After groundbreaking revelations of Panama papers and other documents pointing to tax-evasion efforts of the global elite, another new revelations namely pandora papers has surfaced raising furore about the secret wealth of the global financial elite, leaders and public officials of numerous countries. This revelations indicate an evident trend among the elite across countries to shield their illicit wealth from the probing eyes of authorities and also discloses a big shady financial affairs to which the general mass had been conveniently kept unaware of.
The Pandora Papers has been revealed by the International Consortium of Investigative Journalists(ICIJ) which involved 600 journalists from 150 media outlets in 117 countries. The dump of more than 11.9 million records, tantamount about 2.94 terabytes of data, came five years following the “Panama Papers” that revealed how money was concealed by the wealthy in ways that law enforcement agencies could not detect. The agency leaked files from 14 offshore service providers which has connection with more than 330 public officials, including 35 world leaders underscoring the disproportionate representation of governance elite in the list.
The offshore financing has become a increasingly ploy of the transnational elite as this provide them with tool to conceal their identity and also give them the window to utilize their ill-gotten illicit money to invest. The process of such financing is complex. Especially, financing in a foreign country is operated through a legal process where a tax-compliant individual of any country have to abide by the due procedures in order to invest his money in another country .However, corruption run rampant among the public officials and the leaders of many countries which put them at a disadvantaged position in utilizing their money. Therefore, they often take resort to devious methods in order to make their financial investments in a foreign country discreet from the responsible authorities .
Against this backdrop, a new clandestine economy has taken shape to cater to the demand of the offshore financing. This economy hinges on the countries where the tax regulation are often lax and where the authorities doesn’t impose stringent financial conditionalities with regards to financing and other economic activities. A group of unscrupulous transnational individual exploit these loopholes in those countries and abet with the errant individuals to conceal their wealth and identity and thereby act as an accomplice in illicit financial gains and tax-evasion.
Although these illicit affairs prevailed since 1970,it was not until the revelation of Panama papers when these outlawed activities had been divulged to the public and had evoked considerable uproar among the citizens. The backlash following the revelation panama paper was such that it had led to toppling of political leaders of different countries most prominently Nawaz Sharif in Pakistan. These revelations therefore, facilitate the accountability of errant elite of the countries and also make general people cognizant of the illicit activities of their officials and leaders. Besides, these revelations also dissuade the potential rowdy activities by the elite as they are fearful of such revelation and prospective reputational risks.
While the whole world is grappling with a crippling pandemic due to a appalling lack of resources to combat the virus ,such revelations is worrisome as it points a grave injustice to general people who are dispossessed of the basic necessities and services. Revenue is one of the fundamental sources of government earning. Often, revenue is commensurate with the earning of the individual which facilitates in the fairness and equitability of the revenue system. Besides, the revenue process also ensure the accountability of earning and investigate the legality of earning of individual. Therefore, money earned from shady sources through corruption and outright embezzlement can’t be utilized domestically. This prompts the unprincipled elite to evade tax and other liabilities and funnel to foreign tax havens .However, these activities inflict severe damages to domestic economy due to two reasons. Firstly, when a person can channel money transnationally to such havens are motivated in future to engage incremental corrupt activities to make more financial fortune. This, propels incentivizes increasing corruption which is detrimental to the economy and society of a country. Secondly, this activities also translate to tax-evasion dispossessing the citizens of the benefits of the revenue and thereby deteriorating government spending in areas of health, education and other indispensable services which makes people susceptible to the any shock such as epidemics as has been blatantly revealed by the Covid-19 pandemic. Moreover, such transnational financial activities isn’t innocuous rather it involves far-reaching socio-economic consequences.
What’s more appalling is the fact that the people embroiled in these activities are the very people entrusted with advocating public interest and shielding people from the adversities. Therefore, their involvement in such nefarious activities, as has been revealed by the Pandora’s Papers that features the public officials and political leaders, is indicative of a deep predicament of governance in these countries. Besides, these revelations also unmask the feigned benevolence of the country’s elites.
