Tag: Economic sanctions

BRICS hypocrisy on offshore reform

Post By Politics , , , , , , , , , , , , , , , , , , ,

Andrea Binder is a Freigeist fellow and research group leader at the Otto Suhr Institute of Political Science at Freie Universität Berlin and the author of “Offshore Finance and State Power.” Ricardo Soares de Oliveira is professor of the International Politics of Africa at Oxford University and is currently writing a monograph titled “Africa Offshore.”

Of all the challenges in global governance discussed at the latest BRICS summit in Johannesburg, the role of offshore financial centers should have loomed large. Instead, the issue barely got a noncommittal half paragraph on page eight of the summit’s 26-page declaration.

In an example of breathtaking hypocrisy, BRICS countries rail against the global financial architecture but offer no collective action on offshore banking, and they also continue to be among its major users themselves.

Data leaks such as the Pandora Papers and Panama Papers have shown just how vast amounts of cash end up in jurisdictions that cater to wealthy nonresidents by offering secrecy, asset protection and tax exemption. And according to economist Gabriel Zucman $7.8 trillion — or about 8 percent of global wealth (and 40 percent of corporate profits) — are currently hidden in such tax havens.

What’s interesting is that a considerable share of this originates from BRICS and other developing countries. The U.N. Conference on Trade and Development, for instance, estimates that $88.6 billion leave Africa every year in the form of illicit capital flight, much of it ending up offshore.

The fact that this offshore world is underpinned by the interests of the rich world and also a majorly exacerbates global inequality should fire up BRICS countries.

And certainly, they are quite vocal in denouncing the role of offshore finance: In the 2020 Moscow Summit declaration, for instance, BRICS member countries reiterated their “commitment to combating illicit financial flows, money laundering and financing of terrorism and to closely cooperating within the Financial Action Task Force (FATF) and the FATF-style regional bodies […], as well as other multilateral, regional and bilateral fora.” They have also rightly called out the West for setting up these mechanisms decades ago.

In practice, however, whatever global multilateral action is currently being taken is at the level of the G7 and the Organisation for Economic Co-operation and Development — even if these ambivalent reforms are often protective of the West’s offshore interests. BRICS countries, meanwhile, do almost nothing, despite being the largest global source of capital flight, according to a 2014 report by Global Financial Integrity.

And this lack of multilateral action perfectly aligns with the way individual BRICS countries have engaged with the offshore world thus far.

Brazil currently stands as the world’s second largest borrower from offshore financial markets. India long accepted a double-taxation agreement with Mauritius, which enabled significant foreign direct investment and tax avoidance by the wealthy until 2016. The country also created of an offshore financial center in Gujarat. Meanwhile, Russia’s hydrocarbons are traded through opaque offshore jurisdictions, and its elites have notoriously thrived in such systems. Then, there’s perhaps the most significant — and counterintuitive — stakeholder in the offshore world, which is China. Its state-owned enterprises are major users of jurisdictions like the British Virgin Islands, where they register secretive subsidiaries.

In short, BRICS countries are just as implicated in the offshore world as the Western economies they lambast. The reality is that their governments and political elites both benefit from and need the offshore financial world — and there are four reasons for this:

First, these countries engage in institutional arbitrage by accessing more efficient institutions — and, sometimes, institutions that don’t exist domestically, like credible contracts or a non-political judiciary — offshore.

They also seek access to cheaper and less constrained financing in offshore money markets, where they get access to the U.S. dollar and international investors that are unavailable onshore.

Heavily hit by sanctions — as in the case of Russia since 2022 — the offshore world is also a lifeline for BRICS countries, allowing for the circumvention of punitive measures.

And finally, BRICS elites frequently use such facilities for their own personal purposes, including hiding illicit money and assets.

Thus, closing these discretionary offshore avenues may well have implications for their personal survival — or the survival of their regimes.

This is why multilateral action from BRICS members remains rhetorical at best. And unilaterally, they either do nothing, or selectively implement anti-offshore measures as political tools of regime consolidation and to punish rivals. While continuing to criticize the West, they also voice few qualms regarding the thriving offshore roles of Hong Kong, the United Arab Emirates or Singapore.

The latest summit declaration’s vague language of “international cooperation” and “mutual legal assistance” simply highlighted all this once more, and it even eschewed the previous declaration’s references to the FATF or anything smacking of coordination with the West.

