 On Newsclick's mapping false lines, we often talk about war and conflict, the situations in geopolitical flashpoints which lead to a lot of death and destruction. But what about silent killers, sanctions? Let's take one example. In the late 90s, sanctions in Iraq led to the deaths of over 80,000 people. Between 2017 and 2019, over 40,000 people are believed to have died in Venezuela due to sanctions. Why do these sanctions get imposed? What are their impact? Are there ways countries can get out of it? Today, we'll be talking about all this. We're joined by Prabir Purkayasan. Prabir, so first, let's take a look at this map. A lot of, as you can see, these are 2019 numbers. The numbers may have worsened in these two years. And we have nearly 39 countries which are sanctioned by the United States alone for a variety of reasons, a wide variety of sanctions. So, maybe take us through the very nature of the sanctions regime itself. Which of the countries which like basically are affected the most and what is the kind of impact that takes place broadly and specifically in some countries? First, let's look at the map itself. This is the Hobadayar projection map. And as you know, this gives us a kind of equal area projection. The areas of countries are represented correctly. But the sizes, the shapes, do get distorted. This is in contrast to the marketer projections, which exaggerate the global north, makes Europe, North America look much bigger, Canada look much bigger. Greenland the same size as Africa. So, this is the reason why we are switching to the Hobadayar projection when we talk about the world. Now, as you can see from the map, the number of countries the United States has imposed sanctions on. There is no other country which has imposed this level of sanctions for a very simple reasons. They do not have the economic or the political power to do so. So, US is an outlier of using sanctions as an instrument of its foreign policy. And though there are provisions in the United Nations Security Council, for example, for sanctions, they have been rarely used. In fact, before the Cold War ended, only two other sanctions which were used was against South Africa and I think against Rhodesia at that point, which were both accepted, apartheid countries accepted and those were this kind of sanctions. They even imposed, otherwise sanctions were a rarity. They have increased post the fall of Soviet Union and the fact that the US has now untraveled power and also the financial controls that dollar has, which we can come to later. You are asking about the impact of the sanctions. The impact of the sanctions, you have talked about the direct impact on sanctions. There are two issues which are important. One is the direct expropriation of properties, money that is in the banks and so on. They are very large. For instance, if you take Iran, the amount of money lying, which Iran had already paid the United States for some arms purchases, but also seized. So, they were really direct money transfer which had been made against things which US did not deliver but instead seized the money. So, that went through a long process of case and finally, US did give back that money to Iran long time later. But it is $120 billion of money in various accounts outside Iran, which were lying in international banking, within the international banking system, which you have seized including a building in New York, which was about worth a billion dollars if you take current money into account. So, $120 billion are also enmeshed into the kind of US sanctions. There you have, for instance, Venezuela, where its properties have been expropriated. The Citgo, for instance, refinery which was in the United States. This Venezuelan goal which was held in UK, Bank of London. So, all of these are of course direct expropriations, but there is a huge other impact which is economic. For instance, Iran, the contraction of the Iranian economy after the sanctions and also particularly after the 2018 sanctions, which is a unilateral sanction illegal because the United States Security Council had already passed a resolution saying that the sanctions are to be withdrawn. So, it was a direct contradiction toward the United Nations Security Council had decided. So, that led to a huge fall of Iranian oil exports and therefore a contraction of the Iranian economy. So, direct expropriation is one issue. But the fall of the targeted countries economies means also somebody gains. If oil is not going from Venezuela and Iran into other countries, who benefits? So, here of course, US directly benefits because it is also supplying hydrocarbons in different forms. It also its friends benefit like Saudi Arabia and various other Arab monarchies. Of course, Russia has also gained somewhat because of its supplying hydrocarbons to, for instance, the European Union. But the fall of this countries economies are huge. So, that also has to be factored in when you talk about sanctions. And of course, as you pointed out what happens to countries like Iran, Iraq, Iran, Iran for instance was banned from also getting medicines and vaccines from other countries. So, all of these if we take into account the impact of sanctions is much larger on the countries than what the actual tables or the accounting tables may indicate. Absolutely. And not to mention of course Cuba, which has suffered some of the worst sanctions for decades right now and even then has managed to say target combat COVID-19. COVID-19 also important because we know that a lot of countries like Iran, Venezuela, they really suffered when it has come to actually purchasing medicines. Like you said, even during this massive crisis that was the pandemic because either banks did not process these payments or banks blocked them or other companies were afraid to go into deals with them. But another key question here really is how exactly is the mechanism of these sanctions in terms of how does it really work? Because of course it's one thing for the United States to state on paper that we are imposing sanctions. But what is the underlying system for that? That's a very important question because that is where the United States today has become the leading sanction imposing power in the world because it has the ability to sanction any country in the world which does external trade. So unless you decide to be an autarchy, you have no foreign trade or trade with the very few countries and you do a barter trade, you designate your trade in some currency or the other and most of these transactions pass through either the swift system or directly to the dollar system. Now the swift system is supposed to be a Belgian clearing house. It is supposed to give messages between two banks or two entities entering it to the transaction. So effectively it's not supposed to be an instrument of direct financial transfer. The point is 80 to 90% of the global transactions takes place to the swift system. The swift system, though it's a Belgian system, it is overseen by certain banks so central now to the banking systems as a