Italy & Hungary: Taking Back Control

Recent populist moves by Hungary’s Viktor Orbán and Italy’s Matteo Salvini have widened the rift between their nations and transnational EU policies.

  • Orbán has passed a law permitting families with four or more children to be exempt from income tax for life:

This new tax incentive is a clear pro-white move to boost the native Hungarian population, such a powerful incentive is proof that mass migration is not necessary to replenish a declining population.

Orbán stated that “they (the EU) want as many migrants to enter as there are missing kids, so that the numbers will add up. We Hungarians have a different way of thinking. Instead of just numbers, we want Hungarian children. Migration for us is surrender.” Orbán also called for anti-migration politicians to take over the EU, as he recently hailed a new partnership between Poland’s right wing government and Italy’s populist interior minister, Matteo Salvini.

  • Salvini has called for central banking in Italy to be audited and “reduced to zero”:

Salvini has called for wresting control of Italy’s sizeable gold reserves away from the country’s central bank in a series of threats to the independence of the Bank of Italy by Rome’s populist coalition.

He said the Bank of Italy and Consob, the country’s stock market regulator, should be “reduced to zero, more than changing one or two people, reduced to zero” or in other words eliminated, and that “fraudsters” who inflicted losses on Italian savers should “end up in prison for a long time.”

Meanwhile, ECB head Mario Draghi, an Italian and former former governor of the Bank of Italy, last year warned that central bank independence was under threat by populist governments, while not making a direct reference to Italy. Should Salvini cement his de facto Italian leadership in upcoming elections, it would make life for the local central bank especially complicated.

Recently, the government nominated Paolo Savona, a veteran economist and prominent Eurosceptic who had previously served as minister for European affairs, as the new president of Consob. Savona was last year been blocked as the coalition’s first choice as economy minister by Italian president Sergio Mattarella, following strong pressure from Brussels and a revolt in the Italian bond market.

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Venezuela: US-backed Coup Underway

The attempt to dethrone President Nicolás Maduro has not come out of the blue. Since Maduro became president after the death of Chávez in 2013, the US has resolutely aimed at a regime change.

This is a chain of events totally misrepresented by the western mainstream media, as usual.

The US has tried to persuade parts of the Venezuelan army to turn against Maduro, but without any result so far. That is why Washington relies first and foremost on the internal opposition and on diplomatic pressure.

The US gives assistance to the political opposition and tries to unite it as much as possible. According to the color revolution handbook, NGOs, student organizations and local organizations are funded, trained and coached to organize street riots as effectively as possible. The street violence must destabilize the country to such an extent that the government is forced to resign, or that the army intervenes and deposes the government.

Since 2013, the opposition twice unleashed a cycle of large-scale violence. In 2014, 43 people were killed and 800 injured. In 2017, 131 people died.

In the meantime, the economic situation deteriorated very much. This was mainly the result of an economic model that is extremely dependent on oil prices, but also of an outright economic warfare against the regime.

They lied about Iran. They lied about Vietnam. They lied about Chile. They lied about Iraq. They lied about Afghanistan. They lied about Iraq again. They lied about Libya. They lied about Syria. But yeah, sure, this time (with Venezuela) it’s for a good cause (it’s not).

Venezuela holds sway over a considerable supply of global oil, thus having the ability to influence its price of what is termed “black gold”. In 2017 Venezuela was the seventh largest oil exporter in OPEC, accounting for 6.4% of OPEC’s crude oil exports.

The oil price drop of 2015 which affected Venezuela was a global phenomenon.

Since the formation of OPEC in the 1970s, the Saudi Kingdom has been able to use its immense reserves to undermine other oil-producing countries’ attempts to maintain a high and stable price for petroleum. Even if all these nations were to ally, the Saudi Kingdom can turn the tap up or down and change the entire global economy to benefit its own geopolitical agenda and that of its U.S. patron. It did so in the late 1970s to offset lowered production in Iran after the 1979 revolution. And it did so again in 2015, partly in response to the success of the Iran-U.S. nuclear deal. It’s not a perfect mechanism; the price drop hurt the Saudi economy before prices slowly climbed anew. But the most severe effects were felt by the United States’ designated enemies: Russia, Iran and Venezuela.

Weaponized oil prices are a useful tool in globalist conquest, one piece on the chessboard worth holding. But President Maduro seems to be immune to the temptation of the western bribe or its callous threats.

Now he will have to stand the test of an offer he perhaps cannot refuse; the embargoes and bloodshed that have and will continue to befall his nation for his “lack of cooperation”. This is, as Russia states, a “direct path to bloodshed”. This prophesy is quickly becoming true as Maduro has called for the expansion of armed civilian militias as the threat of more violence on the streets of Caracas continues to grow. The militias, created by deceased former president Hugo Chávez to resist “imperialist aggression,” currently consist of about 100,000 members. Maduro’s proposed expansion of the civilian force would increase its size to 500,000.

Furthermore, up to 400 Russian military contractors are in Venezuela to beef-up security for Maduro, according to reports.

Maduro’s announcement was accompanied by a rousing speech in which he called upon Venezuelans to decide if they are “with the homeland” or against it, adding that “now is not the time to hesitate.”

