Thanks for this James - very important and I really want to support and use the notion of disaster risk creation. In a parallel way, I have been using a set of figures that started out with Rob van den Berg of the GEF, which are very instructive. Although they focus on public spending (the origin is partly the IMF and i am sure it is part of their argument against irrational state subsidies), I am compiling related private sector (and kleptopcracy/ tax dodging/ criminal) figures that are like those for Myanmar below. I call this the 'cure to damage ratio' - in other words, the disparity between the finance available to 'solve' a problem and the vastly larger amounts that are used to cause it. This approach exposes the whole argument of donors that they are supporting the "building of resilience" as a complete lie.

I cannot send attachments, so the figures here may not align properly.

Maybe the election of Corbyn to lead the UK Labour party is a sign of hope that we can shift things away from the victory of neo-liberalism...

best wishes to all
Terry Cannon

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The 1:100:1000 “cure to damage” ratio for climate change
The amount being spent (public funds only) that increases the problem of climate change is currently a thousand times greater than the funds available to help overcome the problems (adaptation)

$1 billion
current estimate of what is available annually for public funding of climate change support to developing countries for adaptation (for mitigation estimate about $10 billion)

$100 billion
Most conservative estimate of what is required for adaptation (Green Growth report provides an overview of various needs assessments and does this for adaptation as well as mitigation)

$1 trillion
Conservative estimate of amounts of public funding available for harmful practices: subsidies for fossil fuels, water practices that deplete resources, fisheries and agriculture. More recently IMF increased this to $2 trillion

Source: Inclusive Green Growth World Bank 2012 and Rob van den Berg (Global Environment Facility). See also Fifth Overall Performance Study of the GEF: Cumulative Evidence on the Challenging Pathways to Impact  www.gefeo.org

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Private sector/ kleptocrats/ criminals/ politicians

Top 200 energy companies spent to explore for more oil, gas, coal - $674 billion (The Guardian 19 April 2013)

Estimated wealth kept in secret tax haven accounts $21 trillion ($21,000,000,000,000) BBC News 22 July 2012 http://www.bbc.co.uk/news/business-18944097

US costs of wars in Iraq, Afghanistan, “on terror”, 2006 (estimate) $80 trillion

Oxfam report (Jan 2014) that the richest 85 people in the world have as much wealth as the world’s poorest 3.5 billion people.

1% of the world’s people own half the world’s wealth ($110 trillion)


At 12:16 PM 10-09-15, James Lewis wrote:

Realities for Radix.

Only a month ago, extensive flooding in Myanmar was reported world-wide, eg : http://www.bbc.co.uk/news/world-asia-33844076
news items for which were followed by numerous appeals for contributions to aid programmes.

It is in this recent but repetitive context that I am forwarding today's press release from Global Financial Integrity, a voluntary non-governmental Washington DC based organisation, regarding the imminent release of their report of "illicit financial flows' and their economic and social effects upon Myanmar's population; increased inequality, reduced education and health services can be quickly translated as increased vulnerability to natural hazards.

When will this reality of "disaster risk creation" percolate through to the creators and followers of Disaster Risk Reduction?

Anyone wanting the imminent report should refer to GFI's website given at the end of the attached message .

James.


-------- Forwarded Message --------
Subject: Nearly US$100 Billion Flowed Illegally through Myanmar from 1960-2013, Finds New GFI Report
Date: Wed, 9 Sep 2015 13:35:07 -0400 (EDT)
From: Christine Clough <[log in to unmask]>
Reply-To: [log in to unmask]
To: [log in to unmask]



 

FOR IMMEDIATE RELEASE:
September 9, 2015

Nearly US$100 Billion Flowed Illegally through Myanmar from 1960-2013, Finds New GFI Report

Illicit Outflows average 6.5% of Myanmar’s Official GDP; Technical Smuggling of Imports via Fraudulent Misinvoicing Accounts for 71.0% of Myanmar’s Illicit Inflows

