Welcome to Season 3 of the Public Key podcast! New Season, New Hosts, New Look. And in the first episode of 2025 and season 3, we bring in Tom Keatinge, Director of the Center for Finance and Security (CFS) at RUSI to discuss Russia’s invasion on Ukraine, tensions in the Middle East, Trump’s incoming administration and BRICS exploration of de-dollarization. This episode has it all and all of these insights have compounded into what might be a historical year of alternative payments systems and geopolitics.
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Public Key Episode 144: Inside the Alternative Payment Revolution
Russia’s invasion of Ukraine, tensions in the Middle East, Trump’s incoming administration, and BRICS’ exploration of de-dollarization, have compounded into what might be a pivotal year for alternative payments systems and geopolitics.
In this episode, host, Eitan Danon (Content Marketing Manager, Chainalysis) sits down with Tom Keatinge, Director of the Center for Finance and Security (CFS) at RUSI to discuss the intersection of digital assets and geopolitics.
Tom shares his journey into crypto, highlighting a 2011 Bitcoin meetup in crypto OGs and explains RUSI’s history and its focus on financial crime and state-based threats, emphasizing the role of alternative payment systems in geopolitical competition, particularly in the context of sanctions evasion.
He highlights the increasing state-based activity in financial crime and the strategic importance of the global payment system, including the weaponization of SWIFT, the development of CBDCs and the potential impact of the incoming Trump administration on international financial relations.
Quote of the episode
“SWIFT is not how money moves around the world, it’s how banks tell each other to debit and credit accounts and therefore, ergo create the movement of money around the world. But countries like China and Russia are setting up their own payment messaging systems, because they’ve realized that actually being connected to SWIFT is a threat” – Tom Keatinge (Director, Centre for Finance & Security (CFS) at RUSI)
Minute-by-minute episode breakdown
2 | Tom’s early journey into crypto in 2012 as an academic
4 | The origins of the Royal United Services Institute (RUSI) and the creation of the Centre for Finance and Security (CFS)
6 | The strategic role of alternative payment systems in global security
10 | Sanctions and the impact it has on Russia and international alternative payment systems
14 | BRICs and the realities of de-dollarization in global markets
18 | Global financial alliances and increase of western strategic challenges
23 | The future of digital currencies and global economic shifts
27 | Global financial threats and strategic economic security challenges
31 | RUSI’s focus for 2025 on sanctions, terrorist financing and Europe’s economic challenges
Related resources
Check out more resources provided by Chainalysis that perfectly complement this episode of the Public Key.
Speakers on today’s episode
- Eitan Danon* Host * (Content Marketing Manager, Chainalysis)
- Tom Keatinge (Director, Centre for Finance & Security (CFS) at RUSI)
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Transcripts
Eitan
Welcome to public key. My name is Eitan Danon. My focus at chainalysis is the intersection of digital assets and geopolitics. I’ll be one of several hosts of the pod in the months ahead. Today, I’ll be speaking with Tom Keatinge, the Director of the Center for finance and security at the Royal United Services Institute in London. Absolutely. Thanks for having me. Great to have you So Tom, you spent almost 20 years at JP Morgan with the last two years of that as the Managing Director, I believe was the head of the European public sector group.
