Published On: Thu, Mar 15th, 2018

The EU behaving like gangsters on blacklisting

youri_kemp4The former leader of the United Kingdom Independence Party (UKIP) and Member of the European Parliament (MEP), Nigel Farage, in a speech to the EU parliament said the EU was acting like the Mafia. He was chastised for insulting the honourable gentle-people of the EU Chamber and later changed it to “gangsters”. Well, no other words can describe this apparent arbitrary blacklisting, out of thin air and with no procedural protocol, what the EU did to several countries this month.

The European Union’s (EU) finance ministers, under the advice of the EU parliament and, by extension, the subsequent PANA Committee (The Committee of Inquiry into Money Laundering, Tax Evasion and Tax Avoidance), decided to blacklist Caribbean countries like St Kitts and Nevis, The Bahamas and the US Virgin Islands. They have also “decided” to delist Bahrain, the Marshall Islands and Saint Lucia. Other nations they have also “decided” not to delist are Trinidad and Tobago for the Caribbean, along with American Samoa, Guam, Namibia, Palau and Samoa.

Outside of Namibia, you can add the general populations of all of the other countries listed and it does not equal the population of Trinidad and Tobago. That’s how small we are in the grand scheme of things. But shockingly, the EU has named these countries as Public Enemies #1.

What makes the EU such an obnoxious and annoying global partner in this tax-administration affair, is their need to go above and beyond to bully any nation into doing anything. Something that is laughable.

Fact is, their EU political group is trending towards breaking apart in the coming years, following Britain and the infamous and humiliating Brexit campaign and successful vote to leave the EU; and more than likely countries like Greece, Portugal and Hungary and perhaps a few smaller others, will leave as well – regardless of the cost.

So, to put this in perspective right off of the bat, the EU is now bullying smaller nations so that the EU membership takes their respective minds off the failure that was Brexit and other political failings within the bloc, and now they are doing what every other wayward and disillusioned regime does that’s losing salience and relevance with their constituents: Starting a meaningless war, with an assault on smaller nations, hoping to build some nationalist or regional relevance in the minds of their constituents in the EU.

What also needs to be put in perspective is that the countries placed on this blacklist are all outside of the Euro-zone. The EU states that there is no need to evaluate or reprimand any country in the Euro-zone because it is assumed that they are in compliance and are not “tax-havens”. That statement could not be any more false than the moon being made out of cheese.

In fact, the largest tax havens and black holes for money laundering happen to be in developed EU countries such as the Benelux region (comprised of Belgium, the Netherlands and Luxembourg). Oddly enough, Brussels is where the EU is headquartered. But don’t tell them of such hypocrisy, they don’t see it any more than they didn’t think the slavery and violent massacres of indigenous people of colour was just a way to “civilise” them and bring them into advanced practices.

Tomasso Faccio, international tax expert at the Nottingham University Business School, United Kingdom, estimates that out of the $600 billion estimated to be lost due to “profit shifting” from EU companies per year, over $350 billion of that is lost in EU countries like Malta, Cyprus, the Benelux region and Ireland. I would contend that it’s more, because they cannot find the rest under their noses if it was their top lip.

Faccio also claims, and I agree, that the list is politically based on the fact that no EU countries of note are on the list. Outside of Namibia, and I am not sure why it is on the list in the first place – but I assume to give the appearance that the list is not arbitrarily political, you had to throw someone in there – all other countries are either former British colonies or American protectorates/satellite states. No one missed that. At all. Brexit and President Donald Trump must rankle them to the point where their cappuccinos need that extra sugar!

This profit-shifting kick the EU has been on as of late, like a small child stuck at the number 9 in counting his arithmetic upwards, is just another twist for EU members, as said, to shift attention from their political failings as a union and, in turn, shirk their own duties to monitor their own corporations for other nations that do not have the capacity, headroom or concern to do the EU’s work for them.

The unmitigated gall of the EU to ask other countries to monitor their companies for them for the EU to make more money that they don’t send back in aid to the very same countries they bully into doing their work is disgusting.

