The absence of financial independence is not the cause of poverty, it is poverty; therefore, to have financial independence is synonymous with achieving economic wealth, not its precondition (Bauer, 1987). Nevertheless, scholars question whether there were missed opportunities by ECA to ensure investment egalitarianism. Anecdotally, post-World War II investment opportunities were scarce; consequently, the Marshall Plan might be credited for stimulating economic prosperity in Europe. Despite the efforts of the plan, proceeding Europe was destitute with infrequent resources. The level of sustainability lessened, making necessary repair to the railroads, buildings, and equipment utterly impossible. Further, they wanted fiscal reform in France and Italy, moderated by ECA austerity, predicated on the volume of counterpart investments that generated revenue for recipients' nation-states. Conversely, ECA's officials criticized counterpart apportionments to national and public companies (Bossuat, 2008). Nevertheless, propaganda forced ECA's position; within two year's monetary resources were relinquished to French, German, and Italian governments to gather important funds for the primary economic sectors (p. 20). Consequently, these conditions changed Marshall Funds to appropriation according to the Monnet Plan: a sociopolitical plan officially named, the theory of *l'engrenage* provisionally legalized the facilitation of, and redirection of coal–production from Germany's existing coalmines in Ruhr and the Saar area to France.19

In summary, ECA ensured investment egalitarianism. Evolution brought with it innovation. Following the implementation of a sociopolitical plan, propaganda further changed bilateral relations between the United States, France, and Germany and its allies. Because of evolution, ECA earmarked \$6 billion grant to fund a revolutionary mechanism (e.g., Intra-European trade), as a means to remove traditional barriers to multilateral trade, constructing all European currencies convertible. Fund allocations aid France, Italy, the U. K., and Belgium's modernization efforts; inevitably, waiving some American rights and weakening its trade proposition. Further, ECA authorized \$4 billion of the grant appropriations to European Payments Union (EPU) to balance payments to nation-states marking the era of a stabilized Europe (Machado, 2008, p. 45).

### **4. Strength**

Arguably, the Marshall Plan has had various effects on nation-states; some European officials believe that, "it sped their recovery" in concurrence with its "initial recovery program." Similarly, Americans suggest that the Marshall Plan eradicated famine, poverty, dogmatic anarchy, subverted communist terrorizations, and stabilized European nationstates (Eichengreen, 2008). Literature reviews indicate that the acceptance of "Communist activities gradually decreased" in the years following the Marshall Plan (DeConde & Burns, 2002). The Plan circumvented export- import trade barriers and created inroads that shaped the "North Atlantic Alliance that would persist throughout the Cold War." Further helping

19 Mr. Jean Monnet, The Time, November 16, 1979

Europeans reclaim confidence in social equipoise (Machado, 2008) and simultaneously reposing the minds of formidable critics. The Marshall Planners were mythical; they collaborated with European governments of the center and far right in Greece, of the centerright in Italy and West Germany, and the left in Norway and the United Kingdom, concurrently cultivating propitious relations with the Royalists, Christian Democrats, Socialists, and Laborites (p. 55).

The Marshall Plan – Global Strategy and Foreign Humanitarian Aid 151

US Aid goes to Israel and Egypt - the majority of which pays for armaments, yet neither are developing nation-states

US Aid goes to Israel and Egypt - the majority of which pays for armaments, yet neither are developing nation-states

Case in point, in 2008, agencies' financial plans totaled \$36.2 billion. President Bush's financial plan entreated \$6 billion in extra subsidies for FY2007 to reserve earmarks not funded in the fiscal budget cycle: \$1.18 billion for extra operating costs for the Department of State and other agencies, mainly linked to the wars in Iraq and Afghanistan. Correspondingly, FY2007 subsidies included \$4.81 billion to satisfy foreign aid requirements in Afghanistan, Iraq, and Lebanon, as well as peacekeeping and humanitarian aid in Sudan, Somalia and other indigenous nation-states. Moreover, in FY2008, the government requested \$3.3 billion in war incremental funding for intervention in Iraq and Afghanistan, of which \$1.37 billion was used to satisfy foreign aid and \$1.93 billion for State Department operations. Between FY2001 and FY2008, foreign aid earmarks were contingent upon American society.21 Table 5 shows foreign humanitarian aid appropriations to the top nation state recipients between FY2001 and FY2010. The summary of U.S. foreign humanitarian aid further illustrates conditions for endowment appropriations to nation-states. Endowments are appropriated to nation-states in the form of cash transfers, equipment, commodities, infrastructure, or technical assistance, and in recent decades, are provided almost exclusively in the form of grants rather than loans (Tarnoff & Lawson 2011). Table 6 shows

**The Summary of U.S. Foreign Humanitarian Aid Top Recipient Unite States (US\$ in millions) FY** 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 Notes

**Aid (ESF)** 400 781 398 120 240 1,537 477 600 1,080 838 One-third of all

**Egypt** One-third of all

2,775 2,550 2,381 2,340 2,280 1,448 2,147 2,100 2,040 1,975

1,300 1,300 1,289 1,300 1,300 1,289 1,292 1,300 1,300 1,297

**Israel**

**Total** 3,175 3,331 2,779 2,460 2,520 2,985 2,624 2,700 3,120 2,813

**Aid (ESF)** 250 200 412 455 495 530 571 615 775 693

**Total** 1,550 1,500 1,701 1,755 1,795 1,819 1,863 1,915 2,075 1,990

21 Congressional Budget Justification Foreign Operations FY2008 Retrieved on February 21 2012 at

the top recipients of U.S. foreign humanitarian aid FY 2010.

**Economic**

**Military Aid (FMF)**

**Economic**

**Military Aid (FMF)**

http://pdf.usaid.gov/pdf\_docs/PCAAB546.pdf

The George Marshall Plan is ascribed to nationalized modernization in France, as defined in the Monnet Plan, whereby, 90% of funds went to revive the substructures of France, Germany, Britain, and Italy and to stimulate economic growth (Wall, 1993; Behrman, 2007). In addition, the United States contributed in excess of \$12.5 billion in aid, and more than \$500 billion as an equivalent to America's gross national product (GNP) and \$100 billion in grants. The United States worked purposelessly to evade actions contrary to their foremost interests (Marjolin, 1989, p. 180). The Marshall Plan allowed for provisions of military support: tanks, planes, and guns to Britain and the Soviet Union to protect interest in modernization; as well, George Marshall was a principal architect of the D-Day attack of 1944 (Burns, 2008).20

In response, the United States ECA ability fostered equalitarianism. The Marshall Plan aided European nation-states into forming the Organization for European Economic Cooperation (OECD) to improve inter-European Trade and multi-lateralizing payments concatenate with the European Payment Union (EPU). The unique function of EPU would expedite the conversion of European currencies to reach convertibility, trade liberation, and extracted trade bilateral practices. Perhaps a missed opportunity in the OECD and the Marshall Plan was the level of difficulty to differentiate between followers and their leaders, as described by Varaschin (2002). Nonetheless, modernization and the most recent American technology produced a model of international relations that produced an exchange of technology instead of one-way imports (Varaschin)

In the wake of the Marshall Plan (ERP), the U.S. has maintained the same philosophy on foreign humanitarian aid: to prevent obdurate nation-states from tumultuous political, economic, and social conditions. In the twenty-first century, however, foreign humanitarian aid has become synonymous with national security, commercial interests, cataclysms, and social conflict. The scope of U.S. foreign humanitarian aid prohibits economic poverty, governance deficiency, incivility, and narcotic manufacturing and trafficking (Tarnoff & Lawson 2009). The question remains: has the Marshall Plan become a metaphor for earmarks, and eccentric government spending in the name of foreign humanitarian aid to persevere American society? To a point, foreign humanitarian aid has become a metaphor for earmarks. Earmarking is the redistribution of revenue used to invest in an explicit domestic or foreign commercial enterprise. Annually, by approval of the Department of State International Affairs, USAID, and other foreign affairs agencies earmark provisions (e.g., social infrastructure and economic substructure) are built-in financial plans as investment allowances from both bilateral and multilateral coffers.

20 Burns, N. (2008). Commemorating the 60th Anniversary of the Marshall Plan, Chapter 9. The Marshall Plan: Lessons Learned for the 21st Century.

Case in point, in 2008, agencies' financial plans totaled \$36.2 billion. President Bush's financial plan entreated \$6 billion in extra subsidies for FY2007 to reserve earmarks not funded in the fiscal budget cycle: \$1.18 billion for extra operating costs for the Department of State and other agencies, mainly linked to the wars in Iraq and Afghanistan. Correspondingly, FY2007 subsidies included \$4.81 billion to satisfy foreign aid requirements in Afghanistan, Iraq, and Lebanon, as well as peacekeeping and humanitarian aid in Sudan, Somalia and other indigenous nation-states. Moreover, in FY2008, the government requested \$3.3 billion in war incremental funding for intervention in Iraq and Afghanistan, of which \$1.37 billion was used to satisfy foreign aid and \$1.93 billion for State Department operations. Between FY2001 and FY2008, foreign aid earmarks were contingent upon American society.21 Table 5 shows foreign humanitarian aid appropriations to the top nation state recipients between FY2001 and FY2010. The summary of U.S. foreign humanitarian aid further illustrates conditions for endowment appropriations to nation-states. Endowments are appropriated to nation-states in the form of cash transfers, equipment, commodities, infrastructure, or technical assistance, and in recent decades, are provided almost exclusively in the form of grants rather than loans (Tarnoff & Lawson 2011). Table 6 shows the top recipients of U.S. foreign humanitarian aid FY 2010.

150 Globalization – Approaches to Diversity

Socialists, and Laborites (p. 55).

instead of one-way imports (Varaschin)

Learned for the 21st Century.

Europeans reclaim confidence in social equipoise (Machado, 2008) and simultaneously reposing the minds of formidable critics. The Marshall Planners were mythical; they collaborated with European governments of the center and far right in Greece, of the centerright in Italy and West Germany, and the left in Norway and the United Kingdom, concurrently cultivating propitious relations with the Royalists, Christian Democrats,

The George Marshall Plan is ascribed to nationalized modernization in France, as defined in the Monnet Plan, whereby, 90% of funds went to revive the substructures of France, Germany, Britain, and Italy and to stimulate economic growth (Wall, 1993; Behrman, 2007). In addition, the United States contributed in excess of \$12.5 billion in aid, and more than \$500 billion as an equivalent to America's gross national product (GNP) and \$100 billion in grants. The United States worked purposelessly to evade actions contrary to their foremost interests (Marjolin, 1989, p. 180). The Marshall Plan allowed for provisions of military support: tanks, planes, and guns to Britain and the Soviet Union to protect interest in modernization; as well, George

In response, the United States ECA ability fostered equalitarianism. The Marshall Plan aided European nation-states into forming the Organization for European Economic Cooperation (OECD) to improve inter-European Trade and multi-lateralizing payments concatenate with the European Payment Union (EPU). The unique function of EPU would expedite the conversion of European currencies to reach convertibility, trade liberation, and extracted trade bilateral practices. Perhaps a missed opportunity in the OECD and the Marshall Plan was the level of difficulty to differentiate between followers and their leaders, as described by Varaschin (2002). Nonetheless, modernization and the most recent American technology produced a model of international relations that produced an exchange of technology

In the wake of the Marshall Plan (ERP), the U.S. has maintained the same philosophy on foreign humanitarian aid: to prevent obdurate nation-states from tumultuous political, economic, and social conditions. In the twenty-first century, however, foreign humanitarian aid has become synonymous with national security, commercial interests, cataclysms, and social conflict. The scope of U.S. foreign humanitarian aid prohibits economic poverty, governance deficiency, incivility, and narcotic manufacturing and trafficking (Tarnoff & Lawson 2009). The question remains: has the Marshall Plan become a metaphor for earmarks, and eccentric government spending in the name of foreign humanitarian aid to persevere American society? To a point, foreign humanitarian aid has become a metaphor for earmarks. Earmarking is the redistribution of revenue used to invest in an explicit domestic or foreign commercial enterprise. Annually, by approval of the Department of State International Affairs, USAID, and other foreign affairs agencies earmark provisions (e.g., social infrastructure and economic substructure) are built-in financial plans as

20 Burns, N. (2008). Commemorating the 60th Anniversary of the Marshall Plan, Chapter 9. The Marshall Plan: Lessons

Marshall was a principal architect of the D-Day attack of 1944 (Burns, 2008).20

investment allowances from both bilateral and multilateral coffers.

