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> forcing foreign financial institutions to tell the US government about any American-owned assets on their books This is another interesting part. How can the

> forcing foreign financial institutions to tell the US government about any American-owned assets on their books This is another interesting part. How can the US "force" a sophisticated wealthy sovereign nation that culturally and morally values banking privacy (not only for the profits), like Switzerland? It cannot be understated how much power, control and ownership the US has of the world financial system. If Switzerland did not comply, they would have been fully cut-off, unable to participate in any finance at all. It happened swiftly (no pun intended [1]), there was no discussion, only power. Most of the west is mostly aligned with what the US is doing, so it's not a big deal. Every government wants more visibility, control and power over finances. It is akin to how the US military handles matters of physical force on behalf of the rest of the west. Just a quick note that the US is equally powerful in the financial arena as they are militaristically, if not more so. [1] SWIFT is one of the systems Switzerland could have been cut off from

throwaway_tech 7y ago
>Just a quick note that the US is equally powerful in the financial arena as they are militaristically, if not more so. This was the trade off Churchill was forced to agree to, as London was being bombed by the Nazis, if he wanted the US to join the war. Before the War the UK ran the World's finance, after the War it was the US. In short the US financial power was birth directly from its military power.
- mlazos 7y ago
  I don’t think it was a deliberate agreement per se, I feel like it was just the natural outcome after the US helped rebuild a lot of Europe. The previous world order had been ripped apart by the war, and the US was the world’s largest economy by the end.
  - mars4rp 7y ago
    It was deliberate, on one of the financial summits over the future of financial system after WWII a US changed all the word of GOLD to USD. there was a planet money episode about it.
    - dv_dt 7y ago
      Yes it was agreed upon that the US Dollar became the underpinning of international finance at the Bretton Woods conference near the end of WWII. https://en.wikipedia.org/wiki/Bretton_Woods_system https://en.wikipedia.org/wiki/Bretton_Woods_system This has a link to the PMoney episode you're thinking of, as well as a more recent discussion of the economic fight other nations possibly trying to supplant or at least be adjacent to the dollar as a reserve currency. https://www.npr.org/sections/money/2019/07/30/746337868/75-years-ago-the-u-s-dollar-became-the-worlds-currency-will-that-last https://www.npr.org/sections/money/2019/07/30/746337868/75-y...
  - chii 7y ago
    It's the "hidden" rewards of winning the war. The US didn't take any territory (cept leaving bases behind). But they can reap the financial control and profit immensely via this indirect control. This is why the US does not want https://en.m.wikipedia.org/wiki/BRICS https://en.m.wikipedia.org/wiki/BRICS to succeed and will do much to sabotage it. In the world of politicking, there are no good guys - just lesser of evils (or better the devil you know).
  - Aeolun 7y ago
    It was also pretty much the only economy left standing. I don’t think that can be overstated enough.
    - SamReidHughes 7y ago
      The entire New World was left standing.
      - Nasrudith 7y ago
        True. The US was an industrial behemoth before even formal involvement in the War and was preposterously powerful in the area. They didn't have it diminished by bombing and gained manufacturing capacity instead of losing it. While others were unscarred they never "stood up" by the standards of the world scale even if they were also industrialized.
- rswail 7y ago
  It was not the UK that ran/runs the world's finance, it's the tax haven of the City of London, with its overseas branches in UK territories that still runs the world's finances. Current CT: Brexit has to happen before 2020 because otherwise City of London will be subject to EU rules that will cause current anonymities to be revealed.
  - cm2187 7y ago
    I am not aware of any tax that is specific to the City of London. How is it a tax heaven? And half of finance in London is not even located in the City (West End and Canary Wharf). The UK is certainly not a tax heaven.
    - NeedMoreTea 7y ago
      Haven, not heaven. :) The city has had the deserved reputation for being a tax haven for well over a century. https://www.newstatesman.com/economy/2011/02/london-corporation-city https://www.newstatesman.com/economy/2011/02/london-corporat...
