Iceland's prime minister Sigmundur David Gunnlaugsson speaks to journalists as he hands in what was thought to be his resignation to Iceland's President Olafur Ragnar Grimsson in Reykjavik, on April 7. Since, he has said he was not actually resigning and will just be "stepping aside."

Iceland's prime minister Sigmundur David Gunnlaugsson speaks to journalists as he hands in what was thought to be his resignation to Iceland's President Olafur Ragnar Grimsson in Reykjavik, on April 7. Since, he has said he was not actually resigning and will just be "stepping aside."

The fallout from the Panama Papers continues as Iceland’s prime minister steps aside and Russian president Vladimir Putin calls the leak a western plot. Asylum applications surge in Greece as the EU begins deporting migrants to turkey. Pope Francis pushes the church to adopt a more welcoming tone toward single parents, unmarried couples and gay people, and signals a path to communion for the divorced. Cases of meningitis and encephalitis are diagnosed in patients infected with the Zika virus. And impeachment proceedings against both the Brazilian president and vice president raise the possibility of new elections.


  • James Kitfield Contributing editor, National Journal; senior fellow, Center for the Study of the Presidency and Congress.
  • Nancy Youssef Senior defense and national security correspondent, The Daily Beast
  • Uri Friedman Staff writer, The Atlantic, covering global affairs


  • 11:06:53

    MS. DIANE REHMThanks for joining us. I'm Diane Rehm. The Panama Papers caused political turmoil in Iceland and put other world leaders on the defensive. Greece begins deporting migrants to Turkey and Pope Francis signals a change for divorce and remarried Catholics. Here for the international hour of the Friday News Roundup, James Kitfield of The National Journal, Nancy Youssef of The Daily Beast and Uri Friedman with The Atlantic.

  • 11:07:26

    MS. DIANE REHMDo join us, questions, comments, 800-433-8850. Send your email to Follow us on Facebook or Twitter. And good Friday to you.

  • 11:07:43


  • 11:07:43

    MR. JAMES KITFIELDGood Friday, happy Friday.

  • 11:07:44


  • 11:07:45

    REHMAnd Uri, welcome to you.

  • 11:07:47

    FRIEDMANThank you, Diane. Good to be here.

  • 11:07:48

    REHMGlad to have you here. So Pope Francis has released a document on family life today. Does this really signal a shift on divorce?

  • 11:08:02

    YOUSSEFWell, this was a highly anticipated document, 256 pages. It signals that the Catholic Church is open to a gray area, that the idea of things being in black and white terms is no longer applicable for a church that wants to stay relevant in a day and age when you have a 50 percent divorce rate in this country and new family structures that the church didn't once embrace. And so the document, one of the things that it calls for is that heterosexual marriage, but it sort of understands that love comes in other forms.

  • 11:08:41

    YOUSSEFAnd that the idea of divorce, in and of itself, doesn't automatically exclude you from the church. So that's a development, but does that mean a fundamental shift? We'll see as it's implemented in the weeks and months ahead.

  • 11:08:52

    REHMWhat do you think, Uri?

  • 11:08:54

    FRIEDMANYeah, there's no change to the definition of marriage. No change to who can take communion. It's not that if you're remarried or divorced and you haven't had an annulment through the church, you still can't take communion. Like many things with the Pope, this is a shift in tone, I think. This is a shift to -- we should not be judgmental. We should be merciful. It is saying you may objectively, according to the church, be living in sin, but that doesn't mean you're not in God's grace.

  • 11:09:20

    FRIEDMANThat doesn't mean the church can't help you. And it's kind of urging, almost, guidance to church officials saying, we have a theological ideal about what marriage is, but sometimes we're too rigid about that and we need to not -- people's lives are much more complicated then this theological ideal. We need to recognize that and embrace that in a way.

  • 11:09:42

    REHMThe only thing here is that this document seems so open to interpretation depending on where you're coming from, James.

  • 11:09:55

    KITFIELDWell, I think Uri's right. That's kind of the style of this pope. He clearly wants to liberalize the church's approach to these issue without having to have a big fight about a change in doctrine. So, you know, he says, you know, divorce is still a sin in the Catholic Church. That's our doctrine, but we should, you know, welcome these people into our religious life, he says. He says, quite clearly, I'm not going to support, you know, gay marriage, but we should talk about, you know, loving relationships and honor and value them.

  • 11:10:33

    KITFIELDSo he kind of skirts with this idea of let's not be, as Uri says, so rigid in our doctrine or in our approach to people, but he hasn't really called for any, you know, dramatic changes in doctrine. And quite honestly, considering where other popes have been, that's pretty radical. I mean, that's a pretty welcoming change from a lot of people.

  • 11:10:50

    YOUSSEFBut I think the reason you're seeing that is this is a pope that understands that in order for the church to remain relevant and apart of the fabric of people's lives, rigid rules are no longer tolerable or enduring in the kind of world that we live in. And this is a pope that clearly recognizes that and is responding to it.

  • 11:11:08

    REHMAnd the pope announced he will -- or the Vatican announced he is going to make a visit to the Greek island of Lesbos on April 16. What do we know about that visit, Uri?