21 Congressional Budget Justification Foreign Operations FY2008 Retrieved on February 21 2012 at http://pdf.usaid.gov/pdf\_docs/PCAAB546.pdf

The Marshall Plan – Global Strategy and Foreign Humanitarian Aid 153

496 (**in US\$ millions**)

Colombia, 507

Egypt, 1296

Ethiopia, 533

Haiti, 1271

Afrhanistan, 4102

**Figure 5.** Shows the United States Foreign Operations 2010-2012 (\$US millions).

Israel, 2220

Rehabilitation.

Jordan, 693

Kenya, 688

Nigeria, 614

Pakistan, 1807

South Africa, 578

www.crs.gov, 1 -31.

War to address the following questions:

to avoid supposition of social imperialism?

The Marshall Plan European Recovery Program's aim to modernize the European economy and to revitalize free enterprise post-war, found itself in stark contrast, to its intent. By 1952, as funding gradually depleted given the inconclusive economics of recipient nation-states, economists could not differentiate through direct nor indirect appropriation how prosperous Europe might have become without it (Eichengreen, 2008). Particularly in lieu of "the shift to remilitarization after the Korean War," results were even less conclusive (Marchado, 2008). The Marshall Plan was not an isolated strategy of assistance, but rather an exclusive act beginning a sequence of postwar aid that included United Nations Relief and

Iraq, 1117

Tanzania, 464 Uganda, 457 West Bank/Gaza,

This chapter session presents a critical assessment of the concept of foreign humanitarian assistance programs as defined in "the Marshall Plan," and administrated during the post-

1. Has the United States missed opportunities to rebuild nation-states through foreign

2. Has the United States missed opportunities for "workfare rather than welfare systems"

4. Is it possible for the United States to structure modernized programs that will not exceed its resources; whereat stability in education and employment can exist and

humanitarian aid programs without the presupposition of hopelessness?

Corporation Compact disbursement in FY 2010, (February 2011), 7-5700, Retrieved on February 2, 2012 at

3. Has the Marshall Plan's (ERP) reputation outlined its grandeur?

**Table 5.** Shows Foreign Humanitarian Aid to the Top United States between FY 2001 and FY 2010.

**Table 6.** Shows the Top Recipients of U.S. Foreign Humanitarian Aid FY 2010.22

22 U.S. Department of State, Report of Foreign Operations CBJ FY2002, FY 2011. *Foreign Aid: Introduction to U. S. Programs and Policy*: Congressional Research Service (CRS)-included supplemental and Millennium Challenge

**Figure 5.** Shows the United States Foreign Operations 2010-2012 (\$US millions).

Data no longer available Economic Support Fund (ESF) - Millennium Challenge Corporation (MCC)- International Military Education and Training (IMET) - Foreign Military Financing (FMF) - International Narcotics Control and Law Enforcement (INCLE) - Global Health and Child Survival (GHCS) - Development Assistance (DA)

West

122513.pdf

Total enacted 2010

estimate

Total enacted 2011

**Table 6.** Shows the Top Recipients of U.S. Foreign Humanitarian Aid FY 2010.22

22 U.S. Department of State, Report of Foreign Operations CBJ FY2002, FY 2011. *Foreign Aid: Introduction to U. S. Programs and Policy*: Congressional Research Service (CRS)-included supplemental and Millennium Challenge

**Table 5.** Shows Foreign Humanitarian Aid to the Top United States between FY 2001 and FY 2010.

**United States Foreign Operations 2010-2012 (\$US millions)**

**Source PDF Report** request

USAID Administration

Bilateral Economic Assistance

Military/Security Assistance

Multilateral Assistance

FY 2007 2006 2005 2004 2003 2002 2001 Notes

Colombia 561 558 567 574 538 381 49Drug

Jordan 458 461 457 559 452 230 228 to leave Israel

Pakistan 734 698 537 387 305 893 3War on

Peru 136 133 152 156 189 197 89 Drug

Indonesia 159 158 135 122 131 124 120 Oil reserves Kenya 437 213 159 101 52 44 38 Christian

Bolivia 122 122 132 133 137 126 89Drug

Bank/Gaza 69 150 74 74 75 72 70 Aim to balance

Bosnia 43 51 45 64 53 68 86 Reparations

Obama's request for 2012

1658.2 1526.9 1744.1 1124 1545

25028.3 21208.9 23743.5 18899.2 21059.9

8267.2 8116.7 11322.8 9969.7 10714.8

2649.7 2302.6 3667.5 1573.9 3218.6

122513.pdf 2010 122513.pdf Page 852, 2009 101368.pdf

House Proposal for 2012

Ukraine 96 115 93 113 166 163 182 India 117 94 92 87 152 79 59 Haiti 225 163 125 101 26 31 48 Russia 67 52 91 101 157 165 169 Ethiopia 474 145 114 74 52 47 40

Liberia 102 89 44 202 7 5 5 Bangladesh 84 49 55 61 65 66 59 abatement

terrorism

abatement

Donations

abatement

Israel aid

Senate Proposal for 2012

alone

The Marshall Plan European Recovery Program's aim to modernize the European economy and to revitalize free enterprise post-war, found itself in stark contrast, to its intent. By 1952, as funding gradually depleted given the inconclusive economics of recipient nation-states, economists could not differentiate through direct nor indirect appropriation how prosperous Europe might have become without it (Eichengreen, 2008). Particularly in lieu of "the shift to remilitarization after the Korean War," results were even less conclusive (Marchado, 2008). The Marshall Plan was not an isolated strategy of assistance, but rather an exclusive act beginning a sequence of postwar aid that included United Nations Relief and Rehabilitation.

This chapter session presents a critical assessment of the concept of foreign humanitarian assistance programs as defined in "the Marshall Plan," and administrated during the post-War to address the following questions:

4. Is it possible for the United States to structure modernized programs that will not exceed its resources; whereat stability in education and employment can exist and

Corporation Compact disbursement in FY 2010, (February 2011), 7-5700, Retrieved on February 2, 2012 at www.crs.gov, 1 -31.

wherefore social resilience is enough to obliterate nation-states' dependency on humanitarian assistance programs?

The Marshall Plan – Global Strategy and Foreign Humanitarian Aid 155

humanitarian aid distributions to control Europe. He contends foreign aid was neither

For example, the economic recoveries in France, Italy, and Belgium existed before the stream of U.S. aid (Cowen, 1985). Belgium, a nation that depended the most on unrestricted exchanges of economic policies after its liberation in 1944, experienced the fastest recovery, eluded a collapse in its housing market and food scarcities seen in other European nations.25 Alan Greenspan explicated in his memoir, *The Age of Turbulence,* that Ludwig Erhard's trade and industry strategies accelerated Western European growth. Erhard's modification to trade and industry *modus operandi* legitimized Germany's recovery, and those strategies jumped-started Western Europe and its allies to rebuild institutions and a nation.26 Conversely, there is an inherent bias of government-to-government aid towards state control and politicization (Bauer, 1981). This session argues the legitimacy of nation-states'

The United States' foreign humanitarian aid has become the "opiate" for nation-states. Independent of how inattentive, unscrupulous, or autocratic a nation-state may be, there is always some administration or global agency motivated to supply aid (i.e., bilateral, multilateral, and unilateral benefactors) with a few more million dollars. By subsidizing political and pernicious policies, foreign aid ill serves the worlds' impoverished.27 For instance, in Indonesia, the government-usurped sharecroppers 'produced for aid-financed irrigation canals. In Mali, sharecroppers were coerced to auction their harvests at bargain prices to joint aid projects and to further Mali government initiatives. In Egypt, Haiti, and elsewhere, the values for sharecroppers harvest plummeted as the United States intervened with aid (p. 2).

Alesina and Weder (1999) said global programs to alleviate poverty (e.g., bilateral aid from richer to poorer nation-states, multilateral aid from international organizations, grants at below market rates, technical assistance, and debt forgiveness) in fact increase the chance of parliamentary exploitation.28 The Marshall Plan initially perpetuated unscrupulous propagandized schemes.29 In retort, critics of these programs argue instead that, contrary to the more or less sincere intentions of the donors, corrupt governments received just as much aid as less corrupt ones (p. 3). These issues are perpetual; often-financial assistance does not reach the needy in the developing nations, but instead is wasted on inefficient public consumption.30 For instance, appropriations given to France and the Netherlands totaled resources used to finance their military forces in Southeast Asia inaugurating the context for the largest sums of private U. S. investments in Europe, creating the groundwork for modern transnational corporations (Chomsky & Ruggiero, 2002, p. 9). Modern transnational

25 A Marshall Plan for Iraq? (http://www.cato.org/research/articles/vasquez-030509.html). CATO Institute, May 9, 2003,

26 Greenspan, A. (2007). *The Age of Turbulence Adventures in a New World*. The Penguin Press New York, ISBN 1-7-4295-

28 Alesina, A. & Weder, B. (May 1999). Do Corrupt Governments Receive Less foreign Aid? at

30 World Bank 1998 at http://monthlyreview.org/1998/10/01/the-state-in-a-changing-world

Europe's indicator of recovery or sustainability.

foreign humanitarian aid and aid distribution.

4652-2 27 Ibid 16.

by Ian Vasquez. Retrieved February 23, 2012.

http://www.nber.org/papers/w7108.pdf?new\_window=1 29 Tucker, J. (1997). The Marshall Plan Myth, *The Free Market*, 15:9.

**Figure 6.** Shows the key International and Humanitarian Aid Accounts for 2011 (US \$ in millions).23 24

### **5. The marshall plan criticism**

The United States has pontificated on the inevitability of bombastic aid to rebuild nationstates without the presupposition of hopelessness. Virtually sixty-five years later the sequence of deficiency is uninterrupted. According to German political analyst, Werner Abelshauser, the United States was the primary economic imperialist orchestrating

23 Congressional Research Service, 2011: figures include funds flagged for "overseas contingency operations" (OCO). 24 Ibid.

humanitarian aid distributions to control Europe. He contends foreign aid was neither Europe's indicator of recovery or sustainability.

For example, the economic recoveries in France, Italy, and Belgium existed before the stream of U.S. aid (Cowen, 1985). Belgium, a nation that depended the most on unrestricted exchanges of economic policies after its liberation in 1944, experienced the fastest recovery, eluded a collapse in its housing market and food scarcities seen in other European nations.25 Alan Greenspan explicated in his memoir, *The Age of Turbulence,* that Ludwig Erhard's trade and industry strategies accelerated Western European growth. Erhard's modification to trade and industry *modus operandi* legitimized Germany's recovery, and those strategies jumped-started Western Europe and its allies to rebuild institutions and a nation.26 Conversely, there is an inherent bias of government-to-government aid towards state control and politicization (Bauer, 1981). This session argues the legitimacy of nation-states' foreign humanitarian aid and aid distribution.

The United States' foreign humanitarian aid has become the "opiate" for nation-states. Independent of how inattentive, unscrupulous, or autocratic a nation-state may be, there is always some administration or global agency motivated to supply aid (i.e., bilateral, multilateral, and unilateral benefactors) with a few more million dollars. By subsidizing political and pernicious policies, foreign aid ill serves the worlds' impoverished.27 For instance, in Indonesia, the government-usurped sharecroppers 'produced for aid-financed irrigation canals. In Mali, sharecroppers were coerced to auction their harvests at bargain prices to joint aid projects and to further Mali government initiatives. In Egypt, Haiti, and elsewhere, the values for sharecroppers harvest plummeted as the United States intervened with aid (p. 2).

