Friday February 26, 2016
The Russian government is readying a new issuance of foreign bonds and has invited non-Russian banks to participate in the bond auction. US banks would like to participate in the auction but have been warned by the State Department that this would violate the spirit, if not the letter, of US sanctions against Russia. Even though it wouldn’t be illegal for the banks to bid in the auction, the State Department is warning of “reputational risk” to those banks that do decide to participate. There must be stronger language that the State Department is using privately, in which they’re undoubtedly trying to make the banks an offer they can’t refuse.
This incident is one more example that demonstrates the contempt with which the US government holds private companies. Private companies are literally being conscripted to serve the state. Last week we found out about the FBI trying to force Apple to hack into phones it produces in order to allow the FBI access whenever it wants. Now we have the State Department trying to bully American banks into not doing business in Russia. In fact, the very concept of sanctions relies on private companies acting as arms of the state. No company would willingly turn down lucrative business opportunities in Russia. It is only through government threats that companies cooperate with sanctions. There is a name for an economic system in which ownership is nominally private but ultimate control is exercised by the government: fascism.