Switzerland is home to delicious chocolate and cheese, picture-postcard valleys, a really cool army knife, and Roger Federer. It also happens to be world’s largest centre for offshore wealth.
Yesterday, it emerged that Indian funds in Swiss banks skyrocketed (by more than 50 per cent) in 2017, bucking a downward trend. If you want to know what the government and the Opposition think of that, you can read this. But here, we’re concerned about a larger, more pressing question: Why are Switzerland’s banks so often in the news? Why do they attract foreign funds?
The Tax Justice Network, an international advocacy group, ranked Switzerland number one in a financial secrecy index published this year (just above the US and the Cayman Islands), and calls it “the grandfather of the world’s tax havens”.
The report identifies three key factors that shape Switzerland’s banking system: an “infamous tradition of banking secrecy”, “political stability”, and “a ‘financial consensus’ strongly rooted in Swiss society which has generally protected the offshore financial services centre against major political challenges”.
Data on funds held by Indians in Swiss banks was first made public in 1997. Last year, Switzerland ratified a decision to implement a global framework for automatic exchange of tax information, with India and 40 other jurisdictions.
Mohan Guruswamy, a top economist, says deposits in Switzerland have been dwindling due to increased transparency, and are routed instead to other destinations like Singapore, Dubai, Lichtenstein, Austria and the Cayman islands.
These, he explains, are havens for illicit money from tax evasion or over and under invoicing, and criminal activity like narcotics and other smuggling activity.
7 Global Issues to Watch in 2018
- Reforming the UN: UN Secretary-General Antonio Guterres assumed his five-year term exactly one year ago, putting reform, prevention, and peace at the heart of his agenda. 2018 is anticipated to be a huge year for next steps on reform of the UN. Just before the holidays, the Secretary-General released his latest report on strengthening the development system, laying out concrete recommendations to help modernize various UN actors to more effectively deliver the Sustainable Development Goals (SDGs). This, along with the pillars of peace and security and UN management, will form the basis of the Secretary-General’s efforts in 2018 to make the UN more fit for purpose in an ever-changing world.
While reform is never easy, at the heart of this laudable and necessary effort is an intent to make the UN more responsive and adaptable to the issues most affecting the world, and the UN today, including: helping countries deliver on the SDGs; mitigating risks related to conflict and the necessity of taking prevention more seriously; and climate change and natural disasters.
- Delivering on the Sustainable Development Goals: It’s hard to believe that the SDGs will be three years old this year. We are in a race against time to meet this ambitious agenda by 2030. 2017 saw positive momentum with increased engagement by governments, civil society, philanthropy, and the private sector (more below) on key global issues such as poverty, inclusiveness, and environmental sustainability. Global deaths of children under age 5 fell to 5.6 million from 12.7 million in 1990, the proportion of adults aged 15 and older with an account at a bank or financial institution increased by 75% from 2005, diseases like polio were at the brink of global eradication, and nearly 40 million people escaped extreme poverty.
Yet, it is also becoming clear that the current pace of progress must accelerate to achieve the SDGs over the next 12 years. 2018 should be the year when actors step up their efforts around implementation, including: ambitious global and local partnerships; the use of data and measuring progress; increased and redirected financing; and sustained action in both developed and developing countries.
These efforts will be critical in teeing up important goalposts for the fall of 2019 when Heads of State and Government are due to convene at the UN to assess SDG progress. The foundation community will get a jumpstart this February at the North American Community Foundations Summit, as foundation leaders from the U.S., Mexico, and Canada discuss the SDGs.
Governments will similarly tackle these issues during two key moments this year – first when Canada hosts the G7 Summit in June with a focus on inclusive growth and jobs, climate, and building a more peaceful and secure world, and second when Argentina hosts the G20 Summit in November emphasizing the future of work and implications of automation and new technologies, food security, infrastructure for development, and equality.
In addition, in July 48 governments will present their progress toward the SDGs at the UN’s High Level Political Forum. There, specific thematic reviews on climate and environment-oriented areas will take place on goals related to water, energy, cities, sustainable consumption and production, and biodiversity.
