The Facts about Neo-Colonialism
TRANSCEND MEMBERS, 10 Jul 2023
David Adams | Transition to a Culture of Peace – TRANSCEND Media Service
6 Jul 2023 – Among the comments concerning the previous blog, some readers have questioned the following statement:
“In our times simple colonialism has been replaced by neo-colonialism. . . . economic sanctions and unbridled exploitation carried out by Europe and North America against the countries of the Global South.”
The question of sanctions was dealt with in the blog published the preceding month: “The Hypocrisy of Economic Sanctions”.
This month I will deal with the question of “unbridled exploitation.”
You are probably aware of the fact that the mineral and agricultural resources of the countries of Africa and Latin America are exploited by big corporations based in Europe and North America. You may believe that the profits extracted from the South are balanced by humanitarian aid that is given to these countries by the North.
In fact, if we look only at the public and legal transactions, this may be the case.
But what about secret and illegal transactions carried out the the big corporations based in the North?
We quote here from a 2017 article in The Guardian based on data from the US-based Global Financial Integrity (GFI) and the Centre for Applied Research at the Norwegian School of Economics. If we include secret and illegal transactions, “in 2012, the last year of recorded data, developing countries received a total of $1.3tn, including all aid, investment, and income from abroad. But that same year some $3.3tn flowed out of them.”
“What do these large outflows consist of? Well, some of it is payments on debt. Developing countries have forked out over $4.2tn in interest payments alone since 1980 – a direct cash transfer to big banks in New York and London, on a scale that dwarfs the aid that they received during the same period. Another big contributor is the income that foreigners make on their investments in developing countries and then repatriate back home. Think of all the profits that BP extracts from Nigeria’s oil reserves, for example, or that Anglo-American pulls out of South Africa’s gold mines.
“But by far the biggest chunk of outflows has to do with unrecorded – and usually illicit – capital flight. GFI calculates that developing countries have lost a total of $13.4tn through unrecorded capital flight since 1980.
“Most of these unrecorded outflows take place through the international trade system. Basically, corporations – foreign and domestic alike – report false prices on their trade invoices in order to spirit money out of developing countries directly into tax havens and secrecy jurisdictions, a practice known as “trade misinvoicing”. Usually the goal is to evade taxes, but sometimes this practice is used to launder money or circumvent capital controls. In 2012, developing countries lost $700bn through trade misinvoicing, which outstripped aid receipts that year by a factor of five.
“Multinational companies also steal money from developing countries through “same-invoice faking”, shifting profits illegally between their own subsidiaries by mutually faking trade invoice prices on both sides. For example, a subsidiary in Nigeria might dodge local taxes by shifting money to a related subsidiary in the British Virgin Islands, where the tax rate is effectively zero and where stolen funds can’t be traced.
“GFI doesn’t include same-invoice faking in its headline figures because it is very difficult to detect, but they estimate that it amounts to another $700bn per year. And these figures only cover theft through trade in goods. If we add theft through trade in services to the mix, it brings total net resource outflows to about $3tn per year.
“That’s 24 times more than the aid budget . . .
“. . . illegal capital flight wouldn’t be possible without the tax havens. And when it comes to tax havens, the culprits are not hard to identify: there are more than 60 in the world, and the vast majority of them are controlled by a handful of western countries. There are European tax havens such as Luxembourg and Belgium, and US tax havens like Delaware and Manhattan. But by far the biggest network of tax havens is centered around the City of London, which controls secrecy jurisdictions throughout the British Crown Dependencies and Overseas Territories.
“In other words, some of the very countries that so love to tout their foreign aid contributions are the ones enabling mass theft from developing countries.”
In another recent blog, we discussed how the New Development Bank, established this year in China by the BRICS countries, may help countries of the South to escape from economic sanctions. And trade with China has now outstripped trade with Europe and North America for the countries of South America.
Will these new trade relations independent of Europe and North America enable the countries of the South to escape from exploitation? We hope so, but only time will tell.
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Dr. David Adams is a member of the TRANSCEND Network for Peace Development Environment and coordinator of the Culture of Peace News Network. He retired in 2001 from UNESCO where he was the Director of the Unit for the UN International Year for the Culture of Peace. Previously, at Yale and Wesleyan Universities, he was a specialist on the brain mechanisms of aggressive behavior, the history of the culture of war, and the psychology of peace activists, and he helped to develop and publicize the Seville Statement on Violence. Send him an email.
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Tags: Anglo America, Capitalism, Catastrophe Capitalism, Corruption, Disaster Capitalism, Elites, Finance, Greed, Monopoly Capitalism, Neocolonialism, Predatory Capitalism, Profits, Right to Food, Rogue states, Super rich, UK, USA, World Order
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