  • 11:11:24

    FRIEDMANSo we know he's going to go with the head of the Eastern Orthodox Church and the head of the Greek Orthodox Church. And Lesbos is very significant. It's been where a lot of migrants coming from Turkey, especially, half of them being Syrian migrants, have arrived in this Greek island of Lesbos in an effort to get to Europe. This is kind of almost the beachhead of the European migration crisis.

  • 11:11:46

    FRIEDMANAnd the Pope, since the very beginning of his time as pope, has really emphasized immigration. His first official visit outside the Vatican was to a Sicilian island, Lampedusa, which had seen a huge influx of North African migrants and he had an amazing line when he went to the island. He said -- he condemned the globalization of indifference, that was his term. And his point was that we are anesthetized, almost, to the plight of these migrants and the world has to wake up and leaders have to wake up.

  • 11:12:18

    FRIEDMANAnd ever since then, he was at the Mexican border when he visited Mexico and he prayed for immigrants who have crossed the border and honored those who have died to make that journey. He famously said in an apparent, though not explicit, reference to Donald Trump that we should, as Christians, be building bridges not walls. So this has been a major theme and I think this is a continuation of that.

  • 11:12:41

    REHMSo how does a visit from the Pope affect what's going on in this worldwide refugee crisis, James?

  • 11:12:51

    KITFIELDWell, I don't think it's going to have a real substantive impact on the new policy that the European Union has announced, where basically anyone who takes a boat from Turkey to Greece basically gets shipped back to Turkey and then gets processed there, which a lot of human rights organizations have a real problem with. I think the Pope is trying to do, which the Catholic Church failed to do during World War II when there was all this immigration crisis caused by the rise of Nazism and fascism, which is to shine a light on the human aspect of this, the humanitarian catastrophe that is this refugee flow.

  • 11:13:26

    KITFIELDAnd I, you know, I commend him for that. It's so easy to forget. I mean, you see all these anti-immigrant parties rising throughout Europe. They're obviously rising in this country as well, to his point about Donald Trump and he's trying to say, these are people and trying to humanize this -- what a lot of people see as statistics and are fearful of and he wants to sort of shine a light on that these are people, families, children, women and they're in deep, deep trouble and we should reach out to them.

  • 11:13:53

    YOUSSEFAnd I think he's been the most consistent voice and compassionate one in the world on dealing with migrant issues, when you've seen the sort of ebb and flow in parts of Europe. Angela Merkel in Germany advocating for migrants where other countries like Hungary and Slovakia being less receptive and, of course, the divisive response to migrants and immigrants writ large in this country. So he really has been consistent. Remember, just last month, he was washing the feet of migrants in Rome, which gives you a sense of how much he has been outwardly trying to communicate the compassion that we all must show towards migrants.

  • 11:14:31

    REHMAnd I must point out that the news media reporting that at least two people are dead in a shooting at a military base in San Antonio, Texas. The sheriff's office spokesman, James Keith, told MSNBC that the attack appears to be a murder/suicide. We shall know more, I'm sure, before long. Let's talk about the Panama Papers, James Kitfield. That story has dominated the news this week.

  • 11:15:13

    KITFIELDHas a real Wikileaks vibe to me...

  • 11:15:15

    REHMYou bet.

  • 11:15:15

    KITFIELD...which is to say maybe an astounding thing because we're learning so much about what has been commonly known went on, but the degree to which it goes on and who it affects and who takes part in these shell companies that, you know, some of them are not illegal, we should say. Some are very legal. Lots of loopholes...

  • 11:15:34

    REHMQuite right.

  • 11:15:35 our tax code that allows these things to happen and some of them are illegal 'cause you're not allowed to do these things specifically to avoid paying your fair share of taxes. But the amount, you know, 215,000 companies involved, 14,000 clients and that's from one Panamanian law firm. So you think about this is just a small slice of this global shell game of hiding wealth. And we're learning now that heads of countries, as well as pop stars, rock stars, sports stars, all kinds of very prevalent people are involved in these sort of shell games trying to hide wealth for whatever reason.

  • 11:16:11

    REHMBoy, that Icelandic prime minister got caught up because he was asked about this and sort of stuttered and bumbled and then walked away?

  • 11:16:23

    KITFIELDAnd then, he's gone. And that...

  • 11:16:25

    REHMAnd now he's gone.

  • 11:16:25

    KITFIELD...and I would place a bet right now he won't be the last to go. I mean, there are a lot of people that -- I'm not suggesting that Cameron, the prime minister of the United Kingdom, is going to go, but he clearly is caught up in this. His father had one of these shell companies. He has not released his own tax returns so he says that he has not avoided any taxes, but you don't know until he releases his tax forms so he'll be pressed to do that.

  • 11:16:49

    KITFIELDLabour Party in Britain is calling for an investigation. You know, the close-knit about President Putin of Russia has been funneling $2 billion just through this one company in a shell company that they set up for them. You know, where is that money coming from? Of course, Putin says, oh, this is, you know, an American plot to make me look bad, but, you know, he takes this you can believe me or you're lying eyes approach to almost everything. I don’t think it's gonna work because there's so much evidence here.

  • 11:17:14

    YOUSSEFI think it's fascinating which countries have been the most affected because I would argue the connective thread are populations in which there is a demand for the end of corruption or leaders who promise to end corruption. I mean, Iceland is so interesting in and of itself because you had a prime minister who was invested in this company, a wind test, and it was funded through banks that he eventually helped rescue during the bailout of 2008.