Alesina and Weder (1999) said global programs to alleviate poverty (e.g., bilateral aid from richer to poorer nation-states, multilateral aid from international organizations, grants at below market rates, technical assistance, and debt forgiveness) in fact increase the chance of parliamentary exploitation.28 The Marshall Plan initially perpetuated unscrupulous propagandized schemes.29 In retort, critics of these programs argue instead that, contrary to the more or less sincere intentions of the donors, corrupt governments received just as much aid as less corrupt ones (p. 3). These issues are perpetual; often-financial assistance does not reach the needy in the developing nations, but instead is wasted on inefficient public consumption.30 For instance, appropriations given to France and the Netherlands totaled resources used to finance their military forces in Southeast Asia inaugurating the context for the largest sums of private U. S. investments in Europe, creating the groundwork for modern transnational corporations (Chomsky & Ruggiero, 2002, p. 9). Modern transnational

154 Globalization – Approaches to Diversity

International disaster & famine

Emergency migration & refugee

International Narcotics control &

Nonproliferation, anti-terrorism,

International clean technology

World Bank international

International fund for

programs

24 Ibid.

International organizations &

**5. The marshall plan criticism**

Millennium Challenge

World Bank global

humanitarian assistance programs?

wherefore social resilience is enough to obliterate nation-states' dependency on

Obama vs. 2011 spending

House vs. 2011 spending

Senate vs. 2011 spending

**Key International Aid and Humanitarian Aid Accounts for 2011 (US \$ in millions)**

Global health and child survival 7829.3 11% -9% 1% Development assistance 2520 16% -18% 1%

assistance 863.3 0% -12% 16% Migration & refugee assistance 1686.6 -4% -11% 7%

assistance 49.9 -36% -36% -100%

Corporation 898 25% 0% 0%

law enforcement 1593.8 58% 55% 39%

demining 738.5 -4% -4% -3% Foreign military financing 5374.2 22% 19% 18% Peacekeeping operations 304.4 -4% 0% -4%

environmental facility 89.8 60% -22% 34%

fund 184.6 117% -100% 90% Strategic climate fund 49.9 281% -100% 100%

development association 1232.5 10% -24% 10% Global food security fund 99.8 209% -100% 100%

agricultural development 29.5 2% -33% 2%

**Figure 6.** Shows the key International and Humanitarian Aid Accounts for 2011 (US \$ in millions).23 24

The United States has pontificated on the inevitability of bombastic aid to rebuild nationstates without the presupposition of hopelessness. Virtually sixty-five years later the sequence of deficiency is uninterrupted. According to German political analyst, Werner Abelshauser, the United States was the primary economic imperialist orchestrating

23 Congressional Research Service, 2011: figures include funds flagged for "overseas contingency operations" (OCO).

354.3 -2% -13% 0%

Total enacted 2011

25 A Marshall Plan for Iraq? (http://www.cato.org/research/articles/vasquez-030509.html). CATO Institute, May 9, 2003, by Ian Vasquez. Retrieved February 23, 2012.

26 Greenspan, A. (2007). *The Age of Turbulence Adventures in a New World*. The Penguin Press New York, ISBN 1-7-4295- 4652-2

27 Ibid 16.

28 Alesina, A. & Weder, B. (May 1999). Do Corrupt Governments Receive Less foreign Aid? at http://www.nber.org/papers/w7108.pdf?new\_window=1

29 Tucker, J. (1997). The Marshall Plan Myth, *The Free Market*, 15:9.

30 World Bank 1998 at http://monthlyreview.org/1998/10/01/the-state-in-a-changing-world

corporations are estimated as twenty-nine to fifty-one of the world's 100 largest economic entities; the remainders are nations-states excluding the gross domestic production of sub-Saharan Africa whereby its revenues do not equal that of General Motors and Ford collectively.31 Because corporations and stats are commonly represented as having an oppositional relationship, scholars have observed the effects of a new phenomenon of globalization on the process of colonization (Mclean, 2004, p. 363). The effect of globalization relative to colonization is not discussed in this chapter.

The Marshall Plan – Global Strategy and Foreign Humanitarian Aid 157

time, it has done little to promote the proliferation of "workfare rather than welfare systems," to breed political responsibility, or to encourage nation-states to help themselves.37 Why has the United States requested taxes from its citizens to fund churlish foreign nations? The United States is unswerving to the United Nations and to multilateral international relations to safeguard global solidarity. In 2011, the United States earmarked for United Nations Educational, Scientific, and Cultural Organization (UNESCO), to increase most multilateral coffers and accounts, the sum of US \$130 million for Global Environment Facility (GEF). A different earmarked designation for the 2013 proposed budget of US \$1.65 billion to support Global Fund fight on AIDS, TB, and Malaria. In addition, the United States Congress aims to spend US \$250 million for debt relief for the world's most insolvent nation-states.

In 2012, American taxpayers, for the purpose of the UNESCO, GEF, and Middle East Funding Initiative, provided in excess of US \$1 billion to USAID in response to the "Arab Awakening"38 in Iraq, Afghanistan, Pakistan, Tunisia, Egypt, Libya, Syria, and Bahrain. The United States assumes the position of securing the sovereignty for Americans, and to support nation-states where tumult has evolved. Both the US House and Senate earmarked \$7 billion dollars from their proposed 2013 budget to create a contingency fund for global war on terror and for administrative support in the Middle East.39 The question: What is the purpose of the United States overtaxing Americans? Are taxable incomes used to build

As cited previously, the Marshall Plan had been a multilateral approach to problem solving. It was conceived as institution building and nation building, but within the constructs of regional economic integration, appropriations increased from 17 to 149 nation-states, with an expectation of self-governance to eliminate xenophobia. Perhaps this plan was too optimistic rather than pragmatic on the part of the United States. Conversely, in the implementation stage of the Marshall Plan, economists have since observed that not all 16 Arab states in the Middle East were included in planned initiatives. The absence of a single democratic government among them poses a threat to the United States; as a result, the

Arguably, it is difficult to oppose fundamental aid to relieve societies who are currently underprivileged under an authoritarian regime, or struggling to gain the sense of tolerance and prosperity that Americans value. In theory, military means will not suffice when it comes to ending the terrorism that threatens the United States and its allies, or halting the insurgencies that destabilize the Middle East (Etzioni, n.d.). It is fitting in this session to concisely discuss the Middle East's (i.e., Iraq, Iran, and Afghanistan) social position on foreign aid, and egalitarianism. Moreover, this does not mean that terrorism and insurgency

nation-states? Why are foreign governments given incentives to operate ethically?

rhetorical question of international reverence and legitimacy has been posed. 40

38 Anitwar.com Retrieved on February 20, 2012 at Original at http://original.antiwar.com

**6. Threats**

 37 Op. cit.

39 Op. cit. 40 Op. cit.

Accordingly, Kahin (2003) wrote that the Netherlands used a significant portion of the aid it received to re-conquer Indonesia during the Indonesian National Revolution, and then forced them to join the Korean War in 1950 after pressuring them to surrender or lose aid if they did not comply. 32 These examples emphasize an unequivocal contradiction of egalitarianism.

The myriad of foreign aid was created on the premise that foreign government is dedicated to its naturalized citizens' welfare. The premise has proven to be a meager supposition of social imperialism. Suppositions of social imperialism are the remnants of rancorous philosophies on the part of nation-states and foreign aid systems of government that describe the impalpable interest of naturalized citizen.33 For example, aid projects in Guatemala failed partly because some Guatemalan government officials opposed improving the plight of the rural impoverished.34 A million people starved in the Sudan in 1985 because the government-owned railroad refused to transport American-donated food.35 In Africa, where tribal rivalries often still prevail, aid money was used to prop up the reigning factions in the same way that local American political machines use federal grants as slush funds; an increase in the accolades of political conflict in contemporary Africa and less urbanized environments, as described by Bauer (1984). Therefore, there is an outlining presumption that the United States has consciously continued to finance an exorbitant quantity of coffers to entice foreign government to not commit economic suicide.36

Generally, foreign investments were interchangeable when outside entities (i.e., multilateral organizations) made cash accessible to recipient governments, consecutively releasing their revenue for other purposes. For instance, Ghana, Brazil, Kenya, and the Ivory Coast spent billions building new capital cities. In addition to alluring industrialized corporations to their nation-states, for example, Mercedes-Benz automobiles were very popular among African government officials; whereby the etymology of Swahili has been changed labeling officials as wabenzi (men of the Mercedes-Benz). The point being, foreign aid has made life more pleasurable for government bureaucrats in impoverished nation-states. At the same

31 Dine, J. (2000). The Governance of Corporation Groups 151.

32 Kahin, G. (2003). Nationalism and Revolution in Indonesia, Cornell Southeast Asia Program Publications, ISBN 0- 87727-734-6, 37-65

33 Schumpeter, J. (November 2011). Imperialism and Social Classes: Two Essays (LVMI) [Kindle Edition], Ludwig von Mises Institute, ASIN B006CR7QC0

34 Agency for International development, Local conditions Beyond AIDs Control and Repeated design, Planning and Monitoring Deficiencies Have Seriously Delayed the Implementation of Projects by USAID/Guatemala (Washington, May 23, 1984), 5.

35 Washington Post, June 24, 1985.

36 Ibid, 17

time, it has done little to promote the proliferation of "workfare rather than welfare systems," to breed political responsibility, or to encourage nation-states to help themselves.37 Why has the United States requested taxes from its citizens to fund churlish foreign nations?

The United States is unswerving to the United Nations and to multilateral international relations to safeguard global solidarity. In 2011, the United States earmarked for United Nations Educational, Scientific, and Cultural Organization (UNESCO), to increase most multilateral coffers and accounts, the sum of US \$130 million for Global Environment Facility (GEF). A different earmarked designation for the 2013 proposed budget of US \$1.65 billion to support Global Fund fight on AIDS, TB, and Malaria. In addition, the United States Congress aims to spend US \$250 million for debt relief for the world's most insolvent nation-states.

In 2012, American taxpayers, for the purpose of the UNESCO, GEF, and Middle East Funding Initiative, provided in excess of US \$1 billion to USAID in response to the "Arab Awakening"38 in Iraq, Afghanistan, Pakistan, Tunisia, Egypt, Libya, Syria, and Bahrain. The United States assumes the position of securing the sovereignty for Americans, and to support nation-states where tumult has evolved. Both the US House and Senate earmarked \$7 billion dollars from their proposed 2013 budget to create a contingency fund for global war on terror and for administrative support in the Middle East.39 The question: What is the purpose of the United States overtaxing Americans? Are taxable incomes used to build nation-states? Why are foreign governments given incentives to operate ethically?

As cited previously, the Marshall Plan had been a multilateral approach to problem solving. It was conceived as institution building and nation building, but within the constructs of regional economic integration, appropriations increased from 17 to 149 nation-states, with an expectation of self-governance to eliminate xenophobia. Perhaps this plan was too optimistic rather than pragmatic on the part of the United States. Conversely, in the implementation stage of the Marshall Plan, economists have since observed that not all 16 Arab states in the Middle East were included in planned initiatives. The absence of a single democratic government among them poses a threat to the United States; as a result, the rhetorical question of international reverence and legitimacy has been posed. 40

### **6. Threats**

156 Globalization – Approaches to Diversity

87727-734-6, 37-65

May 23, 1984), 5.

36 Ibid, 17

Mises Institute, ASIN B006CR7QC0

35 Washington Post, June 24, 1985.

relative to colonization is not discussed in this chapter.

to entice foreign government to not commit economic suicide.36

31 Dine, J. (2000). The Governance of Corporation Groups 151.

corporations are estimated as twenty-nine to fifty-one of the world's 100 largest economic entities; the remainders are nations-states excluding the gross domestic production of sub-Saharan Africa whereby its revenues do not equal that of General Motors and Ford collectively.31 Because corporations and stats are commonly represented as having an oppositional relationship, scholars have observed the effects of a new phenomenon of globalization on the process of colonization (Mclean, 2004, p. 363). The effect of globalization

Accordingly, Kahin (2003) wrote that the Netherlands used a significant portion of the aid it received to re-conquer Indonesia during the Indonesian National Revolution, and then forced them to join the Korean War in 1950 after pressuring them to surrender or lose aid if they did not comply. 32 These examples emphasize an unequivocal contradiction of egalitarianism.

