Sunday
(0)Just over a decade ago, the US and the EU conspired to conduct what has proved to be a very successful war against low-tax jurisdictions and banking secrecy. Under a fig-leaf of a campaign to eradicate 'drug-dealing' and 'terrorism' (but truthfully to maintain the integrity of their various state-welfare arranagements) they employed a combination of legislation, diplomacy and outright bullying to effectively hobble (and, in some cases, shut down) the Western offshore-investment industry.
As expected, the EU went further in this war than the US where the 'anti-money laundering' regime metastasised into a ludicrous campaign against what they called 'unfair tax competition'.
Well, now the chicks are coming home to roost. Or, more accurately, they are flying the nest:
The world's major private banks are beefing up operations in Singapore, anticipating that up to a trillion US dollars worth of offshore assets in Europe may be looking for a new home in the next couple of years.Changes in banking secrecy and tax laws due to take effect in the European Union from 2005 are expected to encourage offshore investors in traditional havens like Switzerland and Luxembourg to start moving their money to other centres.
Singapore, with its stable political system and excellent infrastructure, is seen getting a big share of this money.
"We have estimated that from Europe about a trillion plus could be highly movable without too much difficulty," said Roman Scott, vice-president at the Boston Consulting Group (BCG). "Some of those guys are going to say; 'I need an offshore centre that's not going to be squeezed down'.
All the European places are being squeezed. You can't go into the US, so you suddenly start to look at Asia as attractive," he said.
Western political elites are rather like heroin-addicts. No amount of argument, persuasion or reason will do anything to deter them from their narcotic fix.
Lessons generally have to be learned the hard way.
[My thanks to Dr.Chris Tame who posted this article to the Libertarian Alliance Forum.]
As the old saying goes "The easiest things to move out of a country are money, and the people who have them".
Posted by Bigfire at August 24, 2003 04:18 AM
The reason addicts won't give up their fix is that they are in pain.
Sounds like the EU has the same problem.
Posted by M. Simon at August 24, 2003 10:50 AM
David:
What makes you think the same thing won't happen to Singapore that happened to the other off-shore jurisdictions?
After all, if Switzerland can be "persuaded" to stop "unfair" competition, surely Singapore can also be "persuaded" ?
Posted by Cydonia at August 24, 2003 12:57 PM
Switzerland has a totaly different culture, economy, and strategic location. It would be a whole lot easier for Singapore to tell the EU to go stuff itself.
Posted by Julian Morrison at August 24, 2003 09:42 PM
Cydonia,
No guarantees of course, but I think Julian is correct. The EU method of enforcement against countries that are relcutant to toe the line is to wield the threat of trade sanctions. Switzerland, despite all its proud independence, is critically vulnerable in this regard as I believe most of its trade is with EU countries such as France, Italy etc.
However, I believe a great deal of Singaporean trade is with countries like Malaysia, China, Indonesia, India, Japan, Australia etc. So, as Julian says, they are in a much stronger position and can tell Brussels to go stuff themselves.
Posted by David Carr at August 24, 2003 11:43 PM
