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Saturday, October 03, 2015

Let's Make the Vatican Bank a Bank

James S. Henry & Laurence J. Kotlikoff

The American Interest (Published: October 2, 2015)


Pope Francis has a bank and wants to help the poor.

The poor need low-cost banking services. It's a match made in Heaven.


On his recent visit to the United States, Pope Francis received a warm reception at the UN and Congress for his constructive, thoughtful messages on issues like climate change, poverty, inequality, and immigration. Goodness knows His Holiness doesn’t need more work, but we’d like him to adopt one more priority. Fortunately, this one is a natural for the Vatican in more ways than one. Not only does it complement Pope Francis’s social concerns, but it’s something he’s already working on: banking for the poor.

About a decade ago, in June 2005, a new President took office at the World Bank: Paul Wolfowitz, fresh from the Bush Administration. We had our doubts about his Iraq adventure, but we were willing to give him the benefit of the doubt because we thought he had an opportunity to change the behavior of an institution that is a key player in the global war on poverty. So we wrote an op-ed for the Wall Street Journal calledWhy Can’t the World Bank Be More Like a Bank?

Back then, in addition to advisory work and “poverty counting,” the World Bank was still focused on project lending—an activity that a growing number of other public and private institutions were able to do, often more effectively. In that piece we proposed that the Bank should focus on critical areas that are underserved, partly because they are just not as profitable. Banking for the poor” was at the top of our list.

At the time, by that most people meant micro-finance—namely, the provision of small loans to tiny businesses and individuals. But we preferred to start with the other side of the balance sheet: payments, deposits, savings, and investment. Worldwide, after thirty years of donor- and equity-based micro finance, at most 130 million customers had received loans. But there were still more than 2.5 billion people without bank accounts. In our view, that was the bigger problem. Here is how the problem looked then, and still, pretty much, looks today:

Domestic Payments and Savings: First, billions of poor people lacked ordinary bank account services—mainly facilities for payments and savings. This compelled them to rely far too heavily on “mattress money” for savings and payments. This was not only inconvenient; it also increased the risks of theft, extortion, and corruption, and made it more difficult to advertise for business and accept payments (especially for the self-employed and small businesses), to save, and to accumulate the collateral required for loans.

Remittances: Closely related to the first point, given the rapid expansion of international migration, there was a growing need for low-cost remittance services for overseas workers from poor countries who wanted to send payments back home to their families, to schools and to doctors.

Reserve Savings Basket: Third, there was a huge need for a credible global financial institution to provide simple, low-cost, and secure savings accounts denominated in a basket of reserve currencies, as an alternative to unstable home currencies.

To his credit, Wolfowitz invited us down to a meeting at his DC office and expressed enthusiasm, especially if we could make something work with non-profits or NGOs in Iraq. But he didn’t last long enough at the Bank to make a difference. Since then, his successors have devoted increased attention to what they now call “financial inclusion” and “financial literacy,” but there is still a long way to go, especially with respect to remittances.

Indeed, since then, the need and opportunity for Banking for the Poor, ”BFP”—hey, every anti-poverty program in history has its acronym, and this is ours—has if anything increased. In particular, in the past decade the number of international migrants living abroad has soared to more than 250 million, while remittances have reached $450 billion a year, more than three times annual total official development assistance of $135–150 billion.

Amazingly, for many poor countries, private remittances by the foreign diaspora of low-wage workers are now by far the largest source of foreign exchange, exceeding foreign aid, exports, and foreign direct investment.

For example, take the tiny impoverished Caribbean country of Haiti, the poorest in the Western Hemisphere. Since the 2010 earthquake, which claimed at least 100,000 lives, the island has received a large amount of foreign aid and World Bank loans. But its most important single source of foreign exchange is the 2.2 million Haitians who work outside the country. Their “external GDP” is about three times the island’s, and each year they remit at least $2 billion, more than 20 percent of the country’s GDP.

Furthermore, like remittances to many other poor countries, most of this is still subject to a 5 to 10 percent “cartel tax” exacted by the international remittance cartel, led by Western Union and its local bank partners. In Haiti’s case this cartel is composed of six dominant banks, including Western Union’s key partner, SogeBank, which controls at least a third of the market. Not surprisingly, Haiti’s transfer charges are among the highest in the hemisphere. 

In theory, with more than seven billion cell phones on the planet and a plentiful supply of e-wallet applications, this should be an easy problem to solve technically. But again, Haiti is a great negative example. In 2010–13, when the Gates Foundation and a local cell phone company tried to deploy an e-wallet application in Haiti without the remittance cartel’s support, they failed.

Neither the World Bank nor anyone else has so far been able to help break the international remittance cartel in Haiti or most other places.

Meanwhile, with the help of strong local government in middle-income countries like Brazil and South Africa, banking for the poor has become a proven concept over the past decade, with hundreds of thousands of new accounts established for very poor people. But on a global level, the cause still lacks a real champion—especially one willing to help crack the remittance cartel.

But what about the UN and its brand new Sustainable Development Goals (SDG), you might ask? Doesn’t Pope Francis have the UN’s ear? And isn’t banking for the poor of interest to the UN SDG Committee? Well, true: 15 years ago this month, the UN convened a summit of 155 world leaders—the largest in history to that point—to declare eight new “Millennium Development Goals” for the year 2015. But banking for the poor was not on that list. Now, as that 15-year milestone passes, it is clear that there has been a bit of a shortfall, especially outside China, and especially for metrics like absolute poverty, “enrollment in school”, and several other MDGs that have proved hard to measure.

We can debate exactly how large the shortfall has been. But the clearest indicator is that on the MDGs 15th anniversary the UN has just convened another even larger summit of world leaders, including Pope Francis, to declare yet another 17 new SDGs, this time with 169 targets and 1,063 indicators! Basically these subsume the original eight MDGs, and give world leaders another generous 15 years to realize them. Private sector managers around the world only dream of living under such lax standards: “Let’s see: I get 15 years to reach my goals, and if I miss them, I get new goals and 15 more years? Nice!”

Remarkably, with all this “development banking” expertise at hand, that there is not one mention in all 17 new SDG goals of the fact that, as of 2015, more than 2.5 billion of the world’s poor still lack bank accounts and, therefore, access to the essential financial services that the rest of us take for granted.

If we’re really interested in the “sustainability” of investment, education, consumption, production, and employment, as the SDGs are supposed to achieve, the provision of low-cost financial services to the poor should be a core goal, not a peripheral one. (We might start by adding basic financial services to the minimum basket of goods and services that one has to consume in order to avoid being considered one of the “global poor.”)

Given that the World Bank and its fellow development banks have not been able to break the remittance cartel, should some other institution take the lead? Obviously, the Vatican Bank has new leadership and may be searching for a new mission.

The New Vatican Bank

Ever since Pope Francis became pontiff in 2013, one of his key concerns has been to clean up the Augean stables of the so-called Vatican Bank—formally known as the Institute for the Works of Religion, founded by Pius XII in 1942. Over time, the combination of secrecy, tax immunity, sovereign immunity, and global reach proved simply irresistible to a wide range of shady partners seeking laundry services, from the CIA and the Italian Mafia to big-ticket tax dodgers all over the world.

Technically, the bank now still takes some deposits, as a kind of pass-through shell bank, and manages Church business, but it doesn’t make loans. It has recently declared itself the Vatican’s “central bank,” but that might refer to any number of financial activities. The bank is still being reorganized, but Pope Francis has already succeeded in installing new management and establishing new procedures for transparent operations at the Vatican Bank.

This is a good start, but we invite Pope Francis to go farther. The SDGs may not recognize it, but world’s poor really do desperately need financial services. And they could really use a first-rate financial institution that will be in their corner —that will lead the way in working with other financial institutions around the globe to marshal new technology, cut through cartels and regulatory barriers, and design low-cost e-payments, e-savings, e-lending, and financial literacy services that the poor need to not just survive but prosper. He could start off by setting a goal of eventually providing free remittances to the poor—a target that is well within the reach of mobile technology.

Now cynics may say that in fact the Vatican Bank has limited facilities and staff, and lacks the global distribution network, technology, and expertise in “BFP” needed to pull this mission off. But what are business partners for, if not to fill in the gaps in institutional capabilities? After all, it is not as if there is a shortage of financial institutions in the world. They just need to a little moral fiber and encouragement.

In fact, the Catholic Church ideally suited to organize this effort. Not only does it have international aid organizations like Caritas that work with the poor every day, but it also has a huge global network of schools, hospitals, churches, and…why not train priests and nuns to help ordinary folk with financial literacy? 

Most important, though, if we’ve learned anything from forty years of experience with experiments in banking for the poor and micro finance, what’s been missing is not technology or networks or even capital, but a serious full-time commitment to serving the poor. Pope Francis clearly has that in spades.

So let’s stop waiting around for other institutions to solve this problem. Let’s reinvent the Vatican Bank and unleash it to do what global financial institutions should have been doing all along. It’s a match made in Heaven!

James S. Henry is an investigative economist and lawyer and a senior fellow at Columbia University's Center for Sustainable Investment. Laurence J. Kotlikoff is professor of economics at Boston University and president of Economic Security Planning, Inc.

October 3, 2015 at 11:23 AM | Permalink | Comments (0)

Monday, September 21, 2015


IMF: Emergency Banker to the World, or to W. Europe and FSU?

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As of 2015, not only is the IMF a leading lender to eight tiny Caribbean havens and Cyprus,[i]  with more than $752 million outstanding to them at very low interest rates.  In addition, more than two-thirds of the IMF's total loans outstanding went to just three developedcountries in Western Europe and the former Soviet Union:  Portugul, Greece and the Ukraine.

[i] As of September 2015, the IMF had outstanding credits to the following tax havens:  Antigua ($43.4mm), Cyprus ($594mm), Dominica ($5.4mm), Grenada ($21mm), the Seychelles ($30mm),  St. Kitts ($ 22mm ), St. Lucia ($9.7 ), St. Vincent ($10.5) and Vanuatu ($17mm). These are priced at real interest rates that are close to zero.  See IMF (2015),

September 21, 2015 at 02:43 PM | Permalink | Comments (0)

Sunday, September 20, 2015


IMF's top 10 Debtors: W. Europe plus Failing States?


