Tag Archives: USA

Note to Congress – Please do not force me to give up my US citizenship

by Rhodri C. Williams

Its been a year and a half since my cri-de-coeur about the double-filing (and occasional double-taxation) burden that the US – alone among all other countries in the world but Eritrea – places on its citizens abroad. At the time I wrote it, the best case scenario was for me to find a discreet way to back report some information no one had ever bothered to tell me to forward report before and then get on with it. Meaning?

Well. Continue the annual Springtime circus of spending 48 hours in a pointless and dispiriting clinch with 1040 supplements seemingly written by pedantic Klingons. Maybe hand it all over to a tax lawyer so that I could spend USD 2,000 per year for the purposes of verifying I owed nothing to the US over and over again in grammatically impeccable Klingon. Keep a weather eye on the incoherent calls for reform of this incoherence until it got to be time for the kids to make a decision. Meaning?

I’ve bent over backwards to be sure that my kids, growing up Sweden, will always have a home in the US. From day one, Dr. Seuss has been right there alongside Pippi Longstocking and transatlantic flights represent perhaps our second biggest household cost after the mortgage. But as the little guys approach the age of independent incomes, the IRS is waiting too, a lifetime of pointless Springtime anxiety clutched in its hot little hands.

So while it always seemed self-evident that I would no sooner give up my US passport than I would the nose on my face, the kids were definitely going to have the benefit of an informed choice in the matter. But that all changed with the FATCA, an astonishingly blithe raft of garbled global overreach. With banks worldwide now annually forced to disclose all information on ‘US persons’ holding accounts with them, my individual decision to stand and let the kids eventually decide on jumping became irrelevant. Meaning?

Meaning that the US decision to unleash FATCA on the world has taken the decision out of my hands. My citizenship and that of my children is literally now in the hands of the Swedish banking system, on whom the US Congress has placed the entire cost of compliance with its dogs breakfast legislation. Should the Swedish banks jointly decide that the cost of hosting US persons is too high, then they will cast us out and we will have no decision to make. We will not jump. We will be pushed.

Is this idle speculation or unconsidered hysteria? No. Axa bank in France just took this decision, derailing the lives of thousands of ‘US persons’ there, some of whom, as pointed out by the indispensible Victoria Ferauge, did not even have reason to know they were US persons. My bank here in Sweden might take a different approach. Or it might not. Other banks might take me in. Or not. If not, good luck to me and the kids. Sweden is a bureaucratic society, and loss of my bank accounts would roll out a chain reaction of inconvenience and potential disaster that I do not care to even consider.

If and when I get the letter, I do not see any other option than to apply for Swedish citizenship and renounce my US citizenship – and presumably that of my children. I can live with a little inconvenience and arbitrariness, if that is the cost of maintaining the link with my ancestral home. But I can’t live in the 21st century without bank accounts.

I don’t know if anyone in the US particularly cares about whether me and my little flock in distant Scandinavia remain part of their community or not. But does that justify allowing foreign banks to take the decision for me?

Democracy as a process

by Rhodri C. Williams

Democracy is on my mind this afternoon. For one thing, its July 4th and Philip Gourevich was kind enough to remind me that its about more than hotdogs and fireworks:

As our national day of celebrating our political system passes, I am also currently attending one of the most convincing exercises in homegrown open democracy anywhere in the world here in Sweden, while I simultaneously find myself preoccupied by the ongoing struggle to establish something tenable between the unattractive extremes of autocracy and people power in Egypt.

In Sweden, I am attending “Almedalen week“, an annual political gala in the picturesque seaside town of Visby. Sweden is a small enough polity that after a few years there, you recognize all the politicians and they are literally all here, from the xenophobes to the suecophiles, strolling around in their business casual uniforms, making speeches and gleefully networking. Coming from a country where the president has to cart around truckloads of bulletproof glass on foreign trips, it is a pleasant kind of shock to be this up close and personal with Sweden’s political elite, as well as a lot of leading journalists, diplomats and other functionaries.

There is plenty to find fault with in Almedalen, ranging from the way the week has morphed into a commercial free-for-all to the fact that Swedes of color are frequently notable by their absence. But for all that, Almedalen week is a remarkable experience, a sort of national pep rally for a democratic process that is deeply ingrained, civilly conducted, and fundamentally liberal (in the philosophical sense, Rush. Look it up.) Nothing much of import gets said or decided here, but everyone comes away with a fairly visceral sense of a system that is accessible and responsive.

Meanwhile in Egypt, we are seeing a brand new democratic process experience severe ructions. The commentators have been out in force, and there seems to be a  consensus that both sides are at fault, with the Muslim Brotherhood having vastly overplayed the hand it won in Egypt’s first free elections, and the opposition having responded by undermining the very democracy some of them had risked life and limb protesting for in 2011 (see the ICG’s statement here and Nathan J. Brown’s constitutional analysis here). For both practical reasons and more principled ones, there has been some reluctance to characterise what Egypt is currently experiencing as an unqualified coup. But it is undoubtedly a severe and early setback in a fragile process.

