US has gone rogue, economists talk about SWIFT’s Iran cutoff

We are presenting to you the expert opinions of two renowned economists on Washington’s attempts to deprive Iran of access to the international banking system.

The first one is titled “US has gone rogue, economist talks about SWIFT’s Iran cutoff”. It is part of talks with Russian Television (RT) by Australian economic historian and author, Steve Keen.

In pushing the SWIFT financial messaging system to exclude Iran, the US has “gone rogue,” Australian economist Steve Keen told RT.

Last Monday, the Society for Worldwide Interbank Financial Telecommunication or SWIFT cut a raft of Iranian banks – including the country’s central bank – off from its system, having come under pressure from the US to do so. US Treasury Secretary Steven Mnuchin bragged that the move is “the right decision to protect the integrity of the international financial system.”

Professor Keen, an economist at Kingston University, told RT that while the global economy is too big to be badly affected by the move, the exclusion of Iran “will emphasise the danger of using a single national currency as the means for international payments.”

He said: “The USA is big enough to bully what should be an impartial means for monetary transactions between countries; however, this should not be possible.”

Unfortunately Iran has been targeted, said Post-Keynesian economist, Keen, while holding responsible the American delegation that went to the 1944 Bretton Woods Conference, where the rules of the post-WWII economic order were decided.

At the conference, British economist John Maynard Keynes proposed the creation of an International Clearing Union to regulate the balance of trade. The ICU would effectively be an international bank with its own currency - the Bancor - exchangeable with national currencies at a fixed rate.

The American team led by Harry Dexter White, took a position of “absolutely no,” and Keynes’ dream died.

“We are now seeing why Keynes was right,” Keen told RT.

The SWIFT ban, he argued, should serve as a wakeup call to other countries that “the US has gone rogue, and cannot be allowed to dictate economic or political policy to the rest of the world.”

He added: “The sooner the rest of the world develops an alternate payments system - possibly working through SWIFT, but using a basket of currencies as the basis for a supra-national unit of exchange - the better.”

In the absence of a global overhaul to the current payments system, Iran will pay a high price. Now, unable to receive payments in American dollars for oil exports – which account for 60 percent of the country’s total exports – Tehran is faced with a recession ahead.

European leaders have mulled creating an alternate payments system to bypass US sanctions and keep the JCPOA alive, but such a solution is still months away at least.

Keen, however, reckons last Monday’s news might spur them into action.

He said: “What has been a set of thought bubbles should become a concrete proposal, and pronto. SWIFT would be well-advised to work with the European Union (and probably the Russians and the Chinese) to set this up as soon as possible.”

On the same subject, RT was told by American stockbroker-turned broadcaster, Max Keiser, that SWIFT’s Iran ban will expedite global de-dollarization.

He said, the blacklisting of Iran from international financial messaging system SWIFT serves as a warning to that will hasten the demise of the dollar, told RT.

Under US pressure, SWIFT, a system that facilitates cross-border payments between 11,000 financial institutions in more than 200 countries worldwide has cut off several Iranian banks, including the country’s central bank, from its services.

Max Keiser told RT that in pushing a hard line on Iran, the US will only force other countries to come up with alternatives, and stockpile gold to lessen their dependence on the almighty US dollar.

He said: “The US puzzlingly seems to want to expedite global de-dollarization with its ill-advised weaponization of SWIFT.”

He added: “The impact this is having globally is clear. Russia and China are developing an alternative to SWIFT while also buying hundreds of tonnes of gold as a means to escape the $USD chokehold. This in turn will accelerate global de-dollarization.”

Russia has already drastically expanded its gold stockpile in recent years, as relations between Washington and Moscow have soured. As the Trump regime geared up to impose new sanctions on Moscow in August, the Russian government increased its holdings to over $83 billion, while simultaneously reducing its holdings of US debt from $96 billion in March to just $14.9 billion in May.

Whatever the long-term implications for the US dollar, Iran now faces a more drastic short-term problem. Without SWIFT access, the country cannot be paid for exports or pay for imports with US dollars. Following President Donald Trump’s withdrawal from the Joint Comprehensive Plan of Action (JCPOA) in May, Tehran might have to think outside the box to ensure its economic survival.

Keiser told RT: “Iran needs to get smart and start hoarding Gold and Bitcoin if it wants to avoid the worst of the fallout. It is already, smartly, pursuing bilateral energy deals outside of the $USD, but it needs to add value to its currency with reserves of Gold and Bitcoin.”

“The world is anxious to stop this madness,” said Keiser, who sees gold and cryptocurrency as the way forward for the “post $USD hegemony.”

In the meantime, EU leaders fighting to save the JCPOA enacted a ‘blocking’ law in August, prohibiting firms operating in the bloc from complying with the US sanctions. In siding with Washington, SWIFT may face penalties from Brussels for violating this law.

The Europeans have been working on an alternate payments system to ensure trade with Iran can continue to flow, but any viable system is still months away at least.

Keiser concluded: “Alternatives to SWIFT are relatively easy to create. The only thing stopping this from happening now is inertia.”

AS/ME