Finance, War, and the Rule of Rogue Law

Something like a privatised global constitution governs financial relationships affecting the life prospects of everyone on the planet. Not only does this entrench the pursuit of interests that run counter to social justice, ecological sustainability, and even real economic productivity.[1] It is implicated in a further, fundamental and all-encompassing, problem. War.

I want to explore the connection, but, first, why speak of a privatised constitution? As Katharina Pistor shows, the very existence of finance has the form of a set of legal contracts underwritten by legal norms and institutionalized means of enforcing them.[2] A critical problem, for the vast majority of us, is that the people with most power over the financial system are the least bound by any socially or politically mandated norms. A global rule of law relating to finance is determined by a kind of supra-political order that itself has no constitutional oversight. An essentially private constitution, created and imposed by a global elite, circumvents and subverts the politics of states and the will of peoples. Gunther Teubner points out that this neoliberal world order has a stratum of constitutional norms that provide transnational corporations with unlimited latitude for action;[3] Turkuler Isiksel highlights how private corporations’ investors’ rights can even colonise human rights regimes.[4] With more than three thousand international investment agreements in effect around the world, private corporations can sue signatory states in order to protect their interests in those states’ own territories. These disputes are heard in legal venues above the jurisdictional authority of states, mostly under the auspices of the International Center for the Settlement of Investment Disputes (ICSID). As the ‘investment’ dimension of ‘trade and investment’ agreements comes to involve ever more egregious shifts of power from democratically legitimate authorities to private corporate actors, private rights are even effectively able to trump human rights.[5] From the standpoint of public concern, this looks like the rule of law gone rogue.

The privatised global constitution has taken shape in a period of intense and protracted warfare in many places around the world. The international banking system demonstrated remarkable resilience even throughout World War 2 and has continued to do so during the many further conflicts since.[6] The fact that the banking system is compatible with intense and persistent warfare can be regarded, I think, as demonstrated. The privatised financial constitution has not only survived but seems possibly even to have flourished in these circumstances. This could suggest a lack of incentive on the part of the financial elite to support measures to prevent or contain wars. Once we acknowledge that concern, we face a possibility that is more disturbing still: it could be that those who control the financial system have an active interest in the perpetuation of warfare.

Finance and war are interrelated in three quite general respects: finance needs to be raised in order to fund war; war can be used for the pillage that replenishes finance; war can serve as an outlet for the capital on which finance can draw profits, in particular through arms manufacture and its associated businesses. Those functions can be mutually reinforcing.

Let us consider some more specific connections between the way the global financial architecture is governed and particular wars of the present epoch. Elite financial interests, we know, do not necessarily align with those of states: the Germans, British and Americans, for instance, maintained banking cooperation even throughout World War 2 under the auspices of the Bank for International Settlements (BIS). On the other hand, states that set themselves apart from the dominant system of global financial governance under the BIS do seem to find themselves embroiled in wars that are not typically of their choosing. This correlation applies to a number of states upon which war has been visited in recent years, including Afghanistan, Iraq, Libya, Syria and Yemen; the correlation also holds for other countries that have been subject to economic sanctions by the United States – like Iran, Venezuela, North Korea, and Cuba. A further distinguishing feature of those named countries is resistance to accepting the continuance of the dollar as the world’s reserve currency.

Correlation is not causation, of course, but it is worth looking at a little more closely. Regarding the war on Iraq, for instance, we know this was not genuinely motivated by concerns about weapons of mass destruction.[7] Many critics have suggested it was motivated by corporate oil interests in the territory, but William Clark has added the more specific suggestion that it was as much, if not more, an oil currency war.[8] Support for this suggestion has also come from Karen Kwiatkowsky, formerly of the US Air Force, who was privy to military intelligence. Speaking in 2004, she noted the significance of the fact that in the year 2000, Saddam Hussein had switched Iraq’s oil sales from the dollar to the euro under the UN Food for Oil programme. Although the oil sales under that programme were relatively small, if sanctions were lifted, then ‘sales from the country with the second largest oil reserves on the planet would have been moving to the euro’, and ‘that could cause massive, almost glacial, shifts in confidence in trading on the dollar.’[9] Tyler Shipley similarly argues that at the crux of the Iraq war was the drive to maintain hegemony of the US dollar as the world’s reserve currency.[10]

