Sovereign Ventures? Transborder Corporations and the Politics of Offshore

Abstract

This Master's thesis' purpose is to analyse the challenges that the offshore finance/economy causes to the modern state sovereignty. The offshore finance consists of tax havens, flags of convenience registers, export processing zones, offshore financial centres and international banking facilities, and has grown to such an extent that if we want to understand the international political economy the offshore simply cannot be left unnoticed. I approach the concept of sovereignty by adopting Giorgio Agamben's idea of the close link between sovereignty and the ability to issue a state of exception. Agamben argues that sovereignty is defined by the ability to issue a state of exception and that in contemporary world the exception takes increasingly often the form of a camp. Albeit Agamben's theory focuses mostly on his idea of biopolitics, I find it imperative to extend its reach. Ronen Palan has shown how offshore jurisdictions commercialise their sovereignty by turning the right to draft legislation into a tradable asset. I will analyse the phenomenon of commercialised sovereignty by using Agamben's theory. The question is who has the de facto power to issue and control the commercialised states of exception within the offshore world? Can we see some kind of shift of sovereignty from states to non-traditional actors of politics? My methodological approach to this question comes from international relations' constructivism. In line with Nicolas Onuf's constructivist method that operates around the concepts of structures and agents, I start by setting focus on how different types of offshore jurisdictions (structures) establish and use the states of exception. I will then analyse role of the agents that benefit from the special legislation, with particular focus transborder corporations. Onuf argues that the relationship between agents and structures is not mechanical or rigid relation. I agree with him on this. I will take Onuf's point into account by presenting the connections that the politics of offshore has with larger trends of contemporary economical and financial globalisation Susan Strange's theory of the competition state will be extremely helpful in this research process. After focusing on some empirical case studies I conclude that control of the state of exception within the offshore has, at least in some cases, partially shifted to transborder corporations. Therefore, there are some grounds for analysing transborder corporations as participants in politics and bearers of sovereignty. I argue that these kinds of corporations should be called transnational, while their competitors that do not have significant offshore businesses are essentially multinational. Too often these terms are used interexchangeably and without proper definitions. I end my dissertation by suggesting that our fixation on modern state sovereignty is badly outdated in face of the tremendous rise of the offshore world. In the final chapter I introduce one solution for overcoming the difficulties in combining national regulation with increasingly transnational corporations: the new accounting standards proposed by accountant Richard Murphy. The proposed standards would tax transborder corporations as global entities, thus making the regulatory or tax shopping in offshore by and large useless.