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 Reality ensured that Prohibition was rescinded a decade or so later, but not before it had spawned generations of gangsters and enthroned corruption in American police forces from Manhattan to Miami.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.