- (november 2014)
The easiest way to create wealth.
To the millions of us who don't understand the subtleties of international
finance it has always been a mystery why countries such as Switzerland and
various Caribbean islands are allowed to get rich and richer by helping
criminal organizations, corrupt dictators and, worst of all, multinational
corporations hide their money. After all, it wouldn't be so difficult for
the European armies to invade Switzerland and force the tiny Alpine state
to return all the money that has been stolen from other countries and stored
safely in Zurich. Even easier for the USA to send a warship to the Caribbeans
and demand restitution of all the tax money that has been hoarded there by
corporations that mainly do business in the USA.
While none of this ever happened remains a mystery... unless, of course, the
very members of the European and US governments benefit from this state
For many years
Jean-Claude Juncker, the newly elected president of the European commission,
served as the prime minister of Luxembourg, a tiny operetta-style state
somewhere between France and Germany. Before you smile, check the ranking
of world countries by GDP per capita: Luxembourg is first. The average
citizen of Luxembourg is now twice richer than the average citizen of the USA
($111,000, compared with $53,960 in the USA).
Quite an impressive result by a country that wasn't even in the top 10 before
Juncker became prime minister.
What happened under Juncker's rule is detailed in thousands of secret
documents that have been leaked to the public
by 80 journalists in 26 countries working with the International Consortium of Investigative Journalists.
These documents show how Luxembourg engaged in what any of us ordinary folks
would consider a large-scale fraud consisting in helping corporations avoid
Luxembourg became a favorite destination for any multinational determined
to cheat their country of origin (the country where citizens pay taxes to
pave the roads, collect the garbage and police the neighborhood so that
that corporation's business can prosper).
While Juncker's Luxembourg (technically speaking, a "grand duchy") was becoming
rich through this scheme,
some of the countries that were damaged went through a deep recession and
enacted austerity measures that, in turn, caused millions of people to lose
their jobs and other millions to pay higher taxes.
The current prime minister of the grand duchy reacted to the scandal by
declaring that Luxembourg's shady deals
"are in line with international and national rules". Alas, he is right:
there is nothing illegal with what Juncker did.
In fact, nothing has changed since the scandal erupted.
If they caught you after you robbed a bank, and the loot was still in your
bedroom, they would return the money to the bank, wouldn't they?
Well, nobody is even remotely hinting that Luxembourg should return the "loot",
nor that Luxembourg should stop "robbing the bank" (excuse the metaphor).
It is likely that the amount cheated by the multinational corporations lured to
Luxembourg would be enough to pay a decent salary to all the unemployed people
in the Mediterranean countries, and certainly enough to fund the development
of a vaccine against ebola, all things that governments cannot do because they
don't have enough money.
This scandal also highlights the dilemma of a European Union that is trying
to cement currency union (the euro) while preserving the various contradictory
tax laws of its member states.
To be fair, in 2013 the European Commission create a committee to investigate tax avoidance practices in Europe. The main in charge of this inquiry is now Jean-Claude Juncker himself, basically charged with investigating his own practices.
I take bets that he will find himself innocent.
TM, ®, Copyright © 2014 Piero Scaruffi All rights reserved.
Back to the world news | Top of this page
- Articles on Europe before 2014