Presenting themselves as shocked bystanders to the growing famine in Yemen, the US and UK are in fact prime movers in a new strategy that will massively escalate it.
The protagonists of the war on Yemen – the US, UK, Saudi Arabia and the United Arab Emirates – have been beset by problems ever since they launched the operation in March 2015. But these problems seem to have reached breaking point in recent months.
First and foremost, is the total lack of military progress in the war. Originally conceived as a kind of blitzkrieg – or “decisive storm” as the initial bombing campaign was named – that would put a rapid end to the Houthi-led Ansarallah movement’s rebellion, almost three years later it has done nothing of the sort. The only significant territory recaptured has been the port city of Aden, and this was only by reliance on a secessionist movement largely hostile to ‘President’ Hadi, whose rule the war is supposedly being fought to restore. All attempts to recapture the capital Sanaa, meanwhile, have been exposed as futile pipe dreams.
Secondly, the belligerents have been increasingly at war with themselves. In February of this year, a fierce battle broke out between the Emiratis and Saudi-backed forces for control of Aden’s airport. According to the Carnegie Endowment for International Peace, the struggle “prevented an Emirati plan to move north to Taiz,” adding that “the risk of such confrontations remains…Lacking ground forces anywhere in Yemen, the Saudis worry that the UAE could be carving out strategic footholds for itself, undermining Saudi influence in the kingdom’s traditional backyard.” Notes intelligence analysts the Jamestown Foundation, “The fight over Aden’s airport is being played out against a much larger and far more complex fight for Aden and southern Yemen. The fighting between rival factions backed by Saudi Arabia and the UAE clearly shows that Yemen’s already complicated civil war is being made more so by what is essentially a war within a war: the fight between Saudi Arabia and the UAE and their proxies.” This tension flared up again in October, with Emirati troops arresting 10 members of the Saudi-aligned Islah movement, the Muslim Brotherhood’s Yemeni faction.
And finally, the war is undergoing a serious crisis of legitimacy. Aid agencies are usually doggedly silent on the political causes of the disasters they are supposed to ameliorate. Yet on the issue of the blockade – and especially since it was made total on November 6th this year – they have been uncharacteristically vocal, placing the blame for the country’s famine – in which more than a quarter of the population are now starving – squarely on the blockade and its supporters. Jamie McGoldrick, the UN’s humanitarian coordinator for Yemen, put it starkly: “150,000 will die before the end of the year because of the impact of this blockade” he told ABC news last month. Save the Children had already stated back in March 2017 that “food and aid are being used as a weapon of war”, and called for an end to UK arms sales to Saudi Arabia, whilst in November 2017, Oxfam’s Shane Stevenson said: “All those with influence over the Saudi-led coalition are complicit in Yemen’s suffering unless they do all they can to push them to lift the blockade.” Paolo Cernuschi, of the International Rescue Committee, added that: “We are far beyond the need to raise an alarm. What is happening now is a complete disgrace.” The governments of Donald Trump and Theresa May were being painted – by the most establishment-aligned of charities – as essentially mass murderers, accomplices to what Alex de Waal has called “the worst famine crime of this decade”. Even the Financial Times carried a headline that Britain “risks complicity in the use of starvation as a weapon of war”. “Is complicit” would be more accurate than “risks complicity”, but nevertheless: still a pretty damning indictment.
To confront these problems, a new strategy has clearly emerged. It appears to have been inaugurated by Theresa May and Boris Johnson on November 29th. On that date, whilst the British Prime Minister met with King Salman and Crown Prince Mohammed Bin Salman in Riyadh, the Foreign Secretary was hosting a London meeting of the foreign ministers of Saudi Arabia and the UAE and the US under-secretary of state, representing all four of the belligerent powers in Yemen.