  • 11:17:42

    YOUSSEFAnd since then, Iceland -- the people of Iceland have had a real distrust of government, of financial institutions. And remember, their currency went down 60 percent during that crisis and the scar from that was so evident this week when you had hundreds of thousands of people in the streets saying, we're not going to tolerate this again.

  • 11:17:59

    REHMNancy Youssef of The Daily Beast. And we'll take a short break here. When we come back, we'll talk further about those Panama Papers. Stay with us.

  • 11:20:02

    REHMAnd welcome back. I want to let you know several sources are saying that there have been a number of arrests made in connection with the Brussels attacks. Sources cited in Belgian media say Mohamed Abrini is also likely to be the man in the hat seen on CCTV before the blasts in the Brussels airport departure hall on the 22nd of March. And we will let you know more about that as the news comes in.

  • 11:20:44

    REHMAn email from Kenneth on our conversation regarding the pope. Divorce is not a sin. Divorce and remarriage is without, as you said, Uri, an annulment. I wanted to get your thoughts on the Panama Papers.

  • 11:21:06

    FRIEDMANYeah, I think it's really, as James said, shed a light on something that was kind of going on all around us. It's almost like the Matrix. It was all around us for so long, but we weren't -- it wasn't apparent to us. I do think that one thing that, as a word of caution, is that this is about one law firm in one country, and it can offer a bit of a skewed perception about what this network looks like. So for example, a lot of the companies, the shell companies that were revealed in this leak, were either incorporated in the British Virgin Islands or in Panama itself.

  • 11:21:40

    FRIEDMANBut actually, you know, the United States itself has become something of a tax haven because states like Delaware and Wyoming have corporate secrecy, have low taxes. Some people have called it an onshore version of these offshore havens. And also places like some British overseas territories have a lot of investment in these kinds of tax havens.

  • 11:22:05

    REHMI mean, talk about cutting off your nose to spite your face, to allow that kind of situation to exist here when we so abhor its existence elsewhere, how do we justify that, James?

  • 11:22:23

    KITFIELDWell, I mean, I'm not sure we can justify it, and that's what may be very helpful about this. It might be that aha moment, where you say geeze you know, not only are we looking at all these offshore havens, but we're doing the same...

  • 11:22:36


  • 11:22:37

    KITFIELDWe're allowing the same thing to be done here in this country. And it plays into this whole populist anger about free trade. The Obama administration is now having to defend its free trade deal with Panama reached a few years back. We are now having -- you know, the Obama administration recently had a big success where the Treasury Department redefined the rules on these inversion to stop Pfizer from moving overseas. So we're -- this is a very, very big issue about fairness, about inequality, about the rich figuring out a way to get scot-free when it comes to carrying their tax burden, and I think it's going to be a huge issue in this election because, you know, we have allowed to, along with all of our other trading partners around the world, have allowed to be constructed a shadow sort of economy of shell companies that hides wealth and lets people get away with basically not doing their fair share, and that is a very strong argument, and it resonates very much in this sort of period of populism.

  • 11:23:28

    FRIEDMANAnd I think it's also important to look at the scale of this. So there's an economist name Gabriel Zucman who had tried to estimate -- it's very hard to estimate this industry. It's shadowy for a reason. And he had said that there's $7.6 trillion of offshore individual financial wealth. That's eight percent of total individual financial wealth. That means around $200 billion is lost in tax revenue around the world.

  • 11:23:50

    FRIEDMANSo that happens in the United States, but it can also happen across Africa, Latin America, where you can't -- you have less ability to resource basic services, health services, care for the poor, things like that, because a lot of the high percentage of individual financial wealth in the African continent, for example, is driven offshore, where it's not being taxed.

  • 11:24:12

    REHMAnd what the -- what representative from CATO argued on our program about this yesterday is that you cannot forget that those corporations provide hundreds and hundreds and hundreds of jobs. So what they're trying to do is keep their tax liability to a minimum, but they are producing a lot of revenue. What about China, Uri?

  • 11:24:44

    FRIEDMANAh, well, it hasn't really -- the Panama Papers leaks haven't really dropped in China. There has been very little discussion of it in the media, and it's -- the Chinese censors have been very active in trying to obscure some of the revelations because the affect some of high-ups in the Chinese political establishment. So for example, one of the people named is the husband of Xi Jinping, the president's older sister. And there have been reports for years that Xi Jinping's family has accumulated wealth, but of course Chinese official media outlets do not want to spread these things.

  • 11:25:16

    FRIEDMANSo there have been directives actually leaked from the Chinese censors that have said do not cover this. They've even said if you cover Putin, don't make it on your -- don't put it on the home page, bury it somewhere else. And what's happened with Russia. And so you do see social networking sites trying to get -- Chinese social networking users trying to get around this by, for example, posting screenshots as opposed to words about this because that's harder to censor if you have an image of some kind of report about this in the Hong Kong papers. But it's largely not been part of the discussion, and that's for a reason. They don't want this out to the public.

