About Aylan and your 10EUR T-shirt. What this refugee crisis is really telling us

Aylan Kurdi, a 3 years old Syrian refugee boy, who was found dead on Wednesday, September 2, laying on the beach near Bodrum, in Turkey and whose picture has gone viral shocking millions of people around the world, managed in an impressively extraordinary and stark way to tell and remind the developed world what it normally prefers not to see: people – a lot of innocent men, women, children, who dream and hope for happy, fulfilling lives, just like me and you – die every day as a result of war, conflict, insecurity, drought, famine, extreme poverty.

In the 21st century, when with wealth of information we wake up and go to sleep, Western world has developed and institutionalized a high degree of self-protection and self-censorship. Warning signs such as “this article/video contains images that readers/viewers may find distressing” have been introduced and considered as a norm to prevent people from being too disturbed, provoked, upset. If we don’t see things like suffering, pain, misery, hunger or death, we don’t know about it and do not feel connected or in any way responsible for what we see.

But, Aylan’s picture did not have this warning. And he was probably also white enough.

Its bluntness hit even the biggest cynics and sceptics. Mr Cameron, British Prime Minster, who has been trying very hard to reduce the number of refugees and immigrants coming to the UK, had to acknowledge that Aylan’s picture ‘deeply moved’ him.

But, before and after Aylan there have been many more children dying like this. Right in this moment there are about 60 million refugees worldwide escaping suffering, uncertainty, hunger, poverty and death. Many of them are refugees in their own countries. About 350,000 people, most of them from Somalia fleeing conflict and drought, currently reside in Dadaab, Kenya, the world’s biggest refugee camp. Lebanon with 4 million inhabitants is giving shelter to more than 1.5 million refugees from Syria and Palestine, which means – 27% of its total population are refugees. Also, Pakistan hosts about 1.6 million Afghan refugees. And, last but not least. Turkey is now hosting about 2 million refugees – half of total Syrian refugees.

In contrast, in 2013 28 EU countries together hosted less than 500,000 refugees and the USA was the only Western country, which made the list of the top 10 refugees’ hosting countries. This year more than 370,000 refugees arrived in Europe, which is about the same size as the total population in Dadaab camp.

Though many Western people have been deeply touched by Aylan’s death and have felt compassion for all the people searching safety, equally many people and governments have expressed concerns about the massive influx of refugees with wrong skin color, religion, and ethnicity, clothing, language, work ethics and moral values.

Moreover, dramatization or even criminalization of refugees seeking escape in Europe has transformed the initial ‘refugee crisis’ into ‘Europe’s security and economic crisis’, questioning refugees’ vulnerability and safety at home and presuming that many refugees together with many more economic migrants (about 20 million non-EU migrants currently living in EU) just come to Europe because they want to live as good as Europeans.

And, here are few important questions we all need to ask:

  • why a Syrian, Sudanese or Afghan girl or boy does not deserve to live as good as a European boy or girl?
  • Let’s think further – why Syrian, Sudanese or Afghan girl CANT live as good as European girl in their home countries?
  • If they could live at home as good and safe as they can in Europe, would they leave their home country?

I will not discuss here ‘common sense’ things such as – on the basis of the international law, refugees have the right not to be penalised for illegally entering a country if they request asylum and if their safety cannot be assured in their home country. Each country can come up with their own policies and programmes to ensure adequate solutions, which meets refugees’ basic needs and takes into account host country’s context with regard to social integration, employment, social benefits, eventual repatriations etc. But, there is no question that refugees should not be given shelter. Criminalization of refugees is against any humanitarian principles and human rights.

But, there are much more fundamental things which Europeans need to understand when thinking about this migration phenomenon in a broader context and with longer-term perspective.

For centuries Europe particularly has been the lead driver of the globalization and internationalization on all levels. Europe together with the USA have been passionately spreading the uber-liberal ideology arguing that’s the magic door to wealth, wellbeing, never-ending growth etc. Moreover, especially since 1980s international trade, foreign direct investment, open societies, privatization, single markets, financialization of economy, global competitiveness and ‘race to the bottom’ have been the main tools developed and advanced by the Western countries to liberalize inter-state relations and bring the promised economic benefits.

