We've known this for a long time. For every aid dollar that flows south, ten dollars flows northwards through illicit channels. The odds are stacked against sustainable development.
G20 leaders meet this autumn to discuss the world economy. The prospects don't look encouraging, but this is exactly the moment when they should take action against the underlying problems, which means taking action against tax havens.
Our job is to encourage them to take the necessary steps. Watch this video, circulate the link to your friends and colleagues, and encourage them to take action here.
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This means that foreign aid actually IS working. It’s doing what it’s always been intended to do, facilitate the transfer of wealth from the poor (taxpayers) to the rich (Cameron’s backers). Those who wondered (and continue to wonder) openly how foreign aid could be left untouched by Cameron’s regime when austerity was the cry for all else now have their answer. Like everything else this government has its grubby paws in underneath the worthy facade it’s just another scam.
BB
The problem here is with the corrupt officials, not the tax havens. Corrupt officials do not suddenly become honest just because their offshore accounts are taken away. That is like trying to eradicate heroin addiction by burning poppy fields…it just doesn’t work.
Do you have a link to the research which shows the 10:1 relationship between illicit flows and aid?
Nonsense re corrupt officials
Tax havens ply them with an opportunity – they take it
Call it supply side economics
Re 10 to 1, WB say illicit flows =$1 trn
Aid = £100 bn
I’m sorry, but do you really believe a corrupt official thinks..
1. Oh, i can open a secret offshore bank account.
2. But i’ve got no money to put in it.
3. Wait….why don’t i steal it from my country.
No, they’re told they can do this
Which is why they do it
Your static analysis entirely misses the point
Of course, this by no means suggests that we should cut foreign aid at all. Foreign aid is very important, but it will only truly be effective if we end the tax haven secrecy that’s draining the money back out of the developing countries.
Clark
Precisely
Ending tax haven secrecy will effectively end tax havens.
As these places are “havens” catering for corporate greed, crime and corrupt government officials.who enjoy the “secrecy” to enable them to hide dirty money.who can possibly argue against ending them?
Except the few fat-cats who disdainfully treat the rest of us as idiots – while 3 billion people go to bed hungry every night; or worse.
Foreign aid is pointless and does not result in many benefits to the people in need of aid. However we have made international commitments to increase it.
The UK sends £300million a year to India and India has half the worlds poor. However the Indian government spends many times that on its nuclear weapons and space programme. People are forced of their land so big Indian companies can buy it cheap to develop. The recent 2G spectrum scandal is yet another example of assets being sold of cheap to big business because big business and lobbyists influence who gets jobs in government.
Who sells them the weapons?
And why do you think we send them the aid?
The point is we do need aid to 1) address crises and 2) provide structural support but whilst we allow the cash to be stripped of course it cannot work as hoped
Which is why this campaign is so relevant
But to say foreign aid is pointless is just wrong
Sorry. I was having a bad morning. Helping those in dire need is important.
I have just acquired a deep cynicism regarding how things really work in the last 2 years. Foreign aid sounds good in theory and the emotional side makes it hard to challenge. It is therefore almost certainly abused and subverted so that very little does any good and most makes things worse.
Isn’t there research showing that African countries that have received the most aid had the lowest economic growth in the last 40 years?
@ JJ Lehto You write “I’m sorry, but do you really believe a corrupt official thinks…..” etc
Absolutely. This is exactly what happens and not just “corrupt officials” but any member of their exclusive and secretive club (membership closed) composed of politicians, CEOs and persons employed in the finance, accounting and legal “industry”.
Neither are they particular about where they steal the money from – just as long as the scam is out of reach of law enforecement – hence “secrecy jurisdictions”.
When the lid is taken of this fraud it will make News International telephone hacking look like a vicar’s teaparty!
finanacial product providers.
Well you seem to be misguided as well. Closing down a tax haven or two will not stop corrupt governments stealing money. I struggle to understand why Richard etc believe this.
We’e not talking one or two…..
Even if you close down the usual suspects, the UAE will still be there, as will places such as China. Strong links are already created between such countries, so the opportunity for corruption is rife. Especially when you consider that corruption in the UAE or China is hardly rare.
Ah, I get it
You’re also from the school that says that we shouldn’t tackle crime as we’ll never eliminate it
Of course, I get it
You’re right after all
Let’s have mayhem
Not at all. But, for example, you don’t tackle crime by closing all the shops as all this will do is result in shoplifters turning to burglary. Instead you invest in jobs in deprived areas, improve your schools and look to manage drug addiction rather than the current policy.
@ JJ Lehto
The UK must lead by example in the matter of “secrecy jurisdiction-offshore tax havens”.
It is impossible to expect China, UAE and “other countries” to respect the law when clearly on view are three highly secretive financial centers sitting close to our shores pretending not to be part of the UK.
At present the UK government condones misconduct/tax dodging/fraud on these inscrutable islands by refusing to close them down — this because a few rich, Machiavellian individuals (and their band of lacky accountants and lawyers) are intent on screwing the rest of us. Other countries think that to compete with the UK it is essential to establish their own versions of “secrecy jurisdictions” close to (or even inside) their country where they too can transact dirty business.
There is only one solution: Absorb the Isle of Man, Jersey and Guernsey into the UK and enforce the
rule of law. Only then can we set an example to help prevent our world collapsing into anarchy.
Re: There is only one solution: Absorb the Isle of Man, Jersey and Guernsey into the UK and enforce the
rule of law. Only then can we set an example to help prevent our world collapsing into anarchy.