The first element of this strategy was for Britain and the US to pacify the NGO fraternity by distancing themselves from the blockade, as if it were somehow separate from the war in which they were so deeply involved. This actually came about in the days preceding those meetings, when Theresa May told the press she would “demand” the “immediate” lifting of the blockade during her forthcoming visit to the king. That was disingenuous; after all, had she really wanted the blockade ended, she could have achieved this immediately simply by threatening to cut military support for the Saudis until they ended it. According to War Child UK, arms sales to Saudi Arabia have now topped £6billion, and Britain runs a major training programme for the Saudi military, with 166 personnel deployed within the Saudi military structure. Former US presidential advisor Bruce Riedel is entirely correct when he states that “the Royal Saudi Air Force cannot operate without American and British support. If the United States and the United Kingdom, tonight, told King Salman [of Saudi Arabia] ‘this war has to end,’ it would end tomorrow.”
In fact, the meeting seems to have been more about reassuring the Saudis that her words were but rhetoric for domestic consumption, and not meant to be taken seriously. In the event, far from an “immediate” end, the UK government website reported that May and Salman merely “agreed that steps needed to be taken” and that “they would take forward more detailed discussions on how this could be achieved”. Just to make it absolutely clear that the UK’s support for the war was not in question in any way, the very next line of the statement was “They agreed the relationship between the UK and Saudi Arabia was strong and would endure”. A deeply complicit press ensured that the actual contents of this meeting was barely reported; the last word on the matter, as far as they were concerned, was May’s pledge to “demand” an end to the blockade. Donald Trump followed suit last week, likewise calling on the Saudis to “completely allow food, fuel, water and medicine to reach the Yemeni people” whilst doing nothing to bring this about. Thus have the UK and US governments attempted to manipulate the media narrative such that the blockade they continue to facilitate no longer reflects badly on them.
The next aspect of the strategy became obvious before the Johnson and May meetings had even finished, as fighting broke out between the Houthis and forces loyal to former President Ali Abdullah Saleh the same day. Saleh had made an alliance with his erstwhile enemies the Houthis in 2015 in a presumed attempt to seize back power from his former deputy Abdrabbuh Mansur Hadi, to whom he was forced to abdicate power in 2012. But he had never been fully trusted by the Houthis, and their suspicions were to be fully confirmed when on Saturday 2nd December he formally turned on them and offered himself up to the Saudis. Saleh had always been close to the Saudis whilst in power, positioning himself largely as a conduit for their influence; now he was returning to his traditional role. The swiftness and intensity of the Saudi airstrikes supporting his forces against the Houthis following his announcement suggests some degree of foreknowledge and collaboration had preceded it, as does the Saudi’s reported house arrest of their previous favourite Hadi the previous month. This restoration of the Saleh-Saudi alliance represents a victory for the UAE, who had been pushing the Saudis to rebuild its bridges with him for some time. Analyst Neil Partrick, for example, had written just weeks before the move that “The Emiratis are advising the Saudis to go back to the former Yemeni president Ali Abdullah Saleh, believing his growing disputes with the Houthis, his tactical allies, can be encouraged to become a permanent breach.” Thus was the problem of the military stalemate supposed to be solved by splitting the Houthis alliance with Saleh, paving the way for a dramatic rebalancing of forces in favour of the belligerents. The execution of Saleh two days later has only partially scuppered this plan, with many of his forces either openly siding with the invaders or putting up no resistance to them.
At the same time as the Saudis have finally been brought round to the UAE’s preference for a reconciliation with Saleh’s forces, the UAE have now, it seems, accepted an alliance with the Saudi-backed Islah party. Despite the Saudi’s usual antipathy to the Muslim Brotherhood, it has backed their Yemeni offshoot in this war, a move hitherto firmly opposed by the Emirates. Yet, following earlier meetings between Saudi crown prince Mohammed bin Salman and Islah leader Abdullah al-Yidoumi, the two men met last Wednesday (13th December) with Emirati crown prince Mohammed bin Zayed. Maged Al Da’arri, editor of Yemen’s Hadramout newspaper, explained to The National that “the Gulf leaders are trying to combine the different sides in Yemen to work collaboratively in order to be able to liberate the provinces that are still held by the Houthis.”
