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  • 04/15/15--23:19: Brief summits not enough
  • US President Barack Obama and Jamaica Prime Minister Portia Simpson-Miller have pronounced his visit to Jamaica and their bilateral discussions to be a success. What is certain is that media coverage of Obama’s visit and his late night call at the Bob Marley museum where the President declared “I still have all his albums” will have enhanced the Jamaican ‘brand’ in the US. Jamaica’s tourism and investment prospects would have benefited.

    Obama’s town hall meeting with young people at the Assembly Hall of the Mona Campus of the University of the West Indies, televised live, was a resounding success. He established rapport with a young audience delighted to be in his company. His answers to their questions were fulsome and sincere. 

    But his meeting with leaders of the 14 Caribbean Community (Caricom) nations is a different matter. It is doubtful that much came of that, primarily because the entire encounter was scheduled to last only 90 minutes. The effectiveness of a 90-minute dialogue by 15 leaders would have required extensive, comprehensive and detailed preparation by officials such that only ratification would be required. But, there appears to have been no such preparation.

    The value of the meeting, therefore, seems to have been no more than an opportunity for leaders to raise issues in the hope of addressing them fully at a later time. The principal issues were: security, energy and competitiveness.

    The US is concerned with security matters in the Caribbean insofar as they affect America. It is also interested in neutralising links between Venezuela and those Caribbean countries that benefit from special arrangements for paying for petroleum and petroleum products under Caracas’ Petro Caribe.

    Evidence of the US concern about the Venezuelan influence on Caribbean governments resulting from the Petro Caribe arrangements was provided by US Vice President Joe Biden at a so-called Caribbean Energy Summit in Washington on January 26. In his remarks, Biden talked of “governments dependent on a single, increasingly unreliable, external supplier” and stated that “no country should be able to use natural resources as a tool of coercion against any other country”. The remarks were clearly directed at Venezuela and its supply of petroleum and petroleum products to several Caribbean countries that have come to rely on it because of the very soft loan component of its price.

    For the Caribbean’s part while they too have great interest in security and energy issues, they don’t see them in the same way as the US. Indeed, the greater concern of the Caribbean with the US centres on financial services. 

    The Caribbean region has been categorised as a “high risk area” for financial services and this is resulting in indigenous and offshore banks losing vital correspondent-bank relationships in the US. 

    Many of the US banks are unwilling to take risks with banks located in a “high risk” area, particularly when the earnings from relationship are small. But, for Caribbean banks the relationship is vital to transacting international business. If they lose their relations with correspondent-banks, they will be forced to close their doors with consequential effects on employment.

    The only banks that would be left standing are subsidiaries of established foreign-owned banks that have a relationship with their headquarters institutions. Caribbean governments would also be anxious about the total reliance on foreign-owned banks and the power they could exercise on local economies. 

    Of further disquiet to Caribbean countries is the reputational damage done to all of their financial services sectors by the US State Department’s annual International Narcotics Control Strategy Report (INCSR). In the most recent report, the State Department identifies four Caricom countries as jurisdictions of “major concern” for money laundering. All the other ten countries are listed as “jurisdictions of concern”. Several of the Caricom governments have protested these categorisations pointing out that they have been judged by the Financial Action Task Force and the International Monetary Fund as satisfying international requirements and best practices. The INCSR could heighten the fear of US banks over according correspondent relationships to Caribbean indigenous and offshore banks, and even create reluctance by investors to put money in the region.

    Given the complexities of these issues it is doubtful that the Summit between Caricom leaders and President Obama could do anything more than raise awareness of concerns by both sides. Resolving the problem would require a joint Commission of the US and Caricom governments to work through them steadily.

    With regard to energy, Caribbean countries (except T&T which is an oil and gas producer exporter) are very nervous about supply of their energy requirements and the cost. However, the majority of them will not regard the Petro Caribe arrangement with Venezuela in the same way as the US. 

    The reality is that as oil and gas prices sky-rocketed and became especially damaging during the global financial crisis, only Venezuela came to their rescue through the part payment-part loan scheme of Petro Caribe. Without that scheme the economies of many of them would have collapsed. Further, the scheme is still beneficial to all its participants who still enjoy long and low interest terms for their part payments.

    In these circumstances, for as long as Venezuela continues the PetroCaribe arrangements, no participating Caricom country will turn away from it. 

