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The Latest Victim of the Greenback Police

Author(s): Jacob Funk Kirkegaard
What does the International Federation of Association Football (FIFA) have in common with Vladimir Putin, Ayatollah Khamenei, and France’s largest bank? They have all recently been subject to the full force of American extraterritorial financial attempts at coercion, derived from the world’s unchallenged supremacy of the dollar.

From Peterson:

What does the International Federation of Association Football (FIFA) have in common with Vladimir Putin, Ayatollah Khamenei, and France’s largest bank? They have all recently been subject to the full force of American extraterritorial financial attempts at coercion, derived from the world’s unchallenged supremacy of the dollar.

Iran and Russia are subject to asphyxiating economic sanctions, where American and third-country companies and banks are threatened with expulsion from US financial markets if they do not adhere to US economic sanctions directed at specific Russian and Iranian entities. And FIFA and BNP Paribas (and other large non-US banks like HSBC, Standard Chartered, ING Bank, Barclays Bank, Credit Suisse, and Lloyds TSB Bank) have found themselves at the receiving end of US extraterritorial criminal jurisdiction, as their corruption and sanctions breaks have been conducted at least partly via US financial institutions and reliance on the dollar.

In the post-Iraq era, where the fortunate lack of large-scale terror acts on US soil has seen the American public turn against large-scale military interventions, it is therefore no longer the Pentagon but rather in principle domestic law enforcement organizations like the Treasury, the IRS, and the FBI that fulfill America’s traditional global role as the “world’s policeman.”

The recent case against FIFA started as an IRS investigation into the failure of Chuck Blazer—a US citizen and well-connected wheeler-dealer in the world of football with numerous FIFA contracts—for failing to file his US personal income tax returns. It was Blazer’s testimony and the eavesdropping on him that provided the breakthrough in another FBI case looking into FIFA corruption. This modus operandi has been greatly advanced by expansive legal readings by US courts of the post-9/11 legislation targeting terrorist financing, including parts of the Patriot Act1 and executive orders issued by George W. Bush.2

At the core of this American ability to criminally prosecute foreign persons and entities lies the dominant role of the US dollar in international trade, investments, and capital flows. Since a vast amount of cross-border transactions take place in US dollars, they very often are conducted and routed through American financial markets by US banks or foreign banks present in the United States. US law grants American authorities the right to prosecute foreigners for activities criminal under US law even if such dollar-based financial flows (or say the use of an Internet server located in America) are the only connection to the United States. The reliance of foreign banks on US banks to supply dollars gives American authorities the extraterritorial reach needed to prosecute these cases.

The term “exorbitant privilege,” invented by the French, has been applied to the double-edged sword of the dollar’s dominance for the United States. For the privilege of having the world’s only reserve currency, the US suffers a certain lack of control over its monetary policy and exchange rate. But as recent events indicate, the privilege has been exorbitant for others like Putin, who has already denounced the recent indictments of FIFA officials as another arrogant extension of US economic power. If so much of global trade and commerce were not conducted in the dollar, US law enforcement would have far fewer opportunities to venture abroad.

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