It seems likely that Emirati support for Islah was a quid-pro-quo for Saudi support for Saleh, both moves suggesting perhaps that the two powers’ divisions were to some extent being overcome. But this rapprochement was formalised with the formal announcement of a new military alliance between them on December 5th, the day after Saleh’s death.
Thus, within a week of the London and Riyadh meetings, the coalition’s three seemingly intractable problems – the paralysing divisions between UAE and Saudi Arabia, the military stalemate, and the West’s legitimacy crisis over the blockade – had all apparently been turned around. This readjustment was and is intended to pave the way for a decisive new page in the war: an all-out attack on Hodeidah, as a prelude to the recapture of Sanaa itself.
This new strategy is now well under way. On December 6th – four days after Saleh switched sides, and one day after the new UAE-Saudi alliance was announced – the invaders’ Yemeni assets mounted “a major push…to purge Al Houthis from major coastal posts on the Red Sea including the strategic city of Hodeida.” The Emiratis had been advocating an attack on Hodeidah for at least a year, but, according to the Emirati newspaper The National, President Obama had vetoed it in 2016, whilst in March 2017, the Saudis got cold feet due to fears that the plan was “an indication of [the Emirates’] attempt to carve out strategic footholds in Yemen”. Now, it seems, it is finally under way.
The following day, the red sea town of Khokha, in Hodeidah province, was captured by Emirati forces and their Yemeni assets, backed by Saudi airstrikes. Gulf News reported that “Colonel Abdu Basit Al Baher, the deputy spokesperson of the Military Council in Taiz, told Gulf News that the liberation of Khokha would enable government forces and the Saudi-led coalition to circle Hodeida from land and sea”. The day after that, Houthi positions in Al Boqaa, between Khokha and Hodeidah, were taken by Emirati-backed forces.
The following Sunday, 10th December, Boris Johnson met with the Emirati crown prince and de facto ruler Mohammed bin Zayed in Abu Dhabi, where he “underlined the depth of strategic relations between the two countries and his country’s keenness on enhancing bilateral cooperation”, before attending another “Quartet committee” meeting with his Emirati and Saudi counterparts and the US acting secretary of state for Near Eastern affairs. The four of them “agreed to hold their meetings periodically, with the next meeting scheduled for the first quarter of 2018.”
This intensive activity in the space of just two weeks, bookended by high-level meetings of the ‘quartet’ on either side, is clearly coordinated. But what it heralds is truly horrifying. Presenting themselves as shocked bystanders to the growing famine in Yemen, the US and UK are in fact prime movers in a new strategy that will massively escalate it.
When an attack on Hodeidah was being contemplated back in March 2017, aid agencies and security analysts alike were crystal clear about its impact. A press release from Oxfam read: “Reacting to concern that Hodeidah port in Yemen is about to be attacked by the Saudi-led coalition, international aid agency Oxfam warns that this is likely to be the final straw that pushes the country into near certain famine…Mark Goldring, Oxfam GB Chief Executive said: “If this attack goes ahead, a country that is already on the brink of famine will be starved further as yet another food route is destroyed…An estimated 70 percent of Yemen’s food comes into Hodeidah port. If it is attacked, this will be a deliberate act that will disrupt vital supplies – the Saudi-led coalition will not only breach International Humanitarian Law, they will be complicit in near certain famine.” The point was reiterated by the UN’s World Food Programme, whilst the UN International Organisation for Migration warned that 400,000 people would be displaced were Hodeidah to be attacked.
“The potential humanitarian impact of a battle at Hodeidah feels unthinkable,” Suze Vanmeegen, protection and advocacy advisor at the Norwegian Refugee Council, told IRIN recently. “We are already using words like ‘catastrophic’ and ‘horrendous’ to describe the crisis in Yemen, but any attack on Hodeidah has the potential to blast an already alarming crisis into a complete horror show – and I’m not using hyperbole.”
