Impact of Foreign Relations on Corruption

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The biggest effects here have to do with the explosion in offshore banking, tax evasion, and bribery.  The Economist estimates that the size of the illegal international economy is now at roughly $20 trillion – more than a quarter the size of the “official” global economy of $71.83 trillion.  With so much money in illicit and unregulated shell corporations and bank accounts, tax evasion, money laundering and bribery have become routine and almost impossible to stop.

I have said elsewhere that direct cash bribes to politicians and government officials are not a major problem in the US compared to other forms of corruption, but that is likely to change as the international black economy becomes increasingly pervasive and accessible to everyone with an Internet connection.  If money is transferred from one person or company to another in the US, whether it is cash or through the banking system, there is at least a chance that the audit trail will be uncovered.  But a transfer between a shell company in Belize, secretly owned by a drug cartel, and a shell in the Caymans secretly owned by a judge or senator, is almost completely untraceable.


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