A money changer counts U.S. dollar bills, with Turkish lira banknotes in the background. Photo: Reuters, Murad Sezer
A money changer counts US dollar bills, with Turkish lira banknotes in the background. Photo: Reuters / Murad Sezer

Whereas countries’ Secret Intelligence Services tapping one anothers’ politicians, armies and companies has not been a secret, it is sometimes tough to assess if accusations are true or false, and, at other times, recognize with delay what previously not-spied-on institutions  would suddenly be subject to intelligence gathering – Central Banks, for example, as I show below.

Rarely though, as is the case of the Count de Marenches, who was the head of French Intelligence Services for unprecedented eleven years, surprising revelations can be found.  Below I discuss just two from his 1992 memoirs as they both appear to be particularly relevant now.  One concerns the last minute flare-up between Washington’s soon-to- be- history administration and Moscow, and the second implications of what he discloses about spying on Central Banks during his tenure.

Much is now being made of US President Barack Obama expelling Russian diplomats claiming the Russia clandestinely tapped and interfered in the US elections.  Yet, just few years ago the US revealed that they were tapping Angela Merkel and neither side took penalizing actions; Mr. Obama had no hesitation interfering even openly in the UK referendum on Brexit; and the State Department gave grants, as later was found out, to an Israeli organization fighting Netanyahu’s re-election.

Read carefully Mr. Obama’s own words, when he acknowledged just few days ago on NPR concerning his allegations of Russian interference: “I think there is no doubt that when any foreign government tries to impact the integrity of our elections … we need to take action. And we will — at a time and place of our own choosing. Some of it may be explicit and publicized; some of it may not be.”

“I think there is no doubt”???: What type of statement is that?  Either one “thinks” – speculates, meaning he has no evidence whatsoever, or “he has no doubt.”  So what data did the US intelligence services provide Mr. Obama with – a speculative assessment or some hard facts?  If the former, as Obama’s cautious, hedging-his-bets sentence implies, then de Marenches assessment 25 years ago appears to be in the ballpark and is worrisome.  Here is what he wrote 25 years ago: that one of the great weaknesses of American Intelligence has been “the repeated attempts to use intelligence for political purposes, to skew the diplomatic and political agenda for particular views for partisan reasons.  Truly objective and unbiased assessments of international situations and world leaders can never be presented in such an atmosphere.”  Obama’s own words suggest that the weakness is still there.

Now how are intelligence services linked to central banks?  While until the 1970s in the long forgotten era of Bretton-Woods time of fixed exchange rates, there was no reason to tap central bankers, with the age of floating and both fiscal and monetary lack of responsibility,  accompanied by the constant media-built-up frenzy whether the Astrologers-in-Chief at central banks would raise interest rates by 0.25 percent or not, the incentives to spy on them became significant – and not only for political reasons.

I could find only one disclosed report that secret services indeed were tapping central bankers, one that the Count de Marenches’ mentions in the aforementioned book (cheerfully titled The Fourth World War), when he was heading the French intelligence services for  an unprecedented eleven years under both Georges Pompidou and  Giscard d’Estaing.

While the book is mainly about wars and the changing strategies of intelligence services during World War 2, the cold war, Afghanistan etc., and what de Marenches saw back in 1992 as the coming war with terrorists originating from both the Middle East and other Asian countries, on few pages, gone unnoticed by any reviewer as far as I could find, he describes an episode concerning central banks that he personally was involved with.

At the end of November 1971 he got information not only that the US was going to devalue the dollar on December 18, but by how much exactly. He got the information from “one of [his] most trusted directors – the head of what we called the Economic Intelligence Service, which included not only financial and economic intelligence but … industrial espionage as well.” De Marenches picked up the red hot-line and got a prompt audience with President Pompidou.

Pompidou told him not to disclose the information even to his Minister of Finance, and that he would deal with this issue from then on personally.  It was no secret that Pompidou worked directly with the Bank of France on sensitive matters.  Although de Marenches was no longer involved, his monitoring services left no doubt of the fact that the Bank of France acted upon the information – indirectly – very successfully, dispersing the selling dollars and buying francs around the world, and make enough money in the process that, in his view, would finance the French Secret Service for at least four decades.

Though, as noted, the book deals with the far more important topic of how to deal with terrorism, failed states and with some armies conquering foreign lands, some insightful, others a bit over the top (like turning enemy soldiers in foreign lands into zombies supplying them with drugs), the central bank episode kept coming back to my mind.

In this floating age, where changes in interest rates policies move markets and currencies, wouldn’t many secret services be interested tapping Greenspan and Bernanke at the time, and Yellen, Draghi and Carney now?   And what about some big hedge fund specialized in currency bets incentives?  Could not some of them obtain information that would allow intelligence gatherers to retire in lifelong splendor somewhere?

If so, the implication of de Marenches evidence is not to get in a never ending cyber-arms-race: Instead, government could get back to basics and negotiate an international agreement to stabilize currencies, which would be far, far more beneficial.  After all, contracts are the essence of commercial societies.  Currency fluctuations play havoc with these contracts’ values – and give rise to the massive in the hundreds of trillions of derivatives business (in notional value). This is costly for Western countries but they can deal with it.  However, developing countries with thin stock markets cannot, and the wild currency fluctuations delay their development.  The indirect but still substantial benefit would also be that intelligence services could focus on more vital matters.

Endnote: Since writing the piece, the FBI came out with a report suggesting that Russia may have been behind hacking the Democratic Party emails. If true, it still has nothing to do with the elections, except perhaps that if Russians transferred the information to Wikileaks (that the later denies), it revealed to American voters how the heads of the Democratic party colluded to block any candidate that could pose a threat to their chosen candidate.  Mrs. Clinton, according to these Wikileaks, was berating her staff for not giving her a focus and a message.  It would be pathetic if Americans needed Russian interference to defeat such a candidate in the Electoral College.

Reuven Brenner is a governor at IEDM (Institut Économique de Montréal). He is professor emeritus at McGill University. He was the recipient of a Fulbright Fellowship, was awarded the Canada Council's prestigious Killam Fellowship Award in 1991, and is a member of the Royal Society.