High on the 2018 agenda will also be an increased push on investing in human capital through health, education, and nutrition, building on a high-level UN meeting on financing education during last year’s General Assembly, and the World Bank’s roll out of its Human Capital Project to spur investment in people. An early checkpoint will be the Global Partnership for Education replenishment in early February, co-hosted by Senegal and France, followed by global health funding replenishments (including for the Global Financing Facility) in the second half of the year and into 2019, as well as at the Spring World Bank/IMF Meetings in April.
- Accelerating Climate Action: The Paris Agreement on climate change, aimed at combatting greenhouse gas emissions, will also turn three. 2017 was high profile for climate, as the U.S. Administration announced its intent to withdraw from the accord. This announcement took place against a backdrop of rising carbon emissions after several years of modest but important declines; extreme weather events that devastated homes, livelihoods, and lands from Puerto Rico to Sierra Leone; and one of the top three hottest years on record. Yet, in the face of the U.S. announcement, other countries held firm in their determination to honor national and international commitments under Paris, and momentum continued. Last fall’s climate conference in Bonn kept the negotiation process on track, and a groundswell of support from non-state actors, from governors to CEOs, ushered in expanded and critical leadership.
2018 will be a year to see how subnational and private sector commitments to Paris translate into action and momentum, and what that means for international cooperation around climate and the environment. A seminal moment will be when state and local leaders, businesses, scientists, students, and nonprofit organizations come together for the inaugural Global Climate Action Summit in September in California. Countries will also take stock of their progress toward meeting the goals of the Paris Agreement through a process called the Talanoa Dialogue, which will play a critical role in informing the next round of national greenhouse gas target setting in 2020. Canada will highlight climate change as a key theme during its G7 Presidency, and China will be one to watch as it continues to flex its muscles – including completing the world’s largest floating solar power plant, phasing out of coal, and moves made to establish the world’s largest carbon-trading market. Globally, the push for renewable energy will likely continue to gain momentum.
- Growing Private Sector Engagement: In 2018, the private sector, including companies and the finance industry, will continue to play an essential role in helping to channel the trillions of dollars it will take to realize the SDGs and the Paris Agreement. While this number is somewhat daunting, the Business & Sustainable Development Commission’s work has been critical in helping to quantify the $12 trillion in market opportunities for companies aligning with the SDGs.
A key focus of 2018 will be building momentum and monitoring progress of key initiatives launched in 2017, including: the UN Environment Programme’s Principles for Positive Impact Finance to guide investors and financiers in analyzing the environmental, social, and economic impacts of the financial services and products they deliver; the UN Global Compact’s new Financial Innovation for the SDGs Action Platform to identify instruments to direct private capital to sustainable solutions; and the World Benchmarking Alliance, which intends to rank companies based on SDG performance to influence both consumer and market behavior.
This year will also provide new opportunities to mobilize private sector action on the SDGs and climate. The first big event to kick off the year will be later this month, when Ceres, the UN Office of Partnerships, and the UN Foundation host the Investor Summit on Climate Risk, with the goal of accelerating green finance and investment. A meeting will follow this on financing for development over the summer, hosted by UN General Assembly President Lajčák to strengthen the links between the SDGs and resources that can come from the private sector. A proposed Secretary-General hosted Finance Summit later this year could be a platform to enhance global efforts to mobilize the levels of finance needed for SDG and climate achievement. Expect this broader effort by the Secretary-General to be echoed by other parts of the UN system, like WHO, which will roll out a new General Programme of Work in late May. And it will be helpful to look for early signals at the World Economic Forum’s 2018 Annual Meeting, which could serve as a propeller to explore initiatives such as those focused on the food and land use system and the blending of public and private finance.
- The Universal Declaration of Human Rights Turns 70: A few weeks ago, the UN celebrated the annual Human Rights Day by announcing that it was kicking off a year-long celebration in honor of the 70thAnniversary of the Universal Declaration of Human Rights. Culminating in December 2018 the campaign, #StandUp4HumanRights, will highlight what the Universal Declaration means for people everywhere, helping to reinforce the truism that Eleanor Roosevelt popularized: human rights start at home. The principles of the Universal Declaration are timeless, and are as important today as they were during their creation in the wake of World War II. With backsliding and risks to human rights across the globe occurring amidst populist and nationalist uprisings, we have seen the 11th consecutive yearly decline in global freedoms. As Secretary-General Guterres recently said, “The fundamental principles of the Universal Declaration are being tested in all regions. … These actions imperil us all.”