In the Independent, Peter Salisbury noted that “it is by no means certain that taking Hodeidah will be easy” as the (then) “Houthi-Saleh alliance is well aware of the plan” and preparing accordingly. He added that “While the Saudi-led coalition claims that taking the port would help alleviate the humanitarian crisis in the medium term, aid agencies fret that the short-term effect of cutting off access to a major port could be a killing blow to some of Yemen’s starving millions.” The Jamestown foundation were even more wary, writing that the city’s capture would be impossible without major US involvement and that “Even with U.S. assistance, the invasion will be costly and ineffective. The terrain to the east of Hodeidah is comprised of some of the most forbidding mountainous terrain in the world. The mountains, caves, and deep canyons are ideal for guerrilla warfare that would wear down even the finest and best disciplined military.” Yet the US’s current efforts to argue that Houthis are being supplied with Iranian missiles via Hodeidah may well be aimed at legitimising just such direct US involvement in an attack on the port. After all, continues Jamestown, “the Saudi effort in Yemen hinges on the invasion of Hodeidah. The reasoning behind the invasion is that without Hodeidah and its port — where supplies trickle through — the Houthis and their allies, along with millions of civilians, can be starved into submission.”
This, then – the ramping up of the ‘weapon of starvation’ – is the ultimate end of this new phase in the war. Basic humanity demands it be vigorously opposed.
An edited version of this article was originally published by Middle East Eye
My appearance on Press TV’s show “The Sun Will Rise” from November 2016
The war against Yemen – sponsored by the West and executed by their ever-loyal Saudi fall guys – is going badly. Very badly.
When the Saudis began their bombardment of the Arab world’s poorest country, named ‘Decisive Storm’, in March 2015, they promised a ‘limited’ mission. In reality, it has proved to be seemingly limitless and completely indecisive. A Harvard study estimates the Saudis are spending $200million per day on this war, driving their military budget up to $87billion, the third highest in the world. But they remain nowhere near achieving their stated goal of defeating the Houthi-led resistance and recapturing the capital, Sanaa. Indeed, Hadi, the ‘President’ the Saudis are supposedly supporting, is still holed up in Riyadh,apparently unable to set foot in his own country, such is the depth of popular animosity towards him.
Meanwhile, the ‘coalition’ which Saudi Arabia purports to lead is falling apart. Qatar – the world’s richest country in terms of per capita income, who were supposed to bankroll a large chunk of the war – pulled out long ago; whilst the Pakistani parliament – whose allotted role was to provide the ground troops – unanimously vetoed the proposal last year. Meanwhile, in the South, the Emiratis are backing forces hostile to the very President the war purports to be defending. Indeed, Hadi’s own troops are now complaining that the Saudis and Emiratis are actually bombing them. Yes, the ‘legitimate government’ of President Hadi – the one the whole operation is supposedly being fought in support of – is now itselfbeing targeted by the aggressors, with Hadi accusing the Emirati crown prince ofacting like an occupier. Tawakkol Karman, a Nobel peace prize-winning activist, even suggested that “ the Saudi-led air strikes have killed more fighters of the national army than Houthis.” Furthermore, the war has massively expanded Al Qaeda’s base in the country, and provided a new one for ISIS. Whilst this is not an immediate problem for Saudi Arabia in itself – after all, the more sectarian forces come to the fore, the less likely Yemen will be able to unite and pose a threat to Al Saud – but is nevertheless a real potential danger for the future, should those forces decide to turn their experience and weaponry on the kingdom itself. The Saudis seem to be, belatedly, recognising this, recently branding as ‘Al Qaeda terrorists’ one of the biggest Salafi groups in the country, the Abu Abbas brigade – after years of arming its men.
Indeed, the war is going so badly that even the Saudis themselves are now privately saying they want out. Leaked emails last August revealed that Crown Prince Mohammed bin Salman – who as defence minister was responsible for initiating the war in March 2015 – is keen to end the war. Yet still the war continues. London-based Yemeni Safa al-Shami told me that “The Saudis are in trouble; they don’t want [the war] to continue anymore. But they are being told ‘you have to finish the mission to the end’.” By this analysis, far from ‘turning a blind eye’ to a ‘Saudi war’, the West are positively demanding that a reluctant Saudi Arabia continue its futile and murderous campaign.