  • 11:25:49

    YOUSSEFSo in all we had eight relatives of either current or former leaders of China. I think it's interesting that this firm -- for this firm, China was its most important client, 16,300 offshore firms set up out of China. Twenty-nine percent of their customer base, if you will, came out of China, so -- often through -- by way of Hong Kong. The other thing I think is interesting and worth pointing out is President Xi has been pushing for austerity measures in China, and now we start to see that, as many had suspected, that the families of the privileged weren't -- the rules didn't apply to them the way that they had been applying to the rest of China.

  • 11:26:28

    REHMOkay, so this is one law firm, this is one set of documents. What does this imply about these offshore tax havens worldwide?

  • 11:26:43

    KITFIELDI think it implies that they are much more extensive than we'd ever imagined. This is one company, 215,000 companies from this one law firm. So do the math. This is just one law firm in Panama. What -- you could look under the sort of cover of secrecy in places like, you know, Belize or the Virgin Islands or -- I mean, this is just the tip of the iceberg, and it's massive, which is why I think it's an aha moment because people are going to look at this and say we have to do something.

  • 11:27:16

    REHMWhat can be done?

  • 11:27:17

    KITFIELDWell, I mean, we have allowed this to happen. You can pass laws that you cannot -- you are not allowed to set up a shell company unless it's very transparent what goes into that, where it came from, was it taxed. I mean, we're perfectly within the capability of the international financial community and international governments, and of course it has to be led by us because we are sort of the default leader of the international...

  • 11:27:39

    REHMDoes it have to be the Congress that does something about that?

  • 11:27:41

    KITFIELDSure, so it probably won't get done.

  • 11:27:43


  • 11:27:45

    FRIEDMANI think it all -- yeah, it does speak to why reform is so hard. So just take as one little, quick case study, in the UK David Cameron has admitted he had a stake in his father's offshore trust.

  • 11:27:54


  • 11:27:55

    FRIEDMANAt the same time, David Cameron has been one of the people railing against financial secrecy. He's been a supporter of a public registry in the UK to identify beneficial owners of companies, which are cloaked in secrecy otherwise. He's convening a conference in May on anti-corruption. So this is interwoven. You have -- it speaks to hypocrisy because we're all kind of -- leaders are involved in this and also trying to stop it.

  • 11:28:19

    FRIEDMANAnd so trying to now multiply that onto an international scale, how do you create something international, like an international court for financial crimes or a global registry of companies and tax data, how do you do that when everyone's a bit involved and also a bit thinking about reform. It's very hard to coordinate.

  • 11:28:36

    REHMAnd how come, thus far at least, no big American names have shown up on this list?

  • 11:28:43

    YOUSSEFWell, as we've discussed, there are options in the United States, notably in Delaware, Wyoming, Nevada, and this sounds silly, but among Americans, Panama wasn't sort of the first choice. It was places like the Cayman Islands and other places. So Panama wasn't always at the top of the list.

  • 11:28:59

    REHMSo we need Cayman Island papers, is that it?

  • 11:29:03

    KITFIELDYeah, of course, and let's not forget that, you know, just last election cycle, our -- the Republican nominee, Mitt Romney, you know, got in trouble with the voters because it was revealed that he had some offshore dealings, and he said why, you know, that was up to my accountant, I don't care. I mean, basically it became a problem with him. So I don't think anyone in America should be sitting too comfortable in their seats if they got involved in these things. And this is very common.

  • 11:29:30

    KITFIELDSo I expect as we learn more about this, you'll see plenty of Americans sort of caught in this net.

  • 11:29:34

    YOUSSEFCan I just add, I think it's also, in an age of such great income inequality, where there's rich and poor, you're starting to see worldwide protests and demands from government officials to address corruption because I think people make the link between the income gap and corruption, and worldwide we're seeing more protests and more calls for accountability. And these papers will reaffirm people's commitment to doing that.

  • 11:30:00

    YOUSSEFSo even if we don't see acts by Congress or formal reforms, I do think this will contribute to a growing public sentiment of more accountability, more transparency and more accountability from their government officials.

  • 11:30:13

    REHMI hope you're right.

  • 11:30:14

    KITFIELDBut Diane, can I just make one point?

  • 11:30:15


  • 11:30:15

    KITFIELDThat, you know, look at what the Obama achieved by just a rule change from the Treasury Department.

  • 11:30:20

    REHMI know, and look at the outcry.

  • 11:30:22

    KITFIELDLook at the -- look what was accomplished. You know, just that was just one firm, over a billion dollars in tax revenue saved. So I'm sure there's all kinds of things that can be done along the edges. If you can have significant international reform, it will probably require something from Congress. But literally I think government's going to have to start taking this seriously, and there's plenty that can be done to make this system much more transparent.

  • 11:30:43

    FRIEDMANPew did a study in 2014 and found -- they surveyed 44 countries, and across those 44, majority -- public majorities in every country were -- thought the gap between the rich and the poor was a major problem for their country. This is kind of the context in which this is falling. There are a lot of countries where there's real concern about economic inequality brought on in part by the 2008 financial crisis, which kind of accentuated this.

  • 11:31:08

    FRIEDMANAnd I think you see that in how quickly Iceland's prime minister resigned. This is not being tolerated the way it once was.

  • 11:31:15

    REHMAll right, let's open the phones on that subject to Ian in Indianapolis. You're on the air.

