The long shadow of the Panama Papers

For the last few days, world news has been abuzz about the world’s as of yet largest leak of private information, which are now being called the “Panama Papers.” Publicized by a German newspaper a year after being given them, the information is from a Panama-based investment firm specialized in offshore and otherwise tax evasive practices. Major names around the world have been listed as having engaged in hypocritical and at times criminal financial transactions designed typically to avoid paying the full tax cost owed to various countries and localities.

One of the central figures in the leak was Iceland’s former Prime Minister Sigmundur Davíð Gunnlaugsson, who resigned on Sunday. Elected as a reformer who largely delivered on promises to turn Iceland’s economy back around, the revelation that he had profited from the financial reforms he oversaw through an undeclared and indirect investment essentially invalidated his political legitimacy.

2016-04-05_1414.pngCountries in which heads of state, high ranking public officials, or close associates have been named in the current leak.

Although uniquely duplicitous and corrupt, his place in the broader story of the Panama Papers actually speaks to a broader worry. His gains from Iceland’s economic restructuring weren’t just undisclosed, they were also untaxed. There’s a palpable failure of an Iceland-like series of new restrictions and standards on banks to address the ability of him and other Icelanders to strategically engage in capital flight. With Iceland facing warnings from international financial institutions over the costs of their response to the global crisis, this isn’t a trivial matter. It’s a shortfall in the millions if not billions globally, which in a political climate of widespread austerity has been felt worldwide by the classes who don’t have hidden bank accounts.

Outside of the Sanders-Clinton fight eating up US leftists’ attention, this is one of the system problems the “Warren Wing” has been hinting with growing volume. In the wake of anemic banking reforms, Elizabeth Warren’s individual focus has shifted somewhat towards addressing capital flight, even if just rhetorically. That’s just about the only ideological contingent in the US that can talk about this easily – for civil libertarians currently defending encryption this is an example of the public costs that high tech and high price secrecy can incur, for the more corporate friendly this only demonstrates the shady ethics of the economic order they defend, and for domestically-focused social democrat factions this represents the international scale of the problem which they often don’t acknowledge.

With a Democratic primary debate barely more than a week away, this is precisely the issue that both of them can and should be pressed on. Let’s see if CNN’s Wolf Blitzer brings it up.

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