October 10, 2024 • 45 mins
In recent years, we've seen the emergence of cities whose main industry is that they're a great place to live if you're rich. Dubai would be the ultimate example of this dynamic. But it's not just Dubai. Lots of cities, all around the world, exist to cater to the wealthy, with a set of laws and taxation schemes that act like a magnet for global wealth. So how do these cities work? How big are they? And what exactly do they offer the global rich? On this episode of the podcast, we speak with Atossa Araxia Abrahamian, author of The Hidden Globe: How Wealth Hacks The World. She talks about these booming types of cities, how they emerged, and where they are going.
Read more: Miami Wealth Boom Fuels $13 Billion Firm Serving the Ultra Rich
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Speaker 1 (00:03):
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:20):
Hello and welcome to another episode of the Odd Lots Podcast.
Speaker 3 (00:23):
I'm joll Wisenthal and I'm Tracy Alloway.
Speaker 2 (00:26):
Tracy, did you see that story a few weeks ago
about Andresen Horowitz, the big VC firm closing its Miami office.
Speaker 3 (00:34):
Who I did partially because you tweeted about it.
Speaker 2 (00:38):
See, my tweeting serves a purpose. It allows us to
coordinate and be on the same page on topics.
Speaker 3 (00:45):
It gives us shared content.
Speaker 2 (00:46):
Sure, that's right. But I found that story to be
really fascinating because in twenty twenty or I think, yeah,
around twenty twenty, and obviously with COVID and people frustrated
about things going on in San Francisco, it felt like
there was this big effort to sort of manufacture an
environment in a new city. So it's like, Okay, Miami's nice,
(01:07):
and the standard of living if you have a lot
of money, it seems pretty good. Let's just see if
by a sheer force of will and money and tweets, etc.
Whether we can relocate everything there. And there has been
a lot and we've talked a little bit about Miami
and Citadel has obviously brought a ton of money to
the city. But this sort of impulse to sort of
(01:28):
manufacture cities and manufacture new physical networks is a very
interesting phenomenon.
Speaker 3 (01:35):
To me, right, and I always find it's sort of
the strongest whenever you see a city talk about becoming
a crypto hub or something like that. And there have
been so many, right, so Miami was one of them
at certain points. Eric Adams in New York has talked
about it. Malta wants to be a crypto hub, Dubai
wants to be a crypto hub. It's neighbor, Abu Dhabi
wants to be a crypto hub. And it kind of
(01:57):
raises the question can everyone basically repeat the same economic
or financial model and become these sort of offshore wealth
centers that foster, you know, new business and innovation. It
seems like there are multiple cities where countries or locations
that are trying to do the same thing.
Speaker 2 (02:17):
By the way, well, you lived in Abu Dhabi.
Speaker 3 (02:19):
I did, what do they do?
Speaker 2 (02:20):
What's the business there? What does everyone do?
Speaker 4 (02:23):
Uh No, I'm seriously, I I don't know what Dubai
I mean, I know there's a ton of money there,
but I don't actually know what the big industries are
there in these places, so you must know.
Speaker 3 (02:34):
I'm trying to word this very diplomatically. I would say
light touch regulatory environment. I mean, that's what's basically it
to start companies, yeah, and payload taxes and be able
to do it in a fairly quick way. But the
interesting thing about Abu Dhabi, and again going back to
the point of all these cities basically trying to do
(02:55):
the same thing, is Abu Dhabi very very almost explicitly
was trying to follow the model of Singapore. In fact,
they even hired Richard Tang, who used to run the
Singapore Monetary Authority, to come behead of ADGM. Like it
was that explicit. It's very obvious what a lot of
these places are trying to do.
Speaker 2 (03:16):
It seems to be working well. I mean, I know
people always think like there's a bubble, it's all real
estate and speculation or whatever is going to crash. But
for the most part, I mean, there was something that
happened in late two thousand and nine and one of
them on bankrupt or something, But for the most part,
seems like it's been working.
Speaker 3 (03:30):
For certain countries. Certainly I mean Singapore again is the
big example of this. But I guess the more people
and places try to imitate these particular business models, you know,
not everywhere in the world can be an offshore financial
center for obvious reasons. And I think like one man's
loophole might be another country's comparative advantage. But there's a
(03:53):
limit to how far you can push.
Speaker 2 (03:55):
That, you think, So I wonder how far we are
from Milmot. Anyway, We're in an age clearly where there's
just a l lot of interest in cities and people
want to talk about, you know, on Twitter. They're like
what city should I move to? And where people have
a ton of money and option. Some people have a
ton of money and they go to somewhere for some reason,
maybe because regulation is low, or taxes are low, et cetera,
(04:15):
and essentially kind of be I don't know, rootless. I
remember during the pandemic when ostensibly I thought all of
the borders were closed and you couldn't travel, seeing you know,
friends on Instagram and stuff all over the world and
places where they didn't seem to be any restrictions at all,
and on beaches. I'm very fascinated by this sort of
(04:36):
parallel world that seems to be emerging and still growing,
where the ultra wealthy push up real estate prices, build
giant towers branded by various brands like Porsche, et cetera.
It seemed to live in a sort of just separate world.
Speaker 3 (04:51):
Than what I live in in New York City, right,
And we've talked about this primarily from a real estate perspective,
but we haven't really gotten into these separate world world
of light touch regulatory and tax regimes.
Speaker 2 (05:04):
So I'm excited the separate legal world. Well, I'm very excited.
We are going to be speaking with truly the perfect guest.
We're going to be speaking with a Tusa Eroxia Abrahemian.
She is the author of the brand new book The
Hidden Globe, How Wealth Hacks the World, talking about all
of these different cities and legal regimes and the sort
of separate, parallel world that exists here on Earth for
(05:26):
the ultra rich. Sotusa, thank you so much for coming
on Odd Lots.
Speaker 5 (05:30):
Joe Tracy, thanks so much for having me.
Speaker 2 (05:32):
Absolutely. What's your book about?
Speaker 1 (05:34):
So?
Speaker 5 (05:34):
My book is about this parallel world of loopholes. It's
hiding in plain sight. It's all around us, and once
you see it, you can't unsee it. So I hope
that when you read the book, you'll start to see
it and you will just see it at every turn.
This world, much of it is territorial, some of it isn't.
So I start with my hometown of Geneva. I grew
(05:55):
up in a very sort of stateless environment in Geneva, Switzerland.
My parents were un employees. I went to international schools
for the most part, and it was just this big
mix of people from all over the world who were
always moving.
Speaker 6 (06:09):
I wasn't moving.
Speaker 5 (06:11):
I lived eighteen years in Geneva and I still don't
feel like I know the place. It is the most
mysterious place to me, even though my mother still lives there.
And I started thinking about why that was. How can
you live somewhere and still not really grasp it. And
part of it is, yes, I was in this kind
of international community, didn't really learn a lot about Swiss history.
(06:34):
I have a Swiss passport, but I don't speak German,
I don't speak Italian. I actually don't have a lot
of Swiss friends, so that was definitely part of it.
But the other side, when I kind of zoomed out,
and I thought of the legal topography of the place
that I grew up in. It's like Swiss cheese. Geneva
is this historic, beautiful city with an old town and
(06:56):
old walls that are, you know, more ancient than like
most of the things in the United States. At the
same time, it has all of these pock marks and
black holes and mysteries. An example of that is the
Geneva Freeport. You might have heard of that.
Speaker 3 (07:12):
I was going to say. You mentioned once you see
these things, you can't unsee them. And I remember I
read a book called Unruly Places and they had a
chapter on freeports, and that was the first time I'd
have heard of them, and ever since then, I haven't
forgotten them. I can't get them out of my mind.
Speaker 2 (07:27):
Yeah, what's the Geneva Freeport. What do you get to
do there?
Speaker 5 (07:30):
Uh?
Speaker 6 (07:30):
The Genia?
Speaker 5 (07:31):
Well, I have never been inside, Okay, and it is
not for lack of trying, trust me.
Speaker 6 (07:35):
The Geneva Freeport is a warehouse.
Speaker 5 (07:38):
It was built a long time ago, in the late
eighteen hundreds, and it was originally built to store things
like grain, things like supplies for wartime, and it was
used for that, and the idea was that merchants could
put their goods there, have them sort of hang out
without declaring them to customs, without paying for taxes or
(07:58):
tariffs or what have you, and then move them to
their next destination. So for something like sacks of oats,
there's a shelf life. You can't keep them there forever.
They got to move otherwise everyone's interest.
Speaker 2 (08:12):
To be clear, it serves a very specific purpose because
if you want Geneva, if Switzerland wants to be a
hub of trading, they don't want merchants to have to
pay a tax or a tear of just if they're
like stopping by.
Speaker 6 (08:23):
You got it.
Speaker 5 (08:24):
If you want you want a place to be an entropo,
you want to make it as easy as possible to
be an entropo to leave your things there temporarily and
then move on. Geneva was also a crossroads for trade.
They had a big market, so it made sense. But
as time went on, and as you know, the economy evolved,
and as Switzerland evolved, this became a place to store
(08:44):
things like gold, things likes, and eventually things like very
expensive paintings. And today it's estimated that billions of dollars
worth of paintings and cars and wine and luxury goods
are being stored there.
Speaker 4 (09:02):
Now.
Speaker 5 (09:02):
The difference between a sack of oats and a DaVinci,
apart from how expensive it is, is that now these
places are super climate controlled, like humidity is monitored. Everything
is very very very tightly controlled, and so there's no
there's no rotting, things don't go bad. Things can stay
there perhaps forever. And it's a completely different game because
(09:24):
if you're someone who wants to hide something or to
just sit on something for a very long time without
incurring tax or maybe declaring it to your ex spouse,
you can do that in the Geneva Freeport.
