Swiss make life a bit more difficult for despots

February 14, 2011

By Margaret Doyle
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

LONDON — Switzerland has just made life a bit more difficult for despots. The country’s decision to freeze assets belonging to Hosni Mubarak after he was ousted smacks of hypocrisy: after all, the former Egyptian president and his family have long been suspected of enriching themselves at the country’s expense. But in the absence of a global deal to stop heads of state from exporting the spoils of office, Switzerland’s approach is better than nothing.

The Mubarak decision is not an exception: a few weeks earlier, Switzerland also froze all potential assets belonging to Tunisia’s former president.

It’s not clear how many billions the Mubarak clan might have squirreled away during the president’s three-decade reign. It’s also not certain what proportion of the purported fortune is stashed in Switzerland. Nevertheless, the country’s decision seems rather late. If the Swiss — and other countries — were really serious about state-sponsored looting, surely they should refuse to accept the loot in the first place?

In practice, however, it’s hard to bar banks from doing business with a sitting head of state — particularly one that is a close ally of the United States. Financial sanctions have made it harder for international pariahs like North Korea and Iran to access the financial system. But not all corrupt dictators face the same constraints.

A global rule preventing heads of state from moving more than a certain sum abroad while in office would do the trick. Politicians who had nothing to hide would have little to fear from such a regime. However, there is little prospect of such an accord being agreed — let alone properly enforced.

Switzerland’s latest move is unlikely to have despots quaking in their palaces. Kleptocrats may simply move their money to other less choosy jurisdictions in the Gulf or Asia.

Even so, Switzerland has traditionally been seen as a safe haven for heads of state looking to hide ill-gotten gains. If freezing dictators’ assets makes life even a little bit less comfortable, that is very welcome.

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