I was in a hotel room in Tokyo on Sept. 11, 2001, preparing for negotiations at the Japanese finance ministry. I had just been sworn in as U.S. Treasury Under Secretary for International Affairs. We immediately cancelled our meetings and were soon on a C-17 military jet flying back to the U.S. To get back faster we refueled in midair over Alaska that night. The pilot invited me to watch the procedure from the cockpit; it was the most impressive combination of advanced technology, hand-eye coordination, precision teamwork and raw nerve that I had ever observed.
Our pilot approached the tanker jet from underneath, using a specially designed joystick with a monitoring device consisting of rows of lights that turned red or green depending on whether our plane was coming up at the right position relative to the tanker. These two huge jets were zooming through the dark at something like 500 miles per hour, so close that I could see the faces of the guys in the tanker as they lowered the fuel hose. After a while the tank registered full, and we headed home across Canada. As we flew into U.S. airspace there were no commercial airliners to be seen. The plane’s radar screen was nearly blank.
That aerial refueling would mark a watershed for me. It was the beginning of a much closer cooperation and coordination between the Treasury and the military. It was also the start of many completely new experiences that I could never have expected when I signed up for a job at Treasury. I would be forging new teams to handle new tasks. I would be relying on the expertise and experience of others -- people like those pilots -- and they would be relying on mine. Months later I would be flying on other military aircraft -- from C-130 transports in Afghanistan to Blackhawk helicopters in Iraq.
When I got back to Washington, the city was on alert. The capital was a logical place for another attack, and the U.S. Secret Service was particularly concerned about security around the White House and the adjacent buildings, including the Treasury. We prepared for the worst, but we also had work to do, including laying out a new international plan to freeze terrorist assets. President George W. Bush announced that plan in the Rose Garden on September 24, 2001. That was before military actions began in Afghanistan, so it was really the first shot in the war on terrorism. The announcement sent an important message to the terrorists and to the people at Treasury. Bush said:
Today, we have launched a strike on the financial foundation of the global terror network. Make no mistake about it, I’ve asked our military to be ready for a reason. But the American people must understand this war on terrorism will be fought on a variety of fronts, in different ways. The front lines will look different from the wars of the past ... It is a war that is going to take a while. It is a war that will have many fronts. It is a war that will require the United States to use our influence in a variety of areas in order to win it. And one area is financial.
Soon thereafter the finance ministers from the Group of Seven released a statement pledging to work together to “freeze the funds and financial assets not only of the terrorist Usama bin Laden and his associates, but terrorists all over the world.” This set off what turned out to be the most impressive effort in international financial coordination in history. Soon financial-intelligence networks were set up to get information about the terrorists, and new financial tools began to be used as a weapon against proliferation.
Four years later, in December 2005, the 9/11 commission issued a “report card” on various security and intelligence aspects of the war on terrorism. They were apparently tough graders. They gave many C’s and D’s and quite a few F’s. But the top grade -- an A- and the only grade in the A category -- was for the war against terrorist financing. They specially mentioned that “The government has made significant strides in using terrorism finance as an intelligence tool.”
To solidify these efforts, a new position, the Under Secretary of the Treasury for Terrorism and Financial Intelligence, was created. It still exists today. I think thanks are due to the many people who served in the financial front of the war on terrorism during the last decade -- many in the U.S. Treasury -- for their role in preventing another serious attack of the kind that changed the world 10 years ago.
(John B. Taylor is the Mary and Robert Raymond Professor of Economics at Stanford University and the author of "Global Financial Warriors: The Untold Story of International Finance in the Post- 9/11 World," from which part of this post is adapted.)
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