However, as we all know, there is no such thing as free lunch. That development, high living standards and welfare, which western societies have experienced during the last decades, has a price. Somebody is paying for that.

Just stop for a moment.

Look at the t-shirt or top you are wearing, for which you probably paid 10EUR or 10GBP or even less if you bought it in Primark. Ok, some of you may have paid even 50 or 100 EUR but probably it is only because of the label or a bit better quality fabric. We probably all think, that paying double or triple price for that T-shirt would be too expensive, but from the other side – think about the person who made that 10EUR T-shirt. He might very likely be a 12 years old child working 10-14 hour long work day in a factory, which would not meet normal health and safety standards, and who gets paid few dollars a day for that. And, he does that because 1) we love ‘race to the bottom’ so therefore – he is the most competitive one selling his time and skills for the most competitive price, 2) he has essentially no other choice (his parents may not be able to send him to school) and 3) the western societies love buying things at the lowest possible price. But, we would not, of course, make those T-shirts in our own countries ourselves, because we have labour unions, labour rights, and we would not accept such a low pay as it would not allow us to normally survive and live. But, you see, for some reason we think that it is ok for that child in the developing country to do that. It is ok for our western companies to move all their production to the developing countries so they can utilize this cheap labour to satisfy us – greedy consumers who love bargains and 10EUR T-shirts.

How much of the things you wear or eat or otherwise consume are actually produced in the western country where even the lowest-paid staff could relatively well survive? Think about how much your wellbeing depends on the people who work, produce all these nice goods but still live in poverty?

(p.s. Those who love KitKat chocolate should read this article)

Where next

It is not about compassion and charity what these thousands and millions of refugees and migrants ask or deserve. Though in short term indeed they need shelter, food, safety, protection and opportunities to support themselves (and yes, this is why Europe has to demonstrate its solidarity and open its borders to those who search refuge), what is required more than ever is acknowledgment that the current economic system designed and advanced primarily by the rich countries is fundamentally reliant on poor countries and societies essentially subsidizing wealthier countries and lifestyle of Western societies via liberalized economy’s principles – race to the bottom/ competitiveness on global level, cheap labour, import of cheap raw materials, liberalization and internationalization of domestic markets, unfair and unsustainable tax system. There are more than 230 million migrants, which is more than 3% of the world’s population, who leave their home countries for better living. Nowhere near that number would have been that high if it was not for the unbalanced, unfair international economic system we have, deteriorating environmental situation and inhumane political regimes. We need to support refugees today, now, but tomorrow we need to rewrite the international rules to make them more progressive, fair and just.

Moreover, the foreign aid politics and business (135 billion USD a year) should be revamped and reorganized to ensure that it does not become as one of the cornerstones of the donor countries’ national export and foreign policy strategies. For example, USA is the biggest food aid donor, but all food has to be produced in USA. Who this food aid is helping more in the long term – American agriculture mega-businesses or developing countries? Also, UN Office for Humanitarian Affairs this year has received only 35% of the required funds to help those in need. Why we then feel surprised that certain humanitarian crises escalate to a level, which gets out of control?

It does not matter at which level – municipal, regional, national, European, international – we look, but we all know the truth – human capital will always follow resources. global wealth distributionLiberalization promotes centralization of these resources. Therefore there are only 2 options: either we accept that we need liberalization of movement of people to make it compatible with liberalization of movement of capital/ resources; or we reform our international trade/ tax/ investment laws embedding fair and just redistribution mechanisms, allowing countries around the world to develop and flourish. If we want to build walls for people, we will need walls for resources as well.

Some of the liberals would also argue that obviously many of the developing countries have failed to develop because of corruption, money laundering, waste of public funds etc. But, if you ask then Western countries to carry out progressive tax reform, which would end tax avoidance, evasion and dodging and terminate the harmful, massive network of tax havens, thus making it so much more difficult for corrupt politicians and large companies to do their dodgy things, then somehow enthusiasm to fix the problem disappears.