    At the Energy meeting in Washington last January, the US—now a leading producer of natural gas—promoted “a natural gas strategy for the Caribbean” with support from the Inter-American Development Bank. 

    Clearly, the US thinking was two-fold: first, it could break dependence on Venezuela and reduce Venezuelan influence in the region, and second, US companies could benefit commercially from selling natural gas and the structures for its delivery in Caribbean countries.

    To promote this idea, the US undertook to encourage the multilateral financial institutions to provide concessional financing to Caribbean countries for energy and climate projects. This is a huge departure from the per capita income criteria used over the years by multilateral financial institutions to deny Caricom countries cheaper financing because they are regarded as middle-income states.

    Undoubtedly, Caricom countries would welcome such an energy initiative by the US; it would allow them to diversify their energy sources and reduce dependence on any supplier. But, until the initiative is realised, they are hardly likely to abandon the benefits of PetroCaribe while it continues. Nonetheless, the US government should be taken at its word and every encouragement given to it to deliver on its undertaking.

    The brief meetings between the US President and Caricom leaders are neither satisfactory nor enough. The Kingston encounter should at least serve to advise both sides that what is required is a structure for regular and meaningful discussion between high level officials to follow-up on their general policy guidance.

    The writer is a senior fellow at London University and a Consultant on International Affairs


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    The political parties contesting the May 7 general election in Britain have now published their manifestoes and my friend and colleague, Professor Philip Murphy, found in them a “decidedly lukewarm attitude” to the 53-member Commonwealth of Nations.

    He notes that the Labour manifesto “makes only a couple of brief mentions of the Commonwealth. Even then, it is relegated to an item on a list of other organisations and networks to which the UK belongs, such as NATO, the G20 and the EU.” 

    He concludes that: “The tactic is clear: name-check the Commonwealth in a paragraph about Britain’s global reach, so as not to be accused of ignoring it, but make no attempt to explain what specific role it would play in a Labour government’s foreign or economic policy.”

    Professor Murphy believes that the Conservative and Liberal parties have duplicated this tactic in their manifestoes. In a passage that he regards as being largely cut and pasted from their 2010 manifesto, he observes that the Conservatives have pledged to “use our membership of NATO, the EU, the Commonwealth, our UN Security Council seat, our special relationship with the USA, our intelligence agencies, vital institutions like the BBC World Service and British Council, and the strong personal links between our diaspora communities and other countries, to achieve the best for Britain.”

    According to Professor Murphy, the Green Party manifesto simply ignores the Commonwealth as does the Scottish National Party, but at the opposite end of the political spectrum the new party on the block, the United Kingdom Independence Party, references it “as a tool to refute the claim that Britain is too small to survive outside the European Union.”

    Professor Murphy’s examination of the manifestoes of the British political parties is to make the broad point that “the marginalisation of the Commonwealth in this election should certainly come as no surprise. British governments tend to enter office promising to take the Commonwealth more seriously and to exploit its supposedly vast “potential”, only to find that the task is more difficult than they imagined”. He concludes that “it is difficult to think of a single major achievement of the Commonwealth since 2010 (the year of the last British general election). Hardly surprising, then, that Britain’s political parties are still not prepared to set themselves up for a fall by genuinely investing in it.”

    While Professor Murphy, as a British academic and Head of the Institute of Commonwealth Studies in London, is rightly concerned with the attitude of British political parties to the Commonwealth, too much should not be made of what is reflected in their manifestoes on this subject. Manifestoes for general elections are by their very nature focused on the issues of greatest concern in the societies to which they are directed. Per force domestic matters occupy pride of place and there are many such matters in this general election, particularly the economy and inequality in earnings, the National Health Service, and immigration and its effect on social services. 

    Non-domestic issues seldom find a prominent place in general elections unless the country is embroiled in a conflict at which the state is exposed. Apart from general disquiet about the terrorist group, ISIS, Britain is not now involved in a conflict that arouses popular anxiety. 

    Therefore, the fact that the Commonwealth does not receive detailed and special discussion in the manifestoes of the political parties ought not to be a reflection of lack of interest in it any more than the absence of meticulous and specific treatment of the United Nations. General elections are by their very nature, parochial.

    An examination of manifestoes in many countries in recent general elections, including Africa, the Pacific and the Caribbean, reveals that the Commonwealth received no greater mention than that reflected in the manifestoes of the British political parties. The reason is the same in each of these countries; the electorate is concerned with the immediate issues that affect their lives. 

