Financial warfare against ‘bad guys’
WE know about the Seals and the drones, the special forces hunting insurgents in Afghanistan’s remote villages and the military planners at the Pentagon running off-the-books operations in dusty places like Somalia where large armies can’t go.
And we know about the CIA, which has now morphed into a paramilitary agency ordered by the White House to kill America’s enemies in the deserts of Yemen and the mountains of Pakistan.
But what about that shadow war — less deadly but no less effective — that the US began waging even before 9/11, where no shots are fired, a war whose troops seemingly sedate bureaucrats, using sophisticated software as their only weapon, who are tasked with launching financial warfare against terrorists, real or imagined, by targeting their banks? Surely the way to go about changing the world, to make it responsive to US geopolitical interests, need not be confined to the way of the gun. At least one government agency believes that.
Enter the Treasury Department, whose exploits were recently outlined in “Treasury’s War: The Unleashing of a New Era of Financial Warfare,” a book by Juan C. Zarate, a senior adviser at the Center for Strategic and International Studies.
To be sure, the war that Treasury has been tasked is not directed at one enemy, in this case Hamas, but at a host of enemies that include those so-called rogue regimes that have fallen out of favor with Washington, like North Korea and Iran. And all Treasury has to do here, really, to demonstrate its relevance to “the war on terror,” is tap into America’s immense influence over the international financial system.
Consider as a case in point 2006 when Hamas, to everyone’s surprise, won the parliamentary elections in the West Bank and Gaza. This came as a shock to American officials who saw Hamas as an obstacle in Washington’s plans for the occupied territories. What to do? When sanctions are not enough, you go for the jugular by targeting banks that do business with Hamas and act as conduits for money transfers from the organization’s supporters around the world.
And an American threat to expel these banks from the American system — were they to continue dealing with a “proscribed group” — would effectively be a death sentence. Even in 2005, before Hamas became ascendant as a governing body, Treasury went after the Arab Bank (AB), which had been transferring funds to the group for years from its branch in New York. The AB, to avoid an investigation into its alleged “terrorist financing,” agreed to pay a $24 million fine in a no-contest plea without acknowledging wrongdoing.
Soon after Hamas came to power and other banks in and beyond the Arab world had gotten the message that you don’t lock horns with the US in this arena, money transfers to the new government in the occupied territories dried up. Hamas, now pauperized, became dysfunctional. This type of warfare was well articulated by David Cohen, undersecretary of the Treasury, who said: “The department will continue to work to disrupt Hamas’s efforts to radicalize vulnerable communities and undermine regional stability.”
Treasury’s attempts to “disrupt” those efforts began in the US, when its agents went after the group’s major fundraisers there — along with the banks that held and moved their money — most notably The Holy Land Foundation, a charity that had accumulated $57 million, of which $36 million had already gone to the occupied territories to help the needy there. At the time, according to United Nations estimates, three quarters of all Palestinians existed on less than $2 a day. Yasser Arafat’s Palestinian Authority, crippled by its own organizational inefficiency and a paucity of funds from donors, who accused its officials of corruption, was not capable of alleviating the suffering that pervaded the West Bank and Gaza. Treasury’s response? In 2007, The Holy Land Fund was taken to court and prosecuted for “aiding and abetting terrorists.”
Yes, Treasury has clout worldwide. When, for example, Banco Delta Asia (BDA), a small bank in Macau, an administrative region in China, caught the department’s attention in 2003, for doing business with North Korea (a sanctioned nation), by helping the country stream its profits from illegal arms sales into the international financial system, BDA retrenched. In no time, it shuttered all of its North Korea accounts. Soon after that, fearing Treasury’s wrath, banks around the world ended their business dealings with Pyongyang. In a similar manner, Treasury’s sanctions against Iran have worked: They precipitated an economic crisis in the country and not so coincidentally bought Washington leverage with Tehran.
The role that the Treasury Department’s warriors play in the international banking system, in pursuit of America’s strategic interests, may be bloodless. But is it not questionable when you consider that this government agency’s targets are chosen not for moral but for expedient, even mercenary, reasons? Wouldn’t you like to see Treasury sanctioning, as European Union countries have sanctioned, Israeli settlements in Palestine, which clearly represent a violation of the Geneva Conventions and every UN Charter under the sun, settlements whose very existence breaks every law on the books in the American justice system itself?