The bark is the bite: International organizations and blacklisting

ABSTRACT

This article argues that public blacklisting by international organizations can be an effective means of bringing about compliance in otherwise recalcitrant states. This contention is examined in light of overlapping campaigns by the Organization for Economic Co-operation and Development and the Financial Action Task Force to pressure targeted states to adopt costly financial reforms. In a constructivist vein, blacklisting is held to be a form of speech act that changed the world by damaging states' reputations among investors, and thus produced pressure to comply through actual or anticipated capital flight. To be removed from blacklists, thereby preventing future economic damage, those targeted have had to comply with stringent regulatory standards mandated by these international organizations. Evidence is taken from interviews, press accounts, official documents and quantitative data relating to seven affected tax havens as well as Austria and Switzerland.

KEYWORDS:

• International organizations
• tax havens
• constructivism
• regulation
• speech acts
• reputation

ACKNOWLEDGEMENTS

The author gratefully acknowledges the financial support of the Australian Research Council through grants DP0452269 and DP0771521 and the Centre of Excellence in Policing and Security.