BNP gets a dose the new American financial medicine

When a nation state is on its knees, it often is reduced to petty theft and abuse of law to try to raise revenues. Where possible, the best targets are 'foreginers' who never get a decent press back home, are seen as easy pickings and due to the lack of any real international law, have limited cause for redress.

In recent years, the USA has been very much at this game. As I wrote last month, the US was in the process of fining Credit Suisse for its activities. At least with Credit Suisse, one could argue that US taxes had been avoided by their citizens and Credit Suisse had been helpful to these citizens in a way detrimental to Uncle Sam. Again, with the large fine for HSBC last year, it was for facilitating money laundering on the behalf od Mexican Drug cartels, again an existential threat to the US.

This proposed fine for BNP Paribas is of a different order though. The fine may well come out at a full years profits or $11 billion. This is for facilitating trade with Iran. This is not illegal in France or Iran, only in America. None of the trades were through American businesses. So this law is pure extraterritoriality. The price of non-compliance is losing your New York Banking licence.

America may argue it has a big interest in keeping Iran down, but as of last week there is strong speculation that Iran and the US are going to end up as Allies against ISIS in Iraq (in fact, this has already happened on the ground in effect). But again, the fine is a shakedown of a foreign bank in the US. For balance is should be noted that the US has also levied large fines on its own banks - but this BNP Paribas one smacks of pure greed. President Hollande phoned President Obama to complain and was give short shrift.

I can only see a future where the US uses this financial power ever more which is bad for the health of world markets and world capitalism as the markets are bent to the will of the State. In the long-term this is very bad for the US, as it undermines the Capitalist ethic that served the Country so well over the past 3 centuries.

The great game anew

Poor little Bulgaria. Known for its endemic corruption, which even the EU has described as breath-taking, is having a hard time. In the recent past it has been known for its place as being the only Country in the EU where a former Prime Minister has been jailed for corruption.

Now though the US has stepped in to make sure Bulgaria is involved in the Great Games on the side of the EU and US. Bulgaria had agreed to help Russia build a South Stream gas pipeline (funded by Gazprom) which would mean that gas could come from Russia via the Balkan states and avoid Ukraine.

With the recent events in mind, the US has stepped in which EU backing to put a stop to this project and called into question the process of bidding  - as Russian and local firms helpfully won the tender process which seems to have not included major Western manufacturers, natch.

So little Bulgaria, caught rigging its own processes and taking the Russian rouble, will now have to be paid up member of the EU. Best of all Bulgaria has said this is unhelpful interference by the EU and just this morning the Energy minister has said the building of the pipeline will prove 'irreversible.'

Russia has yet to make a meaningful comment as it must decide what step to take next. Russia may well find it harder to work with full EU members than putting pressure on the Ukraine and former CIS Countries who have no NATO guarantees.

We will see how this plays out, it is possible the Russians have expected this and after all, if they conquer Ukraine they won't need the South Stream project anyway.