As I write this, a raucous group of Yanks (and their Swedish buddies) who are renting the guesthouse next door are doing a very poor rendition of ‘Star-Spangled Banner’. My own patriotism is feeling a bit less bruised now that I dumped this year’s load of IRS busywork into the mail (though Peter Spiro reminds that ever more US citizens abroad are unwilling to face a lifetime of pointless double-filing), and it is tempting to reflect on the progress of democracy. It is undeniably a pretty infectious idea that all those be-wigged gentlemen farmers invoked back in 1776. It certainly feels like the concept has found fertile ground here in Sweden, and it has made extraordinary progress in the last few years in the Middle East. But it is crucial to recall that it is a process, and never an entirely irreversible one.

PS – Anyone interested in watching my efforts to discuss the rule of law in Libya – in Swedish – here in Almedalen can tune in here: http://www.sommartorg.se/. The seminar will be carried live at noon, GMT+2 and will be available for streaming thereafter.

Corporate social responsibility in a changing world: Targeting conflict resource exploitation

by Rhodri C. Williams

The march of the voluntary guidelines continues, it seems, with new approaches geared to address gaps in earlier efforts to urge corporate self-control. As Peter Spiro noted some time back in Opinio Juris (and Chris Huggins pointed out in these pages), the promotion of “soft” voluntary standards as a means of getting at some very hard human rights violations is still seen with skepticism in many quarters.

Nevertheless, Mark Taylor makes an engaging case for such standards in a recent Open Democracy piece on the role of natural resource extraction in fueling conflict. The article highlights the Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict Affected and High Risk Areas, a standard adopted by the Organization for Economic Cooperation and Development (OECD) in May 2011 and subsequently regulated in the US through new regulations issued by the Securities and Exchange Commission (SEC)  under the Dodd-Frank Wall Street Reform Act.

Taylor notes several key insights that have emerged in the wake of older certification schemes such as the Kimberly Process for conflict diamonds. These include the manner in which both illicit inflows into conflict areas (such as small arms) and outflows (such as natural resources) have become incorporated into global market flows, as well as the extent to which vulnerable local populations may be just as dependent on extraction activities for their survival as warlords are for their arms budget. In light of such factors, Taylor argues that considerable advantages may be derived from focusing on business actors rather than states:

Like the Kimberly Process, or even UN sanctions, the Guidance seeks to exclude certain commodities from global trade flows. But there the similarity ends. Instead of obligating states, the Guidance places the responsibility on business to manage their supply chains. Instead of relying on a certification regime hobbled by a lack of state capacity, the Guidance deploys the concept of business due diligence, the practice of self-investigation and risk management in a business activity. And instead of targeting a commodity based on its association with rebel groups – a definition that has plagued the Kimberly Process, for example preventing it from taking action where abuses are committed by state armed forces, as in the case of Zimbabwe – the Guidance in effect focuses on the problems of conflict financing and human rights abuse associated with mineral extraction, regardless of whether the perpetrator is a state or non-state armed group.

In effect, the Guidance places the onus on businesses to show they are not financing conflict or contributing to human rights abuse through their sourcing of minerals. And nothing in the Guidance prevents states from regulating this responsibility to conduct due diligence, which is precisely what the US has done with the conflict minerals provision of Dodd-Frank, a measure the EU is now considering.

The combined reliance on traditional state regulation and more novel forms of corporate self-regulation is promising though not, as Taylor points out, unproblematic. However, even at this early stage, there may be timely lessons that could be drawn by the UN Food and Agricultural Organization (FAO) in its current efforts to develop a set of ‘demand side’ standards regulating the conduct of actors participating in large-scale land investments in developing countries. This process should be facilitated by the fact that the FAO has already launched a set of ‘supply side’ guidelines for countries that are the object of such investment. While the latter clearly addressed state authorities disposing over targeted land, the former will need to take into account the role of both state and powerful non-state actors whose investments are driving the global land-rush.

Finally, in a timely reminder that such policies and safeguards are often only as effective as the advocates that monitor their application, Inclusive Development International issued a press release announcing a complaint before the Asian Development Bank’s Compliance Review Panel. The complaint alleges a violation of the Bank’s involuntary settlement policies with regard to communities affected by an ADB-funded railway rehabilitation project in Cambodia (on which, see Natalie Bugalski’s guest postings here and here). As such, it recalls the ongoing controversy in Cambodia over the World Bank’s attempts to act on a finding by its own Inspection Panel of a violation of its Resettlement Policy.

