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Croatia: New Government Alters Position of Diaspora

The parliamentary elections in January and the presidential elections the following month resulted in a loss of power by the Croatian Democratic Union (HDZ), the party with strong connections to Croats outside the country. The new centre-left government indicated that it would discontinue late President Tudjman’s plans for a Greater Croatia embracing compatriots in Bosnia-Hercegovina.

Against internal and external opposition, the ruling Croatian Democratic Union (HDZ) went ahead with the enfranchisement of around 350,000 voters in the Croatian diaspora (Traces #8). Mainly living in Bosnia-Hercegovina, such electors have in the past strongly supported HDZ. In 1995 all 12 seats in the diaspora went to HDZ, just under a tenth of the seats in the assembly. The West regarded the deal as contravening the Dayton peace accord. Serbs living in Croatia were not enfranchised to the corresponding degree, complained the opposition.

The centre-left opposition won January’s parliamentary elections, making Ivica Racan the new Prime Minister. The Croatian Democratic Union, founded by the late President Franjo Tudjman, was defeated for the first time since independence in 1991. The opposition coalition, including former Communists and Social Liberals, won 9 of the country’s 11 multi-member constituencies. It holds 71 of 151 seats in the assembly (Sabor), and HDZ holds 46.

On top of 10 constituencies in Croatia proper, one constituency is for diaspora voters and five seats are reserved for Croatia’s ethnic minorities. The diaspora electoral unit has 360,110 voters, of whom 127,000 turned out. Of these, 107,847 voted for the HDZ list. Almost all the diaspora voters lived in Bosnia, 110,356, where there were 29 polling stations. They too backed HDZ very strongly. There were reports that turn out in the USA and Canada was much higher than expected. There were polling stations in embassies in Washington DC and Ottawa, as well as consulates in Chicago, Cleveland, Los Angeles, New York and Mississauga (Toronto). There were also 23 polling stations in Germany, 21 in Australia and 10 in Austria.

New Prime Minister Racan signalled his desire to achieve better relations with the European Union and to tone down the nationalism of the former government. He also promised to co-operate with the UN war crimes tribunal in the Hague. The new government also stated that it would restore the national minority status of Slovenes in Croatia’s constitution.

The change of government may mean that many of the Croatian Serbs exiled after the war in 1995 might consider returning. Estimates of the number of refugees vary from 100,000 to 450,000. One obstacle to the return of Serbs is that many of their houses are now occupied by Croatian refugees, particularly in eastern Slovenia and Krajina.

The surprise winner of the Presidential elections in February was Stipe Mesic, once an ally of Tudjman’s in the HDZ. He left the party in 1994, objecting to Tudjman’s aim to create a Croatian enclave in Bosnia-Hercegovina, part of a Greater Croatia. The HDZ candidate, Mate Granic, was beaten into third place and did not make the runoff between Mesic and Drazen Budisa. After his defeat, Granic and some of his supporters left the HDZ to form a new centrist party.

Mesic declared that Bosnian Croats should ‘turn to Sarajevo’ – i.e. regard themselves as citizens of Bosnia-Hercegovina - and not expect to be joined with Croatia or supported in trying to form a separate Croatian Republic. He was strongly denounced by Bosnian Croat politicians. Mesic also said on television that he was willing to testify against Serbian President Slobodan Milosevic in the UN war crimes tribunal. He also declared his intention that Croatia should join NATO and the EU.

Mesic’s first trip abroad was to see Bosnia-Hercegovina’s President Alija Izetbegovic. They discussed the possibility of joint diplomatic representation abroad. Bosnia would represent Croatia in the Near East, and Croatia would reciprocate in South America. They also discussed the return of refugees.

