The water is crystalline, the sand is whiter than white and elegantly bent palm
trees sway in the breeze. This is how the Seychelles markets itself: as
"another world". Tourism is the mainstay of this heavenly island, averaging 20%
of gross domestic product (GDP) and 60% of foreign exchange earnings.
But given the climate crisis, prospects are dim for climate-vulnerable island
nations like the Seychelles. Half of its population lives in coastal areas
directly exposed to rising ocean levels, coastal erosion, flooding and erratic
rainfall. The island is also heavily dependent on agriculture, with 70% of
crops located in the coastal areas and subject to increasingly common saltwater
tidal surges. The rising waters thus threaten the livelihoods of the people of
Seychelles, as well as the existence of the island itself.
According to projections by the Intergovernmental Panel on
Climate Change, many of these island nations are likely to disappear by the end
of 21st century. One reason may be the increasing scarcity of fresh water
sources. "The Seychelles, in particular, is almost entirely dependent on
surface water and therefore highly vulnerable," revealed the UN Framework
Convention on Climate Change.
The future of this paradise isn't as immediately dire as the Maldives, its
fellow member of the Alliance of Small Islands States (AOSIS), formed in the
lead-up to last December's Copenhagen climate summit. The lowest country on the
planet, the Maldives has a maximum ground level of 2.28 meters, or just below
the height of Chinese basketball player Yao Ming. But the Seychelles would be
one of the next islands in line if the water level doesn't stop rising.
The sad irony is that, despite producing little in the way of carbon emissions,
both island nations may have contributed to their own demise. The Seychelles
and the Maldives share the same secret underpinning to their respective
economies. More than 50% of AOSIS members are secrecy jurisdictions,
misleadingly labeled as offshore centers and tax havens. These economies -
characterized by opaque legal and financial services ensuring little or no
disclosure, high levels of client confidentiality and few requirements for
substantial economic activity - are recipients of illicit capital. These
laundered profits have been siphoned from resource-rich but artificially
impoverished developing nations.
Such island hubs act as key facilitators of the network by providing offshore
financial services, remotely controlled from onshore head offices such as the
City of London. Mobile units of lawyers, bankers and accountants serve as the
intermediaries between white-gloved multinationals and black-gloved political
elites. The money that could otherwise go toward reducing the carbon footprint
of multinationals and funding sustainable development in developing countries
is instead sunk in island accounts. And that money may well end up sinking the
Islands of money
At present, almost US$13 trillion in secrecy-protected wealth is held offshore
and out of reach. If moderately taxed, these funds would yield over $250
billion. Such funds could more than finance the Millennium Development Goals,
which are estimated by the World Bank at $40 billion to $60 billion annually
through 2015. They could also go toward the adaption and mitigation funds
needed by developing and emerging nations, which the UN puts at $4 billion to
$86 billion annually.
The recovery of this illicit capital will be difficult. The islands that host
these accounts are dependent on this revenue. The economy of the Seychelles is
dependent on the financial sector for 11% of its GDP. This puts the Seychelles
not far behind the notorious Cayman Islands, the world's fifth-largest
financial center, where financial services account for 14% of GDP. Switzerland,
which launders one-third of all illicit capital, depends on financial services
for 15% of its GDP.
Most island economies are politically and economically dependent on major
economies like the United Kingdom and the United States. They compete to be the
offshore repository of choice by offering opaque financial and legal services
and low or zero tax rates. Through these secrecy services, developed
governments are also on the final receiving end of illicit flight from regions
like sub-Saharan Africa, which is a net creditor to developed nations.
The source of funds
Nigeria is Africa's largest oil producer and the fifth-largest exporter to the
United States. Since the 1960s, the country's political and military elite has
stolen more than $400 billion in oil revenues from Nigeria's citizenry and
deposited it in secrecy jurisdictions such as Switzerland. Meanwhile, despite
the extravagant promises of multinationals like Chevron operating in the
country, Nigeria's people have become progressively poorer. The extractive
industries have generated considerable opposition, human rights violations, and
violence. The mass ecological degradation is pegged at $5 billion per annum.
Africa does not share much responsibility for global warming. The continent
contributes only 3% of global greenhouse emissions. But the extractive
industries that operate in Africa are major emitters. Shell, for instance,
emits more greenhouse gasses than many countries: its carbon emissions in 2005
exceeded the emissions of 150 countries.
Although Africa occupies a small carbon footprint, the continent's autocratic
regimes in Angola, Nigeria, the Congo, and Gabon are located at the base of the
commodity chain and depend primarily on the capital-intensive extractive
industries that supply the world's largest carbon-intensive engines with a
significant share of fuel. But neither the corrupt regimes nor the corporations
that financed and facilitated global warming made it to the Copenhagen agenda.
The discussions at the climate change conference in Copenhagen last year
focused on "developed" and "developing" nations, and the new market for carbon
offsets. Industrialized governments created these carbon permits from thin air
and allocated them to the largest multinationals with the largest carbon
The latter architects of the system, Goldman Sachs, with foreign subsidiaries
criss-crossing the globe from the Bermuda to the Cayman Islands, Hong Kong to
Jersey, Ireland, the British Virgin Islands and Africa's own world-famed
hub, Mauritius, not only designed the huge carbon market, but also hold a 10%
share in Al Gore's Chicago Climate Exchange (CCX) - the pilot carbon trading
program in the United States.
Gore's CCX, whose board includes VIPs such as the former UN secretary general
Kofi Annan and the former World Bank president James Wolfensohn, had advocated
for the privatization of the atmosphere as far back as the 1992 Rio Earth
One well-publicized engine of the new carbon trade is the Clean Development
Mechanism, which enables polluters to circumvent caps by financing projects in
the developing world that emit little or no carbon. Yet, according to studies
by Stanford University's Energy and Sustainable Development Program, "between a
third and two-thirds" of CDM projects do not represent real reductions.
Meanwhile, Group of 20 (G-20) governments subsidized fossil fuels to the tune
of $300 billion in 2009. So, as the G-20 spends its time creating a carbon
trade market that does little to reduce carbon emissions, multinationals
continue to expand their extractive enterprises, dictators continue to siphon
off capital, financial firms cash in on pollution credits, and this illicit
capital continues to flow into offshore locations that are themselves
threatened by the rising waters associated with global warming.