  • 11:31:24

    IANGood morning, all. Thank you for taking my call.

  • 11:31:25


  • 11:31:25

    IANLove your show, Diane.

  • 11:31:26


  • 11:31:27

    IANMy question is, and I know this is -- the Panama Papers is just one law firm, you know, making new revelations. But if we could learn, what dollar amount, maybe ballpark, could we assess that if these companies implicated in the Panama Papers were to have otherwise not engaged in this tax evasion, as it were, about how much money would have funneled back into the tax -- in the U.S. tax system?

  • 11:31:57

    IANAnd B, you know, obviously like your panel previously stated, since Congress is likely to do nothing about this problem, what can, you know, John Q. Public do to maybe combat the inequality -- wealth inequality that this represents other than, of course, getting out the vote for Bernie in this...

  • 11:32:13


  • 11:32:15

    KITFIELDWell, you know, Congress responds to public outcry. So there's -- I have every faith that Congress is going to feel pressure to come up with an answer to this, as will the Obama administration. In terms of putting a price tag on what American companies involved in this have lost, what the government's lost in terms of their tax revenue, I haven't seen that estimate made. I've seen some very sort of aggregate figures like Uri had mentioned, you know, of trillions of dollars worldwide involved in this, but it's not very clear to me.

  • 11:32:43

    KITFIELDI mean, this just came out. There's 2.6 terabits of data still to -- that 400 journalists around the world are going through. So this is going to be a story much like WikiLeaks. This is going to be played out over the next year or two. And you'll see constant stories, and I think we'll learn a lot more.

  • 11:33:02

    REHMAll right, and to Peggy in Durham, North Carolina. You're on the air.

  • 11:33:07

    PEGGYGood morning. I had been reading in the media about the Panama Papers, knowing that it was such a huge story, and I was looking for American names because I want to say aha, they got you. And I hadn't sent -- there was a dearth of information about Americans. Read my newsletter online from the Brookings Brief, the Brookings Institution this morning, where Clifford Gaddy is suggesting that this not being an inside job but rather that this was an outside job and that this could be very well be hacking by the Russian intelligence, overseen by Putin. And what is not revealed in the papers could very well be a tool for blackmail.

  • 11:33:52

    REHMInteresting thought, and you're listening to the Diane Rehm Show. Your reactions, James?

  • 11:34:03

    KITFIELDWell, it would be surprising to me if it was a Russian hack since it revealed that Putin and his little inner circle is, you know, probably funneling at least $2 billion through this one company into shell companies abroad. The way it started was it was an anonymous source called the Suddeutsche Zeitung newspaper in Germany and said, you know, are you interested in data. That data coming from the outside seems to me very unlikely because this law firm would never allow this kind of data to be in the hands of someone who wasn't inside the circle of trust inside its company, I think. So you're probably looking at an inside job.

  • 11:34:36

    KITFIELDThey've given every indication they're going to try to find out who leaked this, but the cat's out of the bag whether they find him or not. Who knows who it is.

  • 11:34:46

    REHMLet's turn to yet another big story this week internationally, impeachment hearings continued against Brazil's president. Now the vice president may also face impeachment.

  • 11:35:02

    YOUSSEFIt is quite a scandal in Brazil. So President Rousseff, the vote was made this week that she should face impeachment hearings, and those will begin next week. The way it works is if two-thirds of the lower house votes for her to be impeached, she is suspended from office for 180 days. If the upper house votes in that time for her impeachment, she will be removed from office, and it goes to the president.

  • 11:35:25

    YOUSSEFExcept the vice president now is facing possible impeachment hearings for a corruption scandal, and so it's supposed to go to the speaker. The next two up are the speaker of the lower house and the Senate speaker. Except they're under investigation. And so it's just a corruption scandal and a corruption scandal and a corruption scandal. This -- you know, this is -- she was re-elected in October of 2014, and within -- or 2014, and within a year, this sort of started erupting. And people have been in the streets of Brazil since December of 2015, most recently last month.

  • 11:36:00

    YOUSSEFI think it really stems from the World Cup and the amount of money that was spent on it and the outrage over that. And now with the Olympics coming up and the expectation that a lot of money will have to be spent on that, it's unclear if they'll be even able to have the funding to put on the Summer Olympics in the way that they had hoped.

  • 11:36:20

    REHMAnd with the Zika virus really overshadowing an awful lot and perhaps changing people's plans, you have to wonder whether this should continue.

  • 11:36:39

    FRIEDMANThe political crisis? Yeah, I mean, I think it's really affecting things like public health services, and for example there's been evidence, not confirmed, but evidence that Zika can be sexually transmitted. But the Brazilian Health Ministry has not really gotten out the word on ways to avoid sexual transmission of this. They have not...

  • 11:36:56

    REHMAlso, also warning women that if you plan to get pregnant within the next two years, don't come to Brazil.

  • 11:37:07

    FRIEDMANRight, exactly, and so the warnings have been really dire in a lot of countries, not only in Brazil, and I think that it is affecting those services because of the political paralysis.

  • 11:37:20

    REHMAll right, short break here, and when we come back, more about Brazil, what's going on there. Your calls, comments. Stay with us.

