| It's important to keep in mind that | | | | possible by the electronic revolution in |
| offshore financial centers were | | | | fund transfer mechanisms which occurred |
| originally established by onshore banks | | | | early on in the 1970s. That single |
| and corporations. Why? Because felt | | | | technological development made it |
| hemmed-in by archaic laws, regulations | | | | suddenly possible and affordable to |
| and statutes. For example, Citicorp (the | | | | establish banks, corporations and |
| largest American-owned bank in the | | | | holding companies in relatively remote |
| United States) was one of the first to | | | | locations. It also made inter and intra |
| set-up offshore operations. It wasn't | | | | time-zone business a viable alternative |
| too long before 64 percent of its net | | | | to home-based operations. In turn, this |
| income was being generated by offshore | | | | gave rise to the creation of |
| sources. | | | | international wholesale banking - where |
| Some of the pioneering centers have | | | | large deposits could be maintained in a |
| evolved into world-class financial and | | | | variety of currencies, transferred via a |
| economic headquarters. Since the early | | | | worldwide network of corporations, |
| 1970s, these centers have initiated | | | | banks, governments and individuals, and |
| policies deliberately designed to | | | | lent to interested borrowers. This, in |
| attract international trade by | | | | turn, led to new transnational business |
| minimizing tax obligations and reducing | | | | practices and the development of the |
| (or entirely eliminating) other | | | | international subcontracting of loans |
| restrictions on business operations. The | | | | and other financial transactions. |
| result is that economic activity within | | | | Basically, international havens have |
| these centers is specifically geared to | | | | become an established part of the |
| the special global needs of outside | | | | international intermediate economy. They |
| businesses and investors. | | | | stand as "brokers" of a sort for global |
| Typically, these centers are small | | | | business and finance. It's important to |
| states with tiny populations. To date | | | | keep in mind that all of this was |
| more than 75 of these tax havens exist | | | | initiated by large banks, corporations |
| throughout the world. Each one of them | | | | and even government agencies from around |
| is a unique offshore haven of sorts | | | | the world. Keep in mind that every |
| deliberately intended to attract very | | | | government from the Soviet Union to |
| particular investors with very specific | | | | Japan, China and the United States needs |
| needs. | | | | to obtain money on the international |
| For example, a center like Aruba was set | | | | market. They, too, use money havens as |
| up primarily for economic development. | | | | convenient transaction points. The |
| Formerly dependent on oil refineries for | | | | Bahamas became one of the biggest |
| its revenue, it has now implemented an | | | | offshore havens because it serves the |
| investment policy that gives it entree | | | | purposes of various government entities |
| to the global economic system. Becoming | | | | from finance ministries to intelligence |
| an offshore money haven was the answer. | | | | agencies. |
| By "renting" its laws regarding | | | | Offshore havens are, today, an accepted |
| taxation, incorporation and other | | | | financial fact. Even more important, |
| related legal matters, Aruba has begun a | | | | they are seen as legitimate vehicles |
| much needed process of economic | | | | through which individual investors can |
| development and diversification. | | | | take advantage of the offshore option. |
| Singapore, on the other hand, was | | | | If is simply a matter of applying the |
| designed to serve the Asian dollar | | | | basic financial principles of profit, |
| market. Today it's one of the most | | | | tax protection and privacy. They were |
| prosperous money havens in the world on | | | | developed over the centuries by |
| a per capita basis. And Bahrain was | | | | Florentine merchants, royal treasurers |
| developed to process the Middle East's | | | | and brilliant bankers. The mechanisms |
| offshore financial needs, especially | | | | and strategies change continuously, but |
| Saudi Arabia's. | | | | the goals always remain the same. |
| All these offshore havens were made | | | | |