And this campaign, already characterised by a brutally callous attitude to the Yemeni population, has just reached a new level of terror. Humiliated by the firing of a Houthi missile into Riyadh on November 5th – demonstrating that, despite years of pummelling, the Houthis are now stronger than ever – the Saudis announced that their blockade would henceforth become total, with entry of allgoods to the country – via land, sea or air – completely ended. Medicins san Frontier verified the following week, that all their humanitarian flights into the country had been blocked. The Saudis then announced that some of the minor ports would be reopened, but only those in government-held areas. The country’s biggest port, Hodeidah, on which 80% of the population depend, remains closed, and this week, the Saudis bombed the capital’s airport again, preventing aid delivery.
Even in it’s previous, partial, form, the blockade’s results have been truly sickening. Hodeidah’s capacity has been massively crippled since its four cranes were destroyed by coalition airstrikes in 2015, and the ‘coalition’ has prevented replacements being installed ever since. In addition, ships have been delayed, often for months, or turned back altogether for no explicable reason other than to punish the populations of Houthi-controlled areas. This siege – against a country dependent on imports for over 80% of its food, fuel and medicine – is nothing less than genocidal. Save the Children reported this week that 130 Yemeni children are now dying every day from extreme hunger or disease, with 50,000 killed this year alone. Meanwhile, the cholera epidemic – triggered by a combination of the war’s crippling of water sanitation systems and the Hadi government’s decision to block payments to all waste, sewage and health workers in Houthi-controlled areas – became the biggest in recorded history last month, with almost 900,000 infected by the disease. The previous biggest epidemic, still underway in Haiti, took seven years to reach 800,000 cases. Yemen surpassed that number in just six months.
Yet, with two-thirds of the population – over 18 million people – now dependent on humanitarian aid for their survival, even these shocking figures are set to escalate very quickly. Seven million people are at immediate risk of famine. If this new total ban on humanitarian aid to the country’s biggest air and sea ports is maintained, they will die. These are the depths to which the West is prepared to push Saudi Arabia in its futile drive to permanently destroy the ‘Yemeni threat’.
The UN’s humanitarian chief, Mark Lowcock, has been very clear. “I have told the [UN Security] Council that unless those measures are lifted … there will be a famine in Yemen. It will not be like the famine that we saw in South Sudan earlier in the year, where tens of thousands of people were affected. It will not be like the famine which cost 250,000 people their lives in Somalia in 2011. It will be the largest famine the world has seen in many decades, with millions of victims.”
Britain and the USA are driving the Saudis to unleash the world’s biggest famine for years against a totally captive population. Yet, as far as Western media is concerned, this is all totally un-newsworthy. The wilful starving to death of 130 children per day for the whole of this year is a footnote, at best, to this week’s rumours about Brexit or Trump’s latest absurd vulgarity. When I met Safa Al-Shami, she asked me, “Where is the media in all of this? How many pictures have we seen from Syria, from Iraq; where is Yemen in all of that? The media should start talking about this!” But she was also clear that this lack of coverage is no excuse for a lack of action, at least not in Britain. “Look at how the British people marched and demonstrated because Tony Blair declared war against Iraq. The British people need to realise that this war in Yemen is part of the same dirty game. They have to do something. I blame the British people because they are educated and they know. The Americans are ignorant.” The horrors inflicted on Yemen by the British have deep historical precedents – it was 50 years ago this month that British forces finally withdrew from Aden, the Yemeni port they had colonised in 1839. Indeed, the country is embedded enough in the national consciousness to be the subject of a new BBC drama, whitewashing and glorifying the British colonisation of Yemen just as they whitewash the British role there today.
And yet the British still like to think of Boris Johnson as some kind of affable buffoon. The truth is, he and the entire UK cabinet are child murderers on the most monstrous level. They, along with all those parliamentarians who voted to continue this vicious war, must be stopped, held to account and brought to justice.
An edited version of this piece was originally published by RT.