Tom
It would be great to learn about your journey towards crypto or alternative payment systems in general. I believe in in one of your own podcasts. This is very meta podcast, interviewing a podcast, or you mentioned having gone to a Bitcoin meetup early on in West London in 2012 or some, something of the sort. So it would be great to learn about your own journey and how you made it to this topic. Yeah, no, sure. So I think that crypto verse would view me as something of a dinosaur, because I grew up on a trading floor at JP Morgan. And everything we did was very traditional, of course, back then. And indeed, I think one of the very vocal critics of crypto in the early days was Jamie Dimon, the CEO of JP Morgan, who, frankly, I think the guy walks on water, so I’m more than happy to follow what he has to say. But anyway, JP Morgan had a very generous sabbatical policy, which meant that in 2011 I took a year out to study at King’s College London. I studied intelligence and international security. And there was a very inspirational lecturer we had back then, a guy called Dr Thomas rid who I think now works in Washington, DC, but he put all sorts of ideas in my mind about sort of the cyber world, and I don’t know, signing up for DDoS attacks and this kind of stuff. And there was a bit of a conversation about crypto. This is 2011 you got to remember. Anyway, I saw a something online about a meetup that was going to happen in Paddington, in a bar or pub in Paddington, and to discuss crypto. And I thought, well, you know, why not? I’m a student. I’m my mind is open. And so I went along to this, and this is where I first really started to understand about crypto. And these were, like, the these were the OG crypto bros in London. These. These were not 20 somethings. These were guys in their, like, 60s and 70s who had sort of come across this topic and thought it was intellectually fascinating. And by the way, if you want to buy Bitcoin for 11 bucks a pop, then why not have a go and and learn how how it all works. So that’s kind of how I first came across the whole concept of crypto, just kind of, I suppose, academic curiosity in a pub in Paddington in West London.
Eitan
That’s great. Thank you. So for our listeners, I think they’re not familiar. I’m personally familiar. But what is Rusi? What is the organization’s mandate? And it would be great for our listeners to learn a little bit more about the CFS. As in my estimation, there are few organizations, if any, that are really like it. Well,
Tom
that’s very kind of you to say. So Rusi is a near 200 year old defense and security think tank, so this is in the United States. Will be scratching their heads and wondering what was going on in the UK or in Europe nearly 200 years ago. And the simple answer is that Rusi was founded by the Duke of Wellington. And the Duke of Wellington, if you know anything about European history, was a British military character who decided to defeat the French on at all, at all forms of of military combat. So in those days on the sea and on land, famously at the Battle of Waterloo in 1815 and for various reasons, a few years after that happened, in 1831 he energized the creation of Rusi. And I suppose the short version is it was a place where people who had this kind of military experience were encouraged to go to study it and write it down and basically memorialize the tactics that had allowed the British to defeat the French. Anyway, fast forward to 2014 and I had just left JP Morgan, and there was a conference going on at Rusi, which was about financial crime. And I went to that conference. I was saying unemployed investment banker with really far too much time on his hands. And I said to someone at lunch, oh, you know, you guys should think about maybe setting up a research program based on the financial crime topic, which was the topic of the conference, and the chat said, Well, yes, actually, we are thinking of doing that, and I’m the person thinking of doing that. And what are you doing tomorrow? To which I said, nothing. He said, right, well, why don’t you come in and let’s start writing a business plan. So that’s how the journey of my program started in 2014 and essentially we style ourselves as studying matters at the intersection of finance and security. So we apply a financial lens to global security issues. And in this day and age, there are a great many global security issues, and actually understanding the financial dimension of them, I would argue, we would argue, is very valuable. So that’s how we earn our corn.
Eitan
That’s great. Thank you for a little bit of history. I think a quick look on the Rusi website suggests that there’s not as much attention being paid to the potential for war with France, but certainly with the international system currently in flux, it would be great for you to walk us through some of your research on alternative payment systems. Why you think they’re developing, what are some examples and how you see crypto fitting in? I think because we’re chain analysis, we have a tendency to focus on the crypto nexus to everything. I think it would be great for our listeners to get some of the strategic context from
Tom
you. Yes. I mean, just as we think that there’s a financial solution to every security problem, I’m quite sure at chainalysis, you think that there’s crypto. There’s a crypto issue under every rock and round every corner, which is there now is, well, quite we can have, we can have that debate as we as we go along. So I suppose where we start is from a macro level. So we’re a policy led research program. We don’t do investigations, but what we do look at is, you know, how are the various tools that are out there, and that could be cash, that could be banks, that could be crypto, how are those tools used by malign actors, be they organized crime groups or terrorist organizations or or indeed, states. And one feature of our work over the last five years it’s just how much the state based element of our work has increased. So yes, of course, you know, there’s still terrorist organizations out there, like Hamas and Hezbollah, which use all these different tools to Fund and Resource their activities. There are organized crime groups still trying to process the sale of their the cash sale of their drugs and