      - cm2187 7y ago
        Thanks. Got caught exactly by what this website describes [1]. “Heaven” was logical from French. [1] https://jakubmarian.com/is-it-tax-haven-or-tax-heaven-in-english/ https://jakubmarian.com/is-it-tax-haven-or-tax-heaven-in-eng...
        NeedMoreTea 7y ago
        Interesting - didn't know most other languages had it as paradise.
      - epanchin 7y ago
        The title is the only part of that page suggesting the City itself is a tax haven.
gwright 7y ago
> It happened swiftly (no pun intended [1]), there was no discussion, only power. Not trying to take a stance on the wisdom of these policies, but this is a nice example of how realpolitik/power-politics/game-of-thrones is still how the international world works.
- buboard 7y ago
  it's not like power politics ever went away, the question is how they are being utilized
Aeolun 7y ago
It seems to me that they could only prevent transfers to US citizens, or transfers that somehow get routed through the US? Of course they could try to pressure SWIFT, but there’s no guarantee that would work.
microtherion 7y ago
As a Swiss, in a way it was sobering to see one of our dominant industries brought to heel so quickly. On the other hand, it was very satisfying to see those banks, who for decades had hid behind their hand tailored secrecy laws to do business with Nazis, dictators, and drug dealers, and were domestically untouchable, finally clean up their acts. As for "culturally and morally values privacy", I would find that a lot easier to believe if those privacy advocates had equally lobbied for the privacy of salary statements for the employed. But, hey, someone has to keep paying taxes, if the rich don't. Now, deprived of other unsavory sources of wealth, Swiss Banks are eagerly dabbling in cryptocurrencies.
- bitL 7y ago
  You can view it as that the previous strategy of the biggest players was to give some scraps to other countries like Switzerland to have them as (unofficial) allies, and now they are out for the whole cake and not willing to share anything.
- newyankee 7y ago
  Sincere question: Do the Swiss have any moral debates about the source of wealth from third world countries' dictators, politicians etc and the impact on these countries of their action of enabling the 'theft' ? Or is the Swiss view generally more like what it has been historically, that they are neutral and provide a service that others can't.
  - lolc 7y ago
    The traditional view is indeed that we shouldn't legislate things happening in other countries. As an example for what is going on though, we're set to have a vote on the Responsible Business Initiative[0] under which "companies will be legally obliged to incorporate respect for human rights and the environment in all their business activities [...] abroad". While initiatives usually fail the popular vote, it is not so certain for this one. It has very broad support. All parties have to argue their position regarding initiatives that will get voted on. So yes certainly there is a debate on such issues. [0] https://corporatejustice.ch/about-the-initiative/ https://corporatejustice.ch/about-the-initiative/
Mirioron 7y ago
I'm not so sure how aligned the EU is with the US anymore. A lot of what some EU politicians say is about not being able to trust the US. Verhofstadt gives me such an impression at least.
- robin_reala 7y ago
  Switzerland isn’t part of the EU.
  - Bayart 7y ago
    It's a part of a lot of European treaties and it's aligned with the rest of Western Europe on most things.
newyankee 7y ago
Fun fact: There is a commonly understood reference in India since as long as i've known. It is that all the corrupt businessmen and politicians stash their money in 'Swiss banks' and if this money could be repatriated a lot of Indian problems will be solved. I know this is exaggerated but this is what even the most average of Indian knows and the country does not have the leverage (at least so far till CRS) to do anything about historical wrongdoings. Also check the relationship between Mauritius and Africa/India for another example of such a relationship. It is funny though how even in today's world the corrupt from developing countries still manage to move the money around so easily, it happens only because you have the ability to grease the right palms. Forget about the island countries, i do not think even developed countries like UK (Russian money) or Canada (Vancouver real estate) cooperate enough if the person gets citizenship and is accused in a different country. I know because there is at least one documented case where the proceeds of a large scam in India were funneled to Vancouver real estate, how something like this is possible is beyond my understanding.