September 20, 2015 at 01:13 PM | Permalink | Comments (0)

Saturday, September 19, 2015

On the verge of the annual IMF/World Bank meetings in Lima in October 2015

The first time the meetings have been held in a developing country that is not a tax haven!
Let's recall who really runs the IMF.  
Hint: havens and creditors!  Those those of you who expect the IMF or the OECD to assist the tax justice reform movement should wake up and smell the Peruvian coffee! 
(Fast Capitalism is speeding up, creating more excess every day. To keep up, please follow us on Twitter: @submergingmkt)
image from

September 19, 2015 at 08:53 PM | Permalink | Comments (0)

Wednesday, September 16, 2015

Rethinking Spillovers of Tax Evasion and Trade Discrepancies

Case of China, Hong Kong and the Republic of Korea

Seung Won Suh

(Columbia Center on Sustainable Investment--Supervised by James S. Henry, Esq.)

Full report including the analysis of all appendixes & tables can be provided, upon request 

(contact to

Lost Tax Revenue in Developing Countries

ImagesTax revenue losses due to tax evasion in developing countries are significant in terms of the international components including profit shifting by corporations and offshore holdings of financial assets by private individuals. As capital becomes more mobile, developing countries are dealing with new international  challenges, such as taxing multinational enterprises effectively, building effective transfer pricing regimes, establishing and using information sharing agreements to obtain tax information about their taxpayers from other countries, and managing tax incentives to attract international investors (OECD, 2014).

Estimates of the level of tax evasion are based on measures of the size of the shadow economy (Fuest and Riedel, 2009). In the context of taxation, the term ‘shadow economy’ can be defined as unreported income from the production of legal goods and services, either from monetary or barter transactions, hence all economic activities that would generally be taxable, were they reported to the tax authorities (Schneider and Enste, 2000). Cobham’s (2005) approach[1*] based on macro indicators of shadow economy presents explicit consequences of lost tax revenue in developing countries. Shadow economies are mounting due to weakness of tax administration and policy structure in developing countries. For example, Bangladesh loses around $2 billion every year because of the tax evasion and profit shifting by the MNCs who evade taxes through the abuse of transfer pricing or mispricing in different ways including capital flight, transfer of dividend and profit to its permanent establishments including over and under-invoicing during transactions of goods and services within their associated enterprises  (EquityBD, 2014). Due to consistent expansion of the underground economy, the Bangladesh government cannot collect taxes to build up internal resources and consequently, development expenditures cause domestic budget deficit and financial default. Another example is a set of tax evasion practices of logging companies in the Democratic Republic of Congo (DRC). Details of tax revenues from DRC’s natural resource sector that have been released by the country’s Ministry of Finance over the last year as part of an effort to meet ‘economic governance’ benchmarks agreed with the World Bank are followings: in 2011 and 2012, the Treasury should have received USD 7,470,967 per year but, in fact, it received only USD 3,090,586 in 2011 and USD 777,908 in 2012 (Global Witness, 2013). In other words, USD 11,073,441 were missing for two years because of tax evasion practices. Provincial authorities in the Provinces of Equateur, Bandundu and Orientale - where huge swathes of forest have been allocated for logging – may have expected a welcome boost to their finances for regional development (Global Witness, 2013). However, they could not develop in the absence of these egregious tax abuses by logging companies.

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It is difficult for government officials in developing countries to stand against tax evasion activities because illicit financial flows of multinationals and private individuals are often ironically main sources of foreign investment and economic development. However, they need to understand how much their lost tax revenue will impact sustainable economic development. Persistent and prospective potential to develop and engage in fair competition with other developed countries cannot be achieved with an increasing rate of lost tax revenue.

Prior to planning how to avoid vicious cycle of tax evasion practices, it is instrumental to understand how we can identify the underlying symptoms of tax evasion practices. There are a variety of methodologies to track down who are illegally not paying tax yet it is difficult to evaluate what methodology is concise and effective. One methodology presented in this report is to investigate discrepancies in multilateral trade.

Discrepancies in Multilateral Trade

Trade-misinvoicing-feature-image Trade data of imports and exports have discrepancies in between. The quantity and value of exports from reporting countries are not identical to those of import that partner countries record. Ferratino and Wang (2007) categorize eight possible sources of discrepancies: (1) timing; (2) shipping and insurance costs; (3) general versus special trade in terms of       goods in transit; (4) classification of goods; (5) re-exports; (6) partner country’s attribution and treatment of processing trade; (7) mis-invoicing, transfer pricing, and mis-attribution; and 8) smuggling. Accordingly, researchers add hypotheses to reconcile the growing statistical discrepancies: (1) recording of export-and-import trade using inconsistent customs standards of valuation (FOB, FAS and CIF); (2) geographic-coverage inconsistencies; and (3) exchange rate fluctuations.

Ferrato and Wang (2007) present mirror statistics to measure the magnitude of statistical discrepancies. Underlying assumption is that export statistics from one country to its partner countries are equal to import statistics from their partner countries. Suppose that there are three countries in trade relations: A, B, C and D. Country C is regarded as tax haven and Country D includes a set of every country other than A, B and C. There are two sides of mirror: eastbound (Country A to Country B) and westbound (Country B to Country A). Ferrato and Wang categorize five possible trade flows for each side of mirror: (1) Country A’s direct exports to Country B; (2) Country A’s reported exports to Country B via Country C; (3) Country A’s reported exports to Country B via Country D; (4) Country C’s reported domestic exports to Country B; and (5) Country C’s reported re-exports of goods of Country A’s origin to Country B.

Raymond Fisman, professor at Columbia University Business School conducted research of tax evasion models followed with findings on discrepancies in multilateral trade. Tax Rates and Tax Evasion: Evidence from “Missing Imports” in China (2004) and Outsourcing Tariff Evasion: A New Explanation for Entrepôt Trade (2007) identify possible causes of trade discrepancies which are developed from Ferrato and Wang’s hypotheses. Fisman examines the estimated amount of lost tax through indirect trade through an Entrepôt and his econometric analysis of measuring discrepancies is valid and instrumental.


Yet, there are some loopholes that need to be improved. Measures of trade values in transit (transshipment not re-export) and error terms are not reliable. In fact, challenges are raised from the nature of trade data which countries do not track down every flow of commodities transactions. Furthermore, there is no international uniform database developed to explain trade discrepancies and misinvoicing.

Trade misinvoicing is a method for moving money illicitly across borders which involves deliberately misreporting the value of a commercial transaction on an invoice submitted to customs. A form of trade-based money laundering, trade misinvoicing is the large component of illicit financial outflows (Global Financial Integrity Web, 2014). It is possible due to the fact that the trading partners write their own trade documents. Usually, through export under-invoicing and import over-invoicing, corrupt government officials, criminals and commercial tax evaders are able to easily move assets out of countries and into tax havens, anonymous companies and secret bank accounts (Kar and Spanjers, 2014). Multinational corporations do engage in trade misinvoicing and their activities involve the deliberate misreporting of the value of a customs transactions which is illegal tax evasion. 

Multilateral Trade: China, Hong Kong and the Republic of Korea
Measuring Discrepancies

According to empirical research of tax evasion using trade data discrepancies, multilateral trade data is provided through UN COMTRADE. The new interface of UN COMTRADE is available online to everyone and aggregate trade data accustomed to any set of preferences is available. In order to examine data availability and discuss about the issues of tax evasion, I conducted an interview with Ronald Jansen, Chief of Trade Statistics Branch and Department of Economic and Social Affairs, United Nations Statistics Division and Luis Gonzales Morales, Statistician on June 30th (Appendix 7).

United Nations officials suggested me to examine the commodities of at least HS 4 level (6 level is more specified) and conduct bilateral symmetries of fixed continuous time period. There are two choices in commodity categories: SITC and HS[1]. SITC is generally used for high-level analysis and HS codes (varies from 2 to 10 digits) are used in this report. Prior to choose the pilot case of multilateral trade: China, Hong Kong and the Republic of Korea, from the UN COMTRADE, I first selected the Republic of Korea as a reporting country and all other countries as partner countries. The time period was fixed to one year, 2012 and the commodity was chosen as total (HS as reported). All trade values of world’s imports (based on CIF) and Korea’s exports (based on FOB)[2] are measured in US dollars and under-invoicing is calculated from a simple equation: world’s imports-Korea’s exports (Table 1). There are two patterns of this value: (1) positive, which can be noted as “over”-under-invoicing and this is the common outcome; and (2) negative, which can be noted as under-invoicing and this is an unusual outcome. There are a number of cases of this unusual outcome and I found out that Hong Kong is the destination with the largest value of under-invoicing (USD -11,153,938,618). On the other hand, China is the partner country with the largest value of “over”-under-invoicing (USD 34,406,006,712) (Appendix 8, Graph). The difference of these two inequalities is significantly large and I generated more concentrated dataset of fixed variables: multilateral trade of China, Hong Kong and the Republic of Korea in terms of detailed commodities noted as HS codes throughout a fixed time period.

Table 2 is the filtered data set (filtered HS 4 level commodities of large quantities (more than 1,000,000) and values(more than USD 10,000,000) in multilateral trade of China, Hong Kong and The Republic of Korea. I looked at 5-year time interval periods of 2000, 2005, 2010. There was one HS 4 level commodity (HS 7210) that consistently displayed “over”-and under-invoicing in China and Hong Kong. In this report, I term this pattern as a “wicked” trade discrepancy. This pattern might imply that Korean exporting enterprises have evaded paying tax by parking commodities via Hong Kong.

I enlarged the range of HS level to 6 levels within the boundary of HS 7210 and set the time period from 2000 to 2012. Table 3 displays how two commodities, HS721069 (Flat-rolled products of iron/non-alloy steel, of a width of 60mm/more, plated/coated with aluminum) and HS721070 (Flat-rolled products of iron/non-alloy steel, of a width of 60mm/more, painted with plastics) belong to the “wicked” trade discrepancies throughout 13 years (from 2000 to 2012). The differences are significantly large and more comprehensive analysis of detailed data is in need to examine the tax evasion practices through Hong Kong.


Analysis and Results

UN officials at Statistics Division suggested that these discrepancies might have occurred because of the difference in time sequence, amount of tax incentives, repackaging and trade costs including transportation and shipping costs. In response to their recommendations, I outlined the list of interviewees (Appendix 5) and distributed an interview request form in Korean (Appendix 6) to them. 

Throughout the interviews I conducted in remote basis (international call meetings from Columbia Center on Sustainable Investment), I realized that detailed data sets explaining the “wicked” trade discrepancies are not available at ease. Statisticians at Korea Statistical Information Service told me that data regarding tax evasion rate might be available at National Tax Service and Korea Customs Service. However, Ministry of Finance, National Tax Service and Korea Customs Service did not permit me to access the detailed data sets of HS721069 and HS721070 under the “Personal Information Protection Law.” Even, Jaeho Jeong who is a senior researcher at Korea Institute of Public Finance was skeptical of this research due to the difficulties regarding data availabilities. 

