Brown leads global drive to close down tax havens

By Nigel Morris, Deputy Political Editor

Thursday, 19 February 2009

The Prime Minister Gordon Brown at Downing Street yesterday

Britain is leading moves to end the privileged status of tax havens as part of a planned “global new deal” to tackle the international recession.

Gordon Brown is believed to have won the support of other world leaders for a drive against offshore shelters used by large firms to cut their tax bills and avoid complex financial regulations. The deal could be done at a summit of world leaders in London on 2 April and form part of wider attempt to revive the global economy.

Speaking yesterday, Mr Brown said the time had come for world leaders to hammer out a “grand bargain” to rebuild the global financial system. He argued that the world had to act as one to supervise banks, including ending the practice of firms and financial institutions setting up registered offices in islands and small countries which offer lower tax rates than the countries in which they are based. Mr Brown said: “We want the whole of the world to take action. That will mean action against regulatory and tax havens in parts of the world which have escaped the regulatory attention they need.” He will face a daunting task in persuading many smaller countries that depend on attracting multinational companies to fall in line and he admitted that success depended on the “rest of the world agreeing with us that this action needs to be taken”.

But he added: “I am more confident now – having talked to world leaders – that we are in a position to take further action on this matter.”

President Barack Obama has been scathing over American companies paying tax offshore, which is believed to account for hundreds of billions of dollars lost to the US Treasury.

He said on the presidential campaign trail: “There is a building in the Cayman Islands that houses supposedly 12,000 US-based corporations. That’s either the biggest building in the world, or the biggest tax scam in the world – and we know which one it is.”

Mr Brown declined to name the tax havens he had in mind, but there are several under British jurisdiction. They include Jersey, Guernsey and Alderney in the Channel Islands, the Isle of Man, Bermuda, the Cayman Islands and the British Virgin Islands.

Mr Brown was speaking after talks in Downing Street with the International Monetary Fund’s managing director Dominique Strauss-Kahn and the World Bank president Robert Zoellick. He is due to meet European leaders in the next few days in preparation for the 2 April summit.

He defended his plans for a massive stimulus of the UK economy and said he was pressing other nations to follow the British lead. He added: “That is at the crux of how we can move towards recovery in the next few months.” A document published by Downing Street setting out its plans for the “Road to the London Summit” suggested that Britain could move to stimulate the economy – either by tax cuts or extra spending – if measures already in train were not effective.

Mr Brown sidestepped questions on the size of bonuses planned for RBS staff following a suggestion that they could amount to more than £900m, rather than the £175m suggested by the Treasury. He said any payments would be linked to performance and argued there would be only be a “very limited” chance of challenging those already written into existing contracts.

He also dismissed as “gossip” the disclosure that cabinet colleagues, including Harriet Harman, have been jockeying for position to succeed him. And he swept aside any talk of his accepting a job as head of a new global regulatory regime as a “lifeboat” from No 10.

Israel's president asks Benjamin Netanyahu to form new government

Israel's president, Shimon Peres, has asked the Likud party leader, Benjamin Netanyahu, to form the country's next government and become prime minister.

By Damien McElroy, Foreign Affairs Correspondent
Last Updated: 1:10PM GMT 20 Feb 2009

Mr Peres called on Mr Netanyahu to establish support for his nomination as prime minister in the country's parliament after his main rival, the Kadima leader Tzipi Livni, declared that she had no desire to join a broad coalition.

Mr Netanyahu's Right-wing Likud party finished a close second in this month's general election behind the centrist Kadima party. But the vote on Feb 10 saw Right-wing parties finish with an overall majority.

"The president has made a decision regarding the formation of the government and the presidency will summon deputy Benjamin Netanyahu... to entrust him with this task," according to a statement issued by Mr Peres's office.

The announcement came after Mr Peres held separate talks with Mr Netanyahu and Miss Livni, the current foreign minister, in an effort to persuade them to form a broad government alliance.

But Miss Livni emerged from the talks saying: "I will not be a pawn in a government that would be against our ideals."

In remarks to Jewish leaders, America's Middle East envoy George Mitchell criticised Mr Netanyahu's stance on negotiations with the Palestinians. Mr Netanyahu has derided political talks with Palestinians and has vowed to put economic improvements before sovereignty talks.

But Mr Mitchell said: "One cannot talk about economic development on the Palestinian side when you are not moving forward with diplomatic moves at the same time."