- TeMPOraL 7y ago
  > There is a commonly understood reference in India since as long as i've known. It is that all the corrupt businessmen and politicians stash their money in 'Swiss banks' I think it's also a Hollywood meme - since I remember, the villains always had Swiss bank accounts to store their ill-gotten money.
bboygravity 7y ago
> This is another interesting part. How can the US "force" a sophisticated wealthy sovereign nation that culturally and morally values banking privacy (not only for the profits), like Switzerland? Two reasons come to mind: 1. Switzerland (like EU countries) depends a 100 % on the US for defense, in the sense it would basically turn into Russia / China overnight if the US wasn't a military power protecting them. This alone gives the US pretty much unlimited political leverage. 2. The US has the number 1 world wide spying agency, which acts as the leader to other "Western" spying agencies (see point 1). This means the US knows everything about everybody and thus has unlimited political leverage over anybody. Again this reason alone gives them quite a bit of political leverage over even a country like Switzerland (hands down the most democratic country in the world). Even though Switzerland has political safeguards in place that no other country has (direct democracy); in this case I guess Swiss people didn't mind (or didn't care about) sharing banking info with the US. After all: this helps tax evasion, so why vote against that... You give some other answers yourself :P There's no reason for the US to compromise on anything with any country in the Western world. And they don't. See for example: leaked cables on Wikileaks for tons of examples of good deals for the US and shitty deals for all counterparts.
- antientropic 7y ago
  > Switzerland (like EU countries) depends a 100 % on the US for defense, in the sense it would basically turn into Russia / China overnight if the US wasn't a military power protecting them. Neither Switzerland nor the EU depend "100%" on the US for defense, far from it. Some EU countries are among the biggest military spenders in the world. It's also difficult to see how Switzerland would "turn into Russia / China overnight" given that it's completely surrounded by the EU. How do you imagine that the Russians or Chinese will come to dominate Switzerland? Note that Switzerland managed to maintain its independence in WWII even though it was completely surrounded by the Axis.
  - bboygravity 7y ago
    China vs France: https://www.globalfirepower.com/countries-comparison-detail.asp?form=form&country1=china&country2=france&Submit=COMPARE https://www.globalfirepower.com/countries-comparison-detail.... Russia vs France: https://www.globalfirepower.com/countries-comparison-detail.asp?form=form&country1=russia&country2=france&Submit=COMPARE https://www.globalfirepower.com/countries-comparison-detail.... Russia vs Germany: https://www.globalfirepower.com/countries-comparison-detail.asp?form=form&country1=russia&country2=germany&Submit=COMPARE https://www.globalfirepower.com/countries-comparison-detail.... The rest of Europe has no military power to speak of. Random example: the Dutch tank force consists of 0 tanks. > How do you imagine that the Russians or Chinese will come to dominate Switzerland? Admittedly Switzerland is probably one of the toughest to beat in Europe due to their strategic advantages (mountains, bunkers, infrastructure pre-rigged with explosives, relatively lots of reservists). However, just look at the numbers above. If the US didn't exist, the EU wouldn't be the EU unless they had 10x the military power they have now to defend themselves. > Note that Switzerland managed to maintain its independence in WWII even though it was completely surrounded by the Axis. A few facts about that: 1. It did so partly through secret deals with the Nazis. Ever wonder where the stolen gold of the dead jews was stored and smelted? Right... CH 2. The world's current military and political powers aren't comparable in any way to those during the second world war. 3. The Netherlands was neutral during the first world war. In the second world ware they fought the Germans for 3 days before they lost. That's right. 3 days. The fact that a country managed to stay neutral 70+ years ago says absolutely nothing about whether they would achieve the same again now, with totally different potential enemies. And a completely different distribution of military powers.
raverbashing 7y ago
> This is another interesting part. How can the US "force" a sophisticated wealthy sovereign nation that culturally and morally values banking privacy (not only for the profits), like Switzerland? By taxing in 30% any money coming from institutions in countries not adhering to FATCA

