It’s hard not to feel satisfaction at the indictment of soccer officials for apparently corrupting the globe’s Beautiful Game—soccer in America but football to most of the world. Yet emotional satisfaction is a bad basis for government policy. While the U.S. is not the only nation to assert extraterritorial jurisdiction, it does so more often and more broadly than anyone else.
Moreover, punishing foreigners creates future risks. Someday Americans might get indicted by other nations for “crimes” committed in the U.S.
How did Washington become the world’s policeman and prosecutor in the case of soccer? The sport remains a modest phenomenon in America. Most of the alleged crimes involve foreigners acting overseas.
The impact in the U.S. is less than that on almost every other nation on earth, since virtually everywhere the sport commands greater loyalty from a larger percentage of the population. Nevertheless, some of the criminal acts took place in America and the corruption affected interstate (and foreign) commerce, the boilerplate justification used by Uncle Sam for regulating most everything.
As American power has grown, so has Washington’s willingness to apply its laws to the rest of the world. Washington has routinely abducted foreigners overseas for drug offenses. Perhaps the most extreme example was the 1989 invasion of Panama, after which ousted dictator Manuel Noriega was transported to America and convicted of violatingU.S. drug laws.
Even more problematic has been the Justice Department crusade to turn foreign banks into arms of the IRS. The U.S. has gone after Swiss banks with the greatest enthusiasm, paying informants, filing criminal prosecutions, and imposing multi-billion dollar fines for accepting deposits from Americans. Yet citizens of Switzerland and the rest of the world have no moral obligation to help fill Uncle Sam’s coffers to finance more waste and wars.
Congress also passed the Foreign Account Tax Compliance Act (FATCA) requiring all non-American financial institutions to report any accounts held by Americans. As a result, foreign banks face substantial costs in dealing with U.S. citizens, even those fully compliant with American tax laws. Many foreign banks now refuse to serve Americans.
Perhaps the most expansive form of extraterritoriality is sanctions. By one count Washington imposed 61 different economic penalties between 1993 and 1998, Washington’s dictates are amplified not only by the size of the American market, but through Swift, the Brussels-based organization which manages international financial transfers.
Traditionally sanctions applied to companies formed in the U.S. and their branches, and firms located in America. However, through both legislation and regulation Washington has constantly expanded the extraterritorial reach of U.S. penalties.
Over time Washington began targeting U.S. subsidiaries and licensees. Later sanctions also applied to resale of U.S.-origin goods, transactions with foreign firms, and foreign banks financing prohibited transactions. European companies, in particular, have found themselves fined for activities which are legal under national as well as European Union law.
Explained attorneys Ronald Meltzer and David Ross of WilmerHale, “U.S. law has undergone a significant shift: it effectively creates an expanding regime of secondary sanctions that are triggered by transactions that do not require a nexus to the United States.” Sometimes other governments have enacted “blocking” statutes which prohibit their nationals from complying with foreign, i.e., American, restrictions deemed harmful to their national interest.
As I point out on Forbes online: “The moral fervor behind many of Washington’s many fevered crusades often is laudable. But a desire to do good does not warrant America attempting to play dictatress to the world.”
So it is with the U.S. indictments against corrupt soccer officials, and even more so with Washington’s determination to make foreign banks agents of the IRS and foreign individuals and companies tools of U.S. foreign policy. Such overreach inevitably breeds abuse.
It also invites retaliation in the future, when America no longer so dominates the globe. If Americans eventually find themselves in a foreign court for legal conduct in the U.S., they will have today’s lawmakers and officials to thank.
This article originally appeared in Cato at Liberty.
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