Obama, Join The Circus!
I read everything that John Le Carre ever wrote until he, like Paul Simon, went African. His Cold War novels had me chained to the page. Who could forget the very end of the Quest for Karla Trilogy as Smiley’s People, the last in the series, draws to a close? Spoiler Alert – you may be about to kiss farewell for all eternity to the chance to savour not one, but three truly amazing books. Karla, the Soviet superspy defects across a Berlin foot-bridge and, as he passes his nemesis George Smiley, drops the gold lighter that had been a gift to Smiley from his estranged wife.
I had that scene on my mind as I flew in yesterday to Schonefeld Airport in the former East Berlin. The last time I was in Berlin, in the middle of the last decade, Schonefeld was a really ugly Soviet- era airport, with the exclusive El Al terminal guarded by a friendly working tank, its gun trained a little too keenly on the airport approach road. Today it is a really ugly Merkel-era airport without the tank but with Aeroflot planes parked next to their Israeli counterparts – the times they are a-changin’.
I had spent the flight reading the OECD’s latest “Revised Discussion Draft on Transfer Pricing Aspects of Intangibles” with an umpteenth review of the “Action Plan on Base Erosion and Profit Shifting” for dessert. And what could turn a man’s thoughts to espionage more effectively than that?
For those of you who did not lay siege to the OECD Headquarters at the end of July salivating over a copy of Working Party No 6’s said Revised Discussion Draft, let me put your minds at rest – you didn’t miss much. It is, to be fair, a highly competent document that deals quite courageously with identifying intangibles and the surrounding transfer pricing issues – looking very closely at value creation in the functional analysis, establishing that effort trumps legal ownership so that you really cannot ignore “people” when planning your tax. A healthily suspect view of the allocation of risk between group companies is also clear to the naked eye and then there is that long list of examples that aims (but fails) to clarify the meaning of the document.
The Revised Discussion Draft also segues admirably into the “BEPS” – the unfortunate acronym for the Action Plan on Base Erosion and Profit Shifting as opposed to a new tablet for dyspepsia – where International Tax and Transfer Pricing are given the Billy Graham/Pat Robertson treatment on the moral responsibility of soulless companies to pay lots of tax even if they are not legally required to do so.
Aye, and there’s the rub. The future of the, undoubtedly dysfunctional, international tax system rests on a Kamakaze academic study (circles the target brilliantly but doesn’t tell you how to land) and a poor Bible Belt impersonation from a group of world leaders who are not even capable of saying “Boo!” to Syrian government atrocities.
Perhaps they should have recruited George Smiley. Le Carre fans will recall that Smiley was an unlikely hero. Looking the spitting image of kindly old Alec Guinness (even Le Carre seems to have thought so), he quietly paced the corridors of the Circus (sort-of-Langley to you Americans out there), frequently displaying the moral highground in his own inimitable way as he devised and practiced his craft.
But when it came to Karla – his Public Enemy No 1 – George went for the oldest and dirtiest trick in the book. He had him blackmailed. That brought him over to the West with his stash of secrets. Smiley didn’t celebrate – it was all too complicated (including that gold lighter) and not cricket – but the job was done.
Now, in case there is any confusion, I am not suggesting a J Edgar Hoover style campaign against MNE CEOs across the Globe nor, for that matter, a J Edgar Hoover style campaign against international tax advisors across the Globe, the latter being far too close to home (however far across the Globe) for my personal comfort.
What IS needed is for a handful of the world’s leading nations (a euphemism for the United States) to quietly steamroller a New World Order using the strong-arm tactics at their disposal – as they did on FATCA. The result will be far from perfect, but it will be a result and inevitably far better than the current proposals most of which will be mired in years of debate and disagreement.
I read once that, after the fall of the Berlin Wall, Markus Wolf, the head of the East German Stasi, was asked what he thought of Le Carre’s books, (contrary to widespread rumour, Le Carre has repeatedly denied that he was the model for Karla) . He is reported to have said that he wanted to meet the author in order to put him right on a number of things. Few would argue that, even if Tinker Tailor Soldier Spy, The Honourable Schoolboy and Smiley’s People were not 100% accurate (who knows?) the world would not have been a poorer place without them. Obama needs to be persuaded for once not to go for the Excellent (which, in foreign policy terms, he invariably misses by a mile) but just for the plain, imperfect Good. He needs to act. Who knows, he might even get it right?