wagering that a drunken sailor would belly up to the bar for another drink.

In response to the reports published in the New York Times, the President defended the looting of the SWIFT systems: “If you want to figure out what the terrorists are doing, you try to follow their money. And that’s exactly what we are doing. And the fact that a newspaper disclosed it makes it harder to win this war on terror.” From this justification it is possible to imagine hard-working Homeland Security agents following a trail of funds from the bank accounts of Osama bin Laden into the coffers of various terrorist organization, and thus avoiding another attack against US citizens. It may happen like that on “Crime Scene Investigation: Crawford,” but in the murky underworlds of violence, if you were actually to follow the money, you would find payments made by couriers or offsets confirmed by e-mails, not SWIFT messages. Terror networks are not hedge funds. How many suicide bombers do you imagine even have bank accounts?

In the meantime, the Bush administration now has unrestricted access to tap into anyone’s bank transfers. When the Times ran its story, the President protested that no laws had been broken and said that Congress had been “briefed” on the program. But how does “briefing” Republican leaders in Congress square with the Fourth Amendment, which in its entirety reads: “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.” In its searches, the Bush administration asserts the right to bypass the constitutional requirement for specific court orders and subpoenas, and claims the right to judge nearly all global banking records before deciding which of them poses a threat to domestic tranquility. We’re a long way from the sentiments of Pericles, whom Thuycidides quotes as saying: “The individual can be trusted. Let him alone.”

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SWIFT is a Belgian-based cooperative, with about 8,000 members, and I suspect for the foreseeable future it will have to explain in any number of world courts on what basis it allowed the US government access to private financial records. It writes on its Web site: “Protecting your privacy is very important to SWIFT. To do so, we follow general principles in accordance with worldwide best practice on data protection. Information we collect may include personal data related to individuals such as name, address and email address. We treat all this information as confidential. We do not give it or sell it to any third party, except as required by law or as necessary for us to provide you with the required services. We hope the following policy will help you understand how SWIFT collects, uses and safeguards your information on our website.” At least that sounds more dignified than if it were to write: “We also will provide all your private and confidential data to the CIA, FBI, and any one else, at least whenever the Bush administration is threatening to put us out of business.”

Already a human rights group, Privacy International, located in London, has sued SWIFT in 32 countries, saying it violated laws in Europe and Asia that pertain to “data protection rules.” The group’s director said: “It [SWIFT] was willing to overlook European civil liberties rules in order to satisfy U.S. objectives and this is the most recent in a long list of attempts by the U.S. to invade the privacy of Europeans.” In response, it will not be sufficient for SWIFT to explain that the US Congress had been “briefed” on its conduct. Indeed, when the SWIFT story broke, the Republican chairman of the House Permanent Select Committee on Intelligence saw fit to release a letter that he had sent in May 2006 to the President, which reads, in part: “I have learned of some alleged Intelligence Community activities about which our committee not been briefed. In the next few days I will be formally requesting information on these activities. If these allegations are true, they may represent a beach of responsibility by the Administration, a violation of law, and, just as importantly, a direct affront to me and Members of this committee who have so ardently supported efforts to collect information on our enemies.” (So much for: “Congress has been briefed…..”)

In rounding up the usual suspects, the Bush administration has put the rest of the financial world on notice that banks anywhere in the world, especially those trading US dollars, are under the watchful eye of the Big American Brother. I am afraid this impression may pay a variety of unanticipated dividends. Potentially a SWIFT transfer of Euros from a French to a Spanish bank is sitting on the desks at Homeland Security. How long will it take for legitimate, international banking clients to conclude that their business is also that of the US government, whether or not it has a subpoena to open an investigation? In my view, such a development will only hasten the global crisis of confidence in the US dollar. In that battle, those attacking the US treasury will not be Muslim brothers so much as the international financial system, which may finally conclude it has had enough of US imperium.

One consequence of legislation like the USA Patriot Act—another September 11th invasion—is that many foreign investors want nothing to do with American stocks and bonds. Now the revelation that Homeland Securitizers are tapping bank transfers could give fresh impetus to, for example, the global petroleum business to peg the price of oil to the Euro, and not the dollar. Nor does anyone know how long the exporting nations of Asia plan to keep investing in US debt obligations, given the potential weakness of the dollar. The Bush administration is forever invoking the image of terrorists “hitting” the United States, to justify domestic repression and invasions of privacy. But those who will hijack the dollar will not be jihadis so much as central bankers and petroleum companies. At least in their case, it will be easier to follow the money.