laundry, all of that and so on. But there’s more and more state based activity, and this is where I think the alternative payments issue is of particular interest. Because, of course, when states compete, one of the things that is in play is the global payment system. And what’s quite interesting is that during the Cold War, the global payment system was, was, was a relatively neutral space. It was sort of, you know, Swift was the Switzerland of the financial system, if you like. Whereas, now, in the last few years, you know, people are walking down the streets demonstrating against Russia’s full scale invasion of Ukraine with banners saying, you know, D Swift, Russia. Now, I think they’ve got no idea what that means, right? But it was sort of a notion that caught on So, so this, this idea that the the international payment system and the and the sort of global settlement system has become part, an extension of the global security architecture, means that countries that are adversaries to those that dominate the Western payment system. Our United States and Europe are looking for new ways of efficiently conducting international payments, continuing trade beyond, bluntly, the reach of Uncle Sam and its sanctions regime. So for me, it’s important to understand this underlying plumbing, because if you don’t understand it, then actually you don’t understand what is a an emerging dimension of international sort of great power competition. Excellent. So, so the global, the global payments architecture itself, is an object of, if not war in the future, at least of strategic competition
Eitan
between east west, and otherwise one could say, yeah, yes, without doubt. And
Tom
you know, just sort of if you look at so not to, not to dwell on the whole swift question. But yes, as I say, Swift has become sort of a consideration when countries are thinking about payment messaging, and for those that aren’t steeped in the lexicon of international payments, Swift is not how money moves around the world. It’s how banks tell each other to debit and credit accounts and therefore, ergo, create the movement of money around the world. But we now understand, and we see that countries like China and Russia are setting up their own payment messaging systems because they’ve realized that actually Swift is potentially a threat, or being connected to Swift is a is a threat, and indeed, Swift is a giant intelligence database. Right? You can see everything that every bank on the planet, pretty much is doing so who’s sticking their bikinos in in there after 911 United States created something called the Terrorist Finance Tracking Program, which was a very tightly controlled but nonetheless entree into Swift data in the context of. Have concerns about certain terrorist activities so swift has been weaponized, and so therefore, if you’re on the other side of that trade, you are going to try and develop your own systems. And that’s what China and Russia have done, and now the United States and others are thinking about how to respond to that. That’s just one example of how the payment system has become
Eitan
sort of a forum for international, as I said before, great power competition. Thank you. That’s, I think will be an extremely useful background to our listeners. So especially since I want to pick up on something relating to Russia, especially since February 2022 Rusi has devoted considerable attention to shining a light on sanctions evasion and analyzing the effectiveness of their implementation. Our crypto crime report is coming out of the winter. We’ll have a section on sanctions, and in September, we put out a blog piece analyzing new legislation in Russia. I think the Russian finance ministry and central bank have been a bit ambivalent. Historically, there seems to be something of an about face afoot to legitimize the use of crypto for mining and in some international payments context, which I think ties into some of what you were describing. Now, my question for you is, how do you see sanctions fitting into this conversation around alternative payments?
Tom
Yeah, so when the full scale invasion began, I think, I suppose, everyone was focused on it. What are the oligarchs going to do because they were having their assets frozen and the like. And I think for kind of individual payment flows, or payment flows that an individual might make, crypto certainly has a role to play in sanctions circumvention. And as you rightly point out, Russia has done a full 180 on its attitude towards crypto. I remember I got the chance to go to a fat AF regional typologies meeting. That sounds like a whole load of jargon, but basically it was a bunch of people getting together from Southeast Asia and Eurasia to talk about financial crime typologies in a giant warehouse in Novosibirsk in December, a different kind of warehouse party. Yeah, a different kind of warehouse party. And indeed, I have to say, one of the joys of my life was seeing the delegation from Vietnam and Cambodia experiencing snow for the first time when they arrived in obviously this. But anyway, the point is that in that conversation, there was a specific track talking about crypto. And to summarize it, the Russian delegation was saying, very simply, you know, we are going to outlaw the use of crypto. And I was asked, in my view, on this, and I said, I’ve just got two words for you, good and luck, because you’re not going to achieve that. So now, yes, we see the central bank governor and others introducing legislation to facilitate the use of crypto for cross border payments. But I think, to my mind, that’s the kind of the kernel of a bigger issue when it comes to the question of sanctions convention, because we’re seeing, for example, coins like tether, being talked about much, much more. We’re seeing discussions about sort of payment systems being developed which perhaps were or being co opted rather perhaps that were developed for other things in the past, like the Asian clearing Union now being considered as a potential platform for clearing of payments to avoid the use of the US dollar. So fundamentally, what are we talking about here? We’re talking about finding anything that allows people to trade with each other that is not the US dollar and does not pass through the Western banking system.
