Dark offshore money threatens democracy

DEMOCRACIES around the world face two major threats: a crisis of legitimacy, and increasingly aggressive authoritarian regimes.

What links both and makes them much more dangerous is the pernicious effect of dark-money transfers, particularly those that pass through offshore tax havens and jurisdictions with excessive financial secrecy. Restricting these tax havens and requiring more transparency on cross-border financial flows should become a major policy priority for all G7 countries in 2024.

The internal threat to democracy is an erosion of legitimacy. In industrial economies such as the United States and Europe, new technologies, rising cross-border capital flows, and lower barriers to trade increased average productivity and created economic growth over the last half-century; but the benefits of this growth were not widely shared. Inequality within these markets has increased dramatically since the mid-1970s, with millions now feeling they have been left behind.