My commentary on the news that Turkey is pulling 40 soldiers out of a NATO exercise in Norway after Erdogan’s name appeared in a list of enemies on a poster at the drill. Erdogan said an “enemy poster”, featuring his name on one side and a picture of modern Turkey’s founder, Mustafa Kemal Ataturk, on the other, was unfurled at the training exercise in Norway, prompting a decision by Turkey’s military chief and European Union minister to pull the troops out.
This article was originally published in April 2017 on RT.com
What’s more, this is all likely to get a lot worse unless action is taken. At present, Gibraltar is – at least in theory – bound by EU regulations on financial transparency. Once it leaves the EU, however, none of those will apply. This is why Spain, in particular, is so worried about Gibraltar being used to destroy its tax base even further. As Richard Murphy of Tax Research UK has pointed out, Gibraltar “is funded by its activity as a tax haven and centre for offshore gambling. The first activity is intent on undermining the global economy and the legitimate tax revenues of democratically elected governments. The other is wedded to destroying individual lives. Quite emphatically, this is a place that is dedicated to undermining wellbeing”. It is time it was closed down.
This article was originally published in April 2016 on RT.com
The British government’s claim to be tackling tax avoidance is about as credible as Al Capone claiming to be leading the fight against organized crime. In fact, Britain is at the heart of the global tax haven network, and continues to lead the fight against its regulation.
The 11 and a half million leaked documents from Panamanian law firm Mossack Fonseca have proven, once again, what we have already known for some time – that the ‘offshore world’ of tax havens is a den of money laundering and tax evasion right at the heart of the global financial system.
Despite attempts by Western media to twist the revelations into a story about the ‘corruption’ of official enemies – North Korea, Syria, China and, of course, Putin, who is not even mentioned in the documents – the real story is the British government’s assiduous cultivation of the offshore world. For whilst corruption exists in every country, what enables that corruption to flourish and become institutionalized is the network of secretive financial regimes that allow the world’s biggest criminals and fraudsters to escape taxation, regulation and oversight of their activities. And this network is a conscious creation of the British state.
You wouldn’t know this, of course, listening to the words of the British Prime Minister, who always casts himself on the side of the angels. In 2013, David Cameron hosted a G8 Summit claiming that he would lead a push for an end to the use of tax havens as a means for what he called “shady secretive companies” to hide their cash and activities. In the event, nothing of any substance was agreed, largely due to Cameron’s failure to conduct the necessary behind-the-scenes lobbying: the posturing, it seems, was designed solely for public consumption.
Even today, in response to the Panama Papers, Number Ten continue to claim that Cameron put tax evasion “front and centre” of Britain’s G8 presidency and is now “ahead of the pack” on tax transparency.” Keen to hype up what will no doubt be another round of empty rhetoric and BRICS-bashing, Foreign Secretary Philip Hammond has also chimed in: “We’ve got an anti-corruption summit here in May. This is a key agenda for the Prime Minister”.
What the Panama Papers demonstrate, however, is that the real, and hidden, key agenda for the British government is maintaining the offshore netherworld’s role as a conduit through which global funds, largely plundered from the global South, can escape democratic control to enter the City of London’s private banks.
Of the 215,000 companies identified in the Mossack Fonseca documents, over half were incorporated in the British Virgin Islands, one single territory in what tax haven expert Nicholas Shaxson calls a “spider’s web” of well over a dozen separate UK-controlled dens of financial chicanery. In addition, the UK was ranked number two of those jurisdictions where the banks, law firms and other middlemen associated with the Panama Papers operate, only topped by Hong Kong, whose institutional environment is itself a creation of the UK. And of the ten banks who most frequently asked Mossack Fonseca to set up paper companies to hide their client’s finances, four were British: HSBC, Coutts, Rothschild and UBS. HSBC, recently fined $1.9bn for laundering the money of Mexico’s most violent drug cartels, used the Panamanian firm to create 2300 offshore companies, whilst Coutts – the family bank of the Windsors – set up just under 500. And, of course, David Cameron’s own father was named in the papers, having “helped create and develop” Blairmore Holdings, worth $20million, from its inception in 1982 til his death in 2010. Blairmore, in which Cameron junior was also a shareholder, was registered in the Bahamas, and was specifically advertised to investors as a means of avoiding UK tax. The Daily Mail noted that: “Even though he lived in London, the Prime Minister’s father would leave the country and fly to Switzerland or the Bahamas for board meetings of Blairmore Holdings – to ensure it would not have to pay UK income tax or corporation tax. He hired a small army of Bahamas residents, including a part-time bishop, to sign its paperwork – as part of another bid to show his firm was not British-based.”