Eitan
Thank you. Yeah, I think on your point towards a total ban, we at chain analysis tend to think that the fastest way to increase adoption and mainstream digital assets is to ban it. We’ve seen a number of different jurisdictions where that’s happened and you can’t really keep technology out of people’s mobile phones and heads for too long. So picking up on that point a little, I think many have argued recently that combating sanctions circumvention and these efforts to remake the international financial system, if not in the image of China and Russia, then at least to kind of change them dramatically to their advantage is going to involve enlisting the support of critical middle, middle powers. We saw at the BRICS summit in Kazan in October. I believe Russia was anything but isolated. It, you know, enjoyed the participation of Iran, Ethiopia, Egypt, other powers. It would be great to get your thoughts on the impact or effectiveness some of these channels are having, certainly in the US, with the incoming administration, there’s been a lot of takes, both hot and measured on the bricks as an entity, its bank, and the prospects for the dollar realization, or at least, perhaps eroding the role of the dollar. Is the main reserve asset right now.
Tom
So I think you have to, there’s a lot of loose talk on this topic. And I think you have to sort of divide the you have to get a bit geeky and divide the payments world into the sort of different elements of it, right? So there is, you know, if I want to transfer value to you, then you know, I can, frankly, use anything to transfer value to you. I can use any system from kind of Hawala through to crypto and everything in between. The if I want to store value, if I’m a central bank governor and I want to store value, well, I’m probably not going to want to store the national wealth of my country in crypto or in beans or in anything orange juice, right? I’m going to want to store that in an asset that I know is going to retain its value, is going to remain convertible, is going to be liquid when I need to liquidate it, etc, etc, etc. And you have to look a long, long way past the US dollar and the euro and basically the kind of the dominant Western currencies to find an alternative. In fact, you won’t find an alternative. And so I think what that there, what we have at the moment, is a kind of a discussion which is sort of slightly being conflated, which is, you know what Iran wants to trade with India, and it wants to do that without using, without using the US dollar. Well, okay, that’s fine. If you want to buy Iranian oil and you’re India, and you Iran are cool with being paid in Indian rupees, then go ahead, make that trade. But now Iran has a whole load of Indian rupees, and it basically can only use those Indian rupees for buying stuff from India. So unlike the US dollar, which is kind of universally accepted, so I think a lot of the chest beating. And by the way, I’m not naive, but I think a lot of the chest beating on de dollarization. And you know, we’re going to set up our our own systems and so on. Maybe they will set up payment systems, but ultimately, you would not be doing your country a service as a central bank governor if you decided to get rid of all the US dollars in your reserve portfolio. Just allow me some people have heard me tell this story before, but in my last year at JP Morgan, because my clients who I worked in a team whose clients were central banks in the Europe, Middle East and Africa, there was a mission at jpm to try and boost the offshore purchase of Chinese RMB assets, right? So let me unpack that. Basically, what we wanted to do was to go to highly rated entities like the European Investment Bank and say, Hey, will you issue AAA rated so top credit rated assets denominated in Chinese RMB to sort of develop a new asset class, and the people that were likely to buy those assets when they were issued in the bond markets, hopefully underwritten by JP Morgan, that was the idea would be central banks. And in order to do that, central banks would have to sell something to create the cash in order to buy those RMB nominated assets. And so we spent the year going round people saying, hey, sell some US dollar assets and buy Chinese RMB instead. And at the end of the year, we had successfully got people to sell us dollar assets from their reserve portfolio, but they bought more Swedish krona denominated bonds than they had Chinese RMB. Now this is 2013 2014 so it’s quite some time ago, but still is. It is exactly because, do you trust the Chinese RMB? Do you really want your national wealth to be in a currency like that? So, you know, I think, I think this, this movie’s got a lot further to go, but I think we would be naive if we felt that initiatives like alternative payment systems that were being discussed in Kazan at the BRICS summit are not a potential reality and something that we need to track closely,
Eitan