A state is a social contract which is devised and driven by a reinforcing social contract between state and the individual. State is represented by its institutions and its apparatuses while citizen binds himself with the state through providing allegiance to the state in exchange of a proportionate guarantee from the state about safety and guarantee from the state. Revenue serves as a fundamental mechanism by which state ensure accountability, undertake redistributive activities, ensure different essential services. Therefore, revenue ensure fundamental rights of the citizens of the state .However, when the powerful and wealthy quarters of the state engage in corrupt dealings and deliberately evade the revenue system, it inflicts a severe harm to the general people as they are deprived of the basic services. Therefore, such instances of tax evasion and shady activities revealed by the Pandora box points to a steady erosion of the social contract between the state and the individual. Besides, this affair is also indicative of emergence of greedy transnational elite who are free of accountability from their government and coordinate transnationally to accumulate greater wealth and their shady activities transcend the borders of state.
While any connection of any Bangladeshi citizen in the leaked documents is yet to be ascertained, it is however indubitable that there are numerous Bangladeshi elite predominantly civil servants who are actively linked with similar kind of nefarious money-laundering activities. In Bangladesh, corruption is unbridled as there is sheer lack of accountability and oversight of the activities of public officials. While government has launched numerous attempts at whitening the black money, there is however still considerable undocumented wealth own by country’s rowdy elite. Therefore, they exploit the opportunities of illicit transfer of the money to the countries where regulation are lax. This money ,however, represents embezzlement of public funds and corruption. This facts aren’t conjectural anymore as the existence of Begum Para has adequately shed light on the contours of transnational capital flight from Bangladesh.
Moreover, the revelations of Pandora Papers unravels the shady business activities of transnational elites who operate across nations and funnel their money to the tax havens where the regulations are often lax. While the developments has elicited enormous public furore for the dramatic effect, it however points to grim situation of governance marked by corruption, greediness and lack of accountability by public authorities who are ironically entrusted with the responsibility to safeguard public interest. Therefore, these shady activities inflict a severe damage on the state’s revenue and erode state’s resources in rendering services to its citizens. Against this backdrop, these revelations contributes to good governance by disclosing the illegal activities and also by subjecting elite activities to public criticism. Moreover, these revelations also underscore a pressing need of a transnational infrastructure to coordinate global governance efforts in order stem the tide of off-shore financing.
Another Look at the Prospects of a Eurasian Digital Platform
In view of the idiosyncratic features of Eurasia with respect to the gravity of distance, a common Eurasian platform for digital economic agreements may allow the region to attenuate the effects of distance and severe economic fragmentation — most notably in the regulatory sphere — emanating from the sheer size of Eurasia and the multiplicity of regional integration arrangements. By consolidating regional, bilateral, as well as corporate alliances, a common Eurasian digital platform would allow its members to introduce greater consistency and compatibility into the existing set of digital economic agreements, thus providing the conditions for multilateralising existing digital arrangements and for creating new digital economic accords.
One of the ways to create a digital “platform of platforms” for Eurasia that is to include platforms for regional integration arrangements, regional development banks and regional financing arrangements (RFAs) of the countries of Eurasia.
- The platform for regional integration arrangements would work towards advancing greater inter-operability into the digital platforms of Eurasia’s regional groupings such as the EU, the EAEU, ASEAN, RCEP, EFTA, BIMSTEC, SAFTA, GCC.
- The platform for regional development banks and funds such as EDB, EIB, ADB, EBRD, SDF, CAF would focus on building project portfolios in the area of digital cooperation/digital connectivity/digital inclusiveness and work to advance digital economic agreements (DEAs) on the basis of the existing digital arrangements concluded by countries such as Singapore.
- The platform for regional financing arrangements (ESM, EFSD, Chiang Mai Initiative Multilateralization, Arab Monetary Fund) would focus on the coordination of anti-crisis measures, the creation of ex-ante anti-crisis response mechanisms based on the use of “big data” and forward looking indicators obtained through digital cooperation and data exchange.
These three platforms can reinforce one another and can be further complemented by country-level and corporate-level platforms to form a Eurasian ecosystem of digital cooperation and inter-operability.