throwaway_tech 7y ago

>Just a quick note that the US is equally powerful in the financial arena as they are militaristically, if not more so. This was the trade off Churchill was forced to agree to, as London was being bombed by the Nazis, if he wanted the US to join the war. Before the War the UK ran the World's finance, after the War it was the US. In short the US financial power was birth directly from its military power.

mlazos 7y ago
I don’t think it was a deliberate agreement per se, I feel like it was just the natural outcome after the US helped rebuild a lot of Europe. The previous world order had been ripped apart by the war, and the US was the world’s largest economy by the end.
- mars4rp 7y ago
  It was deliberate, on one of the financial summits over the future of financial system after WWII a US changed all the word of GOLD to USD. there was a planet money episode about it.
  - dv_dt 7y ago
    Yes it was agreed upon that the US Dollar became the underpinning of international finance at the Bretton Woods conference near the end of WWII. https://en.wikipedia.org/wiki/Bretton_Woods_system https://en.wikipedia.org/wiki/Bretton_Woods_system This has a link to the PMoney episode you're thinking of, as well as a more recent discussion of the economic fight other nations possibly trying to supplant or at least be adjacent to the dollar as a reserve currency. https://www.npr.org/sections/money/2019/07/30/746337868/75-years-ago-the-u-s-dollar-became-the-worlds-currency-will-that-last https://www.npr.org/sections/money/2019/07/30/746337868/75-y...
- chii 7y ago
  It's the "hidden" rewards of winning the war. The US didn't take any territory (cept leaving bases behind). But they can reap the financial control and profit immensely via this indirect control. This is why the US does not want https://en.m.wikipedia.org/wiki/BRICS https://en.m.wikipedia.org/wiki/BRICS to succeed and will do much to sabotage it. In the world of politicking, there are no good guys - just lesser of evils (or better the devil you know).
- Aeolun 7y ago
  It was also pretty much the only economy left standing. I don’t think that can be overstated enough.
  - SamReidHughes 7y ago
    The entire New World was left standing.
    - Nasrudith 7y ago
      True. The US was an industrial behemoth before even formal involvement in the War and was preposterously powerful in the area. They didn't have it diminished by bombing and gained manufacturing capacity instead of losing it. While others were unscarred they never "stood up" by the standards of the world scale even if they were also industrialized.
rswail 7y ago
It was not the UK that ran/runs the world's finance, it's the tax haven of the City of London, with its overseas branches in UK territories that still runs the world's finances. Current CT: Brexit has to happen before 2020 because otherwise City of London will be subject to EU rules that will cause current anonymities to be revealed.
- cm2187 7y ago
  I am not aware of any tax that is specific to the City of London. How is it a tax heaven? And half of finance in London is not even located in the City (West End and Canary Wharf). The UK is certainly not a tax heaven.
  - NeedMoreTea 7y ago
    Haven, not heaven. :) The city has had the deserved reputation for being a tax haven for well over a century. https://www.newstatesman.com/economy/2011/02/london-corporation-city https://www.newstatesman.com/economy/2011/02/london-corporat...
    - cm2187 7y ago
      Thanks. Got caught exactly by what this website describes [1]. “Heaven” was logical from French. [1] https://jakubmarian.com/is-it-tax-haven-or-tax-heaven-in-english/ https://jakubmarian.com/is-it-tax-haven-or-tax-heaven-in-eng...
      - NeedMoreTea 7y ago
        Interesting - didn't know most other languages had it as paradise.
    - epanchin 7y ago
      The title is the only part of that page suggesting the City itself is a tax haven.

gwright 7y ago

> It happened swiftly (no pun intended [1]), there was no discussion, only power. Not trying to take a stance on the wisdom of these policies, but this is a nice example of how realpolitik/power-politics/game-of-thrones is still how the international world works.

buboard 7y ago
it's not like power politics ever went away, the question is how they are being utilized

Aeolun 7y ago

It seems to me that they could only prevent transfers to US citizens, or transfers that somehow get routed through the US? Of course they could try to pressure SWIFT, but there’s no guarantee that would work.

microtherion 7y ago

As a Swiss, in a way it was sobering to see one of our dominant industries brought to heel so quickly. On the other hand, it was very satisfying to see those banks, who for decades had hid behind their hand tailored secrecy laws to do business with Nazis, dictators, and drug dealers, and were domestically untouchable, finally clean up their acts. As for "culturally and morally values privacy", I would find that a lot easier to believe if those privacy advocates had equally lobbied for the privacy of salary statements for the employed. But, hey, someone has to keep paying taxes, if the rich don't. Now, deprived of other unsavory sources of wealth, Swiss Banks are eagerly dabbling in cryptocurrencies.

bitL 7y ago
You can view it as that the previous strategy of the biggest players was to give some scraps to other countries like Switzerland to have them as (unofficial) allies, and now they are out for the whole cake and not willing to share anything.
newyankee 7y ago
Sincere question: Do the Swiss have any moral debates about the source of wealth from third world countries' dictators, politicians etc and the impact on these countries of their action of enabling the 'theft' ? Or is the Swiss view generally more like what it has been historically, that they are neutral and provide a service that others can't.
- lolc 7y ago
  The traditional view is indeed that we shouldn't legislate things happening in other countries. As an example for what is going on though, we're set to have a vote on the Responsible Business Initiative[0] under which "companies will be legally obliged to incorporate respect for human rights and the environment in all their business activities [...] abroad". While initiatives usually fail the popular vote, it is not so certain for this one. It has very broad support. All parties have to argue their position regarding initiatives that will get voted on. So yes certainly there is a debate on such issues. [0] https://corporatejustice.ch/about-the-initiative/ https://corporatejustice.ch/about-the-initiative/

Mirioron 7y ago

I'm not so sure how aligned the EU is with the US anymore. A lot of what some EU politicians say is about not being able to trust the US. Verhofstadt gives me such an impression at least.

robin_reala 7y ago
Switzerland isn’t part of the EU.
- Bayart 7y ago
  It's a part of a lot of European treaties and it's aligned with the rest of Western Europe on most things.