Maybe Aylan’s picture will become an alarm bell awakening the conscious of the Europeans to make them realize that the West is shaping both directly and indirectly the conditions how people live across the world and therefore their misery is often a consequence of our own decisions/ actions and choices. So, maybe it is guilt what we need to feel not compassion? Or if we can feel compassion for Aylan, can we also feel compassion for all those right now sewing jeans and 10EUR t-shirts we will buy tomorrow, or harvesting bananas or coffee beans, or working in horrible conditions to get those shrimps for our seafood sandwich? Jamie Oliver recently said if it was not for workers from abroad “every one of my businesses would close tomorrow”. And, how many Western businesses would close tomorrow if they could not produce their goods for cheap in China, India, Bangladesh, Ghana, Nicaragua, Mexico etc?

We need to understand that our wellbeing and our life style is largely based on the poverty, insecurity, vulnerability of other people. Even if we don’t know them and don’t see them, they are there. But you see – you never know, one day they may knock on your door because you never cared what they deserve for making your life so comfortable, so safe and so good.

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Walmart – master of tax avoidance

Walmart is the second biggest employer in the world (after army of China). Walmart is one of the most active multinational-companies lobbying for TTIP (EU-USA trade agreement) and TPP (Trans-Pasific partnership between USA and Pacific countries). And, Walmart, as the brand new, hot off the press research by Americans for Tax Fairness shows, it is also a very big and smart tax dodger. Make your own conclusions about Walmart, about how and why rich are rich, and who the real beneficiaries of TTIP/ TPP will be.

walmart

the price we pay

Hundreds of billions of dollars every year governments around the world are losing. How? The answer is – tax havens. The Price We Pay – this is probably the newest documentary on modern capitalism’s one of the cornerstones – tax havens, through which multinational companies can dodge or avoid paying tax. No one likes paying tax, one could argue, but equally, tax is one of the cornerstones of the social contract between the state and its citizens.

Moreover, as in this recent interview the director of this documentary Harold Crook puts it, tax havens contribute to increasing inequality, social unrest and disconnection of politics from the society which it is supposed to serve.

 

all you need to know about super-rich

This BBC documentary The Super-rich and Us (demonstrated in early January 2015) is probably the best film so far to shed some light on the ill-famous ‘1%’ and their lives. That 1% who caused global financial crisis in 2008 and who are living better than ever. UK has the highest number of millionaires per capita, yet it is also one of the most unequal developed countries, therefore this film asks – how come?

This film is about the myth of trickle-down effect, pro-rich tax regime (UK as the most important tax haven in the world and opportunities for innovative tax avoidance), corruption (HMRC helping companies to avoid or reduce tax), inequality, Thatcher’s ideological heritage, justice, and last but not least – democracy.

Watch it.

 

What if financial sector, military industry and tax havens have serious impact on global security?

NATO is changing and the world is changing. 65 years ago, when NATO was established, its key defined objective was to “safeguard the freedom and security of its members by political and military means”. However, over these years, not only security concept has expanded significantly, but the content and relevance of political and military means available to NATO to address the security challenges also has changed. If the threats change, weapons and tactics should be changed accordingly too.

Military aggression and threats is not the one and only security problem anymore. National governments and security experts have identified several new security challenges we face in the 21st century; as the most common ones are: cyber attacks, terrorism, energy security and environmental challenges.

However, in my opinion, one of the most overlooked security challenges by the transatlantic community is the liberalized financial sector and commercialized military/ defense sector. Many of the NATO members are strong proponents of free market economies, financial liberalization and host some of the largest financial centres in the world. Therefore, one may even argue that my statement contradicts with the Alliance’s values and spirit of freedom.