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In any economic counterattacks, the US has everything to lose. Total US debt—if you can read one of those spinning clocks—is $8.4 trillion, and, of that, foreign central banks and individuals hold almost half. China and Japan alone own about $1 trillion of the US debt, making them customers that Washington cannot afford to lose. (Buyers of US debt are also buyers of the dollar.) But why should any nation keep a bulk of its savings in a currency that continually loses value or in the paper money of a country that runs a budget deficit between $300-400 billion?

As regards the American dollar’s dependence on oil consumption, the U.S. consumes 20.7 million barrels daily, of which 11 percent comes from the Persian Gulf and 27 percent comes from OPEC members. Overall, the US imports 65 percent of its oil. At $72 a barrel, the country sends abroad $968 million a day in payment for foreign petroleum products. Should some of those countries wish to injure the US, for whatever reason, they could accept only Euros in payment for oil exports or to push within OPEC that the organization peg petroleum to currencies other than the dollar. As it stands now, the US can mitigate the inflationary costs of the oil price increases by paying with depreciated dollars. If it has to pay with gold or Euros, the sticker shock will become more readily apparent.

In the meantime, to keep the electoral home front burning, the Bush administration is shifting its failures in the war on terror to the likes of the New York Times or anyone who opposes the war in Iraq. Vice President Cheney said: “Some in the press, in particular The New York Times, have made the job of defending against further terrorist attacks more difficult by insisting on publishing detailed information about vital national security programs.” From that you might have thought that the Times had directly aided and abetted an enemy, when all it did was report that the US government had pressured a foreign cooperative to reveal the contents of international banking transactions, many of which had no connection to the United States—either its territory or its currency. For a long time legal precedents have governed how to search bank information. As Keller writes in his open letter: “…bankers provide this information under the authority of a subpoena, which imposes a legal obligation.” But Messrs. Bush and Cheney might prefer only to work with newspaper editors who have sworn loyalty oaths.

Is the New York Times, as President Bush stated, really among the reasons that the US is not winning the war on terror? My own sense is that labeling a major newspaper as treasonous is another way of brooking opposition to the government’s appropriated war powers. It also forestalls any questioning of the economic consequences of September 11th. You don’t hear it in Congress or much in the traitorous press (although maybe it’s in the SWIFT receipts), but to date the US has spent $320 billion prosecuting the war in Iraq. Alas, for that money, you still cannot drive safely in Baghdad from the airport to the US embassy. Projected costs for the wars in Iraq and Afghanistan are now forecast to reach $811 billion, more than was spent, on an adjusted basis, in Vietnam. Current estimates are that the war in Iraq costs almost $9 billion monthly, but for that money the US cannot make it clear if it is backing the Sunnis, Shiites, or Kurds or whether some of our Iraqi allies are not, in fact, getting help from many names on the foreign terrorist organization list. In fiscal 2006, according to the Washington Post, the “war on terror” will consume $435 billion in budget allocations, leaving aside the $110 million sent daily to the Persian Gulf to fill up American tanks.

What I find incredible in this story isn’t just the administration threats against the Times—A Fox network acolyte said: "My advice to Attorney General Alberto Gonzales at this point in time is chop-chop, hurry up, let's get these prosecutors fired up and get the subpoenas served, get the indictments going, and get these guys (meaning Timesmen) behind jail"—but that the editors were as accommodating as they appear to have been to the government. Keller writes in his open letter: “Our decision to publish the story of the Administration’s penetration of the international banking system followed weeks of discussion between Administration officials and The Times, not only the reporters who wrote the story but senior editors, including me.” In what brave new world is a newspaper—operating in a democracy that has voted to uphold freedom of the press and which in the Constitution makes no exceptions for “matters of national security”—required to spend weeks explaining to the government why it plans to run a story about how that same government has secretly and probably illegally penetrated the banking records of millions of people, most of whom don’t even live in the US?

Perhaps the only good to come of this heavy-handed government bullying could have been that now Keller understands what it means to be Swift boated. But a week later he wrote, along with the editor of the Los Angeles Times, Dean Baquet, an Op-Ed piece that further explains the decision to reveal the bank spying. Astonishingly, the tone of the piece is fawning and apologetic. (“No article on a classified program gets published until the responsible officials have been given a fair opportunity to comment. And if they want to argue that publication represents a danger to national security, we put things on hold and give them a respectful hearing.”) Further, it shows the extent to which the Bush administration routinely bullies the press, and gets away with it. Keller and Baquet write of government spiked articles: “But each of us, in the past few years, has had the experience of withholding or delaying articles when the administration convinced us that the risk of publication outweighed the benefits. Probably the most discussed instance was The New York Times’ decision to hold its article on telephone eavesdropping for more than a year, until editors felt that further reporting had whittled away the administration’s case for secrecy.” Plus the authors reveal that the Washington Post, under administration pressure, has withheld publishing the location of the secret CIA prisons.