Underground Economy Averaged 55.1% of Country’s GDP; Drives and is Driven by Illicit Flows

Tax Loss due to Illicit Flows Greater than Public Spending on Health

Customs Enforcement, Transparency Measures, Political Will Seen as Key to Curbing Crime, Corruption, and Tax Evasion

Report Launch Event to Be Held at the National Press Club at 2pm EDT on Thursday, September 10th

WASHINGTON, DC – Nearly US$20 billion flowed illegally out of Myanmar between 1960 and 2013— draining domestic resources, driving the underground economy, exacerbating inequality, and facilitating crime and corruption—according to a new report releassed today by Global Financial Integrity (GFI), a Washington DC-based research and advocacy organization.

Titled “Flight Capital and Illicit Financial Flows to and from Myanmar: 1960-2013,†the study finds that trade misinvoicing—the fraudulent over- and under-invoicing of trade transactions—accouunted for the majority of the country’s illicit financial outflows (59.6 percent) and inflows (89.2 percent) over the 54-year period analyzed.

“Myanmar has a very serious problem with illicit financial flows, and curtailing them should be a priority for the government that forms following the forthcoming elections,†noted GFI President Raymond Baker, a longtime authority on financial crime. “Illicit flows have drained billions of dollars from Myanmar’s official economy; this money could have otherwise been used to help the nation’s economy grow.  Beyond the direct loss to the economy, these flows are driving the underground economy, fueling crime and corruption, and costing the government significant revenue.â€

Findings

Authored by GFI Chief Economist Dev Kar and Junior Economist Joseph Spanjers, the study estimates that illicit financial flows from Myanmar totaled US$18.7 billion from 1960 through 2013, with annual average illicit outflows averaging 6.5 percent of the country’s GDP. Illicit inflows totaled a staggering US$77.7 billion over the 54-year period; nearly half of those inflows (in real terms) occurred during the last four years of the study, 2010-2013. On average, Myanmar’s illicit inflows are equivalent to 14.4 percent of its GDP.

“Illicit outflows drain capital from Myanmar’s economy, facilitate tax evasion, exacerbate inequality, and deplete domestic savings,†said Dr. Kar, who served as a senior economist at the International Monetary Fund before joining GFI.  “It is greatly concerning that illicit inflows have grown significantly in recent years, averaging under US$400 million per annum in the 1960s, they’re averaging over US$8 billion per year today.  Unless corrective actions are taken, the economic toll of these illicit flows will only continue to grow.â€

Both the inward and outward illicit movements of money deprive the government of crucial tax revenue. By applying relevant tax rates on illicit flow figures, the report estimates lost tax revenue due to illicit flows and compares it to Myanmar’s public spending on health and education.

“Tax losses due to illicit flows have robbed the country of crucial public funds. The magnitude of this loss is not insignificant; it averaged 122-172 percent of health expenditures and 48-73 percent of education spending from 1960-2013,†explained Mr. Spanjers, the report’s co-author. “Even more troubling, approximately 30 percent of this tax loss occurred in the last four years of the study. This means that some individuals have been taking advantage of increased economic openness for personal gain, at the expense of the rest of the country.â€

Broad Flight Capital

In addition to estimating illicit flows of capital to and from Myanmar, the study also estimates that broad capital flight—a combination consistiing of both licit and illicit flows—amounted to USS$35.9 billion in outflows between 1960 and 2013. Broad flight capital inflows stood at US$82.8 billion.

Underground Economy

The report also found that the underground economy averaged 55.1 percent of official GDP over the 54-year period, increasing from an average of 49.3 percent in the 1960s to 66.1 percent in the 1980s before falling from 2008 through 2013, potentially as a result of increasing economic openness.

The study finds that total illicit financial flows drive and are driven by the underground economy, implying that efforts to curtail illicit financial flows would also significantly reduce the size of the underground economy.