Croatians in Bosnia and across the world first to vote, Agence France Presse International 2.1.00; Turnout of Croats at polls in North America ‘beyond expectations’, BBC Monitoring Service 3.1.00; Pro-Western Opposition Defeats Croatia's Ruling Nationalists, Steven Erlanger New York Times 5.1.00; Landslide victory for Croat opposition, The Guardian 5.1.00; Croatian ruling party should get five or six seats from voters in Bosnia – HINA, BBC Monitoring Service 7.1.00; New President Mesic set to open Croatia up to Europe, Agence France Presse International 8.2.00; Bosnian Croats hope Mesic will help them, Agence France Presse International 8.2.00; New Croat leader asks Serbs to return, The Independent 11.2.00; Stipe Mesic, Tudjman’s nemesis takes his place, Agence France Presse 18.2.00; Main Bosnian Croat party condemns switching off of TV channel, BBC Monitoring Service 18.2.00; Croatian Serb party official calls on government to change policy towards Serbs, BBC Monitoring Service 24.2.00; Croatian ruling parties to demand recognition of Slovenes a national minority, BBC Monitoring Service 25.2.00; Bosnian Croat opposition party assails Croatian president’s Bosnian policy, BBC Monitoring Service 25.2.00; Return of refugees ‘hardest issue’ of Croatian President’s visit to Bosnia, BBC Monitoring Service 23.3.00; Bosnian President sees ‘new spirit of understanding’ in relations with Croatia, BBC Monitoring Service 24.3.00


The Irish Diaspora, a Needed But Neglected Resource?

There are signs that the return of Irish emigrants has peaked, yet the country’s booming economy still needs their labour. Could the Irish government do more to involve the diaspora in public affairs?

Of the estimated 3 million Irish citizens living abroad, 1.2 million were actually born in Ireland. Two-thirds are in Britain, 500,000 in USA, 250,000 in Australia, 75,000 in Canada, 40,000 in New Zealand, and 35,000 in South Africa. A further 40,000 are in other EU countries than Britain. It has been estimated that there are 70 million people abroad with Irish ancestry.

The amended Article 2 of the Republic’s Constitution, changed as a result of the Belfast Agreement, states that "the Irish nation cherishes its special affinity with people of Irish ancestry living abroad who share its cultural identity and heritage". This represents a new deterritorialised definition of Irishness. Presidents Robinson and McAleese have both suggested that the diaspora has a role to play in the peace process: half of Irish abroad are Protestant. But, according to the opinion of Paul Gillespie writing in The Irish Times, the diaspora has little or no official recognition in government, especially when compared with Greece or other countries. Churches and voluntary groups make some contacts, and there are also business networks such as the Ireland Fund. The Department of Foreign Affairs spends some money on informing overseas Irish how to return. But otherwise there is no formal structure for participating in public affairs. There is no provision for participating in elections, and suggestions by three Senators to introduce representation were blocked. This state of affairs compares poorly with the status accorded to diaspora nationals in many other European countries.

Despite the return of Irish from abroad, Ireland’s booming economy is short of labour. Some 65,000 people, mostly expatriate professionals, have joined the labour market in the past four years. But there are signs that the numbers coming back have peaked. There was a net gain of 22,800 in the year to April 1998, but only 18,500 in the year to April 1999. Of the 47,500 immigrants in that year, just over half were returnees (25,900).

Unemployment rates are about half the EU average. As a result, Ireland is developing a demand for immigrant workers, particularly in low-paid and low-skilled jobs. But there is also a demand for skilled professionals. The Irish government estimates it needs to find 200,000 more skilled workers over the next seven years. A campaign has been launched to attract another 10,000 Irish expatriates and EU nationals to work in tele-services, electronics, software and financial industries. There are plans to take the recruitment drive to the USA. In March the Taoiseach helped launch a new e-business company aimed at the Irish community in the USA. Called www.Ireland-USA.com, it features news, information and recruitment details to attract returnees.

A survey by Yankelovich Partners for Local Ireland, an Irish diaspora website, found that almost two-thirds of Irish online users would interact with Ireland on the internet. This compared with 22 percent of the general population who said that they would connect with their ancestral homeland. Half of the Irish-American visitors to Local Ireland go to their genealogy section, where they can get advice on tracing their roots. And 42 percent of their visitors also travel to Ireland at least once a year. The Tourist Board estimates that there will be one million trips from USA to Ireland in 2000.