absolutely and thank you for unpacking that in such detail, I think, for our listeners, thinking about things In terms of where the value sits, storage and transfer. For those who come from a communications background, where the communication sits versus when it’s in transit, and points of vulnerability would be useful. So I want to move a little bit too and you yourself as the host of suspicious transaction report podcast you had Andrea Kendall Taylor from CNAs on, and we’re seeing a lot of literature and a lot of policy attention right now being paid to you know, on the CNAs side, they call it the axis of upheaval. Others have called it the axis of evasion. What are your thoughts on some of the financial collaboration within said axis, whether we think this is a cohesive blocking or not? I mean. One, one thing that jumps out immediately is Iran and Russia linking their payment systems. What impact do you think this will really have, and what are some of the challenges, at least in the West, for those trying to combat this grouping?
Tom
Yeah, I mean, these are, these are marriages of convenience, I think. I mean, I like, I like Andrea’s terminology of axis of upheaval, because at the end of the day, what they’re trying to do is they’re railing against the kind of Western imposed order. And by the way, they’re not alone, right? I mean, there are plenty of countries in the Global South that feel that the kind of my way, or the highway of of Europe or the US is is, frankly, not appropriate in the modern in the modern day. So, you know, that’s a conversation for another time. So So I suppose I come back to my fundamental premise, which is that and on on the discussion that I had with Andrea on our podcast, I think kind of where we ended up on that discussion, if memory serves, is ultimately, we need to keep working hard to ensure that we in the West are offering an alternative that is sufficiently attractive to encourage people to lean our way. We can’t expect countries, I don’t think, to sign up 100% to, you know, come hell or high water, we are going to march shoulder to shoulder with the UK, the EU and the US, but at the same time, we want them to commit to the norms and standards that we aspire to promote. And I think we frankly need to be smarter in the way that we do that and and I think looking at the Russia sanctions and the response of what the EU calls third countries to Russia sanctions is instructive, because diplomats have spent a lot of time circling the globe, visiting countries like the UAE and Turkey and places in Central Asia and essentially saying, Look, we want you to get on board with the Russia sanctions regime issued by the United States, by the EU, by the UK, and others from the g7 what I don’t think we’ve been good at doing, though, is saying, and here’s a carrot, here’s a reason that you should do that. And of course, you know, we would hope that the reason that Russia has illegally invaded innocent neighbor should be sufficient for them to sign up. But at the end of the day, countries are going to consider their own national interest. So what are you offering me? I don’t know. Georgia is kind of bad example at the moment. What are you offering me, country in the South Caucasus or Central Asia that I get in return for putting myself in, you know, in harm’s way, like I’m another country that neighbors Russia, and you’re asking me to restrict the purchase of oil, or you’re asking me to restrict the flow of critical, high priority sort of technologies needed by the Russian military. So I think we need to work harder at offering something in return and not simply kind of railing against what they are doing because we don’t like it. So I think that’s the kind of really important to the other side of this. But of course, you know, we still have the power of the US dollar, the extraordinary privilege of the US dollar, as Valerie Giscard this now said, we still have that in our corner, but I don’t think we should be using that. You know, not, not every, not everyone’s saying, you know, if you think every problem is a is a nail, you always use a hammer or something like that. And this is why, I think, from an academic perspective, the approach that the President elect Trump is taking with sort of threatening sanctions left and right to to do all sorts of things, you know, stop immigration, stop people developing financial systems that are that reject the mighty US dollar, you know, I mean, who knows what he’ll use tariffs for next, but it’s not going to be for for economic purposes. I could pretty much guarantee it. So trade wars are not easy to win. No trade wars aren’t easy to win. And I think as we, as we all know who ends up who ends up paying the tariffs, it’s the American people. So I think we need to work harder to justify why people should stay within the financial system that we’ve created and why they shouldn’t be afraid of it unless they’re planning on invading an innocent neighbor.