The myriad of foreign aid was created on the premise that foreign government is dedicated to its naturalized citizens' welfare. The premise has proven to be a meager supposition of social imperialism. Suppositions of social imperialism are the remnants of rancorous philosophies on the part of nation-states and foreign aid systems of government that describe the impalpable interest of naturalized citizen.33 For example, aid projects in Guatemala failed partly because some Guatemalan government officials opposed improving the plight of the rural impoverished.34 A million people starved in the Sudan in 1985 because the government-owned railroad refused to transport American-donated food.35 In Africa, where tribal rivalries often still prevail, aid money was used to prop up the reigning factions in the same way that local American political machines use federal grants as slush funds; an increase in the accolades of political conflict in contemporary Africa and less urbanized environments, as described by Bauer (1984). Therefore, there is an outlining presumption that the United States has consciously continued to finance an exorbitant quantity of coffers

Generally, foreign investments were interchangeable when outside entities (i.e., multilateral organizations) made cash accessible to recipient governments, consecutively releasing their revenue for other purposes. For instance, Ghana, Brazil, Kenya, and the Ivory Coast spent billions building new capital cities. In addition to alluring industrialized corporations to their nation-states, for example, Mercedes-Benz automobiles were very popular among African government officials; whereby the etymology of Swahili has been changed labeling officials as wabenzi (men of the Mercedes-Benz). The point being, foreign aid has made life more pleasurable for government bureaucrats in impoverished nation-states. At the same

32 Kahin, G. (2003). Nationalism and Revolution in Indonesia, Cornell Southeast Asia Program Publications, ISBN 0-

33 Schumpeter, J. (November 2011). Imperialism and Social Classes: Two Essays (LVMI) [Kindle Edition], Ludwig von

34 Agency for International development, Local conditions Beyond AIDs Control and Repeated design, Planning and Monitoring Deficiencies Have Seriously Delayed the Implementation of Projects by USAID/Guatemala (Washington, Arguably, it is difficult to oppose fundamental aid to relieve societies who are currently underprivileged under an authoritarian regime, or struggling to gain the sense of tolerance and prosperity that Americans value. In theory, military means will not suffice when it comes to ending the terrorism that threatens the United States and its allies, or halting the insurgencies that destabilize the Middle East (Etzioni, n.d.). It is fitting in this session to concisely discuss the Middle East's (i.e., Iraq, Iran, and Afghanistan) social position on foreign aid, and egalitarianism. Moreover, this does not mean that terrorism and insurgency

37 Op. cit.

38 Anitwar.com Retrieved on February 20, 2012 at Original at http://original.antiwar.com

39 Op. cit.

40 Op. cit.

can end by military means. Instead, it means that nonmilitary means will have to be the primary recourse to ending terrorism rather than methods used following World War II (p. 76) or tactics seen in the twenty-first century.

The Marshall Plan – Global Strategy and Foreign Humanitarian Aid 159

Recommendation 1 Decrease the usage of monetization, thereby developing direct processes

percent to procure food in local markets.

Recommendation 2 Keep the budget used to procure U.S food at its current levels for a net

150 account for development assistance.

Monetization of the United States' in-kind food aid is the sale of food commodities purchased, shipped from the United States, and sold into foreign markets. These processes include assistance from U.S. based non-governmental organizations (NGOs). In accordance, these practices generate revenues on local currencies introduced in the Food Security Act of 1985 as a method to support PVOs in order to recuperate administration, transportation, distribution, and storage costs linked to food aid dissemination.52 Monetization is a type of food aid, in accordance to World Vision and international NGO, defined as "all foodsupported processes aimed at improving the food security of people living in poverty over a time, whether funded by means of international, national, public, or private resources."53

Conversely, the process of monetizing can be useful for promoting low-cost, viable food markets by boosting investment in transportation, infrastructure, and human capital (traders, entrepreneurs). Essentially, food aid monetization can improve long-term food security by

http://www.marad.dot.gov/ships\_shipping\_landing\_page/cargo\_preference/cargo\_humanitarian\_assistance/Humanita

51 Afghanistan's Other Neighbors: Iran, Central Asia, and China, Conference Report July 24-26, 2008, Report released

52 Simmons, E. (June 2009). Monetization of Food Aid: Reconsidering U.S. Policy and Practice http://www.partnership-

people worldwide.46

that control food aid distribution to the more than one billion hungry

 Modify monetization to the congressionally mandated minimum of 15 percent for Public Law 480 Title II; Section 416(b)47 nonemergency food aid and Public Law 83-66448; reduce earmark from 30 percent to 15

 Eliminate monetization for Food for Progress and McGovern-Dale in International Food for Education and Child Nutrition programs.49

Appropriate \$280 million in different coffers to the International Affairs

 Allocate coffers to private volunteer organizations (PVOs) to support food security programs and complementary development activities. 50 51

increase in direct distribution to assist those in emergencies.

**Global Humanitarian**

**Foreign Aid**

46 2012 World Hunger and Poverty Facts and Statistics at

48 The Cargo Preference Act of 1954: Public Law 83-664 at

http://www.fas.usda.gov/excredits/foodaid/ffe/ffe.asp

FAQ?Open&lpos=lft\_txt\_Food-Aid-FAQs

rian\_Assistance\_Cargoes.htm

http://www.fas.usda.gov/excredits/foodaid/title%201/pl480ofst.html

http://www.worldhunger.org/articles/Learn/world%20hunger%20facts%202002.htm 47 US Food Aid Programs Description: Public Law 480, Food for Progress and Section 416(b) at

49 McGovern-Dale in International Food for Education and Child Nutrition Programs at

http://dyson.cornell.edu/faculty\_sites/cbb2/Papers/Chicago%20Council%20-

africa.org/sites/default/files/Monetization%20Report%20Final%20June%202009.pdf

February 2009 at www.bu.edu/aias/reports/aun\_conference.pdf.

50 Global Agricultural Development Initiative Policy Development Study Series December 2009 at

%20Policy%20Development%20Study%20on%20Monetization%20-%20December%202009.pdf

53 World Vision, Food Aid: FAQ at http://www.worldvision.org/content.nsf/about/press-food-aid-

It is further noteworthy to mention that the Middle East does not oppose financial aid or economic resources from the United States; however, the Middle East does oppose conditions associated with relief from the United States. Including, but not limited to, radical public and political reform and security interference, which has placed these former allies on a very different historical trajectory.41 For instance, the Pakistani government resented the conditions for building a civil society that were a part of the 2009 Kerry-Lugar Bill. The 2009 Kerry-Lugar Bill mandated \$7.5 billion in aid through 2014. The Egyptian government opposed the United States interference when USAID solicited help for job creation, economic development, and poverty alleviation including civic activism and human rights on behalf of the Middle East.42 As a result, the Middle East government continued to oppose the United States developmental models as inappropriate for their nation and recommended germane models similar to the Chinese or other relevant models.43

As a result, Iranian relations with Afghanistan have been compromised, due to Iran's relationship with the United States. The irony is, every one-share concerns about Iraq's oil politics and Afghanistan's role in the Islamic realm. Accordingly, Iran has repudiated Afghanistan as a peer of the realm. Therefore, although Iran supported the United States' conquest of the Taliban in 2001 and the dethroning Saddam Hussein in Iraq in 2003, the Iranian government has opposed the United States troops left over in both Afghanistan and Iraq, dreading permanent residency and retaliation.44 To underscore the problems, the Afghan and United States governments remain at odds over strategic intentions of Afghanistan's neighbors and the policies needed to engage them. For Afghanistan, Iran is an ally and Pakistan is an enemy; whereas, for the United States, Iran is an enemy and Pakistan an ally. 45

### **7. Recommendation**

The United States legislative bodies continue to be divided over the legitimacy of foreign humanitarian aid programs and the proportions of the federal investments used to fund them. The divide is between those who want to eliminate foreign aid versus those who want to increase reserve delineation, to improve program proficiency, and to lessen taxpayers' liability. This session of the chapter describes methods to achieve objectives. This process has the proclivity to procure billions in taxable revenue, if desired, to eliminate unnecessary regulations that foster inefficient expenditures. Emmy Simmons, in her manuscript, *Monetization of Food Aid: Reconsidering U.S. Policy and Practice,* describes the following solutions to improve global foreign aid relations:

41 Ibid.

42 Trofimov, Y. Egypt Opposes U. S. 's Democracy Funding, The Wall Street Journal, June 14, 2011, Retrieve on February 11, 2012 from http://online.wsj.com/article/SB10001424052702304665904576383123301579668.html

43 Ibid.

44 Ibid.

45 Ibid.

Monetization of the United States' in-kind food aid is the sale of food commodities purchased, shipped from the United States, and sold into foreign markets. These processes include assistance from U.S. based non-governmental organizations (NGOs). In accordance, these practices generate revenues on local currencies introduced in the Food Security Act of 1985 as a method to support PVOs in order to recuperate administration, transportation, distribution, and storage costs linked to food aid dissemination.52 Monetization is a type of food aid, in accordance to World Vision and international NGO, defined as "all foodsupported processes aimed at improving the food security of people living in poverty over a time, whether funded by means of international, national, public, or private resources."53

Conversely, the process of monetizing can be useful for promoting low-cost, viable food markets by boosting investment in transportation, infrastructure, and human capital (traders, entrepreneurs). Essentially, food aid monetization can improve long-term food security by

158 Globalization – Approaches to Diversity

**7. Recommendation**

 41 Ibid.

43 Ibid. 44 Ibid. 45 Ibid.

solutions to improve global foreign aid relations:

76) or tactics seen in the twenty-first century.

can end by military means. Instead, it means that nonmilitary means will have to be the primary recourse to ending terrorism rather than methods used following World War II (p.

It is further noteworthy to mention that the Middle East does not oppose financial aid or economic resources from the United States; however, the Middle East does oppose conditions associated with relief from the United States. Including, but not limited to, radical public and political reform and security interference, which has placed these former allies on a very different historical trajectory.41 For instance, the Pakistani government resented the conditions for building a civil society that were a part of the 2009 Kerry-Lugar Bill. The 2009 Kerry-Lugar Bill mandated \$7.5 billion in aid through 2014. The Egyptian government opposed the United States interference when USAID solicited help for job creation, economic development, and poverty alleviation including civic activism and human rights on behalf of the Middle East.42 As a result, the Middle East government continued to oppose the United States developmental models as inappropriate for their nation and recommended germane models similar to the Chinese or other relevant models.43 As a result, Iranian relations with Afghanistan have been compromised, due to Iran's relationship with the United States. The irony is, every one-share concerns about Iraq's oil politics and Afghanistan's role in the Islamic realm. Accordingly, Iran has repudiated Afghanistan as a peer of the realm. Therefore, although Iran supported the United States' conquest of the Taliban in 2001 and the dethroning Saddam Hussein in Iraq in 2003, the Iranian government has opposed the United States troops left over in both Afghanistan and Iraq, dreading permanent residency and retaliation.44 To underscore the problems, the Afghan and United States governments remain at odds over strategic intentions of Afghanistan's neighbors and the policies needed to engage them. For Afghanistan, Iran is an ally and Pakistan is an enemy; whereas, for the United States, Iran is an enemy and Pakistan an ally. 45

The United States legislative bodies continue to be divided over the legitimacy of foreign humanitarian aid programs and the proportions of the federal investments used to fund them. The divide is between those who want to eliminate foreign aid versus those who want to increase reserve delineation, to improve program proficiency, and to lessen taxpayers' liability. This session of the chapter describes methods to achieve objectives. This process has the proclivity to procure billions in taxable revenue, if desired, to eliminate unnecessary regulations that foster inefficient expenditures. Emmy Simmons, in her manuscript, *Monetization of Food Aid: Reconsidering U.S. Policy and Practice,* describes the following

42 Trofimov, Y. Egypt Opposes U. S. 's Democracy Funding, The Wall Street Journal, June 14, 2011, Retrieve on February 11, 2012 from http://online.wsj.com/article/SB10001424052702304665904576383123301579668.html

53 World Vision, Food Aid: FAQ at http://www.worldvision.org/content.nsf/about/press-food-aid-

FAQ?Open&lpos=lft\_txt\_Food-Aid-FAQs

46 2012 World Hunger and Poverty Facts and Statistics at

http://www.worldhunger.org/articles/Learn/world%20hunger%20facts%202002.htm

47 US Food Aid Programs Description: Public Law 480, Food for Progress and Section 416(b) at

http://www.fas.usda.gov/excredits/foodaid/title%201/pl480ofst.html

48 The Cargo Preference Act of 1954: Public Law 83-664 at

http://www.marad.dot.gov/ships\_shipping\_landing\_page/cargo\_preference/cargo\_humanitarian\_assistance/Humanita rian\_Assistance\_Cargoes.htm

49 McGovern-Dale in International Food for Education and Child Nutrition Programs at

http://www.fas.usda.gov/excredits/foodaid/ffe/ffe.asp

50 Global Agricultural Development Initiative Policy Development Study Series December 2009 at

http://dyson.cornell.edu/faculty\_sites/cbb2/Papers/Chicago%20Council%20-

%20Policy%20Development%20Study%20on%20Monetization%20-%20December%202009.pdf

51 Afghanistan's Other Neighbors: Iran, Central Asia, and China, Conference Report July 24-26, 2008, Report released February 2009 at www.bu.edu/aias/reports/aun\_conference.pdf.