Speaker 3 (09:36):
So you touched on this when you were talking about
the evolution of the freeport. But one thing I often
wonder with these sort of loophole liminal places is how
deliberate are the choices to create them. So the freeport
started out as a place where you could store green
because it wasn't meant to stay there forever and you
(09:57):
wanted to be a hub for trade, and then it
gradually evolved to a place where you could stash things
potentially forever. How did that decision come about? What were
the choices that went into that outcome.
Speaker 5 (10:10):
In the case of Geneva, there's a somewhat organic or
natural progression of things. I don't know that you know,
in like eighteen eighty you necessarily would have anticipated the
art market being just unbelievably full of speculation and using
these places to enable that. So for one of these
entrepose that's been around for a long time, the decisions
(10:32):
are more in the lack of involvement of the states.
So you have this rule for grain, maybe you're not
going to change it too much and have it apply
for gold bars. But there are more freeports than just
the Geneva freeport. There are brand new ones that were
built in the past, you know, twenty thirty years in Luxembourg,
in Singapore there was talk of creating when in Russia,
(10:55):
And for the new ones that are being built, it's
very clear what the intention here is. Right, we're not
talking about oats or salt or any food stuff, so
we're really talking about high end goods that you know,
increasingly are one of the only ways to get around
financial controls as well.
Speaker 2 (11:32):
For country or a city like Singapore, what do they
get from it from the existence of a freeport that
explicitly is there so that people can have our not
declare it.
Speaker 5 (11:42):
I'm trying to figure this out. I'm not sure there's
one exact answer, to be honest, I think a big
part of it is branding.
Speaker 6 (11:48):
It looks good.
Speaker 5 (11:49):
It looks good to say that you have, you know,
stashes of picassos, And the people involved in these enterprises
will say, well, we are creating a huh. And when
the paintings come, then the artists come, and the dealers come,
and the bankers come, and so it creates a sort
of a little ecosystem of.
Speaker 6 (12:09):
Art and art art markets.
Speaker 5 (12:11):
I think that there's a more cynical way of putting it,
which is that these types of places, freeports and so on,
are ways to launder money when it's much harder to
launder money through the banks. So you can have many
reasons for this, and a country would be interested probably
in both sides of this, if the ultimate goal is
(12:32):
to bring money to its territory.
Speaker 3 (12:36):
In researching and writing this book, did you observe any
interesting examples of either freeports or other types of offshore
centers competing with each other and what happens when everyone
is trying to do a similar thing, and you have
a freeport here and a freeport here and a freeport there.
Speaker 5 (12:55):
Yeah, these places are always one uping each other. I mean,
how many you guys work at Bloomberg. How many times
have you read the headline X is the new Switzerland?
Speaker 1 (13:02):
Right?
Speaker 5 (13:03):
I think Singapore has been the new Switzerland, Dubai has
been the new Switzerland. Luxembourg has been the new Switzerland,
although that was a while ago.
Speaker 3 (13:10):
One day Switzerland will be the new Switzerland.
Speaker 5 (13:12):
Well, and then Switzerland is always trying to be the
new Switzerland. Right. They were also trying to do this
crypto valley thing in the Canton of Zug.
Speaker 2 (13:21):
Yeah.
Speaker 5 (13:24):
So yes, there's always competition and they're always trying to
one up each other. It's relentless. And that's why. Also
for regulators who might want to crack down on this,
it's like whackam mol. One jurisdiction might say, Okay, we're
going to put tighter controls on our freeport or on
our crypto market. Another one is going to pop up
tomorrow to fill that void.
Speaker 2 (13:44):
I asked Tracy this, but maybe I should just ask you.
When Abu Dhabi in Dubai, what goes on.
Speaker 5 (13:49):
There, Abu Dhabi and Dubai. I can speak to Dubai.
I've not been to Abu Dhabi. Dubai has, for its
recent I guess the past two twenty or so years,
made really really concerted efforts to attract millionaires and billionaires.
There is the real estate play here. Obviously, You've talked
(14:10):
about this a lot. There's a lot of There are
a lot of articles about these wacky things that they
build and the developments and whatnot, the ski slopes in
the malls. At the same time, there have been many
reports that show from the think tanks and the OCCRP
and the ICJ, the show that Dubai is really the
(14:33):
center of the world of money laundering, criminality and those
types of offshore theatrics. So they are up to that too.
Before Dubai was what we think of today as Dubai,
this place with tall buildings and and crazy stuff going on,
there was a lot of smuggling and pearl smuggling and
gold smuggling going on. It has a sort of long
(14:55):
tradition of this that this did not occur overnight. When
the shakes past a bunch of laws that said For
the past twenty or so years, Dubai has made a
concerted effort to create laws to attract businesses and people.
Some of these laws involve carving out free zones within
(15:15):
the territory of Dubai that cater very specifically to certain sectors.
So you have a media city where ostensibly there's more
freedom of speech and expression. There is an internet city
that has world class infrastructure. I think there's a medical one,
and there's one for commodities, and all of these little zones, clusters, hubs,
(15:40):
whatever you want to call them, have a kind of
a bespoke legal regime. A lot of that is spin,
a lot of that. They're sort of interchangeable, but by
virtue of appealing to a certain type of business, I
think there's something to be said for proximity and exchange,
and that's real. This is why we like to go
back to the office, because you can talk to people anyway.
Speaker 6 (16:01):
All of these zones.
Speaker 5 (16:02):
Also have very preferable tax regimes. They make it easier
to import workers, so the immigration side of things is
a little more streamlined, and overall, I think now Dubai
is on a big kick of reducing bureaucracy. We can
all appreciate the idea of reducing bureaucracy, and I think
that they actually do it, So that's another part of
their play.
Speaker 3 (16:23):
You mentioned the legal regimes and the financial centers in
Dubai and Abu Dhabi, DIFC and ADGM. They're really interesting
to me because they essentially got to craft a whole
new body of law and kind of cherry pick what
they wanted to include in order to attract financial businesses.
(16:45):
And they're obviously influenced by English law. It's an English
law regime, but their systems are still different in various ways.
What's the process that these types of new jurisdictions go
through when they're crafting laws and how much input do
you think is overtly had by people who are perhaps
looking to preserve loopholes.
Speaker 5 (17:06):
So I'll tell you about this story of the Dubai
International Financial Center and more specifically the Dubai International Financial
Center's courts, which are within the Dubai International Financial Center
but their own things. So, the DIFC was established as
one of these free zones that was going to be
the center for finance, banks, traders, et cetera. As companies
(17:29):
started to express interest in moving there, and as Dubai
was making their pitch, come here, you're going to pay
less tax, et cetera, et cetera, they ran into an issue,
which was that the lawyers and the councils and all
the sort of legal infrastructure of the companies that they
were trying to bring in were balking at the idea
of having to deal with a whole new legal system,
(17:53):
namely the Arabic language is law influenced courts. Maybe they
did this out of racism, Maybe they did this because
they truly had no idea how these courts worked.
Speaker 6 (18:03):
We should talk a little bit about the history here.
Speaker 5 (18:06):
So the emirates were previously protectorates of the UK of
England and they had two systems of law. There were
laws for Muslims for natives, and then there were laws
for Brits and expats. So that's the context out of
which this is all coming. So the DIFC sets up
in the early two thousands and they decide, well, we
(18:27):
need to have another set of laws because we don't
want to scare away the big companies. And so they
get to work thinking, well, how are we going to
come up with this parallel legal regime on the one hand,
it's kind of a throwback to the battle days where
the Brits had their laws for themselves and locals had
(18:50):
their own laws. Right. This is colonialism, to put it bluntly.
So instead of just taking the old laws or just
imposing their own court system, they.
Speaker 6 (19:01):
Came up with a kind of a hybrid. And this
is in the book.
Speaker 5 (19:05):
But there was one man who was really instrumental in
building the system. His name was Mark Bier. He was
he is an Englishman, really clever, clever guy, and they
kind of cobbled together a bunch of laws based in
common law, which the multinationals are comfortable with, which the
big banks are comfortable with, and essentially created a court
(19:28):
that was sitting inside the DIFC that would serve the
tenants of the DIFC, and that eventually expanded its reach
to be this kind of opt in jurisdiction, so anyone
could say in their contracts, shouldn't disputarize, We're gonna have
our day in court at the DIFC. The term at
(19:50):
is doing a lot of work here because it is
a place. There is a court house, there was a
court room, but the judges don't all live in Dubai.
They don't all show up for hearings at the DIFC.
A lot of this was taking place remotely even before
Zoom came to consume our lives during the pandemic, and
(20:10):
so the notion that the law and the land are
in any way tied together just doesn't make sense here anymore.
It's a really new way of thinking about law.
Speaker 2 (20:19):
It's a little bit like Delaware in that sense, right
where it's like everyone is like, okay, we want to
be incorporated under Delaware law, but the company and the
judges are prayed there. But by and large the companies
have no meaningful.
Speaker 3 (20:32):
I'm sure Dubai will appreciate it being called the Delaware
of the.
Speaker 2 (20:35):
World, the Delaware the world in your book. I don't
know what the grouping is Dubai, Abu Dhabi, Singapore, Geneva like,
but when you in your mind, when you sort of
think about these cities around the world, like how big
are we talking about? How much money, how much wealth,
or however you want to quantify it has flowed into
these sort of preferential locations.
Speaker 6 (20:57):
Oh, that's a good question.
Speaker 5 (20:59):
I can't really put a number on it, but I
can tell you that the oceans are another jurisdiction that
I write about in the book, and something like ninety
percent of all goods are shipped through the ocean, And
so that'll just give you a sense of scale. Things
do not just happen on the national level. That doesn't
(21:19):
make any sense. Things are always moving and moving between places.
Speaker 3 (21:23):
So one thing you often hear when people are talking
about establishing these new hubs or centers or whatever they
want to call them sandboxes. Maybe people often talk in
terms of innovation and creating new business opportunities and startups
and maybe not falling behind in the brand new thing.
