Instead of bullying and threatening some of the world's smallest countries for hosting perfectly legal offshore financial services, the U.S. and U.K. should negotiate a compromise that will boost local economies, benefit development, return some money onshore, and save face all round.
While the leaders of two of the richest nations on the planet may think they look good with their macho pronouncements to bring offshore banking units to heel, the rest of the world sees it differently.
It's more of the "same old same old" for many in the South with vivid memories of the excesses of colonialism: It's the rich nations punishing poorer countries for the excesses of their own hyper-rich citizens.
Instead of facing the issue at source in London and New York, where the alleged tax dodgers live, and have assets to lien against, the U.S. president and British prime minister are talking about punitive measures against some of the smallest nations on the planet.
The U.K.-U.S. versus Cayman and Cook Islands is a little mismatched, especially when these offshore financial services are perfectly legal entities as they were established by reputable British and American institutions.
So these two accomplished politicians should do what politicos do best: Forge a compromise.
The deal?
Simple.
Account holders would be asked to do the following:
• Invest 60 percent of their cash sitting in havens into businesses in emerging markets, preferably the one they are sitting in.
• Set up a fund to provide very low-interest loans for low-cost housing in the host countries with 10 percent of their current holdings.
• Invest back the remaining 30 percent into the U.S. and U.K. economies – and of course – subject to taxation.
Once all those mentioned above are implemented, all is forgiven and the wayward firms would be welcomed home to the warm, though recession-deflated, bosoms of Wall Street and the City of London. The U.S. and U.K. would be expected, of course, to boost their development assistance to the haven countries.
The alternative? Recovering $100 billion in offshore monies.
Now before you start crying "right on," think of the fun all the presidents' men had with the full force of the richest and most powerful nation on Earth trying to recover $170 million worth of AIG bonuses from a handful of execs.
Still think there's a chance the Feds will crack and bring home to mama a hundred billion dollars from numbered accounts?