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 . The Weekly Update news bulletin offer news and commentary regarding a number of issue which are of interest or concern to clients. Such topics may include offshore company formation, trusts, banking, investing, real estate, expatriate matters, residency & second passport matters, and other topics concerning the Dominican Republic & Panama. |
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(From International Press Releases appearing in various daily newspapers this past week ,June 2000): . Wednesday June 28, 2000 – PANAMA. Mr. Victor Juliao – Panama’s Minister of Economy & Finance, has publicly reaffirmed what we already know to be true. Namely, that Panama has no interest in comments or criticisms being voiced from other nations regarding banking secrecy in Panama. It was very interesting to note that Mr. Juliao also indicated that he realizes these complaints about “banking secrecy” are really only about taxation matters and citizens that may be expatriating from their home countries. In this regard, Mr. Juliao has affirmed that foreign governments that have issues with some citizens regarding taxation matters should not look to Panama. as the resolve to such problems. Panama will not break banking secrecy simply because an account holder has a tax complaint with another country. . Friday June 30,2000 – SWITZERLAND. Mr. Kaspar Villiger, Switzerland’s minister of finance, has issued a statement saying that banking secrecy will no longer be a cornerstone of government policy with respect to Swiss Banking. The European Union has asked Switzerland to eliminate Swiss Banking secrecy for accounts held by European citizens before the year 2010. According to the comments now publicly made by the Swiss government, it seems they are in agreement with this. . Many people often ask why we have such faith in Panama & other Latin American countries, such as the Dominican Republic. With respect to banking, asset protection and privacy issues, the answers can be found not only with the political systems of these countries (legal systems), but perhaps more importantly with social and historical factors. These social and historical factors often play a very important role because they are sentiments ingrained in the “soul” of the people. That is to say, in a democratic society, it is the moods and sentiments of the people that dictate both policy and law (and whether or not such laws or policies are changed in the future). . First and foremost, it is important to note that Latin Americans do not “hate” Americans or Europeans. They very much dislike foreign governments trying to dictate domestic or foreign policy in their own country, but they do not dislike the individual citizens of these countries. Panama has learned “first hand”, what it means to have a foreign country enter with soldiers and have their own citizens killed. The 1989 US invasion of Panama was most certainly a “wake up” call to Panama itself, and the rest of Latin America. One may argue that such a leader (Noriega) was a “bad guy”, and Panama has prospered greatly since his “demise”. However, what right does one country have to enter another and in effect kidnap the leader of that country because they disagree with him (or her). What kind of message does that send? To add insult to injury, what does it say when those same troops end up shooting at some of the local population that supported such an action? . On a grander scale, and more directly applicable to every other Spanish speaking country in the Caribbean & the “Americas”, is the issue of discrimination in business and on a social level. After all, we know that every Latin American is involved in the drug trade, just as every Italian is involved with the Mafia. Even though the US Spanish speaking population is the fastest growing economic segment of the US economy at the moment, such discrimination or “stereotypes” still exists. Latin Americans are well aware of it, but they “keep it to themselves”. In this regard, Latin Americans are much more like Europeans in that they do not publicly vocalize everything the way Americans do. You think or have no idea that they feel this way, because it is not openly discussed, yet it is an integral part of the Latin American “experience”. Latin Americans are not stupid, and they have been very “hurt” by different types of discrimination, they just prefer to keep their mouths shut about it. . In many respects, the so-called “Global Economy” means that just as business is in competition with each other, so are individual countries as well. Individual nations compete for new business, jobs for its citizens, investment capital and even new citizens (retirees). It is ironic that many countries are very vocal in their argument for “open trade” and for “competition”, yet they often start to whine when the “other guy” starts to win. You cannot say you love freedom and a free market economy, and then complain when the other guy beats you at your own game. It does not work that way. . Smaller countries basically have two choices. They can go begging to the US or Europe for money (with all the strings attached), or they can learn how to “compete” and build up their own economies. They say that, “He who has the gold makes the rules”. Many smaller countries have found out all too well what this means when it comes to being reliant on other countries for economic aid. The only notable exception to this seems to be Japan, who willingly has built schools and provided other assistance without any “political” strings. The Japanese are pretty smart in this regard, and why Japan is well respected in Latin America (and why the US is not, at least privately anyway). . There was a “buzz word” heard quite a bit under the previous Bush administration (Senior). That term was “New World Order”. Many took the inference to mean that “communism” was dead, the US was in charge of the world, and that a new “agenda” was created. That agenda, for many, would then seem to include policy, which would basically fill the coffers and further the political aims of the countries participating in this new “club”. As such, that agenda includes doing what ever is possible to further support government sponsored socialism and dictate how the world is “supposed” to operate. Well, based on past and current events, it would seem that this is in fact so. Western governments have increased social welfare programs, increased government spending, increased taxes, and have moved further towards controlling the lives of its citizens (for their own good of course). This new “club” has also seemingly stepped up its campaign against those countries not in agreement. This, in my opinion, is what the “29 member council” is doing. Oddly enough, these member nations are all democracies claiming they believe in freedom, the rights of the individual (so-called human rights