The Trump Administration, with its unorthodox diplomatic tactics, greatly changed the way in which backroom deals are cut. Even before Trump, obviously, almost everyone knew that some degree of arm-twisting takes place between American leaders and their weaker counterparts, but Trump’s braggadocio style made it blunt. He would embarrass other leaders by imposing ultimatums on them publicly. In Biden’s case, it is more subtle, and even interesting to sow together the pieces. Hours to the Thursday meeting between Biden and Uhuru, the White House released a telling statement.
“President Joseph R. Biden, Jr. will host President Uhuru Kenyatta of Kenya at the White House. The leaders will discuss the strong US-Kenyan bilateral relationship and the need to bring transparency and accountability to domestic and international financial systems,” said a White House statement on the meeting.
The financial systems spoken of were in regards to the global minimum tax that USA had been proposing.
Kenya withheld backing for US President Joe Biden administration’s push for a global minimum rate of tax on multinational companies because the deal will stop Nairobi from collecting taxes from tech giants such as Google, Facebook and Amazon.
Kenya, Nigeria and Algeria are among the top African economies that have yet to back the deal. Major African economies that have backed the agreement are Egypt, South Africa and Morocco.
All of the Group of 20 major economies, including China and India, which previously had reservations about the proposed overhaul, have backed the US-driven global minimum tax on multinational corporations.
The Paris-based Organisation for Economic Cooperation and Development (OECD), hosted talks earlier on about the overhaul of taxation rules. The body revealed that Kenya was missing from the list of 136 countries that have backed the agreement.
A Biden Administration official then told Associated Press that the US President intended to raise the Pandora Papers issue with president Kenyatta during their one on one talk. In a pre-meeting Press Briefing by White House Press Secretary Jen Psaki, the Press Secretary was asked whether or not it was “rich” to discuss transparency with Kenyatta given that Biden was a “poster boy” for the use of murky offshore structures. Psaki avoided answering the question directly but insinuated that Biden would follow through.
Worth noting is that Uhuru Kenyatta and his family were mentioned adversely in the recently released Pandora Papers exposé detailing leaders who have stashed money in foreign tax havens. At the same time, Biden has previously been a strong defender of such financial systems in the past.
After their meeting concluded, an interesting and telling readout was issued. It said that the leaders “underscored the need to bring additional transparency and accountability to domestic and international financial systems.”
“Our nations share a deep commitment to fairness and to respect and equity,” Biden said. “And I’m committed to further elevating our ties with Kenya and nations across Africa as a whole. But Kenya is key to this.”
The phrase “International Financial Systems” had been used earlier to refer to the Global Minimum Tax rate. This time, it was referring to Pandora, and how the issues had been brought to Mr. Kenyatta’s attention. A clear carrot and stick case.
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