From August 5th to August 21st, I stayed in Korea and tried to reach out other researchers who are expert on this issue. I had an interview with one of the employees at Korea Iron and Steel Association (Dohyun Kim) and I could find out that big Korean multinational enterprises (POSCO, SEAH Steel Industry and Hyundai Industry) are in charge of trading HS721069 and HS721070. Mr. Kim told me that these commodities require high technology and it is rare that repackaging practices (mostly value added) would occur at Hong Kong. He also argued that tax evasion practices would not be involved in these commodities. 

Based on the information that Mr. Kim provided, I had a meeting with Sanghyung Sim, who is a senior researcher at POSCO Research Institute (POSRI). Since POSCO is the largest firm in trading HS721069 and HS721070 to Hong Kong and China, it was a great opportunity to interview her. She provided a number of answers regarding this issue. She contacted some employees at POSCO’s Hong Kong and China mainland branches and shared their opinions with me. 

According to POSCO employees, the time differences in terms of transactions between Korea and Hong Kong and Korea and China are not large enough (about only 4 or 5 days) to the “wicked” trade discrepancies. They also said that HS 6 digits are specific enough and the value throughout China, Hong Kong and the Republic of Korea is uniformly categorized. They insisted that POSCO has not practiced tax evasion and argued that Tax Tracking Service at Korea Customs Service is well advanced to find out these practices.   

Rather, they provided two possible explanations: (1) Korean iron and steel companies including POSCO do a large amount of transshipment to smaller ships on Hong Kong border shore and these values are recorded as Hong Kong’s import, not China’s import; and (2) Since corporate tax in Hong Kong is “0,” POSCO makes profits by executing transactions in Hong Kong but exporting goods to China. In this case, the values are not recorded as Hong Kong’s import, but China’s import. 

In reference to two possible explanations outlined above, Korean iron and steel enterprises might be doing round-tripping. Round-tripping is a trade-tax-investment strategy whereby Korean enterprises undervalue exports or artificially overvalue imports, in order to move Korean capital across the border through current-account transactions. Specifically, Korean enterprises export domestic capital to the related-party enterprises situated outside China in offshore tax havens, such as Hong Kong, pursuant to non-arm’s length transfer-pricing transactions that are designed to circumvent Korean capital controls. The exported Korean domestic capital is then recycled abroad and returns to Korea in the form of foreign investment, and as such, receives a lower tax rate on profits (Liu and Giesze, 2008). Round-tripping is a pattern of transfer mispricing and it is an offshore tax evasion practices. “Over”-and under-invoicing of iron and steel imports in China and Hong Kong are representative case studies of trade misinvoicing that present virtual offshore tax evasion practices.


Followed with a wide variety of interviews and data analysis, the biggest challenge was to investigate data in depth. Based on theoretical explanations of trade data discrepancies and tax evasion practices, “wicked” trade discrepancies reflect unusual pattern of financial flows. Even if it is not the complete evidence of illicit transfer pricing and tax evasion, we need to know why this pattern continues.

Indeed, “Personal Information Protection Law” is important but decomposition of missing values in trade is significantly instrumental for the research. Each sovereign nation has privilege to secure its own information and data but government officials need to realize the importance of this research. Conformed to a universal data set such as UN COMTRADE, data including re-exports, transportation/shipping costs, transshipment costs and other missing variables (at least estimates) need to be accessible for researchers. 


Efforts to identify tax evasion practices and construct the compliance frameworks accordingly are still in progress. Compared with the previous approaches that tax authorities and academic scholars conducted, this report has its significance of making connections between trade data discrepancies and tax evasion practices. A pilot case of multilateral trade: China, Hong Kong and the Republic of Korea is indeed a representative work and needs more improvements ahead.

In order to identify puzzles in the wilderness of illicit financial flows and tax evasion practices, active collaboration with United Nations, World Bank, OECD, IMF, Non-governmental organizations and academic research centers is recommended. Appendix 4 (Table 4) represents another new set of the “wicked” trade discrepancies in Argentina and Latin America and indeed, research should expand and tackle this issue. A complete set of defanging process to complex trade data discrepancies, developed from this work, will be a remarkable frontier in the fields of tax evasion and compliance. 

[1] The SITC was developed by the United Nations with the intention of classifying traded products not only the basis of their material and physical properties, but also according to which stage of processing, as well as their economic functions in order to facilitate economic analysis. The HS was introduced in 1988, and has since then it has become an internationally accepted method of classification wherever products are traded. The HS classification is “harmonized” in relation to the classifications of the United Nations and the European Communities (International Trade Centre Web, 2014).

[2] CIF(cost, insurance and freight)-type values include the transaction value of the goods, the value of services performed to deliver goods to the border of the exporting country and the value of the services performed to deliver the goods from the border of the exporting country to the border of the importing country. FOB(free on board)-type values include the transaction value of the goods and the value of services performed to deliver goods to the border of the exporting country (UN COMTRADE Web, 2014)

[1*] Cobham’s (2005) approach is an innovative and important contribution to the debate on revenue mobilization in developing economies. The hypothetical tax revenue of a country in the absence of tax evasion is T0 = tw, where t is average tax rate and w is the overall economic activity, which is assumed to be equivalent to the tax base. Assume that the share of the shadow economy in overall economic activity is given by a proportional factor denoted by s, so that the actual tax base is T1 = tw(1-s) (Fuest and Riedel, 2009). Then the tax revenue lost is T0 - T1 = tws.


1. Andriamananjara, Arce and Ferrantino, Transshipment in the United States, U.S. International Trade Commission Office of Economics Working Paper, 2004 

2. Cobham, Tax Evasion, Tax Avoidance and Development Finance, University of Oxford, 2005 

3. Equity and Justice Working Group, Who Will Bell the Cat: Revenue Mobilization, Capital Flight and MNC’s Tax Evasion in Bangladesh, EquityBD, 2014 

4. Ferrantino and Wang, Accounting for Discrepancies in Bilateral Trade: The Case of China, Hong Kong, and the United States, United States International Trade Commission, 2007 

5. Fisman, Tax Rates and Tax Evasion: Evidence from “Missing Imports” in China, Journal of Political Economy, 2004 

6. Fisman, Outsourcing Tariff Evasion: A New Explanation for Entrepot Trade, National Bureau of Economic Research, 2007 

7. Fuest and Riedel, Tax Evasion, Tax Avoidance and Tax Expenditures in Developing Countries: a Review of the Literature, Oxford University Centre for Business Taxation, 2009 

8. Global Financial Integrity Web, Issues: Trade Misinvoicing, retrieved from the website,, Global Financial Integrity, 2014 

9. Global Witness, The Cut-Price Sale of DRC’s Forests: Tax Avoidance, Illegal Deals: 90% of Taxes Missing from Public Coffers, Global Witness, 2013 

10. Henry, The Price of Offshore Revisited: New Estimates for “Missing” Global Private Wealth, Income, Inequality, and Lost Taxes, Tax Justice Network, 2012 

11. Henry, The Global Haven Industry-Impacts on Developing Countries, Tax Justice Network, 2014 

12. International Monetary Fund, Issues in International Taxation and the Role of the IMF, IMF, 2013 

13. International Trade Centre Web, Difference between the Standard International Trade Classification (SITC) and the Harmonized System (HS), International Trade Centre, 2014 

14. Kar and Spanjers, Illicit Financial Flows from Developing Countries: 2003-2012, Global Financial Integrity, 2014 

15. Liu and Giesze, China’s Global Trade Balance Discrepancy: Hong Kong Entrpot Effects and Round Tripping Chinese Capital, The Trade Lawyers Advisory Group LLC, 2008 

16. OECD, Improving Tax Compliance-the Role of OECD’s Committee on Fiscal Affairs, OECD, 2012 

17. OECD, Illicit Financial Flows from Developing Countries: Measuring OECD Responses, OECD, 2014 

18. OECD Web, Introduction about the Forum on Tax Administration, retrieved from the website,, OECD, 2014 

19. Schneider and Enste, Shadow Economies: Size, Causes and Consequences, Journal of Economic Literature, 2000 

20. UN COMTRADE Web, United Nations Commodity Trade Statistics Database Metadata and Reference Glossary, retrieved from the website,, 2014 





September 16, 2015 at 05:11 PM | Permalink | Comments (0)

Thursday, September 10, 2015

[NEW] E-Commerce Access to Report & Data - Investigative Economics - Submerging Markets, Capital Flight, Corruption, Global Poverty and Inequality, Tax Justice & Inclusive Financial Markets, Sustainable Development

[NEW] E-Commerce Access to Report & Data - Investigative Economics - Submerging Markets, Capital Flight, Corruption, Global Poverty and Inequality, Tax Justice & Inclusive Financial Markets, Sustainable Development
Report & Data

September 10, 2015 at 04:17 PM | Permalink

Monday, August 31, 2015


 Fast Capitalism R 1.0

James S. Henry, Esq


Screen Shot 2015-08-31 at 2.13.47 PM

Download PDF


Our Key Findings:

1. The very banksters who rigged the FX and Libor markets now totally dominate the US "Darknet"- alternative securities trading systems that allows for anonymous clearing.

2. For the latest available data, for the week of 8/3/2015, they accounted for 68% of the 3.69 billion (?) shares traded that week on these alternative systems.

3. Surprisingly, the leading bank is Credit Suisse, with 13%, followed by UBS, with 12%.

4. All of these banks have been fined and subjected to lawsuit settlements involving libor rigging, FX rigging, and AML violations.

Each and every one of them.


Feel free to use this chart as a sequel to Friday.

"Even more market madness?"

"What are the world's biggest banks doing to gamble with deposit insurance now?"



August 31, 2015 at 03:00 PM | Permalink | Comments (0)

Friday, August 28, 2015

Taxing Money Madness – now is the perfect time for FTT/Robin Hood tax

Taxing Money Madness — Why This Is A Perfect Time for a Robin Hood Levy on Financial Transactions


A guest blog for TJN by James S. Henry

If ever there was a perfect time to revisit the proposal to adopt a so-called “Robin Hood tax” (AKA the “financial transactions tax,” or the “Tobin tax“) and make it global, this is it.

In the last week we’ve just seen a very compelling reminder of why the Yale Prof. James Tobin (1972), a Nobel Laureate, and long before him, J.M. Keynes, a Cambridge don, were outspoken advocates of taxing financial transactions – in the case of Tobin, only currency purchase, but in the case of Keynes, all transactions in financial assets that might be subject to the speculative furies.