Around 10,000 Irish leave Britain to return every year. Despite this, St Patrick’s Day festivities in 2000 attracted record crowds in Birmingham and Manchester. Michael Ford, from the Irish World Heritage Centre in Manchester was quoted in The Independent, saying that Irish people feel more confident about public displays of their identity now that the peace process has advanced.

Situations vacant – but how will they be filled? Irish Times 17.1.00; Diaspora a resource to the Celtic Tiger, Paul Gillespie The Irish Times 22.1.00; Ireland's labour shortage points to need for immigration, John Murray Brown Financial Times 10.2.00; St Patrick’s Day survey reveals Irish-Americans are more likely than other ethnic groups to use the Internet to connect to the land of their ancestors, PR Newswire 16.3.00; Ireland’s Diaspora go back home to join in the boom, The Independent 17.3.00; Drury starts website to attract Irish-Americans, Sunday Business Post 19.3.00


US Announces New Legislation Against Money Laundering

Recent estimates of the scale of offshore banking suggest that $8 billion passes through such jurisdictions every year. The US and European governments are increasingly alarmed that the uneven regulation of this circulation makes it too easy for the profits of criminal activity to be concealed or laundered. Investigators in the Bank of New York scandal follow the trail to Moscow.

In March the Clinton administration announced new measures against money laundering. The Treasury Department’s package of regulations and legislation includes provision for identifying high-risk metropolitan areas – New York, Los Angeles and San Juan in Puerto Rico. The Department will request powers to block suspect transactions between US banks and offshore financial centres. Lawyers and accountants engaged in handling large sums could find themselves subject to closer scrutiny. Alternative draft legislation from the House and Senate Banking Committee would go further however, and introduce heavy penalties for financial companies failing to police themselves sufficiently. Senator Charles E. Schumer, chairman of the Committee, wants automatic penalties to be imposed on banks and offshore tax havens, instead of discretionary ones.

The OECD is also planning to list countries it considers are offering ‘harmful tax competition’. It is believed that a list will be published in June identifying places that allow non-residents to escape tax where they reside. This causes alarm in Caribbean financial centres.

Caribbean and Atlantic island financial centres are therefore coming under greater pressure to introduce greater regulation and block the expansion of money laundering. The Caribbean has 12 per cent of the world’s tax haven deposits, although this is far less than Switzerland and Luxembourg. The Cayman Islands has over 600 banks, making it the world’s fifth largest banking centre. The islands’ believe that they are blamed unfairly and not given enough credit for their skills at preventing abuse. The governments of Antigua and Bahamas are adamant that their regulations are already adequate. They have been assisted by the Caribbean Financial Action Task Force, which aims to make standards more consistent among the centres. British dependent territories, including Bermuda, the Turks and Caicos Islands, the Cayman Islands, Anguilla, Montserrat and the British Virgin Islands have agreed to independent scrutiny of their systems following concern from Britain.

The US State Department’s report on Money Laundering and Financial Crimes suggests that money laundering is the weak link in drug traffickers’ operations, when their profits are most vulnerable. The Bangkok Post reports that Thailand has become a prime destination for illegal money. Its ‘phoi kuan’, the underground banking system used for remittances, makes the country an attractive target. The system does not used cash or cheques, but relies on personal and kinship ties. There are rarely any official written accounts.

Certain Pacific states are considering setting up a regional Financial Intelligence Unit to guard against money laundering. The initiative comes from the Cook Islands, and could be extended to Samoa, Vanuatu and Nauru. Deutsche Bank and the Bank of New York imposed currency bans on the Pacific island state of Palau, accusing it of being too closely involved in money laundering.

The couple at the centre of the investigation into money laundering at the Bank of New York (Traces #7), Peter Berlin and Lucy Edwards, pleaded guilty to charges in February. Svetlana Kudryavtsev, a Russian-born former employee of the Bank of New York, also pleaded guilty. She was paid by the couple to monitor the Bank’s accounts they were using for laundering after they both moved to London. The investigation into the financial crime led to Moscow, uncovering a network of front companies which acted like banks without being banks. Such ‘specialty’ or ‘pocket’ banks have proliferated in the economic and political chaos of Russia in the past decade. They are subject to minimal oversight. A company might set up such a bank as a front in order to give itself a line of credit. The two banks involved with Edwards and Berlin were Flamingo and DKB, linked to established banks well-connected to the Kremlin and Moscow City Hall. One of these, Sobinbank, was raided by Moscow authorities in October.

