Author: Caroline Olsen-Van Stone
Bringing heroism into the world of international finance, John B. Taylor wove exciting experiences into his speech about serving as the head of the international finance division of the US Treasury after 9/11 on Tuesday, Feb. 12. Taylor was awarded this position only two months before 9/11.
Funding for the talk was provided by Remsen Bird Fund and the Economics department. Chair of the Economics department, Professor George Secondi, said Taylor was chosen to speak because he is one of the world’s most renowned macroeconomists.
On 9/11, Taylor was making a deal in Tokyo, and was immediately flown back to Washington, D.C. “I thought I’d get to make deals in Paris, but this is what the negotiation room looked like in Iran,” he said as he showed a slide of himself and the warlord Ishmael Khan talking in the back of a SUV outside in 2002.
In his new book, Global Financial Warriors: The Untold Story of International Finance in the Post-9/11 World, he explains the role of international finance in gaining information terrorism and terrorist groups worldwide.
Taylor broke the plan down into two steps, “freeze and track.” The first step was to stop the flow of money to Al-Qaeda and Al-Qaeda financiers, which required the cooperation of banks internationally, and the formation of the Coalition to Combat Terrorist Finance. The next step was to track money to get information.
The system used for tracking is called Society for Worldwide Interbank Financial Telecommunication, SWIFT for short. The SWIFT system involves an “elaborate protocol” that accounting firms use to monitor the flow of money internationally.
On Sept. 24, the Coalition to Combat Terrorist Finance made its “first attack”-$130 million of assets were frozen in 180 countries, which required 120 countries to change their laws.
The SWIFT system was used secretly for four years until the summer of 2006, when it leaked to newspapers. “Now, using SWIFT is much more difficult,” Taylor said.
Taylor also explained some of the plans for Post-Saddam Iraq and post-conflict Afghanistan. In 2002, Afghanistan was largely warlord-run, so Taylor was sent to negotiate with Ishmael Khan to return customs revenue he stole. “He finally agreed to relinquish it, and decided to go back to the government cabinet,” Taylor said.
Plans for Iraq’s financial stability were centered on introducing U.S. currency by paying civil servants and pensioners in U.S. dollars, and then depending on the success of the dollar plan, follow up with new currency. However, this project was riddled with snafus, including the looting of the Central Bank and destruction of wage records. “I thought for sure I was going to be out of a job,” Taylor said.
The Iraqi dinar as a currency was also full of problems: easy to counterfeit and emblazoned with Saddam Hussein’s portrait. The new Iraqi currency featured the country’s real heroes, objects of national pride and seven denominations, instead of two.
Taylor seemed optimistic about Iraq’s financial stability, citing a reliable governor and a steady inflation rate.
He was also hopeful about future use of the financial system to “put pressure on countries” financially instead of by force.
Some students appeared impressed with Taylor’s occupation. “I’m graduating in three months. How can I do what you do?” Economics and Politics major Ken Smutny (senior) asked. Economics major Noel Hollowell (sophomore) said she enjoyed the new perspective on economics and politics that the speaker offered.
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