Illegal, but was it wrong?

The French bank BNP Paribas will pay nearly $9 billion in penalties for violating U.S. sanctions against Iran, Sudan, and Cuba (Herald).

I’ll leave Iran and Sudan out of it and focus on Cuba for this latest case of our tax dollars at work in the application of the U.S. embargo.

There is no doubt that the bank’s actions were illegal. In the Treasury Department’s lingo, it moved funds “in which the Cuban government has an interest” through the U.S. banking system and it handled dollar transactions for Cuba. In the electronic tags attached to those transfers of funds, it concealed the fact that they involved Cuba transactions. Treasury tends to catch things like that, as some bank personnel warned, and it did catch them in this case. Hence the penalty.

But what did this bank actually do? Prosecutors explain in this summary.

The Cuba section explains that the embargo began with executive actions in 1960 and 1962 based on the U.S. government’s judgment that the Cuban government posed a threat to “U.S. national and hemispheric security,” and based on that, sanctions were applied under the Trading with the Enemy Act.

The “conspiracy,” the prosecutors explain, involved the bank’s operation of credit facilities for Cuban entities between 2000 and 2010.

Over the course of six years, from 2004 to 2010, $1.7 billion was transacted. That’s roughly the amount of U.S. farm exports to Cuba over a similar period.

Only two examples of transactions are given: “loans to a Dutch company to finance the purchase of crude oil products destined to be refined and sold to Cuba” and loans for “one of Cuba’s largest state-owned commercial companies,” which sounds like Cimex, but no detail is given about the company or the loan’s purpose. That’s it. There’s no suggestion of any commercial activity that threatens “U.S. national and hemispheric security.”

To prosecutors, the purpose of the transactions doesn’t matter because it’s illegal to move money connected to Cuba, period.

But as a foreign policy matter, for all we know the United States brought this case against a bank that was financing routine imports to Cuba – food, consumer goods, construction materials, etc.

This is the embargo at work under President Obama, who talks about the need to be “thoughtful” and “creative” in Cuba policy, and who likes to imply that our policy is an anachronism that needs to be fixed. Meanwhile, he mainly continues to carry out his predecessors’ policies. He continues to apply general pressure on the Cuban economy, with a special focus on international financial transactions. His policies make imports and credit more difficult and expensive for Cubans, and in this case he causes a conflict with a major European bank and an allied government, without even explaining how anyone’s interests were harmed by the credits extended to Cuba. Maybe one day he will explain how this serves our national interest.

Phil Peters, The Cuban Triangle
July 3, 2014

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