And so I'm curious, how do you think governments or
(21:46):
localities looking to set up these types of things are
balancing the need for rules and regulation with that innovation impulse.
Because no one ever says explicitly this is just a
money grab and we want lots of income coming into
the country. It's always about, you know, we're going to
create this creative place where small businesses can flourish and
(22:10):
things like that.
Speaker 5 (22:11):
I don't haven't heard the small business pitch so much,
at least not in the jurisdictions that I've been covering.
Balancing the sort of wild West aspect with the regulatory
aspect is obviously pretty tough. If we look at how
crypto has played out and continues to play out, you'll
see that the regulatory side has not been as strong
(22:31):
as the more free wheeling, you know, quote unquote innovation
side of things. I think this really depends on the jurisdiction.
Some have much higher tolerance for risks, some don't. I
don't know that like Sweden is doing crazy things, but
maybe you know a place like Palau, which is smaller
(22:54):
and maybe a bit more niche can do crazier things.
I mentioned Palau because it comes up twice in the book,
once because they have been offering e residency, but geared
at people who want to transact in cryptocurrencies but come
from a country that doesn't allow it. Huh So it's
almost like a crypto passport. To be clear, you don't
(23:15):
have right to live there, you don't have an address there.
It's really just digital and virtual.
Speaker 2 (23:21):
Wait what do you get?
Speaker 5 (23:22):
You get an identification card and number that you can
sign up for crypto services with.
Speaker 2 (23:27):
Huh oh. I see if you're in a country that
has high restrictions on cryptoactivity, but you want to set
up a fund that can trade and stuff like that,
you basically incorporate there and your money is housed there
and you can then legally transact from there. Is that
kind of the idea.
Speaker 5 (23:44):
I don't even know that your money would be housed there.
It's that you as that you can have a kind
of a second flag that you can and fly under
for the purposes of your blog.
Speaker 2 (23:54):
Is an island country in Micronesia. I didn't know where
it was.
Speaker 3 (23:57):
I had to look it up on the thriving Crypto Center.
Speaker 6 (24:01):
They're trying, They're trying.
Speaker 5 (24:03):
Palau also has had some adventures in the maritime flagging industry,
which is actually very analogous to these crypto passports or
second passports. So most of the ships in the world
do not fly the flag of their owner or of
their parent company, or of where their home port is.
They're flying flags of convenience places like Marshall Islands, Liberia, Panama,
(24:29):
and Palao. Is a really interesting case because it's a
relatively new flag. It's still relatively small, but it's growing
tremendously because it is providing a service that more and
more shipowners want, which is a deregulated way for the
ship to die. Ship breaking is increasingly regulated by European countries,
(24:51):
by the US and more. It's very dirty business, and
it's a very expensive business. To take a ship apart
in a way that does not pull the environment, harm workers,
et cetera. Is quite expensive and often the ships are
not even worth the money it takes to take them apart,
and so jurisdictions like Palau, but also Kumoro Islands and
(25:13):
Cameroon have stepped in to offer a flag under which
the ship can fly for its final journey to the
ship breaking yard. That helps them sort of evade these rules.
There's a bit more to it than that. You have
to have shell companies and cash buyers and all of
these transactions.
Speaker 6 (25:29):
That will help you hide.
Speaker 5 (25:32):
But it's pretty wild that a tiny country like Palau
can pull this off and create its own kind of
offshore economy.
Speaker 3 (25:39):
I'm just going to be hyperbolic. What's the point of
like passports and regulations and restrictions on taking apart ships
If for two hundred and forty eight dollars, I can
buy a crypto residency in Palau, or I can find
a flag of convenience and evade environmental restrictions and stuff.
Why have them at all when there seem to be
(26:01):
loopholes everywhere.
Speaker 5 (26:03):
The loopholes apply mainly to people who have the time
and money and know how to figure them out. These
are not equal opportunity loopholes. You have to know where
they are. Often you have to have lawyers arrangement for you.
Often you have to pay that. You know, two hundred
and fifty bucks for the crypto passport is one thing.
But if you are actually in the market for a
(26:24):
real passport, a second passport that might help you do
some of these things, it's going to cost you hundreds
of thousands of dollars. So it's a great question, why
do we have these things at all if they're so
easy to get around? But the answer is that getting
around them is hardly democratic, and for the vast majority,
the vast vast majority of people and companies and institutions,
(26:47):
they are still subject to the rules of their state.
Speaker 2 (26:51):
Your previous book was about the market for passports. I
believe what's the easiest passport to get? I don't think
I'm going anywhere, but you know, everyone's in a wat
turn on the TV. Things are kind of weird here,
where's the easiest passport to get where I can get
it and also live somewhere, so it's not just a
virtual like a digital passport.
Speaker 5 (27:08):
The easiest passports to get or the most straightforward, time
tested ones, those are mainly in the Caribbean. Saint Kitts
and Davis was a pioneer in the passport industry Dominica Antiga.
So there's a number of islands in the Caribbean that
will offer their passport for money. Until recently you didn't
even have to go there. You could do your citizenship
(27:30):
interview remotely. They're starting to crack down on that a
little bit more, but there are options. There were more
options in Europe. Those have basically been reduced down to Malta,
and Malta is being challenged at the European Court of Justice.
In fact, by the time this podcast comes out, it
will have been decided. So you know, the future of
(27:51):
the European programs because these countries are part of the
EU is a little more dicey that you has been
very critical of them, But yeah, I think depending on
your budget, probably the Caribbean is the way to go.
Speaker 3 (28:04):
Is there any example from your book of someone either
a person or a corporation who you think was particularly
adept at using loopholes or favorable regimes to their advantage.
Speaker 5 (28:18):
I actually have a piece coming out in New York
Times magazine about a man who, to me just embodies
every aspect of offshore. He unfortunately died in an accident
on the sea. He was living on a barge twenty
seven miles offshore from Dubai, and his name was Samuel Landi.
Speaker 3 (28:37):
Truly offshore, truly offshore.
Speaker 5 (28:39):
I mean, you don't get more offshore than this. So
this man, Samuel Landi, was an Italian guy from Tuscany.
His first company was arbitraging phone numbers. So Italy was
deregulating its telecoms industry, and he bought up a bunch
of those easy to remember phone numbers and sold them
to weather reports and phone sex and all of the
(29:02):
numbers that you dial in for services, and you know,
he take cut off the difference between the prices. Then
he went on to be a telecom's entrepreneur. He had
a big telecom's company that went bust, and it later
came out that much of the money of this company
made was sent to some really remote offshore jurisdictions, the
(29:22):
island of Niui.
Speaker 6 (29:23):
He thought Paulau was remote, This is really pretty Niche obviously.
Speaker 5 (29:28):
Switzerland, a couple of Swiss banks who have a record
of this, you know, et cetera.
Speaker 6 (29:33):
That was his corporate stuff.
Speaker 5 (29:35):
As soon as the law came for him, he decamped
to Dubai set up a company in one of these
special economic zones. He had an encrypted cell phone company.
And not only did he move to Dubai, a place
with no extradition agreement with his home country of Italy,
but he then obtained diplomatic immunity via a Liberian diplomatic appointment.
(29:59):
He became the Liberian Honorary Consul General to Dubai. What
this meant is that there is a guy on the run.
He goes to a place with no extradition treaty and
on top of that, he gets diplomatic immunity, so he's
kind of untouchable.
Speaker 6 (30:13):
And you'll have to read this story.
Speaker 5 (30:14):
But long story short, he starts to run out of
options and he moves to a barge that he anchors
between Dubai and Iran, and he lives there for an
entire year until a wave comes and you know that
was the end. Once you develop a mind for these
kinds of offshore structures, like I said, it's hard to
unsee them, and just this whole world of opportunity arises
(30:35):
for you if you have the right mindset.
Speaker 2 (30:52):
First of all, there's a wild story, looking forward to
reading it. By the way, Tracy, you know who I
just remembered, Justin the Son. Yeah, he served as the
permanent representative of Granada to the World Trade Organization, which
apparently isn't anymore. But this Chinese crypto entrepreneur, I remember
one day he was suddenly the honorable Justin Sun.
Speaker 5 (31:11):
Anyway, did he buy the passport?
Speaker 6 (31:13):
Grenada was in this business.
Speaker 2 (31:14):
I don't know if you bought the passport, and I
don't want to insinuate anything, but he became an official
ambassador of Granada to the WTO. So good for him. Okay,
So we know the Dubais and Nabu Dhabi's, and then
we get a little more out there in the world,
the Pulaos and what was the other one, Neo Ni Niwi.
I don't know where that is. I'll have to look
it up. The other thing that's going on in this
(31:36):
new world of like cities. Is these various attempts to
like create startup cities. I once went to a party
at the offices of Praxis, which is this thing which
is a bunch of like crypto people who like talk
about like we were going to set up a crypto
city and like Albania or Montenegro.
Speaker 5 (31:53):
To be clear, practice does not exist.
Speaker 2 (31:56):
Right, yes, but but they talk about exist.
Speaker 6 (31:58):
They do talk about it.
Speaker 2 (32:00):
Any of these real have any of them broken ground anywhere?
Like what's going on in the world of like sort
of just creating a new city whole cloth for rich
crypto people to hang out in.
Speaker 5 (32:10):
Creating new cities from scratches pretty hard, as you can imagine.
There have been a number of attempts. The ones that
come to mind are mostly in Africa. I think there
is one someone in Nigeria. I think the rapper Akon
was involved in one. Yeah, so these things exist. There
are there are cities that are being built. Unclear what
(32:31):
the result is because it takes quite a while to
build a city. I think what you're alluding to, Joe
is there is a startup city ecosystem, and then there's
also this idea of a charter city, and I mean,
there's a lot of overlap in these two things. A
startup city, I guess that it's most basic. It's just
a new city that you know. Some of them have
(32:53):
smart city elements, some of them have different kinds of
zoning laws than make it easier to build. That's one
set of things, and then the charter city universe is
maybe a little bit more political and a little bit
less like urban planning. The original concept of the charter
city was an idea from the economist Paul Romer and
(33:16):
his kind of his papers and his writing about this
essentially said, there are poor countries that have land, and
there are rich countries that don't have land, but they
have good laws. So why don't we take a piece
of land from country X, which may have not so
great economy, applied the rules and regulations and sort of
(33:36):
way of doing business from country Z, and you know,
together they can create a thriving new place for people
to go. Romer got a lot of flak for this
because that too sounds an awful lot like colonialism. Well,
you have a lot of economists on this show. Economists
have a very particular way of coming to their ideas.
