The Cable

37 embassies in Washington face banking crisis

The State Department confirmed that it is engaged in an intensive effort to assist over three dozen embassies in Washington who are all facing the possible closing of their U.S. bank accounts due to a growing movement by several major banks to drop embassies from their rolls.

The embassy of Angola in Washington was the first foreign embassy to have all of its U.S. bank accounts closed against its will. Bank of America closed all five of its accounts Nov. 9, after warning the Angolans of the decision through an unsigned letter only a week before with no explanation whatsoever, according to an Angolan diplomat speaking with The Cable. The State Department is working furiously to resolve the issue -- but if it doesn't succeed, the Angolan government is considering taking action against U.S. diplomats and businesses in Angola in retribution.

The Angolans have been imploring the State Department to help them sort through the problem, and as of Nov. 9 can no longer conduct regular embassy business, such as paying bills and salaries. They even cancelled their planned Nov. 16 event celebrating the 35th anniversary of their country's independence. The State and Treasury Departments have been trying to help, but have taken the position that the U.S. government has no ability to force American banks to do business with the Angolan government.

"It's not just an Africa issue, it's an issue with missions from around the world," said a State Department official, speaking to The Cable on background. "We're aware that some banks are looking to reduce their involvement with this type of business… But the U.S. government does not control U.S. banks. We cannot require them to maintain accounts with any client." 

The official said that up to 37 embassies in Washington could soon face a similar situation, as various banks are moving to get rid of their accounts. Seventeen of those embassies represent countries in Africa. The official declined to identify the names of the other foreign embassies affected or the names of other U.S. banks moving to drop embassy business.

The Angolans, frustrated and running out of options, are considering reciprocity measures, such as closing the bank accounts of the U.S. embassy in Angola, refusing to receive the credentials of incoming U.S. Ambassador Christopher McMullen, or closing the banks accounts of U.S. companies in Angola, such as Chevron, Exxon, BP, and Boeing, according to a source in the American business community with interests in Angola and who is closely monitoring the crisis.

"We don't know why it is happening," the Angolan diplomat said. "In the context of the Vienna Convention, we hope the American administration is going to take measures for us to operate here. The administration says that Angola is a strategic partner to the U.S., so we would like at least to be treated as a strategic partner… A diplomatic mission cannot operate anywhere without a bank account."

Article 25 of the Vienna Convention of 1961 on Diplomatic Relations states, "The receiving State shall accord full facilities for the performance of the functions of the mission."

Why are the banks running away from embassy business? According to the State Department official, several banks, including Bank of America, are calculating that the effort spent making sure government accounts are not being abused for money laundering purposes, sometimes with suspected links to terrorism, is becoming too complicated and costly to justify keeping the accounts.

"Some banks feel it's just not worth their time anymore, it's a cost of business they don't want to deal with," the State Department official said.

Assistant Secretary of State for African Affairs Johnnie Carson has had several conversations with Angolan officials about the matter and briefed Secretary of State Hillary Clinton on the crisis last week. Deputy Assistant Secretary of Treasury Daniel Glaser met with Angolan Ambassador Josefina Diakité twice before she was called back to the Angolan capital of Luanda for consultations on Nov. 16.

"The Department of State seriously regrets the inconveniences -- in some cases, very serious inconveniences -- that African embassies and others have been subjected to as a result of actions by a number of American commercial banks," Carson said in an interview Nov. 15.

The official acknowledged that the discussion of the issue inside the State Department "reaches all the way to the top," and said he was hopeful that a new bank had been found to handle the funds of the Angolan embassy, although nothing was final.

The Angolans are certainly hoping the State Department can come to their rescue. "Both countries are interested in having bilateral relations. I hope that the two governments can solve the problem," the Angolan diplomat said.