As Rohini Hensman and Marinella Correggia explain, due the dollar’s status, currency that the rest of the world has to work and often even suffer to attain, the US has simply to print.[11] So the US can rack up debts to an extent that no other country could. The downside for the US is that doing so has permitted the productivity of its national economy to decline to an extent that has perhaps not been fully appreciated. If the dollar were to lose its world reserve status, the supply of dollars worldwide would then so exceed demand that the lack of collateral would be exposed, thereby prompting a devaluation whose consequences could be catastrophic. The multiple business advantages of maintaining high military spending thus include the direct curtailing of attempts by resistant nations to undermine the status of the dollar.

Not only with Iraq, but with Libya too, there are suggestions that control of the monetary system may have been a motivating factor for the war. Kwiatkowski tells how she had drafted intelligence reports on the success of Libya’s assiduous efforts in recent years to regain the respect of the international community. Her reports, however, were then edited to the point of falsification.[12] This was done, she said, in order that her masters ‘could present their case on Libya in a way that said it was still a threat to its neighbors and that Libya was still a belligerent, antagonistic force.’[13] Following the onset of hostilities, it so transpired that Libya became the site of a very remarkable event whose oddity is hardly explicable except in the light of the above line of analysis.

In early 2011, when the opposition forces in Libya appeared to be in a state of some desperation and disarray,[14] there came the somewhat incongruous report that these rebels were establishing a new central bank. Robert Wenzel, writing at the time in the Economic Policy Journal (28 March 2011), did not conceal his amazement: ‘Here’s one for the Guinness Book of Records. The Libyan rebels in Benghazi said they have created a new national oil company to replace the corporation controlled by leader Muammar Qaddafi whose assets were frozen by the United Nations Security Council and have formed a central bank!’ From this, Wenzel inferred that we were finding here ‘some pretty sophisticated influences’. It was unprecedented for a central bank to be created ‘in just a matter of weeks out of a popular uprising.’[15] As CNBC senior editor John Carney reflected, this was probably ‘the first time a revolutionary group has created a central bank while it is still in the midst of fighting the entrenched political power’ and it ‘certainly seems to indicate how extraordinarily powerful central bankers have become in our era.’[16]

The case of Libya not only suggests some international coordination and planning, but also provides an indication of what passes for legitimacy in this world of interventionism. The rebels had literally broken into the Benghazi bank in March 2011, and when interviewed about it, their U.S.-educated finance minister, Ali Tarhouni, said: ‘“Let me put it this way: We robbed our own bank”. He went on to explain that ‘the bank heist serves as an illustration of the rebels’ ingenuity, wherewithal and organizational skills. It’s proof, he said, that they are ready to run the nation.’[17] It appears, then, that, with the support of the US, favoured rebel leaders can treat entire nations as if existing in a state of nature with respect to the law. The justification offered in the case of Libya, as in so many others, was supposedly ‘humanitarian’; yet, as we have noted, this was based on a falsification of facts. Certainly, no genuine humanitarian motivation is manifest in bombing entire countries to destruction, or in supporting the overthrow of existing state institutions without having any clear plan for establishing either a better constitutional order or improved political leadership. And that criticism does not even touch on more basic questions about the criteria for any legitimate external intervention in a sovereign state’s affairs.

But why is it that certain ‘regimes’ become ripe for imperial subversion or overthrow? What was it, in particular, that linked together the list of countries that retired general Wesley Clark shared in his famous 2007 interview as being next in the sights of the United States’ bellicose intentions and most of which since have indeed been plunged into horrendous wars?[18] Clark professed himself, like his reported source, to be stumped as to the reason. If the strategic objective was not obvious even to senior military figures, then it seems to me that we cannot rule out the kind of motivation that we have seen circumstantial evidence for both in Iraq and Libya. It is quite possible that a number of economic and geopolitical interests converge in motivating the policy concerned, and quite possible that concerns about perceived threats to the dollar as global reserve currency are among them.