I thought about this a lot, and I think that
(33:57):
Roma came to his honestly not sort of reverse engineering colonialism,
but actually just working from his previous ideas about how
economies benefit from foreign foreign influence. So let's give them
that to counter a lot of the pretty vicious criticism.
And so the idea of a charter city is that
(34:18):
you can if you bring in the right kinds of
laws and incentives in business environment, the economy will follow
and people will thrive, and then that will have an
impact on the country that is around this city or zone,
so it will lift all boats. Do any of these exist, Well,
there is one in particular that is maybe a little
more advanced than a praxis, which is mostly a praxice
(34:41):
of the mind, and that's an Honduras It's called Prospera,
and it is really contentious because it was initiated and
built by some pretty ideological people. They will tell you
they are not libertarians, that they don't have these ideologies,
but you know it's pretty clear that they do, and not.
Speaker 6 (35:00):
Everyone likes it.
Speaker 5 (35:02):
Prospera is a more or less deregulated zone on the
island of Roatan, which used to be British. Sort of
interesting history there of foreign influence as well, And for
now there's a real estate angle they're selling. They're going
to sell condos they purport to putting Hondurance, giving Hondurance
work opportunities.
Speaker 6 (35:22):
I don't know. I haven't been there.
Speaker 5 (35:23):
I was supposed to go there during COVID, but then
it didn't work out, not because of COVID, but because
a left wing government was elected in Honduras and the
kind of the people I was going to be called
the whole thing off. Anyhow, Prospera exists in so far
that they have broken ground, they have built things, and
that they have a system of law and regulation for
(35:44):
their zone. But the future of Prospera is a little
up for grabs because since this new left wing government
has come in in Honduras and there have been various
regulatory moves to curb the autonomy of Prospera, Prospera has
hit back and actually issuing the State of Honduras for
(36:05):
like a third of third GDP in international court. So
we don't know how that's going to play out yet.
I'm not sure that they're going to be successful because
the sum of money is so astronomical and a couple
of lawyers I've spoken to think it's a little ridiculous,
but who knows what's going to happen, So there is
a charter city. They were very clearly inspired by Romer's ideas.
(36:28):
Romer was even involved in an early version of the
legislation in Honduras until.
Speaker 6 (36:32):
He got out of it.
Speaker 5 (36:34):
But the future of Prospera is not entirely clear to me.
Speaker 3 (36:37):
Can you talk a little bit more about the downsides
of these types of offshore centers or regimes? And also
is there anything that can be done to maybe crack
down on them or at least limit their growth. And
it seems difficult in the sense that perhaps you need
(36:57):
international coordination and has been a lack of that recently.
But on the other hand, you know, you have seen
some things happen, like with Swiss banking and the Secrecy
Act and all of that. So what are the downsides
and what can be done to limit those downsides.
Speaker 5 (37:14):
The classic argument against these types of offshore jurisdictions is
that they create a race to the bottom. Country A
cuts taxes, country beak cuts taxes even more, country cuts
taxes even more. New Switzerland, newer Switzerland, even newer Switzerland, right,
when does it end? And the impact of that is,
as argument goes, it takes money away from the state.
(37:36):
There's less money to spend on social services and education.
Speaker 6 (37:40):
And healthcare and so on. And that's real.
Speaker 5 (37:42):
I mean, that's happening. There's been a lot of economic
research into the impact of offshore, the billions of not
trillions of dollars that are just not accounted for and
not being taken by governments in the form of taxes,
and that's convincing. The second issue with offshore is that
offshore is much bigger than just money. Offshore can have
(38:04):
really serious human rights repercussions. To use an example, for
more than a decade, Australia was using two offshore sites
to send refugees who who were trying to arrive in
Australia by boat and actually just warehoused people on Manus
Island and Nouru for years and years and years. They
(38:24):
were never told when they were getting out. They were
just in limbo. And if the fiscal stuff has big
picture impact on state budgets, this has really tangible and
traumatic effect on individuals. So I think we need to
talk about offshore both as a money thing and as
(38:45):
a human rights thing. And these are two sides of
the same coin. If you think of offshore as a
legal mechanism to send responsibility elsewhere, you can see that
it can affect people as well as balance sheets.
Speaker 2 (38:58):
Talk more like whether it's the US, US or Europe,
or places or maybe places in Asia, places that are
the net where money is being drained from. And we
always see angry alter rich people wanting to you know,
lower taxes, etc. A threaten to move, etc. What is
being done respond fight? Is there a pushback in any way?
Speaker 5 (39:20):
There's been some pushback the Swiss banks that maybe you
want to call it ground zero of all this stuff
have reformed somewhat. There is going to be as global
corporate minimum tax. How many loopholes there will be to
get around that is another question. But I do feel
like there has been a broad agreement that this is
not great. The only way that anything is going to
(39:41):
be done is to get every single country on board
with whatever agreement is made. Right, if you have any
jurisdiction that decides to become the outlier, the international community
can ice them out by putting them on financial blacklist,
cutting them off from swift you know, typical sanctions regimes,
but they'll still be there and they'll still always be
ways around it. I think another thing that can be
(40:02):
done is to think of ways that offshore can be positive.
And that might sound really contradictory, but the reason that this,
I think kept my attention for so long is that these.
Speaker 6 (40:15):
Hacks are so clever.
Speaker 5 (40:16):
They're ingenious, and what if they were dreamed up not
by people who were just trying to make more money,
but people who were trying to create new types of
places for people to live. This idea of offshoring refugees
is horrendous and horrible, but what if there was a
way to create places that were safe, temporary zones for
(40:38):
people who were fleeing war that were not prisons. So
I think you can regulate, and states know how to
do this. They just have to want to and they
have to get it together to do it, because ultimately
all of this is in many ways in under the
state's control.
Speaker 6 (40:54):
But I think you also want to come up.
Speaker 5 (40:56):
With new solutions by using this way of thinking, because they're.
Speaker 2 (41:00):
Something to ITTUSA. Thank you so much for coming on outlocked.
Speaker 6 (41:03):
Thanks for having me.
Speaker 2 (41:04):
This is really fun, Tracy, I really enjoyed that conversation.
We've talked a little bit about the real estate side
in the past with Hitten, some Tani and some others.
You know, when they're crypto or I guess, like condos
(41:28):
in a high rise somewhere in Miami or Dubai, et cetera.
You know, the common thread to all of it, to
me is people finding ways to store a lot of
high dollar value in a small container. Like to me,
that's like the common thread here, and that basically what
these countries or jurisdictions offer is that ability kind of
(41:50):
like jewels and jewelry, et cetera. Basically to find a
way to put a lot of wealth in a small place.
Speaker 3 (41:56):
Yeah, it's sort of a modern version of I don't know,
stashing a bunch of gold coins under a stone wall
in like Roman times or something.
Speaker 1 (42:06):
You know.
Speaker 3 (42:06):
What's interesting to me is the sort of tension between
globalization and nationalism there. And it comes up in a
lot of different ways. But I remember one of my
favorite examples of this is do you remember a brage
and RIFKNOCKVI?
Speaker 1 (42:20):
No?
Speaker 3 (42:21):
Okay, So abrage once upon a time was like the
world's biggest private equity emerging markets investor, and it was
very much about globalized investing. And then the whole thing
collapsed and turned out to be a fraud and Rfnovi,
the founder, was arrested, and it turned out, you know,
there were all these profiles of him and how did
(42:41):
he become a billionaire while running this fraud? And it
turned out he lived in a place in Dubai called
Emirates Hills. And when you looked up who else lived
in Emirates Hills, it was like a roster of particular character,
let's put it that way. But it was like Robert
(43:02):
mcgabi's son, the Gupta family who were friends with Jacob Zuma.
It was like those types of people living in offshore
centers while sometimes espousing a particular brand of nationalism.
Speaker 2 (43:16):
I love these like destinations where it's like the gangs
all here, so to speak. I have no real connection
to any of this, but when I was nine, I
did live in Malaysia for a year. My dad was
a professor, he taught there. I went to an international school.
It is a fun environment, like being around all of
these people who are like children of ambassadors and heads
of state. As far as I know, there are no
(43:38):
like war, criminals on the land there, or you know,
children of dictators or whatever.
Speaker 3 (43:43):
But es, I went to mostly international schools, and it
is a very particular space, and it often feels like
you're not actually living in that particular country, but living
in like a yeah, compound version of it. But anyway,
without getting too much into my high school experience, shall.
Speaker 6 (44:04):
We leave it there.
Speaker 2 (44:05):
Let's leave it there.
Speaker 3 (44:06):
This has been another episode of the All Thoughts podcast.
I'm Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 2 (44:12):
And I'm Jill Wisenthal. You can follow me at the Stalwart.
Follow our guest atusa Eroxia Abrahemian. She's at atusa Eroxia,
and check out her brand new book, The Hidden Globe,
How Wealth Hecks the World. Follow our producers Carmen Rodriguez
at Carman armand dash Ol Bennett at Dashbot and Kilbrooks
at Keilbrooks. And thank you to our producer Moses Ondam.
(44:32):
For more Oddlots content, go to Bloomberg dot com slash
odd Lots, where you have transcripts, a blog in a
newsletter and you can chat about all of these topics
with fellow listeners. Twenty four seven in our discord Discord
dot gg, slash od loots and if.
