Published daily by the Lowy Institute

Corruption summit brings out the best in David Cameron

Corruption summit brings out the best in David Cameron
Published 17 May 2016 

The Anti–Corruption Summit held in London last week was both intensely personal for David Cameron and significant for the future of global financial flows.

'Statesman' is traditionally not the first term connected with the British Prime Minister. 'Experienced tactician' has been more common from the outset, when he engineered his rise just as Labour appeared finally beatable. In his first term he neutralised his anti-European right wing with a vague promise for a European referendum.

Later he adroitly hid behind a negative majority in parliament when called upon to support Obama in a military intervention against Assad in Syria. This was not incomprehensible given the Iraq fiasco of Tony Blair, but nor was it in the statesman mold of a Maggie Thatcher, with her famous 'Don't go wobbly on me' line to Bush Snr when he was confronted in 1990 with Saddam Hussein's invasion of Kuwait.

Now history has caught up with Cameron. The Brexit vote will be as decisive him as it is for the country. He can't possibly survive the UK exiting the EU. Consequently he is now concentrating on his political legacy.

A first clear sign appeared with his economic but also security-related arguments for British EU membership. The phrase 'The country is safer within Europe' really means that in the 21st (and Asian) century, the UK can only be assured of a ring-side seat at the global table when it joins with other former great powers such as France and Germany. Seen from the perspective of the inevitable long-term shift of the European defence burden from American to European shoulders, it is the correct strategic (and thus statesman–like) judgment.

It is interesting to note in this regard the recent German initiative both to bolster its own military (after a declining defence budget since 1990) and Berlin's proposal in Brussels for a real European army.

With his crusade against corruption Cameron has now also hit on a more immediate and visible target. Corruption is the main impediment on the road to economic well-being, democracy and the rule of law for most emerging and developing countries. It is a truly global problem: sustained and equitable economic growth in the South would mean fewer economic migrants to the North, more democracy, fewer political refugees and more personal and economic security for locals and foreign investors alike. [fold]

The truly remarkable point about the Anti-Corruption Summit was that it took place at all and moreover in London, second financial centre of the world. For the first time ever at an international conference open to all countries, practices which had hitherto been acceptable or at least tolerated, legal if not ethical, were newly and officially put under the umbrella definition of corruption. Thanks to 'Luxleaks', international tax optimisation by multinationals is on its way out, or rather into the law books of the fight against corruption. And since the publication of the Panama Papers, the same is true for offshore accounts and letterbox companies. This comes in the form of national registers of all kinds (foreign property owners, true beneficiaries of shell companies etc) and internationally through blacklists compiled by the OECD.

Even more remarkable is Cameron's leadership on these questions, as he must have known that British overseas territories such as the Virgin Islands (BVI) and crown dependencies (Isle of Man, Guernsey, Jersey) would become a big target of fiscal Perestroika, newly enshrined by the summit. The same goes for the scandalous shell company practice in the heartland (Delaware, Dakota, Wyoming, Nevada) of the UK's big cousin. The Financial Times had a 'Big Read' during the Summit asking, with justification, whether the US is rapidly becoming 'The New Switzerland'.

Whether all Anglo-Saxon money laundering saloons will henceforth cease their activity remains to be seen. At the summit, Cameron indicated that non-compliant British territories would be punished by ignoring them, whatever that means. Regarding the US, John Kerry did announce new legislation but it is a safe bet that it will not pass Congress before the elections in November, and probably never if the Republicans can hold on their majority in the House.

Given the fact that media coverage on the summit was virtually nil in Australia it is tempting to think that the Land of Oz is little concerned. Yet last time I looked foreign ownership of land, both in the form of urban condos and office blocks as well as rural domains, is a hot topic in Australian politics. A public register such as proposed by David Cameron for the UK might be a first step to define the problem.

Moreover, Australia as the international gatekeeper and benevolent uncle of many Pacific Islands might want to look more closely where offshore centres such as the Marshall Islands and Vanuatu are going. Small now, they could become suddenly very big if tropical safe heavens in other parts of the world are shut down.

Photo: Getty Images

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