You remember the harrowing incident, when the Luxembourg Government, stirred up by interest groups of the Luxembourg financial center, had a hyper-reaction about a study commissioned by the Cercle de Coopération of Luxembourg NGOs.
The study focused on the topic of illegitimate third world money that might hide in Luxembourg. The Government, stressed-out by a months' long fight and futile resistance to the OECD accusations of harboring tax evaders, had lost its nerves. Dealing with much smaller than itself, it did not miss that easy target and seriously muzzled it. That had my own blood boil, seeing this worrying trend away from what we are and have always been: well balanced and reasonable people. It prompted me to publish an article on the subject on September 8: http://feierwon.blogspot.com/2009/09/luxembourg-une-lecon-de-democratie-qui.html
On 27 October, it appears, a panel discussion was held in Luxembourg, with on one side the interests of the financial center and across the table the NGOs, at the initiative and invitation of Etika. According to press reports, this was a "dialogue of the deaf". In this debate of the deaf, it is clear that official Luxembourg, lost for some time on the slippery slopes of intolerance, has regained some of its good spirits by agreeing to sit at the same table with the NGOs. Missing however was the mysterious figure who had been blackmailing the NGOs with the threat to cut subsidies, and also missing was Professor Rainer Falk, author of the afore-mentioned study. Too bad we couldn't hear their contribution.
Reviewing the detail of the dialogue, however, I come to the conclusion that the dialogue was not only a "dialogue of the deaf" but also a "dialogue of the blind". On one hand was the financial center, certainly deaf to the NGOs. Indeed, you cannot find an any deafer person than the one who doesn't want to hear. On the other hand you had the NGOs, blind, unable to see what bank secrecy was hiding, which was exactly what the keepers of the secret were accusing them of not seeing. Those financial experts also say that the problem raised by the NGOs is minimal in Luxembourg. But then again, you can trust, but you should verify. The Madoff fraud in Luxembourg is also said to be minimal, less than 0.5% of deposits in the Luxembourg funds. But that translates into billions ...
The discussion went on mainly in monologues, with a rare and sparkling exception: Lucien Thiel, who as Member of Parliament is well known in Luxembourg public life, developed the idea that if dirty money were in Luxembourg, and because the State budget is fed almost by half with revenue from the financial center, then there would be dirty money in the generous subsidies that NGO's receive from the State budget, making them an accomplice receiving it. Richard Graf, President of Action Solidarité Tiers Monde, responded that in this case the NGOs, just like Robin Hood, would only return the stolen money to those it was stolen from. This response actually characterized this debate. It gives the NGOs the moral upper hand, whereas it pushes the financial center into the defensive again, and unnecessarily. A fierce defense of the financial center only makes sense on the main fronts. The center however wastes resources, its reputation and it will lose those battles anyway in which the opposite cause is perceived as being fairer and much more noble.
In fact, NGOs are not that blind when it comes to return the stolen money to desperately poor people. It is very likely indeed that they return a portion of the money stolen from the poor by:
• the kleptocrats of the world, presidents for life of "eternally developing countries"
• the corrupt of all backgrounds, because it takes two to tango
• the global artists of "transfer pricing"
• the professionals of global tax evasion
But let's face it, this meeting was a first and a good opportunity to throw out a feeler. Defending the interests of the financial with wholesale denials of any exposure to the dirty money is not credible. The Luxembourg financial center is like any other financial center exposed to dirty money. Denying this sounds like a good advertisement to attract more. That's where you want to hide! However advertising how you combat it, showing which severe sanctions there are would sound like a commitment to the contrary. The NGOs' recent action, condemned by the Government could as well be construed as an opportunity to acknowledge that problems exist and that they will be tackled with the help of volunteering NGOs. Why should the Government only listen to the advice of interested professionals such as the "Big Four" and large law firms when it comes to determining the route to follow by the financial center? The time has come perhaps to incorporate the ideas of NGOs in the process of reflection, and to gently correct erroneous numbers and estimates that may be in their studies. NGOs could thus support the political dimension of development aid in the good sense of the word "political", to guide sustainable action.
By ignoring criticism from NGOs, the Government is confined to charity towards the third world, which may be perceived as paternalism, or as a vain exhibition of newly-rich self promotion, or worse, a display of a bad conscience vis-à-vis Robin Hood. NGOs, are certainly not too blind in the countries where they operate, to become very useful pathfinders who mark targets for sustainable assistance, and to expose the thugs and practices that thwart their efforts on the ground.
Incidentally, I would like to take advantage of this episode and single out one of those embarrassing defensive slogans being used and abused by Luxembourg officials. This slogan sounds like a wonderful argument only to those who use it, not so much those who have to endure it, because it reeks pure selfishness. This is the slogan, uttered excessively, that lifting the veil of bank secrecy in Luxembourg would trigger a capital flight from Luxembourg to Singapore. Funny response to those who want to prevent capital flight from the South to the North and who think that Luxembourg is a receptacle of this flight capital. So we are basically in favor and against capital flight. It just depends on the direction of flight.
Whereas UN "statistics" talk about a billion people who suffer from hunger, and whereas "high level" delegates, such as Mugabe, meet at the FAO and are feasting in Rome, and whereas Luxembourg ambitions a seat on the UN Security Council to change the world, why not change the world at home? Why not stop ignoring the perverse effects of the causes that NGOs identify every day as the real obstacles to progress in the third world. Why not call on those NGOs to become the allies in this ambition to change the world, an ability that these NGOs, exemplified by ADA, have demonstrated by being the champions of micro finance. It is without doubt that potential of collaboration, once it is recognized, that is the most valuable outcome of this roundtable, that at least helped to put some democratic principles back on track.
It is indeed ridiculous and supremely suspicious of Luxembourg to be bent on being the world champion of aid to the third world, but in doing so, to accept to only treat the symptoms. Deliberately ignoring the root causes of poverty in the "developing countries", such as theft, corruption, capital flight and tax evasion, and certifying that Luxembourg plays no role in those, is intellectually unbearable.
Egide Thein
egidethein.blogspot.com