This year is an opportunity to infuse the 30 Articles of the Declaration throughout many work streams, from UN reform, to maintaining momentum on the SDGs, to putting conflict prevention at the center of the UN’s work, to Compacts around Migration and Refugees(see below). The recent announcement that UN High Commissioner for Human Rights Zeid Ra’ad Al Hussein will step down at the end of the summer adds to the profile of these issues going into 2018 and will be important to monitor throughout the year.
- A Focus on Migration and Refugees: Core to the SDG framework is a principle to ensure that progress toward sustainable development “leaves no one behind.” This year, the international community will negotiate a first-ever Global Compact for Migration to help shape what the future of migration will look like, as well as hold consultations to develop a Compact on Refugees. While still adapting to recent news of U.S. withdrawal from the Migration Compact process, the compact is a critical opportunity to elevate the voices of migrants and protect their security and rights. It provides a chance to help shift global opinion and response to better adapt, embrace, and prepare for future migration. The Refugee Compact, likewise, aims to develop a blueprint for refugee access to health, education, and livelihood opportunities and specific ways to ease pressure on governments hosting and welcoming refugees. With one out of every seven people on this earth on the move (15% of the population), the impact of these two Compacts could be huge.
- Gender Equality and Women’s Rights Progress: 2017 was a year of heightened attention to the struggle for gender equality and women’s rights. The U.S. Administration reinstated the Global Gag Rule, eliminating critical funding for international family planning, and a movement confronting sexual harassment and violence dominated our Twitter feeds as survivors stood up and said #MeToo. The #WomensMarch rocked our collective consciousness, and the record, likely becoming the largest single-day demonstration in recorded U.S. history.
At the UN, Secretary-General Guterres started the year by appointing five women to his top nine posts, as part of his commitment for equal numbers of women and men to lead the UN. Later in 2017, Guterres launched a new strategy aimed at achieving gender parity, calling for each agency to monitor progress toward gender equality at all levels. Additionally, the UN and the EU launched a new “Spotlight Initiative” to fight gender-based violence. And others stepped up, including Canada in launching its first feminist international assistance policy.
In 2018, these efforts will feature renewed attention with gender guidelines adopted by intergovernmental bodies starting to take effect, and female leaders joining forces in support of the SDGs. WomenRising2030, an initiative of the Business and Sustainable Development Commission, will release a report coinciding with International Women’s Day to inspire more women in the private sector to lead on the global goals, and motivate more companies to invest in women’s leadership to meet the 2030 deadline. Advocacy for the collection and use of complete, unbiased gender data to monitor progress for women and girls will play an increasingly important role. Amidst projections that it could take 200 years to close the economic gender gap, BNY Mellon and the UN Foundation will launch a report highlighting the economic and human rights imperative for expanding access to financial products and services as well as its impact on the achievement of SDG 5, gender equality. In March, just after International Women’s Day, the 62nd Commission on the Status of Women will take place in New York, with a priority focus on achieving the empowerment of rural girls and women. And gender will be front and center at both the G7 and G20 Summits in June and November.
The US Role in the Migrant Crisis
Announcing the US withdrawal from the United Nations Human Rights Council (UNHRC), Nikki Haley, the US ambassador to the UN, told the media, “I want to make it crystal clear that this step is not a retreat from human rights commitments. On the contrary, we take this step because our commitment does not allow us to remain a part of a hypocritical and self-serving organization that makes a mockery of human rights.” Haley cited a “chronic bias against Israel” as the reason for the US exit from the UNHRC. The ambassador’s statement sounds hollow in the backdrop of “mockery of human rights” happening in its very own border with Mexico.
Attorney General Jeff Sessions and the Trump administration instituted a “zero-tolerance” immigration policy in April. The policy meant families crossing the US-Mexico border without proper authorization, including those seeking asylum, would be separated. Parents faced criminal prosecution, while their children were taken to detention centers. In less than two months since the policy went into effect, more than 2,300 children have been separated from their parents. Once separated, there is no process in place for the parents and their children to communicate with each other, nor a guarantee that the family will be reunited at some time in the foreseeable future.
A gut-wrenching recording of the voices of children separated from their parents at the border was released by ProPublica. This recording intensified the national and global outrage against Trump administration’s inhuman policy of taking the children away from the parents. Unable to withstand the sustained backlash, Donald Trump signed an executive order on June 20 to stop the practice of separating families, while still maintaining the zero-tolerance policy.