Such a Eurasian “platform of platforms” is:
- Digital: it advances digital cooperation, including digital trade at the level of countries and regions
- Regional: it places particular emphasis on building cooperation in areas that have hitherto lacked coordination, namely among regional integration arrangements and their development institutions
- Scalable: it can be replicated in other parts of the world as well as at the global level via creating a regional layer of global governance
The current economic framework in Eurasia is fragmented and lacks the digital connectivity that would be predicated on cross-country and cross-regional digital agreements. This in turn limits the capability of countries to coordinate policies in areas such as trade, migration, digital economy development. A common platform would address the issue of the “digital gap” across the countries of Eurasia via promoting greater “digital inclusivity”, most notably with respect to the low-income developing economies. Such a common digital platform for Eurasia may prove to be particularly important for land-locked developing countries that face notable geographical/logistic barriers to trade.
Indeed, of all of the different parts of the global economy Eurasia stands to benefit the most from greater digital connectivity and inclusivity, given the prominence of the “distance factor” that constrains the intensity of economic cooperation within the region. The gravity of distance is particularly costly for Eurasia’s land-locked economies — in fact Eurasia harbours 26 out of 44 (59%) of all of the world’s landlocked countries. Moreover, the scale of “inwardness” of some of the regions of Eurasia in terms of geographical location is truly unique, whereby Kazakhstan is the largest landlocked country in the world, while Bishkek is the farthest capital city from the coast in the world (all top-5 of the most distant capitals from the sea coast in the world are in Asia).
Existing research suggests that digital platforms may exert a sizeable effect in reducing the gravity of distance: as noted by Pierre-Louis Vézina, “distance between countries impedes international trade, but it matters 65% less for trade on the eBay platform than for traditional offline trade… The online world is flatter”. Yet another study focusing on the EU evaluated the importance of distance for e-commerce. This study of 721 regions in five countries of the European Union shows that while distance is not “dead” in e-commerce, there is evidence that express delivery in e-commerce reduces distance for cross-border demand.
Ways of measuring the effectiveness of a common platform would include the scale of liberalization and trade facilitation in digital trade across the Eurasian platform; increases in the size of the portfolio of joint investment projects related to the digital economy on the part of the region’s development institutions, increases in cross-border and cross-regional trade and investment associated with the digital economy. The number of multilateral digital economic agreements (DEAs) facilitated by the platform would be a measure of the contribution of the initiative to multilateralism. Another important metric is increases in connectivity arising from the creation of the platform — this would concern increases in digital connectivity/inclusivity, most notably in developing economies.
A common digital platform in Eurasia will serve to improve coordination across countries as well as regional integration arrangements and their development institutions. It will also serve to transform the landscape of trade agreements by facilitating the conclusion of digital economic agreements and multilateralising existing digital accords. The common platform will also advance international cooperation in the digital sphere and other areas pertaining to the Fourth Industrial Revolution to strengthen the response to the Covid pandemic and improve the region’s capabilities in the health care sphere as well as other areas pertaining to the development of human capital. A more cooperative framework for Eurasia that aims to emulate best practices and standards across the platform will also be conducive to longer-term cooperation, a more active use of ESG standards and greater emphasis placed on economic sustainability.
The creation of the Eurasian digital platform may be a step towards building a global network of cooperation on the basis of a “bottom-up” plurilateral cooperation among regional blocs rather than a “top-down” framework devised at the global level. Such an approach conforms with the principles contained in the WEF’s White paper on Globalization 4.0 that advocates the use of flexible plurilateral trade agreements as a way of further advancing trade openness in key areas, including in digital trade and e-commerce: “open plurilateral agreements of this nature are the most promising way available to update the trade rulebook without further fragmenting the world economy and weakening its crucial multilateral foundation”.
The formation of an open digital platform for Eurasia renders it amenable to replication at the level of not only regional arrangements, but also at the level of country-to-country cooperation as well as multilateral corporate platforms. An important aspect of the operation of such a platform is the principle of openness and inclusivity — whereby developing countries benefit from greater “digital inclusion” and the possibility to join digital alliances with advanced economies across Eurasia. In this way, the operation of such a platform contributes to a more sustainable and balanced economic paradigm across Eurasia.
From our partner RIAC
Future of the Chambers of Commerce of the World
New world has already emerged; the global populace on economic fronts, now thinks and demands differently, smart are the nations cognizant of such tectonic shifts, adjusting post pandemic recovery and tabling new economic models. All over the world, some 10,000 plus Chamber of Commerce with some 45 million members represents a big slice of such global economics in post pandemic fights. Today, in metamorphosis, if each such chamber as a local pillar within a city needs to be on digital platforms of upskilling and exportability to enable displaying their individual members on the global stage and engaging marketplaces with updated skills will boost local global trades. Such narratives are no longer rocket sciences but as existing realities since last decade as necessary tools to survive in a digitized world. What are the challenges of such transformations? Hence awaits a bright future for the Chamber of Commerce of the world.