newyankee 7y ago

Fun fact: There is a commonly understood reference in India since as long as i've known. It is that all the corrupt businessmen and politicians stash their money in 'Swiss banks' and if this money could be repatriated a lot of Indian problems will be solved. I know this is exaggerated but this is what even the most average of Indian knows and the country does not have the leverage (at least so far till CRS) to do anything about historical wrongdoings. Also check the relationship between Mauritius and Africa/India for another example of such a relationship. It is funny though how even in today's world the corrupt from developing countries still manage to move the money around so easily, it happens only because you have the ability to grease the right palms. Forget about the island countries, i do not think even developed countries like UK (Russian money) or Canada (Vancouver real estate) cooperate enough if the person gets citizenship and is accused in a different country. I know because there is at least one documented case where the proceeds of a large scam in India were funneled to Vancouver real estate, how something like this is possible is beyond my understanding.

TeMPOraL 7y ago
> There is a commonly understood reference in India since as long as i've known. It is that all the corrupt businessmen and politicians stash their money in 'Swiss banks' I think it's also a Hollywood meme - since I remember, the villains always had Swiss bank accounts to store their ill-gotten money.

bboygravity 7y ago

> This is another interesting part. How can the US "force" a sophisticated wealthy sovereign nation that culturally and morally values banking privacy (not only for the profits), like Switzerland? Two reasons come to mind: 1. Switzerland (like EU countries) depends a 100 % on the US for defense, in the sense it would basically turn into Russia / China overnight if the US wasn't a military power protecting them. This alone gives the US pretty much unlimited political leverage. 2. The US has the number 1 world wide spying agency, which acts as the leader to other "Western" spying agencies (see point 1). This means the US knows everything about everybody and thus has unlimited political leverage over anybody. Again this reason alone gives them quite a bit of political leverage over even a country like Switzerland (hands down the most democratic country in the world). Even though Switzerland has political safeguards in place that no other country has (direct democracy); in this case I guess Swiss people didn't mind (or didn't care about) sharing banking info with the US. After all: this helps tax evasion, so why vote against that... You give some other answers yourself :P There's no reason for the US to compromise on anything with any country in the Western world. And they don't. See for example: leaked cables on Wikileaks for tons of examples of good deals for the US and shitty deals for all counterparts.

antientropic 7y ago
> Switzerland (like EU countries) depends a 100 % on the US for defense, in the sense it would basically turn into Russia / China overnight if the US wasn't a military power protecting them. Neither Switzerland nor the EU depend "100%" on the US for defense, far from it. Some EU countries are among the biggest military spenders in the world. It's also difficult to see how Switzerland would "turn into Russia / China overnight" given that it's completely surrounded by the EU. How do you imagine that the Russians or Chinese will come to dominate Switzerland? Note that Switzerland managed to maintain its independence in WWII even though it was completely surrounded by the Axis.
- bboygravity 7y ago
  China vs France: https://www.globalfirepower.com/countries-comparison-detail.asp?form=form&country1=china&country2=france&Submit=COMPARE https://www.globalfirepower.com/countries-comparison-detail.... Russia vs France: https://www.globalfirepower.com/countries-comparison-detail.asp?form=form&country1=russia&country2=france&Submit=COMPARE https://www.globalfirepower.com/countries-comparison-detail.... Russia vs Germany: https://www.globalfirepower.com/countries-comparison-detail.asp?form=form&country1=russia&country2=germany&Submit=COMPARE https://www.globalfirepower.com/countries-comparison-detail.... The rest of Europe has no military power to speak of. Random example: the Dutch tank force consists of 0 tanks. > How do you imagine that the Russians or Chinese will come to dominate Switzerland? Admittedly Switzerland is probably one of the toughest to beat in Europe due to their strategic advantages (mountains, bunkers, infrastructure pre-rigged with explosives, relatively lots of reservists). However, just look at the numbers above. If the US didn't exist, the EU wouldn't be the EU unless they had 10x the military power they have now to defend themselves. > Note that Switzerland managed to maintain its independence in WWII even though it was completely surrounded by the Axis. A few facts about that: 1. It did so partly through secret deals with the Nazis. Ever wonder where the stolen gold of the dead jews was stored and smelted? Right... CH 2. The world's current military and political powers aren't comparable in any way to those during the second world war. 3. The Netherlands was neutral during the first world war. In the second world ware they fought the Germans for 3 days before they lost. That's right. 3 days. The fact that a country managed to stay neutral 70+ years ago says absolutely nothing about whether they would achieve the same again now, with totally different potential enemies. And a completely different distribution of military powers.

raverbashing 7y ago