Speaker 3 (44:45):
You enjoy Odd Lots, if you like it when we
dive into the separate legal world that the ultra rich
are building for themselves, then please leave us a positive
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(45:07):
follow the instructions there. Thanks for listening.
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:20):
Hello and welcome to another episode of the Odd Lots Podcast.
Speaker 3 (00:23):
I'm joll Wisenthal and I'm Tracy Alloway.
Speaker 2 (00:26):
Tracy, did you see that story a few weeks ago
about Andresen Horowitz, the big VC firm closing its Miami office.
Speaker 3 (00:34):
Who I did partially because you tweeted about it.
Speaker 2 (00:38):
See, my tweeting serves a purpose. It allows us to
coordinate and be on the same page on topics.
Speaker 3 (00:45):
It gives us shared content.
Speaker 2 (00:46):
Sure, that's right. But I found that story to be
really fascinating because in twenty twenty or I think, yeah,
around twenty twenty, and obviously with COVID and people frustrated
about things going on in San Francisco, it felt like
there was this big effort to sort of manufacture an
environment in a new city. So it's like, Okay, Miami's nice,
(01:07):
and the standard of living if you have a lot
of money, it seems pretty good. Let's just see if
by a sheer force of will and money and tweets, etc.
Whether we can relocate everything there. And there has been
a lot and we've talked a little bit about Miami
and Citadel has obviously brought a ton of money to
the city. But this sort of impulse to sort of
(01:28):
manufacture cities and manufacture new physical networks is a very
interesting phenomenon.
Speaker 3 (01:35):
To me, right, and I always find it's sort of
the strongest whenever you see a city talk about becoming
a crypto hub or something like that. And there have
been so many, right, so Miami was one of them
at certain points. Eric Adams in New York has talked
about it. Malta wants to be a crypto hub, Dubai
wants to be a crypto hub. It's neighbor, Abu Dhabi
wants to be a crypto hub. And it kind of
(01:57):
raises the question can everyone basically repeat the same economic
or financial model and become these sort of offshore wealth
centers that foster, you know, new business and innovation. It
seems like there are multiple cities where countries or locations
that are trying to do the same thing.
Speaker 2 (02:17):
By the way, well, you lived in Abu Dhabi.
Speaker 3 (02:19):
I did, what do they do?
Speaker 2 (02:20):
What's the business there? What does everyone do?
Speaker 4 (02:23):
Uh No, I'm seriously, I I don't know what Dubai
I mean, I know there's a ton of money there,
but I don't actually know what the big industries are
there in these places, so you must know.
Speaker 3 (02:34):
I'm trying to word this very diplomatically. I would say
light touch regulatory environment. I mean, that's what's basically it
to start companies, yeah, and payload taxes and be able
to do it in a fairly quick way. But the
interesting thing about Abu Dhabi, and again going back to
the point of all these cities basically trying to do
(02:55):
the same thing, is Abu Dhabi very very almost explicitly
was trying to follow the model of Singapore. In fact,
they even hired Richard Tang, who used to run the
Singapore Monetary Authority, to come behead of ADGM. Like it
was that explicit. It's very obvious what a lot of
these places are trying to do.
Speaker 2 (03:16):
It seems to be working well. I mean, I know
people always think like there's a bubble, it's all real
estate and speculation or whatever is going to crash. But
for the most part, I mean, there was something that
happened in late two thousand and nine and one of
them on bankrupt or something, But for the most part,
seems like it's been working.
Speaker 3 (03:30):
For certain countries. Certainly I mean Singapore again is the
big example of this. But I guess the more people
and places try to imitate these particular business models, you know,
not everywhere in the world can be an offshore financial
center for obvious reasons. And I think like one man's
loophole might be another country's comparative advantage. But there's a
(03:53):
limit to how far you can push.
Speaker 2 (03:55):
That, you think, So I wonder how far we are
from Milmot. Anyway, We're in an age clearly where there's
just a l lot of interest in cities and people
want to talk about, you know, on Twitter. They're like
what city should I move to? And where people have
a ton of money and option. Some people have a
ton of money and they go to somewhere for some reason,
maybe because regulation is low, or taxes are low, et cetera,
(04:15):
and essentially kind of be I don't know, rootless. I
remember during the pandemic when ostensibly I thought all of
the borders were closed and you couldn't travel, seeing you know,
friends on Instagram and stuff all over the world and
places where they didn't seem to be any restrictions at all,
and on beaches. I'm very fascinated by this sort of
(04:36):
parallel world that seems to be emerging and still growing,
where the ultra wealthy push up real estate prices, build
giant towers branded by various brands like Porsche, et cetera.
It seemed to live in a sort of just separate world.
Speaker 3 (04:51):
Than what I live in in New York City, right,
And we've talked about this primarily from a real estate perspective,
but we haven't really gotten into these separate world world
of light touch regulatory and tax regimes.
Speaker 2 (05:04):
So I'm excited the separate legal world. Well, I'm very excited.
We are going to be speaking with truly the perfect guest.
We're going to be speaking with a Tusa Eroxia Abrahemian.
She is the author of the brand new book The
Hidden Globe, How Wealth Hacks the World, talking about all
of these different cities and legal regimes and the sort
of separate, parallel world that exists here on Earth for
(05:26):
the ultra rich. Sotusa, thank you so much for coming
on Odd Lots.
Speaker 5 (05:30):
Joe Tracy, thanks so much for having me.
Speaker 2 (05:32):
Absolutely. What's your book about?
Speaker 1 (05:34):
So?
Speaker 5 (05:34):
My book is about this parallel world of loopholes. It's
hiding in plain sight. It's all around us, and once
you see it, you can't unsee it. So I hope
that when you read the book, you'll start to see
it and you will just see it at every turn.
This world, much of it is territorial, some of it isn't.
So I start with my hometown of Geneva. I grew
(05:55):
up in a very sort of stateless environment in Geneva, Switzerland.
My parents were un employees. I went to international schools
for the most part, and it was just this big
mix of people from all over the world who were
always moving.
Speaker 6 (06:09):
I wasn't moving.
Speaker 5 (06:11):
I lived eighteen years in Geneva and I still don't
feel like I know the place. It is the most
mysterious place to me, even though my mother still lives there.
And I started thinking about why that was. How can
you live somewhere and still not really grasp it. And
part of it is, yes, I was in this kind
of international community, didn't really learn a lot about Swiss history.
(06:34):
I have a Swiss passport, but I don't speak German,
I don't speak Italian. I actually don't have a lot
of Swiss friends, so that was definitely part of it.
But the other side, when I kind of zoomed out,
and I thought of the legal topography of the place
that I grew up in. It's like Swiss cheese. Geneva
is this historic, beautiful city with an old town and
(06:56):
old walls that are, you know, more ancient than like
most of the things in the United States. At the
same time, it has all of these pock marks and
black holes and mysteries. An example of that is the
Geneva Freeport. You might have heard of that.
Speaker 3 (07:12):
I was going to say. You mentioned once you see
these things, you can't unsee them. And I remember I
read a book called Unruly Places and they had a
chapter on freeports, and that was the first time I'd
have heard of them, and ever since then, I haven't
forgotten them. I can't get them out of my mind.
Speaker 2 (07:27):
Yeah, what's the Geneva Freeport. What do you get to
do there?
Speaker 5 (07:30):
Uh?
Speaker 6 (07:30):
The Genia?
Speaker 5 (07:31):
Well, I have never been inside, Okay, and it is
not for lack of trying, trust me.
Speaker 6 (07:35):
The Geneva Freeport is a warehouse.
Speaker 5 (07:38):
It was built a long time ago, in the late
eighteen hundreds, and it was originally built to store things
like grain, things like supplies for wartime, and it was
used for that, and the idea was that merchants could
put their goods there, have them sort of hang out
without declaring them to customs, without paying for taxes or
(07:58):
tariffs or what have you, and then move them to
their next destination. So for something like sacks of oats,
there's a shelf life. You can't keep them there forever.
They got to move otherwise everyone's interest.
Speaker 2 (08:12):
To be clear, it serves a very specific purpose because
if you want Geneva, if Switzerland wants to be a
hub of trading, they don't want merchants to have to
pay a tax or a tear of just if they're
like stopping by.
Speaker 6 (08:23):
You got it.
Speaker 5 (08:24):
If you want you want a place to be an entropo,
you want to make it as easy as possible to
be an entropo to leave your things there temporarily and
then move on. Geneva was also a crossroads for trade.
They had a big market, so it made sense. But
as time went on, and as you know, the economy evolved,
and as Switzerland evolved, this became a place to store
(08:44):
things like gold, things likes, and eventually things like very
expensive paintings. And today it's estimated that billions of dollars
worth of paintings and cars and wine and luxury goods
are being stored there.
Speaker 4 (09:02):
Now.
Speaker 5 (09:02):
The difference between a sack of oats and a DaVinci,
apart from how expensive it is, is that now these
places are super climate controlled, like humidity is monitored. Everything
is very very very tightly controlled, and so there's no
there's no rotting, things don't go bad. Things can stay
there perhaps forever. And it's a completely different game because
(09:24):
if you're someone who wants to hide something or to
just sit on something for a very long time without
incurring tax or maybe declaring it to your ex spouse,
you can do that in the Geneva Freeport.
Speaker 3 (09:36):
So you touched on this when you were talking about
the evolution of the freeport. But one thing I often
wonder with these sort of loophole liminal places is how
deliberate are the choices to create them. So the freeport
started out as a place where you could store green
because it wasn't meant to stay there forever and you
(09:57):
wanted to be a hub for trade, and then it
gradually evolved to a place where you could stash things
potentially forever. How did that decision come about? What were
the choices that went into that outcome.
Speaker 5 (10:10):
In the case of Geneva, there's a somewhat organic or
natural progression of things. I don't know that you know,
in like eighteen eighty you necessarily would have anticipated the
art market being just unbelievably full of speculation and using
these places to enable that. So for one of these
entrepose that's been around for a long time, the decisions
(10:32):
are more in the lack of involvement of the states.