There is no business like small business; no further proof required as almost all economies of the world have now accepted small and midsize business as top of the agenda. Economic development teams have now understood that any uplift, upskilling, reskilling, unskilling of SME+MFG on AI+AV+VR platforms will only save national economies. On the National Mobilization of Entrepreneurialism Protocols already tabled by Expothon Worldwide, study more on Google, where the local chambers can enjoy an excellent opportunity to lead on such fronts. Critical mind shifts are essential, as new attitudes needed with an entrepreneurial mindset for such deployments.
Emergence of new business math: A $1000, investment in technology buys digital solutions, which were million dollars, a decade ago. Today, a $1000 investment buys on global-age upskilling on export expansion that were million dollars a decade ago. Today, a $1000 investment on virtual-events buys what took a year and cost a million dollars a decade ago. Today, any micro-small-medium-enterprise capable of remote working models can save 80% of office and bureaucratic costs and suddenly operate like a mini-multi-national with little or no additional costs. What opportunities all this creates for 10,000 chambers of the world and how can they shine with their 45 million membership on various platforms and uplift the local economic base? How such events tabled, planned and executed and what will it take to start the process, on a systematic basis on which there are starting points.
Now is the time for national mobilization of entrepreneurialism on digital platforms of upskilling for exportability, for some 200 nations and 10,000 cities. Imagine if chambers in selected nations mobilized 1K to 5K SME for digital platforms for rapid-fire upskilling of exporters and reskilling of micro and small-medium manufactures to quadruple productivity, performance and profitability leading to additional new jobs creations. This is like a Marshall Plan but in reality more like a turnkey digital platform economy maneuver seeking right and authoritative leadership. Imagine if doubling or quadrupling productivity created dozens of new jobs, this would add 100s of million new jobs in 1-2 years. Maybe not the best jobs but surely secure local grassroots prosperity. The new global vision of the chamber waits for massive digitalization and mind shift change to optimize such global power play.
Facing tribulations; when everything is upside down, every business model on its knees, every effort futile where human endurance is always on real test, the outside world now morphed into unrecognizable formats. This is not dystopia; this is a new world.
Creating triangulations; when strange combinations create brand new landscapes, when accidental triangulations germinate new powerful new solutions, innovative excellence takes over and entrepreneurialism becomes a super driver.
Awaiting transformations; when such new frontiers transform our ideas and accidents into real actions lifting us to the upper stratosphere, when superior critical thinking and complex problem solving finds new paths to lead forward, we embrace new normalcy.
New global opportunities bring highly value added solutions to the local memberships of each chamber. The “Work + Office + Health + Money + Politics + Globalization” suddenly, all morphed into one gigantic blob of global calamity, forcing new challenges, creating new thinking and getting the world on brand new combinations of growth tracks. Now is the time for trade groups to come together, Local Department and Agencies, Trade Associations and Chambers across the world must unite in global narratives in participating on various aspects to boost their own local presence and their own memberships across the board. The challenge is open-mindedness to cope with SME + MFG +EXPORTS +PRODUCTIVITY + PERFORMANCE + PROFITABILITY + PLATFORM +ECONOMY aspects of expanding enterprises.
The new Trends: the global loss of credibility of institutions and distrust of political leadership will now open new narratives, new debates and bold new thinking. Absence of leadership will dispose of political correctness and seek disruption of political abuse. Almost every century there are such clashes of ideologies and strikingly humankind always survives no matter how battered. The game is about recognizing and defining values and understanding the global age of expanding diversity. Observe how new mindsets appear, how they shift, progress and advance. Therefore, becoming a lifelong learning student is not only a great start but also a safeguard from public hysteria. Without upskilling on global age platforms, the future is dark for economic development.