Their chief goal was financial stability. The idea was to “throw a little sand in the cogs of speculation, ” in order to rein in what they saw as one of modern capitalism’s most self-destructive tendencies. This is its periodic propensity to turn itself into a gigantic speculative casino, generating wild gyrations in asset prices that have nothing to do with their real economic value – and, indeed, may actually help to undermine real value, while scarring the BeJesus out of the rest of us. As Keynes argued in 1936.

“Speculators may do no harm as bubbles on a steady stream of enterprise. But the situation is serious when enterprise becomes the bubble on a whirlpool of speculation….(A) substantial transfer tax on all transactions might prove the most serviceable reform available…to mitigating the predominance of speculation over enterprise…” [1]

The Mainstream Case for FTT (Yawn)

Of course, the FTT has recently attracted many other supporters for other reasons beside Keynes-Tobin’s focus on money madness. [2]

For example, many supporters find the FTT attractive simply because it would be a good revenue generator – not unlike the global taxes on international airline tickets that have been in place since the 1970s. [3] From this standpoint, a global FTT would be an efficient, low-cost way of generating hundreds of billions of dollars that the planet urgently needs to pay the costs of fighting global problems like climate change, natural disasters, epidemics, and security threats. FTT advocates argue that it would be relatively painless to deduct just .05% to .1% of the gross asset value of financial transactions. The tax would apply to publicly-traded stocks, bonds, commodities, futures, derivatives and ETFs, as well as the $5-$6 trillion per day of foreign exchange trades, most of which are conducted in a handful of financial centers by a handful of giant banks. Given the immense size of these markets, even at those low percentages, FTT advocates argue that it might easily raise at least of $100 billion a year if it were implemented by major financial centers.

In addition, many advocates also see this particular tax as unusually progressive. While, in principle, the revenues would be channeled to all these worthy causes, the costs would be concentrated on a particular segment of the especially-undeserving that the rest of us, involuntarily, have come to know far too well since 2008 – banksters, LIBOR market riggers, currency market riggers, and high-frequency stock traders.

Naturally, all these arguments have been hotly contested by the financial services industry and its minions. However, FTT proponents appear to be winning the analytical side of the debate. But it is also fair to say that up to now, the idea has yet to catch on fire, especially given the opposition of key financial centers like Wall Street and the City of London. While proposals for an EU-wide FTT are on the table, and the FTT has even been discussed by the US Presidential candidate Bernie Sanders as a way to pay for his college tuition aid plan, politically speaking, a global FTT still has a very long way to go.

The China Syndrome

Until now. Perhaps the last three weeks of global stock market madness might help to break the logjam. Ever since China’s Central Bank decided to suddenly loosen its managed peg to the US dollar in mid-August, stock markets the world over have experienced wild gyrations way out of proportion to changes in economic fundamentals.

Last Friday, August 21, following several days of heavy losses on Shanghai’s market, European stocks fell sharply, and the Dow fell 525 points in the US, or 3 percent. On Monday, August 24, there was another 8.5% Shanghai market plunge. The Dow then fell like a stone, losing more than 1085 in its first 2 hours of trading, and forcing the exchange to halt trading entirely. Stock markets everywhere recorded similar sell-offs – all told, more than $3 trillion of market value was wiped out overnight, at least on paper.

But then markets rebounded sharply. As of Thursday, August 27, the Dow was just 2 percent below where it had been a week earlier, most of the world’s other 292 stock markets had also recovered sharply, and even Shanghai had rallied. Indeed, compared with a year ago, the Shanghai market is still 43 percent higher.

What’s been going on? Well, the disturbing fact is that all these wild gyrations are almost entirely utterly unrelated to “fundamentals” – the rational determinants of shareholder value like expected growth rates, profitability, and competitive position. For example,

Some analysts tried to blamed the wild gyrations on a "currency war" initiated by China's Central Bank with its mid-August 3 percent "devaluation" of the reminbi. In fact this was a drop in the bucket. Since 2005, when it shifted from a hard $US (from 8 reminbi per $ to 6.4), even while the $US has also gained strength against most other currencies. The overall effect, for example is that China's currency has appreciated against the Japanese yen by more than 80 percent since 2013.

Contrary to right-wing China bashers (especially in the US), China’s latest moves are not part of a “currency war,” but an attempt to actually reduce its interventions the currency market – as the IMF has been requesting. If anything, given the desire to reverse capital flight, stimulate domestic consumption, open up its capital markets to foreign bond investors, and allow its currency to play a larger international role as a “reserve currency,” China’s preference is clearly to have have astronger currency. While its Central Bank should have done a better job of telling the world what it was up to, this mild devaluation can’t explain the wild overreaction.

Other analysts have blamed this week’s market madness on a variety of other domestic factors with respect to China – like its declining growth rate, the country’s soaring internal debt levels, the ups and downs of President Xi’s recent anti-corruption drive, and this year’s soaring capital flight. But “China doomsayers” have aware of all these factors for some time. They don’t come close to explaining this week’s wild ride.

For example, while China’s stock market did indeed become overheated in 2014-2015, a correction was already well under way. Shanghai’s market index peaked in June 2015 (at 5166 on 6/12/15), after more than doubling in the past year (from 2052 on 6/12/2014). But by July 2 it was already down 24 percent (to 3912), and by July 31, another 6 percent (to 3664.) By last Monday, it had fallen another 16 percent, to the point where average price-earnings ratios are now about the same as in the US.

Moreover, China’s economy is hardly in free-fall. The IMF’s latest forecast, issued just this week, is for a healthy 6.8 percent GDP growth rate over the next year, about the same as last year, and only slightly below the 7.2 percent recorded in 2013. Nor is the Shanghai stock market a good predictor of China’s growth rate – which makes sense, given that that market, now the world’s fifth largest, is notorious for its “Wild East,” margin-fueled, speculative ups and downs.

Whatever has been going on in China’s economy, it should not have the dramatic impact that it did on the world’s stock markets, especially those in the US and Europe. For example, US exports to China now account for just .7 percent of US GDP.

Just this week we learned that US GDP growth in QII 2015 was proceeding at an annual rate of 2.7 percent, the highest growth rate since 2008. The US housing market is strong; energy prices are low; real interest rates are close to zero; the federal deficit is declining; corporate profitability has been setting records; and big banks are much less highly leveraged than they in the years preceding the financial crisis.

True, US stock markets have now had 6.5 years of steady growth, and investors always feel a little guilty when a winning streak has continued this long. But none of this justifies the 3 to 7 percent daily swings that we saw this week in US markets. And similar market madness has gone on almost everywhere else.

The gap between market valuation and economic value were even more glaring at the level of individual companies. For example, it is true that Apple, the world’s most valuable tech company, has invested heavily in China. When the Shanghai stock market plumetted by 8.5 % last Monday, however, on total trading volume of around $70 billion, back in the US, Apple’s stock price fell by 13 percent in the first three hours of trading –about $70 billion of the company’s market value. At that point, then, perhaps the most successful, dynamic company in the history of capitalism was trading at less than 10 times earnings – compared with a 19 average for all US companies. And Apple’s stock price had fallen 23 percent in the previous two weeks – all because of China.

All this led Apple’s CEO Tim Cook to call reporters and tell them that in fact Apple had just had its best two quarters everfor sales in China – despite all the Shanghai market ups and downs. He expected this trend to continue. And he tried also tried to explain that the “rebalancing” going on in China’s economy right now is likely to improve that country’s real stability and growth over the long run – where by far the largest portion of any company’s – or country’s – net present value is located.

Market Madness Components

Across all major markets, there have been many other similar stories of companies whose stock prices have just experienced a brutal disconnect between economic fundamentals and speculative mania. Keynes was absolutely right – market madness can produce contagions where the “enterprise becomes the bubble on a whirlpool of speculation.”

If this was true in the 1930s, it is even more so now.

First, now we have many more powerful ways to speculate, with an extraordinary range of traded options, derivatives, commodities, futures, exchange-traded funds at our disposal, plus many ways of leveraging and hedging all such tranactions. It has gotten to the point where many of the smartest MIT math wizards and Harvard PhD economists no longer want to teach or work on real-world problems — they head to Wall Street to build quantitative trading models for hedge funds.

Second, the power of trading all these speculative instruments is now amplified across at least 292 public stock markets in 153 countries, as well as markets for for currencies, commodity futures, and debt. In addition, there is also a growing number of “dark” markets not available to the public at large.

Third, since the 1990s, we’ve seen the globalization of 7×24 financial news in almost every market, as well as instant mobile communications, Internet and data services, and mobile financial transactions of all kinds. A feather does not fall in Kinshasa without it being recorded and refracted around the planet as a potentially-tradable event. Citigroup used to say “The Citi never sleeps.” Now it is not just Citi. The whole remotely-connected world is on pins and needles, waiting for that event, and then instantly reacting before someone else does.

But this means there is never enough time for interpretation, nuance, in-depth investigation. “Long-term investing” becomes holding an asset any longer than it takes to find a buyer.

Fourth, on top of all these other trends, there has also been the proliferation of so-called “high-frequency” securities trading, powered by ultra-fast networks and automatic computer trading algorithms, as ably described by Michael Lewis.[4] This now account for at least 84 percent of all stock trades in the US, 77 percent in the UK, and a rising share in other markets as well. [5] Ownership of these systems is reported dominated by our old friends, Wall Street investment banks (61%) and hedge funds (24%).[6]

Indeed, consistent with this, US retail brokers report that on Monday, August 24, high-frequency automatic trading programs accounted for almost all of the trades reflected in 1085-point Dow Jones downdraft, before trading was halted. Retail brokers watched from the sidelines, unable to break into to the trade flow, as one automated program after another followed the rest of the market down, robotically. At that point, in a sense, the entire New York Stock Exchange had been replaced by a very fast,utterly unconscious computer algorithm.

Fast Capitalism

The combination of all four factors just described leads to a degenerate form of free enterprise we will call “fast capitalism,” a generalization of the “fast food” and “fast fashion” concepts to the world of finance. If the folk hero of conventional, “slow capitalism” is the Ayn Rand’s John Galt-type entrepreneur, the business innovator and builder, the folk hero of fast capitalism is the trader/ speculator. The full specification of the contrasts between these really two quite different systems is interesting and important, but we have to leave that for another occasion.       