52 Simmons, E. (June 2009). Monetization of Food Aid: Reconsidering U.S. Policy and Practice http://www.partnershipafrica.org/sites/default/files/Monetization%20Report%20Final%20June%202009.pdf

reassuring competitive food marketing systems that have built-in incentives to provide the poor with affordable food.54 Today the United States reinforced its commitment to food aid and monetization for nonemergency development through the 2008 Farm Bill. As a result, the Farm Bill provides concurrent earmarks for nonemergency Title II programs: \$375 million in FY2009, \$400 million in FY2010, \$425 million in FY2011, \$450 million FY2012 (Section 3021).55

The Marshall Plan – Global Strategy and Foreign Humanitarian Aid 161

**Author details**

Angela R. Payne

Bharat S. Thakkar

**9. References**

30226203.1903

1583225471

*University Press*, 134.

*Payne and Associates, LLC, Chicago,Illinois, USA*

Macmillan. February 2, 2012

*PREMGroup, Inc. and Faculty, College of Business, Walden University, Baltimore, MD, USA*

Alvarez-Cuadrado, F. (2008, August). The Marshall Plan, *The New Palgrave Dictionary of Economics*. Online Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2009. The New Palgrave Dictionary of Economic Online. Palgrave

http://www.dictionaryofeconomics.com/article?id=pde2009\_M000442>doi:10.1057/97802

Bandow, D., & Vasquez, I. (1994). (Eds.): Perpetuating Poverty: the World Bank, the IMF and the Developing World. Washington, D.C. CATO Institute. 1994 (Introduction), pp. 1-15. Bauer, P. (1981). Equality, The Third World, and Economic Delusion, *Cambridge: Harvard*

Bauer, P. (1987). Creating the Third World: Foreign Aid and its Off-spring. In: *Journal of*

Behrman, G. (2007). *The Most Noble Adventure: The Marshall Plan and the Time When American*

Chomsky, N. & Ruggiero, G. (2002). The Umbrella of U. S. Power: The Universal Declaration of Human Rights and the Contradictions of U.S. Policy, *Seven Stories Press*, ISBN

Cowen, T. (1985). The Marshall Plan: Myths and Realities. In: *Bandow 1985*, pp. 61-74 at p. 65. De Long, J. & Eichengreen, B. (1993). The Marshall Plan: History's Most Successful Structural Adjustment Program. In: Dornbusch, R., Noelling, W., & Layary, R. (Eds.): Postwar Economic Reconstruction and Lessons for the East Today. *Cambridge,*

DeConde, A. & Burns, R. (2001). *Encyclopedia of American Foreign Policy* edition 2, Charles

Eichengreen, B. (2008). *The European Economy Since 1945: Coordinated Capitalism and Beyond*,

Graml, Hermann: Nationalstaat oder westdeutscher Teilstaat. Die sowjetischen Noten vom Jahre 1952 und die öffentliche Meinung in der Bundesrepublik. in: Vierteljahrshefte für Zeitgeschichte (VfZ, *Quarterly Journal of Contemporary History*) 25 (1977), pp. 821–864. Grogin, R. (2001). *Natural Enemies: The United Nation-states and the Soviet Union in the Cold*

Bauer, P. (1984). Reality and Rhetoric*, Cambridge: Harvard University Press*, 104.

*Economic Growth*. 24 (1987), quoted. In Bandow, and Vasquez 1994, 4-5.

*Helped Save Europe*, Free Press, New York, NY. 221.

*Massachusetts: MIT Press*. Pp. 190-228 at p. 220.

ISBN<PHONE_NUMBER>545, Princeton University Press.

*War, 1917-1991*, Lexington, Books, ISBN<PHONE_NUMBER>

Scibner's Sons, ISBN 97—0684806570, Amazon.com.co.uk

Etzioni, A. (n.d.). No Marshall Plan for the Middle East, Prism 3(1), 75-86.

Theoretically, expansive subsidy systems foster American sovereignty. In reality, the United States could not be more in control, or secured following the threat of 9/11. Globally, the United States yields the most expensive food of any other multilateral organization without question: It has the capability to eliminate agricultural subsidies. The United States could lessen the impact of subsidies maneuvering for a better position and expurgate appropriations without jeopardizing its market position if it chooses to do so. The adverse effect of Congress' inability to relinquish control impedes aid agencies ability to seize different opportunities to modernize programs or ripostes to global emergencies. Therefore, it stand to reason that neither Europe, nor its allies are incapable of jettisoning humanitarian assistance programs. The central question: is there a need to modernize the Marshall Plan?

### **8. Conclusion**

No one can rebut the gist of economic growth, institutional reconstruction, cultivation of external and internal affiliations, or ethicality, of indoctrinating indigenous military and police forces to keep us safe; they are indispensable. Yet, is there a need to modernize the Marshall Plan? Let take a brief look at the Marshall Plan and its impact:

Because the United States is the greatest beneficiary of the Marshall Plan, the best ever foreign assistance throughout the developing world proves that aid may be best served, as a cushion for reform; but, it can never substitute the soundness of domestic economic policies.56 However, one should realize that such resources aim to alleviate immediate suffering; the reconstruction that follows should begin and end at home (Narozhna, 2001, p.7).

54 Monetization Field Manual, Office of Food for Peace, P.L. 480 Title II Programs October 1998 Retrieved on February 15, 2012 at http://www.usaid.gov/our\_work/humanitarian\_assistance/ffp/monetiz.htm

55 Food, Conservation, and Energy Act of 2008 (Pub. L. 110-234, H.R. 2419, 122 Stat. 923 enacted May 22, 2008, also known as the 2008 U.S. Farm Bill)

56 Ibid.

### **Author details**

160 Globalization – Approaches to Diversity

**8. Conclusion**

current processes.

deficiency collectively.

sociolinguistics.

known as the 2008 U.S. Farm Bill)

56 Ibid.

bilateral, multilateral, unilateral).

7. It has served as a cushion for reform bills.

reassuring competitive food marketing systems that have built-in incentives to provide the poor with affordable food.54 Today the United States reinforced its commitment to food aid and monetization for nonemergency development through the 2008 Farm Bill. As a result, the Farm Bill provides concurrent earmarks for nonemergency Title II programs: \$375 million in FY2009, \$400 million in FY2010, \$425 million in FY2011, \$450 million FY2012 (Section 3021).55

Theoretically, expansive subsidy systems foster American sovereignty. In reality, the United States could not be more in control, or secured following the threat of 9/11. Globally, the United States yields the most expensive food of any other multilateral organization without question: It has the capability to eliminate agricultural subsidies. The United States could lessen the impact of subsidies maneuvering for a better position and expurgate appropriations without jeopardizing its market position if it chooses to do so. The adverse effect of Congress' inability to relinquish control impedes aid agencies ability to seize different opportunities to modernize programs or ripostes to global emergencies. Therefore, it stand to reason that neither Europe, nor its allies are incapable of jettisoning humanitarian assistance programs. The central question: is there a need to modernize the Marshall Plan?

No one can rebut the gist of economic growth, institutional reconstruction, cultivation of external and internal affiliations, or ethicality, of indoctrinating indigenous military and police forces to keep us safe; they are indispensable. Yet, is there a need to modernize the

1. It did not provide an economic package that gave nation-states sanguinity beyond

4. It did not provide aid equitably, reconcile global affiliations, or eradicate global

5. It has not rectified didactic organizations, yet, it has multiplied in aid agencies (i.e.,

6. It has provided prominence of dominating nation-states' socioeconomics and

Because the United States is the greatest beneficiary of the Marshall Plan, the best ever foreign assistance throughout the developing world proves that aid may be best served, as a cushion for reform; but, it can never substitute the soundness of domestic economic policies.56 However, one should realize that such resources aim to alleviate immediate suffering; the

54 Monetization Field Manual, Office of Food for Peace, P.L. 480 Title II Programs October 1998 Retrieved on February

55 Food, Conservation, and Energy Act of 2008 (Pub. L. 110-234, H.R. 2419, 122 Stat. 923 enacted May 22, 2008, also

reconstruction that follows should begin and end at home (Narozhna, 2001, p.7).

15, 2012 at http://www.usaid.gov/our\_work/humanitarian\_assistance/ffp/monetiz.htm

Marshall Plan? Let take a brief look at the Marshall Plan and its impact:

2. It did not provide long-term centralized processes for implementation. 3. It did not provide political stability or a comprehensive legitimate milieu. Angela R. Payne *Payne and Associates, LLC, Chicago,Illinois, USA*

Bharat S. Thakkar *PREMGroup, Inc. and Faculty, College of Business, Walden University, Baltimore, MD, USA*

### **9. References**

Alvarez-Cuadrado, F. (2008, August). The Marshall Plan, *The New Palgrave Dictionary of Economics*. Online Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2009. The New Palgrave Dictionary of Economic Online. Palgrave Macmillan. February 2, 2012

 http://www.dictionaryofeconomics.com/article?id=pde2009\_M000442>doi:10.1057/97802 30226203.1903

Hogan, M. (1987). The Marshall Plan: American, Britain, and the Reconstruction of Western Europe, 1947-1952. *Cambridge: Cambridge University Press*

**Chapter 7**

© 2012 Patel and Thakkar, licensee InTech. This is an open access chapter distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

© 2012 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution,

**Money Laundering Among Globalized World**

In 21st century, economy is largely governed by advances made in information and communication technologies (ICT). Such technological advances make it easier to invest into developing countries. Developing countries' economies are growing at faster pace. Developed economies as well as developing economies continue to face challenges that come with economical advancements such as regulation of money flow, financial crimes, and abuse of financial systems. Among these challenges include crimes related to the information economy which is seen as an increasing source of concern within the international financial community. The proceeds from these crimes are bundled to give it a legal appearance and this process is known as "Money Laundering". Whenever a criminal activity generates substantial profits, individuals must find ways to hide, control, and legalize the funds without grabbing any attention from legal authorities. Failing to do so, their criminal activity will be transparent. During the process of legalizing the funds, they must ensure that their criminal activity is untraceable and all connections of funds to criminal activity must be removed. Money laundering is a sort of criminal activity trying to conceal the illegality of proceeds of crime by disguising them as lawful earning. In practice, criminals are trying to disguise the origins of money obtained through illegal activities so it looks like it was obtained from legal source. This would further make the same money usable, transferable, and negotiable. This is a common activity happening in almost all developing and developed countries where money that looks like usable can be re-used

As crimes are occurring in each and every part of the world, money laundering initiates from each and every part of the world. Each scheme involving money laundering involves transferring money through various channels, using number of ways, and via multiple financial transactions to satisfy the primary goal of obscuring the origin of money and thereby making criminal activity hidden. Otherwise, money is unusable because it would connect criminal to criminal activity and it would be easy for law-enforcement to seize. The

and reproduction in any medium, provided the original work is properly cited.

Hitesh Patel and Bharat S. Thakkar

http://dx.doi.org/10.5772/49946

**1. Introduction**

easily.

Additional information is available at the end of the chapter

Johnson, G. (2002, January). Lessons for today from the Marshal Plan, *CIPE. Org Feature Service: Technical Paper Series*, December 31, 2011:

http://www.cipe.org/publications/papers/pdf/mplan.pdf

## **Money Laundering Among Globalized World**

Hitesh Patel and Bharat S. Thakkar

Additional information is available at the end of the chapter

http://dx.doi.org/10.5772/49946

### **1. Introduction**

162 Globalization – Approaches to Diversity

Law Journal, 79 (363), 363-365

04156216296, New York: NY

Marin's Press, ISBN 0-312-23340-X

London: Methuen

from www.crs.gov

*politque*, Lille, 21.

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In 21st century, economy is largely governed by advances made in information and communication technologies (ICT). Such technological advances make it easier to invest into developing countries. Developing countries' economies are growing at faster pace. Developed economies as well as developing economies continue to face challenges that come with economical advancements such as regulation of money flow, financial crimes, and abuse of financial systems. Among these challenges include crimes related to the information economy which is seen as an increasing source of concern within the international financial community. The proceeds from these crimes are bundled to give it a legal appearance and this process is known as "Money Laundering". Whenever a criminal activity generates substantial profits, individuals must find ways to hide, control, and legalize the funds without grabbing any attention from legal authorities. Failing to do so, their criminal activity will be transparent. During the process of legalizing the funds, they must ensure that their criminal activity is untraceable and all connections of funds to criminal activity must be removed. Money laundering is a sort of criminal activity trying to conceal the illegality of proceeds of crime by disguising them as lawful earning. In practice, criminals are trying to disguise the origins of money obtained through illegal activities so it looks like it was obtained from legal source. This would further make the same money usable, transferable, and negotiable. This is a common activity happening in almost all developing and developed countries where money that looks like usable can be re-used easily.

