Saturday, October 18, 2008

Bring home cash piles in Swiss banks




In the 2006 report on black money in Swiss banks, the Swiss Banking Association has put the deposits of five top countries as: India, the highest, with $1.456 trillion, Russia $470 billion, Britain $390 billion, Ukraine $100 billion and China $96 billion.
How much is stashed by other corrupt leaders from other Asian countries, namely Malaysia? Rumours about our leaders' Swiss accounts have been circulated but can never be proven......but then again, one per cent of world population is said to be holding more than 57 per cent of the total global wealth!

An interesting article...

Bring home cash piles in Swiss banks

THIS is not a grandma's prescription. This is plain commonsense. Whenever you are hard up you reach for the money you have hidden. India or, for that matter, the entire South Asia, is facing the crisis of liquidity. And this is the time when politicians, industrialists and bureaucrats from India, Pakistan, Bangladesh, Nepal and Sri Lanka should bring back the money they have stashed away in Swiss banks.
The amount reportedly runs into billions of dollars which the corrupt elite have come to possess through dishonest methods. I do not want to argue the rights and wrongs of their deeds because that would start another kind of debate. We need money to stave off the crisis we face. Even otherwise, if the corrupt have even an iota of patriotism, they should not hesitate to bring back the much-required finance to bolster our sagging economies.
Since Switzerland maintains secret bank accounts, it is not possible for any intelligence agency, however resourceful, to trace the money. The account holders will have to do it themselves provided they feel the pain which their nation is going through. I do not know how much money is hidden by the Pakistanis, Bangladeshis, Nepalese or the Sri Lankans. But the estimate about Indians is around $1.5 trillion (Dh5.5 trillion). Indeed, the figure is mind-boggling.

Gold pledged
In the 2006 report on black money in Swiss banks, the Swiss Banking Association has put the deposits of five top countries as: India, the highest, with $1.456 trillion, Russia $470 billion, Britain $390 billion, Ukraine $100 billion and China $96 billion. If India's deposits were to be distributed, 450 million people would get Rs100,000 (Dh83,333) each.
When I was India's High Commission at London, I met a bank manager from Switzerland at a party. He said that his bank alone had so much money of Indians that their country could meet foreign exchange requirements for 10 Five Year Plans. Those were the days when we were acutely short of foreign exchange and had even pledged our gold to the Bank of England as a guarantee.
World financial situation is not getting better. India is bound to be affected sooner or later. The money in Switzerland would come in handy at this time. Yet, the question is how to persuade the corrupt politicians, civil service officials and industrialists to move their piles back to India.
It may sound immoral, but there will have to be something like a tax holiday or some scheme where no questions are asked. If they were to give one-third of the amount they have abroad, they can retain the rest.
In fact, tax havens that Switzerland provides are a drag on poor countries. It is the exploitation to which South Asia has been subjected to by the West for centuries. A book written by a Western economist - entitled Capitalism's Achilles' Heel: Dirty Money and How to Renew the Free Market System - estimates that at least $5 billion have been shifted out of poorer countries to the West since the mid-1970s.
Still the markets and several banks in the West have crashed. They are in fact responsible for ruining our measly financial institutions. Imagine what would have happened to them if they did not have the money which our corrupt industrialists, bureaucrats and politicians have deposited with them? Add to this the money they have stashed away elsewhere-in Britain, the US and tax havens like St Kitts.
South Asia has been hit because it is part of the global economy which has caved in. Under pressure from the West, we have opened up several sectors to them. It has been seen during the last few weeks that they have been the first to sell their shares in various Indian companies, bringing the share market tumbling down. It is estimated that in India alone they were withdrawing Rs20-30 billion in foreign exchange per week because they experienced hardship in their own country.

Further disaster
In India, the Left who were supporters of the Manmohan Singh government, has saved us from further disaster by not allowing some financial sectors opening up to the global players. We also owe it to the Left that the Western institutions were not allowed to enter insurance to the full extent. The Left also put in place some regulatory measures on banks.
The economic crisis, primarily because of Western wasteful living, brought the entire Europe, America and others together the other day at Washington to discuss how to overcome the situation. I wish New Delhi had taken the initiative to get the countries of South Asia around the same table to have a joint action to face the problem. Poor countries have a lot of resilience. They may therefore weather the storm. But it will be again at the expense of the lower half. In a capitalist economy, the upper half loses luxuries, not comforts. The poor had to cut down on their necessities. One per cent of world population is said to be holding more than 57 per cent of the total global wealth.
Manmohan Singh who authored a South-South Commission report proposed a close commerce and economic cooperation among the countries in the third world. The suggestions never took off. He should wash off the stigma by grouping the countries in South Asia into a common market. World financial crisis can be turned into an opportunity for the region to lessen dollar transactions. We can meet most needs from our own resources.

Kuldip Nayar is a former Indian High Commissioner to the UK and a former Rajya Sabha MP.

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