Bank of America's decision to close the Angolan embassy's accounts came only three months after their accounts with another bank, HSBC USA, were dropped as well. Our sources say the action is partly related to a February report issued by the Senate Permanent Committee on Investigations, led by Sen. Carl Levin (D-MI), which cited Angola "for an ongoing corruption problem, weak anti-money laundering (AML) controls, and a cash-intensive banking system."

Bank of America spokesman Jefferson George told The Cable, "Due to confidentiality, we can't comment on specific client relationships. In general, Bank of America Merrill Lynch is actively committed to providing banking services for the diplomatic community. This includes countries in Africa, where we have a number of clients."

The Cable

How many Poles does it take to pass New START?

As the White House scrambles to secure enough GOP Senate votes to ratify the New START treaty with Russia, there's a lot of overt political grandstanding -- and a lot of horse trading going on behind the scenes.

In a long floor speech on Wednesday Sen. George Voinovich (R-OH) declared, "I am deeply concerned the New START treaty may once again undermine the confidence of our friends and allies in Central and Eastern Europe." Then, quietly, he offered his support to the Obama administration in exchange for waiving visa requirements for Polish citizens.

Various GOP senators have submitted demands in exchange for their support of the treaty, but they are usually related to concerns over the treaty itself. For example, the administration has offered Sen. Jon Kyl (R-AZ) over $84 billion for nuclear modernization, under the premise that shoring up the safety of the stockpile is needed to ensure national security.

But admitting Poland into the State Department's Visa Waiver Program, a longstanding aim for the Polish government, is pretty tough to tie to the New START treaty. Here's how Voinovich's office linked the issues in a statement given Thursday to The Cable.

"Senator Voinovich is eager to strengthen the United States' relations with our allies in Eastern Europe to allay their concerns stemming from President Obama's pursuit of the ‘Reset Policy,' and the expansion of the existing Visa Waiver Program does just that," said Voinovich's press secretary Rebecca Neal.

Neal said that Voinovich requested an expansion of the Visa Waiver Program following a Sept. 9 phone conversation with Vice President Joseph Biden.

"During the call, Vice President Biden asked what the administration could do to address Senator Voinovich's concerns regarding the treaty, as well as other matters of importance to the senator," said Neal. "The vice president's offer was not limited to items already in the treaty."

Voinovich drove home his advocacy for the Poles in a long floor speech Wednesday about New START that was seen by some as an indication he wasn't ready to support the treaty.

"The president's stated goal of a world without nuclear weapons is noble, but I believe the Senate's consideration of the New START treaty must be considered through a wider lens that includes the treaty's implications for our friends and allies in the former captive nations," said Voinovich.

Voinovich even went so far as to circulate a proposed amendment to the Senate's resolution for ratification for New START, obtained by The Cable, that would prevent the treaty from going into force unless the Visa Waiver Program was opened up to Poland.

A Polish diplomat told The Cable that Warsaw has been working with Voinovich for years on this issue."We knew about this initiative, we support it, and we like it. We have cooperated with Senator Voinovich for years over the issue," the diplomat said. "Maybe with the help of Senator Voinovich we can achieve this in the next months."

But Voinovich may also have interests at home informing his amendment: Large parts of Ohio were settled by Polish immigrants, and second- and-third generation Poles are extremely influential in Ohio government.

The diplomat said that for Poles, and their relatives all over Ohio, the issues is one of fairness -- not related to U.S.-Russian relations in any way.

"We don't fear the ‘reset' with Russia, but the main issue is that we are suffering an injustice right now by being excluded from the program."

Biden's office declined to comment.

Update: Pawel Maciag, press attaché for Embassy of Poland in Washington, wrote in to The Cable, "Quotes from a Polish diplomat published in this article may have mistakenly suggested that Poland takes a position regarding linkage between ratification of the New START and Visa Waiver Program. We do not. We are very sorry for the misunderstanding."

Meanwhile, Polish Foreign Minister Radoslaw Sikorski published an article Friday that said, "It is important to make clear: my government supports the ratification of New START, because we believe it will bolster our country’s security, and that of Europe as a whole."

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