Tax havens: 'Why do we tolerate this?'

What good does pumping in millions of dollars in aid do when so much of that money never goes to development programs and is instead stashed away in tax havens like Dubai or Luxembourg?

That’s what’s really hindering progress in poor nations with rampant corruption like Afghanistan, Eva Joly, chair of the Committee on Development at the European Parliament, told Devex President and Editor-in-Chief Raj Kumar at the European Development Days in Brussels.

“As long as it is possible for Afghans … to use tax havens to hide away the money they are stealing, this will be going on,” she said. “Developing countries and developed countries have the same interest. Why do we tolerate this?”

Joly singled out Dubai and especially Luxembourg: “We have a problem within the European Union. one of the founding members is a tax haven, and they want to stay a tax haven because 40 percent of their GDP comes from stealing from other countries.”

“Life would be much better for everybody if we managed [to] blacklist those places,” she said.

Check out the above video for more of Joly’s insights on fighting illicit capital flows, and how corruption is preventing developing countries from receiving more direct budget support from donors.

Devex was at the European Development Days 2013. Check out our coverage of Europe’s leading global development event of the year.