whole. Unfortunately it has a server in the United States and the United States therefore has claimed it has access, it should have total access to the swift system and therefore it can see which are the entities entered into transactions and therefore it claims that its sanction regime not only touches the primary entities which are being sanctioned which are named so the Iranian XYZ companies but also any company which transacts business with them. Then there is also the secondary sanctions regime. Any country, any entity which is transacted business with an entity which is barred under the US sanction regime. Other companies which can do business with them, they are also touched. So you have a spreading kind of infection of sanctions which means that if you have been sanctioned by the US then that entity is considered untouchable and anybody who enters into any transaction with them are also untouchable. We had for instance State Bank of India. When we were trying to buy oil from Iran that was treated with sanctions and because State Bank of India has a lot of business therefore it could not transact transactions with Iran. In fact India stopped virtually buying Iran oil after a certain point. Same thing European Union when Trump imposed, reimposed sanctions. European Union said we will not obey the sanctions but none of the commercial entities in European Union was willing to either buy or sell goods to Iran because of the threat of secondary sanctions. So because of the control that US has over both the financial system lot of the transactions take place in dollars, most transactions take place in dollars and the second part of it because of its control today effectively control over the Swift system in terms of access to its transactions which it didn't have earlier but which it has really asserted over a period of time particularly after 2002-2003 and as you know from Snowden revelations Swift gave complete access to the United States. In fact it could be argued that this is a violation of the Privacy Act that the European Union has passed but you know those things are really much further away because is there a will by the European Union to assert these rights vis-a-vis the United States, do they have the ability to actually impose these conditions on the United States is a very important question. So the Facebook has come under certain regulatory bars in the European Union because of the privacy laws but does it extend to the Swift system? That is the open question as of date it doesn't and therefore US has total access to the information of all transactions that takes place to the Swift system which is virtually 90% of the world's transactions maybe it's falling now but that is what it used to be so that is where the US really asserts its control to the Swift system access to the Swift system and because dollar is still the king of currencies of any transaction that takes place and how foreign exchange holdings are held. Prabir in this context of course once when the Iran sanctions were being discussed there was a lot of debate about whether there could be an alternative to Swift for instance whether the European countries or Russia or China could consider this so right now could you take us through what is the situation on that front because are there any credible alternatives that are emerging and does it look like at any point of time any of these could emerge as a proper system where others could go in place of Swift? I think almost all countries in the world whether it is Russia, China which are the big entities being threatened, Iran of course because it is the primary target even countries like India which would like to have the freedom to do what it wants in terms of foreign policy all of them are thinking about what are the alternatives so there are two clear channels that are emerging one is the fact that for instance European Union is talking of something called trans techs which they can use for transaction of business very little has it has been used but the point is as somebody said it the plumbing is being set in place that it can be used if the European Union wants to so those infrastructures are slowly being put in place if they want to switch that they have an alternative at least without that switching doesn't really take place second is Russia and China they are also setting mechanisms which will be outside the Swift system and Russia and China at least can trade between themselves and so can they trade with Iran so alternatives to the Swift system are being put in place but I think the most interesting of this is China combining this with how do you clear the funds you see one part of it is okay you designate your trade to be in not in dollars but in say I mean by or something else digital yuan XYZ but how do you transact the business and the digital yuan really comes in over here because that could be the mechanism of settlement as well so therefore instead of having a Swift system the digital yuan would effectively also act both as a currency as a reserve currency which of course the world is now beginning to accept and also as a mechanism of transfer of money so therefore it becomes a dual purpose vehicle one is acts as a reserve currency be acts in lieu of the Swift system as a means of settlement these are long term issues they are not going to be short term issues we also see for instance the US has actually lost in terms of the amount of reserves that were held earlier in dollars it's lost some of it from 70% it has dropped about 60% but these drops have taken place earlier as well the question is is it a drop which will continue or which it will not and I think the most important issue over here is not what is happening in the financial world but what is happening in the real world and if you look at that then we would understand that the trade for instance what's happening to the trade of goods in the world and you will see that what the post war scenario was trade with the United States as a dominant element of trade if you look at the map that you have then you will see that it is slowly shifting to the trade the dominant trader or trade with being today China not the United States most countries are trading with China it is also becoming the largest producer of physical goods not intangible goods but physical goods and if you take that into account therefore the trade being designated in a currency outside the dollar is becoming more and more feasible and therefore the long term trend of US overreach in financial sanctions using it directly as an instrument of foreign policy which is what it is doing and combined with the fact that it is no longer the largest producer of goods in the world nor is it the largest trader in the world means there could be a secular shift away from the dollar and that is the possibility the long term trajectory that we are seeing Thank you so much Prabir that's all we have time for today keep watching NewsClick and keep watching Mapping Falselines the only international news show with a genuine map of the world see you next week