EDITORIAL: The prime minister’s demand that rich countries in general and tax havens in particular immediately return “stolen assets” of poor countries and help end the latter’s exploitation makes a lot of sense but unless the international financial order changes dramatically his words are likely to fall only on deaf ears. Nobody, not even states that allowed their banks to keep secret, numbered accounts, disagree with the fact that such practices divert precious resources away from serious issues like poverty, climate change and Covid-19 in some of the world’s poorest and worst-affected countries. Yet they’d still rather be part of the immensely complex and complicated web of governments, investment banks, and multinational companies that feed off Big Money than stand on the side and protest against the injustice, which goes to show just how little space there is for things like human rights or even international law in the cold world of global finance. Prime Minister Imran Khan’s heart is no doubt in the right place, and he has been speaking against safe havens passionately but all that is not very likely to matter much at a time when the nerve centres of world finance and homes of the biggest capital markets, cities like New York and London, are themselves adopting some of the characteristics of tax havens in order to attract money from wherever it can come.
The PM was addressing a high-level forum on Financial Accountability, Transparency and Integrity (FACTI) on the sidelines of the UN General Assembly session. In a report released during the session, a group of former heads of state, past central bank governors, and a number of other personalities also called on governments to do more to control tax abuse and corruption in the international economic system. They also made the argument that resources that should help the world’s poor are being drained by tax abuse, corruption and financial crime. According to the latest estimates, governments lose about $500 billion every year to profit-sharing enterprises, $7 trillion in what can be called private wealth, although much of it is stolen public money, is stashed away in haven countries, and money laundering worth approximately $1.6 trillion takes place every year. But while some of these numbers are very recent and seem shocking, the trends they reflect are hardly new. And anybody who still believes that they can be reversed simply by persuading some countries into ending a very lucrative trade that routes unbelievable amounts of money through their systems and ensures very high standards of living in their countries is just wasting time.
Indeed it’s not that financial controls have not kept pace with a fast globalizing and digitalizing world, rather it is that most rich countries have deliberately kept things this way. One need only take a look at this week’s revelation of $2 trillion of illegitimate transactions to see how international banks facilitate such practices by helping criminals move dirty money around the world. Still, it is unfortunate that global leaders have chosen to lubricate the world economy with suspect money even at the risk of a very concerning rise in international poverty. And it is true that countries that frame laws that legitimize keeping other countries’ stolen money in their own banks actually encourage and support corruption everywhere. Therefore, even if leaders of countries that the prime minister’s demand was directed at just laugh it all away, there can be no denying that he was right and something will have to be done about the matter sooner or later, especially since most of the poorer countries have been very badly hit by the coronavirus and now need all the help and money they can get. The best thing to do right now for states that wish to see this particular trend change is to continue highlighting all that is wrong with it and pile pressure on countries that wish to protect it. As more and more people become aware of all the global social and economic problems that stem from keeping proceeds of corruption in protected accounts, especially in countries that allow this practice, there’s a good chance of such governments coming under pressure and revising their position on this issue at some point in the future. It is, without a doubt, a great miscarriage of justice.
Copyright Business Recorder, 2020
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