Sure, there are companies domiciled in jurisdictions all over the world, but they are domiciled in those countries because they choose to be – no one is hiding them. Also, if they are attached to larger corporations, corporations that the EU is supposed to be monitoring and regulating in the first place, how is it anyone else’s business but your own?

So does the EU mean to tell us that they want us to spend our money, our resources, to track their corporations for the EU’s profit – profit they have not shared with the said countries, or even tried to in the past in a meaningful way? One only need look at Haiti to see how dealing with the EU can be. Thank God for the USA, China, Canada, Britain, India, Japan, Brazil, Singapore, South Korea, Russia and a host of other partners.

Furthermore, some countries have committed to doing their own work, watching their own national statistics and tax-mixes and don’t have time bother with yours – an ever shifting tax-protocol and mix in the EU as it is. The end game or reasoning behind the current wave of blacklisting tax-mix gobbledygook is a murky as split peas soup!

To add to all of that, the possible sanctions include a reduction in aid funds from the EU to said countries. Like a pimp to his street-trick, they insult us. Do you mean that all of that EU funding went to Haiti and the Dominican Republic? I’m sure they have benefited from that giant dollop of funding from France and Spain because they are so far advanced than everyone else.

Even when you compare current protectorates to their independent counterparts, there is no stark difference aside from the independent countries that have not been raided and assaulted and raped by EU member states over the past 50 years up to their independence, all have better or equal standards of living by and large. Least of which are the US protectorates of the US Virgin Islands and Puerto Rico, quite obviously.

Even in terms of trade: The Caribbean and EU can stop trading altogether right now today and no one would miss a beat.

In fact, in terms of trade in goods and services, the trade value between the EU and the Caribbean Community (CARICOM) region has dramatically decreased. This was after we signed the European Partnership Agreement (EPA), which was supposed to increase exports from CARICOM and reduce the trade deficit. What we got was a relatively large trade deficit and a precipitous decrease in exports to the EU 28.

In terms of overall trade in goods and services, over 80 percent of that comes from the USA to the CARICOM region. Another 12 percent comes from the BRICS nations of Brazil, Russia, India, China and South Africa and the rest from the United Kingdom. In fact, if you were to take the UK out of the equation, less than three percent of all trade to CARICOM comes from the combined EU 28 countries.

If we were to remove trade between CARICOM and the EU, we can possibly improve our trade deficit overall as a region. Not that anyone would miss anything significant, but there are markets out there and no one should be forced, bullied or insulted by the EU’s gangsterism.

We don’t even need the EU to feed us anymore, not that they did a good job of it in the first place. The revocation of the chump-change money in “aid transfers” they just recently “decided” to assist smaller nations who they left high and dry after independence, while we would take it, we don’t live off of that – that’s our extra pocket money for when we need to travel to the USA for holiday if we choose.

Even so, Britain has always been fairly decent to their former colonies in any event, regardless of what the EU as a whole has done. So a reduction of trade from the EU to The Bahamas, at least, while we would not wish it to happen, is no biggie.

While the merits of tax cooperation is a good, and I see no issues with some of the legislation the Bahamian parliament passed recently to address this and some domestic, reporting and evaluation standards – albeit, if rushed, it can cause a severe depression and one in which if those pieces of legislation was to satiate EU demands on their tax-craziness, then I hope we rethink how we roll those initiatives out and measure them according to the country’s ability to absorb the shock of those reforms.

The last and only measure for now that the EU “decides” to take action on the blacklist non-performers is to ask financial firms and corporations to not make investment in our financial services industry. Which would mean, back to one of the central points of this article: The EU would *gasp* be forced to do their own work and monitor their own corporations and ensure only non-tax dodgers invest their money worldwide. I think the EU should do its own work!

By Youri Aramin Kemp, BA, MSc., CFM, AFA, ChE
Kemp is an Associate Editor of Caribbean News Now and the CEO of KEMP GLOBAL, a management consultancy firm based in The Bahamas

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