The grand topic of the past month remains: the Panama Papers and their economic and political ramifications which for some could culminate in their personal Waterloo. The first political victim of the Panama revelations is Iceland’s Prime Minister, who was forced to resign on the account of his Panamanian company.
Allegedly, in the circle of Vladimir Putin’s associates, amounts in billions were stashed in Panamanian companies. Putin, however, will hardly come to any harm on this account. A far greater damage – despite a vastly negligible amount – could cause the turmoil surrounding the British Prime Minister David Cameron. Cameron has invested 31,000 pounds in a Panamanian investment vehicle of his, in the meantime, deceased father. Brexit advocates (Brexit means Great Britain’s exit from the EU), who at all cost want to leave the European Union, are scenting a scandal within their reach. Considering that Cameron counts among barely a few prominent Brexit opponents, should his credibility indeed suffer, Brexit would move that bit closer. Paradoxically, the damage caused by a 31,000 pound investment could be immense should the Brits vote – yes – when the referendum takes place on 23 June, 2016.
The economic consequence of the Panama Papers is above all the new inspiration it gave to the fight against tax havens and tax loopholes. After their year-long one-sided preoccupation with Switzerland, politicians finally see it also fit to look into the affairs of many island states. And this is precisely where the challenge comes for David Cameron. Whether it is Jersey, Guernsey, Isle of Man, Bahamas or the British Virgin Islands, they all belong to the British Crown or remain under the British influence otherwise. The ball seems to be now in the Brexit supporters’ court within the British parliament that until now has made no political move towards closing tax havens within its own sphere of influence. Eager Brexit opponents have been instead denouncing Cameron, who exploited, for his own benefit, the practice tacitly supported by the parliament. The Panama Papers have given also a new impetus to the battle against tax evasion made possible thanks to loopholes. The current course of action aims at instituting new legal regulations that will impose more transparency on internationally operating companies. A number of governments are hoping, thus, for higher tax revenues when profits are finally taxed there, where they also accrue.
The question persistently coming up in the media, why virtually no US-citizens would appear in the Panama Papers, has a fairly rational answer. Why would anyone fly to Panama, if one could equally well take a train to Delaware or from Washington, DC reach the location even by bike (70 km). Indeed, it seems that many have opted for this solution. By way of example, there are no less than 285,000 companies registered at one single address in Wilmington in northern Delaware, two of which belong to Bill and Hillary Clinton.
No joy from the Panama Papers seems to be deriving Norbert Walter-Borjans. The finance minister of North Rhine-Westphalia who has made it his life’s mission to acquire stolen Swiss bank data was rather upset when the latest revelations have shifted the focus to other financial centres and, thus, away from his person. To make sure that his past deeds do not fall in oblivion, the bustling SPD politician called, without further ado, for a press conference during which he made public that he will now provide also other EU countries with his illegally obtained data. Following the agreement on automatic exchange of information (AEoI), the Westphalian politician seems to mourn the times in which one could deal a blow against Swiss banks with a medial club. Walter-Borjans has stalled in a world that no longer exists.
In the referendum held on April 7 the Dutch have clearly rejected – with more than 60 percent votes – an EU Association Agreement with Ukraine (EU partnership to remove trade barriers). The resistance to the EU negotiated Agreement stems partially from fear of it being a preliminary step towards Ukraine’s full EU accession. With the Dutch referendum outcome the right-wing populists in the Netherlands (Geert Wilders) and Europe by large, receive a further boost.
Your Wealth at a Glance.