As crimes are occurring in each and every part of the world, money laundering initiates from each and every part of the world. Each scheme involving money laundering involves transferring money through various channels, using number of ways, and via multiple financial transactions to satisfy the primary goal of obscuring the origin of money and thereby making criminal activity hidden. Otherwise, money is unusable because it would connect criminal to criminal activity and it would be easy for law-enforcement to seize. The

© 2012 Patel and Thakkar, licensee InTech. This is an open access chapter distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. © 2012 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

origin of money is always some sort of illegal activity and that activity is subject to criminal action, hence it is important to hide the money. While hidden money is useless, attempts are made to unhide the money by attempt to make the money untraceable.

Money Laundering Among Globalized World 165

and their assessments are frequently made available in public statements. There are reports published and researchers have tried to summarize and quantify amounts involved in money laundering activities. The author's model suggests a global money laundering total of \$2.85 trillion per year, heavily concentrated in Europe and North America. Numbers published by Walker or FATF may not be accurate and it is impossible to find actual number. Though, these numbers overall tell us the magnitude of money laundering activities performed across the world. Walker's report summarized origin and destination of

**Rank Origin Destination Amount (\$Usmill/yr) % of Total**  1 United States United States 528,091 18.50% 2 United States Cayman Islands 129,755 4.60% 3 Russia Russia 118,927 4.20% 4 Italy Italy 94,834 3.30% 5 China China 94,579 3.30% 6 Romania Romania 87,845 3.10% 7 United States Canada 63,087 2.20% 8 United States Bahamas 61,378 2.20% 9 France France 57,883 2.00% 10 Italy Vatican City 55,056 1.90% 11 Germany Germany 47,202 1.70% 12 United States Bermuda 46,745 1.60% 13 Spain Spain 28,819 1.00% 14 Thailand Thailand 24,953 0.90% 15 Hong Kong Hong Kong 23,634 0.80% 16 Canada Canada 21,747 0.80% 17 United Kingdom United Kingdom 20,897 0.70% 18 United States Luxembourg 19,514 0.70% 19 Germany Luxembourg 18,804 0.70% 20 Hong Kong Taiwan 18,796 0.70%

laundered money as described in this table.

**Table 1.** Flows of Laundered Money source Walker 2003 & 2009

offshore financial centers.

As this table describes, United States is most preferred country for money laundering due to strength of its currency. Tax havens such as Cayman Islands are becoming prominent

Money launders have only one goal in mind: to transform illegally obtained money into legitimate funds without exposing underlying criminal activity and make money usable towards further criminal activity. In today's world, majority of laundered money account for money coming from sale of illegal narcotics. Those who commit the underlying criminal activity may attempt to launder the money themselves, but increasingly a new class of criminals provides laundering services to organized crime. This new class consists of lawyers, bankers, and accountants. Criminals want their illegal funds laundered because they can then move their money through society freely, without fear that the funds will be traced to their criminal deeds. In addition, successful attempt of laundering prevents the funds from being confiscated by the authorities and in result criminal hides crime.

Most frequently used instrument by money launderers is banking institution as these institutions can provide multiple services such as deposit, cashier check, deposit box, loan, acceptance, discount, foreign exchange, settlement, and like. These institutions also provide easy means of transferring money or assets into another institutions or different branch of same institution in different geographical region with different regulations. With global economy and integrated financial markets, transferring funds across international borders is convenient and fast. Many countries have rigid bank secrecy laws allowing anonymous fund transfers. This creates an easy way for criminals to transfer money into other countries, and eventually cover up or conceal the nature or source of illegally obtained funds. Many organized international crimes lead to money laundering, such as Drugs, Property, Financial, Violence, Nightlife, Trafficking, Weapons, Fraud, Political Corruption, Financing of Terrorism . The connection between money laundering and terrorism is complex and very well known. But it plays very important role in survival of terrorist organization. Terrorism financing involves the raising and processing of funds to supply terrorists with resources to carry out their attacks or further training of individuals involved. Successful attempt of money laundering by a terrorist can have significant impact on national or regional security and can create significant damage to nation, culture, and economy. Whereas, the connection between money laundering and narcotics financing is simple clear as drug traffickers have one simple goal of bringing more drug on the streets.

The International Monetary Fund (IMF) estimates that the aggregate size of ML in the world could be somewhere between 2 and 5 percent of global gross domestic product (GDP) . The amount of illicit funds traveling through money laundering channels is estimated to grow at an annual rate of 2.7 percent. However, the full magnitude of the problem is still not known with any certainty. Using 1996 statistics, these percentages would indicate that money laundering ranged between US Dollar (USD) 590 billion and USD 1.5 trillion. This figure is almost equivalent to total output of economy of size of country Spain. However it must be said that overall it is absolutely impossible to produce a reliable estimate of the amount of money. A wide range of national and international agencies have attempted to quantify organized crime and components of money laundering in their particular sphere of interest, and their assessments are frequently made available in public statements. There are reports published and researchers have tried to summarize and quantify amounts involved in money laundering activities. The author's model suggests a global money laundering total of \$2.85 trillion per year, heavily concentrated in Europe and North America. Numbers published by Walker or FATF may not be accurate and it is impossible to find actual number. Though, these numbers overall tell us the magnitude of money laundering activities performed across the world. Walker's report summarized origin and destination of laundered money as described in this table.

164 Globalization – Approaches to Diversity

origin of money is always some sort of illegal activity and that activity is subject to criminal action, hence it is important to hide the money. While hidden money is useless, attempts are

Money launders have only one goal in mind: to transform illegally obtained money into legitimate funds without exposing underlying criminal activity and make money usable towards further criminal activity. In today's world, majority of laundered money account for money coming from sale of illegal narcotics. Those who commit the underlying criminal activity may attempt to launder the money themselves, but increasingly a new class of criminals provides laundering services to organized crime. This new class consists of lawyers, bankers, and accountants. Criminals want their illegal funds laundered because they can then move their money through society freely, without fear that the funds will be traced to their criminal deeds. In addition, successful attempt of laundering prevents the

funds from being confiscated by the authorities and in result criminal hides crime.

as drug traffickers have one simple goal of bringing more drug on the streets.

The International Monetary Fund (IMF) estimates that the aggregate size of ML in the world could be somewhere between 2 and 5 percent of global gross domestic product (GDP) . The amount of illicit funds traveling through money laundering channels is estimated to grow at an annual rate of 2.7 percent. However, the full magnitude of the problem is still not known with any certainty. Using 1996 statistics, these percentages would indicate that money laundering ranged between US Dollar (USD) 590 billion and USD 1.5 trillion. This figure is almost equivalent to total output of economy of size of country Spain. However it must be said that overall it is absolutely impossible to produce a reliable estimate of the amount of money. A wide range of national and international agencies have attempted to quantify organized crime and components of money laundering in their particular sphere of interest,

Most frequently used instrument by money launderers is banking institution as these institutions can provide multiple services such as deposit, cashier check, deposit box, loan, acceptance, discount, foreign exchange, settlement, and like. These institutions also provide easy means of transferring money or assets into another institutions or different branch of same institution in different geographical region with different regulations. With global economy and integrated financial markets, transferring funds across international borders is convenient and fast. Many countries have rigid bank secrecy laws allowing anonymous fund transfers. This creates an easy way for criminals to transfer money into other countries, and eventually cover up or conceal the nature or source of illegally obtained funds. Many organized international crimes lead to money laundering, such as Drugs, Property, Financial, Violence, Nightlife, Trafficking, Weapons, Fraud, Political Corruption, Financing of Terrorism . The connection between money laundering and terrorism is complex and very well known. But it plays very important role in survival of terrorist organization. Terrorism financing involves the raising and processing of funds to supply terrorists with resources to carry out their attacks or further training of individuals involved. Successful attempt of money laundering by a terrorist can have significant impact on national or regional security and can create significant damage to nation, culture, and economy. Whereas, the connection between money laundering and narcotics financing is simple clear

made to unhide the money by attempt to make the money untraceable.

**Table 1.** Flows of Laundered Money source Walker 2003 & 2009

As this table describes, United States is most preferred country for money laundering due to strength of its currency. Tax havens such as Cayman Islands are becoming prominent offshore financial centers.

### **2. Money laundering process**

The money laundering process usually involves several steps that make it difficult to trace the original source of money. Some of these steps include transferring the money between bank accounts, breaking up large amounts of money into small deposits, or buying acceptable forms of money such as money orders or cashier's checks. Time of deposit and amount of time money sits in particular place can also play a role in money laundering. The process is usually planned and organized to avoid being caught and facing punishment.

Money Laundering Among Globalized World 167

**Figure 1.** Money Laundering Process

Typical money laundering process involves three steps: Placement, Layering and Integration. A typical money flow from origin to destination is described in chart below. As chart describes, the main intent is to convert dirty money into what looks like clean money. Money flows across various financial institutions, across borders, in different forms of assets or investments, and ultimately reaches intended destination.

### **2.1. Placement**

This is the initial stage of money laundering where launderer inserts money resulting from illegal proceedings into some financial account, sometimes multiple accounts owned by multiple foreign individuals. The aim for launderer is to remove the cash from location of acquisition (also referred as source) to avoid detection from authorities and to then transform into other asset forms or instruments offered by various banking institutions in financial market. Launderer may purchase a series of monetary instruments (checks, money orders, etc.) that are then collected and deposited into accounts at another location. Financial institution is usually located and operated in different geographical location from intended destination. Majority of nations require that all large amount deposits be filed with regulatory agency. United States require that any cash deposits over \$10,000 be reported to Internal Revenue Service (IRS) and any suspicious deposits be reported to Financial Crime Enforcement Network (FinCEN). Launders often initiate this process with multiple accounts across multiple financial institutions to avoid suspicious activity with one large amount.

### **2.2. Layering**

Layer is important step of money laundering. This is where money transfers multiple financial institutions across different nations and can also change its form. Money can be converted to tangible or intangible assets or money can be transferred using various forms of transportation mechanisms. Layering may consist of multiple wire transfers between different accounts of different individuals, usually in chunks of amounts for each transfer. As part of these transfers, money can also change its form of currency or asset values. Assets can be in form of bonds, gold, cars, houses, diamonds, or even loan payments.

Launderers also use various forms of banking and investment in fake companies. Launderers use method known as smurfing where large amount of money transfers are broken into small less-suspicious amounts. In United States, this amount has to less than \$10,000. Different countries have different amount limits to be flagged as suspicious.

#### Money Laundering Among Globalized World 167

**Figure 1.** Money Laundering Process

166 Globalization – Approaches to Diversity

**2.1. Placement**

**2.2. Layering**

**2. Money laundering process**

The money laundering process usually involves several steps that make it difficult to trace the original source of money. Some of these steps include transferring the money between bank accounts, breaking up large amounts of money into small deposits, or buying acceptable forms of money such as money orders or cashier's checks. Time of deposit and amount of time money sits in particular place can also play a role in money laundering. The process is usually planned and organized to avoid being caught and facing punishment.

Typical money laundering process involves three steps: Placement, Layering and Integration. A typical money flow from origin to destination is described in chart below. As chart describes, the main intent is to convert dirty money into what looks like clean money. Money flows across various financial institutions, across borders, in different forms of assets

This is the initial stage of money laundering where launderer inserts money resulting from illegal proceedings into some financial account, sometimes multiple accounts owned by multiple foreign individuals. The aim for launderer is to remove the cash from location of acquisition (also referred as source) to avoid detection from authorities and to then transform into other asset forms or instruments offered by various banking institutions in financial market. Launderer may purchase a series of monetary instruments (checks, money orders, etc.) that are then collected and deposited into accounts at another location. Financial institution is usually located and operated in different geographical location from intended destination. Majority of nations require that all large amount deposits be filed with regulatory agency. United States require that any cash deposits over \$10,000 be reported to Internal Revenue Service (IRS) and any suspicious deposits be reported to Financial Crime Enforcement Network (FinCEN). Launders often initiate this process with multiple accounts across multiple financial institutions to avoid suspicious activity with one large amount.

Layer is important step of money laundering. This is where money transfers multiple financial institutions across different nations and can also change its form. Money can be converted to tangible or intangible assets or money can be transferred using various forms of transportation mechanisms. Layering may consist of multiple wire transfers between different accounts of different individuals, usually in chunks of amounts for each transfer. As part of these transfers, money can also change its form of currency or asset values. Assets

Launderers also use various forms of banking and investment in fake companies. Launderers use method known as smurfing where large amount of money transfers are broken into small less-suspicious amounts. In United States, this amount has to less than

can be in form of bonds, gold, cars, houses, diamonds, or even loan payments.

