London, United Kingdom - Historians
tell us that there were two quite distinct British empires - the first an
Atlantic empire built on North American colonies and Caribbean possessions
and the second an Asian empire, built on control of India and coercive trade
with China. These two empires were deeply criminal projects, in the specific
sense that they relied heavily on profits from slavery and the sale of
narcotics. Empire on the British model was a moneymaking venture, where moral
considerations took second place to the lure of super profits.
The first British Empire came to
an end when the Americans fought a revolutionary war for independence in the
1770s. The second British Empire began to fall apart with Indian
independence in 1947. Arab and African nationalism progressively undermined
British influence in the years that followed. At some point, perhaps with
defeat in Suez in 1956, or when Britain withdrew from its last significant
overseas possession, Hong Kong, in 1997, the game was finally up.
Nowadays, if you believe what
you're told by respectable historians and broadcasters, Britain has turned
its back on its imperial past and is trying as best it can to make its way as
an ordinary nation. The reality is somewhat more complicated. One day,
perhaps history will describe a third British Empire, organised around the
country's offshore financial infrastructure and its substantial diplomatic,
intelligence and communications resources. Having given up the appearance of
empire, the British have sought to reclaim its substance.
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The Cayman Islands, a British territory in the Caribbean, is a popular tax haven |
Banking on billionaires
Two news stories from last week
help us sketch the outlines of this third, offshore empire. On Tuesday, March
20, a Russian banker was shot and seriously wounded outside his flat in
Canary Wharf. On Sunday, March 25, the co-treasurer of the Conservative Party
resigned after the Sunday Times claimed that he had been
soliciting donations to his party from what he thought was a wealth fund
based in Liechtenstein. These two apparently unrelated events together tell
us quite a lot about contemporary Britain.
The United Kingdom allows foreign
residents to hold their funds offshore and only taxes them on money they
bring into the country. This approach, a relic from the days of openly
declared empire, makes the country a popular place of residence for
billionaires from all over the world, from Africa, mainland Europe and India.
Once in London, a sophisticated
legal and financial apparatus arranges for foreign funds to be deposited in a
network of offshore jurisdictions. In his groundbreaking book, Treasure
Islands, Nicholas Shaxson describes London as the centre of a spider web
that links to the Channel Islands, the Isle of Man and the Caribbean. With
impressive frugality, the British have reinvented the scattered remnants of
formal empire as instruments for serving the needs of global capital.
When the Soviet Union broke up,
those who secured control of the privatized Russian economy flocked to
London. They had little in the way of a social base in their own country and
their position was chronically insecure. They needed a way to channel profits
overseas, and London offered them access to a world-class financial centre
and favourable tax rates.
The city also gave some of them a
public profile outside Russia. In buying Chelsea Football Club and the Evening
Standard, Roman Abramovich and Alexander Lebedev respectively have made
themselves international figures. Moves against them by opponents back home
are thereby made that much more difficult.
The British state does more than
provide a hospitable, low-tax jurisdiction and the means to acquire a higher
profile abroad. It puts its diplomatic resources at the disposal of favoured
foreign residents.
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Adrian Nastase
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Tony Blair |
In July 2001, Tony Blair wrote a letter to Romanian
Prime Minister Adrian Nastase to support Lakshmi Mittal's efforts to buy
up the state-owned steel company, Sidex. Though Mittal had offices in London,
the company making the bid was registered offshore, in the Dutch Antilles.
But while Mittal did not employ many people in Britain, or pay much tax there,
he did make a significant contribution to the Labour Party.
In May 2001, two months before
Blair wrote his letter, the Indian magnate had given them £125,000
($199,750). It is hardly surprising that Peter Cruddas was happy to talk with
financiers from Liechtenstein about donations to the Conservative Party.
Donations from foreigners are illegal, but it is a relatively simple matter
to set up a company registered in the UK to handle the transaction. Offshore
blurs the distinction between domestic and foreign.
Capital of capitalism
All this is part of a much larger
imperial project, whose full scale and significance is difficult to
appreciate. This is not an empire that advertises itself widely. Indeed, it
tries to hide the very fact of its existence. But there is no doubting the
ambition. For decades now, Britain's rulers have sought to make London the capital of global capitalism.
The state has reorganized itself
to this end. Privatization was tested in the UK and then exported around the
world. Deregulation brought foreign banks to London. The financial sector,
the intelligence establishment and the political parties are committed to a
project that the major media can scarcely bring themselves to discuss.
Elections become ever more hallucinatory exercises, in which shallow
differences in tone and detail obscure a far deeper complicity.
Occasionally, the dynamics of the
offshore empire become visible as scandals or sensational crimes. Power
struggles cause ripples that can't be missed. A foreign businessman is shot
in the street. The sheer strangeness jolts us for a moment out of our
obliviousness. A politician is caught soliciting donations and resigns.
Rupert Murdoch, a significant
figure in Britain's revived imperialism, owns the Sunday Times,
the paper that broke the Peter Cruddas story. One faction in the empire is
sending a message to another. For a moment what cannot be discussed is
mentioned, obliquely, as is the way of empire.
The third British Empire is not an
industrial or military superpower. Indeed, it is intensely vulnerable. The
United States and the great powers of Europe could do a great deal to hamper
it, if they chose to do so.
The empire is a standing
temptation to betray the local or the national for the sake of membership of
a far more exclusive and elusive entity - an entity whose allure is
intimately linked to its tact, its capacity to avoid straightforward
description. Empire prospers to the extent that it can exploit, and where
possible foster, corruption elsewhere.
Much of the old bombast is gone.
There are fewer flags and trumpets. But in other respects, the third empire
closely resembles its predecessors. Like them, it must do all it can to
prevent effective democracy from breaking out at home, as it profits from
tyranny abroad.
The dedication to the needs of
global capitalism benefits only a tiny minority of the population. The rest
face a future of steepening inequality and shrinking prospects. Besides, as
in previous centuries the people at home must pay up when adventures abroad
turn expensive.
And like the first two British
empires, the current one is a criminal enterprise. But having specialised in
slavery and drug trafficking, perhaps the empire's current, signature crime
is tax evasion.
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