And while de-dollarization was again bandied about, BRICS countries remain keen on access to offshore dollars. Moreover, several of the bloc’s newly admitted states have deeply problematic records when it comes to money laundering and illicit financial flows. This is especially true of the UAE — an aggressively growing offshore financial center with dense layers of secrecy, and which the FATF placed on its “grey list” due to “strategic deficiencies” in its efforts to counter money laundering.

Given all this, what are the chances of BRICS-initiated reform in this area? Realistically, the only reason they would take action is because they care about their own regime stability. Though offshore mechanisms may seem like useful short-term levers, their long-term impact is likely to have troubling consequences for their economies. In time, offshore finance supercharges inequality and begets financial instability, which can lead to the toppling of regimes. Brazil experienced this first-hand in the 1982 financial crisis, which had a significant offshore component.

Of course, Russia’s dependence on offshore financial facilities to circumvent sanctions means it can be written off as reformer. But one would hope that some of the others might belatedly come to see an enlightened self-interest in going beyond their rhetoric.

For now, however, even this seems highly unlikely as, in the immediate future, the availability of offshore services continues to come in handy, while their negative impact on domestic inequality remain largely hidden from public view.

Besides, fighting domestic inequality isn’t really a major concern for many of these governments anyway.



Source link

#BRICS #hypocrisy #offshore #reform

West must move faster to prevent a catastrophe in northern Syria

Post By Politics , , , , , , , , , , , , , , , , , , , ,

Jamie Dettmer is opinion editor at POLITICO Europe.

On the “treacherous night” of the deadly earthquake that shook northern Syria, Idris Nassan, a Kurdish official living in Raqqa, was startled awake as his apartment swayed.

“My body was trembling, noise filled the place; the building turned into a swing, leaning left and right,” he said.

With his wife and mother in tow, Nassan scrambled down three flights of stairs, joining neighbors who, “like birds fleeing snakes of prey,” made their chaotic exit. The stairwell echoed with the cries and screams of terrified children.

The scenes outside were “beyond endurance,” Nassan said — telling, coming from a man who witnessed the siege of Kobani and the vicious battles between Kurds and the Islamic State militants there. But, he added, the “pain of the earthquake has been “deepened by the failure of others to help.”

Of all the places to be tested by the grinding of tectonic plates, this is one that just didn’t need to suffer more pain and grief.

The Syrians of Idlib and northern Aleppo, many displaced from elsewhere in the war-ravaged country, have endured barbaric conflict, a gruesome descent into hell, for over a decade. They’ve suffered barrel bombs; their hospitals and markets have been targeted; they’ve been starved; and they’ve been preyed upon by the jihadists of Al Qaeda and the Islamic State. Idlib was turned into a large “kill zone” by the Syrian regime of Bashar Assad and his Russian and Iranian backers, as rebels and their families were funneled into the area, corralled like cattle awaiting slaughter.

Adding insult to injury, since 2018, Turkish authorities have been deterring Syrian asylum seekers from crossing the border and declining to register them. Turkey has also mounted unlawful deportations and coerced some to return to northern Syria, while the European Union — fearful of another migration surge — has raised few objections to this breach of the Geneva Convention.

Along the arc of northern Syria, the widespread complaint by Arabs and Kurds alike is that since the defeat of the Islamic State, they’ve been abandoned by the international community. That sense of desertion is now being compounded as they dig mass graves and grapple with the effects of a devastating earthquake.

Since the deadly 7.8-magnitude earthquake flattened towns, destroyed homes and crushed thousands of lives on February 6, the world’s focus has mainly been on Turkey — that’s where Western media and international rescue crews, aid and equipment have been heading.

But across the border, there’s been scant assistance.

Sent into rebel-held Idlib, a member of Mercy Corps, a global humanitarian organization, said, “What sticks in my mind is that some people were standing above the rubble and hearing the voices of their families and relatives a few meters away, but they could not do anything to rescue them due to the lack of equipment and the absence of an international response to help.”

Predictably, Moscow and Beijing haven’t been lagging in their efforts to try to spin the events in Syria. “The sanctions imposed by the US and its allies are hampering relief and rescue work . . . such a humanitarian disaster is not enough to melt the cold-blooded heart of the US,” goaded the Global Times, the English-language mouthpiece of the Chinese Communist Party.

Meanwhile, Russia’s Foreign Ministry spokesperson Maria Zakharova accused the “collective West” of ignoring what’s taking place in northern Syria, blaming the economic sanctions against the Assad government for prolonging suffering.