A lengthy western media onslaught has pinned Venezuela’s economic troubles on Maduro’s regime; ignoring western trade embargoes entirely, not to mention the geopolitical significance of Venezuela’s oil supply and its closeness to Russia and China. It is in imperialist interests to subjugate Venezuela.

If the opposition does ultimately capture the presidency, the best-case scenario is that Venezuela adopts the ruinous austerity policies of Macri’s Argentina or Temer’s Brazil. The worst-case scenario could look something like the U.S.-led occupation of Haiti, with the country’s oil industry turned over to the multinationals, like Iraq’s was more than a decade ago.

Juan Guaidó: the western choice for regime change in Venezuela.

Maduro says Venezuela is “the victim of a US conspiracy,” referring to reports that US Vice President Mike Pence promised Guaido full American support the day before he declared himself Venezuela’s new leader. An act of unabashed interference and sponsorship in foreign elections.

Maduro has spoken at length on the situation:

“This is the reason for the coup. They don’t want us to get better. They sabotage us and try to destroy the (Venezuelan) economic system.”

“We will continue denouncing US lies, and I will continue to encourage national dialogue because I am up for a dialogue with all the political opposition, with the opposition media,” he said. “I think dialogue should prevail. I believe in dialogue.”

Guaidó is the thirty-five-year-old president of Parliament. He is very close toLeopoldo López, with whom he is in daily contact, despite his house arrest. Together they founded the right-wing party Voluntad Popular. In the past, this party organised armed pickets that killed people, set fire to public buildings and hospitals, led to attacks on ministries, etc.

Strengthened by Trump’s backing, the opposition took to the streets the same day with the aim of ousting President Maduro and forming a provisional government. Amnesty was promised to the military who would defect. Six days later, on 21 January, some rebellious soldiers posted a video message online in which they declared themselves loyal to the opposition leader.

Tensions increased. On 22 January, Mike Pence, vice president of the US, posted a video message calling on Venezuelans to take to the streets and get rid of Maduro. One day later, the opposition did what Pence asked, they massively took to the streets. There were also large counter-demonstrations by supporters of the government. Guaidó proclaimed himself the new president. He was immediately recognized by the governments of the US, Brazil and Canada, among others. Russia, China, Turkey and Mexico, a large and important country in the region, continue to recognize Maduro. Europe takes a cautious and moderate position.

The situation as it unfolds.

It is unlikely that the recognition of Guaidó by the US and some other countries will bring down President Maduro. But it may lead to further destabilisation of the country. The White House has opted for the strategy of chaos, as it has already done in so many other places.

The recognition of Guaidó will give the opposition a boost. If Guaidó is not allowed to hold the presidency, this may lead to more economic sanctions. The US is currently considering a ban on oil imports. This would have serious consequences for Venezuela’s financial position and would further reduce oil production.

An increasing number of recognitions of Guiadó as president will make it more likely that more countries will adopt economic sanctions against Venezuela. Threatening sanctions, stronger opposition and increasing violence will intensify the pressure on military officers and the PSUV top, in the hope that they will eventually change camps.

At the moment a foreign military intervention is unlikely, even with escalating violence. But in the past Trump has not ruled out such an intervention. With the recent election of the belligerent Bolsonaro, such an intervention could possibly be outsourced by the US to Brazil, together with Colombia, Peru and other countries in the region.

In any case, the interference in the domestic affairs of a sovereign country that the US is exhibiting today is unashamed and unprecedented. It violates the most elementary principles of the United Nations.

The deadlock in Venezuela can only be resolved through national dialogue. Maduro, for his part, is in favor of calling for a dialogue, directed to the country as a whole by the governments of Uruguay and Mexico. Any foreign interference or pressure will only add fuel to the flames.

Analysis: How rich oil firms are using a secretive court to fight capital gains tax in developing world

By George Turner from Finance Uncovered.

At a little known but powerful international court of arbitration, so secretive that senior officials decline to disclose even the dates of hearings, a new case has been filed that will pitch a mighty US oil major from Houston, Texas, against one of the world’s last Communist-run countries.

On the face of it, this battle between ConocoPhillips and the Socialist Republic of Vietnam is as dry as it gets. Hardly anyone has yet heard of it.

But the result could mark a significant shift in the way huge multinationals fight off the threat of taxes from desperate revenue authorities in developing countries.

For ConocoPhillips is using the not-so-glamourous Bilateral Investment Treaty Mechanism of the UN to launch a pre-emptive legal strike against Vietnam’s intention to levy an estimated $179m capital gains tax charge on oil fields sold by one of its UK subsidiaries.

Capital gains: A new frontier

Think of any of the major tax avoidance scandals that have dominated headlines in the last ten years: Google, Facebook, Apple, Nike, all have focused on profit shifting, the art of moving money out of profitable markets and into tax havens as a means of avoiding corporate income tax.

Most commonly, profit shifting happens when companies move revenues abroad, for example by billing their customers from an offshore company, or by invoicing a local business for fees and costs from an offshore company.