    The political parties must respond to those concerns or perish. That is not to say that the parties do not have a duty to introduce other important matters into their policy statements. In Britain, as in other Commonwealth countries, the major political parties have done so within the constraints of a ferocious debate on domestic issues.

    Of course, Professor Murphy is right that “it is hard to think of a single major achievement of the Commonwealth” since the last British general election. Indeed, in recent years, fractious and divisive conditions have arisen from years of neglect in which the Commonwealth could have been reformed and inspired by its leadership. The absence of vibrant initiatives to keep Government fully engaged in preserving and strengthening the association has led to the inertia and lack of enthusiasm in which it now languishes.

    But that is a separate issue. At the root of the current malaise is a North-South divide that has crept into the association’s decision-making bodies at the inter-governmental level. 

    Significantly, it is not a divide that is replicated in the more than 90 Commonwealth civil society groups. The divide has shifted the inter-governmental Commonwealth from the use of its greatest strength to wallowing in its greatest weakness. It is that shift that requires the most urgent attention.

    The Commonwealth can be an association of considerable influence for good in its countries individually and collectively as well as for the international community, if its members accentuated the matters on which they find common ground on issues such as: fair and just trade; addressing terrorism; reform of the international financial system to boost economic development; promoting understanding and tolerance of the rights of minority communities, tackling climate change and global warming; looking to the needs of small and vulnerable states; strengthening democratic institutions for economic and social development as much as for political stability.

    These are issues that matter to the people of the Commonwealth. If they were tackled vigorously and effectively, they would have to be acknowledged and commended in policy documents, including political party manifestoes.

    The writer is an international affairs consultant and senior fellow at the Institute of Commonwealth Studies at London University 

     


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    The economies of Caribbean Community (Caricom) countries are not doing well. Belize, Guyana and Suriname are the only three economies showing appreciable growth. The major effect of little or no growth has been increasing unemployment and underemployment of young people who constitute three of every five persons across the region.

    The problem of youth unemployment and underemployment was emphasised at a Commonwealth Caribbean Ministerial Youth Conference in Antigua from April 28-30. Without the prospect of jobs, young people are becoming increasingly dissatisfied and disenchanted. Their discontent manifests itself, in some instances, in gangs, crime and violence. 

    In other cases, where young people have graduated from higher education and cannot find jobs, they have either migrated depriving their countries of qualified persons, or they accept any job they can get, but brood over their circumstances. In any event, the situation of youth unemployment and underemployment is a boiling cauldron in the Caribbean. 

    The solution to the problem rests in the creation of jobs that are sustainable. Such job creation requires investment and particularly foreign investment; new businesses have to be formed and economies have to be diversified from traditional areas of production that have depended on preferential markets and subsidies. The region could be a much more attractive area for investment in goods and services if it were a truly single market with a customs union. Foreign investors would be more greatly attracted to a larger regional market than to the individual small markets of most Caricom countries. It would be one effective way of creating a larger economic space for the employment of young people.

    The pace of perfecting a single market and a customs union has been painfully slow, dragged out since it was first proposed in 1989. In the elapsed time, a generation was born and grew-up. For the most part, that generation constitutes the largest number of the unemployed and underemployed in Caricom countries.

    In the meantime, governments have been inventive about ways in which investment could be attracted to national economies, but, by and large, the environment for doing business in the region is uncompetitive. Jamaica is the only country in recent years that is recognised in the international community as striving to streamline and improve its procedures. 

    Bureaucratic red tape, customs bottlenecks, lengthy processes for issuing permits and high costs for transportation and communication all contribute to a disabling environment.

    Smaller countries without the natural resources of Belize, Guyana, Jamaica, Suriname and T&T have had to become even more creative in their efforts to earn revenues and investment. One such scheme is the Citizenship by Investment Programme (CIP) that was started by St Kitts-Nevis. It is a scheme that Dominica also introduced some years ago and is now operational by Antigua and Barbuda as well.

    In these three countries, governments would admit that the CIP is not a mechanism of choice. But their policy options are limited. Preferential markets in Europe for bananas and sugar have disappeared despite promises by the European Union and misplaced faith in the Economic Partnership Agreement. 

    Tourism has been badly affected by the effects of the global financial crisis. Additionally, the governments of developed countries, whose imposed rules erode the financial services sector of these small states, make the least contribution to their economic improvement.

    Antigua and Barbuda and St Kitts-Nevis have turned to selling citizenship because it is one of the few assets they have left from which they can earn significant incomes. 