While Trump’s executive order would stop families being torn asunder at the border, the plight of the migrants trying to make it across the US-Mexico border would still be terrible by any measure. Trump’s order will run into issues with the Flores agreement, the landmark 21-year-old court decision which mandates that migrant children be held in detention for no more than 20 days. The executive order does not address the fate of the 2,300 children already separated from their parents. The zero-tolerance policy is cruel, with or without separation of families. With the prospect of indefinite detention along with their children, migrant families have effectively been thrown from the frying pan into the fire.
Trump’s behavior is very much akin to that of the authoritarian dictators in the modern era. Joseph Stalin, Adolf Hitler and Augusto Pinochet had used the tactic of separating children from their parents as a way to punish dissidents and enforce obedience. It should come as no surprise that Trump, who has a fascination with Vladimir Putin and Kim Jong-un, both leaders of authoritarian regimes today, chose to emulate the actions of Stalin and Hitler in his immigration policy. Even when signing the executive order, Trump showed no real compassion by stating, “I did not like the sight of families being separated.”
Justifying the approach of tearing apart families as a deterrent to border crossings, Sessions said: “If you cross this border unlawfully, then we will prosecute you. It’s that simple. … If you are smuggling a child, then we will prosecute you and that child may be separated from you as required by law.” He added, “If you don’t like that, then don’t smuggle children over our border.” Trump and Sessions have resorted to what dictators from the recent past did in order to instill fear among the less fortunate, instead of taking a balanced approach to the complex problem of immigration.
Trump dumps Russia, woos China instead
Once upon a time, Trump mused about how well he and Russian President Vladimir Putin would get along. Then-candidate Trump said Putin had declared him a “genius,” criticized the Obama administration’s tensions with Moscow and said it would be better “if we got along.”
China, on the other hand, was a currency manipulator, a thief of US jobs that should no longer be allowed to “rape our country.” If elected, Trump promised to impose heavy tariffs on Beijing and take it to court for shady trade practices.
It turns out that wielding power — as opposed to criticizing it — can change your outlook.
This month, during which his administration has stepped up US military action in Syria and Afghanistan as he looks to reassert US power, Trump said that “we’re not getting along with Russia at all, we may be at an all-time low.” He and Chinese President Xi Jinping, on the other hand, have “a very good chemistry,” Trump declared.
The President’s reversal on Russia and China is part of a series of policy flip-flops that have seen Trump abandon campaign positions on NATO, Israel, the Iran nuclear agreement and US alliances in Asia.
The shifts, which bring Trump’s White House in line with many Obama and George W. Bush administration policies, may not last under this mercurial president, but they reflect some hard facts about America’s interests.
“Whatever the aspirations on the campaign trail, they have given way to the realities of what it takes to conduct American foreign policy in a cruel and unforgiving world,” said Aaron David Miller, vice president at the Woodrow Wilson International Center for Scholars.
“The way this administration does business is highly unorthodox in so many respects,” Miller said, “but the ultimate outcome on so many issues seems now to come around to a pretty conventional approach.”
And so it is — these days — with Russia and China.
Trump had been eager to improve relations with Moscow and often expressed confidence that his ability to bond with Putin would ease friction between Washington and Moscow over Russia’s role in Syria and its annexation of Crimea from Ukraine.
But Syrian President Bashar al-Assad’s alleged April 4 chemical weapons attack on his own civilians triggered Trump’s outrage, leading him to strike a Syrian airfield with Tomahawk missiles and seeming to mark a change in Trump’s outlook on Russia — which has supported Assad throughout Syria’s bloody civil war. The US missile strike was an exclamation mark establishing that Trump, for the time being at least, has come to see Russia in more conventional US foreign policy terms. “You have a much more consolidated policy toward Russia now,” Stent said.
Putin told Russian TV in an interview Wednesday that under Trump, the relationship between Washington and Moscow had “worsened.”
Even as he took a harsher tone on the longtime US adversary, Trump still seemed to offer some reassurance in a Wednesday appearance with NATO Secretary General Jens Stoltenberg, saying that, “It would be wonderful … if NATO and our country could get along with Russia.” On Thursday, Trump tweeted that, “things will work out fine between the U.S.A. and Russia. At the right time everyone will come to their senses & there will be lasting peace!”