COME CLEAN ON MONEY LAUNDERING

The action is all part of the misguided, unwinnable and often hysterical
'war on drugs'

The bad news, which most people in Britain know by now, is that a $500,000
bung to the Democratic Party of the United States is about to put an end to
the livelihoods of thousands of banana-growers in the Caribbean and many
workers in the cashmere factories of the Scottish Borders. The worse news,
which is only just dawning on many, is that the struggling Caribbean is
about to be hit by a second, and perhaps more damaging, body blow. The
Foreign and Commonwealth Office is publishing a White Paper next week which
will threaten the administrations of Britain's 13 remaining colonies with
terrible punishments if they do not halt their participation in the trade of
handling the cash generated from narcotics.

At the same time, the United Nations is convening a meeting of its Global
Programme Against Money Laundering in Vienna in what will be a vain attempt
to stop citizens of all nationalities handling those greasy bundles of
soiled banknotes, or trading their worth over computer screens.

This action is all part of that misguided, unwinnable and often hysterical
"war on drugs", which was originally a stratagem of the late and unlamented
Richard Milhous Nixon to curry favour with the middle class of his country,
and which rumbles on against all logic to this day. As any war does, the war
on drugs creates chaos in its wake; such chaos is about to be wrought on the
West Indies and other spots around the globe.

Wherever it is attempted, the business of trying to stop money-laundering is
as impractical an enterprise as trying to stop people taking narcotics,
smoking tobacco or drinking alcohol. In the Twenties the US Congress decreed
that alcohol should not be sold. Reality ensured that Prohibition was
rescinded a decade or so later, but not before it had spawned generations of
gangsters and enthroned corruption in American police forces from Manhattan
to Miami.

In a bid to achieve some success in their efforts today, governments engaged
in the war on drugs are putting small and vulnerable economies in their
sights. They realise that they have about as much chance of stopping
money-laundering in the myriad banks of Europe and the United States as pigs
have of flying.

So they go for the easier targets in places with tiny populations and simple
administrative structures where everyone knows everyone else. They realise
that by moving in on, say, the British Virgin Islands, the Caymans or the
Turks and Caicos they will, in fact, do little to halt the major money
launderers. But it will look as though they are doing something about the
problem and getting some results.

And this is not just opportunistic, it is also perverse. Decades ago Her
Majesty's Government was encouraging dots of British islands in the West
Indies to go in for "financial services", for the simple reason that there
was precious little else for them to live off. The islanders, backed by
creative financiers in the City, Amsterdam and Wall Street, quickly built up

offshore emporiums. There, taxes could be avoided in comfort and money could
be swapped from round the world via the satellite communications which had
been thoughtfully provided by Cable and Wireless.

Nowadays the financial fun and games that were once encouraged are deemed to
be evil, and have to be stopped. But today, as in the Sixties, the West
Indians still have few alternative ways of making a living. Sugar has long
since stopped being the nice little earner that it once was and the local
peasantry who grow bananas must submit to the power of the cheque book
belonging to Mr Big in Washington. Now they are being told to bow gracefully
out of the money business.

And it is not only the peoples of the Caribbean who are being affected.
What, for instance, are the Gibraltarians supposed to live off these days if
they are denied the fruits of money-laundering? The Cold War is over, the
Mediterranean - well, all right, the western Mediterranean - is at peace and
the Rock has lost its once immense strategic significance. There is a
limited demand among the people of Andalusia for the warm beer and cold fish
and chips which the Gibraltarians used to sell at enormous profit to the
jolly tars of the Royal Navy. Their financial dealings are one of the few
lifelines they have left.

Robin Cook and the United Nations must surely realise sooner or later that
these latest campaigns of theirs are as unjustifiable as they are futile.