Global Financial Integrity

Event Recap: How Illicit Financial Flows are Europe’s Common Enemy

On Wednesday, representatives from the Senate, European Embassies of Luxembourg, the Netherlands, and anti-corruption NGOs, including GFI’s Tom Cardamone, gathered in the U.S. Senate’s Kennedy Caucus Room to discuss the growing dangers of illicit financial flows in Europe as major contributors to the European financial crisis.

U.S. Senator Jeff Sessions (R-AL) spoke about his experience with Russia’s systematic aggression in the Balkan areas, and advised they take a stronger stance against Russian encroachment. Dependence on American financial and military hegemony in the region is not a sustainable security solution, he added. Sessions, who also served as Attorney General of Alabama, urged that Central and Eastern Europe push for anti-corruption and transparency laws.

I am convinced that prosperous and open societies make the world better. The values of financial integrity are exactly what we need.

All agreed that financial integrity is the linchpin of stability and security. Hon. Becky Norton Dunlop, Vice President of the Heritage Foundation, said:

Ensuring transparency is key to dealing with corruption.

This is not just a Republican issue. This is not just a Democratic issue; this is an issue for all Americans.

The crisis in Crimea was preventable, argued Natasha Srdoc, Chairman of the Adriatic Institute for Public Policy. Regional stability is greatly undermined by Western European banks promoting fraudulent transactions in the Balkans. Had Ukraine formally broken its ties to Russia and joined the EU, it could have deterred Russia from annexing Crimea. Yet joining the EU may also have exposed the corruption schemes of Ukrainian elites, including that of former President Viktor Yanukovych and former PM Pavlo Lazarenko, whose own anonymous shell company was based in Wyoming.

Europe Needs To Reduce Underground Economies, Fight Tax Evasion

This morning, Larry Summers, former U.S. Treasury Secretary under President Clinton and former top economic advisor to President Obama, wrote that European austerity is holding back economic growth, which is making their sovereign debt problem worse, both in individual countries passing austerity budgets and on a continent-wide basis.

Asymmetric Shocks And Other Woes Of The Eurozone

Massive capital flight from the weaker Eurozone economies, not envisaged before the creation of the Eurozone, are putting further pressure on the union Cross-posted from the blog of the Task Force on Financial Integrity and Economic Development. One...

The Alpha, But Whither The Omega, Of The Greek Crisis?

Global Financial Integrity Lead Economist Dev Kar Examines the Role of Illicit Financial Flows in the Greek Debt Crisis. IFFs Cost Greece an Estimated US$160 Billion over the Last Decade

Greece has been in the news a lot lately and as we all know, it has not been good news.  By all accounts, the austerity measures being imposed on the population as a condition for bailing Greece out of the financial crisis, is severe.  As Walter Mead points out in a recent blog, investors are worried that the Greeks may not stand for them.  He rightly notes that ordinary Greeks feel that the rich should pay the costs of the economic crisis and not them.  They are right.  According to an article in the Washington Post (Is austerity a Greek myth? By David Ignatius, May 3, 2010), Prime Minister Papandreou admits that corruption now robs the Greek economy by US$20-30 billion and “graft” (probably meaning bribery and kickbacks) accounts for some 8-12 percent of GDP.  If, as I suspect, the Prime Minister is talking of graft and corruption as separate components, the size of Greece’s underground works out to some 18-21 percent of GDP.  The result still falls short of the 25-30 percent of GDP estimated by most economists.