During the war on terror, the United States quietly turned the world financial system into a hidden empire. The American government used the power of the dollar and its influence over obscure organizations such as the Swift financial messaging service to monitor what its adversaries and terrorists were doing and, in some cases, to cut entire states, such as North Korea, out of world financial flows. These policies effectively pressed foreign banks into service as agents of American influence and helped bring states like Iran to the negotiating table.
On Nov. 4, the United States is set to escalate sanctions against Iran as part of its decision to withdraw from the Iran nuclear deal. These sanctions include financial messaging, so the Trump administration could press for Swift, a private cooperative based in Brussels, to disconnect Iranian banks from its network. Swift is like a global post office for banks, providing a secure messaging system for the vast majority of international transactions, so disconnecting Iran would isolate it almost completely from the global financial system and would have drastic and immediate consequences for the Iranian economy.
If the Trump administration goes ahead with this plan, it will have serious consequences for the United States as well. It will undermine America’s influence over the international financial architecture and diminish its power over allies and adversaries alike.
Jack Lew, who served as secretary of the Treasury from 2013 to 2017, warned two years ago that other countries might start looking for alternatives to the dollar and organizations like Swift if America takes its financial power for granted. Germany’s foreign minister, Heiko Maas, recently threatened to do just that. In an editorial published in the German financial newspaper Handelsblatt, he proposed that Europe should set up its own international payment channels and its own equivalent of Swift.