    Unfortunately, instead of being sympathetic to these small states and providing guidance to allow their CIPs to flourish with legitimacy, governments of developed countries have taken a hard line against them.

    In the case of Antigua and Barbuda, it took that government’s initiative for certain foreign governments to engage in the country’s CIP process.

    Unfortunately, Antigua and Barbuda’s sensible approach appears not to have happened in St Kitts-Nevis, according to Prime Minister Timothy Harris who won the government at general elections in February. 

    Even as the region’s Youth Ministers were meeting in Antigua, focussed on issues including unemployment, Prime Minister Harris told the people of his country at a two-hour media conference that damage had been done to the reputation of its CIP “due to its less than appropriate management by the former administration.”

    He was, nonetheless, determined to continue with it as an essential tool for foreign investment. He revealed that his government would implement 20 recommendations from the US firm IPSA International to bolster aspects of its security. He laid great emphasis on it as a spur for investment and employment.

    The same firm has also conducted a review of the newer Antigua and Barbuda CIP which required minor fine tuning but no major overhaul. The Antigua and Barbuda government is also implementing the recommendations of the IPSA, including investing in modern computerisation techniques that would enhance the management of the programme and the high level of investigation required for its integrity.

    The point of all this is to create incomes for small countries that require investment to develop their physical infrastructure, improve the knowledge base and managerial know-how of their people, and create new industries that would allow them to provide jobs for their people and participate competitively in the international community.

    Both the present governments of Antigua and Barbuda and St Kitts-Nevis have committed themselves fully to ensuring that the interests of countries such as Britain, Canada and the United States are not compromised by the CIPs. 

    Given such a commitment, the urgent need to address youth unemployment, and as long term partners with many links to these three more powerful countries, Caribbean small states deserve co-operation. 

    (The writer is a senior fellow at the Institute of Commonwealth Studies, London University)


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    The performance of only five of the 14 independent Caribbean Community (Caricom) countries are recorded in the 2015 Travel and Tourism Competitiveness Report published by the World Economic Forum.

    Of the 144 countries measured by the Report Barbados is the highest ranked Caricom country at 46 with T&T at 69 and Jamaica at 76. Guyana at 104 and Haiti at 133 are at the tail end of the index. The only other Caribbean country graded in the report is the Dominican Republic at 81.

    Surprisingly, countries such as the Bahamas, Antigua and Barbuda, St Kitts-Nevis, St Vincent and the Grenadines and St Lucia, which have a heavy reliance on tourism for their economic growth, are not included in the Report’s measurement of competitiveness. The reason for the exclusion of the latter named countries lies in the report’s statement that there was insufficient data from several countries.

    It is regrettable that a large number of tourism-dependent Caricom countries were not included in what the Report rightly describes as “a strategic tool for both businesses and governments” allowing for “cross-country comparison of the drivers of Travel and Tourism (TT) competitiveness, for benchmarking countries’ policy progress and for making investment decisions related to business and industry development.” 

    The report’s methodology for measuring global competitiveness is based on 14 important pillars. They include: business environment, prioritisation of travel and tourism, price competitiveness, tourist service infrastructure and cultural resources. Against these criteria, the top ten most competitive countries in global TT are in descending order: Spain, France, Germany, United States, United Kingdom, Switzerland, Australia, Italy, Japan and Canada. China has jumped 27 places to reach number 17 in the global rankings.

    In the Caribbean, the report observes that common TT issues include underdeveloped natural and cultural resources. Tellingly, the Competitive Index suggests that most Caribbean countries rely extensively on their beaches but do not seem to promote their cultural resources sufficiently. It is significant that China managed to advance to 17th place in the global rankings because Tourists are attracted to its cultural resources and its World Heritage natural sites that have been developed and made accessible. In 2013, China welcomed over 55 million visitors.

    The TT industry is growing more quickly than the global economy as a whole, and so is related employment creation and higher paid jobs in the sectors that service it. These sectors are not limited to hotels, ground transportation, restaurants and shopping. They now include hospitals and other medical facilities; trained persons to maintain yachts; mechanical engineers for airplanes and ships; rental of properties and technologically-savvy persons capable of delivering services in a wide range of telecommunication areas. The TT sector, therefore, remains a thriving business from which Caribbean countries can benefit enormously if innovative measures are put in place.