But let me highlight just some of the most detrimental aspects of liberalized financial sector and commercialized defense sector and their impact on the global security:

  1. Comparatively unregulated banking sector with the tax havens at the forefront nurtures abusive, undemocratic, corrupt regimes allowing political leaders and elite to carry out corruptive, money laundering as well as tax evasion activities; sooner or later this leads to destabilization of the country or the region and due to negative effects on society and legitimacy of political leadership, it can create security risks within particular country and abroad. Moreover, ability to hide millions and billions of USD in bank accounts of Western banks make such leaders fearless and untouchable. No matter what they would do, their bank accounts would remain safe (think about Gaddafi or Putin, for example, or 35billion USD which leave Africa each year as a result of tax evasion and other illicit financial transactions via tax havens).
  2. The same tax havens and secrecy jurisdictions (Switzerland, Lichtenstein, Cayman islands etc) facilitate, promote and profit from illicit money flows which can allow terrorists, rebel groups and extremists directly or through under-cover organizations to accumulate and transfer funds which can be then used to purchase weapons, carry out terrorist attacks etc.
  3. Commercialization and liberalization of military industry over the last decades offers only two incentives – to produce more arms, to sell more arms and to make greater profits. Military industry, which is one of the biggest lobby groups in the USA and UK, is probably one of the most subsidized business sectors and has developed a very asymmetric and dangerous demand/ supply relationship with the state. Outsourcing of defense services to the military industry, which cant exist without conflicts and problems, may per definition mean that conflicts remain unresolved. Moreover, business/ profit interests of military industry may jeopardize political and diplomatic efforts to solve conflicts. Just recently, only because of massive international pressure, French military company stopped delivery of military equipment to Russia, which had just occupied Ukraine. How effective NATO campaign defending its ally Ukraine and its sovereignty can be, if one of its members is selling arms to the aggressor?
  4. Since the governments have been required to commit to military spending at 2% of its GDP, the less important aspect has become the quality of spending. Afghanistan is one of the examples where practitioners from the field have openly been questioning the cost-effectiveness and impact of the military spending.

It’s not a rocket-science, what is required from the current and future global political leaders; it is 1) long term thinking and 2) courage to compromise their own individual country interests (boosting GDP through billion-worth military industry business and keeping tax havens going as a result of massive lobbying from the financial industry) to achieve global peace. Growing GDP through arms manufacturing is inhuman. Praising boosting global financial centres in London, New York, Frankfurt etc which may contribute to world’s instability and insecurity, is cruel.

Security should not be viewed only as a defense and preparation for the attack. Security should equally mean prevention and proactive mitigation of risks. Security should mean peacebuilding not only manufacturing of more weapons. No innocent human being should die as a consequence of misused freedom of liberalized market.

misbehaving in a tea party: review of UK Gold

If there is one good outcome of the 2008 financial crisis followed by cold-blooded austerity policies, then it is this increased attention to the massive tax avoidance, which has been taking place for years and years. This excellent documentary UK Gold (rent full movie here) is yet another contribution building greater awareness in society about the ugly side of the British wealth and the wealthy. It is about complete kleptocracy, clientelism and lack of democracy.

This film, firstly, disproves the myth that the most notorious tax havens like Cayman Islands, British Virgin Islands etc, are independent, autonomous from the British government. This argument of their autonomy from the UK government, which British government often uses to explain its in-action with respect to abolishment of tax havens, is farce. In reality all of these ‘independent’ territories have British governors appointed by the Queen (in addition to the locally elected governments) who enjoy power and influence over their internal policies and rules.

The facts are:

  • 1 in 4 UK companies pays no tax at all;
  • 25bn GBP a year UK is losing because of tax avoidance;
  • 360bn USD developing countries are losing as result of tax avoidance via tax havens (for comparison – annual international aid is about 120bn USD);
  • 98 out of top100 FTSE companies use tax havens;
  • Cayman Islands is the 4th largest financial centre in the world and has more money than NY;
  • Corporate tax avoidance has been constantly rising;

 So, with these facts on the table, one may wonder why then British government is so unwilling to get rid of tax havens? Why it tolerates this escape from responsibilities, undermining of democracy and theft of common purse?