Annual double-taxation-without-representation time rolls around for US citizens abroad

by Rhodri C. Williams

Spare a thought this week for US citizens abroad, who will be scrambling to comply with one of those nightmarish bureaucratic systems that no rational person would ever propose if they were working from a clean slate today.

As one of those affected, what to say? Many of us will have stayed up far too late during recent nights, working out whether we are likely to fall victim to an arbitrary snap-enforcement program that has imposed massive fines on people out of compliance with a previously dormant filing requirement we had precious little reason to be aware of. Still more of us face the prospect of spending entire days working through a battery of incomprehensible forms in order to prove what should be a self-evident point – we owe nothing to the US Government because our residence is registered in foreign jurisdictions with a legal right (and often a great enthusiasm) for culling our incomes in exchange for the services they offer. Those with higher incomes will simply be taxed on them twice over, and this by the ostensibly most tax-averse country in the developed world.

As an American on the ‘liberal’ side of the political spectrum, I have never had much time for black helicopter conspiracy theories about an oppressive ‘big government’. On the other hand, my experience with the US tax authorities has sharpened my classically American concerns about unrestrained government. While I have little doubt that the US Internal Revenue Service behaves responsibly and responsively (e.g. as a ‘service’) when it comes to ‘internal revenue’, it has taken the form of an unaccountable, repressive juggernaut for those of us in the ‘external revenue’ free-fire zone (consider the terrifying recent experience of one of my fellow US citizens in Sweden). However, it is ultimately the IRS’ masters in Congress and the Executive Branch (ahem, Mr. Obama) that have given these dubious tendencies ample room to breathe.

For those of you interested (academically or personally), there is lots of good information out there on the internet. A few starting points include the Isaac Brock Society representing the enormous population of affected people in Canada, as well as the more academic Federal Tax Crimes blog. Peter Spiro also provides a helpfully contextualized running commentary on these issues on Opinio Juris. However, the most important player is American Citizens Abroad (ACA), an organization that provides updated advice on navigating the double taxation labyrinth while actively seeking to replace it with an ordinary system recognizing residence-based taxation that would let Americans abroad get on with raising families and engaging in the private diplomacy and trade promotion we provide our country with every day (at zero cost to any taxpayer!)

If you surf this topic a bit, you will probably find yourself scratching your head and wondering how this could have come to pass. Foreign banks to refuse to open accounts for US citizens as a matter of policy? Struggling US citizens abroad put to the rack for the sins of fat-cats with undeclared Swiss bank accounts who are mostly US residents anyway? (I mean, who really thinks the Swiss care where you live if the numbers add up?) US citizens lining up to renounce their citizenship because their own government is shaking them down in a desperate and legally questionable attempt to fill the deficit gap?

In the cold light of day, this stuff should not stand up for a single Congressional term, particularly in a Congress now dominated by politicians dead-set on (1) reining in out-of-control Federal agencies, and (2) cutting tax burdens on productive citizens come hell or high water. For the first time in my memory, I may actually passionately agree in principle with my conservative delegates to Congress, at least as far as this issues goes. So why does it just get worse?

My considered opinion after some self-interested research is that affected people have been kept so busy sweating over personal compliance that they have had very little energy left over to focus on political message. There are lots of complaints about how the US media seems only too happy to fall into line with the IRS’ implicit assumption that living outside the US is in itself a form of tax evasion. However, beyond the ACA’s important efforts, there doesn’t seem to be much systematic advocacy. So let me take a first stab of my own. Why should the average US citizen care about the fiscal fates of their brethren abroad?

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A roundup of international law debates

by Rhodri C. Williams

For the international lawyers and those who take an anthropological interest in their doctrinal debates, there have been a few interesting iterations on old themes recently. They fall into three categories, namely the ‘law of peace’ debate, the ‘justiciability’ debate, and the debate over whether UK Prime Minister David Cameron’s international law advisor is a crank or a mad genius. Lets take them in that order.

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Mixed signals on citizenship

by Rhodri C. Williams

The last few weeks have brought a confusing spate of reports that predict the demise of traditional, monogamous one person-one passport citizenship along with others that indicate that states are more determined than ever to retain its essence. So what does this have to do with this blog? Well, for one thing, citizenship is the glue that governments have traditionally used to bind particular populations to the territories they control, completing the triangle of statehood. But the issue also has personal overtones for me as part of the great global expat class. I’ve got two dual citizen kids, and could probably use a bit of dual citizenship myself, at the very least as a matter of administrative convenience.

Should administrative convenience count? The Economist argues yes in an editorial the week before last, noting that traditional citizenship was never an ironclad guarantee of loyalty, and nor is it particularly relevant to security in an age of professional militaries. Although significant complications involving voting rights are acknowledged, the magazine sees and applauds a trend toward routine multiple citizenship as an economic win-win situation, and one in which tax residence can serve as a new and more practical signifier of political loyalties:

Rather than making a fetish out of passports, a better approach would be to use residence (especially tax residence) as the main criterion for an individual’s rights and responsibilities. That encourages cohesion and commitment, because it stems from a conscious decision to live in a country and abide by its rules.

