From Mon Jan 13 12:00:15 2003
From: Le Monde diplomatique <>
To: Le Monde diplomatique <>
Subject: United States: the dollar standard
Date: Mon, 13 Jan 2003 16:29:48 +0100 (CET)

Appointment with war: United States; the dollar standard

By Jean de Maillard, Le Monde diplomatique, January 2003

To protect its interests and its world dominance the United States has only one option. It must extend its global reach by imposing not just its military superiority everywhere, but also its administrative, legal and technical standards on international trade and finance.

PHILOSOPHERS of globalisation were once proud that the planet's North-South split had ended. But since 11 September 2001 support for economic and financial globalisation has waned, even among the most optimistic. In the United States hopes that the end of history was near gave way to the idea of a clash of civilisations, which was like saying that the benefits of globalisation, sought and instigated by Western nations, had failed to materialise—but that that failure was the fault of the West's short-sighted and unenlightened enemies.

It is worth revisiting the philosophical debate in the 1990s between the devotees of Francis Fukuyama and those of Samuel Huntington (1). The Europeans viewed this debate as poorly reasoned theorising and failed to see that the two sides complemented, rather than contradicted, each other. Nor did Europeans see how the theories would be applied in practice. US thinking is primarily utilitarian, especially when it has strategic and ideological implications. The end of history hypothesis dovetailed nicely with US dogma during the first wave of globalisation, when benefits from that globalisation were supposed to flow freely.

This hypothesis was resisted by geopolitical elements opposed to financial globalisation. In the US view, evil forces were at work in Iran, Colombia, Cuba and Iraq; in grey areas such as the Balkans, Somalia and Afghanistan; and in the Middle Eastern powder keg. Globalisation's benefits had failed to appease these forces, which found themselves reinvigorated by rampant market liberalisation. This was where Huntington and his clash of civilisations came in: if globalisation had failed to deliver its expected benefits, this was because the campaign for it had been hindered and assailed by the enemies of the US, who sought to prevent the rest of the world from embracing the American way of life and its pleasures.

What were these shadowy threats blocking access to the global village? Ideological discourse could not give an answer; it just provided justification to those entrusted with defining the correct response. The US strength stems not only from its economic and financial might, but from its ability to exercise power within an established framework, by a strategic doctrine. This provides a coherent and rational basis for US power, at least as far as ideological discourse is concerned; it also enhances the interactive and synergistic nature of the power structure's constituent parts.

Despite its initial haziness, a new thesis began to take shape, that of new threats. Some naively believed that this thesis was meant to make up for the disappearance of the Soviet threat. But the immediate task was different: globalisation's losers, who had dared challenge the founding principles of globalisation, had to be addressed. This happened when the US was reaching new heights, as was the globalised economy that served its interests so well.

In the early 1990s the acknowledged threats were primarily mafia-related or otherwise criminal, yet over the next 10 years US rhetoric focussed increasingly on terrorism. Then came 11 September. The threats to globalisation had clearly become the threats inherent in globalisation. Was it enough to launch a counter-attack on the South's hotbeds of criminal and terrorist activities when these forces had struck at the heart of the system by adopting its own devices? Not only Western technological devices, turned against the West through rudimentary boxcutters, but ingenious financial schemes, shady and subtle, designed to elude strict governmental regulations. The vulnerabilities of globalisation had become the 21st century's real threat.

Some say that these weaknesses result from distortions produced by a developmental model that exacerbates socio-economic disparities and disorder on a global scale, while ravaging non-Western cultures and corrupting the economic and financial sectors. Others maintain that the vulnerability stems from globalisation's complex but fragile high-tech structures, which only thrive in a trouble-free environment. Those in the first group seek a different kind of globalisation. The others espouse the reassuring doctrine of globalisation-as-saviour, with the US, which must defend itself ferociously lest it be swept away by the forces of evil, as its driving force. Over the past year American strategists have set out and begun instituting new doctrines, strategies and policies. These will be the overriding issues in the decade ahead.