    Caribbean countries could learn lessons from the success of the nations that now top the TT league table. For instance, while France is ranked second overall, it attracts the most tourists with over 84 million arrivals. This is because the government and the private sector give priority to the TT sector. They have invested in developing tourist facilities for leisure and conferences and have pro-actively built up their natural heritage resources and their historical sites. Throughout the Caribbean, there are many such resources and sites but they require private sector development within a government-private sector agreed plan. 

    Italy, which is ranked 8th in the overall rankings, manages only 127th position for business environment. 

    The country has an inefficient legal framework, high taxation and regulations that are a disincentive to investment. Caribbean countries should be mindful of the importance of encouraging the private sector to share in the costs of developing the TT sector. After all, tourism is an export. Overtaxing hotels, airlines, and passenger tickets raises costs and renders the tourism product uncompetitive. Airline travel within and to the Caribbean suffers now from high government taxes on tickets.

    In South America, most countries have prioritised air transport, particularly with larger and newer airports and terminal buildings. Some of this is necessary, especially for countries whose tourism volume has outgrown the facilities their airports provide. However, ground transportation is underdeveloped, undermining the effects of investment in air transport infrastructure by limiting the ability to move within countries. 

    A similar situation obtains in most Caribbean countries with Barbados being the most notable exception. While bus rides on that island can sometimes be hair-raising, for the most part they are safe, accessible and inexpensive. 

    Other Caribbean countries should be mindful, as part of the development of the TT sector, that tourists do not travel to airports; they travel to countries. Airports are important to ease entry and exit and they should be as accommodating as possible, but visitors want to experience the country. Without good ground transportation, they are deprived of that opportunity.

    Significantly, countries that maintain a competitive edge in TT are those that are alert to changing trends. For example, the number of people over 60 years of age is predicted to rise from 900 million in 2010 to almost 1.4 billion in 2030. These older travellers have larger budgets, and while they account for only 40 per cent of travellers, they represent 60 per cent of wealth and they travel all year round. 

    The Competitive Index report provides important data and analysis of the factors that make for success in TT as well as the issues that obstruct the industry’s development. It is regrettable that many Caribbean countries were excluded from the Index because of insufficient data by which to measure their strengths and weaknesses. 

    Without information on how they perform against their competitors, Governments and the private sector will not be able to identify the requirements to do better. 

    Barbados deserves commendation not only for being the only Caricom country in the top 50 most TT competitive countries, but also for maintaining the statistical information that permits it to measure itself against its competitors. The importance of good statistical information in all aspects of decision-making is often overlooked. 

    Consequently, many governments and private sector organisations are forced to make crucial decisions on a guess rather than on sound evidence. Guesses are not a basis for successful planning or effective competition.

     (The writer is a senior fellow at the Institute of Commonwealth Studies, London and Massey College, Toronto) The performance of only five of the 14 independent Caribbean Community (Caricom) countries are recorded in the 2015 Travel and Tourism Competitiveness Report published by the World Economic Forum.

    Of the 144 countries measured by the Report Barbados is the highest ranked Caricom country at 46 with T&T at 69 and Jamaica at 76. Guyana at 104 and Haiti at 133 are at the tail end of the index. The only other Caribbean country graded in the report is the Dominican Republic at 81.

    Surprisingly, countries such as the Bahamas, Antigua and Barbuda, St Kitts-Nevis, St Vincent and the Grenadines and St Lucia, which have a heavy reliance on tourism for their economic growth, are not included in the Report’s measurement of competitiveness. The reason for the exclusion of the latter named countries lies in the report’s statement that there was insufficient data from several countries.

    It is regrettable that a large number of tourism-dependent Caricom countries were not included in what the Report rightly describes as “a strategic tool for both businesses and governments” allowing for “cross-country comparison of the drivers of Travel and Tourism (TT) competitiveness, for benchmarking countries’ policy progress and for making investment decisions related to business and industry development.” 

    The report’s methodology for measuring global competitiveness is based on 14 important pillars. They include: business environment, prioritisation of travel and tourism, price competitiveness, tourist service infrastructure and cultural resources. Against these criteria, the top ten most competitive countries in global TT are in descending order: Spain, France, Germany, United States, United Kingdom, Switzerland, Australia, Italy, Japan and Canada. China has jumped 27 places to reach number 17 in the global rankings.

