UNITED NATIONS, Jan 10, 2011 (IPS) - When the United Nations decided to locate its secretariat in the city of New York, the United States as host nation signed a "headquarters agreement" back in 1947 not only ensuring diplomatic immunity to foreign diplomats but also pledging to facilitate the day-to-day activities of member states without any hindrance.
But a recent decision by JP Morgan Chase Bank to close its division that serves diplomatic and foreign government missions has prompted a strong protest from member states.
A letter sent by the bank advises all U.N. Missions to close down their business accounts by Mar. 31.
Additionally, all business credit cards will also be terminated by that date.
The bank warns that it "continues to reserve the right to close the accounts earlier, at any time, for any reason, without any notice".
A letter sent by the U.S. Mission to the United Nations to the 191 member states pointedly refers to a "recent decision by large commercial banks (plural) to discontinue diplomatic or foreign government accounts."
The implication is that more than one commercial bank - besides Chase - may be trying to throw out all diplomatic business accounts, virtually blacklisting them.
Although the Chase bank, in its letter to U.N. Missions, has officially not given any reason for its sudden decision, one U.N. diplomat told IPS it was probably related to preventing money laundering and terrorism funding.
"Chase Bank's decision to close down diplomatic accounts is most unhelpful," he said.
Even though it has been presented as a commercial decision, it leaves one wondering why they are doing it now, after so many years of assisting diplomatic missions, the diplomat said.
"Is it because of pressure from the host government's authorities? If so, why?" he asked
"This is not consistent with the obligations of the host country under the U.N. Headquarters agreement and they should do something about it before it gets out of hand," he added.
According to Section 17 of the Headquarters Agreement, "American authorities" are expected to "supply on equitable terms with the necessary public services", including telephone and telegraph facilities, to the United Nations and its member states.
"In case of any interruption or threatened interruption of any such services, the appropriate American authorities will consider the needs of the United Nations as being of equal importance with similar needs of essential agencies of the government of the United States, and will take steps accordingly, to ensure that the work of the United Nations is not prejudiced."
The U.S. Mission to the United Nations has scheduled a meeting Thursday to brief member states, most of whom have had their accounts for decades, either with JP Morgan Chase or its predecessor bank, the now-defunct Chemical Bank.
"We recommend that you open bank accounts with another financial institution and begin using them immediately in order to minimize any disruptions," the bank's letter said.
Chase has, however, said that personal accounts of diplomats and delegates will not be subject to termination - at least not yet.
In a letter sent to all member states, the U.S. Mission says it is aware that "the majority of the Permanent Missions in New York have for years been clients of JP Morgan Chase, and that the closure by the bank of this division means that the Mission's business accounts will likewise by closed by March 31."
The letter also says that some Missions "believe that they may experience difficulty in establishing accounts at other financial institutions in the New York area".
Absolving the host country of any responsibility, the letter says that JP Morgan Chase is a private sector bank and its decisions are made for "business reasons alone". But those reasons remain unstated.
"The government of the United States has no authority to force banks to continue to serve their customers or to open or close any accounts," it says.
"The authorities of the host country are in contact with JP Morgan Chase, as well as with other large commercial banks and alternate types of financial institutions, with a view to determining which entities are prepared to open accounts of the Missions to the United Nations, as well as for bilateral embassies in Washington DC and consular establishments around the United States that may need to make alternate banking arrangements in the wake of recent decision by large commercial banks to discontinue diplomatic or foreign government accounts."
A message left with the Chase bank did not elicit a response.
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