However, an article in the same Economist outlines new restrictions on the acquisition of dual citizenship imposed by EU states such as the Netherlands and Germany. Meanwhile, citizenship law expert Peter Spiro posts on Opinio Juris on how the US – which is already virtually unique in imposing double taxation on its better-earning expat citizens – has now piled on burdensome reporting requirements on assets held abroad. Spiro notes that the requirement may make it impossible for the 4-6 million Americans abroad to open local bank accounts and speculates that many with dual citizenship will go underground or renounce their US citizenship.

However, Israel appears to have gone furthest in bucking the trend toward more liberal citizenship rules, with its  Supreme Court deciding last week that Palestinians who marry Israeli citizens may be categorically excluded from citizenship. Sound a bit … oh, well … hard to square with fundamental non-discrimination norms?  Israeli judge Asher Grunis will no doubt long be remembered for his pithy response:

Human rights do not prescribe national suicide.

Well, don’t they now? In a separate and fascinating survey of trends in citizenship law, Peter Spiro argues in the latest American Journal of International Law that perhaps they do. Sadly, the full article lurks behind a subscription-wall, but the abstract can be read here:

State practices relating to nationality and citizenship have historically been insulated from international law. That is beginning to change as citizenship moves into a human rights frame. Citizenship practices relating to naturalization, birthright citizenship, and dual citizenship are being measured against anti-discrimination and self-governance norms. These developments will expand access to citizenship, though the new international law of citizenship may also contribute to the erosion of state solidarities that are important to liberal governance.

In essence, Spiro argues that human rights norms are inexorably curtailing the the traditional prerogative of states to ‘self-define’ their membership through the discretionary grant of citizenship. Given that human rights advocates have focused on forbidding the arbitrary denial of citizenship to long-term residents, liberal theory would ordinarily hold that those eligible for citizenship under such terms would likely have integrated over time and made the type of “conscious decision to live in a country and abide by its rules” the Economist lauds (above) in promoting tax residence as a sort of contemporary proxy for what citizenship has been.

However, Spiro cites the scale of current migration and the nature of globalization in questioning whether such bonds can still be said to automatically result from residency. Ultimately, he raises the question of whether “internationally mandated membership” may not only reduce the levels of solidarity in states, but also – and as a result – their actual capacity to continue acting as the primary guarantors of human rights. Death of states? Not necessarily. Default devolution of some of the central attributes of sovereignty to supranational institutions that will hopefully have the legitimacy and capacity to pick up the slack by then? Well, stay tuned.

So where do my loyalties (or at least my sympathies) lie? I pay taxes and consume services in Sweden, and enjoy a quality of life here that would be the envy of a vast proportion of my fellow global citizens. I participate most emphatically in the culture of Finland, or rather Åland, at least since I got involved in the slightly manic ritual of wrestling the annual midsummer pole up along with the other (and better qualified) yeomen of my wife’s ancestral village. And whenever I get back to the  States again, its like I’ve woken up from a dream. Not a bad one, mind you, but one that has you scratching your head because it seemed so plausible at the time, but could it really have been like that?? I guess a bit of cultural vertigo is the sign of our times.

The view from Sarajevo, 12 September 2001

by Rhodri C. Williams

On the tenth anniversary of 9-11, I thought it might be more appropriate to post on what I thought then than what I think now. Then was Sarajevo, working on property restitution with the OSCE, my then girlfriend (now wife) ‘A-L’ in New York doing an LLM. What to say about the decade that followed? Turns out Ehud read the tea leaves better than I did, I guess. My endless gratitude to ‘H’ for having a proper filing system and digging this ancient email up.

During World War II, a fighter on patrol got lost in fog and hit the Empire State Building.  It made a big hole that was patched and life went on.  Thats the first thing I thought of when my boss called me in my office to tell me the news yesterday afternoon.  Simultaneously, some other part of my mind was tracking A-L’s morning bus route past the twin towers.  The rain was pouring down outside, and the email I was typing on the stage during which an administrative decision becomes executable under Bosnian law stopped in its tracks.

CNBC was the only channel we could get in the guard room, which was already packed with colleagues.  Smoke was pouring out of both towers into a hazy blue New York sky, the likes of which had greeted me so many bleary mornings on the way to law school.  As the Pentagon caught fire and the south tower went in a vast cloud of smoke, the world ground and slowly rotated from its bearings.

Anything was possible.  The urban architecture of the eastern seaboard was steadily being demolished in paced five minute blasts.  Every airplane in the sky had gone mad.

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