    In the Caribbean, the report observes that common TT issues include underdeveloped natural and cultural resources. Tellingly, the Competitive Index suggests that most Caribbean countries rely extensively on their beaches but do not seem to promote their cultural resources sufficiently. It is significant that China managed to advance to 17th place in the global rankings because Tourists are attracted to its cultural resources and its World Heritage natural sites that have been developed and made accessible. In 2013, China welcomed over 55 million visitors.

    The TT industry is growing more quickly than the global economy as a whole, and so is related employment creation and higher paid jobs in the sectors that service it. These sectors are not limited to hotels, ground transportation, restaurants and shopping. They now include hospitals and other medical facilities; trained persons to maintain yachts; mechanical engineers for airplanes and ships; rental of properties and technologically-savvy persons capable of delivering services in a wide range of telecommunication areas. The TT sector, therefore, remains a thriving business from which Caribbean countries can benefit enormously if innovative measures are put in place.

    Caribbean countries could learn lessons from the success of the nations that now top the TT league table. For instance, while France is ranked second overall, it attracts the most tourists with over 84 million arrivals. This is because the government and the private sector give priority to the TT sector. They have invested in developing tourist facilities for leisure and conferences and have pro-actively built up their natural heritage resources and their historical sites. Throughout the Caribbean, there are many such resources and sites but they require private sector development within a government-private sector agreed plan. 

    Italy, which is ranked 8th in the overall rankings, manages only 127th position for business environment. 

    The country has an inefficient legal framework, high taxation and regulations that are a disincentive to investment. Caribbean countries should be mindful of the importance of encouraging the private sector to share in the costs of developing the TT sector. After all, tourism is an export. Overtaxing hotels, airlines, and passenger tickets raises costs and renders the tourism product uncompetitive. Airline travel within and to the Caribbean suffers now from high government taxes on tickets.

    In South America, most countries have prioritised air transport, particularly with larger and newer airports and terminal buildings. Some of this is necessary, especially for countries whose tourism volume has outgrown the facilities their airports provide. However, ground transportation is underdeveloped, undermining the effects of investment in air transport infrastructure by limiting the ability to move within countries. 

    A similar situation obtains in most Caribbean countries with Barbados being the most notable exception. While bus rides on that island can sometimes be hair-raising, for the most part they are safe, accessible and inexpensive. 

    Other Caribbean countries should be mindful, as part of the development of the TT sector, that tourists do not travel to airports; they travel to countries. Airports are important to ease entry and exit and they should be as accommodating as possible, but visitors want to experience the country. Without good ground transportation, they are deprived of that opportunity.

    Significantly, countries that maintain a competitive edge in TT are those that are alert to changing trends. For example, the number of people over 60 years of age is predicted to rise from 900 million in 2010 to almost 1.4 billion in 2030. These older travellers have larger budgets, and while they account for only 40 per cent of travellers, they represent 60 per cent of wealth and they travel all year round. 

    The Competitive Index report provides important data and analysis of the factors that make for success in TT as well as the issues that obstruct the industry’s development. It is regrettable that many Caribbean countries were excluded from the Index because of insufficient data by which to measure their strengths and weaknesses. 

    Without information on how they perform against their competitors, Governments and the private sector will not be able to identify the requirements to do better. 

    Barbados deserves commendation not only for being the only Caricom country in the top 50 most TT competitive countries, but also for maintaining the statistical information that permits it to measure itself against its competitors. The importance of good statistical information in all aspects of decision-making is often overlooked. 

    Consequently, many governments and private sector organisations are forced to make crucial decisions on a guess rather than on sound evidence. Guesses are not a basis for successful planning or effective competition.

     (The writer is a senior fellow at the Institute of Commonwealth Studies, London and Massey College, Toronto) 


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    China’s Premier Li Keqiang, accompanied by over 100 senior Chinese business leaders, visited four South American countries for eight days in May. Along the way, he pledged hundreds of billions of dollars to Brazil, Peru, Chile and Colombia; US$53 billion was announced for Brazil alone.

    The Chinese pledges were met with scepticism by Western analysts who fret over the presence of China “in America’s backyard”. They used a study, conducted by the Brazil-China Business Council, to argue that only around one-third of China’s promised investments in Brazil from 2007-2012 were actually done. 

    While there is no reason to doubt the findings of the study, there is equally no reason to believe that the failure to make the investments rested with China alone; Brazil could have also have contributed by its inability to absorb the investments. In several Caribbean countries, for instance, Chinese offers to undertake projects have either been ignored or the countries have lacked the capacity to implement them.