That Britain should emerge as central to this scandal is no surprise. For as Nicholas Shaxson, a leading authority on tax havens, put it when I interviewed him in 2011, “The City of London is effectively the grand-daddy of the global offshore system”. Whilst there are various different lists of tax havens in existence, depending on how exactly they are defined, on any one of them explains Shaxson, “you will see that about half of the tax havens on there, of the ones that matter, are in some way British or partly British.” These are essentially of three types. Firstly, are “Jersey, Guernsey and the Isle of Man: the crown dependencies. They’re very fundamentally controlled by Britain.” Next are the Overseas Territories, such as the Caymans, Bermuda, the Virgin Islands, Gibraltar and the Turks and Caicos Islands, in which “all the things that matter are effectively controlled by Great Britain”. Of course, it suits the British government to portray all these territories as ‘autonomous’ or ‘self-governing’ in order to provide itself with plausible deniability about what they are doing. But the reality is that the overseas territories are run by a governor appointed by the Queen on the British government’s advice. The governor, not the elected council, Shaxson notes in his book Treasure Islands, “is responsible for defence, internal security and foreign relations; he appoints the police commissioner, the complaints commissioner, auditor general, attorney general, the judiciary and a number of other senior public officials. The final appeal court is the Privy Council in London”. Casey Gill, one of the earliest lawyers specializing in offshore operations explained how legislation was devised in the Caymans: tax experts and accountants would fly in from all over the world “and say ‘these are the loopholes in our system’. And Caymans legislation would be designed accordingly”, often by a conglomerate run by Gill, before being sent to the British Foreign Office for approval. Shaxson asked Gill if Britain, who had the power to veto such legislation, ever raised any objections. “No,” he said, “Not ever. Never”.
Finally, “there are other countries that are either in the British Commonwealth or they have very long and deep historical links with Britain. All of these different networks feed money and feed the business of handling money into the City of London. And so the City is the biggest protector – the City of London Corporation but also the banks located in the City – huge defenders of the tax havens around the world.” Recently, the City of London Corporation has been negotiating with the Kenyan government on plans<http://africanarguments.org/2015/12/01/campaigners-warn-of-kenyas-secretive-plan-to-set-up-international-financial-centre/> to create an ‘International Financial Centre’ in Kenya, which will effectively turn Kenya into the first tax haven in mainland Africa.
The entire UK-controlled web is home to offshore deposits estimated in 2009 to be worth $3.2trillion, 55% of the global total: equivalent to roughly $500 for every man, woman and child on the planet.
In his book ‘Treasure Islands: Tax Havens and the Men Who Stole the World’. Shaxson describes how, in the 1960s, a “London-centred web of half-British territories” was “deliberately created” in order to “catch financial business from nearby jurisdictions by offering lightly taxed, lightly regulated and secretive bolt holes for money. Criminal and other money could be handled by the City of London, yet far enough from London to minimize any stink”.