Reframing the Case for the FTT

In any case, by now we have at least begun to gather the firewood that will be needed for another attempt to light a new, slightly different kind of political fire under the FTT. Rather than merely emphasizing FTT’s revenue-generating potential, let’s argue that the kind of speculative excesses just witnessed in the China case, while severe, are not unique, and that they may be avoidable. On the other hand, they might well also be a harbinger of even worse to come, if “fast capitalism” is allowed to extend its reach, underregulated and undertaxed.

From this angle, the kind of extravagant price fluctuations, way out of proportion to value, that were witnessed in this week’s China madness are just another kind of market “externality” that deserves to be taxed, so that the “polluters” – in this case, heavy traders – have to pay.

When it comes to criticizing capitalism, the Left’s traditional focus has been on so-called “objective” structural factors like “inequality,” “unemployment,” and “poverty” that, at least in principle, can be measured and counted.

In contrast, with respect to the problems described here, we have focused on capitalism as a lived experience — on how it actually feels to live in a society that is subjected to such utterly pointless ups and downs.

The global trading system described here fails not only because it doesn’t make us all rich, “successful,” employed, and well-fed. It fails because it doesn’t make us feel content, fulfilled, or secure. And that insecurity will persist, even if, on average, the system continues to expand.


[1] J.M Keynes (1936), The General Theory of Money, Interest, and Employment. (Cambridge U., 1936), 104-105.

[2] See

[3] See

[4] See Michael Lewis, Flash Boys (W.W. Norton, 2014).

[5] See

[6] See See also;

August 28, 2015 at 05:16 PM | Permalink | Comments (0)

Friday, August 01, 2014

Understanding Argentina's Pseudo-Debt Crisis


ImagesFor those who are interested in Argentina's recent troubles with the debt vultures, here is Chapter VII from my book The Blood Bankers. (New York: Basic Books, 2005).  

No important political or economic event can be Images-6 understood without an historical analysis.  

This chapter provides the essential historical background  that you need to understand where Argentina's current crisis came from, and its "debt problem" is so deep-rooted. 


Griesa_thomas.jpg_1328648940 Images-7Here are a few of my recent TV and newspaper interviews on the subject: (1),  (2), and (3). And here is the 2012 US Court of Appeals decision that upheld US Federal District Court Judge Thomas P. Griesa's 2011 rulings in favor of the vulture funds. 

Download USCOURTS-ca2-12-00916-0.pdf
More later!  Stay tuned! 

August 1, 2014 at 05:30 PM | Permalink | Comments (0)

Friday, February 28, 2014

The Real Wolves of Wall Street

Please click on this image to get a real sense

of what "too big to jail" is all about: CorpCrimes

February 28, 2014 at 09:59 PM | Permalink | Comments (0)

Saturday, August 25, 2012

Please watch this video. Then call your US Senators and Congresspeople. Tell them to open their ears. The US Constitution is at stake.


August 25, 2012 at 02:08 PM | Permalink | Comments (0)

Wednesday, March 07, 2012

Blood Diamonds


March 7, 2012 at 04:21 PM | Permalink | Comments (0)

Wednesday, January 18, 2012

24 Hour Blackout, In Opposition to SOPA and PIPA "Closed Internet" Legislation




January 18, 2012 at 01:38 AM | Permalink | Comments (0)

Friday, August 26, 2011

Gaddafi's Fellow Travelers
James S. Henry

(An earlier version of this appeared today as a Forbes column.)

GaddafiCartoon I recall one cold wintry Saturday evening about three years ago in Vermont,  and a dinner conversation among a small group of former business colleagues, including  HBS Professor Michael E. Porter, the eminent competitive strategist.

He’d just returned from Tripoli, where he’d been working on what he told us was a  “strategy project” for the Gaddafi regime with a raft of consultants from Monitor Group, the Cambridge-based consulting firm that he’d helped to found in the early 1980s.  

For about thirty minutes or so he shared with us how excited they all were to be working to reform the Libyan economy, and how Colonel Gaddafi and his sons now really seemed to “get it.”

Clearly Prof. Porter felt this was all pretty cool. When asPorterked about the issue of democracy and the rule of law, he rather quickly brushed aside such concerns, suggesting that they were sort of beside the point – after all, as the case of China supposedly demonstrated, all those annoying traditional liberal values sometimes just need to get out of the way of progress.

At the end of all this, there was a brief silence. I suspect that most of those at the table were slightly discomforted by Prof. Porter’s blunt, hard-nosed neoliberal analysis, and certainly by his apparent intoxication with the infamous Libyan dictator. But he was,  after all,  an eminent Harvard professor. And unlike us, he’d not only been to the country, but had met its most senior leaders personally.

Finally, however, my friend Roger Kline, a wise old McKinsey partner, broke the silence with a simple, direct, slightly impolitic question,  which would be answered only by the silence that it provoked from Professor Porter:  “Doesn’t it ever bother you at all, Michael, to be working for a terrorist?


As the spirit of doom hovers over the last remnants of Muammar Gaddafi’s 42-year-long dictatorship, and most Libyans are celebrating his departure with sheer delight, there is much less joy in a handful of top-tier academic and professional-class households in Cambridge, Princeton, Georgetown, Baltimore,  East Lansing, and London.Porter'sNeoliberalSoup

For Mighty Muammar has indeed struck out -- contrary to the hopes  and  expectations of some of our very best and brightest experts on  “competitive country strategy," “global democratic governance," "the idea that is America,” and “soft power.”

After all, from their perspective, whatever Gaddafi's flaws, his blood-stained but deep-pocketed regime was certainly not like that of Kim Jong Il.

Unlike Kim, Gaddafi had been willing to pay quite handsomely to PinochetDemocracyBlood hear them spout off about their pet aerie-faerie neoliberal theories of political and economic development.

Meanwhile, Gaddifi's  government also ordered up an expensive grab-bag of university grants, endowments, special education for Libyan police and diplomats, ginned-up degrees for his dim-witted family members, lots of slick lobbying and lawyering, plus a large number of custom press portraits by leading Western academics gurus none of whom ever bothered to disclose the fact that they were all on Brother Leader's  payroll.

This sordid tale first began to trickle out about two years ago from the Libyan opposition,  but it really picked up steam after the Revolution began in February 2011.  The interested reader can look here, here, here, here, and here for  the gory details.

But right now, just as the Gaddafis are about to take their rightful place in history’s waste bin, it is worth recalling the highlights  for several reasons.Hanfstaengl

First, we’d like to make sure that all of the leading academic   collaborateurs who helped to legitimate Gaddafi's abattoir receive their due: the  very first installment of the “Milton Friedman/ "Putzi" Hanfstaengl Iron Cross Award. Friedman_pinochet

Second, we'd like to require all these collaborateurs to donate the millions of dollars of blood money and the  thousands of frequent flier miles they accumulated as unregistered foreign agents for Gaddafi’s regime to Libya’s teeming hospitals and orphanages.

Together, these two simple steps might help to insure that this kind of totally uncool dictatorship rebranding is brought to a screeching halt.


Images This tale really began in 2003, when the Gaddafi regime, seeking to end an annoying economic  boycott,  gave its solemn word  to swear off terrorism forever, cease dabbling in nuclear technology, pay compensation for the 1988 Pan Am 103/Lockerbie bombing, and "accept responsibility for the actions of its officials,” whatever that meant.

Not surprisingly, given Gaddafi's horrific track record, most ordinary Westerners, not to mention the hard-pressed LBUSHBLAIRBERLUSCONIibyan opposition, were deeply skeptical.

But Western leaders and policy experts were curiously much more receptive to Libya’s extraordinary effort to upgrade its image from “terror camp” to “the West’s best new pragmatic partner in the Middle East."

Indeed, it turned out to be a very fertile time for this kind of rebranding effort. First, even though Libya’s U-turn had largely been  motivated by economic self-interest, George W. Bush, Tony Blair, and Silvio Berlusconi welcomed it as a badly-needed victory in the “war on terror.”  Berlusconi and Blair even flew directly to Tripoli to welcome the “reborn” Gaddafi back into the community of nations.

BERLUSCONIGADDAFI Nor, in the US, was the welcome committee just limited to Republicans. In July  2008, Democrats Carl Levin and (now Vice President) Joe Biden played a key role in guiding S.1330 through the US Senate.

This  scurrilous bill, signed into law by President Bush, controversially granted Gaddafi complete legal immunity for the Lockerbie bombing, so long as he paid a (rather paltry) agreed-upon sum to the victims’ families.

Second, Libya’s U-turn opened the door to a whole bevy of Holy-Water merchants and academic medicine men. These instant Libyan "experts" were eager to offer Gaddafi not only absolution, but also their very latest pet theories about everything from “competitive clusters" and "strong democracy" to “the Third Way.”

They were also eager to see test such theories in Gaddafi’s living laboratory -- especially if the dictator was willing to subsidize the  clinical trials. Not since Boris Yeltsin, General Suharto, and General Pinochet have neoliberal academics had such a golden opportunity to test their theories on real live human subjects at country scale.  BLAIRGADDAFI

Third, to a large extent mainly for PR purposes,  Western experts also made much of their opportunity to "dialogue" in person with real live Libyans. Well, perhaps not so much with the nascent opposition, which was mainly abroad, in hiding,  in jail, or dead.

 Of course, according to Gaddafi & Sons, confirmed by US intelligence officials like John Negroponte – who got much of his info about Libya from his brother Nicholas, who got it from Gaddafi & Sons (see below) – the Libyan opposition consisted of radical "al Qaeda” sympathizers or the members of “dissident tribes” in Libya’s supposedly “very tribal” society, anyway.

Their received image of Libya, seen through Gaddafi-colored lens, was curiously similar to the self-image that South Africa’s apartheid regime used to project – a deeply “tribal” society that required strong-armed rule to preserve it  from the radical horde at the gates.

75px-Snake-oil In any case,  Western experts were generally quite happy to take the Gaddafis’ word -- and his moolah --  for all this, and to participate in  one-sided “dialogues” with Brother Leader  himself whenever he was able to spare the time.

This delighted Brother Leader. No doubt this was partly because of  3076876128_8511664b49_s his  deep intellectual curiousity about the very latest  economic and political theories. But, more practically, it also meant that prominent Western expert after expert had to fly  thousands of miles to Tripoli and back just to help his regime flaunt its wares on Libyan State TV and lend him unprecedented respectability.

Ultimately, you see, Gaddafi had  all these neoliberal academics pegged to the tee.

He understood from the start that many were frustrated by their powerlessness in (more) democratic Western societies.  Their secret wet dream is the absolute dictator who takes them seriously, and able and willing to test their theories on command, without the need for messy democratic processes.

Indeed, Gaddafi's personal power n Libya was so complete that he never even bothered to give himself a formal title other than "Colonel."


