CATF Reports Apr. 14, 2016, 1:42pm


Last week, The Fuse featured a discussion on what the Panama Papers data leak revealed about how wealth is administered in countries that rely on oil revenues. Matt Piotrowski mentions King Salman of Saudi Arabia, former Minister Iraqi Prime Minister Ayad Allawi, former Qatari Prime Minister Hamad bin Jassim al-Thani, and former Sudanese President Ahamad al-Mirghani to exemplify patterns of “authoritarianism and corruption” among the ruling elites of oil-heavy economies. More often than other countries, petro-states tend to resort to secretive offshore accounts not only to evade taxes and scrutiny but also to protect their positions of power.

 

From The Fuse:

“A lot of this comes down to how wealth and power are exercised in rentier states,” David A. Weinberg of Foundation for Defense of Democracies (FDD) told The Fuse. “Rentier states, in a nutshell, end up with a strong concentration of wealth in a few hands. There’s a tendency toward sustained authoritarianism, and those who exercise power seek to protect their wealth from certain kinds of oversight in their own system, because power can be exercised capriciously and vindictively.” […]

“Not only do the elite use offshore havens to avoid scrutiny and taxes in their home countries; they also seek to protect their assets against the risk of power changing hands. With the desire to hold onto their wealth when and if they lose power, they distribute their holdings in safe havens offshore. For instance, both the King of Saudi Arabia and its Crown Prince used offshore accounts, and both have faced the possibility at certain points that they would be disinherited. King Salman stashed assets with overseas shell companies used for real estate assets and a yacht. According to FDD’s Weinberg, Saudi Arabia has long demonstrated such opaque ownership dynamics. For instance, Saudi Arabia, the world’s largest producer of crude oil, as a state has sought secrecy regarding its massive investments in U.S. debt, while the Kingdom’s central bank’s overseas holdings are heavily but discreetly invested in conservative U.S. assets and considered “one of the region’s most secretive investment funds,” according to a CNBC commentator.”

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