When movie metaphors and hardball politics are intertwined, it’s usually The Godfather and The Godfather: Part II that play center stage: “I’ll make him an offer he can’t refuse,” or, “Keep your friends close, but your enemies closer.”
But as I’ve watched with increasing trepidation the ever-intensifying rhetoric about Iran, its pursuit of nuclear-weapons material, and the global effort to avert a hot war by means of cold sanctions, a conversation from The Godfather: Part III springs to mind.
Vincent Mancini, who wants to succeed Michael Corleone as Godfather, encounters Don Lucchesi, a powerful European financier who is at the heart of a plot to deny the Corleone family operational control of a European conglomerate in which the Vatican is a controlling investor. The Corleone family wants the conglomerate to wield vast and never-before-seen family power. Legitimate power. The family wants “clean” power in the new globalized economy (the year is 1979) and will be as ruthless as ever to get it.
Mancini approaches Lucchesi.
Mancini: “Don Lucchesi, you are a man of finance and politics. These things I don’t understand.”
Lucchesi: “You understand guns?”
Lucchesi: “Finance is a gun. Politics is knowing when to pull the trigger.”
The context couldn’t be more different, but the underlying truth is unmistakable. If the world has learned anything from the global financial meltdown, it’s that finance is a gun. It can lead nations—even powerful ones—to do things they otherwise might not. The threat of collapsing finances in America and the world led Congress to approve the Troubled Asset Relief Program—an unprecedented taxpayer-financed rescue of distressed multinational banks and insurers deemed too big to fail. Banks in America with stable balance sheets still shudder at the memory of government pressure to take TARP relief funds—even when they didn’t need them.
Finance is a gun. Politics is knowing when to pull the trigger.
In his interview with The Atlantic’s Jeffrey Goldberg and in his speech to the American Israel Public Affairs Committee, President Obama made crystal clear that the most important weapon he now wields versus Iran is finance. Obama wants to douse talk of a hot war with Iran, waged either by Israel or by the United States. Obama implored Israel’s Prime Minister, Benjamin Netanyahu, to give the new sanctions a chance to work. To most Americans, the word “sanctions” sounds weak. In the long history of their use, they often have been. But there is a new and underappreciated wrinkle in the U.S. and European attempt to sanction and deter Iran.
It’s called SWIFT.
SWIFT is the Society for Worldwide Interbank Financial Telecommunication. It’s based in Brussels and is overseen by many powerful banks. Which ones? The European Central Bank and central banks in the United States, United Kingdom, Germany, France, Canada, Japan, the Netherlands, Belgium, Switzerland, and Sweden. SWIFT is not a bank. It holds no money. It holds the key to money. SWIFT is a secure system banks use to send other banks payment messages. SWIFT is a crucial conduit of global finance.
Obama and many lawmakers in Congress want SWIFT to kick Iran out of this global financial network, its conduit to oil-fueled riches. SWIFT recently said it will comply with European Union rules to evict Iran. If it does, this would be an unprecedented intrusion into the day-to-day financial well-being of Iran. If SWIFT acts—and there is no reason now to suspect it won’t—it may soon be impossible for Iran’s central bank to receive secure and reliable communications about its key financial transactions. If Iran can’t make reliable oil sales, it can’t be paid. Payments for oil deliveries run in the tens of millions of dollars. Those transactions don’t move globally in paper bags or leather satchels. You need electronics. Secure electronics. You need SWIFT. If Iran doesn’t have it, it can still sell oil to China and India, but it would have to assume the risk of insecure wire transactions (an anti-Iran hackers’ paradise) or fall back on hard assets like gold or other commodities. If Iran wanted to sell its oil this way, it would. It doesn’t. In this super-heated climate of fear and instability, Iran doesn’t want to sell tankers of oil for barges of bullion.
In Obama’s interview with Goldberg, he said the only durable way for the world to prevent Iran from obtaining a nuclear weapon is to talk them out of it—to persuade them to give it up voluntarily in exchange for other benefits. A crucial question in this calculus is whether Iran’s regime is practical or messianic. Goldberg asked Obama if it was messianic.
“They are able to make decisions based on trying to avoid bad outcomes from their perspective,” Obama said. “So if they’re presented with options that lead to either a lot of pain from their perspective, or potentially a better path, then there’s no guarantee that they can’t make a better decision.”
Finance is a gun. And Obama is pulling the trigger.
This article appears in the March 7, 2012, edition of National Journal Daily.