We have noted the congruence of motives regarding dollar hegemony and control of oil markets, but the case of Libya alerts us to a further possible dimension of financial interests in war. For it might be asked how allowing the rebels to get control of Libya’s oil and wealth benefits the global financial elite.  Was a larger purpose for their backers served? Although not mentioned much by western politicians or media, it could be a significant fact that the Central Bank of Libya was 100% state owned. An analysis that found resonance at the time was Eric Encina’s argument that the world’s ‘globalist financiers and market manipulators’ could not stand the Libyan monetary authority’s independence, for the government still created its own money, the Libyan Dinar, through its own central bank. ‘One major problem for globalist banking cartels is that in order to do business with Libya, they must go through the Libyan Central Bank and its national currency, a place where they have absolutely zero dominion or power-broking ability.’[19] As Ellen Brown observes, it is this monetary and financial independence that would explain, inter alia, ‘where Libya gets the money to provide free education and medical care and to issue each young couple $50,000 in interest-free state loans.’[20] Kwiatkowsky and others have also observed that whatever the faults of the former Libyan government, its deployment of finance in the public interest appears to have been impressive. That this arrangement should so eagerly be replaced by a US-backed band of rebels clearly presents a scenario of a kind that a global constitution for monetary governance might want to consider avoiding.

Nor is Libya an isolated case of this kind. Similar conflicts of interest appear to apply with regard to Iran, another part of what George W. Bush referred to as the ‘Axis of Evil’, a group of countries each of which had an independent central bank and a stance of resistance in the face of what they regarded as US imperialism.[21] Their resistance includes looking at ways of avoiding being bound in with the dollar. Iran has been actively exploring alternatives since at least 2002 and has taken various significant steps to that end, including establishing its own oil bourse that trades in non-dollar currencies. Meanwhile, it has remained firmly committed to the principle that the Central Bank of Iran should not fall under private control because this would not benefit the Iranian people over the long run. The United States has responded with sanctions, and commentators have suggested that their unstated aims specifically include ‘shutting down Iran’s central bank’.[22] At the time of writing, Iran has not become the subject of a war, although the threats and drumbeating are now quite intense.

And then there is Syria. Syria’s Central Bank is state-owned and state-controlled with a mission to serve the national economy and the Syrian people. It is not beholden to the international banking class,[23] and nor is it therefore subject, through having to deal with the IMF and World Bank, to the ‘usurious loans generating artificial debt crises by which [other] nations are in effect enslaved’ (‘Syrian Girl’ 2012).[24] It is certainly striking that, despite more than six years of warfare and economic sanctions, the country’s administration and army retain the practical cooperation of the wider population; and although the country’s finances and infrastructure are under massive strain, provision of public services is as far as possible maintained, including salaries in opposition-held areas. The practical message sent by the Syrian people through their astounding resilience is that whatever improvement needs to be made to their constitution, and whatever they may in due course decide is the best way to reform the political administration of the country, this will be their decision. To be noted, moreover, is that no part of the domestic political opposition – secular or jihadist – has been arguing for a more capitalist or globalist constitution; nor have they been ideologically committed to integrating Syria into the privatised constitutional arrangements of the foreign powers that have been pressing their regime change agenda.