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In military and economic terms, the US suffered little as a result of the attacks of September 11th. The hijackers were not the first wave of an invasion force, and most had grievances with governments other than that in Washington. To be sure, it was shocking to lose four planes, two large office towers in New York, parts of the Pentagon, and about 3,000 citizens. That same year, however, the US lost 42,900 persons in road accidents, following which no one declared war on driving or General Motors. Instead of deeming 9/11 a criminal act, with jurisdiction residing in the office of the New York District Attorney, the Bush administration deemed September 11th to be a physical attack on the territory of the United States—and appropriated to the federal government all sorts of self-proclaimed war powers, of which the right to inspect bank transfers anywhere in the world is just the latest example.

Abroad, the US government has launched a preemptive war in Iraq, held prisoners beyond the reach of US or international law, had its troops target certain individuals for assassination, ferried detainees to jurisdictions that tolerate torture, and degraded prisoners of war in manners that make a mockery of Geneva conventions. At home, the government is threatening to investigate a major newspaper under the Espionage Act while it claims the unilateral right for itself to police the books withdrawn from libraries or to eavesdrop on portable phones calls and millions of e-mails.

Perhaps the biggest abuse of the Bush administration is to employ language that justifies its state-of-siege measures as being in support of a “war on terror.” Rarely, if ever, do I hear anyone spell out exactly with whom the United States is at war. As best as I can determine, terror is method, not a place or a nation. Thus the US is fighting a tactic, not a country or even an ideology. On various State Department and congressional Web sites, it is possible to download compendiums of foreign terrorist organizations, and I have one before me that lists 36 such potential enemies, beginning with Abu Nidal and ending with the United Self-Defense Forces in Columbia. In between are the murderers’ row of terror, including Islamic Jihad, the Tamil Tigers, Basque separatists, and the Al-Aqsa Martyrs Brigade.

I have no sympathy with any of these groups but why would any nation choose to declare war on gangs as far-flung as the Shining Path in Peru and the Islamic Movement of Uzbekistan? In declaring itself in a war against terror, the Bush administration finds itself potentially fighting on as many fronts as there are bored and angry teenagers with access to car bombs—not to mention governments, like those in Iran or Sudan, which subscribe to terrorist rules. A week after 9/11 the President declared in front of Congress: “Our war on terror begins with al-Qaeda, but it does not end there. It will not end until every terrorists group of global reach has been found, stopped, and defeated.” Most strategists counsel against two-front wars; in attacking terror, the US has as many enemies as its wishes to imagine, and on every continent. (I need some help identifying exactly which barricades are manned by the Salafist Group for Call and Combat or Jaish-e-Mohammed.) No wonder the US thinks it needs to review 11 million banking transactions a day.

I would submit that if “you want to find out what the terrorists are doing,” that instead of auditing global funds transfers, you spend a few weeks in the Gaza Strip, the West Bank, south Lebanon, the slums of Cairo, Baluchistan, the holy city of Qom, Afghanistan, North Korea, Chechnya, Sri Lanka, or remote jungles in the southern Philippines. Given that most of the September 11th hijackers were nationals of Saudi Arabia, as is Osama bin Laden, it might even help to pass through the madrassas in Riyadh, not to mention his erstwhile headquarters in Sudan. You could also make contact with his sympathizers in Yemen. Whether such a journey will pinpoint who lives in the land of Terror or if and why they hate Americans is another question. My guess is that you will discover that the war on terror is more an opportunity to scam national security appropriations and to read each other’s e-mails, than it is about pacifying Harakat ul-Mujahidin or rounding up the Philippine New People’s Army. The journey may even shed light on whether the US has declared war against Shiites, Sunnis, nationalists, separatists, irredentists, or just arsonists.

One thing you will discover on such a journey is that few of the banks operating in those regions are even members of SWIFT. Indeed, as a test, ask that someone wire you funds in Quetta, Pyongyang, or in southern Mindanao. While waiting for the money, it might be useful to compare the advice of John Quincy Adams (“America does not go abroad in search of monsters to destroy”) with George Orwell’s observation ( "A few agents of the thought Police moved always among them, spreading false rumours and marking down and eliminating the few individuals who were judged capable of becoming dangerous..."), and decide which best describes America in the new millennium.