Why offshore financiers stoke nationalist sentiments

The rise of right-wing populism is closely linked to the growth of offshore finance, according to two scholars. In a paper written for the Netherlands-based Transnational Institute (TNI), they even argue that global oligarchs are driving populist agitation.
Rupert Murdoch is one of the global media barons who have supplemented “neoliberal narratives with nativist venom”. picture alliance / ZUMA Press Rupert Murdoch is one of the global media barons who have supplemented “neoliberal narratives with nativist venom”.

Around the world, right-wing populists claim that they must protect their nation from exploitative global elites. Their idea of “the” people is typically a culturally and ethnically homogenous entity, which they define themselves. Their constant clamour is that this entity is not only being taken advantage of by global elites but also threatened by  minorities. They suggest that the response must be to reclaim national sovereignty and back off from multilateral agreements.

Political movements of this kind have been gaining strength in many countries. In some, they have risen to power. The USA, Britain and the Philippines are currently run by populist leaders, for example.

Reijer Hendrikse and Rodrigo Fernandez, the authors of the TNI paper, see populist politics in an entirely different light. In their eyes, right-wing populists are actually serving the interests of oligarchic billionaires who hoard their wealth offshore. As the authors point out, right-wing populists tend to say “yes” to free finance and free trade, but “no” to free migration, democracy, multilateralism and human equality. The obvious beneficiaries of that policy mix are offshore billionaires.

The super-rich, the authors argue, are indeed using populist forces, deliberately manipulating nationalist sentiments. After all, the finances of populist organisations tend to be shady. They often seem to depend on foreign funding.

In the meantime, global media barons, of whom Rupert Murdoch is probably the most prominent, have supplemented “neoliberal narratives with nativist venom, selling the virtues of patriotism while themselves living as true ‘citizens of nowhere’,” as the authors state. The scholars point out that right-wing populists are far more likely to promote tax cuts than to introduce new welfare or social-protection schemes. They may agitate against “elites”, but their policies hardly hurt the privileged few who benefit from tax havens.

Sovereign capital

Hendrikse and Fernandez state that capital has become sovereign due to offshore finance. A multitude of bilateral and multilateral agreements, which were all signed by the governments of sovereign nations, has given rise to a network of offshore financial centres. This state-created network is now largely beyond state regulation. It protects wealth and financial returns. According to Henrikse and Fernandez, this offshore world is “a curious sovereign creature capable of exerting a political-economic authority similar to imperial powers of the past”.

It is obvious that the billionaire elite can shift wealth easily from one centre to another, both in order to avoid taxation and to exert influence. Offshore oligarchs make investment decisions with a massive bearing on national economies. The billionaires like to be able to pit governments against one another, but they have no interest in governments that are strong enough for effective policymaking. Populist rhetoric may emphasise “taking back control”, but their policies hardly interfere with plutocratic interests, as the TNI paper points out.

The authors see humankind split into two groups. Normal citizens must comply with the law of nation states and depend on public infrastructures which tend to be poor in developing countries and have been becoming worse in advanced nations as governments imposed austerity in the course of the financial crisis. The billionaire elite, by contrast, is exempt from paying taxes and bypasses rules and regulations as it pleases.

Hendrikse and Fernandez are not simply inventing a conspiracy theory. Scandals like Lux Leaks or the Paradise Papers prove that offshore finance is of great global relevance. Nonetheless, their paper leaves several relevant issues undiscussed. While the policies of US President Donald Trump generally serve the richest Americans, he is definitely not a free trader. Do offshore oligarchs really not care about the growing frictions between the USA and China? The trade war that is morphing into a currency war is certainly reducing their room for manoeuvre.

What is entirely left out is that billionaires may have diverging interests. Russian oil oligarchs, Chinese industrialists and Silicon Valley corporations alike benefit from offshore finance. So do mafia bosses, corrupt politicians and people who have simply inherited fortunes. Perhaps they all resent government regulation, but they probably do not have a joint policy agenda.

India’s Prime Minister Narendra Modi, who is certainly one of the most dangerous right-wing populists, is currently causing a serious crisis in Kashmir. Yes, it serves his Hindu chauvinist agenda to impose his government’s rule on the country’s only Muslim-majority region. Displaying strength at a time when the economy is slowing, is what authoritarian leaders do. How it serves the interest of offshore oligarchs is not clear, however. India’s business leaders would like Modi to focus on economic reforms, and they resent his plans to increase tax revenues. Quite obviously, Modi’s approach to Kashmir is not only driven by capitalists’ interests. It would be silly to consider him to be a puppet of offshore oligarchs.



Hendrikse, R., and Fernandez, R., 2019: Offshore finance – How capital rules the world. Amsterdam: Transnational Institute (a fully referenced pdf is yet to be published).

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