Dollars Instead of Bombs

France has become indignant regarding the multimillion dollar fine — approximately 6.6 million euros — imposed by the American government on the French bank BNP-Paribas for violating the sanctions imposed in 1997 on the Sudanese regime for its support of Osama bin Laden and its role in the Darfur genocide. Speaking through Minister of Finance Michel Sapin, the French government has declared that this fine is unjust and out of proportion with the accusation. By Sapin’s judgment and that of many others in France, this fine obligates Europeans to question the supremacy that the dollar currently enjoys as an international currency. “Enough already,” they say, of the abuse of power that the United States exercises by means of the dollar, which de Gaulle defined* as an “exorbitant privilege.”

And regarding supremacy, they do have a point: The American economy represents only one-fifth of the global economy, yet 85 percent of currency transactions are carried out in dollars, and at the same time, the dollar makes up 60 percent of the reserves in the central banks of the world. They also point out the absurdity of this supremacy: A multitude of European banks and businesses continue to denominate their transactions in dollars instead of euros. BNP is in the right regarding the legality of these sanctions: Even though maintaining transactions with a regime of terrorists and [perpetrators of] genocide like that of Omar al-Bashir was repugnant from a moral point of view, if these transactions had been carried out in euros, they would have been blatantly legal, since the European Union did not approve such sanctions.

For these reasons, it would seem evident that a world without a monetary unipolarity would be a very welcome change. Are we sure about that? It is not so clear. One must look at the discussions regarding financial havens and the opacity of the international banking system in general. For decades, such opacity did not seem to matter much to the world’s governments, not even to the Americans. Despite the cliché that paints a picture of financial havens as tropical islands with crystal waters, the most important ones were in places just as soothing, such as Delaware or Zurich, but also in the heart of Europe, as in Luxembourg, Vienna, or the islands of the English Channel. Apparently, while the financial havens helped businesses and individuals elude taxes and launder money stemming from corruption, organized crime or illicit trade, there was not much urgency to put a stop to them. This is the reason the uproar from the meetings of the Organization for Economic Co-operation and Development or the G20 did not accomplish much. The United States has since realized that this parallel financial channel was what allowed terrorism and its patrons to survive and to finance Iran’s nuclear program. Washington decided to launch an offensive and put an end to the opacity of the global financial system. Without pressure from the United States, respectable neighbors like Luxembourg, Switzerland or Austria, which for decades had blocked any advance on this subject, would still be resisting legislative change regarding fiscal transparency.

The paradox is that the fear governments and businesses have of the United States Department of the Treasury can be a tool for global progress.

*Editor’s note: It is unclear that this term originated with Charles de Gaulle.