Opinion Sur
With the crisis xenophobia reemerges in Europe and the United States. Immigrants are rejected ignoring their contribution to development and without taking into account that central countries are the main responsible for generating backwardness and poverty in those African and Latin-American countries that expel migrants. This occurred through the enormous extraction of resources and the dismantling of local societies and institutions. Surely this monumental holdup did not favor all European and American citizens equally; thus they should focus their frustration towards those responsible for larceny, not towards its victims. Despite how much migrations have contributed to mankind’s development, there has always been xenophobia (hate, repugnance or hostility towards foreigners [[Royal Spanish Academy’s Dictionary]] ); unfortunately, it is also found nowadays. Xenophobia becomes more virulent in times of crisis such like the one the United States and European countries face today. These lines do not attempt to explain why and how xenophobia arises; there are excellent sociological and psychological analyses that do so. The analysis seeks to specify the factors and responsibilities that explain why migrations towards United States and Europe arose and still take place.
With each region’s singularities, the fact that contributed the most to generating the migrations was the relentless resource extraction from Southern Hemisphere countries and the simultaneous dismantlement of their societies and institutions. This was not only conducted during the European colonization of America and Africa, which is more than dramatic on its own, but it was also prolonged throughout the entire XX century and so far it continues in the XXI. Just a few figures from recent decades express the magnitude of resources that are still being extracted from Southern Hemisphere countries and capitalize Northern Hemisphere central countries.
In 2010, the European Parliament passed a report pointing out that illicit monetary flows coming from developing countries fluctuated between 641.000 and 941.000 million dollars a year, ten times more than the entire official development aid! [[Andreu Missé, La Eurocámara exige una acción más enérgica contra los paraísos fiscales (The EP demands stronger action against tax havens), El País de España, April 5th 2010.]] Which means those countries did not only finance the entire aid ‘granted’ by the countries of the North, but they also gave them a ten time larger amount of resources for free, which financed a great part of their economic development. Africa and Latin America where ransacked without mercy.
‘In the second half of the 1990s, funds amounting to almost one third of the GDP of the Sub-Saharan African nations were sent overseas. Likewise, 50% of the net worth of Latin America’s wealthiest has been fleeing annually. The World Bank (known for its bearish propensities) estimates ill-gotten money circulating worldwide to stand at between US$1 and US$1.6 trillion, half of which originates in developing countries’ [[José Nun, Tax havens, Evils of our Time, Opinion Sur, July 2011.]] . Global Financial Integrity, also quoted by Andreu Missé, concludes that in Africa illicit flows amounted to 854.000 million dollars between 1970 and 2008 (and they are still growing at an 11% annual rate!). That report states that this figure would eliminate Africa’s entire external debt and the remaining 600.000 millions could be dedicated to easing poverty and promoting development.
Such an enormous holdup performed with the connivance of local partners, profiting at the expense of their fellow countrymen, has contributed and still contributes to generating the difficult situation regarding poverty, inequality, socioeconomic falling behind and institutional dismantlement that burden Southern Hemisphere societies. Only hypocrites or the misinformed could then be surprised by the fact that the ransacked countries are not able to withhold their own populations.
How they do it
Multiple Mechanisms were used to drain Southern Hemisphere resources. The most significant ones are related with international trade and the exploitation of natural resources such as oil, copper, gold, silver, lithium, forests, among many others.
The surpluses extracted from the exploitation of their natural resources were a constant that worsened with the European colonization. Military domination enabled practicing it openly and without granting any compensation whatsoever. The value of what was extracted must have been phenomenal since it was the basis for the economic functioning of the metropolis in that traumatic period of history. Since the gradual independence of colonies, the extraction process was held by large international corporations that imposed their terms on the weak countries. This implied all kinds of privileges, such as very low royalties, tax exemptions, lax environmental and working conditions regulations, provision of ports’ and roads’ infrastructure, among others.
Ultimately, it was for centuries, not years or decades, that there was a greatly burdensome suction of surplus that weakened southern countries, preventing them from capitalizing while central countries strengthened. Quite different it would have been if that immense mass of resources had stayed in Southern societies and had been used to finance their development. This natural resources exploitation still exists although adapted to the institutional circumstances of our time.
Regarding international trade, the difference in bargaining power between economic actors and countries enabled imposing unfavorable prices and conditions upon Southern Hemisphere countries. It is commonly known as a decline in the terms of trade, which is nothing other than recognizing that the prices of products exported by central countries rise more than the prices of products exported by Southern Hemisphere countries, therefore more and more local products must be handed over in order to get the same or even lesser volume of products imported. This happened historically ever since the colonization and it was prolonged through vast periods of time. Only in the past few years China, India and other emerging economies’ explosive growth generated a strong demand for raw materials that had a favorable impact on the prices of products offered by some, not all, Southern Hemisphere countries. [[Almost 60% of the 72 havens known to-date are located in the United Kingdom or have somewhat been linked to it; José Nun, Tax havens, Evils of our Time, Opinion Sur, July 2011.]]
With the globalization process, where most international trade is in the hands of large multinational companies, other mechanisms to extract surpluses from Southern Hemisphere countries appear, such as evading taxes set by local tax legislation. This is accomplished by under-invoicing what a company exports to another company of the same group located in a different jurisdiction in which income taxes are lower. By reducing the value of sales, profits are concealed and taxes are evaded, which constitutes a felony. The evaded amount is capitalized by the company located outside the exporting country and, ultimately, by the international company both associates belong to. The producing country is affected by the detraction of fiscal income it could have dedicated to promoting its development.
These triangulations are usually conducted using fiscal hideouts, deceitfully named tax heavens, which are actually havens for criminals and evaders. It is not a coincidence that most of these havens have been established at and by Northern countries .
‘Tax havens hide nothing less than one fourth of all private funds circulating worldwide. The problem lays in those funds’ composition: Three percent of those capital flights originates in political corruption; one third, comes from organized crime, while 60% to 65% of that wealth is derived from illegal schemes orchestrated by individuals and large corporations: the rich send to tax havens twice as much money as politicians and organized crime together’ [[José Nun, op.cit.]]. Accumulated wealth in tax havens is estimated at around 10 billion euros while developing countries’ 2010 financial deficit was 315.000 million euros.
Consequences of the enormous surplus’ extraction
In so doing, large companies and central countries benefit from the way they manage to exploit Southern countries’ natural resources, with the trading terms they impose in practically the entire world, with the tax evasion that should be paid to countries they operate in, with the free movement of capital through which financial capital almost instantly accesses speculative opportunities in any corner of the planet. The counterpart is the weakening of most Southern countries because of the enormous surplus’ suction they suffer. It comes as no surprise then, that factors in Southern countries that expel population and factors in Northern countries that attract those migrants take place simultaneously.
It is in that context that inhabitants of assaulted countries are being held from migrating or staying in economies partially capitalized with Southern resources. Those economies wanted the resources and were the main responsible for extracting capital; they took in migrants that contributed to their development but in the crisis they do not welcome them anymore. A hard lesson and a teaching for both sides: sustainable global development and social peace are possible under a righteous international order that eliminates trading and natural resources’ exploitation so that countries that are now left behind can capitalize in their own benefit the vast resources that continue to flow towards central countries. The problems and challenges coming from the crisis that the affluent countries are confronting will not be resolved by laying responsibilities upon migrants but by transforming the concentration dynamic and unbridled financial speculation.