So you have this rule for grain, maybe you're not
going to change it too much and have it apply
for gold bars. But there are more freeports than just
the Geneva freeport. There are brand new ones that were
built in the past, you know, twenty thirty years in Luxembourg,
in Singapore there was talk of creating when in Russia,
(10:55):
And for the new ones that are being built, it's
very clear what the intention here is. Right, we're not
talking about oats or salt or any food stuff, so
we're really talking about high end goods that you know,
increasingly are one of the only ways to get around
financial controls as well.
Speaker 2 (11:32):
For country or a city like Singapore, what do they
get from it from the existence of a freeport that
explicitly is there so that people can have our not
declare it.
Speaker 5 (11:42):
I'm trying to figure this out. I'm not sure there's
one exact answer, to be honest, I think a big
part of it is branding.
Speaker 6 (11:48):
It looks good.
Speaker 5 (11:49):
It looks good to say that you have, you know,
stashes of picassos, And the people involved in these enterprises
will say, well, we are creating a huh. And when
the paintings come, then the artists come, and the dealers come,
and the bankers come, and so it creates a sort
of a little ecosystem of.
Speaker 6 (12:09):
Art and art art markets.
Speaker 5 (12:11):
I think that there's a more cynical way of putting it,
which is that these types of places, freeports and so on,
are ways to launder money when it's much harder to
launder money through the banks. So you can have many
reasons for this, and a country would be interested probably
in both sides of this, if the ultimate goal is
(12:32):
to bring money to its territory.
Speaker 3 (12:36):
In researching and writing this book, did you observe any
interesting examples of either freeports or other types of offshore
centers competing with each other and what happens when everyone
is trying to do a similar thing, and you have
a freeport here and a freeport here and a freeport there.
Speaker 5 (12:55):
Yeah, these places are always one uping each other. I mean,
how many you guys work at Bloomberg. How many times
have you read the headline X is the new Switzerland?
Speaker 1 (13:02):
Right?
Speaker 5 (13:03):
I think Singapore has been the new Switzerland, Dubai has
been the new Switzerland. Luxembourg has been the new Switzerland,
although that was a while ago.
Speaker 3 (13:10):
One day Switzerland will be the new Switzerland.
Speaker 5 (13:12):
Well, and then Switzerland is always trying to be the
new Switzerland. Right. They were also trying to do this
crypto valley thing in the Canton of Zug.
Speaker 2 (13:21):
Yeah.
Speaker 5 (13:24):
So yes, there's always competition and they're always trying to
one up each other. It's relentless. And that's why. Also
for regulators who might want to crack down on this,
it's like whackam mol. One jurisdiction might say, Okay, we're
going to put tighter controls on our freeport or on
our crypto market. Another one is going to pop up
tomorrow to fill that void.
Speaker 2 (13:44):
I asked Tracy this, but maybe I should just ask you.
When Abu Dhabi in Dubai, what goes on.
Speaker 5 (13:49):
There, Abu Dhabi and Dubai. I can speak to Dubai.
I've not been to Abu Dhabi. Dubai has, for its
recent I guess the past two twenty or so years,
made really really concerted efforts to attract millionaires and billionaires.
There is the real estate play here. Obviously, You've talked
(14:10):
about this a lot. There's a lot of There are
a lot of articles about these wacky things that they
build and the developments and whatnot, the ski slopes in
the malls. At the same time, there have been many
reports that show from the think tanks and the OCCRP
and the ICJ, the show that Dubai is really the
(14:33):
center of the world of money laundering, criminality and those
types of offshore theatrics. So they are up to that too.
Before Dubai was what we think of today as Dubai,
this place with tall buildings and and crazy stuff going on,
there was a lot of smuggling and pearl smuggling and
gold smuggling going on. It has a sort of long
(14:55):
tradition of this that this did not occur overnight. When
the shakes past a bunch of laws that said For
the past twenty or so years, Dubai has made a
concerted effort to create laws to attract businesses and people.
Some of these laws involve carving out free zones within
(15:15):
the territory of Dubai that cater very specifically to certain sectors.
So you have a media city where ostensibly there's more
freedom of speech and expression. There is an internet city
that has world class infrastructure. I think there's a medical one,
and there's one for commodities, and all of these little zones, clusters, hubs,
(15:40):
whatever you want to call them, have a kind of
a bespoke legal regime. A lot of that is spin,
a lot of that. They're sort of interchangeable, but by
virtue of appealing to a certain type of business, I
think there's something to be said for proximity and exchange,
and that's real. This is why we like to go
back to the office, because you can talk to people anyway.
Speaker 6 (16:01):
All of these zones.
Speaker 5 (16:02):
Also have very preferable tax regimes. They make it easier
to import workers, so the immigration side of things is
a little more streamlined, and overall, I think now Dubai
is on a big kick of reducing bureaucracy. We can
all appreciate the idea of reducing bureaucracy, and I think
that they actually do it, So that's another part of
their play.
Speaker 3 (16:23):
You mentioned the legal regimes and the financial centers in
Dubai and Abu Dhabi, DIFC and ADGM. They're really interesting
to me because they essentially got to craft a whole
new body of law and kind of cherry pick what
they wanted to include in order to attract financial businesses.
(16:45):
And they're obviously influenced by English law. It's an English
law regime, but their systems are still different in various ways.
What's the process that these types of new jurisdictions go
through when they're crafting laws and how much input do
you think is overtly had by people who are perhaps
looking to preserve loopholes.
Speaker 5 (17:06):
So I'll tell you about this story of the Dubai
International Financial Center and more specifically the Dubai International Financial
Center's courts, which are within the Dubai International Financial Center
but their own things. So, the DIFC was established as
one of these free zones that was going to be
the center for finance, banks, traders, et cetera. As companies
(17:29):
started to express interest in moving there, and as Dubai
was making their pitch, come here, you're going to pay
less tax, et cetera, et cetera, they ran into an issue,
which was that the lawyers and the councils and all
the sort of legal infrastructure of the companies that they
were trying to bring in were balking at the idea
of having to deal with a whole new legal system,
(17:53):
namely the Arabic language is law influenced courts. Maybe they
did this out of racism, Maybe they did this because
they truly had no idea how these courts worked.
Speaker 6 (18:03):
We should talk a little bit about the history here.
Speaker 5 (18:06):
So the emirates were previously protectorates of the UK of
England and they had two systems of law. There were
laws for Muslims for natives, and then there were laws
for Brits and expats. So that's the context out of
which this is all coming. So the DIFC sets up
in the early two thousands and they decide, well, we
(18:27):
need to have another set of laws because we don't
want to scare away the big companies. And so they
get to work thinking, well, how are we going to
come up with this parallel legal regime on the one hand,
it's kind of a throwback to the battle days where
the Brits had their laws for themselves and locals had
(18:50):
their own laws. Right. This is colonialism, to put it bluntly.
So instead of just taking the old laws or just
imposing their own court system, they.
Speaker 6 (19:01):
Came up with a kind of a hybrid. And this
is in the book.
Speaker 5 (19:05):
But there was one man who was really instrumental in
building the system. His name was Mark Bier. He was
he is an Englishman, really clever, clever guy, and they
kind of cobbled together a bunch of laws based in
common law, which the multinationals are comfortable with, which the
big banks are comfortable with, and essentially created a court
(19:28):
that was sitting inside the DIFC that would serve the
tenants of the DIFC, and that eventually expanded its reach
to be this kind of opt in jurisdiction, so anyone
could say in their contracts, shouldn't disputarize, We're gonna have
our day in court at the DIFC. The term at
(19:50):
is doing a lot of work here because it is
a place. There is a court house, there was a
court room, but the judges don't all live in Dubai.
They don't all show up for hearings at the DIFC.
A lot of this was taking place remotely even before
Zoom came to consume our lives during the pandemic, and
(20:10):
so the notion that the law and the land are
in any way tied together just doesn't make sense here anymore.
It's a really new way of thinking about law.
Speaker 2 (20:19):
It's a little bit like Delaware in that sense, right
where it's like everyone is like, okay, we want to
be incorporated under Delaware law, but the company and the
judges are prayed there. But by and large the companies
have no meaningful.
Speaker 3 (20:32):
I'm sure Dubai will appreciate it being called the Delaware
of the.
Speaker 2 (20:35):
World, the Delaware the world in your book. I don't
know what the grouping is Dubai, Abu Dhabi, Singapore, Geneva like,
but when you in your mind, when you sort of
think about these cities around the world, like how big
are we talking about? How much money, how much wealth,
or however you want to quantify it has flowed into
these sort of preferential locations.
Speaker 6 (20:57):
Oh, that's a good question.
Speaker 5 (20:59):
I can't really put a number on it, but I
can tell you that the oceans are another jurisdiction that
I write about in the book, and something like ninety
percent of all goods are shipped through the ocean, And
so that'll just give you a sense of scale. Things
do not just happen on the national level. That doesn't
(21:19):
make any sense. Things are always moving and moving between places.
Speaker 3 (21:23):
So one thing you often hear when people are talking
about establishing these new hubs or centers or whatever they
want to call them sandboxes. Maybe people often talk in
terms of innovation and creating new business opportunities and startups
and maybe not falling behind in the brand new thing.
And so I'm curious, how do you think governments or
(21:46):
localities looking to set up these types of things are
balancing the need for rules and regulation with that innovation impulse.
Because no one ever says explicitly this is just a
money grab and we want lots of income coming into
the country. It's always about, you know, we're going to
create this creative place where small businesses can flourish and
(22:10):
things like that.
Speaker 5 (22:11):
I don't haven't heard the small business pitch so much,
at least not in the jurisdictions that I've been covering.
