IS IT A MATTER OF MONEY?

One year ago I wrote (See Blog 3/03/2011- Emancipation Manifesto) ‘150 years ago today on 3rd March 1861, Tzar Alexander II of Russian issued the Emancipation Manifesto. It proclaimed the emancipation of the serfs on private estates and of domestic, household, serfs.’ It was at least an attempt to reclassify the population as free citizens, even though the actuality of their lives saw little difference. I ended the piece with this comment:

‘Meanwhile in 1861, on the other side of the world, while Alexander II was organising freedom for the serfs, the American Civil War, to allegedly free the slaves, was brewing. Liberty and justice for all was about to get a hearing, at least in the form of a pledge. Whether that pledge is ever fulfilled is another question. 150 years have elapsed and the ring and cry of freedom is sweeping across North Africa into Asia. Will it ever happen ?’

In March last year, the Libyan revolution was well on the way to success; however it should be noted that:

The Royal Canadian Navy Frigate HMCS Charlottetown was on 2nd March 2011 deployed to the Mediterranean, off the coast of Libya, but did not take immediate action once arrived.[ Seventeen days later, a multi-state coalition began a military intervention in Libya to implement United Nations Security Council Resolution 1973, which was taken in response to events during the Libyan civil war. That same day, military operations began, with US and British forces firing cruise missiles, the French Air Force, United States Air Force and British Royal Air Force undertaking sorties across Libya and a naval blockade by the Royal Navy.

Since the beginning of the intervention, the initial coalition of Belgium, Canada, Denmark, France, Italy, Norway, Qatar, Spain, UK and US had expanded to seventeen states, with newer states mostly enforcing the no-fly zone and naval blockade or providing military logistical assistance. The effort was initially largely led by France and the United Kingdom, with command shared with the United States. NATO took control of the arms embargo on 23 March, named Operation Unified Protector. An attempt to unify the military command of the air campaign (whilst keeping political and strategic control with a small group), first failed over objections by the French, German, and Turkish governments. On 24 March, NATO agreed to take control of the no-fly zone, while command of targeting ground units remains with coalition forces.

How was this possible only a year ago? The situation in Syria is becoming quite drastic. Perhaps the chart below might explain part of the problem. I guess there’s no money left, when you take into account Afghanistan expenditure as well.

Speaking of money, there is a bit of history relating to the 3^rd March 1865.

After the British established Hong Kong as a colony in the aftermath of the First Opium War, local merchants felt the need for a bank to finance the growing trade between China and Europe (with traded products including opium). They established the Hongkong and Shanghai Banking Company Limited in Hong Kong (March 1865) and Shanghai (one month later).

The founder, a Scotsman named Thomas Sutherland wanted a bank operating on "sound Scottish banking principles." Still, the original location of the bank was considered crucial and the founders chose Wardley House in Hong Kong since the construction was based on some of the best feng shui in Colonial Hong Kong. The bank initially leased its premises for HK$500 a month in 1864.

After raising a capital stock of HK$5 million, the Hongkong and Shanghai Banking Company Ltd. opened its doors on 3 March 1865. It opened a branch in Shanghai during April of that year, and started issuing locally denominated banknotes in both the Crown Colony and Shanghai soon afterwards. The bank was incorporated in Hong Kong by special dispensation from the British Treasury in 1866, and under the Hongkong and Shanghai Bank Ordinance 1866, a new branch in Japan was also established. The bank handled the first public loan in China in 1874, thereafter issuing most public loans.

Today HSBC faces potential £3bn UK tax bill if it loses its HM Revenue and Customs case. The dispute focuses on a decision by HSBC to hold shares in its Asian and some European subsidiaries through a Dutch company, which it has done since moving its main holding company to the UK. HSBC believes it should not pay UK tax on dividends it receives. However, HMRC argues that the bank, through its controlled foreign company rules, should pay tax in the UK, as rates in the Netherlands are lower.

The dispute covers the period from 2002 to 2009. HSBC said "In the event of an adverse outcome from our on-going discussions with HMRC on the CFC and other open tax issues, the tax payable and financial impact could be as high as $4.9bn, plus related interest expense."

Well,  money has to come from somewhere.