Some of the explanations are:

  • Legislative process has been captured by multinational companies and influential lobbyist groups;
  • Government’s own links with tax havens or their own reliance on tax havens to maintain or improve their wealth (apparently Cameron’s inherited wealth was very much created through tax havens);
  • Over 60 MPs have relations with companies related to tax havens;
  • The City of London, the mother of all tax havens, is the top lobbyist in the UK, the oldest lobbyist in the world, and has a designated seat in the parliament;
  • Since mid 20th century international finance has been the key sector, which has preserved UK’s world power status. Without the City of London and its worldwide cobweb of tax havens and further plans of expansion and influence (the cityUK is behind the ambitious project of making Nairobi the international finance centre) UK would be a medium-size economy;
  • what will the firms like Maples (the leading international law firm advising financial, institutional and business clients around the world on the laws of the Cayman Islands, Ireland and the British Virgin Islands).do, once they wont be able to makes fortunes out of advisory services on ‘developing innovative and effective solutions’ on tax matters?

The last G20 and G8 summits indeed have expressed concerns about the negative impact of tax havens and have even called for concrete actions against them, however, in reality the hyperactive signing of cooperative agreements is far from sufficient to make a significant change. It’s like putting a plaster on an infected wound; nobody will be able to say that you have not done anything, but it will only hide the infection but bacteria will continue growing.

US and EU has been more progressive in addressing tax haven issues, but will they be strong enough to challenge the UK’s status quo?

One of the main narrators in this film, father William Taylor, who is extremely passionate about tax justice issues and wants to make politicians and companies accountable for this theft, ironically calls his own actions of speaking up and challenging the establishment as ‘farting at a tea party’ – you are just simply not supposed to talk about these tings! How dare you, but we should. We need more fathers William Taylor and more such noise-making films like the UK Gold.

Who is broke?

Last weekend thanks to the Tax Justice Network an TippingPointFilmFund i had a chance watch absolutely fascinating film “We are not Broke” which every single person in the USA and worldwide should watch. And, not because it probably will make you angry (i hope so), but because we need to leave the comfy zone of ignorance and wake up. In essence this film is about massive tax evasion by multinational companies (MNCs), which in a way is not illegal, but for sure is not right and fair either. Because of the tax regime loopholes, tax havens, transfer pricing and financial innovations, many billions of dollars and pounds and euros are never reaching the governments’ wallets.

Though official corporate tax rate in the USA is 35%, in reality some of the MNCs like Bank of America, GE, Chevron etc have been paying 0%! Now, when was the last time you were able to pay 0% tax of your salary??? Or, when have you been able to negotiate your tax rate?

In 2008 when Obama ran for elections it was one of his commitments to close tax loopholes. But, not much progress has been made so far. His dependence on donations from the financial sector and multinational companies (MNCs) in order to stay in power (last USA presidential elections cost about 7-8bn USD) is probably the answer to this. Moreover, in 2010 lobbying industry in USA was worth 3.5bn USD which is obviously working hard to maintain ‘status quo’ or make even greater loopholes. Complexity of tax system as such in itself is a problem which allows tax optimization experts to explore the limits of their creativity.

In this film though, there was hardly ever mentioned word ‘corruption’ but in all honestly this is what it is. In 2004 government did an experiment and for one year allowed repatriation of profits being hidden abroad for 5% tax only (instead of 35%). Ability to openly abuse the system without being punished has effectively been legitimized and accepted by the authorities.

This privilege to avoid tax or to negotiate tax is based on the argument that in such a way MNCs are creating more jobs and increasing the global competitiveness of these MNCs and hence the USA in general. This would make sense only if all companies in the USA would have a chance to negotiate their tax and if only that money which was not paid in tax would have really been invested in more jobs instead of being hidden in tax havens.

Also, by avoiding tax, MNCs de facto are subsidized by everyone who is paying tax as they use the public infrastructure and human capital which is a direct result of public investment (education, health, social welfare, roads, etc).

To sum up, indeed, we are not broke. Broke is the system.

for those who are in the USA – you can watch full film here.