Whilst ostensibly involved in a process of ‘decolonisation’, in fact the UK hung on to a large global network of small, sparsely-populated islands; “the British empire”, Shaxson wrote, “had faked its own death”. These islands were to serve the same imperial purpose the empire had always had: the projection of British power and the channeling of African, Asian and Latin American wealth into Britain. But whilst some of the islands, such as Diego Garcia and the Falklands, were to serve as crucial military outposts, many of the others were developed as a means of facilitating the financial plunder of the former colonial world. In Shaxson’s words, the role of these tax havens is to “capture passing foreign business and channel it to London just as a spider’s web catches insects” whilst also acting as a “money laundering filter that lets the City get involved in dirty business while providing it with enough distance to maintain plausible deniability”. Whilst the vast majority of critical media reporting on tax havens tends to portray the UK as a ‘victim’ of tax havens, the reality is that, just like the empire they replaced, these ‘treasure islands’ provide a massive cash injection into the ‘motherland’: “in the second quarter of 2009”, Shaxson writes, “the UK received net financing of US$332.5billion just from its three Crown Dependencies Jersey, Guernsey and the Isle of Man”. And where does this money come from? Obviously, it comes from all over the world; but wealthy European and North American nations have been much better equipped to prevent ‘capital flight’ from their territories than have developing countries. Indeed, the Bank of England took special care, when it was establishing the global tax haven network, to protect the UK from potential ill effects; a letter from the Bank of England quoted by Shaxson, written in 1969 and marked ‘secret’, writes of the new tax havens that “there is of course no objection to their providing bolt holes for non-residents but we need to be sure that in so doing opportunities are not created for the transfer of UK capital to the non-Sterling area outside UK rules”. As Shaxson comments, “No objection to the looting of other countries – so long as Britain was protected”. Of course, it is the poorest countries which are in the worst equipped to defend themselves against this looting.
In 2008, Global Financial Integrity estimated that flows of illicit money out of developing countries into tax havens were running at about $1.25 trillion per year, roughly ten times the total value of aid given to developing countries by the rich world. Shaxson himself originally came to be interested in tax havens whilst investigating the illegal West African oil trade. As he explains: “I began to see how the terrible human cost of poverty and inequality in Africa connected with the apparently impersonal world of accounting regulations and tax exemptions. Africa’s supposedly natural or inevitable disasters all had one thing in common: the movement of money out of Africa and into Europe and the United States, assisted by tax havens and a pinstriped army of respectable bankers, lawyers and accountants. But almost nobody wanted to look beyond Africa at the system that made this possible”. People, like Cameron, were more interested in handwringing about ‘corrupt African governments’ than in examining the system that enabled and promoted this corruption. Tax havens are facilitating the plunder, by the London banks, of African wealth. And they are doing so because this is what they were designed to do – to continue the extortion of colonialism, just at the moment Britain was forced to give up the bulk of its formal empire.
It is this system that Cameron’s government – in diametric opposition to its rhetorical flourishes – is working to perpetuate. Indeed, much of Cameron’s battling with Europe has been driven precisely by the desire to maintain the impunity of the City and its web of tax havens in the face of attempts by the EU to regulate the banking sector. As the FT reported this week, “David Cameron personally intervened in 2013 to weaken an EU drive to reveal the beneficiaries of trusts, creating a possible loophole that other European nations warned could be exploited by tax evaders”. Britain has also led opposition to EU attempts to reforms that would make corporations register for tax in the places where they actually do business. And one of the key concessions Cameron managed to wring out of the EU Summit in February this year was that Britain, in the words of the Telegraph, “can now pull an emergency lever over eurozone laws they have “reasoned opposition” to, forcing leaders to hold back from implementation until their concerns are addressed”. The Telegraph then gives some revealing detail on exactly what kinds of laws might trigger Britain’s ‘reasoned opposition’: “The protections will address real concerns in the Treasury that the EU will develop a sprawling framework which will clamp down on the reckless “Anglo-Saxon” lenders which many on the continent still blame for bringing crisis to European shores back in 2009…In the aftermath of the last financial crisis, the UK had its fingers burnt over the EU’s decision to press ahead with a controversial banker bonus cap in 2012. …Other British battlegrounds include the much-resented Financial Transactions Tax, a radical attempt to impose a single levy on Europe’s financial sector. This was initially vetoed by the UK at the EU level, but is still being pursued by a group of euro states.” In other words, far from being hamstrung from taking action by the non-cooperation of other countries, the UK is the leading saboteur of any attempts to make the financial sector more accountable.
But of course, this is only natural. For accountability would bring the whole criminal enterprise crashing down.