The investigators believe that the Bank of New York was part of a network which not only moved money from Russian importers trying to hide their payments to foreign suppliers and funds from rich Russians trying to avoid tax, but also to launder criminal proceeds. Between 1996 and 1999 over $7 billion was circulated through this network, ending up in offshore accounts.

In an unprecedented move the FBI announced that it was opening an office in Budapest, Hungary, in order to combat Russian mafia activities. This will be the bureau’s first office abroad with full-time investigators. FBI agents are often attached to US embassies and also participate in one-off investigations abroad. The agents will carry weapons and work alongside Hungarian forces, but will otherwise be independent. Hungary has therefore ceded an unusual amount of control to a foreign police force, and has also agreed to share criminal intelligence. Budapest was chosen because it is a gateway to eastern and central Europe, a good site to gather intelligence and ideal for observing the activities of Russian gangs engaged in smuggling, prostitution and human trafficking. Two gangs, one headed by Semyon Mogilevich and the other named Solntsevskaya, will be prime targets. The head of the FBI’s organised crime division, Thomas Fuentes, justified the unusual funding of the FBI abroad on the grounds that Russian mafia were ‘a direct threat to us’.

Banker and Husband Tell Of Role in Laundering Case, Timothy L. O’Brien and Raymond Bonner New York Times 17.2.00; Caribbean and Atlantic financial centres, Canute James Financial Times 22.2.00; FBI to fight Russian mob in Hungary, Raymond Bonner The Guardian 22.2.00; Bank Inquiry's Trail Leads to Top Levels of Power in Russia, Celestine Bohlen New York Times 18.2.00; Narcotics/money laundering: Thailand a prime target for slickers, Bangkok Post 6.3.00; U.S. to Offer Strategy on Money Laundering, Timothy O’Brien New York Times 8.3.00; Offshore Banking Bill Attacked, Timothy O, Brien New York Times 10.3.00; Cook Islands: Premier approves regional unit to combat money laundering, BBC Monitoring Service 23.3.00; Tax havens seek OECD resolution, Canute James Financial Times 24.3.00; Deutsche Bank, Bank of New York may face legal action from Palau, AFX Europe 28.3.00; Ex-Banker Pleads Guilty in Money Laundering, The Associated Press 29.3.00; All roads lead offshore in the pursuit of dirty money, The Scotsman 31.3.00; Trouble in paradise, John Sweeney The Guardian 2.4.00


For Expatriate Workers London is Expensive, has a Moderate Quality of Life but Still Attracts Thousands

Two surveys of the world’s major cities ranked them according to quality of life for expatriates and cost of living. London has become the most expensive city in the European Union, and does not rank among the highest for overall quality of life. Nonetheless, partly attracted by low income taxes, its workforce is being swelled by overseas professionals. One in seven of the capital’s workers are foreign-born.

William M. Mercer, a human resources consultancy, published its annual survey of the quality of living in the world’s major cities (see Traces #2). Variables for political, economic and social environment, including health and education, were scored for over 200 cities. The firm calculates the index on behalf of multinational companies considering foreign postings. The joint leaders in the survey were Vancouver, Berne, Vienna and Zurich while Sydney, Geneva, Auckland and Copenhagen tied for second. Brazzaville, Congo, ranked bottom because of the ongoing civil war, just below Khartoum, Baghdad, Bangui and Pointe Noire. Twelve of the top 20 cities were in Europe.

