Given that offshore tax havens are largely located in small, independent states or self-governing territories, it could be assumed that they have little connection to OECD states and major financial centers such as London and New York. This is not the case. The so-called tax havens are in fact part of a much larger network of financial and corporate services that depends on lawyers, accountants, and bankers located in major Western cities. Only one part of the havens’ business actually involves providing lower tax rates to individual foreign account holders.
These techniques originally developed to assist American executives and Belgian dentists, and later multinational corporations, to limit their exposure— sometimes lawfully, sometimes unlawfully—to their respective tax authorities. Today, they’re increasingly deployed to flows of tainted capital from developing countries, helping those funds transit from their home jurisdictions and ultimately to the West.
There are more capital flows into the offshore world from OECD states than from developing countries. The argument of this paper, however, is that while OECD origin capital flows erode the tax base and some of the flows amount to illegal tax evasion, the overall effect of the money coming from developing countries, especially the tainted flows, is more damaging from both an economic and a security perspective.
In other words, the West, with its rule of law and creation of the Western-governed offshore economy, has given corrupt elites in developing countries the tools and capacity to avoid ever establishing the rule of law in their own countries. They are the beneficiaries of the West’s firmly-established rule of law and can leverage that advantage against their own people to ensure that they never benefit from the rule of law themselves. This is the rule of law paradox.
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2018 saw political tides turn in three of Latin America’s largest democracies. These elections also saw deep polarization and distrust in institutions among Brazilians, Mexicans, and Colombians in an information environment ripe with disinformation. And while disinformation and misinformation are nothing new, the spread of false information at alarming rates – facilitated by politicians, non-state actors, or even our own families and friends – are more effective and worrisome than ever. With this trend unlikely to change, how can we detect and combat this borderless phenomenon? What's next in the fight against disinformation?
Disinformation in Democracies: Strengthening Digital Resilience in Latin America, authored by Roberta Braga, Luiza Bandeira, Donara Barojan, Maria Fernanda Pérez Argüello, and Jose Luis Peñarredonda, provides an overview of polarization, automation and disinformation in Latin America, and outlines lessons learned from the region’s 2018 elections. Following a year-long effort in which the Digital Forensic Research Lab and the Adrienne Arsht Latin America Center exposed and explained disinformation around elections in Latin America, the report also lays out multi-stakeholder vision for fostering digital resilience as the world prepares for major elections in 2019 and 2020 in Argentina, the European Union, India, Indonesia the United States and beyond.
This groundbreaking study of the illicit tobacco trade in southern Africa explores how this trade supports organized crime, helps enable official corruption, and erodes state structures. A major feature of South Africa’s, and to a lesser extent Zimbabwe’s, political economy revolves around conflict—overt and covert, violent and non-violent—over who makes the most money from the illicit tobacco trade, who controls that trade, and how the state responds to it. This conflict now takes places in the midst of huge political transitions within the ruling parties of both countries.
The study maps the key dimensions of the illicit cigarette trade in Zimbabwe and South Africa, including the key actors, the pathways of trade and the accompanying ‘modalities’ of criminality, as well as other important dimensions of the illicit cigarette market in southern Africa. It identifies “good-faith actors,” primarily in South Africa, whose positions could be strengthened by policy and technical interventions, explores opportunities for such intervention, and assesses the practical solutions that can be applied to combat illicit trade and tax evasion in the tobacco industry.
Human capital is fleeing Russia. Since President Vladimir Putin’s ascent to the presidency, between 1.6 and 2 million Russians – out of a total population of 145 million – have left for Western democracies. This emigration sped up with Putin’s return as president in 2012, followed by a weakening economy and growing repressions. It soon began to look like a politically driven brain drain, causing increasing concern among Russian and international observers.
In this pioneering study, the Council’s Eurasia Center offers a clear analysis of the Putin Exodus and its implications for Russia and the West. The study, which is authored by Ambassador John Herbst and Dr. Sergei Erofeev, examines the patterns and drivers of Russian emigration to the West since 2000 based on the findings from focused interviews and surveys with new Russian émigrés in four key cities in the United States and Europe.
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The US-Danish relationship has proven itself remarkably flexible and effective throughout the post-Cold War era, and it is once again on the cusp of evolution with new challenges and opportunities. In the midst of the ongoing debate among NATO allies about burden-sharing, Denmark has consistently punched above its weight, contributing substantially to collective defense for a small country.
Indeed, at the start of 2019, the Danish government released a supplemental defense agreement committing Denmark to increase defense spending to 1.5 percent of GDP by 2023. The agreement demonstrates Denmark’s continued aspiration to contribute to the NATO Alliance and provides a needed influx of resources for defense and deterrence. These developments have the potential to profoundly affect a deep but often overlooked security relationship—that between the United States and Denmark.
North Central Europe has become the central point of confrontation between the West and a revisionist Russia. Under President Vladimir Putin, Russia is determined to roll back the post-Cold War settlement and undermine the rules-based order that has kept Europe secure since the end of World War II. Moscow’s invasion and continued occupation of Georgian and Ukrainian territories, its military build-up in Russia’s Western Military District and Kaliningrad, and its “hybrid” warfare against Western societies have heightened instability in the region have made collective defense and deterrence an urgent mission for the United States and NATO.
The United States and NATO have taken significant steps since 2014 to enhance their force posture and respond to provocative Russian behavior. Despite these efforts, the allies in North Central Europe face a formidable and evolving adversary, and it is unlikely that Russian efforts to threaten and intimidate these nations will end in the near term. Now, ahead of NATO’s seventieth anniversary there is more that can be done to enhance the Alliance’s deterrence posture in the region. Against this backdrop, the government of Poland submitted a proposal earlier this year offering $2 billion to support a permanent US base in the country. While negotiations are ongoing, the issue is fundamentally about what the United States and NATO need to do to defend all of Europe.
One word will define 2019 for Latin America (and the world): uncertainty.
Three new presidents in the region’s largest countries have jumpstarted their agendas. Juan Guaidó has assumed the interim presidency in Venezuela.
The USMCA awaits next steps in Congress. China continues to increase its regional economic footprint. And Central American migration continues, as push factors remain.
But one trend is certain: what happens in the Americas will increasingly have global ramifications.
Check out what the Adrienne Arsht Latin America Center is watching for 2019 and where we will lean in.
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In global discussions over climate change and the policy interventions needed to address it, the role of land use – including forests – is often overlooked. Given its unique role as both a potential source of emissions – as well as storage – for carbon, the land use sector may play a crucial role in the world’s success or failure in avoiding dangerous levels of climate change over this century. Nowhere is the pivotal role of land use more apparent than in tropical forests, which have gone from serving as sinks for global carbon emissions to being a source of them amid rampant deforestation. Southeast Asia has witnessed some of the world’s most significant tropical deforestation over the past several decades, and is currently a significant contributor to the roughly eight percent of total global greenhouse gas emissions that tropical deforestation represents.
In a new paper, “Does Money Grow on Trees?: Restoration Financing in Southeast Asia,” authors Prajwal Baral, Mikkel Larsen, and Matthew Archer provide a compelling analysis of the current state of tropical deforestation in Southeast Asia, including its drivers, extant efforts to mitigate it, barriers to effective reforestation finance, and possible new policy and market tools that could finally tip economic incentives towards reforestation rather than deforestation.
Read the full analysis on Medium.
Read the full analysis on FGV.