However, there is another important form of tax avoidance which multinationals frequently abuse but which has received little attention from the media: avoiding tax on capital gains.

Over the next few years, as more countries claim their resources have been bought and sold by foreigners tax free, this issue is likely to become a new frontier in the anti-tax avoidance campaign.

A capital gain is where a company or an individual sells an asset and makes a profit on that sale due to an increase in value of the asset being sold. Think of selling a house. The money you make by the virtue of your house increasing in value is your capital gain.

When it comes to major multinational mergers and acquisitions the capital gains can be enormous, and tax can easily be avoided if deals are structured offshore.

Capital gains tax: Made in Vietnam?

In 2012, a UK subsidiary of ConocoPhillips sold two other UK companies it owned, ConocoPhillips Gama Limited, and ConocoPhillips Cuu Long. It sold them to a UK company owned by Perenco, the Anglo-French oil firm. Perenco is also a party to the arbitration.

The only assets held by ConocoPhillips Gama and Cuu Long were Conoco’s oil interests in Vietnam.

ConocoPhillipsAccording to accounts filed at UK Companies House, ConocoPhillips sold the companies for $1.3bn making a profit of $896m. Buried in the detail of those accounts, a small note states that the company paid no taxes on that capital gain.

Why? Because Britain operates a loophole known as a “substantial shareholder exemption”. This means that profits on the sale of shares in subsidiary companies are not subject to capital gains tax in the UK.

But although the UK may choose not to levy any capital gains tax, that has not prevented Vietnam’s policymakers from trying to do so.

Under the terms of the UK-Vietnam tax treaty, Vietnam has the right to tax any capital gains made by UK companies that originate in Vietnam. If the profits on the deal were subject to the standard corporation tax rate in Vietnam, then ConocoPhillips could have to cough up an estimated $179m to the Vietnamese government.

So the question therefore becomes, what and where is the source of the profits?

If you are ConocoPhillips, the value is all in the shares, and the profit should be located in the UK. When we asked the company about the deal a spokesman said: “The sale was between two UK incorporated and resident entities with no taxable presence in Vietnam. The target companies are also UK companies. As a result, no taxes were owed on the sale in Vietnam.”

The Vietnamese government takes a different view, claiming the profits really arise out of the transfer of the oil assets. As these were located in Vietnam, it says that’s where they should be taxed.

Indeed, Vietnam has signalled its intention to tax the transaction – and that has alarmed not only the US oil giant, but also in all likelihood other similarly powerful corporations.

The potential precedent for multinationals

If Vietnam is successful, there could be profound implications for other developing countries, which have often seen Western companies make huge profits on their investments, only to walk away with them tax-free.

It is an issue that has concerned policymakers at the highest levels of the United Nations and the Organisation for Economic Cooperation and Development. In essence, the argument is: if multinationals make fortunes from a poorer country’s resources, then surely the host should have the right to levy the appropriate tax on the gains.

But ConocoPhillips is holding firm, telling Finance Uncovered that it would “pursue all available legal remedies to challenge any attempt by Vietnam to tax the transaction”.

And that is exactly what the company is doing with this new legal move: it wants to stop the threat in its tracks.

ConocoPhillips and Perenco have quietly filed a petition in the secretive investment tribunal, requesting it orders Vietnam not to levy the tax.

Unusually, the case is being brought under the UK-Vietnam Bilateral Investment Treaty, which is subject to an arbitration process run by a little known corner of the United Nations System, The United Nations Commission on International Trade Law.

The use of the Bilateral Investment Treaty Mechanism is itself controversial. Such disputes are expensive, opaque and are not usually used to settle tax disputes.

Cavinder BullNeither ConocoPhillips nor Cavinder Bull (pictured, left), a senior Singaporean barrister and chairman of the arbitration panel looking into the case, would disclose the location, or the dates, of the hearings.

And this case is thought to be the first to look at the issue of capital gains tax. If it goes ahead, that itself could act as a deterrent to developing countries trying to levy taxes because such battles cost fortunes in legal fees – about $5m a case, on average.

Michael Lennard is the Chief of the UN International Tax Cooperation Section who is currently on sabbatical as a visitor at the Oxford University Centre for Business Taxation. He has negotiated many tax and investment agreements, and speaking in a personal capacity he told Finance Uncovered: “The proceedings are held in secret, with expensive Western law firms often having to be hired to deal with arcane procedures.

“Most of the potential arbitrators in tax-related cases are not tax experts or else are tax advisers to corporations, with insufficient experienced and non-partisan arbitrators from the developing world (such as academics), not enough women and not enough younger experts.

“As a result it is extremely difficult for developing country governments to secure the expertise they need to defend these cases.”

For many, this reeks of injustice: big multinationals using the sledgehammer of a secretive and prohibitively expensive court to deprive developing countries of the revenue they feel is theirs.

Jayati Ghosh, a renowned professor of economics at Jawaharlal Nehru University in New Delhi, said: “Developing countries’ experience with the outcomes of such cases does not inspire optimism, as it is well known that the panels tend to be more investor friendly and generally support the claims of firms over the rights of governments or even the human rights of their citizens.”

Perenco declined to comment.