The Economist Intelligence Unit calculates measures of how much it costs to live in various cities and ranks them in a global survey every two years. Tokyo and Osaka/Kobe continue to be the most expensive places. Tokyo is 30 percent more expensive than Hong Kong, in third place. London is the costliest city in the European Union, overtaking Paris mainly because of the strength of the pound relative to the euro. London has been getting steadily more expensive since 1995. The fourth ranked city was Libreville, Gabon. Expatriate life there is expensive because almost everything they consume is flown in: a drink at the bar can cost $20. The cheapest city in Europe was Budapest, but Delhi and Bombay are the least expensive in the world. New York ranks 12th and Vancouver, which heads the Mercer survey, is the 70th most expensive city.

The EIU’s costliest cities:

1 Tokyo
2 Osaka Kobe
3 Hong Kong
4 Libreville
5= Oslo
5= Zurich
7 London
8 Paris
9 Geneva
10 Copenhagen
11 Vienna
12= New York
12= Taipei
14= Stockholm
14= Tripoli
16 Peking
17= Shanghai
17= Singapore
19 Guangzhou
20= Chicago
20= Manchester
20= Shenzhen

London ranks 34th in the world for quality of living according to the Mercer survey, slightly ahead of New York but behind Berlin, Paris and Tokyo. Low scores were given for traffic congestion and climate, but high scores for personal freedom and international relations. And it is also an expensive place to live, according to the EIU. Nonetheless, recent figures suggest that more than one in seven of London workers is foreign-born, up from one in nine two or three years ago. For the UK as a whole, only 4 percent of workers are foreign-born. As many as 482,000 foreign workers are employed in London, just under half the 1,043,000 overseas employees in the whole country. A second survey found that one in seven new houses bought in the capital went to a foreign European purchaser.

The foreign contingent is made up of: casual or transient workers from the ‘white’ Commonwealth (Australia, Canada, New Zealand and South Africa) on the one hand and young professionals in the financial services sector and related industries, including many from the USA, France and Germany, on the other. Working in the City’s financial industry is seen as essential to career progress in Europe, because of the volume and sophistication of the transactions there. And despite high costs, these workers can earn significantly higher salaries in a short time. Young Germans and French workers are also attracted by Britain’s low personal income tax. For single and childless individuals Britain has a favourable mix of taxes and benefits, although the situation for families is not so advantageous. UK tax law is also unusual in that it allows foreign citizens resident in the country not to pay tax on their earnings from abroad. In April there was a highly publicised ‘defection’ of French super model Laetitia Casta. Casta was chosen as the model for the figures of the republican heroine Marianne which adorn city halls across France. So her statement that she was considering moving to London was greeted with glee by the British press and led to criticism of France’s socialist government.

In 1971 there were only 21,000 French people recorded living in the UK. The figure is now nearer 245,000 (or 300,000 by one estimate), many of whom are in London. By comparison, only 65,000 Britons live in France.

London a lowly 34th in quality of life poll, The Guardian 13.1.00; 'Boring' Berne tops quality of life league, Financial Times 13.1.00; Weak euro means London is continent’s costliest city, The Independent 20.1.00; Nothing for free in Libreville, BBC News 21.1.00; Cost of Living, The Economist 29.1.00; My little gift: two billion for Gordon, David Mills the Guardian 23.2.00; Channel hopping, Emma Brockes The Guardian 24.2.00; Foreign workers flock to London, Sarah Hall The Guardian 26.2.00


Global Firms Need Expatriate Employees but Few Want Foreign Assignments

A number of surveys of multinational firms, managers and employees point towards similar conclusions. All predict a growth in the need for foreign assignments, but all are aware that such postings place stress on family life and are increasingly unpopular. A common theme was that more needs to be done to prepare families for work and life in a different society.

A survey of 300 organisations by Cendant International Assignment Services found that, although the number of foreign assignments was predicted to grow over the next five years, almost two-thirds of companies reported increasing rates of assignment failure. Many firms recognise major problems recruiting and retaining employees. TMP Worldwide, a British-based executive search consultancy, found that 90 per cent of senior managers in its survey believed it was becoming increasingly important for executives to be globally mobile. But at the same time, half the sample were less likely to make the personal sacrifices necessary. TMP predicts a shortage of globally mobile executives. Arthur Anderson also surveyed 76 large US and European companies and identified the mismatch between the need for globally mobile workers and the difficulty of recruiting and retaining them. Whether the firms were predominantly national in orientation or genuinely global in their outlook, they all recognised the need to establish a global leadership cadre held together by a corporate culture.