Balancing the sort of wild West aspect with the regulatory
aspect is obviously pretty tough. If we look at how
crypto has played out and continues to play out, you'll
see that the regulatory side has not been as strong
(22:31):
as the more free wheeling, you know, quote unquote innovation
side of things. I think this really depends on the jurisdiction.
Some have much higher tolerance for risks, some don't. I
don't know that like Sweden is doing crazy things, but
maybe you know a place like Palau, which is smaller
(22:54):
and maybe a bit more niche can do crazier things.
I mentioned Palau because it comes up twice in the book,
once because they have been offering e residency, but geared
at people who want to transact in cryptocurrencies but come
from a country that doesn't allow it. Huh So it's
almost like a crypto passport. To be clear, you don't
(23:15):
have right to live there, you don't have an address there.
It's really just digital and virtual.
Speaker 2 (23:21):
Wait what do you get?
Speaker 5 (23:22):
You get an identification card and number that you can
sign up for crypto services with.
Speaker 2 (23:27):
Huh oh. I see if you're in a country that
has high restrictions on cryptoactivity, but you want to set
up a fund that can trade and stuff like that,
you basically incorporate there and your money is housed there
and you can then legally transact from there. Is that
kind of the idea.
Speaker 5 (23:44):
I don't even know that your money would be housed there.
It's that you as that you can have a kind
of a second flag that you can and fly under
for the purposes of your blog.
Speaker 2 (23:54):
Is an island country in Micronesia. I didn't know where
it was.
Speaker 3 (23:57):
I had to look it up on the thriving Crypto Center.
Speaker 6 (24:01):
They're trying, They're trying.
Speaker 5 (24:03):
Palau also has had some adventures in the maritime flagging industry,
which is actually very analogous to these crypto passports or
second passports. So most of the ships in the world
do not fly the flag of their owner or of
their parent company, or of where their home port is.
They're flying flags of convenience places like Marshall Islands, Liberia, Panama,
(24:29):
and Palao. Is a really interesting case because it's a
relatively new flag. It's still relatively small, but it's growing
tremendously because it is providing a service that more and
more shipowners want, which is a deregulated way for the
ship to die. Ship breaking is increasingly regulated by European countries,
(24:51):
by the US and more. It's very dirty business, and
it's a very expensive business. To take a ship apart
in a way that does not pull the environment, harm workers,
et cetera. Is quite expensive and often the ships are
not even worth the money it takes to take them apart,
and so jurisdictions like Palau, but also Kumoro Islands and
(25:13):
Cameroon have stepped in to offer a flag under which
the ship can fly for its final journey to the
ship breaking yard. That helps them sort of evade these rules.
There's a bit more to it than that. You have
to have shell companies and cash buyers and all of
these transactions.
Speaker 6 (25:29):
That will help you hide.
Speaker 5 (25:32):
But it's pretty wild that a tiny country like Palau
can pull this off and create its own kind of
offshore economy.
Speaker 3 (25:39):
I'm just going to be hyperbolic. What's the point of
like passports and regulations and restrictions on taking apart ships
If for two hundred and forty eight dollars, I can
buy a crypto residency in Palau, or I can find
a flag of convenience and evade environmental restrictions and stuff.
Why have them at all when there seem to be
(26:01):
loopholes everywhere.
Speaker 5 (26:03):
The loopholes apply mainly to people who have the time
and money and know how to figure them out. These
are not equal opportunity loopholes. You have to know where
they are. Often you have to have lawyers arrangement for you.
Often you have to pay that. You know, two hundred
and fifty bucks for the crypto passport is one thing.
But if you are actually in the market for a
(26:24):
real passport, a second passport that might help you do
some of these things, it's going to cost you hundreds
of thousands of dollars. So it's a great question, why
do we have these things at all if they're so
easy to get around? But the answer is that getting
around them is hardly democratic, and for the vast majority,
the vast vast majority of people and companies and institutions,
(26:47):
they are still subject to the rules of their state.
Speaker 2 (26:51):
Your previous book was about the market for passports. I
believe what's the easiest passport to get? I don't think
I'm going anywhere, but you know, everyone's in a wat
turn on the TV. Things are kind of weird here,
where's the easiest passport to get where I can get
it and also live somewhere, so it's not just a
virtual like a digital passport.
Speaker 5 (27:08):
The easiest passports to get or the most straightforward, time
tested ones, those are mainly in the Caribbean. Saint Kitts
and Davis was a pioneer in the passport industry Dominica Antiga.
So there's a number of islands in the Caribbean that
will offer their passport for money. Until recently you didn't
even have to go there. You could do your citizenship
(27:30):
interview remotely. They're starting to crack down on that a
little bit more, but there are options. There were more
options in Europe. Those have basically been reduced down to Malta,
and Malta is being challenged at the European Court of Justice.
In fact, by the time this podcast comes out, it
will have been decided. So you know, the future of
(27:51):
the European programs because these countries are part of the
EU is a little more dicey that you has been
very critical of them, But yeah, I think depending on
your budget, probably the Caribbean is the way to go.
Speaker 3 (28:04):
Is there any example from your book of someone either
a person or a corporation who you think was particularly
adept at using loopholes or favorable regimes to their advantage.
Speaker 5 (28:18):
I actually have a piece coming out in New York
Times magazine about a man who, to me just embodies
every aspect of offshore. He unfortunately died in an accident
on the sea. He was living on a barge twenty
seven miles offshore from Dubai, and his name was Samuel Landi.
Speaker 3 (28:37):
Truly offshore, truly offshore.
Speaker 5 (28:39):
I mean, you don't get more offshore than this. So
this man, Samuel Landi, was an Italian guy from Tuscany.
His first company was arbitraging phone numbers. So Italy was
deregulating its telecoms industry, and he bought up a bunch
of those easy to remember phone numbers and sold them
to weather reports and phone sex and all of the
(29:02):
numbers that you dial in for services, and you know,
he take cut off the difference between the prices. Then
he went on to be a telecom's entrepreneur. He had
a big telecom's company that went bust, and it later
came out that much of the money of this company
made was sent to some really remote offshore jurisdictions, the
(29:22):
island of Niui.
Speaker 6 (29:23):
He thought Paulau was remote, This is really pretty Niche obviously.
Speaker 5 (29:28):
Switzerland, a couple of Swiss banks who have a record
of this, you know, et cetera.
Speaker 6 (29:33):
That was his corporate stuff.
Speaker 5 (29:35):
As soon as the law came for him, he decamped
to Dubai set up a company in one of these
special economic zones. He had an encrypted cell phone company.
And not only did he move to Dubai, a place
with no extradition agreement with his home country of Italy,
but he then obtained diplomatic immunity via a Liberian diplomatic appointment.
(29:59):
He became the Liberian Honorary Consul General to Dubai. What
this meant is that there is a guy on the run.
He goes to a place with no extradition treaty and
on top of that, he gets diplomatic immunity, so he's
kind of untouchable.
Speaker 6 (30:13):
And you'll have to read this story.
Speaker 5 (30:14):
But long story short, he starts to run out of
options and he moves to a barge that he anchors
between Dubai and Iran, and he lives there for an
entire year until a wave comes and you know that
was the end. Once you develop a mind for these
kinds of offshore structures, like I said, it's hard to
unsee them, and just this whole world of opportunity arises
(30:35):
for you if you have the right mindset.
Speaker 2 (30:52):
First of all, there's a wild story, looking forward to
reading it. By the way, Tracy, you know who I
just remembered, Justin the Son. Yeah, he served as the
permanent representative of Granada to the World Trade Organization, which
apparently isn't anymore. But this Chinese crypto entrepreneur, I remember
one day he was suddenly the honorable Justin Sun.
Speaker 5 (31:11):
Anyway, did he buy the passport?
Speaker 6 (31:13):
Grenada was in this business.
Speaker 2 (31:14):
I don't know if you bought the passport, and I
don't want to insinuate anything, but he became an official
ambassador of Granada to the WTO. So good for him. Okay,
So we know the Dubais and Nabu Dhabi's, and then
we get a little more out there in the world,
the Pulaos and what was the other one, Neo Ni Niwi.
I don't know where that is. I'll have to look
it up. The other thing that's going on in this
(31:36):
new world of like cities. Is these various attempts to
like create startup cities. I once went to a party
at the offices of Praxis, which is this thing which
is a bunch of like crypto people who like talk
about like we were going to set up a crypto
city and like Albania or Montenegro.
Speaker 5 (31:53):
To be clear, practice does not exist.
Speaker 2 (31:56):
Right, yes, but but they talk about exist.
Speaker 6 (31:58):
They do talk about it.
Speaker 2 (32:00):
Any of these real have any of them broken ground anywhere?
Like what's going on in the world of like sort
of just creating a new city whole cloth for rich
crypto people to hang out in.
Speaker 5 (32:10):
Creating new cities from scratches pretty hard, as you can imagine.
There have been a number of attempts. The ones that
come to mind are mostly in Africa. I think there
is one someone in Nigeria. I think the rapper Akon
was involved in one. Yeah, so these things exist. There
are there are cities that are being built. Unclear what
(32:31):
the result is because it takes quite a while to
build a city. I think what you're alluding to, Joe
is there is a startup city ecosystem, and then there's
also this idea of a charter city, and I mean,
there's a lot of overlap in these two things. A
startup city, I guess that it's most basic. It's just
a new city that you know. Some of them have
(32:53):
smart city elements, some of them have different kinds of
zoning laws than make it easier to build. That's one
set of things, and then the charter city universe is
maybe a little bit more political and a little bit
less like urban planning. The original concept of the charter
city was an idea from the economist Paul Romer and
(33:16):
his kind of his papers and his writing about this
essentially said, there are poor countries that have land, and
there are rich countries that don't have land, but they
have good laws. So why don't we take a piece
of land from country X, which may have not so
great economy, applied the rules and regulations and sort of
(33:36):
way of doing business from country Z, and you know,
together they can create a thriving new place for people
to go. Romer got a lot of flak for this
because that too sounds an awful lot like colonialism. Well,
you have a lot of economists on this show. Economists
have a very particular way of coming to their ideas.