Well,we`re hardly in the age of gunboat diplomacy now-more in the age of devolution I`d say-but you miss the point-the UK IS the ultimate law in those islands,and the native residents are British subjects,and the UK Government is responsible. But successive UK Governments refuse to pass the necessary legislation to deny those practices to which you object.
In the U.S, each State can enact laws that don`t conflict with Federal laws-so that in principle,would be all that`s needed re the Crown Dependencies and the UK.
The U.S.also taxes Americans regardless of where they live in the world too-a good idea on personal wealth maybe.
After a testy exchange where I suggested that the libertarian stance of ignoring illicit outflow, even endorsing it as a positive to developing countries, I finally got an answer from Worstall
“Tim adds: “So do you believe that poverty is being helped by illicit capital outflow or not?”
I certainly think it’s possible to construct an argument where it could be, yes.
Imagine, just imagine, two possible types of economy.
1) One in which the opposition to markets, to voluntary exchange, is so twisted and extreme that the black market is the only way the population can live. This was certainly true of the Soviet Union.
2) Imagine a close analogy. An economy where the rulers are so predatory that lying and cheating, hiding from the authorities what is being made, is the only manner possible of continuing to do business. This was certainly true of at least parts of Russian business immediately post-communism.
I have direct evidence that Angola in recent years has been like this. I have anecdotal evidence that parts of Nigeria, Ethiopia, certainly Eritrea, have been like this.
I think it eminently possible that illicit capital outflows could be helping reduce poverty: because the depredations upon declared capital are so high that there is none declared. Thus the illicit outflows enable the illicit inflows which are reducing poverty.
Now you, Arnald, in the Channel Islands, really only have to go talk to those few remaining who lived through the occupation to see that this can be true at times and places. And I’m entirely willing to argue that in some places, right now, it’s only the black and grey markets that actually allow the reduction of poverty.”
Is it just me or is this guy taking the rag?
Two things:
a) As ever, Worstall argues in absurdum. Like all libertarians of his ilk he can only see the world in black and white so he has to adopt extreme positions from which he then extrapolates a generality. That is not an argument; that is failure to observe that there already is a generality and in it the scenario he paints does not exist and IFF are harmful – so he is not recognising reality
b) You have to remember again that again like all of his ilk he suffers from a persecution paranoia – because he imagines at all turns his rights are violated – and this informs this extremist view.
So, of course in the wartime occupation of Guernsey illicit acts took place and could be condoned and as the Russian communist economy collapsed the economy failed and illicit action had to be resorted to – but let’s not for a moment then say crime is good. But Worstall does do that. It reveals him for what he is – a man who so hates the state that crime must be good because it too opposes the state. But to describe that mentality as warped is being kind to it
Richard
in this instance I think you’re being too kind to Worstall. His argument is, at best, disingenuous if not outright dishonest. Like many people who laud the efforts of those in the secrecy jurisdictions to enable avoidance/evasion of tax he is highly sensitive to the point that a great deal of the capital now lodged in those places doesn’t come from the UK & that more serious laws than UK tax legislation may be being broken. Put simply, if you are facilitating the kleptocracy taking funds out of 3rd world countries then you have blood on your hands.
Worstall doesn’t want to own up so he responds with a, frankly ludicrous, argument which, as with the JJ Lentho guy, mixes up small-time corruption for a handful of notes (which I’m sure doesn’t trouble our learned friends dreaming up schemes in the CI) & the sort of massive fraud that has, eg, seen oil firms essentially buy most of Nigeria’s Atlantic coast under the feet of the people who have farmed & fished it for generations in return for a one-off payment which will, of course, be winging its way to a secrecy jurisdiction bank A/C v soon !
JJ Lehto says “I’m sorry, but do you really believe a corrupt official thinks..1. Oh, i can open a secret offshore bank account. 2. But i’ve got no money to put in it. 3. Wait….why don’t i steal it from my country
I think you may be confused. We aren’t interested in the corrupt policeman or border official taking a few notes. It is much higher up the chain (although, obviously, it is the high-level corruption that helps to make the low-level first popular & eventually endemic) &, yes, it does require the help of first world accountants, lawyers, Co formation agents etc.
Most dictators end up not merely wanting to be rich in Thailand, Peru, Nigeria etc but throughout the world. They want things that can only be had in the first world, like world-class education for their children, world-class shopping for their wives, beautiful mews houses etc. They need to launder the money they steal back out to where they want it. How would you do that without secrecy jurisdictions ? I’d like to think even the dolts in the FA might’ve quibbled if Takhsin had turned up to buy Man City with a big £500m cheque signed UNESCO !
Actually, knowing the FA, they probably would just have said “well, if you’re sure its ok, sign it on the back & initial it”.
JJ Lehto
think corruption in China is a fair bit rarer than it is here. In fairness, if HMRC regularly shot people for tax evasion, as I understand happens in China, we’d have not much corruption at all (& we’d never get our drives tar-macked).
Here’s ‘economic hitman’ John Perkins on the subject of foreign aid… http://www.youtube.com/watch?v=0CofEbxtIxI&feature=share This perspective will be new to some here, I gather.
BB
“Even if you close down the usual suspects, the UAE will still be there, as will places such as China.”
The last thing the Chinese would want is a great swoosh of capital. They have been struggling to hold the Yuan down artificially against the entirely legitimate currency rush caused by their doing almost all the world’s manufacturing !
As for the UAE, great thinking ! If I had a large pot of illicit gelt I’d obviously want to put it somewhere where Sharia law forbids the payment of interest to capital. D’oh !!!!