  • 11:40:02

    REHMAnd welcome back. A tweet from Brian. Prime Minister Cameron had $40,000 U.S. dollars, not $4 billion or even million. And he paid taxes after selling his stake. And we should say he sold that stake before he became prime minister. Another email from Sandra. When discussing the Panama Papers, please be careful when you say Virgin Islands. The British Virgin Islands operate under different laws in the areas of tax, corporations and banks than the U.S. Virgin Islands. Who's worse?

  • 11:40:52

    KITFIELDYeah, I mean, I think from this current scandal, there's been a lot of speculation that a lot of these shell companies are in former British colonies and that maybe Britain has kind of a lax attitude towards this. But quite honestly, I don't think the last shoe has fallen on all this. We'll see if our own Virgin Islands or other tax shelters that we allow to exist like in Delaware, get wrapped up in this kind of a discussion.

  • 11:41:18

    REHMAll right, let's go to Alex here in Washington, D.C. You're on the air.

  • 11:41:24

    ALEXHey Diane, big fan of the show. I listen every week.

  • 11:41:27

    REHMThanks. Thank you.

  • 11:41:27

    ALEXJust about every week I hear a caller or a panelist talk about the need for the United States to take more migrants from Europe. I guess I was just a little curious. You know, a couple of years ago, I think we had 70,000 unaccompanied children, and that's just the unaccompanied children, and, you know, tens of thousands of others. How many of those migrants did the Europeans take at the time? And why, if we don't know the answer, should there be a different answer for Europe versus the United States? Thank you.

  • 11:41:57

    YOUSSEFWell, I'll say this. I think the reason so many people say that the United States should take migrants, and I'm just giving you sort of a view from the Middle East and from parts of Europe, is that many people hold the United States responsible for the crises that led to the migrant crisis. For a lot of people, the original sin was the Iraq War. And so you'll hear a lot of Europeans say the U.S. should take more migrants because they were a -- the biggest contributing factor.

  • 11:42:18

    YOUSSEFAnd so that's why I think the comparison that Alex is making is not quite right because this wasn't simply about borders but about crises that were spurred on by the wars. Now the counter argument is that Europe was just as involved and supported the war and depended too much on the U.S. military to sort of lead its approach to the Middle East and to the post-9/11 world. But I think that's why you hear that criticism so much. For a lot of people, it was the U.S.' actions that really spurred the crisis that we're seeing now.

  • 11:42:54

    KITFIELDI would also point out that we are only being asked to take a small fraction of what Europe and our allies...

  • 11:43:00

    REHMTen thousand?

  • 11:43:01

    KITFIELDWell, the Obama administration talked about 80,000, I think, for a year of Syrian refugees specifically because they are -- they are open to asylum claims. Turkey's taken in 2.5 million, Jordan over a million, Europe itself over a million just in the last year. So what we're talking about is kind of a good-faith gesture that we'll help our allies with this really existential problem, but we're not -- we're not shouldering anything like the burden that people closer to the crisis are.

  • 11:43:32

    REHMAll right, a caller in St. Louis, Missouri, you're on the air.

  • 11:43:37

    UNIDENTIFIED CALLERYes, Diane, fabulous show. You're incredible. Where does the actual, physical money end up? You keep talking about the fact that these are fake companies, and where does the actual, physical money end up?

  • 11:43:54

    REHMDoes it go into a safety deposit box? Where does it go?

  • 11:44:00

    FRIEDMANYeah, this is, like, one of those dolls where you open it up, and there's another doll, and you open up another, you know.

  • 11:44:03


  • 11:44:04

    FRIEDMANSo this can be really complicated. So just to give you a sense of how this can work, you could have a physical bank account in Switzerland, but it's owned by an offshore company in another jurisdiction, a legal structure. That offshore company is owned by a trust in a different jurisdiction, and then you could have the trustees in a different jurisdiction. And these are just different ways that these elaborate schemes can happen that you can kind of conceal the identity of the owners or the funds.

  • 11:44:30

    FRIEDMANAnd so...

  • 11:44:32

    REHMAnd do those funds earn interest?

  • 11:44:35

    FRIEDMANYes, they can, yeah.

  • 11:44:36

    REHMLots of interest.

  • 11:44:38

    FRIEDMANYes, exactly, exactly.

  • 11:44:40

    REHMAnd then what happens if somebody wants to get that money out? Is that a simple process?

  • 11:44:49

    FRIEDMANMy understanding is that it can be relatively simple. And I think that -- you know, there hasn't been a lot of research done on where the physical funds are and how they're distributed across these different havens and, like, trying to geographically plot that. But my understanding is that it can be because there's not so much scrutiny on that money. And so it can be easy.

  • 11:45:09

    KITFIELDAnd, you know, and I'm not an expert on shell banking, but, you know, basically money exists as a number on some bank's bank sheet. And all these are just numbers that are traded from different banks to different banks. Where the money actually ends up is probably at a keystroke, wherever the person who has, you know, the trustee at the bottom of this sort of, you know, network...

  • 11:45:31

    REHMWants it to go.

  • 11:45:31

    KITFIELDWhere he wants it to go. He goes to his local bank and says deposit so much money in my bank, keystroke. I go there, and the cash gets picked up at a local bank anywhere. So that's -- we've created this globalized system of finance, and it's very complicated, but, you know, it's amazing at moving money wherever you happen to want it.

