Panamá, la OCDE y la Crisis Financiera

by Eduardo Morgan Jr. 

October 2008 

The attacks by the Organization for Economic Cooperation and Development (OECD) against Panama and other Financial Centers deemed by it to be tax havens, has as the sole intention to put an end to the competition that such centers, thanks to the technological revolution, pose to the members of their Club. (See, “The double standard of the OECD and the Offshore Financial Centers”).

The OECD steamroller seemed unstoppable until the affected countries expressed their wish to subject themselves, provided what became known as “Level Playing Field” be applied. The OECD counted on being able to obtain world unification in fiscal cooperation and that its members, many of them renowned tax havens ─that do not tax interests earned on deposits held by foreigners in their banks, or like England, that has the famous “non dom,” by virtue of which wealthy foreigners residents do not pay taxes on their income, and the largest, the USA, which in addition does not tax capital gains and allow bank depositors and Stock Market investors allowing them complete anonymity ─would also accept the conditions the OECD wanted to impose to the so-called Offshore Centers.

The largest disappointment of the OECD took place when the United States Congress, with full public support, led by the financial sector, flatly refused to furnish information to foreign tax authorities regarding deposits and investments of their citizens and Switzerland took a similar stand with the European Union. Faced with this defeat, the OECD opted to forego the notion of “Level Playing Field” and now intends to force, because it says so, all non-OECD financial centers to furnish any requesting OECD member with tax information and information regarding the identity of the accountholders of bank deposits,. This new imposition has been dubbed the principle of transparency and effective exchange of information, the philosophical basis of which is none other than cooperation ─please read submission─ owed by smaller countries to rich ones. The premise of a “Level Playing Field” disappears because of the impossibility for the same to be accepted by the main OECD partners, led by the USA, and is then replaced by the blatant imposition of the strongest over the weakest.

The OECD was not able to recommend any measures that might have prevented or mitigated the very grave financial crisis we are currently experiencing and which could also trigger an economic crisis even worse than the one experienced by the world as a result of the economic collapse that began in 1929. The OECD countries are at fault for this crisis and its cause is the lack of transparency in their financial markets, as well as their unethical handling of the system. When interviewed by Spain’s El País newspaper on October 26, 2008, German President Horst Kohler, himself a former IMF Manager and President of the European Bank for Reconstruction and Development, he stated literally:

“The lack of transparency of the markets has originated a situation in which the risks in the financial sectors have extended across the planet and have reached clients the worldwide. What makes it a monstrous system is the fact that, at the end, nobody knows anymore who, in fact, has purchased these risks.”

On the other hand, the immorality of the absurd earnings produced by such vulgar speculation –executives with annual incomes over US$100MM and dummy corporations with billions of dollars in annual revenue–failed to raise any red flags for the very-well-compensated Secretary General of the OECD and its very-well-paid Directors.

What is unheard of, and unacceptable, is that the OECD is now attempting to cover up its own incompetence, as well as the immorality of its partners and intends to blame the debacle on the Centers that they call Offshore. Thus, on October 21, 2008, amidst a monster of a crisis, in a speech before 17 member countries, the Secretary General of the OECD lashes out against the financial centers that he calls tax havens and with threats and pressures proposes to (please read carefully this irony) “totally implement TRANSPARENCY and standards of exchange of tax information”. The OECD is not, however, handled by inept people who would believe that we are to blame for the worldwide financial disaster. No; they have realized that with the loss of confidence in the traditional financial centers, countries such as Panama and Singapore will emerge as the great victors. This is why they threaten us once again with punitive measures if we do not self-destruct by eliminating the banking confidentiality and our territorial tax systems, that would render our international financial centers non-existent. We know that they will not succeed against Singapore. That is a proud, dignified nation with a history of standing up to foreign pressures and is now so wealthy and holding such large reserves that they need it, just as they need China and Japan, as a sources of funds to alleviate the financial downfall. And so, they are left with Panama. We must be ready for these attacks and it is imperative for our Government to pay attention to the many petitions from all the trade associations related to international services and to the letters sent during the months of May and July of 2008 to the President of the Republic by the Banking Association and the Chamber of Commerce, urging him to apply the Retaliation Law, as the only means for us to be excluded from the so-called black lists. Such action becomes all the more important now, in order to successfully confront the future and immoral attacks that will be launched against us by the arrogant rulers of the OECD.

October 28, 2008