The US seeks above all to make its territory and interests completely and exclusively secure. On the pretext of defending the Western system—democracy and market liberalisation—the US is primarily concerned with reinforcing its territory and national interests, turning itself into an armed fortress. This should not be seen as a new manifestation of American isolationism since US areas of vulnerability, its open borders and networks, also provide its power; so they must be preserved at any cost. The US will reject any regulations that threaten the strategic advantages it enjoys because of its absolute power over the economic and financial markets.

To defend its economic model, the US is obliged to apply it to the rest of the world, regardless of the consequences. Its strategy is to impose its own standards unilaterally; those who resist risk losing access to US markets. This course of action is not new—the Clinton administration used it as part of its shaping the world through engagement doctrine. The radically new idea is that US strategy now applies not only to the key communications technology sectors (in which the US enjoys information superiority) but to the financial sector and economy as well. These were previously considered outside US regulatory purview.

The objective is not to regulate markets but to preserve Washington's dominant status. Offshore banks and tax and legal havens are safe because they form an integral part of the US economy, with the US using them to indulge in unfair tax competition with Europe (2). Today the US has the ability to control all financial transactions in dollars or executed within its territory. Foreign correspondent banks must now provide US financial institutions with information on every transaction (3). This monitoring system seems so inoffensive that the European press has ignored it. But it gives US authorities control over most transactions conducted within the formal financial system—using Western accounting standards and administrative procedures.

Showing a similar indifference to European concerns, the US is imposing unilateral economic standards as it recasts the rules governing trade and commercial links. US customs authorities compiled a list of 20 foreign ports authorised to send container shipments to the US (4). If countries want to be on the list, they must accede to US administrative and security demands and agree to the presence of US customs agents, who monitor operations.

After being left off the initial list, France was forced to accept US conditions to avoid shutting down Le Havre, which exports 90% of France's US-bound container shipments. The US seeks to impose American-style passports meeting its own biometric security standards.

The US is exporting its own standards, which are then implemented by its foreign allies. This strategy governs the smart border initiative, which provides military and police protection for US territory and interests while establishing legal and administrative standards for trade in goods and services (including financial services). According to US security doctrine, America's partners and allies are outposts in its lines of defence. This strategy is tied up with the doctrine of long-arm jurisdiction provided for in the Patriot Act. This authorises US jurisdictions to pass legal judgment on attacks on US interests, regardless of where such attacks occur.

What are the real policy objectives in the US war on new threats? These threats became the pretext Washington needed to justify its new status as the world's most conspicuous and dominant force. Despite assertions that it provides the ultimate protection for Western nations, the US is initiating a militarised economic polarisation that pits the North against the South. Europe is on the front lines as US companies lurk in the background, reaping profits as they recolonise the world in a grand imperial fashion.


(1) Francis Fukuyama, The End of History and the Last Man, Avon Books, New York, 1993; Samuel P Huntington, The Clash of Civilisations and the Remaking of World Order, Simon & Schuster, New York, 1997. See also Tariq Ali, Blood and belief, Le Monde diplomatique, English language edition, October 2001.

(2) Last August the World Trade Organisation, in response to a petition filed by the EU, condemned US legislation on foreign sales corporations. This legislation allowed export-related tax dumping through subsidiaries of large companies operating within tax shelters.

(3) This requirement was contained in the USA Patriot Act, passed on 26 October 2001. Foreign banks must provide correspondent US banks with information on their capital structure and the particulars of financial transactions processed by any US bank (this applies to all dollar-denominated transactions). Some foreign banks must obtain this information from their own upstream correspondents, thereby creating a global monitoring system removed from any territorial constraints. Any financial institution that refuses to comply on the grounds of banking confidentiality runs the risk of being shut out of the US financial system.

(4) The EU made a number of protests but is now negotiating with the US with respect to applying the regulations throughout the EU to avoid a potential bidding war between European ports.