\$10,000. Different countries have different amount limits to be flagged as suspicious.

or investments, and ultimately reaches intended destination.

Overseas banks: Money launderers often use various "offshore accounts" in countries that have bank secrecy laws allowing anonymous banking. These accounts allow easy means of making multiple transactions without being caught.

Money Laundering Among Globalized World 169

Almost all profit making criminal activity is linked to money laundering in one way or another throughout the world. As the main motive of individual is to make the money look like legal and to put the money in hands of criminal, launderers use variety of ways and number of geographical locations during layering and integration phases. During placement stage, money is very close to underlying activity but moves away farther during layering phase, ultimately untraceable at the end of integration. It is very important that such activity be stopped or caught during layering phase but layering phase can be very complex as money can flow through multiple financial institutions across various geographical regions providing adequate financial infrastructure. As an example, individual involved in criminal activity south Asia can use hawala system to transfer money to five individuals residing in north Asia. Each of five individual, then, can use different methods such as money orders, financial instruments, loans, to transfer money to offshore where yet another individual can

Politically Exposed Persons (PEPs) are considered high risk in today's regulatory environment. PEPs present a higher risk of money laundering because their political power or access to those with political power places control of their countries' funds within their reach. If they choose to abuse this power they can embezzle money, accept bribes and kickbacks or benefit from insiders knowledge. Many corrupt officials accumulate fortunes within their own countries and use money laundering methods to move that wealth into the broader financial system. Financial institutions who take on PEPs as customer assume a higher risk and are required to apply enhanced due diligence to these accounts and their associated transactions. Heavy fines have been imposed on financial institutions failing to

While there is no global definition of PEP, the European Union (EU) Third Money

Natural persons who are or have been entrusted with prominent public functions and

The USA Patriot Act and European Union Directive use following five layers as identifying

1. Current or former senior official in the executive, legislative, administrative, military, or

3. A senior executive of a foreign government owned commercial enterprise, and/or being a corporation, business or other entity formed by or for the benefit of any such

4. An immediate family member of such individual; meaning spouse, parents, siblings,

5. Any individual publicly known (or actually known by the relevant financial institution)

immediate family members, or persons known to be close associates, of such persons

collect and accumulate the money which now looks like legal income.

**3. Politically Exposed Personnel & money laundering**

maintain proper risk based approaches while working with PEPs.

judicial branch of a foreign government (elected or not)

2. A senior official of a major foreign political party

children, and spouse's parents or siblings

to be a close personal or professional associate.

Laundering Directive defines PEPs as

an individual as PEP:

individual

**Underground/Alternative Banking**: Mainly prevalent in Asia, countries often have alternate banking systems allowing undocumented money transfers across regions. These are trust based systems involving humans working as agents on both sides and these transfers have no paper trail. These systems operate outside of government control. Some of these underground banking systems are called hawala in India and Pakistan and fie chen system in China. Money launderers use these systems aggressively to accommodate intermediate transfers and can be crucial step in entire money laundering process.

**Shell companies**: These are fake corporations built to serve a single purpose of money laundering. These corporations play important role in process of selling goods across or services across border when actually they don't provide any goods or services but they simply create appearance of legitimate transactions through fake invoices and balance sheets. There have been reports of shell companies selling single screwdriver for thousands of dollars.

**Smuggling**: Cash smuggling is a method of money laundering in which proceeds of crime are stealthily moved across border, and then deposited in banking institution. Smuggling can be in form of large sum of money in luggage or hidden parts of body in multiple attempts.

**Insurance Agencies**: These agencies allow purchasing insurance policy. Money launders often purchase insurance policy with illegal source of money and later on try to alter the policy or file insurance claim to avert tracing of origin.

Money laundering scheme usually involves combination of these methods. Layering ultimately makes the origin of money untraceable and is the most complex step in illegal money laundering scheme.

### **2.3. Integration**

This is the final stage in Money Laundering 'Washing' cycle. At this stage, money usually enters into destination location or main-stream economy in legitimate looking form i.e. appears to have come from legal transaction. This is the stage when money is integrated into the legitimate economic and financial system and is assimilated with all other similar assets. It would be very hard to trace the origin of money due to various layering methods involved. Hence, criminals have high confidence of not being suspect about origin of money. If criminal is not caught during placement or layering stage, it becomes very difficult to catch a launderer at integration stage. A successful integration in money laundering attempt means a successful money laundering attempt which results in money that shouldn't have become usable and results in successful hiding of criminal activity that should have been caught.

Almost all profit making criminal activity is linked to money laundering in one way or another throughout the world. As the main motive of individual is to make the money look like legal and to put the money in hands of criminal, launderers use variety of ways and number of geographical locations during layering and integration phases. During placement stage, money is very close to underlying activity but moves away farther during layering phase, ultimately untraceable at the end of integration. It is very important that such activity be stopped or caught during layering phase but layering phase can be very complex as money can flow through multiple financial institutions across various geographical regions providing adequate financial infrastructure. As an example, individual involved in criminal activity south Asia can use hawala system to transfer money to five individuals residing in north Asia. Each of five individual, then, can use different methods such as money orders, financial instruments, loans, to transfer money to offshore where yet another individual can collect and accumulate the money which now looks like legal income.

### **3. Politically Exposed Personnel & money laundering**

168 Globalization – Approaches to Diversity

of dollars.

attempts.

money laundering scheme.

should have been caught.

**2.3. Integration**

making multiple transactions without being caught.

policy or file insurance claim to avert tracing of origin.

transfers and can be crucial step in entire money laundering process.

Overseas banks: Money launderers often use various "offshore accounts" in countries that have bank secrecy laws allowing anonymous banking. These accounts allow easy means of

**Underground/Alternative Banking**: Mainly prevalent in Asia, countries often have alternate banking systems allowing undocumented money transfers across regions. These are trust based systems involving humans working as agents on both sides and these transfers have no paper trail. These systems operate outside of government control. Some of these underground banking systems are called hawala in India and Pakistan and fie chen system in China. Money launderers use these systems aggressively to accommodate intermediate

**Shell companies**: These are fake corporations built to serve a single purpose of money laundering. These corporations play important role in process of selling goods across or services across border when actually they don't provide any goods or services but they simply create appearance of legitimate transactions through fake invoices and balance sheets. There have been reports of shell companies selling single screwdriver for thousands

**Smuggling**: Cash smuggling is a method of money laundering in which proceeds of crime are stealthily moved across border, and then deposited in banking institution. Smuggling can be in form of large sum of money in luggage or hidden parts of body in multiple

**Insurance Agencies**: These agencies allow purchasing insurance policy. Money launders often purchase insurance policy with illegal source of money and later on try to alter the

Money laundering scheme usually involves combination of these methods. Layering ultimately makes the origin of money untraceable and is the most complex step in illegal

This is the final stage in Money Laundering 'Washing' cycle. At this stage, money usually enters into destination location or main-stream economy in legitimate looking form i.e. appears to have come from legal transaction. This is the stage when money is integrated into the legitimate economic and financial system and is assimilated with all other similar assets. It would be very hard to trace the origin of money due to various layering methods involved. Hence, criminals have high confidence of not being suspect about origin of money. If criminal is not caught during placement or layering stage, it becomes very difficult to catch a launderer at integration stage. A successful integration in money laundering attempt means a successful money laundering attempt which results in money that shouldn't have become usable and results in successful hiding of criminal activity that Politically Exposed Persons (PEPs) are considered high risk in today's regulatory environment. PEPs present a higher risk of money laundering because their political power or access to those with political power places control of their countries' funds within their reach. If they choose to abuse this power they can embezzle money, accept bribes and kickbacks or benefit from insiders knowledge. Many corrupt officials accumulate fortunes within their own countries and use money laundering methods to move that wealth into the broader financial system. Financial institutions who take on PEPs as customer assume a higher risk and are required to apply enhanced due diligence to these accounts and their associated transactions. Heavy fines have been imposed on financial institutions failing to maintain proper risk based approaches while working with PEPs.

While there is no global definition of PEP, the European Union (EU) Third Money Laundering Directive defines PEPs as

Natural persons who are or have been entrusted with prominent public functions and immediate family members, or persons known to be close associates, of such persons

The USA Patriot Act and European Union Directive use following five layers as identifying an individual as PEP:

As per this definition, PEP is not necessarily the only person who holds political recognition but also their relatives, correspondents, and anybody financially affiliated with them. Regulations require enhanced due diligence and risk assessment when conducting business with Politically Exposed Persons, particularly when they become part of private banking transactions. Corrupt PEPs, like all skilled money launderers, use middle men and legal identities such as companies and trusts as vehicles in the process of moving value derived from their corrupt actions. Only the inept or brazen PEP moves value in her or his own name, or the name of a family member. Movement of value by PEPs and money launderers alike is also likely to involve transactions across country borders whether by movement of funds or the acquisition and disposition of assets . This includes an acknowledgment that business relationships with family members or close associates of PEPs involve "reputational" risks similar to those with PEPs.

Money Laundering Among Globalized World 171

funds arising from money laundering activities can flow through which puts financial institution into criminal network. Evidence of such complicity will damage integrity of financial institution. When multiple financial institutions are involved in such activities, economy can be under risk, and there will be changes in money demand, exchange rates. Eventually, corruptions and crimes are rewarded. The successful money laundering damages the integrity of the entire society and undermines democracy and the rule of the

Money laundering is a threat to the good functioning of financial system where it can acquire control of large sectors of the economy through investment, or increase bribes to public officials and government. Money laundering requires an underlying, primary, profitmaking crime (such as corruption, drug trafficking, market manipulation, fraud, tax evasion), along with the intent to conceal the proceeds of the crime or to further enhance the criminal activity. These activities generate financial flows that involve the diversion of resources away from economically- and socially-productive uses—and these diversions can have negative impacts on the financial sector and external stability of member states. They also have a corrosive, corrupting effect on society and the economic system as a whole. In countries transitioning to democratic systems, this criminal influence can undermine the transition. Most fundamentally, money laundering is inextricably linked to the underlying criminal activity that generated it. Laundering enables criminal activity to continue. Money laundering distorts the economic data and complicate government's efforts to manage economic policy. It will have adverse consequences for interest and exchange rate volatility, mainly in dollarized economies. This affects income distribution, contaminates legal transactions, and increases potential for reduced GDP, increases the risk of macroeconomic

Many times, laundered money is usually untaxed at its destination. Though any attempt to invest into small business will create stiff competition against other small business investors who are actively investing already taxed money. Ultimately, money laundering is linked to underlying criminal activity that generated it, and hence, laundering enables criminal

Corruption and money laundering often take place together, with the presence of one reinforcing the other. Corruption results in funds of billions of dollars which will result into an attempt to legalize. Money laundering is often an easy way to legalize the funds acquired through corruption and bribes. Besides financial institutions, many other highly reputable professions are vulnerable to money laundering. Lawyers, accountants, and trust and company service providers are also known to be involved in money laundering processes especially layering and integration. These professional have specific knowledge and tools to create complex maze of corporations in offshore havens and know how to destroy financial records to hide originality of funds. A key element of these money laundering services is

A report from International Monetary Funds stated that Money laundering and terrorist financing activities can undermine the integrity and stability of financial institutions and

anonymity in the ownership or management of private sector entities.

law.

instability.

activity to continue.

Financial institutions are faced with challenges in regards to maintaining proper risk based procedures while working with PEPs. First of all, different countries may have different regulation requirements and different definitions of PEP. Maintaining enhanced due diligence requires screening entire customer base and all financial transactions against commercially available PEP database which is huge, over 1.5 million listing of individuals. Financial institutions are requires to initiate, process, and conclude the payment within a day while ensuring risk based approach to each individual involved in payment transfer. This is not only time consuming but also costly resulting in less efficient operations on financial institution's behalf. Many times, lack of full information availability of individual involved make it difficult to identify individual as PEP or not.

### **4. Effects of money laundering**

A successful money laundering attempt can provide enough cash value at intended destination which can be used towards further illegal activities or money appearance as a result of illegal activity can be made legal. In either case, each and every success of money laundering attempt pays for illegal activity. This type of successful activity encourages criminals to continue their illegal schemes because criminals get to contain the profit without trace of criminal activity or origin of money. These profits ultimately come from citizens' and tax-payers' pockets knowingly or unknowingly. These activities also create more fraud in financial systems, bring more drugs on the streets, bring more drug-related crimes, bring more illegal activities in society, provide solid base for terrorist activity and training. These advancements in criminal activity ultimately results in need for more resources with law-enforcement agencies.