Toadies_-_Mister_Love_300px From 2004 on, therefore, Tripoli became a kind of alternative Mecca for a veritable “Who’s Who” of leading Western intelligentsia. Among the key interlocutors were Professor Porter; Cambridge  University/LSE’s   “Baron” Anthony Giddens and George Joffe; LSE’s Director Sir Howard Davies (now resigned), and Professor David Held,  its leading expert on “globalization;”  and Monitor Group’s Rajeev Singh Molares (now at Alcatel), Mark Fuller (recently resigned as its Chair), and Bruce J. Allyn (formerly the head of Monitor’s Moscow office).

75px-Francis_Fukuyama Others who tagged along for the camel ride included Ann-Marie 75px-Lewis-pre Slaughter, Dean of Princeton’s Woodrow Wilson School; Princeton Professors Bernard Lewis and Andrew Moravcsik; the insidious neo-con Richard Perle (2 visits); MIT Professor Emeritus Nicholas Negroponte (several visits), brother of  US DNI John Negroponte, and the former head of the MIT Media Labs,  who was very eager to get Libyan funding for his ill-fated pet “One 75px-Voa_chinese_Joseph_Nye_03Aug10 Laptop Per Child” project; a flurry of other Harvard profs, including the Kennedy School’s Robert Putnam, Joseph Nye, and Marshall Ganz, an organizer-guru who became involved in another tidy little dictatorship, Syria; and Johns Hopkins' "end of history" champion Francis Fukuyama, who made history himself by pulling down a record $80,000 for a single audience with Brother Leader.

Perle  Nor were journalists entirely immune from the attractions of the 75x75 Libyan honeypot. Here,  the Monitor ringmasters also went for high-profile celebrities, including Al Jazeera's David Frost, who collected $91,429 for a single visit.  They also nearly  recruited several others before the project got terminated.  One Monitor project memo reports, for example,  that:

“Monitor approached (Fareed) Zakaria who said that he is very interested in travelling to Libya in order to meet with the Leader….Monitor also approached ( the New York Times’ Thomas) Friedman who said that he was interested in travelling to Libya at some point in the future.

Images-4 Collectively this respectability caravan made dozens of such Gaddafi-tour site visits, logging tens of thousands of First Class miles and receiving millions of dollars in fees to commune about the “New Libya" – all the while helping to launder the regime’s  blood-stained image.

This activity seems to have gone far beyond simply helping Libya to restructure its economy and political system along more open,  competitive lines. Indeed, it is now clear that the regime probably never seriously intended any meaningful reforms, but was mainly trying to curry influence and favors.

The experts’ punch list included such dubious activities as ghost-writing Saif Gaddafi’s PhD thesis; helping to design a “national security agency” for Libya (!), quite probably with inputs from folks like the Negropontes and Richard Dearlove, the Monitor “senior advisor” who ran the UK’s MI6 from 1999 to 2004; offering to ghost-write a puffed-up version of Brother Leader’s collected works;  and, all along, orchestrating a flurry of favorable press coverage in influential papers like the Washingon Post, the New York Times, the International Herald, and the Guardian.

All of this was done without without ever bothering (until this Spring, in the case of Monitor Company) to register as what many of these high-toned folks truly turned out to be:  foreign agents of the Government of Libya.


There are many glaring examples of outright shilling for the Gaddafis by these brown-nosing academic and consulting mercenaries, but a handful captures the essential odor.

Images-7 One good example was LSE Professor Emeritus/ Blair confidant/ Baron Anthony Gidden’s bold March 2007 speculation in the UK’s Guardian newspaper that Colonel Gaddafi’s Libya might soon turn out to be “the Norway of North Africa.” The piece mentioned Lord Giddens’ impressive academic credentials, but  it neglected to mention the fact that he had received $67,000 in fees from Libya, plus First Class round-trip travel expenses for at least two hajjs to visit with Brother Leader and his staff in Tripoli.

Another example is Rutgers Professor Emeritus Ben Barber’s even more wildly enthusiastic August 2007 Washington Post endorsement of the “surprisingly flexible and pragmatic” Gaddafi andImages-5 his “gifted son Saif.” Of course Saif is much more familiar to the rest of us now for his blood-curdling “rivers of blood” speech on February 20, 2011, which contributed mightily to the subsequent polarization and bloodshed.

Images-6 Professor Barber’s piece reminded his readers that he was a  best-selling author and a Distinguished Senior Fellow at the think-tank Demos. But it neglected to mention the fact that he’d also made multiple all-expense-paid trips to Tripoli, for which he’d been paid at least $100,000 in fees by the Libyan Government.

A third example is HBS Professor Michael E. Porter’s February 23 2007 Business Week interview, in which he reported that he had “taken on” a consulting project in Libya,  as if this were some kind of beneficent act. Gaddafi,  he maintained with a straight face, MarkFuller  wasn’t really a dictator after all: “In a sense, decision-making is widely distributed in (Libya). People [consider Libya] a dictatorship, but it really doesn't work that way. That is another reason for optimism.” (Emphasis added).

75px-Monitor.svg Prof. Porter neglected to mention the fact that he and FullerJoe1 Monitor Group, the Cambridge consulting firm that he, plus HBS grads Joe Fuller and Mark Fuller, had founded in the early 1980s, were not only earning several million dollars for their Libyan strategy work, but were also up to their proverbial eyeballs in a second multi-million dollar PR project to bolster Gaddafi’s image.


All this salacious material is interesting.  But did it really have any harmful impacts on Libya?  Or is all this merely frivolous second-guessing?

The answer is that this kind of orchestrated air-brushing of the Gaddafi regime by leading Western consultants and academics clearly was not only enormously harmful to the interests of most Libyans, but also that these negative impacts were entirely foreseeable – and, indeed, were anticipated by many critics who had the same intuitive reaction as Roger Kline (see above.)

✔ The academic white-washing helped to conceal the fact that the Gaddafi regime was enormously unpopular with its own people – that the opposition was broad based, that high-level corruption was rife, and that  the “tribal”/al Qaeda paradigm of the Libyan opposition was simplistic and dangerously misleading, not to mention self-serving for the Gaddafi clan.

Academic air-brushing also contributed to the misleading view that “reforming Libya" was mainly just a technocratic exercise for the insider-elite and their Western advisors,  to which constitutive matters like elections, rights, the rule of law, and genuine popular representation could take a back seat.

The bevy of  big-name Western intellectuals and consultants who courted the Gaddafis not only inflated their egos even larger than they already were, but also encouraged them to believe they could easily  buy influence, as well as arms, in the West -- and delay fundamental political reforms.

In short, the white-washing and the kid glove treatment of the Gaddafi regime by leading Western academics may well have discouraged that regime from pursuing deeper political reforms much earlier, and from negotiating in good faith once conflict increased.Fellowtraveler

In other words, it probably cost lives.  

 If and when the Gaddafi clan is captured and put on trial, either in  Libya or before the ICC, we hope that these courts seize the opportunity to examine the conduct and responsibilty of these  neoliberal fellow travelers of dictatorship very closely.     


So, in the waning hours of the Gaddafi regime,  it is important to recall that Brother Leader and his band of thugs did not simply become a menace to Libya’s people and the world on their own.

Nor was his particular brand of madness simply due to the “usual suspects:” anti-Western radicalism, liberation ideology,  Gaddafi's own imperialistic ambitions in Africa, his idiosyncratic version of political Islam, or even the fact that he spent far too much time spent frolicking in the desert sun with Ukrainian nurses.

No – while Gaddafi’s buddies in Venezuela still portray  him as a stalwart opponent of Western imperialism,  the fact is that in recent years he actually continued to increase his influence in the West only with the really quite extraordinary assistance of prominent, high-priced, incredibly smart, but ultimately quite gullible Western “friends.”

(c) JSH 2011


August 26, 2011 at 04:47 PM | Permalink | Comments (0)

Wednesday, August 04, 2010

A Modest Proposal for Improving Global Tax Justice NOW
James S. Henry


(Note: The following article also recently appeared in Forbes.)

How can we get the world's wealthiest scoundrels – arms dealers, dictators, drug barons, tax evaders – to help us pay for the soaring costs of deficits, disaster relief, climate change, and development?

Simple: levy a modest withholding tax on untaxed private offshore loot

Many above-ground economies around the world are struggling, but Fatrich the global economic underground is booming. By my estimate, there's $15 to $20 trillion of private wealth sitting offshore in bank accounts, brokerage accounts, and hedge fund portfolios, completely untaxed.

Money_laundering Much of this offshore wealth derives from capital flight and the proceeds of past and present tax evasion. Another key source is crime. At least a third comes from developing countries -- more than their outstanding foreign debt.   This wealth is incredible concentrated. Nearly half of it is owned by 91,000 people -- 0.001% of the world's population.  Ninety percent is owned by the planet's wealthiest 10 million people.

146082857v8_225x225_Front Let's tax it. The pile of offshore anonymous loot is now large enough so that even a very modest 0.5% global withholding tax would yield at least $50 to $100 billion a year.

This "global scofflaw tax" could be used to help pay our own staggering unpaid bills for debt service, retirement insurance, and heath care, as well as the developing world's bills for disaster relief and climate change.

By reducing incentives for capital flight and tax evasion, a tax on illicit, anonymous wealth would also help countries to depend less heavily on debt, inflationary finance, and regressive taxes.

Is it feasible?   Yes. The majority of these assets are managed Alg_ubs by the top 50 global banks. As of September 2009, these banks accounted for $8.1 trillion of all offshore assets under management -- 72% of the offshore industry's total. The top 10 banks manage 40 percent.

Images-1 In other words, the real "tax haven" problem is not tiny island havens on the periphery of the system. The real problem is the global "pirate banking" industry, with an assist by the best lawyers, accountants, and lobbyists money can buy. At its core are the world's true tax havens: institutions like JPMorganChase, UBS, Credit Suisse, Citigroup, Morgan Stanley, HSBC, Deutsche Bank, Barclay's, Bank of America, BNP Paribas, Pictet & Cie, Goldman Sachs, and ABN Amro. They are all based, not in picturesque principalities or remote tropical paradises, but in New York, London, Amsterdam, Zurich, Geneva, Frankfurt, Hong Kong, and Singapore.  They fall firmly under the jurisdiction of First World government agencies.3253574971_c8494b57aa_o

Capital may be "mobile," but it rarely travels without an escort. For  decades these institutions have operated "Capital Flight Air," recruiting clients and teaching them how to hide wealth offshore, launder it, and access it remotely.

