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Thursday 25th of July 2019 |
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Macro Thoughts
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"We sometimes have a flash of understanding that amounts to the insight of genius, and yet it slowly withers, even in our hands - like a flower. The form remains, but the colours and the fragrance are gone." - Robert Musil Africa |
“He is capable of turning everything into anything--snow into skin, skin into blossoms, blossoms into sugar, sugar into powder, and powder back into little drifts of snow--for all that matters to him, apparently, is to make things into what they are not, which is doubtless proof that he cannot stand being anywhere for long, wherever he happens to be.” ― Robert Musil
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@realDonaldTrump and @ImranKhanPTI were all smiles when they met earlier this week Law & Politics |
The new bilateral bargain seems to be this: if Islamabad can deliver Washington an honourable exit from Afghanistan that addresses its main counterterrorism concerns, the Trump administration will, in turn, restore military aid and take active steps to expand trade. Against the backdrop of the intensifying US-China rivalry, Washington’s relationship with Islamabad is of particular consequence for Beijing, given the decades-long alliance between China and Pakistan. Repeated suspensions of US military assistance have pushed Islamabad further into Beijing’s arms, driving the overall surge in Chinese weapons exports. From 2008-17, Pakistan was the No 1 buyer of Chinese arms sales, with its expenditure of about US$6 billion, accounting for 42 per cent of China’s total weapons sales. In Pakistan specifically, China’s economic assistance, diplomatic support and military aid offers an alternative to the “unreliable” US, enabling Islamabad’s deterrence of arch-rival New Delhi and “strategic defiance” of Washington.However, China may be hedging on its “no strings attached” approach when it comes to Pakistan. The two countries are now each other’s top allies and Pakistan’s security and stability are of utmost importance to China. Beijing’s investment – physical and reputational – is rapidly expanding via the China-Pakistan Economic Corridor (CPEC), which is linked to the vast belt and road infrastructure plan. As a result of irresponsible economic planning by Pakistani policymakers, though, the CPEC has contributed to a balance of payments crisis in Pakistan. Beijing has intervened, ramping up short-term lending to prop up the Pakistani rupee. However, the fact there was no broader financial bailout from China has compelled Pakistan to enter yet another programme with the US-dominated International Monetary Fund, which has pushed it to make some painful economic reforms.
Conclusions
Gwadar Port and CPEC is China's geopolitical Escape Hatch.
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Mauritius is a country of white coral beaches and low mountains located off the southeast coast of Africa in the Indian Ocean. @qzafrica @Lattif Africa |
Since gaining independence in 1968, the country has been dubbed a miracle: a stable democracy with a robust economy that provides free education and healthcare to all its 1.3 million inhabitants. This middle-income country is often one of the few positive exceptions on global development indexes for Africa. Yet this success story has long been shadowed by financial secrecy, with the island state overseeing legal but questionable processes that have allowed global companies to siphon millions of tax dollars away from low-income African nations.
The journey to becoming an offshore financial hub started in 1989 as Mauritius sought to move away from agricultural dependence and diversify its economy. Positioning itself as a “gateway to Africa,” officials embarked on a plan to become the jurisdiction of choice for investors and multinationals seeking to invest in Africa. This plan was solidified through the enactment of the 1992 Mauritius Offshore Business Activity Act, which enabled foreign entities to incorporate companies with limited public disclosure, extremely low or no taxation, besides high levels of privacy and asset protection. Mauritius also signed double tax avoidance agreements (DTAA) with 46 states worldwide, 18 of them from Africa. These bilateral agreements encourage investment by ensuring investors from one country operate in another without being taxed twice on the same income. But they also paved the way for abuse, allowing multinationals to shield their assets and profits from the prying eyes of authorities and the public.
In the three decades since Mauritius turned itself into a desirable financial hub, the country has been criticized for impoverishing African governments and widening wealth inequality. Even as the number of millionaires in the island rapidly grew, the United Nations Economic Commission on Africa in 2013 censured Port Louis for deepening the exposure of African states to illicit financial flows.
In 2015, the European Union placed Mauritius on its top 30 tax blacklist nations; Oxfam listed it as one of the world’s worst tax havens in 2016; and the 2018 Financial Secrecy Index gave it a 72.3 score out of 100 for enabling questionable tax avoidance maneuvers.
Offshore legal services provider Appleby and accounting firm Deloitte have both been accused of taking advantage of these lenient tax measures and advising their clients—including Yale University—on how to maximize their profits.
The structure of these treaties has also run into legal quagmires, especially in India, where the government couldn’t collect $2.2 billion from Vodafone’s acquisition of an Indian operating company through offshore firms including one in Mauritius. In March, Kenya’s high court ruled that the legal notice that brought the two nations’ joint DTAA into operation had not been laid before parliament as required by law and was thus invalid.
Despite the assurances, Cobham says “it’s hard to put a number on the damage that Mauritius individually has done to other African countries. This is partly a “data problem,” he argues, because “we still lack detailed numbers on the scale of dividend, interest and royalty payments that leave other African countries under their treaties with Mauritius.”
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Sudan military says it thwarts coup attempt, arrests senior officers @Reutersafrica Africa |
Sudan’s military said on Wednesday that it had thwarted a coup attempt and arrested an unspecified number of senior officers in connection with a plot to restore the party of ousted President Omar al-Bashir to power. The military said in a statement: “The failed attempt aims to abort your glorious revolution and to return the former National Congress regime to power, and to disrupt the path before the expected political solution that aims to establish a civilian state”. It said the coup attempt involved General Hashim Abdel Mottalib Ahmed, head of the joint chiefs of staff; a number of high-ranking officers from the armed forces and the National Intelligence and Security Service; and leaders of the National Congress Party and the Islamic Movement party Bashir also headed. Among those detained was General Bakri Hassan Saleh, who served as first vice president and prime minister until months before Bashir was ousted, sources close to the military council said. He was a leading figure in the 1989 coup that brought Bashir to power and was one of his closest confidants throughout his 30-year rule. “These are fabricated attempts by the (Transitional Military Council) to strengthen their grip on power,” he said.
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