Hanging sword of FATF
THE latest report issued by the Asia Pacific Group (APG)on Money Laundering indicates that the Group has improved Pakistan’s rating on four more of the 40 technical recommendations of the Financial Action Task Force (FATF) against money laundering and terror financing (AML/CFT) but retained the country on ‘Enhanced Follow up’ to meet the outstanding requirements.
Most of the APG report is so dense and opaque that one fails understand whether one is coming or going.
The same goes for the welcoming sentiments expressed by the finance ministry and the head of FATF task force Hammad Azhar.
Meanwhile, the sword of Financial Action Task Force (FATF) continues to hang over the head of Pakistan, not because Islamabad has not been bending backwards to comply with all the conditions of the Task Force but because the US and Europe continue to refuse to close their own respective kleptocratic shops.
And the other, perhaps a more cogent reason could be a desire on the part of countries like the US and India—members of the Group— to blackmail Pakistan into going slow on the Beijing sponsored China-Pakistan Economic Corridor (CPEC), and also to force Islamabad not to make much of a noise over the on- going fast-paced process of amalgamation of Indian Occupied Kashmir (IOK) into the Indian Union as also to get Islamabad’s armed support in forcing the Afghan Taliban to comply with Washington’s dictations.
The truth is, most of the developed countries, the richer ones especially are financially so corrupt that they would all miserably fail to pass the FATF criteria if applied to their respective financial systems.
It is because of their open houses of corruption that these countries maintain that the estimates of the cost of corruption to the global economy now ranges from $1 trillion to $2.6 trillion annually, much of it coming from the developing world.
If even a fraction of that money were caught and kept in the country of origin each year by anti-corruption efforts, it would far outstrip the global development assistance spending, which in 2018 hit almost $166 billion worldwide.
Indeed, massive corruption has been the major foundational basis of prosperity of the first world as robber barons and carpet baggers of this world looted and plundered the third world for centuries.
They are still plundering the developing countries and are likely to continue committing the crime for ages to come using what the global economic hegemony call the ‘rules of the game’ set by themselves.
Corruption is not being attempted to be condoned here but one cannot escape the history of wealth creation as such.
Here is a glimpse of this history in the words of Shashi Tharoor, the author of the book An Era of Darkness: “At the beginning of eighteenth century, as the British economic historian Angus Maddison has demonstrated, India’s share of the world economy was 23 per cent, as large as all of Europe put together.
(It had been 27 per cent in 1700, when Mughal Emperor Aurangzeb’s treasury raked in 100 million pounds sterling in tax revenue alone).
By the time British departed India, it had dropped to just over 3 per cent. The reason was simple: India was governed for the benefit of Britain whose rise for the subsequent 200 years was financed by its depredations in India.”
And here is how the rich now violate the rules of the game they themselves keep setting via the institutions that they have created like the World Bank, the IMF, the Asian Development Bank, the World Trade Organization etc.
based on principles of what is called the Washington Consensus: Recalling the promise world’s richest countries made on 24 October 1970 through a landmark UN resolution to give a small percentage of their income annually – just 0.7% – in international aid to poor countries, Chema Vera, Interim Executive Director of Oxfam International estimates that had all donor countries kept their promise they would have donated, over the last 50 years, an extra $5.7 trillion to the recipients.
Since they did not, therefore, by Mr. Vera’s logic the rich donor countries owe the world’s poor recipients as much (The world’s poorest people are owed $5.7 trillion, published in World Economic Forum’s Newsletter dated 03 Nov 2020).
“This is not largesse. It is not charity,” says Mr. Vera but a duty and an obligation, “if only in a small way, towards making up for the colonial exploitation of the developing world by wealthy nations.”
Too many rich nations continue to fail to meet the target they have set for themselves. Last year, members of the OECD club of rich nations contributed on average just 0.3% of their gross national income (GNI) to the aid fund.
In 2019, over a third of that amount ($55 billion) was in fact paid back to wealthy nations in debt repayments by countries in sub-Saharan Africa alone – a harsh reminder of aglobal economic system rigged in favor of the richest nations and richest people.
Not content with what they have already captured from the developing countries over centuries these rich countries of the first world have established as many as 55 0ff shore sites to enable their traders as well as their so-called multinational companies to shift their profits to tax havens to continue robbing the developing countries of their legitimate taxes.
Here is the list of off- shore sites the developed world owns: Andorra, Anguilla, Antigua and Aruba, Bahamas, Bahrain, Barbados, Belize, Bermuda, British Virgin, Cayman Islands, Cook Islands, Costa Rica, Cyprus, Djibouti, Dominica, Gibraltar, Grenada, Guernsey, Hong Kong, Ireland, Isle of Man, Jersey, Jordan, Lebanon, Liberia, Liechtenstein, Luxembourg, Macao, Maldives, Malta, Marshall Islands, Mauritius, Micronesia, Monaco, Montserrat, Nauru, Netherlands, Antilles, Niue, Panama, Samoa, San Marino, Seychelles, Singapore, St. Kitts and Nevis, St. Lucia, St. Martin, St. Vincent and the Grenadines, Switzerland, Taiwan, Tonga, Turks and Caicos, Vanuatu. T
he U.S. has such dedicated entities in Delaware and Puerto Rico and similar to the U.S., Germany can be included on lists for its tax secrecy, per the Financial Secrecy Index.
The United States continues to allow for the creation of anonymous shell companies, the likes of which have enabled human trafficking, terrorism, and sanctions evasion.
At present, more stringent identity checks are required to obtain a library card in the US than to open a shell company in that country.
As well, the rich world over half a century or so has been siphoning off annually even what little the developing countries earn selling cheap their natural endowments, agricultural produce and mining extracts like oil and precious and non-precious metals by offering them in return at exorbitant prices weapons which they do not need.
The Stockholm International Peace Research Institute (SIPRI) estimated military expenditures as of 2018 at $1822 billion.
The combined arms-sales of the top 100 largest arms-producing companies and military services companies (excluding China) totalled $420 billion in 2018, according to SIPRI.
The five largest exporters in 2014–18 were the United States, Russia, France, Germany and China whilst the five biggest importers were Saudi Arabia, India, Egypt, Australia and Algeria.
— The writer is veteran journalist and a former editor based in Islamabad.