It is not only in the Middle East and North Africa region that we find countries that are resistant to global finance and are also in the crosshairs of bellicose intentions. North Korea, for instance, in shifting towards the Euro for the pricing of its oil may not have the same material impact as Iraq and Iran, but it does have symbolic significance. Venezuela, with its vast oil reserves, presents both a symbolic and material challenge with its moves to detach its trade in them from the dollar. With Arab nations more generally starting to look at Euros to replace the dollar, and Russians and China doing so too, the threat to the dollar’s status as global reserve currency is evidently becoming increasingly serious. It could be argued that what the US has been doing in recent decades, with the continued printing of dollars without creating corresponding real assets, is inflating the mother of all bubbles. If the dollar were to lose its world reserve currency status, its price would collapse and that bubble would burst. The immediate results could be catastrophic for the US, we may assume, and very likely create a severe global crisis. So a determination of capitalist world leaders to stave it off by any means necessary would not be inexplicable.

The role of the central bank system under the BIS is inextricably linked with that system. Those countries whose central banks are within it are structurally beholden to it; and the preservation of the dollar’s hegemony is functional for it. The countries that stand outside these arrangements may or may not present serious material challenges to the dominant order of things, but their persistence could be a cause of concern for its leaders.

Yet if we look at this matter from the perspective of a public, and shared human, concern about the welfare of human beings around the planet, and about the condition of the biosphere itself – including our nonhuman cohabitors – one is bound to think that the countries of resistance may come closer to providing a model of a sustainable and just future than those that are bought into the idea of a ‘progressive’ liberal democracy taking over the world.

It seems to me, in fact, that some of us may have laboured too long under certain illusions about liberalism and liberal democracy. Why assume, for instance, that neo-liberalism is an aberration with respect to liberal business as usual, or that liberal interventionism is genuinely an ethical alternative to outright neo-conservative warmongering? Anybody who looks dispassionately at the cause of the wars of the past two decades and at the arguments used to perpetuate them – under administrations of both conservative and liberal politicians – will see an essential continuity of fundamental attachment to a capitalist world system that exploits resources and the majority of people for the benefit of a tiny number. I fear that ethically intended liberal thinkers may prove to have been tragically mistaken if they believe that the existing system of monetary governance can be adapted through reform so as to yield the possibility of global justice. I see no reason to believe that real justice for the world will readily be ceded by the powers that have created the global rule of rogue law.


[1] See the forthcoming book by Tim Hayward, Global Justice and Finance, from which this post is an edited extract.

[2] Katharina Pistor, ‘A Legal Theory of Finance’, Journal of Comparative Economics, 41(2) (2013): 315-330.

[3] Gunther Teubner, ‘Self-Constitutionalizing TNCs?: On the Linkage of” Private” and” Public” Corporate Codes of Conduct’, Indiana Journal of Global Legal Studies, 18(2) (2011): 617-638

[4] Turkuler Isiksel, ‘The Rights of Man and the Rights of the Man-Made: Corporations and Human Rights’, Human Rights Quarterly, 38 (2016) 294–349.

[5] This happens, if only by default, because ‘while international human rights treaties provide sparse procedural remedies and enforcement mechanisms and tend to lack direct effect within domestic systems, the rights of investors can be invoked against states before international arbitral tribunals.’ (Isiksel 2016: 308) Thanks to investor-state arbitration, investors’ rights may be the most effectively protected ‘human’ right that there is, at the global level. ‘Thus, the expansion of the rights of corporations under international law is likely to weaken the ability of sovereign states to protect the public interest at the domestic level, without a federal authority to compensate for the pernicious regulatory race to the bottom among states.’ (Isiksel 2016: 310)

[6] During the 1930s, the Bank for International Settlements was the central meeting place for central bankers, and during the second world war it accepted looted Nazi gold and foreign exchange deals for Nazi Germany. Governments in Washington and London were well aware of this, and yet it was not something they had constitutional or legal means to prevent. Nor did the British Government even do anything when the gold handed over had been deposited with the Bank of England (see Henry Glazer, ‘A Functional Approach to the International Finance Corporation’, Columbia Law Review, 57(8) (1957): pp.1089-1112). ‘Nationalities were irrelevant. The overriding loyalty was to international finance.’ (Adam Lebor, Tower of Basel: the shadowy history of the secret bank that runs the world, Public Affairs, New York, 2014 p.xix )

[7] Piers Robinson, Learning from the Chilcot report: Propaganda, deception and the ‘War on Terror’, International Journal of Contemporary Iraqi Studies, Vol 11 (2017) 47-73.