Of course, these are crocodile tears coming from a Chinese Communist government that’s incarcerated over a million Uyghurs since 2015. It’s also strikingly indecent of Russia to claim sympathy for the north of Syria, where it shunned the laws of war and rehearsed the bombing campaigns and egregious tactics it’s now using in Ukraine.

Nonetheless, one doesn’t have to be a Russian or Chinese propagandist to question the West’s sluggishness in anticipating the scale of the humanitarian crisis unfolding in northern Syria, or in developing an action plan to ease the suffering in Idlib and northern Aleppo.

Last week, EU officials slammed the complaints of neglect coming from northern Syria. “I categorically reject the accusations that EU sanctions may have any impact on humanitarian aid. These sanctions were imposed since 2011 in response to the violent repression of the Syrian regime against its own civilian population, including the use of chemical weapons,” European Commissioner for Crisis Management Janez Lenarčič told reporters. “There is nothing there that would hamper the delivery of humanitarian aid and emergency assistance, especially not in the situation in which Syrian people find themselves after this terrible earthquake,” he added.

The EU says it’ll provide additional emergency support to both Turkey and Syria, and emergency humanitarian assistance worth €6.5 million. But officials say the bloc will also require safeguards to ensure aid effectively reaches those in need and isn’t misused by the Assad government — something that’s plagued humanitarian assistance in the past.

Indeed, funneling aid into northern Syria is fraught with logistical and political nightmares. Idlib is controlled by a variety of feuding rebel groups, with a large part held by Hayat Tahrir al-Sham (HTS), an Islamist militant group that’s been designated as a terrorist organization by the U.S. and, much like the Assad government, has been accused of manipulating international aid.

Additionally, of the five border crossings from Turkey into northern Syria, only one has been authorized by Turkish authorities to handle humanitarian aid — although Ankara has now said it’s considering reopening more crossings to allow aid into both opposition-held and Assad-controlled areas.

But time is of the essence, and the scale of the crisis unfolding requires a momentous step change.

Mercy Corps reports that there aren’t enough structural engineers in northern Syria to inspect buildings, and even small aftershocks risk further collapse. There’s also very little coordination on the ground, with extremely limited information available on shelter options for survivors.

Fuel for heating and cooking is becoming a major challenge as well. “There is limited availability, and what is available is of poor quality and very expensive. People are burning trash to stay warm, and aid deliveries will be dependent on consistent access to fuel for trucks,” said Mercy Corps. Meanwhile, food is hard to procure, prices are skyrocketing, and access to clean drinking water is becoming a critical problem, with assessment teams worried about pollutants leaking into water sources.

On Friday, the United Nations warned that over 5 million Syrians may be left homeless after the earthquake. “That is a huge number and comes to a population already suffering mass displacement,” said Sivanka Dhanapala, the Syria representative of the U.N. High Commissioner for Refugees.

Thankfully, in the past few days, 20 U.N. aid trucks have crossed into rebel-held areas, but most were carrying pre-planned provisions that had been delayed due to the earthquake. And on Friday, the U.N. announced it was releasing an additional $25 million in emergency funding for Syria, bringing the total to $50 million so far.

However, NGO assessment workers say this is far short of what’s needed — and they argue that Western powers will have to rethink the sanctions regime.

While humanitarian aid isn’t barred by Western sanctions, there are plenty of other things desperately needed in northern Syria that are, including fuel and construction equipment critical to rescue efforts, to prop up battered buildings and to rebuild, so the displaced aren’t left to shelter in tents.

The United States has moved faster than the EU in recognizing that sanctions risk impeding quake assistance, issuing a six-month waiver for all transactions related to providing disaster relief to Syria.

 Navigating the political dilemmas all this will bring — getting in front of Assad exploiting the earthquake to force a normalization of relations, getting Turkey to coordinate with the Kurds of northern Syria, and dealing with HTS and the other feuding rebel groups — is undoubtedly going to be a tall order.

Aside from the imperatives of compassion, a slow and inadequate Western response will also feed into African and Middle Eastern countries’ perception — kindled by Moscow and Beijing — that Western powers only pay attention to them when they want or need something.

And if these challenges aren’t confronted, the immediate humanitarian crisis risks turning into a catastrophe.



Source link

#West #move #faster #prevent #catastrophe #northern #Syria