Dr. Joseph Fitsanakis
(Teaches politics and history at King College, USA. He is Senior Editor of intelNews.org)
Last February, Spain’s intelligence services began investigating alleged suspicious efforts by foreign financial speculators to destabilize the Spanish economy. According to newspaper El País, the Spanish government asked the country’s Centro Nacional de Inteligencia to probe links between speculative moves in world financial markets and a series of damaging editorials “in the Anglo-Saxon media”(01).The newspaper’s revelations were almost immediately dismissed as “piffle” by British magazine The Economist, whose editors called on the Spanish government to “grow up” (02). Interestingly, The Economist had remained silent exactly a year earlier, when Washington issued direct warnings against possible moves by the Chinese government to sell US Treasury bonds in its possession. The chances of China dumping most of the nearly $1 trillion-worth of US monetary debt that is currently in its control were --and remain-- slim. The US dollar would sink overnight, but the Chinese economy would also suffer from such a move. But US intelligence agencies took no chances: on February 19, 2009, the Office of the Director of National Intelligence issued a public warning to China that it would consider any attempts to sell US Treasury bonds an act of “financial warfare”(03).
The Americans know all about financial warfare, as they were among the first to employ it in the postwar era. In the fall of 1956, two of Washington’s main European allies, Britain and France, waged a war against Egypt for control of the lucrative Suez Canal. Washington’s main concern was to prevent a probable military involvement of the Soviet Union, which had threatened to take Egypt’s side. US President Dwight Eisenhower repeatedly urged Paris and London to withdraw their claims to the Canal. When these calls were ignored, Washington promptly resorted to financial warfare, by threatening to sell off the majority of its vast holdings in the British currency. Since the US was at the time the major owner of Britain’s enormous war debt, London knew well that such a move would effectively annihilate the British pound. Within weeks, British and French forces abandoned the Suez region, signaling the end of European colonialism in the Middle East, and the beginning of American dominance in the oil-rich region.
History never repeats itself, but the obvious parallels between 1956 and today are not lost on US policy planners. America’s economic dependency on China has placed it in a position similar to that of Britain during the Suez Crisis. What is more, US strategists understand that their country’s undisputed military supremacy effectively prompts its rivals to seek nonmilitary methods to defy American dominance, including financial warfare. It was precisely this fear that prompted US Director of National Intelligence, Dennis C. Blair, to remark in March of 2009 that the global economic crisis and the weakening American economy was “the primary near-term security concern of the United States”(04), eclipsing issues such as global nuclear proliferation, peak oil, or the so-called “war on terrorism”. Admiral Blair’s admission was correctly interpreted as a “sea change”(04) by perceptive observers, who described it as a crucial shift in emphasis, one that elevated economic security to a primary task of intelligence. Since Admiral Blair’s remark, the Central Intelligence Agency has started producing a daily Economic Intelligence Brief, a financial threats supplement to the President’s Daily Brief. The Agency’s Directorate of Intelligence has also intensified its recruitment of former Wall Street investment bankers, many of whom lost their jobs during the 2008 credit crisis.
It has taken a while, but European Union member states are gradually beginning to realize that their intelligence services do not have the luxury of abstaining from the broader effort of safeguarding European economic security. The new, more aggressive functions of European intelligence agencies, which are already apparent in countries like Holland (05), Belgium (06) and Germany, among others, include a very definite economic parameter. In 2006, a carefully organized financial espionage operation by Germany’s Bundesnachrichtendienst (BND) intelligence agency, helped expose the nation’s largest tax evasion scandal in modern times. The BND paid upwards of €4.5 million (nearly $6 million) to purchase a DVD from an informant, containing the names of nearly 1,000 wealthy German citizens banking with LLB and LGT Group, two ‘no-questions-asked’ banks owned by the Royal family of Liechtenstein. The investigation has now expanded to include thousands of individual tax evaders in at least a dozen countries (07).
There are indications that the National Intelligence Service of Greece (EYP) is following in the BND’s footsteps. In February, when Athens and Brussels began to realize the magnitude of the financial crisis threatening the European common currency, several news outlets suggested that EYP was cooperating with Spanish, Irish and Portuguese intelligence services in investigating a series of coordinated speculative attacks in money markets, most of which allegedly originated from London and Washington (08). In a rare exhibition of sound policy, the Greek Finance Ministry refused to comment on the reports of EYP’s involvement; but it is clear that one European government after another is resorting to its intelligence apparatus to combat what increasingly resembles a sustained financial war on the eurozone.
There is no denying that the current economic calamities in Europe are the direct result of chronic mismanagement, large-scale tax evasion, and the costly delay in European integration caused by the European Union’s rapid eastward expansion. However, although it is rarely openly admitted, it is commonly understood by observers that the timing of these calamities is not unrelated to the ongoing financial rivalry between the world’s two leading economies, the European Union and the United States. In 2003, commenting on this intensifying economic war between supposed political allies, Robert Zoellick, who today heads the World Bank, said it resembled a nuclear standoff (09). As the economic and political interdependence between European states deepens, and the Union’s economic status expands, this ‘nuclear standoff’ between Brussels and Washington will undoubtedly continue.
European nations must respond by galvanizing the quantity and quality of their financial intelligence, and by integrating their approach to transatlantic issues. The beginning was already made late last month, when the European Parliament’s new Congressional liaison office opened its doors in Washington. Commenting on the move, one European official said it amounted to a “wake up call” to American legislators, who should “recognize the growing powers of the 27 nation, 736-member European Parliament, which represents the largest market in the world, and some 500 million citizens in all”(10). What is desperately needed in this moment of crisis is for European intelligence agencies to follow suit. It may upset The Economist’s atlanticist editorial board, but it would be a wise precautionary step nonetheless.
01 C. PÉREZ "El CNI investiga las presiones especulativas sobre España" El País [14feb2010]
02 ANON. "The zapping of Zapatero" The Economist [11feb2010]
03 J. FITSANAKIS "US Issues Financial Warfare Warning" intelNews [20feb2009]
04 T. SPARKS "Spy Masters: It's the Economy, Intelligence" Congressional Quarterly [22mar2009]
05 S. DERIX "Dutch spies become more active abroad" NRC Handlesblad [04may2010]
06 I. ALLEN “Belgian intelligence concerned about increasing spy presence” intelNews [03feb2009]
07 J. FITSANAKIS "Unprecedented German tax scandal has intelligence connection" intelNews [27jan2009]
08 G. GEORGIOPOULOS "Greek intelligence probes bond speculators" Reuters [19feb2010]
09 E. Becker “Europe Warns US Is Facing Consequences Over Trade” The New York Times [5nov2003]
10 L. ROZEN "EU parliament president comes to Washington to open office, issue wake up call" Politico [26apr2010]