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 Richmans' Trade and Taxes Blog

Capitalism is coming to an end in China
Howard Richman, 11/17/2019

Capitalism is coming to an end in China. On the China Law Blog, Dan Harris writes that Chinese businesses are trying to get short-term profits now because they don’t believe in the long run. Harris also writes that Chinese partners in joint manufacturing ventures with American companies are starting to ignore their American partners:

[O]ur China lawyers are dealing with an increasing number of situations where the Chinese side of a China joint venture has essentially taken over the joint venture and stops communicating with its foreign joint venture partner. Maybe these joint ventures are no longer even profitable, but our clients are entitled to determine this and if the joint venture should be shut down, our clients are also entitled to a share of the joint venture company’s existing assets. For how to prevent/mitigate such problems, check out this article on China joint ventures. It’s as though the Chinese side in these joint venture partnerships views it as their patriotic duty to kick their foreign partner to the curb....

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How Urkaine oligarchs stole $1.8 billion of IMF (i.e., U.S.) loans, while Biden was watching.
Howard Richman, 11/15/2019

The U.S. gives loans to prop up foreign banks through the International Monetary Fund (IMF).  In 2009 and 2015, President Obama increased the U.S. contribution to the IMF, so that our contribution went up by a total of $9.2 billion. In 2014, the IMF gave the central bank of the Ukraine a massive $4.51 billion loan. However, $1.8 billion of that loan disappeared, despite the fact that Vice President Biden had been delegated by President Obama as the U.S. point man (start watching at 51:37) to prevent such corruption. In an article that was published in 2015, Harper's Magazine traced how that $1.8 billion disappeared:

The scheme, as revealed in a series of court judgments of the Economic Court of the Dnipropetrovsk region monitored and reported by Nashi Groshi, worked like this: Forty-two Ukrainian firms owned by fifty-four offshore entities registered in Caribbean, American, and Cypriot jurisdictions and linked to or affiliated with the Privat group of companies, took out loans from PrivatBank in Ukraine to the value of $1.8 billion. The firms then ordered goods from six foreign “supplier” companies, three of which were incorporated in the United Kingdom, two in the British Virgin Islands, one in the Caribbean statelet of St. Kitts & Nevis. Payment for the orders—$1.8 billion—was shortly afterwards prepaid into the vendors’ accounts, which were, coincidentally, in the Cyprus branch of PrivatBank. Once the money was sent, the Ukrainian importing companies arranged with PrivatBank Ukraine that their loans be guaranteed by the goods on order....

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Review of: The Unifinished Peace: The Council of Foreign Ministers and the Hungarian Peace Treaty of 1947 by Mihály Fülöp
Jesse Richman, 11/11/2019

Published by Social Science Monographs, Center for Hungarian Studies and Publications. 

2019 marks the 30th anniversary of what in Hungary is sometimes referred to as the "annus mirabilis" or year of miracles -- the fall of the iron curtain which was rapidly succeeded by the end of the cold war.  In that year a series of events, some planned from above and others organized from below, brought about the dissolution of the Soviet empire in eastern Europe and the freeing of nations which had been held in bondage and coercion in the Soviet orbit for more than four decades.  One of the joys of my Fulbright in Budapest this year has been the opportunity to take part in many commemorations of the events that unfolded 30 years ago.  

But the world is now 30 years beyond that era.  And as tensions rachet, institutions are tested, and power balances shift in the current moment, it is worthwhile to reflect upon another set of lessons: lessons from the tumultious years that marked the transition point from World War II to the Cold War.  And to understand those events, there are perhaps few more intriguing vantage points than the Hungarian experience.  During WW II Hungary had fought the Soviets, attempted shifting sides, been occupied by the Germans, and been liberated by the Red Army.  In the aftermath of the war, it was the only country in what would become the Soviet block to hold nearly free elections, a late 1945 ballot in which communists won less than 20 percent, even under Red Army occupation. 

Fülöp's book introduces the reader to the complicated interplay of understandings and and actions that shaped the policies... 

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