Tag Archives: panama papers

Ukraine

As Yatsenyuk throws in the towel, a grim future for Ukraine

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If it weren’t possible to be more pessimistic about the future of Ukraine and its economy, Arseniy Yatsenyuk’s sudden resignation on Sunday is reason to be even more glum. (Facebook)

No one believes more in the possibility of a post-crisis and prosperous Ukraine than Arseniy Yatsenyuk, the country’s prime minister and, too often, its chief punching bag.Ukraine Flag Icon

Never beloved, even among the pro-European Ukrainians who live in the country’s western regions and who resent Russian interference within their borders, Yatsenyuk’s goal since the fall of former president Viktor Yanukovych, an ally of Russian president Vladimir Putin, has been rightsizing an economy that’s underperformed even by standards of the region, with growth rates dwarfed by authoritarian Belarus, a Russian ally that’s retained Soviet institutions.

Facing few good options, Yatsenyuk simply gave up, hoping that, perhaps, the resignation of Ukraine’s last ‘true believer’ might shake loose enough support for the economic reforms that Ukraine desperately needs to continue its financial lifeline from the International Monetary Fund. Ironically, though Yatsenyuk has personally advocated liberalizing reforms and anti-corruption measures for years, his government is now seen as incapable of delivering reforms and as incorrigibly corrupt.

Yatsenyuk must now know how former Indian prime minister Manmohan Singh surely felt after a decade in office (if not quite in power).

It’s not even the first time the pressured premier resigned. His resignation in July 2014 paved the way for fresh parliamentary elections in October 2014 that restored a majority for a pro-western, pro-European government that was ultimately headed by Yatsenyuk. Continue reading As Yatsenyuk throws in the towel, a grim future for Ukraine →

Iceland

Iceland’s Pirate Party stands to gain from Panama Papers mess

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Birgitta Jonsdottir is the leader of the Pirate Party, which now leads polls in Iceland. (Facebook)
Birgitta Jónsdóttir is the leader of the Pirate Party, which now leads polls in Iceland. (Facebook)

In a normal environment, elections would be due in Iceland only in April 2017.Iceland Flag Icon

But after its prime minster, Sigmundur Davíð Gunnlaugsson, suddenly resigned on Tuesday the small Nordic country could be headed to snap elections. If so, the beneficiary is likely to be the new Píratar (the Pirate Party), a protest movement rooted in the values of direct democracy and transparency, that would, if elected, grant Edward Snowden Icelandic citizenship.

It’s a relatively new party formed in 2012 by Birgitta Jónsdóttir, a former Wikileaks official and social activist first elected as an MP in 2009 from the Citizen’s Movement that emerged out of the ashes of Iceland’s banking crisis and reelected as one of three Pirate MPs in 2013. The party is a motley protest group of hacktivists, anarchists and other outsiders. Staunchly in favor of greater privacy for individuals and more transparency in government, the Pirates want to reduce the working week to 35 hours and liberalize drug legislation.

The weekend’s ‘Panama Papers’ leak revealed that the Icelandic prime minister and his wife owned an offshore company, Wintris, with over $4 million in assets. More damning, the company is a creditor to all three Icelandic banks that collapsed in 2008 and 2009. Previously undisclosed, the company’s existence (and its stake in Iceland’s failed banks) amounts to an unpardonable conflict of interest, given the role that Gunnlaugsson’s government has played in sorting out the post-collapse claims from remaining creditors against those three banks. Gunnlaugsson, who took steps to transfer the interest in the offshore company to his wife, never publicly acknowledged that Wintris was, in fact, one of those creditors, even as he campaigned on negotiating a hard line against those creditors.

Gunnlaugsson came to power after the April 2013 elections, in which his economically liberal Framsóknarflokkurinn (Progressive Party) narrowly trailed the more established, center-right Sjálfstæðisflokkurinn (Independence Party), ushering out a left-wing government elected in the aftermath of Iceland’s banking collapse. Continue reading Iceland’s Pirate Party stands to gain from Panama Papers mess →

Panama, United States

No, Bernie wasn’t right about Panama — and offshore havens have little to do with trade

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Even before a bilateral free trade deal with the United States, Panama City was thriving as a center of commerce, banking and shipping in the Caribbean. (Kevin Lees)
Even before a bilateral free trade deal with the United States, Panama City was thriving as a center of commerce, banking and shipping in the Caribbean. (Kevin Lees)

During Barack Obama’s presidential administration, the United States entered into bilateral free trade agreements with not only Panama, but Colombia and South Korea as well.USflagPanama Flag Icon

It might surprise Vermont senator Bernie Sanders, but that didn’t transform Colombia and South Korea offshore tax havens.

Panama, like the British Virgin Islands or a handful of well-known jurisdictions (including Delaware), was known as a top offshore destination for foreign assets well before 2012, when the U.S.-Panama Trade Promotion Agreement took effect. Today, in the aftermath of the jaw-dropping leak of the ‘Panama Papers,’ a 2011 video clip of Sanders, the insurgent candidate for the Democratic presidential nomination, is now going viral.

But it’s far from evidence that Sanders was somehow prescient, and the suggestion that the U.S.-Panama free trade agreement somehow led to Panama’s reputation as a tax haven is disingenuous.

The truth is that offshore jurisdictions have been under siege for years, and the United States has been at the forefront of that fight. It began in earnest in the 1990s, a result of efforts to stymie money laundering related to drug trafficking. But it accelerated to warp speed after the 2001 terrorist attacks in response to concerns about the intricate networks that financed terrorism. Both before and after the aftermath of the global financial crisis in 2008-2009, the Organization for Economic Co-operation and Development took steps to force many of the worst global offenders, named and shamed on its ‘blacklist’ and ‘graylist’ of violators, to weaken their bank secrecy regimes.

That included, perhaps most notably, Switzerland, once the gold standard of secret bank accounts, which agreed to relent its famous standards of bank secrecy in 2009 and 2010. For the record, neither Panama nor the United States signed a more recent effort from 2014 to introduce greater tax transparency. Yet, under the Obama administration, the Foreign Account Tax Compliance Act (FATCA) has put unprecedented burdens on foreign financial institutions in the effort to root out American tax cheats.

Despite the easy meme about Sanders, the U.S.-Panama free trade agreement was always about free trade.

Continue reading No, Bernie wasn’t right about Panama — and offshore havens have little to do with trade →