Now they are going to help us tax it.

Images-3 These highly-visible institutions should be required to withhold a 0827wyly modest 0.5% tax, prorated each quarter, on the value of their clients' assets – which they already track on a daily basis. The proceeds could be turned over to First World tax authorities, with a disproportionate share dedicated to development aid.

Only anonymous wealth should be taxed. If the beneficial owners can show they're paying taxes on their offshore assets back home, they can claim rebates. Most will just pay up.

Images Over time, we can continue to chip away at "tax havens," trying to make the world's 80-odd havens less secret while helping developing countries enforce their own tax codes.Images-2

But that's a long war. The haven system has taken decades to build,  and it will probably take decades to dismantle. Right now there's something simple that OECD countries can do to collect badly-needed revenue from the world's wealthiest crooks – no questions asked.

August 4, 2010 at 05:28 PM | Permalink | Comments (0)

Thursday, May 27, 2010

"Let's Fill Up the Land Rover and Drive to the Mall!"

May 27, 2010 at 03:43 AM | Permalink | Comments (0)

Thursday, May 13, 2010

Haiti: Gov Facing Political Test

May 13, 2010 Port au Prince. Today UN spokesperson Edwin Mueller said the UN was opposed to President Rene Preval' decision to seek an extra 3 month emergency term now, delaying the elections scheduled for the end of Nov. 2010. He said the GOH could easily wait til November to determine if emergency conditions existed that required such a delay, and that elections have been held in other countries under much more turbulent conditions. He also said the UN is witholding further aid to the GOH, and will channel it only to NGOs, pending improvement in the GOH's administration of the emergency shelter camps, where at least 1.41 million people -- probably more -- are now living under miserable conditions.
Separately, opposition groups have today announced plans for protests next Monday May 17, demanding Preval's resignation. Stay tuned!!!
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May 13, 2010 at 02:52 PM | Permalink | Comments (0)

Haiti: No Real Shortage of Land -- Just Political Will

En route from Mirabelais to Port au Prince, May 13 2010
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Wednesday, May 12, 2010

Is Medical Care In Haiti Really Better Now Than Before the Quake?
James S.Henry

(HEUH,Port au Prince, May 12, 2010)

0127-general-hospital-haiti_full_6001 On Monday AP carried a story, unfortunately replayed with no editing by the Huffington Post , which baldly claimed that medical care in Haiti is now actually much better and more accessible than it was before the January 12th quake.

Having spent much of the past week in Haiti visiting nurses, doctors, and medical workers at the main hospital and leading clinics in Port au Prince, as well as several of the largest camps here, I've concluded that this report is, at best, highly misleading.

At worst, it is yet another striking example of sloppy AP reporting and the virtually-unedited brave new world of "fast food" Internet journalism.

While the supply of medical care in Haiti has indeed increased since January, mainly because of the temporary influx of foreign volunteers and donations, the fact is that the demand for most kinds of care has increased even more.

For example, in the aftermath of the quake, there was an immediate need to treat traumatic injuries and perform amputations. That need, which had not really existed before Haiti, naturally got most of the world's attention.

Haiti-earthquake-boy By now that specific need has indeed mostly been met, however. Accordingly, most US volunteer surgeons and nurses have either rotated out, or are in the process of leaving.

However, according to more than a dozen nurses, doctors and health workers at HEUH, the main hospital in PauP, and at the leading clinic at the 50,000 person Camp Jean-Louis, this hardly means the country's medical needs are now being better served than before the quake.

The need for the kind of high-visibility, "ER-" type fly-in care has now been replaced by a surge in other maladies, which may be less visually-dramatic to international TV audiences, but no less life-threatening.

Unfortunately, treating these other less glamorous quake-related medical consequences demands a longer term commitment -- plus basic improvements in nutrition and community health that are -- like Adam Smith's "invisible hand" -- for the most part still nowhere to be seen.

For example, since the quake, there's been a sharp rise in under-5 age mortality and physical illnesses and injuries. These include not only infectious diseases like malaria, typhus, and diptheria, but also tetanus (from rubble), accidental poisoning toxic, injuries due to fires.

I spoke with medical workers at Partners in Health, a leading NGO that has been active in Haiti since the mid 1980s, and now operates 15 clinics here, including 4 in PauP. They attribute this surge in infant illness and injuries to the dire living conditions for the 1.412 million (as of this week) still living in temporary shelters. They also attribute many of the health problems they are seeing for kids and adults alike to the increasing prevalance of hunger and malnutrition in the camps. And that, in turn, is due in large measure to the total inadequacy of Government/NGO food and water distribution -- right up to the present.

The PIH clinic workers that I spoke with also rIMG00585-20100510-1053.jpgeport that there has been a serious increase in mental health problems, due to the quake's unusual capacity to inflict severe simultaneous traumas: the sudden loss, not only of one's loved ones and many friends, but also of shelter, job, savings, community, and sense of security. PIH mental health workers described patients who have recurrent feelings that the ground is shaking, irrepressible memories of the sights and smells of death and destruction, acute fears about entering buildings, nightmares and daymares about searching for the missing.

0f course before the quake, this country had a grand total of 17 psychiatrists, only 9 of whom were public doctors, to serve a population of at least 8.5 million. There were more Haitian mental health workers in any one of New York, Miami, Boston, and Montreal than in all of Haiti.

Now, after the quake, dedicated NGOs like Partners in Health are indeed working hard to beef up their community mental health efforts -- PIH will launch mental health services at up to 4 of its clinics this year.

However, even PIH freely admits that they are just beginning to scratch the service -- and to understand how vast the need is for post-traumatic therapy on a community-wide scale as a result of the quake. This will require a long-term commitment on all sides.

It would also be really helpful if foreign journalists would make a long-term commitment to really understanding this country, rather than treating it as an endless source of "unexpected natural disasters" and "amazing recoveries."

(C) SubmergingMarkets, 2010

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May 12, 2010 at 09:37 PM | Permalink | Comments (0)

Haiti: Getting Food to Hungry People

Outside camp at Croix d S'pres, Port au Prince, May 12, 2010.
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May 12, 2010 at 08:23 PM | Permalink | Comments (0)

Haiti: "Morning Bath"

"All God's Children" Orphanage, Mirabelais, May 12 2010
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Tuesday, May 11, 2010

Haiti: "As Hard As It Is, There's Good People Doing Good Things Every Day."

Alfredo Merat, intrepid Hamptons musician and activist, entertaining the kids at an orphanage in Mirabelais, Central Plateu, Haiti, May 11, 2010.

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May 11, 2010 at 09:50 PM | Permalink | Comments (0)

Haiti: "As Hard As It Is, There's Good People Doing Good Things Every Day."

Alfredo Merat, intrepid Hamptons musician and activist, entertaining the kids at an orphanage in Mirabelais, Central Plateu, Haiti, May 11, 2010.

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May 11, 2010 at 08:48 PM | Permalink | Comments (0)

Haiti: The UN Defines This as Victory

Jim Henry (Tent camp, road to Mirabelais, May 11 2010.)

At the 8:30 am UN Logbase "transitional housing cluster" this morning, a meeting of (overwhelmingly white, non Haitian) representatives more than 25 NGOs and international aid agencies discussed the ongoing challenges involved in meeting the housing and shelter needs of Haiti's quake victims.

An interesting new progress report was distributed, which indicated that as of right now, countrywide, there are an estimated 1.4127 mm "people in need of shelter," including precisely 282,538 households.

To meet the needs of all these people for housing, the UN says that to date 62,732 tents and 563,558 tarps have been distributed by shelter NGOs. In addition, they have doled out some 58,999 tool kits, 107,735 kitchen sets, 196,053 mosquito nets, 339,151 "hygiene kits," 150,994 sleeping mats, and 490,383 "blankets or sheets."

On the housing front, the UN cluster leaders claim an overall coverage ratio of 113%, defined as the sum of "tents plus (# of tarps passed out, divided by 2)" -- though this ratio is still below 50 percent in a few big communes like carrefour (47%) and grande-goave (38%).

Some NGOs representatives in the audience expressed some discomfort with these metrics, however -- especially given the fast approaching rainy/ hurricane season.

For example, one rep from the Amer Red Cross suggested that perhaps "adequate drainage" or "ability to withstand high winds and rain" might be added to the success criteria. And another NGO rep suggested that perhaps the real answer was to accelerate the relocation of those in the camps back to "green" houses -- in cases where their original homes had been certified as sound -- and to speed up repairs to "yellow" houses, those which have damage, but are deemed repairable. He claimed that in many cases such repairs might be cheaper than the kind of temporary shelters that many NGOs have emphasized.

The UN cluster group leader reminded such critics that his forum was only about "transitional housing," and that such "longer-term" shelter, reconstruction, and, indeed, land tenure issues would have to reserved for (some other unspecified) cluster meeting.

To date the "transitional housing" cluster's efforts have raised about 63 % of the $122 million that was budgeted for all this activity through the end of May. The group expects to start another fund raising effort in June to complete its work on "transitional" shelter.

(c)SubmergingMarkets, 2010

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May 11, 2010 at 05:55 PM | Permalink | Comments (0)

Haiti: Shelter Situation, May 10 2010

...According to UN temporary shelter coordinators, overall coverage of 283,000 "households in need," with 1.4 mm people, is 113%. But this counts a HH as "covered" if it has been provided with 1 tent or 2 tarps. Quietly, many NGOs -- for example, the Amer Red Cross -- are scared stiff about the lack of preparation for heavy rains and hurricanes. But the focus of this "cluster" was on "transitional" housing; apparently weather resistant housing is someone else's concern.
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May 11, 2010 at 03:18 PM | Permalink | Comments (0)

Haiti:"Transitional Shelter" NGO Meeting, UN Log Base, May 11 2010

...Lots of white faces, except for Sean Penn, who missed this week's meeting...Little discussion of the flooding threat; some debate about whether people should be encouraged to return to homes marked "green," and whether it is cheaper/safer to help people fix "yellow" (damaged but fixable) housing. One black NGO rep: "Many Haitians are staying in the tents because they think people like you will build them new houses...or are unsure what "green" and "yellow" means, if new quakes are a risk."
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May 11, 2010 at 12:49 PM | Permalink | Comments (0)

Haiti: The UN Goes in Style!

