Undoubtedly, none of the individuals named in the “Panama Papers” had foreseen the unexpected outcome to their rather suspicious actions. Thanks to globalization, even though the boundaries of states might be fading away ostensibly making the world much simpler, it is essentially becoming more and more complex.
Very well aware of the advantages that globalization has brought to us, were we expecting the effects of its quickening pace? On the 3rd of April, 2016 over a hundred media sources in coordination with the International Consortium of Investigative Journalists, released stories on what came to be known as the biggest leaks in history of its kind. A Panamanian law firm Mossack Fonseca allegedly helped its clients to set up offshore shell companies in order to hide their assets in countries like Panama where tax is very low. Offshore accounts are not necessarily illegal however they may be used for ambiguous illegal activities. The documents showed a record of over forty years, containing 11.5 million files and 2.6 terabytes of data. Its unprecedented size is what made it a global investigation which lasted for about a year after which it was made public.
The Panama Papers have created an upheaval in several countries across the globe primarily because they show the involvement of the establishment, the heads of states, celebrities, business tycoons, drug mafias, criminals as well as renowned athletes and huge finance companies, in short the global elite in hiding assets in tax havens. Around twelve current and former world leaders have closely been associated to the offshore shell companies set up by Mossack Fonseca. These include the Russian president Vladimir Putin, the Pakistani prime minister Nawaz Sharif, Iceland’s prime minister, leaders of Argentina, Ukraine, Syria and Egypt. Even the father of the prime minister of United Kingdom David Cameron. The Ukrainian president Poroshenko, Saudi Arabia’s King Salman, president of the UAE, officials of the Communist Party of China, Chinese president Xi Xingping’s sister’s husband and the former UN Secretary General Kofi Annan’s son etc. the list is endless. These revelations enlighten the rest of the world with two significant yet interrelated points about the international economy. Firstly how corruption is becoming globalized and secondly how the global elite have successfully been able to deceive their countries as a consequence of which the rich are becoming richer and the poor are becoming poorer.
The increasing interconnectedness of the world has been beneficial for most developing economies and has changed the way the global arena works however it cannot be denied that globalization may bring risks of a different kind. It is because of the process of globalization of the international economy that the offshore industry even exists.
Globalization has resulted in free trade agreements which make the transfer of money very easy in order to avoid taxation. The greater the international involvement the more the possibility for corruption to erupt at a larger scale, Panama Papers being a clear illustration. Does globalization then from the elitist perspective refer to the globalization of corruption? In this case corruption is being referred to as the misuse of one’s powerful position or public office for personal benefits. Corruption acts as a hurdle in the advancement of states and obstructs the pace of growth especially of the developing countries. What makes the situation even more alarming is the fact that Mossack Fonseca which has linked the wealthy to tax evasion is just one of the several firms that have been following the same practices.
Isn’t it true then that the rich of the developed or the developing nations have been able to store away their money in tax havens, and have been able to prevent themselves from investing in their own economies, hence the poorer aren’t able to prosper. Thus the underprivileged nations are stuck at being subservient to the privileged states. What is all the more strange is how the names given out by the Panama Papers puts world leaders who have been political enemies alongside each other with drug dealers and other criminals, all in the same boat. Even though political views and differing interests may be a source of disagreement between and amongst the ruling class what keeps them united is their wealth. What questions then come to mind are if capitalism which cannot be distinguished from globalization, is the preferred system for economic prosperity or is it a mere reflection of exploitation, is this a problem of global governance?
The dependency theory explains the interaction between the developing and the developed states. Initially it was developed as a counter perspective to the policies of the free market economy rejecting the idea that the free market economy through liberalized trade policies and greater integration makes the developing nations progress towards becoming developed. According to the dependency theory the limited number of dominant states are developed by the wealth taken from the dependent states through sanctions and loans etc. which results in the developed being even better established while the developing economies in particular continue to deteriorate. The wealth moves from the periphery (developing) states to the center or the core (developed) states as these developing countries become part of the international economy.
Thus globalization helps widen the gap between the rich and the poor instead of making them equal, and a part of the globalized world economy is these offshore businesses. The Panama Leaks was not shocking to many others alongside the proponents of the dependency theory. It was an expected behavior of how the rich run the global economy. Globalization integrates the world through free movement of capital, culture, goods and people but why is it that only a small percentage of the global population is able to reap the benefits of globalization that too to an extent which makes it unjust and slows the progress of the developing, making us question the notion of globalization as a whole.
It is undeniable that the world could have come to know about the Panama Leaks without being integrated in to an international community. It would have been absolutely impossible for someone in Panama to contact someone in another part of the world let alone send such a massive sized data to a journalist in Germany had the world not become the global community it has become over the years of human advancement. However it is also true that it is because of this interconnectivity that the powerful have been able to misuse their supremacy at a much larger scale than ever before, but irony plays an imperative part in the demise of such stockpiling practices. The very processes used to accumulate such wealth are the same instruments being used to expose the deception of the global elite.