Lafayette, We Hate Your Guts

Freedom Fries, anyone? It’s a pretty badly-kept secret that generally, the French despise Americans. To them, we are gun-toting, shoot-first-and-ask-questions-later cowboys where money rules and nothing else matters. We are the cause of the 2008 financial collapse, and France’s equally less-than-subtle suspicion of things British – especially a financial system and attitude (one which completely avoided going “Euro” and kept the pound sterling) that seemed more American than European. We are the global-policy bullies that finally cemented one of the most important reasons the European Union was created in the first place: to aggregate European power to counter American unilateral mandates for the world.

Not that American have much love for the French, it seems, even though the Revolutionary War tilted toward the rebels in part because of French intervention (Lt. General Marie-Joseph Paul Yves Roch Gilbert du Motier de La Fayette, Marquis de La Fayette, known to us as “Lafayette” for short), and both WWI and WWII pushed towards French liberation from the Nazis largely because of American soldiers and materiel. Too many Americans see the French as snobby, lazy and lacking the Teutonic work effort of the German neighbors, focused on social safety nets at the expensive of competition, cooking up and painting a storm… but those are triumphs of a past seemingly long gone.

Enter a new banking scandal. You see the French have diplomatic relations with Iran, and while there are ups and downs to this diplomatic link (recently strained over Iran’s nuclear enrichment program), they actually aren’t enemies. That the United States, which has no diplomatic relations with Iran, considered Tehran to be an outlaw nation and currently our enemy, is of little concern to the French. We’re the uncultured bullies, we eschew diplomacy in their eyes, and prefer guns, sanctions and vitriol to pragmatic coexistence with a Shiite power with very different values and priorities.

Enter BNP Paribas, one of Europe’s largest banks, a symbol of French financial pride in a global economy. Paribas’ financial services operations boast a vast pool of American clients, including high-end private wealth management clientele, among their most valuable connections. Operating in the United States primarily out of their New York offices,  Paribas is truly a global financial powerhouse. But since it has an U.S. operating subsidiary, Paribas everywhere is subject to our statutory and regulatory boycott requirements to avoid supporting financial transactions in places like Cuba, Sudan and, most of all Iran. To violate these restrictions is a felony under American law.

When Paribas admitted to trading infractions because of its involvement in these three banned nations, it found itself facing the shotgun barrel of U.S. federal prosecutors screaming for blood. So Paribas admitted guilt and held its breath for the fine. They had set aside over $1 billion in anticipation of the result, but they knew that the fine could be higher, since “[e]arlier in May, Swiss bank Credit Suisse agreed to a $2.6bn penalty and admitted criminal wrongdoing in helping ‘tax cheats’ avoid paying US taxes , [although t]o date, the largest fine levied against a bank by US regulators for sanctions violations was the $1.9bn HSBC paid in 2012.” BBC.co.UK, June 3rd.

The announced number, $10 billion (rumors say it was almost $16B!), shocked the global financial community and stunned the French government, already railing that a French bank was being prosecuted for simply dealing with a nation with which the French had diplomatic relations. The fine, which still has not received final approval by the court, was even bigger than the $4 billion fine paid by BP in 2012 after the Gulf oil spill and if implemented would become the largest criminal fine paid in U.S. history. Further possible restrictions, like a temporary ban on clearing dollar transactions, would also hurt Paribas’ ability fully to service U.S. clients.

French President Francois Hollande blanched (what else?), and “French Foreign Minister Laurent Fabius said ‘a fine of the size suggested would be ‘an extremely serious problem.’.. Speaking on the France 2 television channel, he added it would be an example of an ‘unfair and unilateral decision… The fine has to be proportionate and reasonable. These figures are not reasonable…’” BBC. While most French treat banks in general the way Muslims treat pork, this issue rapidly escalated to a matter of French, no, make that European, pride, against continued American bully-tactics.

Hollande, scheduled to meet with President Obama as part of the celebration of D-Day, mounted pressure on the Americans to replace the odious fine with one they considered commensurate with the crime. Germans were cheering the French on, knowing that their banks were next on the American prosecutors’ plate. The Americans responded that our judicial system, unlike the systems in Europe, cannot be swayed by political pressure… from anyone. Ouch! American hubris rubbing salt in the wounds, mused the Europeans.

 Parisbas  noted in its official response to the fine: “A high degree of uncertainty exists as to the nature and amount of penalties that the US authorities could impose on the bank following completion of the ongoing process: there is the possibility that the amount of the fines could be far in excess of the amount of the [bank’s set aside] provision.” Ya think? Will this fine be finalized? Exactly, how will Europe respond? Can we expect retaliation? Will the criminal settlement require Paribas to curtail its U.S. operations and disqualify it from many of existing lucrative business services in the United States? And why really do the French and American dislike each other so much? I am so tired of all this bickering.

I’m Peter Dekom, et je suis vraiment fatigué de cette problématique… neah!