Policy Recommendations

“Addressing the problem of capital flight and illicit flows is crucial to the policy reforms Myanmar is pursuing as it opens to the world,†stated Tom Cardamone, GFI’s Managing Director, who will launch the report at an event Thursday afternoon in Washington, DC.  “Illicit financial flows are a real and rapidly growing problem, as our research shows, one which requires serious attention by policymakers.â€

GFI recommends a number of steps Myanmar’s next government can take to ameliorate the problem of illicit financial flows from the country revolving around two principles:

1. Greater transparency in domestic and international financial transactions.
2. Greater cooperation between governments to shut down the channels through which illicit money flows.

These steps include implementing a real-time world market pricing risk analysis system to curtail trade misinvoicing, making more meaningful progress on AML/CFT responsibilities, studying physical and technical smuggling routes to form the basis of an organized and effective program to curb these illegal transactions, and developing an internal review process that determines the highest priority areas for technical assistance.

Methodology

The study is a methodologically rigorous analysis of illicit financial flows.  Dr. Kar—assiisted by GFI Junior Economist Joseph Spanjers—developed robust multi-equation economic models highlighting the interactions between illicit flows and the underground economy.

Nevertheless, Dr. Kar cautioned that the methodology for estimating illicit flows is very conservative and that there are likely to be more illicit flows from Myanmar that are not captured by the estimates, particularly given its complex history with regards to international sanctions and drug trafficking.

“The estimates provided by our methodology are likely to be extremely conservative as they do not include trade misinvoicing in services, same-invoice trade misinvoicing, hawala transactions, and dealings conducted in bulk cash,†explained Dr. Kar.  “This means that a large amount of the proceeds of abusive transfer pricing between arms of the same multinational corporation as well as much of the earnings from drug trafficking, human smuggling, and other criminal activities—which are often settledd in cash—are not included in these estimates.ââ€

Report Launch: Thursday

Global Financial Integrity will launch the report at a conference at the National Press Club in Washington, DC on Thursday, September 10, 2014 at 2pm local time.  The event will feature a brief presentation of the report and its findings by GFI Chief Economist Dr. Dev Kar, followed by a panel discussion with Vikram Nehru of the Carnegie Endowment for International Peace and Aaretti Siitonen of the Embassy of Finland and a question & answer period.

GFI hopes that the report and the conference will begin a constructive dialogue with Myanmar’s government about measures that can be taken to curtail illicit flows.

“We hope that this study will spur the Government of Myanmar to consider effective legislative and regulatory measures to curb the flow of illicit money from the country, thereby maximizing domestic resources for economic growth,†added Mr. Baker. “GFI’s goal is to work constructively in conjunction with government officials to curtail these harmful illicit flows.â€

Funding

Funding for the new report, “Flight Capital and Illicit Financial Flows to and from Myanmar: 1960-2013,†was generously provided by the Government of Finland.

###

Notes to Editors:

• Click here to view an HTML version of this press release.
  
  
• More information about the GFI report—including Excel files with the report’s data—is avaailable on the GFI website here. A PDF of the full report can be downloaded here [PDF | 3 MB].
• To schedule an interview with Mr. Baker, Dr. Kar, Mr. Cardamone or Mr. Spanjers, contact Christine Clough at [log in to unmask] / +1 202 293 0740, ext. 231.  On-camera spokespersons are available in Washington, DC.
• The report will be launched at an event at the National Press Club in Washington, DC on Thursday, 10 September 2015 at 2pm local time.  To RSVP for the event, contact Christine Clough at [log in to unmask] / +1 202 293 0740, ext. 231.
• All monetary values in the report and in this release are expressed in real 2010 U.S. dollars (USD).

###

Contact:

Christine Clough
[log in to unmask]
+1 202 293 0740 ext.231

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Global Financial Integrity (GFI) is a Washington, DC-based research and advocacy organization which promotes transparency in the international financial system.

For additional information please visit www.gfintegrity.org.

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