Eitan
Yeah, thank you. I mean I, as someone who previously worked at the US Department of the Treasury and comes out of its national security apparatus, your words resonate deeply with me. I think for our listeners who are interested in this, I would recommend saleha sends book Paper soldiers on the weaponization of the US dollar in recent decades. I don’t endorse every point in it, but it’s a it’s a great read. And I think we’ll get people’s wheels turning on these topics. So on this set of of marriages of convenience, or kind of groupings that are that are trying to erode the status quo. How do you see from your vantage point, from Rus perspective? How does, how do crypto and digital assets, permissionless and permissioned, fit into this conversation? And you know any. Student of history would know that these are not natural alliances or not Alliance, perhaps might not be the right word, but there’s a lot of historical friction between some of these countries, and so is there an opportunity to drive a wedge, or kind of take some of some of the countries, you know, not only China, Russia, Iran, North Korea, but those in trading with those countries out of the orbit or to entice with carrots. What, I guess my question is, what are some of those carrots that you, that you propose or mention?
Tom
Yeah, so I think the first carrot, sorry to be boring, but the first carrot is respect, right? You know, so undervalued in our day and age. Yeah, yeah, exactly. So the kind of my way or the highway attitude, I don’t think necessarily, India’s countries around the world to to us, and we need to, we need to respect that. I think the again, just going using the kind of Russia case as a as a focus, what the Western Allies failed to do after February 2022 is to win, basically make the case, and to win the Strategic Communications battle with Russia. You know, the likes of Sergey Lavrov had done multiple laps of Africa blaming energy price shocks and food security issues on Western sanctions before we had realized that that was happening and had got our act together to try and combat that, that messaging and so we’re kind of on the on the back foot. I don’t, I’m gonna, I’m gonna dangerously swerve into American sports analogies here. I don’t think we’ve quite reached the moment where we need to throw a Hail Mary, but we definitely need to work harder at, at basically selling why. You know, our half of the globe is the half that you want to be, to be part of, and for so long as there are the kind of the the alternative payment mechanisms, whether it’s crypto, whether it’s groups of countries getting together around a common central bank, digital currency, for example. You know, as those alternatives develop, and they’re only going to develop, right? There’s no going back, or whatever one might think of crypto or anything else. There’s no going back as the frankly, the Russians discovered themselves. We need to work harder to explain why, actually? Well, you don’t need to run your economy on Bitcoin. You’re perfectly safe running it on the US dollar, or being connected to the US dollar, or using the international correspondent banks based in New York and London. And as the the the appeal of crypto, or as the ubiquity of central bank digital currency technology develops, we’re going to have to work even harder, because the options will proliferate, and using the US dollar or using the euro or pound sterling becomes less and less obvious, a need.
Eitan
Thank you. That’s that’s very fascinating. You mentioned CBDCs at the end. Is that, is that the area where you think there is the most compelling argument on the side of China, Russia and others, to to kind of move away from the dollar, or is it more of the stable coin Bitcoin, kind of permissionless crypto technology? Is it something else? Where do you see digital assets in this conversation?
