The twentieth century in the United States marked a significant shift in the country’s economic and political landscape. The establishment of the Federal Reserve in 1913, following the Jekyll Island Conference, ushered in a new era of federal authority over economic matters. The Fed was tasked with maintaining low inflation and high employment, using tools such as control over the money supply and the federal funds rate.
However, the Great Depression of 1929 exposed the limitations of the Fed’s power in preventing or mitigating economic crises. This led to a growing belief among economists and political leaders that the government needed to exert even more control over the economy. President Franklin D. Roosevelt’s Executive Order 6102 in 1933, which required the surrender of gold to the US Treasury, reflected this shift towards greater state control.
During and after the World Wars, the US accumulated a vast gold stockpile, leading to the establishment of the US dollar as the global reserve currency at the Bretton Woods conference. This period also saw the rise of a military-industrial complex, which perpetuated a wartime economy and arms dealing to allies. The Nixon administration’s decision to suspend the gold standard in 1971 marked a pivotal moment in the country’s economic history.
The petrodollar agreement with Saudi Arabia, established in secret, further solidified the US dollar’s dominance in global trade. However, the system is now showing signs of strain as major oil producers price oil in other currencies. The post-Cold War era, marked by a unilateral American foreign policy, culminated in the War on Terror following the events of September 11, 2001.
The militarization of the homeland, underscored by the establishment of USNORTHCOM and the Department of Homeland Security, has eroded privacy rights in the name of counterterrorism. The Bank Secrecy Act of 1970 set the stage for increased financial surveillance, with reporting requirements for transactions exceeding certain amounts. The erosion of privacy rights was further solidified by the Supreme Court’s ruling in United States v. Miller (1976) and subsequent legislation such as the Right to Financial Privacy Act and the Foreign Intelligence Surveillance Act.
The twentieth century in the United States saw a consolidation of federal power, a shift towards greater state control over the economy, and a transformation of the country’s financial and political landscape. These developments continue to shape the country’s economic policies and national security measures in the present day. The Foreign Intelligence Surveillance Act (FISA) of 1978 was intended to provide a legal framework for the government to conduct surveillance on foreign powers and agents within the United States. However, critics argue that the establishment of the Foreign Intelligence Surveillance Court (FISC) as a secret court has turned it into a kangaroo court that issues classified warrants for virtually any surveillance activity requested by the state. This has raised concerns about civil liberties and the potential for abuse of power.
The roots of the modern surveillance system in the United States can be traced back to a series of legal maneuvers starting with the Bank Secrecy Act of 1970. Subsequent court cases such as United States v. Miller in 1976 and the Right to Financial Privacy Act of 1978 laid the groundwork for the expansion of government surveillance powers. The passage of FISA in 1978 further solidified the government’s authority to collect and share financial transaction data, leading to the creation of additional laws such as the Money Laundering Control Act, the USA PATRIOT Act, and the FISA Amendments Act.
These laws, along with the establishment of new intelligence agencies like the Financial Action Task Force, FinCEN, and the US Treasury Office of Intelligence and Analysis, have transformed the US banking system into an extension of the state’s policing function. The revolving door between Wall Street, the Federal Reserve, and the Treasury has further blurred the lines between those who make and enforce laws and those who control money.
The practice of rule by state of emergency, formalized by the National Emergencies Act of 1976, has allowed US presidents to declare national emergencies and wield unprecedented powers. Executive orders, such as Executive Order 12170 issued by President Jimmy Carter in 1979, have been used to impose sanctions on foreign nations and entities, effectively extending US jurisdiction over the global financial system.
The International Emergency Economic Powers Act has been invoked to freeze assets and block transactions with entities deemed to pose a threat to US interests. This combination of laws has enabled US presidents to punish economic activity worldwide, bypassing traditional legal processes and checks on executive power.
The proliferation of sanctions, both unilaterally through executive orders and multilaterally through the United Nations Security Council, has become a popular tool of coercion and punishment for American politicians. As a result, the United States has imposed sanctions on approximately one-third of all countries in the world, leading to a strain on the Treasury Department’s resources and an increasing caseload.
In conclusion, the intertwining of financial surveillance, executive power, and international sanctions has created a complex web of control that extends far beyond US borders. The erosion of civil liberties and the concentration of power in the hands of a few elites highlight the need for greater transparency, accountability, and oversight in the realm of government surveillance and financial regulation. The revolving door between the Treasury and private legal, consulting, and lobbying firms has been a longstanding issue, allowing former Treasury officials to leverage their knowledge of the sanctions system and government connections to benefit their clients. This practice has raised concerns about conflicts of interest and the influence of special interests on political and legal outcomes.
Sanctions, which are meant to target and pressure regimes, have often failed to achieve their political objectives. Autocratic regimes tend to remain in power despite sanctions, while democracies respond by increasing defense spending, further entrenching existing power structures. The wide range of countries sanctioned by the United States has led many to seek alternative financial systems to bypass the US-controlled banking system. The primary impact of sanctions has been on the people of targeted countries, leading to poverty and economic collapse, which in turn fosters resentment and animosity towards the United States.
Even so-called “smart sanctions,” which focus on specific industries or entities, have limited effectiveness. These sanctions often lack the necessary pressure to induce desired policy changes or regime turnover. Furthermore, the implementation of sanctions can have unintended consequences, such as collateral damage to innocent parties or minimal impact on powerful actors who have prepared for such measures.
The consolidation of power between banks and the state since the 1970s has resulted in legislation that was intended to limit the power of certain entities but has had the opposite effect. Laws like the Bank Secrecy Act, the National Emergencies Act, and the Foreign Intelligence Surveillance Act have expanded state power and eroded individual rights, creating a political culture in crisis.
The need for reform in the sanctions system and the regulation of the revolving door between the Treasury and private firms is evident. Transparency, accountability, and checks and balances are essential to ensure that sanctions are effective, ethical, and aligned with democratic values. The current system perpetuates a cycle of power and influence that undermines the intended goals of sanctions and erodes public trust in government institutions.
Understanding the Impact of Economic Sanctions on Global Politics
Economic sanctions have long been used as a tool by powerful nations to influence the behavior of others on the international stage. However, a recent study by Agathe Demarais in her book Backfire: How Sanctions Reshape the World Against US Interests sheds light on how these measures can often backfire and reshape the world in unexpected ways.
The Money War
In their article “The Money War,” Stein and Cocco discuss the intricate dynamics of economic sanctions and their impact on global financial systems. They highlight how these measures can create ripple effects that go beyond their intended targets, affecting the economies of multiple countries.
Geopolitical and Financial Realignment
Demarais points to the emergence of BRICS+ as a significant example of the geopolitical and financial realignment that can occur in response to economic sanctions. This alliance of countries, including Brazil, Russia, India, China, and South Africa, has come together to counter the dominance of traditional economic powers.
The Human Consequences
While economic sanctions are often seen as a strategic tool, Francisco R. Rodríguez’s research highlights the human consequences of these measures. In a report for the Center for Economic and Policy Research, he discusses how sanctions can lead to severe hardships for ordinary citizens, impacting their access to basic necessities.
Rethinking Smart Sanctions
Gordon’s article “Smart Sanctions Revisited” calls for a reevaluation of the effectiveness of targeted sanctions. He argues that a more nuanced approach is needed to minimize unintended consequences and ensure that the intended goals are achieved.
Overall, the study of economic sanctions and their impact on global politics is a complex and multifaceted issue. As countries continue to wield these tools in pursuit of their interests, it is essential to consider the broader implications and unintended consequences that may arise.