Next year this time, our world would have moved forward at much faster paces, but all due to almost free technologies. Those with mastery of national mobilization will have distinct advantages. By design nouveau-revolutionary, by style mobilization-centric, and by action deployment-ready, by results transformational; this economic-friendly thought leadership is a pragmatic approach to shake down lingering slowdown on global exportability and challenges midsize business economic management nation by nation across the world and offers immediately deployable solutions. Platform economy allows such mobilizations; global-age provides the right battlefields. Mostly, not dependent on new funding, rather deployment craved and execution starved. New mindsets urgently needed. The future is knocking; open the doors
The rest is easy
Dostoevsky’s Economic Cycles
The prophecy should come true, but I will not explain it. Then in due time it will be remembered and recovered. He who has ears to hear, let him hear. –F. M. Dostoevsky
In November 2021, the world celebrates the 200th anniversary of the birth of the great Russian writer Fyodor Mikhailovich Dostoevsky. For me, as a Russian economist, a real discovery and revelation was the economic article written by Fyodor Mikhailovich in “A Writer’s Diary”, which was in fact one of Dostoevsky’s last articles on the ways Russia was developing. In this article, Dostoevsky largely anticipates such key topics for the Russian economy as the “turn to the East”, the prioritisation of long-term development guidelines (as an argument in favour of the creation of the Stabilisation Fund in our time), the fight against bureaucracy, the importance of public confidence in the economic policy of the authorities, and much more. Dostoevsky’s economic legacy can serve in our time as a kind of a moral compass for Russian economic policy.
In the context of Russia’s experience in the 1990s as well as the current crisis of the global economic system, which is overly focused on achieving short-term benefits/results, Dostoevsky’s arguments in favour of reorienting economic policy from short-term to long-term guidelines are very relevant: “What if we are at least halfway able to force ourselves to forget about the current situation and direct our attention to something completely different, into a certain depth, into which, in truth, we had never looked, because we were looking for the depth on the surface?” But Dostoevsky is ready to soften his formula, and “here is what I will propose instead; not half to forget about the current one – I refuse half of it – but only one-twentieth”.
As Dostoevsky notes, the reorientation of funds to the most important long-term tasks can become a guarantee of achieving key targets for long-term development, despite short-term obstacles and difficulties: “re-focussing attention away from the current issues in the amount of at least one-twentieth part annually, on something else, then the matter will seem almost not fantastic, but quite even possible to start”.
Dostoevsky associates such a redistribution of budgetary funds for long-term development with what he calls “healing the roots”, which in the budgetary sphere of today we could associate with our “National Projects” designed to develop Russia’s “human capital”.
As a result, we can say that Dostoevsky formulated a kind of a budget rule, that largely anticipates the principles of the modern fiscal rule and our Stabilisation Fund (National Welfare Fund): “My thought, my formula is the following: a state that has experienced the well-known upheavals, please do not think too much about current needs, no matter how much they cry out, but think only about healing the roots – and you will get finances.” This formula largely meets the priorities that we observe in Russian budgetary policy today, with its emphasis on accumulating reserves to finance longer-term economic needs.
Another area of economic policy that Dostoevsky writes about – administrative reform and the reduction of bureaucracy. As Fyodor Mikhailovich notes, when trying to reduce the bureaucracy, we often only get an increase in the number of officials due to the creation of countless commissions on administrative reform. “Are we capable of such, for example, a reduction: to move from forty officials to four at once? Of course, no one can have any doubts that four officials will often do what forty do, especially with the reduction of paperwork and, in general, with a radical transformation of the current formulas for doing business.”
Arguably, the most important economic thesis for Dostoevsky is the problem of the lack of trust on the part of the population with respect to economic policy, or, as Fyodor Mikhailovich himself calls it, “the problem of the moral/spiritual concern of the population.” Moreover, Dostoevsky notes the tendency that has become painfully familiar in Russia in the past several decades towards an outflow of capital while undermining this very trust/“moral calm”: “How can we make the spirit of the people, yearning and worried everywhere, be encouraged and calmed down? After all, even capital itself and its movement is in search of moral tranquillity, but without moral tranquillity it either hides or is unproductive.”
The problem of lack of trust in economic policy on the part of the population remains acute to this day – during Dostoevsky’s time, the writer noted how important it is to achieve long-term understanding and trust within the population: “We have little peace of mind, especially spiritual peace, that is, the most important thing, without spiritual peace there will be nothing. They do not pay much attention to this, but only achieve a temporary, material effect on the surface. There is neither calmness in the minds, and this is in all layers, nor calmness in our convictions, in our views, in our nerves, in our appetites. There is neither work, nor the consciousness that only by work ‘you will be saved’ – none in the least.”