Tom
I mean, I think it’s going to be a combo. Because right now, no one sort of digital asset alternative has, I think, the capacity, or the the network to provide the kind of the volume mean, just imagine trying to run, you know, whatever it is, one $2 trillion economy like Russia, on on using Bitcoin as your, as your, as your method of payment. It’s just not going to work, right? So there isn’t the liquidity there exactly or the exact capacity Exactly. So, so you’re going to need, you’re going to need a kind of a combo of these different tools available to you. So you’re basically going to have to cobble together an alternative to the ubiquity and the liquidity and the accessibility of the US dollar. But as the years and maybe just the weeks go past, the opportunities of using these alternatives, these digital tools, digital currencies, expands so, you know, China might set up, you know, digital currency rails that could. Connect it with its kind of regular trading partners, for example, and there. So, you know, all the settlement will be easily done, in in, in easy and why? Yeah, exactly. So I just think that that it’s going to be a mosaic. But I think over time, the pieces of the mosaic will get bigger and bigger and bigger until, you know, maybe there are half a dozen tools you need to act as an alternative to the US dollar, rather than, probably the, I don’t know, 2530, 4050, you need. You need today and again. Sorry to be boring. But I would stress this point that there is a fundamental difference between setting up payment rails, where value moves from A to B and setting up stores of value, where that where you are basically stewarding the national wealth. And those two things are very different. The former is much easier to do as an alternative to US dollar than the latter. In my opinion, yes, custody and storage versus transfer. And I think for the naysayers, at least in the use us who invoke Mark Twain. You know, rumors of my death are greatly exaggerated. A lot of this is a long term game, and we’re talking about the fate of the international system itself. So this, this gets into mainstreaming things that perhaps over 10 or 15 years become more normalized. It’s not a it’s not a short term horizon by any stretch. Yeah. And the reality is just, I mean, the reality is that for the, you know, for the next four years in the United States, we can kind of expect the the winds to be at the back of the, kind of the crypto community on the one hand. So there’ll be lots of opportunities. There’ll be lots more innovation coming, I’m sure, and there’ll be lots of things that we haven’t even thought of today that will be around three or four years from from now, because people will feel that they’ve got the confidence to invest in developing that technology. And at the same time, there may also be a wind that encourages people to move away from using the US dollar more and more, which will be the heavy use of sanctions or the heavy use of tariffs by an incoming President Trump. I mean, I would encourage people to read. I’ve been going back and looking at some of the Donald Trump speeches when he was president last time around, and there’s a speech he made in the Oval Office. I think it was when he was signing into law Katsa, the Combating Americans adversaries through Sanctions Act, I think is what it stands and the short version of that, and I suspect maybe you were in Treasury at the time, I don’t know, but the short version of that is that that took some sanctioning power away from The White House and vested it in Congress. I think that’s my rough summary. And when he signed that, and it would pass, but passed Congress with no trouble at all, and when he signed that into law, he had a big grumble about the fact that sanctions were a tool for doing great deals to the American people. And by shifting this, some of the power from the White House to Congress, that tool was being removed in part from the hands of the President, and then he says at the end something like, and who’s better at doing deals for the American people, Congress or a billionaire, successful businessman like Donald Trump? Slam, slam down end of speech. Right? So, you know, I think we’re going to, I personally, from an academic perspective, I’m quite excited about the Trump presidency, because I think we’re going to see I think we’re going to see a lot of stuff going on. That’s a very safe bet. Yeah, and, and so, you know, there will be an awful lot of having this conversation again in four years time. I think, you know, we could be looking at a landscape which has changed quite considerably,
Eitan
absolutely, just a quick few quick points. I think your cats a summary was spot on as as was your football analogy. Your American football. I would never call American football football to the Englishman, but thank you for that. I think there’s certainly no shortage of threat actors right now. And if you go on Russ website or follow some of chainalysis research between nation states, traditional organized crime networks and others who are abusing the international financial system, or at least trying to bend it to their advantage. We have the invasion of Ukraine, tensions in the Taiwan Strait. The Middle East, yet again, is literally on fire. My question for you, Tom, is, what keeps you up at night
Tom
