When it comes to “offshore” tax havens, there seem to be two diametrically opposed schools of thought.

They are either the scourges of the global financial system, a sort of Ground Zero of the greed and audacity that led to the current crisis.

Or they are merely convenient scapegoats at a time when politicians are facing mounting pressure to rein in a world economy gone berserk.

The truth probably lies somewhere in the murky middle.

On the one hand, tax havens are anything but natural objects of empathy. According to a recent report in Le Point, a weekly French news magazine, some 10 trillion dollars are stashed away in the bank vaults of the world’s tax havens; that’s nearly five times the amount of France’s total GDP, the weekly notes. It’s also more than the combined profits of the global organised crime trade.

The fact that virtually all of this money belongs to the world’s wealthiest individuals - and that two thirds of all hedge funds adopt them as operational bases - does not help increase the sympathy quotient.

But then again, just because we may not like them, doesn’t mean they deserve the tarring and feathering they have got as the source of original sin. The fact is, tax havens for the wealthy are merely a warped by-product of a globalised financial system that’s served the (warped) needs of globalised money managers and banks.

(In the name of full disclosure, I myself have a small account in the offshore centre of the Isle of Man, in the UK. It’s a few thousand dollars that was being slowly whittled away by the outrageous fees charged by my financial advisor in the US. So the Isle of Man seemed a logical – and perfectly legal – choice.)

A blacklist

The tax havens themselves are not impervious to the pressure.

The tiny principality of Liechtenstein, a non-EU member, has agreed to exchange more information about its banking business. It’s a loosening of banking secrecy aimed at burnishing its image. Liechtenstein now says it’s ready to seek bilateral agreement with other states on information sharing.

Liechtenstein is one of several countries on a “blacklist” of uncooperative tax havens drawn up by the Organization for Economic Cooperation and Development. The other nations include Switzerland and Austria (the larger neighbours between which Liechtenstein is wedged), as well as Monaco and the bite-size principality of Andorra.

France and Germany sought such a list. The idea was to publicly name and shame nations that they say are not being helpful in exchanging bank information. They want to see sanctions applied in the event of non-compliance with basic OECD rules.

Hence - Liechtenstein’s move, more than just a display of good-will, is also an attempt to get its name dropped from the blacklist.

Drawing the line

With the early-April G20 summit on the financial crisis just around the corner, the whole tax haven issue has become a political football.

President Barack Obama has been outspoken in his drive to track down tax cheats; the recession, for obvious reasons, has cranked up pressure on world leaders to look for ready culprits.

But while the tax havens may be showing signs of compromise, they are hardly on the verge of relinquishing their historic claims to banking secrecy. Most havens make a fine distinction between tax fraud, which is a crime anywhere, and tax evasion, a more legally nuanced act.

Switzerland has been facing off with the US over where to draw the line on banking openness. Its largest bank, UBS, has already bowed to pressure from US authorities and released information on 300 suspected tax “cheats” who had accounts at the bank. But the US wants thousands of more client files to be divulged; Switzerland is resisting.

In Britain, two offshore centres, the isles of Guernsey and Jersey, have signed cooperation agreements with the UK authorities.

What’s clear is that the tax haven issue won’t go away, even if the G20 leaders choose to defer tackling it until a later day. As Le Point points out, transactions representing half the world's trade are processed in these tax havens, home to some 4,000 banks and two-thirds of the world's hedge funds; the world's biggest bank, Citigroup, has over 400 branches in offshore centres.

That said, defenders of tax havens insist they did not cause the financial crisis, and that they should not be unfairly singled out in the search for solutions.

Also read: Liechtenstein to ease banking secrecy rules