Sarko's Latest Guise: Doha Round Fiend

Sarko's Latest Guise: Doha Round Fiend

One thing you cannot accuse French President Nicolas Sarkozy of being is staid. His extroverted character has taken a number of turns, many of which are in conflict with each other: tabloid fodder, potty mouth, free market skeptic, union buster, defender of French national champions..and now this. It is known by every third world campaigner and NGO from Afghanistan to Zaire that France is the European state whose farmers rely the most on farm subsidies. Furthermore, "the farm" still has a mystique (mistake?) among the French electorate that keeps it lathered in subsidies which hurt farmers in the developing world. Well, here's something that will give the Oxfam crowd fits. According to Sarkozy, Peter Mandelson is going overboard with offers to cut EU farm subsidies already. Not that they have been successful in gaining the assent of developing countries, but whatever subsidies are already on offer are too much according to Sarkozy. Somehow, I don't think this will play very well in the developing world. From Reuters:

French President Nicolas Sarkozy said on Saturday the European Union was making too many concessions in current World Trade Organisation (WTO) talks and called for emerging countries to show more goodwill. He said the EU needed to defend its interests more vigorously and France would oppose any deal that went against its interests and those of the EU bloc. "I regret that Europe is making more and more important concessions without anything in exchange. This attitude is an impasse," Sarkozy said at the inauguration of the Paris annual farm show. "The government of the French Republic will firmly oppose any agreement that would sacrifice the interests of French and EU agriculture," he added.

France is the single biggest beneficiary of the EU's farm subsidies, worth more than 40 billion euros ($58.5 billion) a year in total. Negotiations on the Doha round have ground almost to a halt in Geneva this week as diplomats pored over the revised texts issued this month to pave the way for a ministerial meeting...

"The emerging countries think that they have only rights and no obligations," Sarkozy said.

The talks, often declared dead, were revived last year, and trade ministers meeting at the World Economic Forum in Davos Davos-City-Guide Jan-08 last month declared their determination to meet in March or April with a view to completing the deal by the end of the year [we can all dream, no?]

Showdown: US Treasury v. Iran's Central Bank

Here's more conflict escalation, American style. The US Treasury Department is in the process of gathering dirt on Iran's central bank, accusing it of facilitating the transactions of Iranian banks that have been sanctioned against by the US of A. Isolating Iran's central bank would be a major move by the US to choke off one of Iran's key remaining financial links to the rest of the world, though the US needs to gain the support of its allies. The US hopes to do so by linking Iranian financial activity to terrorist financing. This showdown will be an interesting one to watch. Unlike the US, most European countries are not as harsh in their treatment of the Islamic republic. From the Wall Street Journal:

The Treasury Department is gathering evidence it says shows that the central bank of Iran is helping other Iranian institutions elude U.S. economic sanctions, in what could be a prelude to penalties against the central bank.

The investigation, described by financial-intelligence officials in three countries, signals a potential escalation in the financial battle Washington is waging against Tehran. Beginning in 2006, the U.S. imposed sanctions against several of Iran's major private-sector banks, blacklisting them for allegedly supporting terrorism and Iran's nuclear-weapons program.

Now, financial-intelligence officials say the Iranian central bank, also known as Bank Markazi, is handling U.S.-dollar transactions for the blacklisted private banks, and is also helping them by backing their existing dollar-denominated letters of credit.

The impact of any American move to sanction the central bank would depend in large measure on the extent to which U.S. allies joined in the effort. To enlist such support, the U.S. would have to make a strong public case for action...

The central bank is the keystone of Iran's financial system and its principal remaining lifeline to the international banking system. U.S. sanctions against it could have a severe impact on Iranian trade if other nations in Europe and Asia choose to go along with them. That would intensify the economic pressures already facing Iran...

U.S. officials have begun trying to lay the groundwork for a move against the central bank in public statements and meetings with key allies. In a Feb. 8 speech, U.S. Deputy Treasury Secretary Robert Kimmitt asserted that Iranian banks are attempting to remove their names from transaction records when conducting business internationally.

"This practice, which makes it difficult, if not impossible, to determine the true parties in the transaction, is even used by Bank Markazi, Iran's central bank," Mr. Kimmitt alleged...

The U.S. has rarely sanctioned a foreign central bank, though the central bank of Iraq was included in sanctions it imposed on that country in the 1990s as it ratcheted up pressure on then Iraqi leader Saddam Hussein.

Unlike the independent Federal Reserve in the U.S., Iran's central bank is an arm of the Iranian regime and subject to political influence. Its Money and Credit Council includes the country's minister of intelligence.

Also unlike the Fed and many other central banks, Bank Markazi handles letters of credit and foreign-exchange transactions for private and state-owned companies. Because it isn't included in current American and U.N. sanctions, and has accounts with many of the major European banks, it is able to tap those banks' services on behalf of the banks the U.S. has punished with sanctions...

Under American laws, any institution that aids an entity covered by American financial sanctions is itself liable to penalties. In practice, however, officials acknowledge that getting international support for action may require them to make a more powerful case that the Iranian central bank actually aids sinister activity, such as funding terrorism.

Officials are aiming to lay that foundation as well. Between 2001 and 2006, Mr. Kimmitt alleged in his speech, Bank Saderat, an Iranian bank, "moved $50 million from the central bank of Iran through its subsidiary in London to its branch in Beirut to the benefit of Hezbollah front organizations in Lebanon that support acts of violence." Those remarks reiterated an allegation the U.S. Treasury first leveled in 2006.