between all of that, or something else? Well, I live in a national park in the UK, so what keeps me up at night is the owls hooting the nightingales. Yeah, exactly. I think. So I think what? What if I think about the projects that we, we run at Rusi and my program, first of all, the number of projects is is expanding. So there’s clearly, you know, great interest in trying to understand the financial dimension of the growing number of threats that we that we witness. But I think probably what keeps me up at night is that fundamental institutions. We’ve relied on for decades, like, you know, like the UN like the Financial Action Task Force, and everything in between are finding it more and more difficult to hold themselves together and thus maintain a sort of a global standard of responsibility. So if I just look at things through my own little lens, you know the fact that the back to the beginning of the conversation, the fact that Swift is now sort of open season on Swift. I find that problematic. I find it problematic that we are having conversations about the payment system and the financial system being kind of weaponized and fragmenting. It’s just not good for global coherence. And the thing that really keeps me up at night is I have a book in my in my study, which is was written in, I think, 1933 34 and basically it’s a study of the economic tools used against Germany during the First World War. And when you read that book and you realize it was written basically 100 years ago, there are some scary parallels in that book with where we are now. And of course, we all know what happened after 1919 3334 right? So that probably is what keeps you up at night. It’s flicking through that book and wondering whether
Eitan
past is prolog, as they say, yeah. I mean, History doesn’t repeat itself, but it rhymes. And I think for the pessimists among us, looking at what you just described, I think many might wonder whether we’re witnessing in slow motion the fragmentation of the international system. It was just a piece over the weekend in the Wall Street Journal about whether we’re in world war three right now and don’t even know it, or are realizing it too slowly. I guess a final question as a continuation of what you were just describing, going back to Rusi and your focus for the CFS and the Institute writ large. One of the things I think that really sets your team apart is the strategic angle to the focus on financial crime and economic statecraft. It would be great for our listeners to learn a little bit about what’s on your roadmap for the first half of 2025
Tom
Sure. So there are, there are basically two halves to what we do. We have part of our program focuses on what we call financial crime policy. So that’s sort of the blocking and tackling of the anti money laundering legislation, I don’t know, beneficial ownership registries. How do we improve access information there, and all the sort of stuff related to the Financial Action Task Force. There are some interesting things going on there, around developments in the EU and elsewhere. So that’ll be quite active. And then on the sort of the sort of state based threat side, sanctions, economic security and related issues, I think, for us there, and thinking about it from a European perspective, I’m astonished that Europe has managed to stay active on sanctions against Russia for as long as it has done. I mean, you think about after 2014 the Europeans and others kind of issued sanctions, and then kind of went home and thought, well, we’ve done everything we can do. We do need our gas. After all, yeah, we do, yes, we do need our gas. Well, yes. So I think probably, I think 2025, with the arrival of Donald Trump and everything else, I think on the kind of Russia sanction side could be extremely interesting. And Europe is going to have to, I think, assume that many of the allies that were in US Treasury kind of assistant secretaries and under secretaries who, you know, we stood shoulder to shoulder across the Atlantic on sanctions against Russia over the last three years that that isn’t there anymore. So Europe is going to have to, and I say Europe, as opposed to the EU, because, I mean the EU and the UK, to get the UK is going to have to really get its stuff together to operate, potentially, on an on an in an autonomous fashion. And then I think the the other thing that we are investing a lot of time and effort in is this focus that countries are placing, increasingly on economic security. So again, supply chains. Supply Chain integrity is no longer guaranteed. United States has been way out in front on recognizing that and acting on that, compared to the Europeans. We run a task force on economic European economic security from my team at Rusi and you know, the EU, the UK and others, again, need to get their acts together, because the world is not becoming safer, and the decisions that were made by countries like Germany to kind of cozy up to Russia back in the day turned out to be very much the wrong decision, and frankly, not distancing ourselves and our critical supply chains from China and kind of other potentially hostile. Actors will come back to bite us, unfortunately. So I think that’s probably the kind of state based dimension of what we do. I think will continue to grow considerably. And then the last point I’d mention, which is that that we just learned today that we’ve been awarded a new grant to work on terrorist financing, and terrorist financing has not been a thing for the last two or three years, at least, in the in the research world. So that seems to be back as a topic that people want to focus on. And obviously we will certainly embrace that. That’s great. Thank you for the thank you for the overview. I think one thing that’s clear is that, given the way the world looks today, there will be no shortage of work on your side, nor on ours.
Eitan
And thank you for your time today. This has been a very illuminating discussion, and it’s been it’s been great to have this discussion with you. Thank you for sure, thanks to a turn and thanks to analysis for having me chairs. Have a good rest of your day.