as well), and of course free and fair competition (pro free market economy). . It is interesting to note that throughout past human history, those governments that favored strong central government, socialism dictated by the state, and promoting their agenda elsewhere (not respecting the rights and policies of other nations) all were totalitarian or dictatorships. Germany when governed by the Nazi Political party is one blaring example of this. It is difficult to believe any government that claims to hold the virtues of “tolerance” for others & freedoms in the highest regard, and then attempt to “coerce” another government to adopt their own agenda. Promoting your own country for the benefit of trade is one thing, meddling in the political affairs of another country is a very different story. . What is currently happening in the world is quite simple. There are people in the world that favor the above, and there are people in the world that do not. Stated another way, there are countries in the world that operate (willing or subconsciously) on what I would term “libertarian” values, and others that do not. The problem really comes down to those 29 member countries (and quite often the case, the US government) that wants the rest of the world to operate on their "“terms”. . For the most part, the “club” did often get its way through either economic aid as a carrot or other forms of “intimidation”. This is what we see happening in many of the English speaking “commonwealth countries”. England, who in turn is feeling pressure from the US and perhaps the rest of the European Union, is placing tremendous pressures on “commonwealth” members who happen to be considered “tax havens”. This is a broad-based initiative, but places such as the Bahamas have already started to fold. Recent court decisions to allow the invasion of Bahamian Trusts to settle US originated law suits, public statements that the Bahamas wishes to eventually exist the tax haven business and focus on banking & E-commerce all point in this direction. Will the other English speaking islands of the Caribbean follow? Your guess is as good as mine, but the political pressures from mother England still exist. . Many of the countries that do not want to “play ball” are those countries that have previously taken “abuse”, and who now have economies that are strong enough so they do not need to go “begging”. They are also countries that were never allowed into the “club” in the first place, so do not care if their membership card is “canceled”. In other words, those countries that had been politically “disposable” in the past. The English speaking “tax haven” islands always had mother England behind them before, now even “mom” is singing a different tune. But, none the less, the comfort of having a “mom” tends them to do what is dictated, as this has been the historical relationship all along. . Independent Spanish speaking countries in Latin America are a different story. The US had historically seen itself as having this “maternal” role in this part of the world, but the relationship was very different from that of “mother” England and its commonwealth member countries. In addition, many smaller nations have come to realize the US as a sort of “mommy dearest”, changing from a caring parent one minute to a psychotic the next. After all, how does a country complain about human rights violations and other matters, and then offers “most favored nation” trading status to China? It would seem then, that the US government really does not believe what it says publicly or does what it wants for its own selfish gain anyway. In reality, every nation has its own “self interests” and does things to promote them (economic aid, trading agreements, etc.). This is clearly understood. The heart of the issue then is any country that publicly claims they are doing something for one particular reason, and then does something else which is clearly contradictory. All of this has been part of the “Latin American” experience, and why such countries do not trust the US. They have been “burned” too many times before. . Panama is such a country, and so are a number of others. In the specific case of Panama, the sole agenda is to carry on as a center for business and international trade, on THEIR terms. Panama has no interest in waging war, developing nuclear weapons, or anything else that is not consistent with “who they are” as a country. If many of the so-called “high tax” countries have a problem with citizens or businesses that want to leave, why don’t they do something to make it more attractive to stay? Solve the problem or the reason why people want to do something they feel is negative (expatriate). Stop blaming another country because they have a more favorable tax or legal code than you do. Instead cut taxes, cut government spending, reform the court system, respect the rights of the citizens you govern, and give people a reason to stay – voluntarily. Another option is of course to keep on with the current “state of affairs”, but let the people that do not agree with it “check out” peacefully. If the government is doing the “right” thing and the majority of its citizens are in agreement, then why worry? In theory then, the people that disagree are in the minority and are possibly “crazy” anyway, so let them leave (and don’t harass them after they have gone). Or is it that so many people are expatriating that the governments of these countries are now afraid? . Where are they all going? They are going to places where the government does not tax them to death. They are going to places where they are happy to live “free”, without the government dictating every aspect of their lives. In fact, one can say, they are going to countries that are also self-reliant and independent minded, just like they are. After all, if you believe that the government should not “take care” of you, and that you are a responsible adult capable of taking care of yourself, then you have “found you match” in another country that thinks the same way. . The point of all these themes and discussions comes down to one thing for investors. There is nothing “wrong” with many countries or jurisdictions with respect to forming an offshore structure or even investing. What is “wrong”, in our opinion, is that many places have seemingly folded to political pressures from outside their own country to stop “doing what they are doing”. Switzerland has now publicly said so. The Bahamas has in effect said so, both through many newspaper comments and through judicial decisions in the court system as well. The sentiment of a people to uphold the laws that exist and stand behind what they believe in is more important then anything else. Think hard about “where” you may wish to “be” and how you may wish to “get there”. In a changing and often unfair world, consistency of values becomes more impressive with each passing day. |
