The papers are awash with news today on the illicit black money flow worldwide. The majority of these illicit cash flows are from developing nations especially from the top BRICS countries.
Global Financial Integrity the Washington based think thank reported these figures tracking data between 2004 - 2013. The data is rather interesting and an eye opener on cash flow to and from developing and developed nations.
The amounts are staggeringly huge and may not necessarily capture true black money flows. The figures may only be indicative even with the best extrapolation of data. An indicator of just how huge these figures are can be gauged from the average reported Russian figure of $104 billion.
While the world tries to struggle with the problem of raising trillions to deal with development and climate change issues these massive cashflows flow counter clockwise to disrupt the development process.
Figures
Figures for other countries include China with $139 million, Mexico with ......
Global Financial Integrity the Washington based think thank reported these figures tracking data between 2004 - 2013. The data is rather interesting and an eye opener on cash flow to and from developing and developed nations.
The amounts are staggeringly huge and may not necessarily capture true black money flows. The figures may only be indicative even with the best extrapolation of data. An indicator of just how huge these figures are can be gauged from the average reported Russian figure of $104 billion.
While the world tries to struggle with the problem of raising trillions to deal with development and climate change issues these massive cashflows flow counter clockwise to disrupt the development process.
Figures
Figures for other countries include China with $139 million, Mexico with ......
$52.8 billion, India with $50 billion. The figures are huge and even with the best data in the world accurately tracking this information is impossible. The data is only the tip of the iceberg and if anything an indicator of how global cash flows are today bigger threats to stability and growth.
Networks
Cash flows via different banking and non banking routes including the so called Hawala network is notoriously difficult to track. That these networks can fund various illegal activities including the terrorist networks and allow illegal entities an legal entities to hide their dealing behind walls of enforced financial ambiguity ensures that these cash flows are not fully tracked.
Was the illegal cash flow a reason for the ballooning investment in developed nations which saw huge rises in property values and investments? If so were developing nations resources once more being pillaged albeit by their own internal elements to line their pockets and with he connovance of developed nations to support their economies. The provision of money laundering adn offshore banking by developed countries serves only one purpose and that is the permit the process of money laundering.
Countries that house money laundering offshore banks know that the cash flows to their countries will need to be routed via their economies in developed nations and therefore support such illegal transfers and cash flows permitting the continued exploitation of the developing nations.
The figures alone tell a sad story of how little aid reaches the developing nations with development aid figures grossly below the black money outflow for each of these countries. That these black money flows will include development aid siphoned off by various political and industrial conglomerates and individuals is not even in question.
Such black money cash flows have a two tier effect on developing nations:
1. It reduces available cash for growth in a country
2. It depends on the continued exploitation and disenfranchisement of its population to support continued cash flow for the individuals invested in such contraran flows
The siphoning off of large sums of aid money before they reach their intended recipient is a known factor that most aid agencies try and accommodate in their costing when estimating and calculating aid grants. While it is not acceptable it is a known factor and as such needs to be accounted for in development aid.
That these aid flow grabs fund the rich at the cost of the poor is also a known fact. It aids the increase in prices at the local level thereby creating increasing income disparity and lowering life chances for the aid recipients.
Increased prices siphon off any side effects of growth and development by increasing their input costs i.e. land, labour, property, food etc. thereby eating into the financial success that aid flows aim to initiate. This directly affects disposable income and especially where the aid flow is tied to development initiative linked to loans and repayments creates a cycle of indebtedness which is no less endemic than that which existed with money lenders in the un-organised sector.
In India for example it is quite common for money lending at usurious rates of interest even in first tier cities and not in villages alone to continue to finance purchase of properties. A large part of property purchase and sale in developing nations includes a cash element in the transaction which can be up to 60% or even more in black money.
That this money has to come from somewhere is not lost on anybody and just like the property boom in the west developing nations continue to pile on debt to purchase more property in the hopes of quicker gains pushing up prices and further increasing black money cash flows.
The disenfranchised now struggle even more with the poor living in shanty towns controlled by antisocial elements who again charge exceedingly high rates for property even in shanty towns which are very clearly linked to political parties who use these as means of creating a captive power base and for funnelling their illicit gains.
The cash flows to developed nations from the developing nations now creates an interesting dichotomy. In developing nations they create an undercurrent of positive cash flow in the economy allowing for increased investments in property and business. This contrarian cash flow now helps developed nations to continue to develop at the cost of developing nations creating a perfect counter cash flow mechanism allowing for their own needs to be met while ignoring the source of these investments.