...Countless NGOs (59 big ones), UNICEF, UNCTAD, WFO, USAID...." You can't get enough of what you can't stand."
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May 11, 2010 at 10:01 AM | Permalink | Comments (0)

Monday, May 10, 2010

Haiti: At Least "There's Partners in Health"

PIH Clinic, near Camp Jean-Louis Vincent, in downtown Paup, 5/11/10. 50,000 people, 15K kids, in this camp alone. Just 2-3k are in school. Haitian gov has stopped free food distribution to the camp since March 31. PIH estimates 40-50 % are hungry. Last week alone its new nutrition center I'd 107 kids with malnutrition, included 40 seriously malnourished.

PIH now has 4 such clinics in Paup, 11 more in the central plateau, where its efforts started in the mid-1980s. Last year, before the quake, its $25 mm budget was 2x the entire Haitian gov's Ministry of Health budget. This year, it will spend $40 mm here, supporting more than 5500 community health workers, more than 200 haitian doctors and nurses, the country's only community mental health services, and 100 foreign volunteers.

Meanwhile, the GOH continues to fall down on the job. Last week it finally managed to pay some of the doctors and nurses on staff at HUEH gen hospital for the first time since Nov. Its own outpatience clinics, mobile medical services, and mental health service are virtually non-existent; there are only 9 publc health psychiatrists in the entire country, and conditions at the badly-damaged mental hospital in Paup are zoo-like. Of course the food distribution calamity noted above -- a concession to the country's private food vendors, big and small -- is a triumph of brutilitarianism over humanity.

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May 10, 2010 at 09:54 PM | Permalink | Comments (0)

Haiti: At Least "There's Partners in Health"

PIH Clinic, near Camp Jean-Louis Vincent, in downtown Paup, 5/11/10. 50,000 people, 15K kids, in this camp alone. Just 2-3k are in school. Haitian gov has stopped free food distribution to the camp since March 31. PIH estimates 40-50 % are hungry. Last week alone its new nutrition center I'd 107 kids with malnutrition, included 40 seriously malnourished.

PIH now has 4 such clinics in Paup, 11 more in the central plateau, where its efforts started in the mid-1980s. Last year, before the quake, its $25 mm budget was 2x the entire Haitian gov's Ministry of Health budget. This year, it will spend $40 mm here, supporting more than 5500 community health workers, more than 200 haitian doctors and nurses, the country's only community mental health services, and 100 foreign volunteers.

Meanwhile, the GOH continues to fall down on the job. Last week it finally managed to pay some of the doctors and nurses on staff at HUEH gen hospital for the first time since Nov. Its own outpatience clinics, mobile medical services, and mental health service are virtually non-existent; there are only 9 publc health psychiatrists in the entire country, and conditions at the badly-damaged mental hospital in Paup are zoo-like. Of course the food distribution calamity noted above -- a concession to the country's private food vendors, big and small -- is a triumph of brutilitarianism over humanity.

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May 10, 2010 at 09:54 PM | Permalink | Comments (0)

Haiti: Continuing Medical Crisis

Open air ICU, HEUH general hospital (only public hospital still open in Paup, 5/11/10.
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May 10, 2010 at 09:28 PM | Permalink | Comments (0)

Sunday, May 09, 2010

Haiti: What Would We Do W/O the Olaffson?

...Landmark P aup P "Addams Family" hotel, used as a hospital by the US Marines, 1915-34; frequented by the NY London early jet set, 1950s (Graham Greene, Sir John Gielgud, Anne Bancroft, Truman Capote, Marlon Brando, etc.; young Mick Jagger), given up for dead and revived again and again -- like Haiti. Since 1988, under the tender care of Haitian-American musician Richard Morse and his family.....
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May 9, 2010 at 01:07 PM | Permalink | Comments (0)

Haiti: Using Your Head

Pacot, May 9 2010
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May 9, 2010 at 01:06 PM | Permalink | Comments (0)

Haiti: Not All Is Rubble

Dadeski, Pacot, Port au Prince, May 9 2010
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Haiti: Rainy Season Aftermath

Matisan, May 9 2010
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Saturday, May 08, 2010

Haiti Once Had Fabulous Architects

Marche en Fer, downtown Port au Prince, May 8 2010.
It recently caught fire for the second time.
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May 8, 2010 at 08:29 PM | Permalink | Comments (0)

Haiti: Rebuilding

Croix d S'pres, May 8 2010
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May 8, 2010 at 08:19 PM | Permalink | Comments (0)

Haiti: Most Wooden Houses Survived.

.... Unfortunately Haiti has been largely deforested. Another libertarian achievement: no land reform+ few national forests+rural poverty + no forestry programs. So they built Port au Prince out of cheap cement and "sable blanc...,designed to survive hurricanes but not even 7.0 quakes. "
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May 8, 2010 at 08:05 PM | Permalink | Comments (0)

Haiti: The Perfect Free Market Economy

...Downtown Port au Prince: Marche de la Croix des Bossales, May 8 2010. No regulation, few police, no army, no courts, no taxes, no import controls, no environmental laws, no labor laws, no consumer protection, no social security contributions, few public schools, no public hospitals still functioning, no public medical care, no parks, gov buildings mostly destroyed, no foreign exchange controls....and millions of people willing to work for nothing, and, indeed, sell themselves in slavery. Question: did the world's first slave revolt (in the 1790s) ) really succeed?
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May 8, 2010 at 07:58 PM | Permalink | Comments (0)

Haiti: Cite d' Soleil, end of the dock

May 8 2010
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May 8, 2010 at 07:43 PM | Permalink | Comments (0)

Haiti: There's Always Football

Croix d'Pres, May 8 2010
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May 8, 2010 at 05:32 PM | Permalink | Comments (0)

Haiti: Bootstrapping the Country

Croix de S'Pres, May 8 2010
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May 8, 2010 at 05:30 PM | Permalink | Comments (0)

Haiti: Giving Aid Directly to Hungry People, May 8 2010

My friends "Junior" laForest and Alfredo Merat distributing bags of rice, oil, and pasta in the camps at Croix de S'Pres...out of their own pockets. Most people here have gotten little aid.
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May 8, 2010 at 05:05 PM | Permalink | Comments (0)

Haiti's Next Disaster?

(Port au Prince, May 8 2010)

Here's an interesting problem -- a great example of the "politics of aid" in Haiti, even though you didn't heard much about it from the mass media, let alone Bill Clinton or Michelle Obama.

Three months after the January 12th earthquake, you've still got at least 1 mm people "living" in Port au Prince, Haiti's capital city, in crowded camps of tents and makeshift shacks.

Furthermore, hurricane season is fast approaching: it lasts from June to November here. And NOAA, the US weather agency, says there could be at least a dozen Caribbean hurricanes this year. While they don't predict land fall more than a few days in advance, we know that Haiti is clearly at risk --
In 2008, it was hit by 4 hurricanes that were Class 3 or stronger.

And that was before the quake, when most people were living in concrete houses. Now those are mostly all gone.

The real problem, in other words, is not just "the rainy season;" it is the hurricane season.

The Preval government has recently received nearly $1 billion from foreign donors. But it is not spending nearly enough of that money on new housing or relocation.

Indeed, not long ago, President Preval was quoted as warning people to stay where they are, because, he said, there was a danger of "new earthquakes."

Of course earthquakes are much more unpredictable than hurricanes. But Preval evidently doesn't want to admit that to relocate a million people to better housing and safer land, he's have to have already started --- mandating relocation to rural areas where people came from, and putting up stronger shelters on gov and private lands near Port au Prince, or in the existing camps, for those who have nowhere to go.

The problem is that such a move was politically unpopular. Preval, a lame duck President, has been fighting for an extension of his term, which was supposed to expire in November. Yesterday he got at least a three month extension -- but in the interim, very little has been done about relocation.

Nor has any one else taken charge of this issue. There's been lots of bold talk from the international community about "reconstructing Haiti," and some efforts to rebuild "places that can be named after donors," like hospitals and government buildings.

But none of this really addresses the looming hurricane threat. Unfortunately, many of the hundreds of NGOs that are still here are still focused on "fighting the last war" -- dealing with the continuing dire impacts of the earthquake.

Of course the Obama Administration has had its hands, but to some extent it has also glossed over this looming hurricane threat. In a tough election year, with many Americans facing tough times, providing more aid to Haiti is not exactly popular -- although dealing with thousands of Haitian "boat people" would also be a nightmare.

Apparently the USG also doesn't want to be perceived as "intervening in internal Haitian affairs" by telling Preval to step it up. The US military, which has been helping with aid, is slated to leave the island in June.

Well, Earth to Obama: the US already crossed the Haitian intervention bridge long ago. (... Just to pick a few examples: the US trade boycott with Haiti in the 1820s-1860s; occupying the island with thousands of Marines in 1915-1930; supporting Papa Doc Duvalier and his son in the 1950s-1980s; supporting Gen. Cedras' 1991 ouster of Aristede, Aristede's first return to power in 1994, and his ouster again in 2004...)

So right now may actually be the time for another US intervention -- a humanitarian one, in the interests of saving lives, perhaps as many as were lost in the earthquake.

There's still time -- not much, but maybe just enough to get some of those empty thousands of FEMA trailers down here for people who can't go bsck to the countryside, plus mount a serious effort, mainly through incentives, to get folks able to move to do so. And right now, before it is too late.

We know that the world's donor community has "Haiti fatigue." It feels that it has already done as much as it can do for Haiti, and that the patient has stabilized. Indeed, the International Red Cross and most its affiliates have already moved on, and many other NGOs are also in the process of withdrawing.

Unfortunely the weather gods didn't get the memo about Haiti's "stabilization"....

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May 8, 2010 at 04:48 PM | Permalink | Comments (0)

Cochon Noir d'Haiti: May 8 2010

...Evidently USAID didn't get them all!
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May 8, 2010 at 02:57 PM | Permalink | Comments (0)

Haiti, May 8 2010: Pay Day!

...Workers hired by USAID for $4.80 per day to move rubble are lining up to get paid...hired for two weeks at a time... Perhaps we should try the same approach in Detroit, Hartford, Cleveland, Phoenix..!
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May 8, 2010 at 02:53 PM | Permalink | Comments (0)

Friday, May 07, 2010

Haiti: Croix de S'pres Camp, May 7 2010

...These kids are receiving almost NO help from anyone...the Haitian gov and the top ten families are stealing like bandits...they know who they are, and YOU will too...
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May 7, 2010 at 06:37 PM | Permalink | Comments (0)

Hait: US rice imports, May 2010

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May 7, 2010 at 01:54 PM | Permalink | Comments (0)

Croix de S'Pre may 7 2010

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May 7, 2010 at 01:37 PM | Permalink | Comments (0)

Croix de S'pre, May 7

Home-made camps
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May 7, 2010 at 01:26 PM | Permalink | Comments (0)