I constantly see “experts” pitching jurisdictions saying how great and perfect they are, but the reality is that there are no true safe havens anymore.
The reality might shock you, but there are absolutely no more true safe havens left. There is no single place where you can move to personally, with all of your assets, and be entirely safe.
In a highly globalized world, everything is interconnected, for the better and for the worst. There is always someone / a group of people / a government out there who might want to have a go at you or your assets, for a variety of reasons, even if you didn’t do anything wrong yourself; just ask Iranians, Russians, Syrians and Westerners such as myself who invested in Russia and got caught up in their own government’s sanctions).
In this short video I elaborate on why Switzerland, Dubai, various European micro-states, crown dependencies, Panama, Singapore, etc are NOT the perfect safe havens that many people would like you to believe.
In a world of heightened geopolitical tensions, no single place is absolutely safe
The safest strategy is to be diversified. And with diversification comes more exposure. At any given point something, somewhere in your portfolio will be going belly up.
The days of stashing everything in Singapore or Geneva and feeling 100% safe are gone. The “new world” we have to live in will be marked by tension, betrayal, and extremely aggressive governments and people.
However, with the right strategy, and particularly the right mindset, it is possible to mitigate the risk, and even thrive.
These are the sorts of straight conversations that take place in my internationalization and diversification consulting calls.
To a World of Opportunities,
The Wandering Investor
If you want to discuss your internationalization and diversification plans, book a consulting session* or send me an email.
*a consulting session is a discussion about your portfolio and objectives. It does not constitute legal, financial, tax or investment advice.
Full transcript of True Safe Havens do NOT exist anymore
Hello, Ladislas Maurice from thewanderinginvestor.com. So, today, I will elaborate on why I believe there are no true safe havens anymore. We’re going to go through a list of traditional safe havens and I’ll explain, safe haven by safe haven, why I believe that they’re not true, true safe havens in the traditional sense of the meaning.
Switzerland is not a true safe haven anymore
So the first one that everyone knows about is Switzerland. So what’s quite amazing about Switzerland is that when you take a step back and look at the country’s history, they are a country that is composed of Germans, Italians, and French. And through two world wars that entailed France, Germany, and Italy shooting at each other, they managed to stay completely neutral, even though they were right in the middle of it all. And this, ultimately, is what made Switzerland so special and so rich. But what’s happened is, in the meantime, Switzerland has signed a bunch of agreements with the European Union, has become a lot more closely aligned with the West in general.
And recently, we saw what happened with the whole situation between Russia and Ukraine, Switzerland imposed sanctions on some Russians. So essentially, Switzerland is now taking sides when there is a conflict. So before, if we were going to take a stress test, and if the Russians would have, you know, come through Europe with their tanks, they probably would have gone around Switzerland, because Switzerland would have absolutely not been involved at all. But now Switzerland is actually a target. And you, as an individual, when you’re putting your money in Switzerland, you’re now at the risk of falling under some sanctions that the Swiss are now aligned with. So some Swiss politicians are now saying that if China were to make a move against Taiwan, then Switzerland would impose sanctions on China as well. So, essentially, Switzerland, as a true haven, is a thing of the past.
Other small European countries and territories
Then you’ve got these little European countries like Liechtenstein, Andorra, Monaco, they’re too small to matter. They invariably get bullied by the European Union, so they’re not safe havens.
British Crown Dependencies are too political
Then you have the British Isles, such as Guernsey, Jersey, Isle of Man. So typically, they offer interesting banking but the issue with these isles is that they’re too linked to the United Kingdom. If the UK imposes sanctions, typically, they just run with it. I would tend to say that the British Isles have an undue reputation for being welcoming of foreign wealth. So if you take a step back and you look at what happened to Russians, so in the 2000s, they were being welcomed with open arms by the English, with a lot of flattery, like the English like to do. And then things changed. They got stabbed in the back, they got their residency permits revoked, a lot of them had their assets frozen, and they were kicked out of the country. So this is a true risk for people who put their money in the UK or in the British Isles thinking that it’s a safe haven. It’s all marketing.
If we’re completely honest with ourselves, the reality is that the UK is a highly belligerent country. Throughout centuries, they’ve been waging war all over the world. They are an extremely aggressive nation from a foreign policy point of view. They’re getting involved in everything, everywhere, they are very belligerent. So it is absolutely not a safe haven. And that’s a mistake that a lot of people are making. So if you’re Egyptian, if you’re Serbian, if you’re Turkish, do not put your money in the UK thinking that it will be safe there, because who’s to say that you, an Egyptian, are not the next Russian, that you, a Serbian, we see things happening now with Kosovo, are going to be branded like the next Russian. And the West takes a collective approach. So they don’t mind putting sanctions on a whole nation, including all the individuals, and not just government officials. So no, the UK and all of these British dependencies, these Crown dependencies, these British islands are absolutely not a safe haven. Do they offer good banking and other financial services? Absolutely. There’s a space for them in one’s portfolio, but people should not see it as a real safe haven.
Carribean countries are not independent enough
Then you’ve got the Caribbean. So the issue with the Caribbean is a mix of the issue that the British Isles have and that the small European countries have in the sense that they’re just too small to matter, they get bullied around by the UK, by the European Union, and by the United States. We see this a lot with their banking, whenever there’s an issue, correspondent banking gets cut off and then, suddenly, you have these banks, they’re not able to send dollars abroad anymore. And you see it as well with the citizenship by investment programs that are a lot of these islands are running. They’re constantly under pressure from the European Union, from the United States to shut them down, to improve compliance, to put pressure to say, you can’t accept these countries, you can’t do this, you can’t do that. They’re not true sovereign nations, because they’re just too weak.
