Phyrric Victory?

New York City claims India owes $18 million taxes and interest and Mangolia about $2 million in property taxes on buildings used to house the staff of their United Nations mission. City officials plan to use the ruling to pursue claims against several other countries that house their U.N. or consulate employees in the same buildings as their diplomatic offices, which are exempt from taxes.

International law immunizes foreign governments, and diplomats, except when it involves ” immovable property.” Traditionally, countries have treated diplomatically immunity against civil and criminal prosecutions broadly and the U.S. government fears that the Supreme Court decision could boomerang.
The United States maintains the world’s largest diplomatic presence with more than 3,500 buildings, which local authorities could subject to retaliatory taxation.

The Bush administration had sided with India and Mongolia in the case, arguing in a brief that the ruling “is likely to have adverse consequences for the nation’s foreign policy, including retaliatory measures taken against the United States.