AS the US Government seeks to close tax loopholes and the UK investigates the island's finances, a third and perhaps unexpected party has taken aim at Bermuda: the Pope.

In a policy paper released by the Vatican last week, Pope Benedict XVI has called for the effective closure of 'offshore centres' such as Bermuda, the Channel Islands and the Cayman Islands, which he blames for worsening the global economic crisis.

In the paper sent to worldwide political and financial leaders by the Holy See, Pope Benedict says offshore markets like Bermuda have "given support to imprudent economic and financial practices and have also played a significant role in the imbalances of development, allowing a gigantic flight of capital linked to tax evasion".

The report goes on to link offshore financial centres such as Bermuda to "the recycling of profits from illegal activities".

The Pope also claims that offshore financial activities have caused a global deficit of over $250 million, which he points out is "more than three times the entire sum of development aid" to Third World countries.

The Pope's attack on tax havens closely follows US President-elect Barack Obama's vow to close 'loopholes', including Bermuda, in order to save US citizens billions of dollars in taxes. Last month, England's Chancellor of the Exchequer Alistair Darling announced an imminent review of Bermuda and other jurisdictions under UK governance, drawing the ire of Premier Ewart Brown.

The Vatican report has attracted the attention of the media worldwide, placing Bermuda firmly in the international spotlight following a spate of negative press coverage this year – the latest of which chronicled, with amusement, the inability of the Bermuda Monetary Authority to depict the correct bird on the new banknotes.

The popular UK Sunday newspaper The Observer carried the story last Sunday under the headline: 'Pope attacks tax havens for robbing poor.'

Other offshore centres such as Jersey and Guernsey in the Channel Islands have reported the Pope's scathing attack in their own newspapers as a further sign of the increasing international pressure to close tax loopholes.

The Observer notes, however, that this policy paper may not hold much water with critics of the Catholic Church thanks to the Vatican's "history of hoarding gold, artwork and cash in Europe and beyond".