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2014 Cyril Black International Book Forum: Financial security issues take center stage in national security doctrine


By Jasper Ryckman ’15

In the aftermath of 9/11, financial security has become the key to US national security, said Juan Zarate at the 2014 Cyril Black International Book Forum speaking about his new book, Treasury’s War: The Unleashing of a New Era of Financial Warfare (Public Affairs Books 2013).

“We’ve entered a period in terms of our national security doctrine where financial security issues have taken center stage,” the former US Assistant Treasury Secretary for Terrorist Financing and Financial Crimes told the audience at gathered for the event at Princeton University on Feb. 12.

 “You look at the question of how one impacts non-state actors or networks threatening US security," said Zarate, now a senior advisor at the Center for Strategic and International Studies in Washington DC.  "Central to that is how to limit those groups’ ability to raise money throughout the world.”

The Cyril Black International Book Forum is an annual event sponsored by the Princeton Institute for International Regional Studies (PIIRS) that brings together Princeton scholars and the author of a recent book focused on international affairs. The forum is held in honor of the late Cyril Black, who was the director of Princeton’s Center of International Studies (the predecessor of PIIRS) for nearly 20 years and served as James S. McDonnell Distinguished Professor of History and International Affairs.

According to Zarate, who also serves as the senior national security consultant and analyst for CBS News, the United States began emphasizing financial counterterrorist tactics in the aftermath of 9/11. Understanding the full US response to the 9/11 attacks, he said, is essential in understanding the current use of financial tactics in US national defense.

“There was a mandate politically to use all elements of national power to go after al-Qaeda,” he said. “Financial requirements of transparency and accountability grew and deepened. In the post-9/11 period, there was a sense that not only did these rules have to be widened, but they had to be enforced.”

A crucial element of financial warfare policy tactics was utilization of the private sector, such as merchant banks and other large financial institutions, Zarate said. That collaboration became central to the success of the government’s financial counterterrorist methods.

“There was a convergence of private sector power and national security issues,” he said.  “This realization led to new ways of thinking about American economic power and the power and prominence of the US dollar itself.”

Still, Zarate said financial warfare has limitations and should not be viewed as a policy silver bullet.

“It alone cannot solve the hardest of our problems,” he said. “This has to be viewed as an element of leverage that you build in concert with other elements to impact decision making.”

Zarate was joined at the forum by Harold James, Claude and Lore Kelly Professor in European Studies, professor of history and international affairs, and director of the Program in Contemporary European Politics and Society at Princeton, who acted as respondent.

James, who specializes in European economic and financial history, said Zarate's work raised the concern that anti-American countries could employ US financial counterterrorist tactics to further their own goals.

“You’re creating a snowball effect,” James said. “Once a large number of states realizes how important this process is, they will want to do the same thing.”

James also raised the question of whether there was unintended damage caused by so-called financial warfare, and whether that damage had the potential to undo some of the positive impact.

Zarate responded that the “faith and confidence of the system” was of the utmost importance to financial counterterrorist tactics, and that the recent financial crisis limited their use and scope.

Ultimately, Zarate and James agreed that perhaps the most significant effect of the new era of financial warfare is the revelation of new ways in which the government can use its power to align public and private sector interests toward the common good.

“These are ways of thinking creatively about government power and influence and understanding how that power can be wielded to great impact,” Zarate said. “This is a story of the evolution of the US Treasury and a level of policy innovation that we don’t give much credit for, but that government can do if it’s enabled and empowered in the right way.”


Photos from top: Juan Zarate; Juan Zarate (r) and Harold James; Harold James.

Photos by Frank Wojciechowski /