Political analysts have predicted friction between a Right-wing government and President Barack Obama's administration.

"Netanyahu is going to face big pressure from the Obama administration to at least look like he is making some movement on the peace process, and he will need Livni for that," said Shmuel Sandler, professor of political science at Bar-Ilan University.

"As for Livni, if she stays too long in opposition, she runs the risk that some of her Kadima colleagues who originally came from the Likud and remain ideologically close to the party, might decide to bolt back there."

'Unhappy US' claims over Afghanistan dismissed

By Matt Dickinson, Press Association

Thursday, 19 February 2009

The Defence Secretary John Hutton today dismissed claims that US military commanders are unhappy with the performance of the UK armed forces in Afghanistan.

A flurry of recent reports have suggested that US top brass has been left unimpressed by some aspects of the British effort in the country, with the counter-insurgency tactics singled out for criticism.

But Mr Hutton said in an interview with the Financial Times: "I do not think that is fair, nor do I think that reflects the real view in the Pentagon and elsewhere.

"There is a very high level of regard for the contribution that UK forces have made in Iraq and Afghanistan."

He said the UK - whose armed forces have suffered 145 fatalities in Afghanistan since 2001 - was open to criticism as long as it was "fair".

But Mr Hutton added: "Our reputation is very important to us. We will very strongly defend it.

"We will defend it by begin open to criticism where it is fair.

"We will not change our tactics in Afghanistan on the basis of uncorroborated and unsourced gossip from people who don't have the courage to put their names to their remarks."

The comments from Mr Hutton - who will discuss the Afghanistan mission at a meeting of Nato defence ministers in Poland today - came as President Barack Obama revealed plans to send 17,000 more US troops to Afghanistan.

Foreign Secretary David Miliband yesterday welcomed the move, saying the extra forces would play an "important and positive role" in the campaign.

Some will be deployed in Helmand province, where UK soldiers have been engaged in fierce fighting with the Taliban.

Around 8,100 British servicemen and women are currently serving in Afghanistan.

Speaking on a visit to the troubled country last night, Mr Miliband said: "I think that there is a universal recognition that these extra American troops can play, and will play, an important and positive role, when they are aligned and allied with a strategy for economic development and political development."

He also pledged that Britain would keep its troop levels "under review" - although he stressed that the prospect of an increase had not been raised directly.

"In terms of the United Kingdom we represent about 12% of the troops in Afghanistan at the moment," Mr Miliband said.

"We have had no request to increase our number of troops but, of course, we always keep the number under review."

Mr Hutton said he will raise the issue of increased troop contributions from other countries during today's meeting in Poland.

The US currently has around 30,000 troops in Afghanistan.

Mr Hutton acknowledged a shortage of troops may have hampered progress in Afghanistan and said he would press the UK's European Nato allies to provide extra military resources.

He said Britain had not received a direct request from the US to provide additional soldiers and added that the UK was "playing above our weight" compared with other Nato members.

Mr Hutton told BBC Radio 4's Today programme: "There has been a very lively debate in Europe over the last few years about this.

"Our view has always been very clear that Nato needs to do more, the European members of Nato need to do more.

"There needs to be a fairer burden-sharing of responsibilities, particularly in those really hard areas where what we need are combat forces."

Asked whether a shortage of troops had led to less progress being made, he said: "I think that's probably right. I think what we have got to do is understand the mission-critical status of our campaign in Afghanistan.

"The jihadists do pose a fundamental threat to our way of life. We have got to meet that challenge and we should meet it on a number of levels."

Mr Hutton said no decision had been made about deploying extra troops from the UK, although he was looking at whether the UK could do more.

But, he added: "We are playing, certainly, above our weight in the campaign there, so my initial view is it is for others to make further contributions ahead of any extra contributions from the UK."

Mr Hutton said it was "absolutely essential" for the Afghan government to speed up the political process and improve reconstruction programmes.

In a criticism of Afghan president Hamid Karzai's administration, he said: "There's no doubt at all that the government in Kabul needs to do more.

"It needs to tackle the problem about corruption, it needs to deal with the problem about drugs which is a poison in Afghan society and making it very difficult for good governance to take hold across the country.

"These are areas where there has got to be change and improvement in Kabul and these are very much the messages we have relayed to president Karzai and his colleagues."
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