Panama has social issues
Then you’ve got Panama. So Panama has a lot of good things going for it. But the issue is it’s constantly on people’s blacklist, it’s constantly on the European Union’s grey list, blacklist, trying to send money from there to the European Union is nearly impossible. We’re seeing, right now, there have been a lot of protests in Panama for a few weeks. Like the whole supply chain situation is messed up because of the protests, stores are running dry. So can you have a true safe haven when there is, one, such a high level of cartel activity, and, two, such political instability on the street social instability? So for now, it’s still fine, but it just shows that there is inherent stability in the system in Panama. So is it a true safe haven? Unfortunately, it’s not.
Dubai’s judicial system is too biased to be a true safe haven
Then there is Dubai. So a lot of people are going around, “Dubai, Dubai. Dubai is amazing. Dubai is this, Dubai is that.” So with the whole Ukraine-Russia situation, it’s done quite well, it stayed out of it. It has accepted Russian money, so it has proven to be a safe haven for Russians. But the reality is Dubai is not a safe haven from two points of view. One, it actually has a pretty belligerent foreign policy. It was involved in Yemen, it got in a ridiculous fight with Qatar, etc. It’s always it’s very politically active. And with political activity comes geopolitical risk and potential issues. And you believing that Dubai is a safe haven because of all of the marketing, you could run into issues because you never know, something’s could happen between Iran and Dubai. Right now, they seem to be getting closer to each other, but what’s not to say that they could have major issues.
The second thing with Dubai, and that’s across the Gulf, is, as a foreigner, and this is a point that either never gets mentioned by people selling Dubai because they’re overseas and they absolutely do not understand how the Gulf operates, or because they live in Dubai and they’re not allowed to say otherwise. So when you live in the Gulf, as a non-citizen, you have absolutely zero rights. If you run into legal issues with a local, whether you’re right or wrong does not matter, you will always be on the losing side from a legal point of view. You’ll just lose in court, and it’s always going to be your fault. So you do not have there is no true rule of law in the Gulf. There are two different legal systems. One is the protection for locals, the other one is for foreigners.
So nothing wrong with Dubai, a lot of positive things about Dubai, a great place to get residency, no taxes, fun place, great airlines, great travel base, lots of things to do. I like Dubai. But the point is people that are selling you this dream of Dubai being perfection are absolutely wrong. It is not a safe haven. And people who know Dubai and who live in Dubai are not putting all their savings in Dubai because they understand the reality. They live in Dubai, they have maybe a house, an apartment, a few things, but the bulk of their savings are overseas.
Mauritius has the potential for social issues
Then you have Mauritius. So Mauritius is quite interesting because it’s managed to stay out of the spotlight. It’s doing a lot of business between Africa and India. No one really talks about it. It offers actually very decent financial services. But the issue with Mauritius is that it does have a tendency, once in a while, to pop up in some grey lists. Not blacklists but grey lists. And they had, during the whole issue, the whole COVID issue, they had extremely hard lockdowns, which meant that you couldn’t even get into the country. So you couldn’t even have access to whatever you had there if you didn’t have the proper power of attorney, etc, that was set up. And also it is a country with relatively high levels of inequality and of racial disparity, which could prove to be an issue if the economy were to hit a tough spot. So the inherent stability of the country is not guaranteed. So it’s doing better than a Panama. We’re not seeing all the issues that Panama is seeing, but they are a potential risk.
Hong Kong is an example of what can happen to safe havens, and Singapore has tail risk
And then there’s Hong Kong. We all know what happened to Hong Kong. That story is over. And then there’s Singapore. So Singapore has a lot going for it. It is wealthy, it is stable. It has a very good rule of law, your rights as a foreigner there are protected. But the issue with Singapore is an issue of geography, in the sense that because of its location right on the Strait of Malacca, if there were a war between China and the United States, it would be very hard to believe that no one would try to have a go at Singapore.
Twenty-five percent of the world’s trade transits through the Strait of Malacca, and most of China’s oil as well. So if you’re China, and you’re in a war with the West, and there’s little Singapore right there, and you have all of these strategic goods and commodities that are transiting right there, you need to secure access. And then there’s this little country, flat, that was, by the way, invaded during the Second World War because of its strategic location that is populated by 75% ethnic Chinese, and that has a lot of financial assets, a lot of gold, it becomes a very interesting target. So I’m not, I’m absolutely not just standing here saying that China is going to invade Singapore, but it’s tail risk that you need to take into account in a world of heightened geopolitical tensions. It is tail risk, the risk is there, and you need to build this into your model when you create your whole strategy.
So the point of this video is essentially to tell you that never listen to people that are going around saying, “Dubai. Dubai is the best thing. Dubai this, Dubai that,” or, “Panama this, Panama that,” or, “Singapore this, Singapore that.” The reality is that there is no perfect safe haven, those days are gone. Absolutely gone. And the safest thing you can do at this stage is, again, to diversify, is to use each safe haven or formerly safe haven in a specific way for your specific situation so that you can maximize the benefits of each essentially safe haven and build a portfolio of assets and services in these various jurisdictions, so you’re not entirely dependent on one. They all have a place, they all have their positives, but, unfortunately, people never discuss their negatives. And this is why I travel around the world full-time looking at these opportunities on the ground.
If you’re interested about finding out more about some of the opportunities out there, about the pluses and minuses of each jurisdiction, what you could do for your portfolio, there is a link below. I offer consulting services.