Streetwise Professor

July 1, 2014

Putin’s Tell on What He Really Fears: Let’s Take the Hint and Make His Nightmares Reality

Filed under: Economics,Military,Politics,Regulation — The Professor @ 2:58 pm

Vladimir Putin played his favorite game today: divide and conquer. He weighed in on the $9 billion US fine of French bank BNP Paribas for its flagrant and repeated violations of US sanctions on Sudan and Iran. He took a typically narcissistic view: according to Vova, the US offered to relent on its prosecution of BNPP if France terminated its sales of Mistral attack ships to Russia:

“We know about the pressure which our U.S. partners are applying on France not to supply the Mistrals to Russia,” Putin told Russian diplomats in Moscow today. “And we even know they hinted that if the French don’t deliver the Mistrals, they would quietly get rid of the sanctions against the bank, or at least minimize them,” he said without naming BNP Paribas.

He knows this how, exactly? Electronic surveillance? (Don’t tell Angela!) A leak from the French?

Certainly Putin is trying to stir trouble between the US and France, and exploiting the French anger at the US penalties. (To which I say: the anger should be directed at the mangers of BNP Paribas, especially the offenders in its Geneva commodity finance operation who violated sanctions against malign regimes with malice aforethought.)

But the chronology is way off. The US prosecution of BNP began long before Ukraine exploded. Years before. The USDOJ was particularly furious at the French bank’s flagrant attempts to conceal its sanctions busting: the bank eliminated identifying information from the transactions in order to evade detection, a sure sign of a specific intent to commit a violation. This fury was well-stoked long before Putin’s adventurism in Ukraine/Crimea. What’s more, US prosecutors operate very independently, and those involved in the BNP case would be outraged at attempts to interfere in their case against the French by a White House playing geopolitical games, especially given the years and blood, sweat, and tears involved in the prosecution. Prosecutors do not take orders from on high, especially in big cases like this.

This is likely another example of Putin projection. This is how Putin would have instructed his prosecutors to act, and they would have implemented his instructions without question: he just presumes that the same would happen in the US. But the US is very different in that regard. Indeed, I would wager that if the White House did attempt to interfere in this way, the prosecutors would have leaked.

Of course Putin has another agenda here. He realizes that the biggest threat he faces is US sanctions that would be enforced (via the financial provisions of the Patriot Act) by prosecuting any sanctions violator who deals in dollars just as the US has prosecuted BNP. By emphasizing the existential legal threat that European banks would face under a sanctions regime, Putin is attempting to fuel opposition to sanctions: since Obama has made it plain that he will not proceed with sanctions without European support, by fomenting European opposition he can counter the US. To the Europeans (and probably American banks too), the easiest way to avoid severe punishments for sanctions violations is to have no sanctions at all. Which is what Putin wants.

In other words, Putin’s mischievous comment on the BNP Paribas case is a tell. He is revealing what he really fears.  So let’s take the hint, and make his nightmares reality.

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  1. Do you like your tea with one drop of polonium or two?

    Good points. People forget/ignore who Putin is.

    Comment by S Roche — July 1, 2014 @ 5:09 pm

  2. @S Roche. This is why I don’t drink tea. Especially in London (where I am now).

    The ProfessorComment by The Professor — July 1, 2014 @ 5:48 pm

  3. I’m thinking sanctions have put a bid under gold. Turkey/Iran (CS, BNP etc), Russia. Any thoughts?

    Comment by S Roche — July 1, 2014 @ 8:18 pm

  4. SWP, glad you are in london… what is the event? I would like to attend. True that BNP investigation started mahy years ago, but suddenly came to the front of the queue with Hollande’s invite to Putin on D-day. Credit Suisse finally got squeezed with political zeal by Obama when he was looking weak. All of these allegations are 5+ years old, and suddenly Holder is interested in procescution…. come on. It is a political vendetta. I don’t see Obama acting on judicial principal.

    Comment by scott — July 2, 2014 @ 2:51 pm

  5. “People forget/ignore who Putin is.”

    A hired actor like other “leaders”.

    Comment by So? — July 2, 2014 @ 6:41 pm

  6. SWP…Zerohedge just ran an absurd article claiming that the dollar was headed for disaster because BNP Paribas was fined, and repeating Putin’s claim that the fine was due to the Mistral sale.
    The BNP Paribas fine was the result of a long investigation (the Manhattan district attorney office and the Federal authorities joined together in 2007 after parallel investigations) started when a father of a Gaza Strip bus bombing victim brought a lawsuit against Iran. He was awarded $250M, which Iran never paid. So he pursued the Alavi Foundation, an Iranian front, and his pursuit exposed the shenanigans of Credit Suisse, Lloyds, ING, Standard Charter and others (banks which settled their cases in 2010 and 2012). They substituted their names for their actual client name (Iran)in wire transfers. They knew what they were doing was illegal, and they conspired to do it anyway. So some sleazy European bankers got caught, and ZH swallows Putin’s claim entirely, then bends it into a ‘dollar-catastrophe’ story to appeal to the aluminum-foil-hat crowd.
    BTW, in hindsight, it would have been cheaper for BNP to pay the original settlement against Iran. $8.9B minus $250M still leaves for a lot of bonuses.

    Comment by Richard Whitney — July 4, 2014 @ 2:26 pm

  7. @Richard-That’s straight out of the ZH playbook. As I’ve written in the past, it shares the agenda and methods of an FSB/KBG information operation. Given the connections of the founder (via his father) it’s not implausible that it *is* an FSB information operation, but maybe it’s just a wannabe/fellow traveler. Apocalyptic articles about the demise of the dollar are a big part of that.

    Although I am ambivalent, at best, about the extraterritorial reach of US law, this case is so egregious that it doesn’t trouble me.

    I would also note that in the current circumstances, there is a big reason for pro-Russian outlets to make such a big deal about the blowback from the US’s use of financial penalties on foreign banks handling the transactions of sanctioned countries. Such penalties would be the main reason why foreign banks would adhere to sanctions imposed on Russia. So this could well be more about Russia than it is about BNPP.

    The ProfessorComment by The Professor — July 5, 2014 @ 6:59 am

  8. And yet the Russians still have no real clue what they are going to do with the MISTRALs anyway (other than take over as the Pacific Fleet flagship role). Cancelling them might be a blessing in disguise for the Russian defense industry (if not the Russian Navy).

    Re: ZeroHedge et all. Every time something with the Russians comes up in the news, I’m reminded of just how deeply they are embedded into various news sources and how effective they are at their messaging. I’m likewise constantly amused by all the people who parrot RT talking points and refer to them as an “unbiased source”.

    Comment by Blackshoe — July 6, 2014 @ 11:55 am

  9. @Blackshoe. They just want them because the other kids have them. These are supposedly power projection ships, but they are of no use in projecting power in the absence of air control/supremacy. Since the Russians have no real carriers, this means that these ships will be useful against . . . Georgia, and maybe Ukraine. Or they could be the most expensive anti-piracy craft ever deployed off the coast of Somalia. In the Pacific-ha!

    You are exactly right re how effective the Russians are at messaging. This is their old MO. The only thing that has changed since the 80s is that their techniques have become slicker, and they’ve proven masters at using social media. But in essence, the methods and objectives are the same.

    The ProfessorComment by The Professor — July 6, 2014 @ 4:38 pm

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