I wrote an OpEd a few weeks ago, on how fragile our system is and how susceptible it is to an external shock; and today, there are market jitters about two lawsuits filed in New York against eleven local banks.
One, consisting of 203 pages, was filed on January 2, by 22 Israeli-American citizens against Lebanese banks and Hizbullah, for "traumatizing" them with rockets launched from Lebanon in 2006. This lawsuit is a bit of a stretch, being that this occurred during an all-out war, in which Israel, despite having precision missiles and smart bombs, destroyed much of the civilian infrastructure of the country, including power plants, killing over 1,000 Lebanese civilians, versus 43 Israeli civilians by these rockets. I think it can fairly be assumed that if they win, say, $1 billion in damages, then a countersuit should win $23 billion (the ratio of civilians killed times damages), assuming the world is fair and human lives are weighted equally.
The other lawsuit, filed the day before, January 1, was over 600 pages, which I skimmed. There were striking similarities between the two, at first making me think that it was written by the same law firm. Then I realized they were totally independent. Let's just say that one of the lawyers was not well-prepared and might have cut some corners, plagiarizing large swaths from the more diligent lawyer, right down to making the exact same distinctive mistake of geographically placing the Dalhamia Country Club in the Beqaa Valley (North-East of Beirut), instead of South in the Chouf province.
Thus, the Jan 2 lawsuit seems to be the "ambulance chaser" type - let's throw some mud (that we copy from someone else in a couple of hours of work) and see what sticks. I see this one summarily dismissed or, if they get a sympathetic judge and it proceeds, won by the banks, nonetheless. The plaintiffs are more likely to make money from suing their own lawyer for malpractice.
On the other hand, the Jan 1 lawsuit is much more tight and detailed, with names, dates, and account numbers, and accurately describing the country's economy and its vulnerabilities, and applying an arguably overreaching law, quite skillfully and effectively. This plaintiff has done his homework and this makes him dangerous. That's the real opponent here. There are various ways how this can end, most probably with a sealed settlement. The main danger, though, is that one of the plethora of US agencies (Treasury, OFAC, DHS etc.) sees a case and decides to jump on the bandwagon and turn it into a criminal case as well.
But that's not what I want to talk about today.
In the old article, I warned that we were walking a dangerous tightrope and not enough thought had been put into the viability of our system, if we stay on this path. In my mind, this development, while annoying and costly, is actually good news, if it wakes people in power up to the real dangers lurking. For example, I have always disputed the claim that some of our leaders have excellent relations with the US Authorities, because there simply is no one point of contact over there that controls all actions against us. Just like this situation. A good relationship with the US Treasury or even President Trump won't make this go away. They don't have a Ghazi Kanaan over there who can fix things for you, in return for appropriate compensation or an ass-kissing session in Anjar.
For those who, erroneously, believe that this move is political, note that one of the defendants had hired John Ashcroft in 2011, at significant cost, I might add, to certify that the client accounts they acquired were "clean" and had been purged of any bad apples. Ashcroft first achieved infamy in 2000 as the only person in history to lose an election to a dead guy. But his fortunes improved shortly thereafter when he was appointed Attorney General in the George W. Bush administration, which was peppered with neocons, some of whom wanted to invade half the world. At the time, it must have been assumed that if this ultra right-wing Republican, in the most conservative administration in the last 50 years, certifies their client accounts, then they basically have the proverbial "get out of jail free card." Except they don't. Nobody in the US can give you that. And that's the mistake that our people keep making over and over again. They presume that it's like dealing with, say, the Syrian regime. You make a deal with Hafez El Assad, and the deal is "till death do us part" - in fact, short of a coup d'état that removes the son, it even outlasts death, as our more sticky politicians know very well. This is in sharp contrast to deals with the US Government, as the Kurds just learned last month, unless you have a vastly powerful lobby that can transcend administrations and political parties.
Our leadership has spent eight months bickering over the composition of the government and the latest snag is the so-called pro-Hizbullah Sunnis. I think the powers that be need to think long and hard about this, because I have a hunch that this time America ain't messin' around. Any representative of a sanctioned organization in the government will quite likely open the gates of hell on the system. If you want to be brave and play chicken with the most powerful nation on earth, that's fine, but at the very least don't make it easy for them to squash you by having their currency fill your bank accounts and by pegging your currency to theirs.
If you don't believe me, read the lawsuit (P:173):
"With its currency tied to the U.S. dollar and its dependence on infusions of U.S. dollars in hard currency from expatriate Lebanese, the entire structure of the Lebanese financial system is dependent on Lebanese commercial banks maintaining access to U.S. dollar-clearing capabilities through the maintenance of correspondent accounts with U.S. financial institutions."
Your opponent understands this. Why can't you?
Dan Azzi is a regular contributor to Annahar. He has recently been invited to be an Advanced Leadership Initiative Fellow at Harvard University, a program for senior executives to leverage their experience and apply it to a problem with social impact. Dan’s research focus at Harvard will be economic and political reform in a hypothetical small country riddled with corruption and negligence. Previously, he was the Chairman and CEO of Standard Chartered Bank Lebanon
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