  • 11:45:47

    REHMAll right, to Waldorf, Maryland. Trent, you're on the air. And Trent, before you speak...

  • 11:45:55

    TRENTYeah, hi Diane, how are you?

  • 11:45:55

    REHMFrench police officials are confirming that the Paris attack suspect Mohamed Abrini has been arrested in Belgium.

  • 11:46:09

    YOUSSEFThat's such an extraordinary development because you now have a very tiny cell, it appears, that was able to carry out attacks in both Paris and Brussels within a few months of each other. This is another person who is part of a very tiny cell, Salah Abdeslam's cell. It's extraordinary that so few people were able to carry out two massive attacks on Europe.

  • 11:46:29


  • 11:46:30

    YOUSSEFThe biggest attack in Belgian history.

  • 11:46:32

    REHMAll right, Trent, you're on the air.

  • 11:46:36

    TRENTHi Diane, how are you?

  • 11:46:36

    REHMHi, fine, thanks.

  • 11:46:39

    TRENTGood, I've enjoyed your show for a long time. I appreciate you doing it.

  • 11:46:42

    REHMThank you.

  • 11:46:43

    TRENTNo problem. I was only calling -- maybe I'm stepping backwards with regard to the Panama Papers, but there's a couple things. One, I find it intriguing that, right, Putin's default response was that this was Western media attempting to make him look bad. And unfortunately given the list of quote-unquote suspects in the papers and sort of a conspicuous exclusion of others, whether there's regions or whatever, his statement may gain ground. I think if you reconcile the leaders or reconcile the people listed, a lot of them are in countries where there's interesting civil, economic occurrences happening where the quote-unquote West economic interests are involved.

  • 11:47:29

    TRENTAnd in addition to that, as was stated by your panelists, inherently there's going to be a response to this to capture more of the dollars that were lost due to these activities. But speaking to the West economic interest, the key is going to be once these countries retrieve these dollars, what happens to them? Do they go to servicing the massive debts of these particular countries, or will they be used to better those particular countries?

  • 11:48:04


  • 11:48:05

    KITFIELDWell, I mean it -- I've grown a little cynical, too, about the ability actually to recover all the funds involved in something like this. I think what you're -- what more likely will happen is hopefully it will lead to some reforms so this kind of things doesn't keep happening. But I don't think under the rules of international finance you're allowed to confiscate. A lot of these things, quite honestly, have been done legally. I mean, it's legal to put money into these shell companies.

  • 11:48:30


  • 11:48:30

    KITFIELDAnd so I don't think that a lot of money is going to go pouring back into these countries that'll be used for, you know, government services. I don't expect that to happen.

  • 11:48:39

    REHMSo you've got to change the tax laws, Uri.

  • 11:48:40

    FRIEDMANYes, yes, and just on the point on the way Putin has cast this and described this, you see this in Russia and in China, a degree to which people are saying they're out to get us. You know, this was by an international consortium of investigative journalists based in D.C. There was a German paper reporting on it. And so there's -- and there haven't been as many, there have been some like David Cameron, the Icelandic prime minister, but there haven't been so many Western leaders.

  • 11:49:04

    FRIEDMANSo you had an editorial in the global times that said this is conspicuously not naming Western leaders and out to get Putin. I think, you know, that's the conspiracy theory side of it and the way that these countries are spinning it. Even one of the leaders of the Panamanian law firm, Ramón Fonseca, said we just don't do business with Americans. We do business with Latin America, with Europe. Those are our markets. So there could be very banal explanations, too.

  • 11:49:30

    REHMAll right, to Lebanon, New Hampshire. Robin, you're on the air.

  • 11:49:35

    ROBINHi, I wanted to just make a point that I think it's a mistake to be citing the state of Delaware in the same breath with Panama or British Virgin Islands or other offshore havens. Delaware has had a long history of favorable tax treatments to corporations within its -- that incorporate and operate within its bounds. But that's not -- by incorporation in Delaware, a corporation saves money but does not avoid the U.S. tax code. It's just not. It's not a haven in the same sense as an offshore haven is.

  • 11:50:15

    REHMAny comments?

  • 11:50:16

    KITFIELDI'm not -- again, I'm not an expert, so I'll take that. I will say that I think it was National Public Radio that did an investigation where it tried to set up a lot of shell companies, and they found out that one of the easiest places to do, requiring the least documentation, the least identification, et cetera, was in Delaware. I was kind of astounded by that.

  • 11:50:34

    REHMOkay, so what you have to do is define a shell company. What is a shell company? How does it get incorporated? How does it gain legitimacy? What is the justification for being able to stash great amounts of money in a shell company? Maybe Robin knows. Are you still there?

  • 11:51:03

    ROBINI'm still here, Diane. You know, a shell -- I'm not an incorporation expert, but I can tell you that a shell company is basically company that exists on paper but may not have direct operations of its own, okay. So it may own other stocks, or it may have cash, or it may have other assets, but it's not -- usually a shell means it's not an operating company.

  • 11:51:28


  • 11:51:28

    ROBINBut you can stash money in a Delaware corporation, and that does not shelter those assets from the IRS.

  • 11:51:38

    REHMAnybody disagree here?