Perhaps one of the most interesting predictions of Dostoevsky relates to the priorities of foreign economic policy and our regional development. In fact, Dostoevsky in his economic article substantiates the need for a Russian “turn to the East” and the active development of the Asian regions of Russia: “So, it is a necessity, because Russia is not only in Europe, but also in Asia; because a Russian is not only a European, but also an Asian. Moreover, there may be even more hopes in Asia than in Europe. Moreover, in our future destinies, perhaps Asia is our main gateway!”
For Dostoevsky, a turn to Asia is part of that very fundamental process of “healing the roots”, while Asia for Russia can provide a means of uplifting the spirit and gaining greater independence: “Meanwhile, Asia may indeed be our gateway into our future – I exclaim it again! And if we had at least partially assimilated this idea – oh, what a root would have been healed then! Asia, our Asiatic Russia – after all, this is also our sick root, which not only has to be refreshed, but must be completely resurrected and recreated!! … with a turn to Asia, with our new perspective on it, we may have something like what happened to Europe when America was discovered. After all, Asia for us is the same undiscovered America of that time. With the striving for Asia, we will revive the rise of spirit and strength. As soon as we become more independent, we will immediately find what to do, while with Europe, in the past two centuries, we have lost the habit of any business and have become talkers and lazy people.”
I don’t know how many times I have read Dostoevsky’s economic article, and each time I find in it something new for myself, a kind of new look at the problems we face in Russia today. Dostoevsky also writes about the exchange rate of the rouble, about the need for Russia to value its national currency – and then it will be appreciated by foreign investors as well. The observations by Fyodor Mikhailovich of the very possibility of imitating European economic practices on Russian soil are also extremely interesting and relevant. After 140 years have passed since the writing of the economic article, many of the observations of our great writer remain extremely relevant. This testifies to Dostoevsky’s astounding farsightedness and genius, but also to how entrenched some of the fundamental foundations of our country system turn out to be over time. Or could it be that we are dealing with the long-term Dostoevsky cycles, even more long-term than the Kondratieff’s waves? Plus ça change, plus c’est la même chose.
From our partner RIAC
Digital Child’s Play: protecting children from the impacts of AI
Artificial intelligence has been used in products targeting children for several years, but legislation protecting them from the potential impacts...
Testing the waters: Russia explores reconfiguring Gulf security
Russia hopes to blow new life into a proposal for a multilateral security architecture in the Gulf, with the tacit...
People are increasingly worried about inequalities but divided on how to address them
For a recovery from the COVID-19 crisis that is strong, sustainable but also fair, it will be key to tackle...
Industrial innovation to accelerate transitions towards greener and digital economies
In the context of the 8th European Conference on Corporate R&D and Innovation (CONCORDI), 2021 – Industrial innovation for competitive sustainability,...
Data show how the COVID-19 pandemic has hit all aspects of people’s well-being
The COVID-19 pandemic has not only had devastating effects on physical health and mortality but has touched every aspect of...
Inflation Concerns Push Up Emerging East Asia Bond Yields
Emerging East Asia’s bond market grew 3.4% in the third quarter to $21.7 trillion, although rising global inflation and a...
New COVID-19 Surges Keep Travel Restrictions in Place
One out of five destinations continue to have their borders completely closed as new surges of COVID-19 impact the restart...
East Asia4 days ago
How Beijing’s Disinformation Campaign threatens International Security in the Post-Truth Era
Intelligence4 days ago
The visit of the head of Israeli Mossad intelligence to Bahrain
Middle East4 days ago
Sino- Iranian Deal: A new marriage of convenience
Middle East3 days ago
UAE chalks up diplomatic successes with uncertain payoffs
South Asia3 days ago
US and India in the Indo Pacific: Advancing a shared vision
Tech News2 days ago
193 countries adopt the first global agreement on the Ethics of Artificial Intelligence
Defense3 days ago
S-400 Ballistic Missile Defence System and South Asian Strategic Stability Dynamics
South Asia3 days ago
India wanted to divert public attention from domestic issues by accusing Pakistan