The London high end property market is an example of just this kind of contrarian cash flow. Some of the more infamous owners of these properties have included Saddam Hussein, Gadaffi and other unsavoury elements. Deals for millions with laundered cash continue and the government continues to tax them for it aware through their intelligence networks that these are funded through arms, exploitation and pillaging. These investments help the buyers and sellers to further utilise their assets to develop cash flows which finance and fund further activities. Some of the resultant activities may be benign but others hold a more dangerous future plan.
It is thus the continued illicit cash flows from developing nations to developed nations continuing in the tradition of colonial exploitation that maintains this pattern. Interestingly data for illegal cash flows form developed nations appears to be practically non existent and should possibly be the next focus of research to track cash flows and funding for terrorism and war.
Let me know what you think.
Networks
Cash flows via different banking and non banking routes including the so called Hawala network is notoriously difficult to track. That these networks can fund various illegal activities including the terrorist networks and allow illegal entities an legal entities to hide their dealing behind walls of enforced financial ambiguity ensures that these cash flows are not fully tracked.
Was the illegal cash flow a reason for the ballooning investment in developed nations which saw huge rises in property values and investments? If so were developing nations resources once more being pillaged albeit by their own internal elements to line their pockets and with he connovance of developed nations to support their economies. The provision of money laundering adn offshore banking by developed countries serves only one purpose and that is the permit the process of money laundering.
Countries that house money laundering offshore banks know that the cash flows to their countries will need to be routed via their economies in developed nations and therefore support such illegal transfers and cash flows permitting the continued exploitation of the developing nations.
The figures alone tell a sad story of how little aid reaches the developing nations with development aid figures grossly below the black money outflow for each of these countries. That these black money flows will include development aid siphoned off by various political and industrial conglomerates and individuals is not even in question.
Such black money cash flows have a two tier effect on developing nations:
1. It reduces available cash for growth in a country
2. It depends on the continued exploitation and disenfranchisement of its population to support continued cash flow for the individuals invested in such contraran flows
The siphoning off of large sums of aid money before they reach their intended recipient is a known factor that most aid agencies try and accommodate in their costing when estimating and calculating aid grants. While it is not acceptable it is a known factor and as such needs to be accounted for in development aid.
That these aid flow grabs fund the rich at the cost of the poor is also a known fact. It aids the increase in prices at the local level thereby creating increasing income disparity and lowering life chances for the aid recipients.
Increased prices siphon off any side effects of growth and development by increasing their input costs i.e. land, labour, property, food etc. thereby eating into the financial success that aid flows aim to initiate. This directly affects disposable income and especially where the aid flow is tied to development initiative linked to loans and repayments creates a cycle of indebtedness which is no less endemic than that which existed with money lenders in the un-organised sector.
In India for example it is quite common for money lending at usurious rates of interest even in first tier cities and not in villages alone to continue to finance purchase of properties. A large part of property purchase and sale in developing nations includes a cash element in the transaction which can be up to 60% or even more in black money.
That this money has to come from somewhere is not lost on anybody and just like the property boom in the west developing nations continue to pile on debt to purchase more property in the hopes of quicker gains pushing up prices and further increasing black money cash flows.
The disenfranchised now struggle even more with the poor living in shanty towns controlled by antisocial elements who again charge exceedingly high rates for property even in shanty towns which are very clearly linked to political parties who use these as means of creating a captive power base and for funnelling their illicit gains.
The cash flows to developed nations from the developing nations now creates an interesting dichotomy. In developing nations they create an undercurrent of positive cash flow in the economy allowing for increased investments in property and business. This contrarian cash flow now helps developed nations to continue to develop at the cost of developing nations creating a perfect counter cash flow mechanism allowing for their own needs to be met while ignoring the source of these investments.
The London high end property market is an example of just this kind of contrarian cash flow. Some of the more infamous owners of these properties have included Saddam Hussein, Gadaffi and other unsavoury elements. Deals for millions with laundered cash continue and the government continues to tax them for it aware through their intelligence networks that these are funded through arms, exploitation and pillaging. These investments help the buyers and sellers to further utilise their assets to develop cash flows which finance and fund further activities. Some of the resultant activities may be benign but others hold a more dangerous future plan.
It is thus the continued illicit cash flows from developing nations to developed nations continuing in the tradition of colonial exploitation that maintains this pattern. Interestingly data for illegal cash flows form developed nations appears to be practically non existent and should possibly be the next focus of research to track cash flows and funding for terrorism and war.
Let me know what you think.