In this globalized world, financial economy is heavily dependent on well-functioning of financial institutions. Financial institutions must be operating with legal, professional, and ethical standards. Reputation of integrity of financial institutions is utmost valuable. In such integral environment, if funds from illegal activities and money laundering activities are allowed flow through financial institution, it causes adverse effects on reputation and will be on national newspapers the next day. Though, when employees or directors are bribed, funds arising from money laundering activities can flow through which puts financial institution into criminal network. Evidence of such complicity will damage integrity of financial institution. When multiple financial institutions are involved in such activities, economy can be under risk, and there will be changes in money demand, exchange rates. Eventually, corruptions and crimes are rewarded. The successful money laundering damages the integrity of the entire society and undermines democracy and the rule of the law.

170 Globalization – Approaches to Diversity

"reputational" risks similar to those with PEPs.

**4. Effects of money laundering**

resources with law-enforcement agencies.

involved make it difficult to identify individual as PEP or not.

As per this definition, PEP is not necessarily the only person who holds political recognition but also their relatives, correspondents, and anybody financially affiliated with them. Regulations require enhanced due diligence and risk assessment when conducting business with Politically Exposed Persons, particularly when they become part of private banking transactions. Corrupt PEPs, like all skilled money launderers, use middle men and legal identities such as companies and trusts as vehicles in the process of moving value derived from their corrupt actions. Only the inept or brazen PEP moves value in her or his own name, or the name of a family member. Movement of value by PEPs and money launderers alike is also likely to involve transactions across country borders whether by movement of funds or the acquisition and disposition of assets . This includes an acknowledgment that business relationships with family members or close associates of PEPs involve

Financial institutions are faced with challenges in regards to maintaining proper risk based procedures while working with PEPs. First of all, different countries may have different regulation requirements and different definitions of PEP. Maintaining enhanced due diligence requires screening entire customer base and all financial transactions against commercially available PEP database which is huge, over 1.5 million listing of individuals. Financial institutions are requires to initiate, process, and conclude the payment within a day while ensuring risk based approach to each individual involved in payment transfer. This is not only time consuming but also costly resulting in less efficient operations on financial institution's behalf. Many times, lack of full information availability of individual

A successful money laundering attempt can provide enough cash value at intended destination which can be used towards further illegal activities or money appearance as a result of illegal activity can be made legal. In either case, each and every success of money laundering attempt pays for illegal activity. This type of successful activity encourages criminals to continue their illegal schemes because criminals get to contain the profit without trace of criminal activity or origin of money. These profits ultimately come from citizens' and tax-payers' pockets knowingly or unknowingly. These activities also create more fraud in financial systems, bring more drugs on the streets, bring more drug-related crimes, bring more illegal activities in society, provide solid base for terrorist activity and training. These advancements in criminal activity ultimately results in need for more

In this globalized world, financial economy is heavily dependent on well-functioning of financial institutions. Financial institutions must be operating with legal, professional, and ethical standards. Reputation of integrity of financial institutions is utmost valuable. In such integral environment, if funds from illegal activities and money laundering activities are allowed flow through financial institution, it causes adverse effects on reputation and will be on national newspapers the next day. Though, when employees or directors are bribed, Money laundering is a threat to the good functioning of financial system where it can acquire control of large sectors of the economy through investment, or increase bribes to public officials and government. Money laundering requires an underlying, primary, profitmaking crime (such as corruption, drug trafficking, market manipulation, fraud, tax evasion), along with the intent to conceal the proceeds of the crime or to further enhance the criminal activity. These activities generate financial flows that involve the diversion of resources away from economically- and socially-productive uses—and these diversions can have negative impacts on the financial sector and external stability of member states. They also have a corrosive, corrupting effect on society and the economic system as a whole. In countries transitioning to democratic systems, this criminal influence can undermine the transition. Most fundamentally, money laundering is inextricably linked to the underlying criminal activity that generated it. Laundering enables criminal activity to continue. Money laundering distorts the economic data and complicate government's efforts to manage economic policy. It will have adverse consequences for interest and exchange rate volatility, mainly in dollarized economies. This affects income distribution, contaminates legal transactions, and increases potential for reduced GDP, increases the risk of macroeconomic instability.

Many times, laundered money is usually untaxed at its destination. Though any attempt to invest into small business will create stiff competition against other small business investors who are actively investing already taxed money. Ultimately, money laundering is linked to underlying criminal activity that generated it, and hence, laundering enables criminal activity to continue.

Corruption and money laundering often take place together, with the presence of one reinforcing the other. Corruption results in funds of billions of dollars which will result into an attempt to legalize. Money laundering is often an easy way to legalize the funds acquired through corruption and bribes. Besides financial institutions, many other highly reputable professions are vulnerable to money laundering. Lawyers, accountants, and trust and company service providers are also known to be involved in money laundering processes especially layering and integration. These professional have specific knowledge and tools to create complex maze of corporations in offshore havens and know how to destroy financial records to hide originality of funds. A key element of these money laundering services is anonymity in the ownership or management of private sector entities.

A report from International Monetary Funds stated that Money laundering and terrorist financing activities can undermine the integrity and stability of financial institutions and systems, discourage foreign investment, and distort international capital flows. They may have negative consequences for a country's financial stability and macroeconomic performance, resulting in welfare losses, draining resources from more productive economic activities, and even having spillover destabilizing effects on the economies of other countries. In an increasingly interconnected world, the problems presented by these activities are global, as are the links between financial stability and financial integrity. Money launderers exploit both the complexity inherent in the global financial system as well as differences between national anti-money laundering laws and systems, and they are especially attracted to jurisdictions with weak or ineffective controls where they can move their funds more easily without detection. Moreover, problems in one country can quickly spread to other countries in the region or in other parts of the world. Strong AML/CFT regimes enhance financial sector integrity and stability, which in turn facilitate countries' integration into the global financial system. They also strengthen governance and fiscal administration. The integrity of national financial systems is essential to financial sector and macroeconomic stability both on a national and international level.

Money Laundering Among Globalized World 173

*"Illicit finance, in its many forms, is a threat to the integrity of our financial system, both domestically and internationally. Combating illicit finance not only protects our financial system from abuse by money launderers, terrorist financiers, weapons proliferators and others engaged in financial crime, but it helps to advance our most critical foreign policy and national security objectives. The many tools that the Treasury Department can deploy – ranging from anti-money laundering regulatory oversight, to outreach to counterparts overseas, to deploying targeted financial measures focused on particular individuals and entities – play an integral role in responding to many of the challenges we face. Treasury's unique capacity to understand financial flows and the operation of the financial system, analyze financial intelligence, map financial and material support networks, and take targeted, powerful actions are key to meeting these challenges." - David Cohen -- Under Secretary for Terrorism and Financial Intelligence,*

Prepared remarks at his confirmation hearing before the Senate Committee on Banking,

The combat against money laundering was started as early as 1986 with lawful criminalization of money laundering. The United States government was concerned over the increasing threat of organized crime and infiltration in legal economy. Large sum of money were said to be in control of criminal elements, it was believed that underground economy was expanding. This resulted in the "Drugs Trafficking Offenses Act" and the "Money Laundering Control Act of 1986" which declared money laundering as criminal offense.

Financial Crime Enforcement Network (aka FinCEN) was established in 1990 to provide the United States government with intelligence, knowledge, and data from multiple sources. FinCEN would also provide guidelines and capabilities to analyze data to help regulatory agencies and prosecutors detect, investigate, and prosecute financial crimes. FinCEN's mission is "to enhance U.S. national security, deter and detect criminal activity, and safeguard financial systems from abuse by promoting transparency in the U.S. and international financial systems". FinCEN carries out its mission by receiving and maintaining financial transactional data; analyzing and disseminating that data for law enforcement purposes; and building global cooperation with counterpart organizations in other countries and with international bodies. Today, FinCEN's duty also includes promulgating regulations under Bank Secrecy Act (BSA), evaluating BSA violations, and providing assistance in leading the Treasury's efforts in fighting money laundering both inside the country and internationally. All public and private financial organizations are obliged to report any suspicious activity to FinCEN. Suspicious Activity Reports (aka SAR) are filed in connection with transactions that financial institutions know, suspect, or have reason to suspect may be related to illicit activity. These reports are especially valuable to law enforcement because they reflect activity considered problematic or unusual by depository institutions, casinos, MSBs, securities broker-dealers, mutual funds, futures commission merchants, introducing brokers in commodities, and insurance companies.

*Department of the Treasury*

Housing, and Urban Affairs May 3, 2011

**5.1. Anti-money laundering regulations**

### **5. Combating money laundering**

Money laundering is known to be a crucial step in success of drug trafficking, terrorist financing, white collar crimes, and other illegal activities.

There are many national and global organizations which are actively trying to combat money laundering. Efforts are in place to aim increase awareness of phenomenon and to provide necessary legal or regulatory tools to the authorities. In United States, Department of Justice, State Departments, Federal Bureau of Investigation, International Revenue Service, Drug Enforcement Agencies and other regulatory agencies have divisions investigating money laundering and underlying structures that make money laundering work. Most nations have declared money laundering as crime. The global community is combating money laundering through various organizations such as Financial Action Task Force (FATF). The United Nations, the World Bank, and the International Monetary Fund also have anti-money-laundering divisions.

These organizations actively monitor and enforce laws and regulations on any institution or corporation involved in money transfer. These institutions include Banks, Insurance companies, Money Serving Businesses, Asset trading businesses, etc. Besides enforcing these regulations, regulatory organizations also publish criminals publicly to avoid further future crimes.

After money laundering has become a global concern and that the governments worldwide have started to create agencies to fight it, their efficiency is still being challenged. Combating money laundering has become an international priority. Fighting money laundering requires help and compliance from many entities and resources involved on the prevention and detection of money launders. Prevention, detection, and reporting should be performed by private partners such as banking institutions. Public partners such as law enforcements should be responsible for analytics and repression.

*"Illicit finance, in its many forms, is a threat to the integrity of our financial system, both domestically and internationally. Combating illicit finance not only protects our financial system from abuse by money launderers, terrorist financiers, weapons proliferators and others engaged in financial crime, but it helps to advance our most critical foreign policy and national security objectives. The many tools that the Treasury Department can deploy – ranging from anti-money laundering regulatory oversight, to outreach to counterparts overseas, to deploying targeted financial measures focused on particular individuals and entities – play an integral role in responding to many of the challenges we face. Treasury's unique capacity to understand financial flows and the operation of the financial system, analyze financial intelligence, map financial and material support networks, and take targeted, powerful actions are key to meeting these challenges." - David Cohen -- Under Secretary for Terrorism and Financial Intelligence, Department of the Treasury*

Prepared remarks at his confirmation hearing before the Senate Committee on Banking, Housing, and Urban Affairs May 3, 2011

### **5.1. Anti-money laundering regulations**

172 Globalization – Approaches to Diversity

systems, discourage foreign investment, and distort international capital flows. They may have negative consequences for a country's financial stability and macroeconomic performance, resulting in welfare losses, draining resources from more productive economic activities, and even having spillover destabilizing effects on the economies of other countries. In an increasingly interconnected world, the problems presented by these activities are global, as are the links between financial stability and financial integrity. Money launderers exploit both the complexity inherent in the global financial system as well as differences between national anti-money laundering laws and systems, and they are especially attracted to jurisdictions with weak or ineffective controls where they can move their funds more easily without detection. Moreover, problems in one country can quickly spread to other countries in the region or in other parts of the world. Strong AML/CFT regimes enhance financial sector integrity and stability, which in turn facilitate countries' integration into the global financial system. They also strengthen governance and fiscal administration. The integrity of national financial systems is essential to financial sector and

Money laundering is known to be a crucial step in success of drug trafficking, terrorist

There are many national and global organizations which are actively trying to combat money laundering. Efforts are in place to aim increase awareness of phenomenon and to provide necessary legal or regulatory tools to the authorities. In United States, Department of Justice, State Departments, Federal Bureau of Investigation, International Revenue Service, Drug Enforcement Agencies and other regulatory agencies have divisions investigating money laundering and underlying structures that make money laundering work. Most nations have declared money laundering as crime. The global community is combating money laundering through various organizations such as Financial Action Task Force (FATF). The United Nations, the World Bank, and the International Monetary Fund