I thought about this a lot, and I think that
(33:57):
Roma came to his honestly not sort of reverse engineering colonialism,
but actually just working from his previous ideas about how
economies benefit from foreign foreign influence. So let's give them
that to counter a lot of the pretty vicious criticism.
And so the idea of a charter city is that
(34:18):
you can if you bring in the right kinds of
laws and incentives in business environment, the economy will follow
and people will thrive, and then that will have an
impact on the country that is around this city or zone,
so it will lift all boats. Do any of these exist, Well,
there is one in particular that is maybe a little
more advanced than a praxis, which is mostly a praxice
(34:41):
of the mind, and that's an Honduras It's called Prospera,
and it is really contentious because it was initiated and
built by some pretty ideological people. They will tell you
they are not libertarians, that they don't have these ideologies,
but you know it's pretty clear that they do, and not.
Speaker 6 (35:00):
Everyone likes it.
Speaker 5 (35:02):
Prospera is a more or less deregulated zone on the
island of Roatan, which used to be British. Sort of
interesting history there of foreign influence as well, And for
now there's a real estate angle they're selling. They're going
to sell condos they purport to putting Hondurance, giving Hondurance
work opportunities.
Speaker 6 (35:22):
I don't know. I haven't been there.
Speaker 5 (35:23):
I was supposed to go there during COVID, but then
it didn't work out, not because of COVID, but because
a left wing government was elected in Honduras and the
kind of the people I was going to be called
the whole thing off. Anyhow, Prospera exists in so far
that they have broken ground, they have built things, and
that they have a system of law and regulation for
(35:44):
their zone. But the future of Prospera is a little
up for grabs because since this new left wing government
has come in in Honduras and there have been various
regulatory moves to curb the autonomy of Prospera, Prospera has
hit back and actually issuing the State of Honduras for
(36:05):
like a third of third GDP in international court. So
we don't know how that's going to play out yet.
I'm not sure that they're going to be successful because
the sum of money is so astronomical and a couple
of lawyers I've spoken to think it's a little ridiculous,
but who knows what's going to happen, So there is
a charter city. They were very clearly inspired by Romer's ideas.
(36:28):
Romer was even involved in an early version of the
legislation in Honduras until.
Speaker 6 (36:32):
He got out of it.
Speaker 5 (36:34):
But the future of Prospera is not entirely clear to me.
Speaker 3 (36:37):
Can you talk a little bit more about the downsides
of these types of offshore centers or regimes? And also
is there anything that can be done to maybe crack
down on them or at least limit their growth. And
it seems difficult in the sense that perhaps you need
(36:57):
international coordination and has been a lack of that recently.
But on the other hand, you know, you have seen
some things happen, like with Swiss banking and the Secrecy
Act and all of that. So what are the downsides
and what can be done to limit those downsides.
Speaker 5 (37:14):
The classic argument against these types of offshore jurisdictions is
that they create a race to the bottom. Country A
cuts taxes, country beak cuts taxes even more, country cuts
taxes even more. New Switzerland, newer Switzerland, even newer Switzerland, right,
when does it end? And the impact of that is,
as argument goes, it takes money away from the state.
(37:36):
There's less money to spend on social services and education.
Speaker 6 (37:40):
And healthcare and so on. And that's real.
Speaker 5 (37:42):
I mean, that's happening. There's been a lot of economic
research into the impact of offshore, the billions of not
trillions of dollars that are just not accounted for and
not being taken by governments in the form of taxes,
and that's convincing. The second issue with offshore is that
offshore is much bigger than just money. Offshore can have
(38:04):
really serious human rights repercussions. To use an example, for
more than a decade, Australia was using two offshore sites
to send refugees who who were trying to arrive in
Australia by boat and actually just warehoused people on Manus
Island and Nouru for years and years and years. They
(38:24):
were never told when they were getting out. They were
just in limbo. And if the fiscal stuff has big
picture impact on state budgets, this has really tangible and
traumatic effect on individuals. So I think we need to
talk about offshore both as a money thing and as
(38:45):
a human rights thing. And these are two sides of
the same coin. If you think of offshore as a
legal mechanism to send responsibility elsewhere, you can see that
it can affect people as well as balance sheets.
Speaker 2 (38:58):
Talk more like whether it's the US, US or Europe,
or places or maybe places in Asia, places that are
the net where money is being drained from. And we
always see angry alter rich people wanting to you know,
lower taxes, etc. A threaten to move, etc. What is
being done respond fight? Is there a pushback in any way?
Speaker 5 (39:20):
There's been some pushback the Swiss banks that maybe you
want to call it ground zero of all this stuff
have reformed somewhat. There is going to be as global
corporate minimum tax. How many loopholes there will be to
get around that is another question. But I do feel
like there has been a broad agreement that this is
not great. The only way that anything is going to
(39:41):
be done is to get every single country on board
with whatever agreement is made. Right, if you have any
jurisdiction that decides to become the outlier, the international community
can ice them out by putting them on financial blacklist,
cutting them off from swift you know, typical sanctions regimes,
but they'll still be there and they'll still always be
ways around it. I think another thing that can be
(40:02):
done is to think of ways that offshore can be positive.
And that might sound really contradictory, but the reason that this,
I think kept my attention for so long is that these.
Speaker 6 (40:15):
Hacks are so clever.
Speaker 5 (40:16):
They're ingenious, and what if they were dreamed up not
by people who were just trying to make more money,
but people who were trying to create new types of
places for people to live. This idea of offshoring refugees
is horrendous and horrible, but what if there was a
way to create places that were safe, temporary zones for
(40:38):
people who were fleeing war that were not prisons. So
I think you can regulate, and states know how to
do this. They just have to want to and they
have to get it together to do it, because ultimately
all of this is in many ways in under the
state's control.
Speaker 6 (40:54):
But I think you also want to come up.
Speaker 5 (40:56):
With new solutions by using this way of thinking, because they're.
Speaker 2 (41:00):
Something to ITTUSA. Thank you so much for coming on outlocked.
Speaker 6 (41:03):
Thanks for having me.
Speaker 2 (41:04):
This is really fun, Tracy, I really enjoyed that conversation.
We've talked a little bit about the real estate side
in the past with Hitten, some Tani and some others.
You know, when they're crypto or I guess, like condos
(41:28):
in a high rise somewhere in Miami or Dubai, et cetera.
You know, the common thread to all of it, to
me is people finding ways to store a lot of
high dollar value in a small container. Like to me,
that's like the common thread here, and that basically what
these countries or jurisdictions offer is that ability kind of
(41:50):
like jewels and jewelry, et cetera. Basically to find a
way to put a lot of wealth in a small place.
Speaker 3 (41:56):
Yeah, it's sort of a modern version of I don't know,
stashing a bunch of gold coins under a stone wall
in like Roman times or something.
Speaker 1 (42:06):
You know.
Speaker 3 (42:06):
What's interesting to me is the sort of tension between
globalization and nationalism there. And it comes up in a
lot of different ways. But I remember one of my
favorite examples of this is do you remember a brage
and RIFKNOCKVI?
Speaker 1 (42:20):
No?
Speaker 3 (42:21):
Okay, So abrage once upon a time was like the
world's biggest private equity emerging markets investor, and it was
very much about globalized investing. And then the whole thing
collapsed and turned out to be a fraud and Rfnovi,
the founder, was arrested, and it turned out, you know,
there were all these profiles of him and how did
(42:41):
he become a billionaire while running this fraud? And it
turned out he lived in a place in Dubai called
Emirates Hills. And when you looked up who else lived
in Emirates Hills, it was like a roster of particular character,
let's put it that way. But it was like Robert
(43:02):
mcgabi's son, the Gupta family who were friends with Jacob Zuma.
It was like those types of people living in offshore
centers while sometimes espousing a particular brand of nationalism.
Speaker 2 (43:16):
I love these like destinations where it's like the gangs
all here, so to speak. I have no real connection
to any of this, but when I was nine, I
did live in Malaysia for a year. My dad was
a professor, he taught there. I went to an international school.
It is a fun environment, like being around all of
these people who are like children of ambassadors and heads
of state. As far as I know, there are no
(43:38):
like war, criminals on the land there, or you know,
children of dictators or whatever.
Speaker 3 (43:43):
But es, I went to mostly international schools, and it
is a very particular space, and it often feels like
you're not actually living in that particular country, but living
in like a yeah, compound version of it. But anyway,
without getting too much into my high school experience, shall.
Speaker 6 (44:04):
We leave it there.
Speaker 2 (44:05):
Let's leave it there.
Speaker 3 (44:06):
This has been another episode of the All Thoughts podcast.
I'm Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 2 (44:12):
And I'm Jill Wisenthal. You can follow me at the Stalwart.
Follow our guest atusa Eroxia Abrahemian. She's at atusa Eroxia,
and check out her brand new book, The Hidden Globe,
How Wealth Hecks the World. Follow our producers Carmen Rodriguez
at Carman armand dash Ol Bennett at Dashbot and Kilbrooks
at Keilbrooks. And thank you to our producer Moses Ondam.
(44:32):
For more Oddlots content, go to Bloomberg dot com slash
odd Lots, where you have transcripts, a blog in a
newsletter and you can chat about all of these topics
with fellow listeners. Twenty four seven in our discord Discord
dot gg, slash od loots and if.
Speaker 3 (44:45):
You enjoy Odd Lots, if you like it when we
dive into the separate legal world that the ultra rich
are building for themselves, then please leave us a positive
review on your favorite podcast platform. And remember, if you
are a Bloomberg subscriber, you can and listen to all
of our episodes absolutely ad free. All you need to
do is find the Bloomberg channel on Apple Podcasts and
(45:07):
follow the instructions there. Thanks for listening.
Hosts And Creators
Joe Weisenthal
Tracy Alloway
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