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