The main reason for overseas contracts ending is the stress of working abroad on the family. Several managers interviewed by the Independent on Sunday identified the key problem as the lack of preparation and briefing before an assignment. Laura Herring, president of The Impact Group in St Louis, pointed out that 78 per cent of professionals sent abroad had spouses with a career. She stated that 81 per cent of failures were the result of spouses failing to find adequate employment. In one study of German expatriates by the University of Giesen, 90 per cent of spouses could not obtain work permits. Many countries operate work permit and visa systems that make it difficult for spouses. The US government is working on legislation to make it easier, and Canada has already done so. Other problems concern the disruption to children’s education or the responsibility for elderly relatives.

One solution may be to use more short-term assignments, or long-distance commuting. Executives can work in New York but spend weekends in Britain. London City Airport for example, now operates a 10-minute check-in in recognition of the numbers travelling back and forth to Paris and Amsterdam. Other airports are trying to make their wealthy commuters feel more at home with massages, showers, aromatherapy and like services. But a report by Liberty Occupational Health found that travelling abroad on business increases the risk of getting ill by over 60 per cent.

Many of the surveys argued that more preparation was needed for working and living abroad. Arthur Anderson runs a website (CountryNet.com) for expatriates and international business travellers designed to brief them on the problems of working abroad. It includes information on more than 1,000 international schools aimed at expatriates’ children, as well as tax information for 84 countries.

The Political and Economic Risk Consultancy (PERC) surveyed expatriates in Asia. They found that, despite the fall out from the Asian crisis, in most countries respondents reported declining levels of hostility or xenophobia. The exceptions were China, Indonesia and the Philippines. Vietnam, Hong Kong and Singapore were reported as being the friendliest countries. PERC’s survey of over 500 American and European expatriates found that the Philippines was ranked highest for overall quality of life. Good value housing, nightlife and ability to mix with locals were identified as plus points. Singapore was also rated highly, but less fun, while Japan had a good quality of life but was expensive. The respondents mentioned robbery and burglary as major problems in Malaysia, Indonesia and Thailand. South Korea was ranked bottom because of the problems of breaking down language and cultural barriers. India was also not highly rated because of the standard of its health care and the limitations on leisure activities

In some locations the concern for personal safety among executives is higher than others. Rates of kidnapping have doubled in five years, according to underwriter with Hiscox Rob Davies. In 1999 there were 972 kidnappings in Colombia, 402 in Mexico, 105 in the former Soviet Union and 51 in Brazil. In all, there were 1789 recorded seizures worldwide. Expatriates in Guatemala, Mexico and Colombia are most at risk. But Cambodia, Kashmir, Indonesia, Taiwan, Chechnya and Tajikistan are also identified as dangerous. When Manchester United played in Brazil in January, the club took out high risk insurance for its players. Two other top British football clubs are also paying for abduction and ransom cover.

Australia informed the UK that it would no longer top up social security payments for Britons retired in Australia. This is in protest at Britain’s refusal to index-link expatriate pensions in the same way it increases domestic pensions. There are around 200,000 British pensioners in Australia.

Partners of German expatriates considered according to study, Frankfurter Allgemeine Zeitung 3.1.00; World of difference in human resources, Financial Times 7.1.00; Just how far will you go for your job?, The Observer 30.1.00; Internet to help overcome nationalism in Asia, Agence France Presse International 27.2.00; Australia warns Britain over expats’ pensions, BBC Monitoring Service 1.3.00; Countrynet.com and culturesavvy.com prepare expatriates for personal and professional success when living abroad, PR Newswire 7.3.00; More expats are failing assignments, Independent on Sunday 12.3.00; Kidnapping a real threat to travellers, Business Day 23.3.00; Philippines comes out tops in expats’ survey on quality of life, Agence France Presse International 2.4.00; Kidnaps for ransom reach worldwide high, Jamie Wilson The Guardian 21.4.00


 

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