Obama Willing To Sink BNP Paribas To Blackmail France over Arms Sales to Russia
June 7, 2014 • 9:34AM

Friday was a real Presidential day for French President François Hollande. After drinking tea in the morning with Queen Elizabeth II, he had dinner with U.S. President Obama, and supper with Russian President Vladimir Putin, who is among some 18 international leaders taking part in D-Day landings commemorations in France.

Hollande clashed with Obama over two subjects which turn out to be a single one: France's persistent refusal to give in to Obama's pressure to scrap the sale of two warships to Russia, and the giant $10 billion fine about to be inflicted by U.S. prosecutors on French mega-bank BNP Paribas.

While French main public TV channel TF1 aired a 24-minute interview with Putin on June 5, allowing the Russian President to debunk some of the Anglo-American propaganda against him, Obama repeated what Assistant Secretary of State for European Affairs Victoria Nuland had some weeks ago told French authorities: In the context of our war on Russia over Ukraine, you better drop your sale of two warships to Russia, or else!

One of the ships is Sevastopol, named after the Russian port in Crimea. French media describe the Mistral-class carriers as the "pride of the Navy," and Russia's Navy chief has described them as significantly enhancing its combat potential.

Since France refuses so far to capitulate, and a Foreign Ministry spokesman said the contract had been signed and had to be honored, and Putin has said he expects Paris to go through with the warship deal, Obama is furious. At the Brussels G7 summit, Obama fumed: "I think it would have been preferable to press the pause button." And pressured by Obama, Polish Foreign Minister Radoslaw Sikorski has called on France to cancel the deal because "Russian generals have already said what these ships will be used for: to threaten Russia's neighbors in the Black Sea and that means Europe's partners."

It is in this context, that suddenly the BNP Paribas case has become explosive. For several months, the U.S. Justice Department and three U.S. prosecutors have accused BNP Paribas' subsidiary in Geneva of having violated the U.S. embargoes on Iran, Sudan, and Cuba. While the transactions were legal in Switzerland, yet, since they were done in dollars, the United States is upholding criminal charges against the bank. The amount of the initial fine was about $1 billion, which suddenly became 10 billion from the day on which France refused to give in to Obama.

Giving up the sale of the warships would "only" cost France over $1 billion and hurt its political partnership with Russia, while the fine against BNP would cost $10 billion. Furthermore, U.S. prosecutors are asking the bank to plead guilty, and are threatening to suspend the bank's access to U.S. dollars, a decision that would make the bank's clients flee to its competitors. BNP Paribas is one of the world's "dollar clearers."

To counter the blackmail, Hollande has argued that the fine would hurt the entire EU monetary system. Former European Central Bank President Jean-Claude Trichet, who is French, reminded a BFM radio interviewer that BNP Paribas is a systemic bank, and that therefore, any damage done to the bank would pose a systemic risk to the entire system. Foreign Minister Laurent Fabius has made it known that if the U.S. threat against the bank is not withdrawn, France could consider not signing the free-trade TAFTA/TTIP agreement (which is deadly in any case) now being negotiated between the EU and the United States.