  • 11:51:39

    YOUSSEFWell, I just would say the firm that we've been talking about the center of the Panama Papers, their job was to -- you establish a corporation, and they -- and they administer it. And so I think that's the first and sort of the wall that you put up or the ability to sort of make things more opaque. And again, I'm not an expert, but my own reaction is, is there not a difference between the sort of the setting up corporations that happens in places like Delaware and a shell company. And I think that's the distinction that I hear that James is making and what Robin is pointing to. But again, I'm not an expert, but that's sort of my first gut reaction to it.

  • 11:52:15

    REHMBut you know, this is an issue I think the American people and people all over the world would like to know more about, exactly how these companies work, how they operate, how much money they actually cost the ordinary citizen and the middle class itself and to what extent does their existence really take away from the overall welfare of the general society.

  • 11:52:50

    YOUSSEFOne of the challenges in learning about this, I know there have been some British investigative reporters who have tried this, it is very expensive. We're talking tens of thousands of dollars just to get the documentation needed to begin to open this can of worms. So there are limitations in terms of finances. The team that worked on this, the investigative team, we've mentioned a few of them, we're talking about 100 news organizations in 80-plus countries spending over a year. That's the kind of time and investment that's needed at a time when investigative journalist is not getting the kind of funding and support that it needs. This is a wonderful testament to why it should continue to exist, but it comes at a very challenging time for the industry.

  • 11:53:29

    REHMAnd you're listening to "The Diane Rehm Show." On that note, Nancy, it does seem to me you've got so many bureaus, so many newspapers that formerly did go into these issues very, very deeply. I think The Atlantic still is doing that, Uri, wouldn't you say?

  • 11:53:53

    FRIEDMANOh yes, I'd agree with you. That's our goal.

  • 11:53:57

    KITFIELDAnd it's very telling that this was done by a group, this international consortium of investigative journalists, which is funded not by, you know, paid journalism. It's funded by foundations, it's funded by nonprofits because of what Nancy is saying, because so many investigative journalists have gone off the beat because of what's happened in the reshuffling of the whole media industry, you're now seeing this new model come up where journalism is funded by nonprofits and other organizations because it's just not being done by a lot of publications. They can't afford it anymore.

  • 11:54:21

    FRIEDMANAnd I think that the approach of the international consortium is really interesting, too, because they basically went to different papers and different countries and news outlets and said you know your country better than anyone. You know the financial context here, what's been reported and what's not about corruption, about the way people handle their money. Why don't you look through the papers. They even created, like an internal Google, where they could search, and you could -- you're going to search Putin, you're not going to find anything, but you know who his confidants are. You know who his best friends are. And so you can kind of search and look for names and look for ways to identify people in your country who would be relevant to that kind of reporting. And so I think it was a very smart approach by them.

  • 11:54:56

    REHMBut that's so interesting because James, at the start of our discussion on this, you compared this revelation to WikiLeaks, which was a deliberate leak on the part of certain individuals. This is very different.

  • 11:55:17

    KITFIELDWell in what way? Because this was a deliberate leak by a certain individual who knew, had these records and was willing to share them with the media. That's very close to what WikiLeaks was. You had a lot of -- you had someone who had access, it happened to be a low-ranking military guy, but had access to a huge trove of State Department cables and released them to Julian Assange of WikiLeaks, who was the sort of conduit. In this case the conduit was this international reporting consortium.

  • 11:55:41

    KITFIELDBut it was -- it started the same. Some whistleblower said this reeks, and I'm going to call a journalist and give it to them, and that person...

  • 11:55:52

    REHMBut what I'm saying is you had an international news consortium working on this in the first place. So that does, doesn't it, make a different...

  • 11:56:05

    KITFIELDWell, you don't have the middleman of an Assange, but what he did was then reach out to the New York Times and the British Guardian.

  • 11:56:11


  • 11:56:12

    KITFIELDSo there was a middleman in the other one, but to me, the sort of -- the dynamic is pretty similar, where you have a whistle-blower, and then you have the media getting on to this and spending a huge amount of resources to get at the bottom of the story, and we're still seeing, you know, WikiLeaks mentioned in stories today.

  • 11:56:28

    REHMOf course.

  • 11:56:30

    KITFIELDWe know this happened because WikiLeaks, you know, showed this cable back in 2004, et cetera.

  • 11:56:36

    REHMAnd so many more revelations, I would think, to come on these Panama Papers.

  • 11:56:40

    YOUSSEFTo me the biggest difference is WikiLeaks, you as a consumer could go through and find stories yourself or find the information. It was a manageable document dump. You could search, you could Google, you could go through. I mean, if you were a government employee, you might get in trouble for it, but it was -- it was -- you could read it and understand it. These kinds of documents demand such a fine eye.

  • 11:57:01

    YOUSSEFI mean, the McClatchy News Agency, which was my former employer, dedicated four journalists, and for those -- for months and months they didn't write any story, but that's how much time and investment it took to really understand what was before them.

  • 11:57:14

    REHMNancy Youssef, now with the Daily Beast, Uri Friedman, he's staff writer covering global affairs with The Atlantic, James Kitfield, contributing editor with the National Journal, senior fellow for the Center for the Study of the Presidency and the Congress. Thank you. Have a great weekend. Thanks for listening, all. I'm Diane Rehm.

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