Viktor Ivanov Invokes Glass-Steagall, Calls for New Global Financial Architecture

Speaking to the Argentine Council of Foreign Relations in Buenos Aires on June 27, Victor Ivanov, the head of Russia's Federal Drug Control Service (FDCS), asserted in stronger and more specific terms than ever before, that a Glass-Steagall-type separation between commercial and investment banks is the first step to combatting the international narcotics trade and restoring the sovereignty of nation-states. He said that the institution of this measure must be accompanied by a global system of fixed exchange rates among currencies, and long-term credit allocations for high-technology infrastructure development. Ivanov called for joint action by the heads of state of nations affected by the dope plague, to achieve these goals.

Ivanov stated:

"There must be a change in the current global financial architecture: in particular, a separation between commercial and investment banks for the defense of credit operations against speculative ones, support for stability in the exchange rates of national currencies, and allocation of long-term targeted credits for infrastructure development. In particular, there needs to be a collective appeal from the heads of state of the countries that are suffering from the drug trade, on the necessity of introducing these measures."

This new financial architecture, Ivanov declared, must replace the existing world monetary and financial system, which is the main cause for the spread of drug trafficking on a global scale, saying that the current system was built on the ruins of national economies, forcing them into backwardness by sucking their resources and depriving them of the right to sovereign economic development. He identified a three-tiered program by which nations must reclaim this right to the sovereign development of the state:

"The first level is the creation of the infrastructure needed for organizing advanced agriculture, including the formation of stable markets, a low-interest credit system for peasants, technical and technology support for agriculture (scientific and industrial seed-farming, fertilizers, and agricultural machine-building), a system of teaching and training for agronomists and other agriculture professionals, as well as tough protectionist measures to defend peasants who are growing legal crops.

"The second level is the creation of conditions for employment diversification, in order to reduce the portion of families whose welfare directly depends on succeeding in agriculture; in particular, this means forming a national high-technology industrial sector into which the population can be drawn. An example is Malaysia, which has turned from a backward agrarian country into one of the leading high-technology countries in a few decades.

"The third level is the sovereign development of the state, endowed with financial and credit independence. Nations must have the right to sovereign development. The existing world monetary and financial system, which was built on the ruins of national economies and by sucking their resources, is the main reason for the spread of drug trafficking on a world scale." (This passage led directly into the paragraph on a divided banking system, quoted above.)

Ivanov's Buenos Aires speech dramatically amplifies the ideas he has presented in a series of speeches during the past eight months. In his "Drug Traffic and the Financial Crisis," presented last November at the Center for Strategic and International Studies in Washington, Ivanov asserted that the only way to liquidate global drug trafficking would be through a drastic transformation of the international financial system based on the logic of Glass-Steagall and accompanied by a shift to an economy of development, where decisions are based on development projects and special-purpose credits. (The full text was published in EIR of December 2, 2011.) At the winter 2012 Davos Forum in Switzerland, Ivanov again charged that the current world financial system is a horrific failure that should be replaced. At the March 12 session of the UN Commission on Narcotics, in Vienna, Ivanov called for "abandoning sick neoliberal economics," and outlined a program for "the radical uplifting of the economy of Central Asia," including through the employment of Russia's scientific and industrial capabilities (see Executive Intelligence Review of March 23, 2012); the means of doing this are now specified in the Argentina speech.

Both Ivanov and Antonio Costa, recently the executive director of the United Nations Office on Drugs and Crime, have stressed that the current international financial system could not continue to exist without the flows of illegal liquidity associated with drug money laundering, and that the only successful way to combat the narcotics trade is through a complete restructuring of the financial and economic architecture of the world.

For coverage of Ivanov's speech to CSIS, click here.

For interview with Antonio Costa in EIR, click here.

Update as of July 3, 2012:

LPAC has received the full text of Viktor Ivanov's speech. Here are a few more key passages in which Ivanov identifies narco-money as a key facet of the current global financial architecture, and also supports the recent assertion by Argentina of sovereignty over its natural resources in the case of YPF, stating that all natural resources available to states must be placed at the service of national development, and that such development is the only guarantee of true sovereignty.

"These [world drug] centers are the origin of narco-money, which is an inalienable part of the current system and generates the inevitable world economic and financial crisis, preventing the world from adopting a new financial architecture.''

"All of the natural resources available to states have to be placed at the service of national development. In that case, Argentina can provide a good example with steps such as the adoption of the Argentine law of sovereignty regarding hydrocarbons and the expropriation of 51% of YPF belonging to the Spanish oil company Repsol, which are directed precisely to organize the conditions for national development, which in itself already constitutes an important contribution to de-narcotization and to de-criminialization. It is development that guarantees true sovereignty.''

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The international angle of accomplishing a new, global development perspective characterized by Glass-Steagall and NAWAPA will be fostered through a close partnership between the United States, Russia, and China. This page is a continuing exploration of the potentials of that arrangement.