[8] William Clark, ‘The Real Reasons for the Upcoming War With Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken Truth’ (2003)

[9] Karen Kwiatkowsky, Quoted by Marc Cooper, ‘Soldier for the Truth’, Alternet, 24 February 2004

[10] Tyler Shipley, ‘Currency Wars: Oil, Iraq and the Future of U.S. Hegemony’, Studies in Political Economy 79 (2007): 7-33.

[11] Rohini Hensman and Marinella Correggia, ‘US Dollar Hegemony: The Soft Underbelly of Empire’, Economic and Political Weekly, Vol. 40, No. 12, Money, Banking and Finance (Mar. 19-25, 2005), p.1093.

[12] Karen Kwiatkowsky, Quoted by Marc Cooper, ‘Soldier for the Truth’, Alternet, 24 February 2004 See also Ellen Brown, ‘Libya all about oil, or central banking?’, Asia Times 14 April 2011

[13] Karen Kwiatkowsky

[14] Some indicative reports around this time:


[16] ‘Libyan Rebels Form Their Own Central Bank’ CNBC 28 March 2011

[17] Washington Post 24 May 2011 :

[18] Iraq, Syria, Somalia, Libya, Sudan, Iran and Yemen. See also Ellen Brown, 14 April 2011 ( ).

[19] ‘Globalists Target 100% State Owned Central Bank of Libya’ by Eric Encina

[20] This is from a 2002 article in Asia Times titled “The BIS vs National Banks,” by Henry Liu.

[21] ‘When we look at the IMF-labeled ‘MENA’ region (Middle East/North Africa), which includes the US geostrategic targets of Libya, Iraq, Iran, Syria, and Yemen, we find that this is the region least integrated into the IMF/World Bank debt regime.’ (Daniel Robicheau,‘The ‘MENA’ region and the International Monetary Fund’,London Progressive Journal, 23 April 2013 Robicheau continues: ‘Finance capitalism seeks to disintegrate and isolate states, but maybe regional state-to-state cooperation will re-emerge. Maybe internal struggles between different factions of society can be peacefully negotiated to avoid war. Only one thing is certain: The IMF, like a machine, serves the needs of the speculators and oil multinationals who seek out profits from any situation round the world. It will sink regions and countries into its debt regime to serve that purpose.’

[22] ‘The latest round of American sanctions are aimed at shutting down Iran’s central bank, a senior US official said Thursday, spelling out that intention directly for the first time’ (National Post 2012) ‘“We do need to close down the Central Bank of Iran (CBI),” the official told reporters on condition of anonymity’. (The measures were in a bill signed by President Obama on 31.12.2011.) And why is that? The official reason appears to be to put pressure on Iran regarding its nuclear programme. See also the call of US senator for ‘crippling’ sanctions on Central Bank of Iran   See also

‘Why is the U.S. targeting Iran’s central bank? Well, multi-billionaire Hugo Salinas Price told King World News: What happened to Mr. Gaddafi, many speculate the real reason he was ousted was that he was planning an all-African currency for conducting trade. The same thing happened to him that happened to Saddam because the US doesn’t want any solid competing currency out there vs the dollar. You know Gaddafi was talking about a gold dinar.’ (Washingtonsblog 13 Jan 2012:

[23] The Central Bank of Syria pursues monetary policy that is committed ‘to maintain the of priority of public utility’ with a view to ensuring the financial sector serves to support ‘quality, soundness and sustainability in the national economy as a whole.’ The Syrian Central Bank website

[24] ‘Syria, like Iran and Libya, is not beholden to the IMF/World Bank for any loans, which would seem to be an unusual phenomenon in our present era of ‘globalization’.’ (Daniel Robicheau 2013)

Originally published: Tim Hayward (Blog)

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