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1. So Bloomberg Voice has a collective editorial condemning Europe's new vehicle for trade with Iran. As a scholar who is writing on these topics (my and @ANewman_forward article coming out in IS soon), my professional opinion is that this is fucking nuts bloomberg.com/opinion/articl…
2. The key recommendation - "U.S. officials would be right to insist that the SPV be shut down — if necessary, by threatening sanctions against any person, bank or company associated with its creation." Either they don't know what they're suggesting, or they do, and they're crazy
3. Here's who those sanctions would designate, for starters. ecfr.eu/article/commen… … UK Permanent Under-Secretary of State for Foreign Affairs Simon McDonald; Miguel Berger, head of economics at the German Foreign Office,
4. and Maurice Gourdault-Montagne, secretary-general of the French Ministry of Europe and Foreign Affairs. Bloomberg's editorial board is pushing for the US to designate senior French, German and British diplomats, working in their official capacities, as sanctioned entities.
5. In other words, Bloomberg is advocating all out diplomatic war against America's three most important allies, for having the impertinence to try to maintain an international agreement that the US itself negotiated and Iran has not violated.
6. There has indeed been some sabre rattling by the Trump administration already, Mandelker hints at sanctions here thehill.com/opinion/nation… … . But actually formally threatening sanctions would cause Europe to react in a not-good way.
7. The Bloomberg piece suggests that Europe is bluffing. It isn't. Nor is the SPV only about Iranian sanctions. Instead it's a reaction to a much broader problem - US overuse of secondary sanctions. Abe and I provide general discussion of problem here - dropbox.com/s/27mnqcxrxwap…
8. In our terms, the SPV is best understood as a put option on US financial hegemony. It is a superficially technical seeming arrangement that allows key European states to start building capacity should they need it, to start working around US overreach.
9. So what then happens if the US follows the sage advice of the Bloomberg Opinion editorial board? Well, maybe Europe does fold - but that's not the way to bet, if this is a strategic exercise in institution building rather than an Iran focused scheme.
10. The more plausible interpretation is that aggression would provide Europe with damning evidence that the US is indeed prepared to use its financial powers in a hostile and direct way to target allied states directly (not just their businesses but their senior diplomats).
11. Indeed, the Europeans have set up this entity as they did precisely to signal to the US the grave consequences of proceeding in this fashion. The personnel are senior and the responsibility and risk is shared across UK, France, Germany. Think Schelling and tripwires.
12. Targetting the SPV would be a direct declaration of financial warfare against Europe. And that would likely end up very badly. The dirty little secret of US financial hegemony is that it rests on far more shallow foundations than its most enthusiastic proponents realize.
13. Ask former US Treasury Secretary Jack Lew: atlanticcouncil.org/blogs/new-atla… … "the plumbing is being built and tested to work around the United States. Over time as those tools are perfected, if the United States stays on a path where it is seen as going it alone…
14. there will increasingly be alternatives that will chip away at the centrality of the United States.” The US is pushing its allies to develop an alternative financial infrastructure of their own, precisely so as to counter the problem of US overreach. And not only the allies
15. "Kerri-Ann Bent, Americas head of sanctions at Barclays, noted that there is already growing “comfort with processing certain types of transactions” in other forms of currency to avoid the risk of sanctions." The US is sowing the seeds of its own downfall as financial hegemon
16. and Bloomberg Opinion is enthusiastically roaring for them to do MOAR MOAR MOAR! ! ! Now, while @bopinion is a collective voice, I would guess that not all the members of the board signed onto or would necessarily agree with this opinion. More likely it's an individual.
17. And if I had to guess who was responsible for this stinkeroo, I would nominate Clive Crook, based on previous form (it could possibly be someone else though, since I don't know most of the other people on the board).
18. But Jesus - this piece is deranged. FIN.
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