    In any event, even if half of the monies promised by China flows into the four South American nations, they will benefit enormously from the build-out of much needed infrastructure to boost their economies. The Chinese money—Western skepticism notwithstanding—is important.

    Caribbean economies can also do with more investment from China in a range of sectors if they are to overcome the lingering effects of the global financial crisis of 2008 and the recession that followed. But to do so, the China-Caribbean relationship needs to be improved and put on a more predictable and certain footing.

    What is sure about the Caribbean’s relationship with China is that the latter now enjoys a huge trade surplus. In 2013, China’s exports to the Caribbean totalled US$4.21 billion, more than double its imports from the region valued at US$1.88 billion that year. The sum of US$3 billion, pledged for loans in 2013 by China’s President Xi to ten Caribbean countries, was less than China’s trade surplus with the region for the year 2012 alone. In other words, China recycled its trade surplus with the region for one year to finance its loans to regional countries from which it earns interest and gains political credit.

    The huge trade imbalance is a crucial area that needs urgent attention. Even though the Caribbean accounts for less than one per cent of China’s trade with the world, its trade deficit with China is significant to the Caribbean. The Chinese authorities appear to have recognised this issue. That’s why President Xi offered the 2012 trade surplus as loans to the region. It was a classic case of aid for trade.

    But, the relationship between China and Caribbean countries ought not to operate on an ad-hoc basis, nor should it be reliant only on what China is willing to offer. 

    The region does have some bargaining capacity, and it should use it collectively.  The five elements of its capability are: the trade surplus that China enjoys with the region; the financial return to China of investments, including loans made to regional countries; the valuable products China is securing from the region such as forestry, petroleum and minerals; political support of Caribbean countries for China’s interests in international organisations and in the global community; and the region’s strategic importance to China because of its proximity to the United States and major maritime trade routes and infrastructure such as the Panama Canal.

    Ideally, China should be persuaded to ease its protectionist trade policies and open its market to the 14 independent members of the Caribbean Community (Caricom) on a non-reciprocal basis to give the region a chance to narrow the trade surplus. China should also expand its investment in the region to help build much needed infrastructure and to boost sectors such as agriculture, financial services, tourism, sea transportation and manufacturing. 

    In making such investments, China should also stop making the use of Chinese workers and equipment a condition. As long as this condition continues, the positive impact of these investments on employment will not be fully realised and will fan a flame of resentment.

    Of course, the Caricom countries are divided in relation to China. Five of them continue to have diplomatic ties to Taiwan and this inhibits Caricom from seeking to establish a structured, long-term aid, trade and investment relationship with China. The consequence is that each of the other nine Caricom members pursue individual relations with China in which they are disadvantaged, but nonetheless grateful. However, imperfect loan and investment arrangements might be with China, these governments are, at least, getting monies no other country or agency is advancing to them. 

    Further, the monies are being provided on soft terms.

    China is demonstrating a willingness to invest. It is putting huge sums of money into South America as Premier Li’s recent tour demonstrates.

    In the case of the Caribbean, through two Chinese state-owned banks, China Export-Import Bank and China Development Bank, China has disbursed tens of billions of dollars in Caricom countries since 2005.

    But more can be done by China in the Caribbean if a Free Trade Agreement (FTA) with strong provisions for development assistance could be negotiated and established. On his South American tour, Premier Li discussed the possibility of an FTA with Colombian President Juan Manuel Santos. The matter is, therefore, occupying the minds of China’s leaders. Undoubtedly, there will be a few South American countries that will conclude such FTA’s with China in the near future.  

    If the Caribbean region is to benefit from China’s obvious interest in investing its considerable foreign reserves around the world, it has to engage the Chinese government collectively. The reluctance to do so by the five Caricom countries that continue to gain from their relations with Taiwan is understandable, but they should give their blessings to the other nine member states to strike an enhanced relationship with China while the iron is hot.

     The writer is a senior fellow at the Institute of Commonwealth Studies, London and Massey College, Toronto


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    It is, to say the least, unfortunate that Venezuela’s President, Nicolas Maduro, has allowed domestic pressures to cause him to take the extreme measure of issuing a decree on May 27, creating the “Atlantic coast of Venezuela” that includes sovereignty over Guyana’s territorial waters in the Atlantic Ocean off the Essequibo region and stretches eastward across the rest of the country into part of Suriname’s maritime space.

    Effectively the decree claims all the territorial waters within a 200 miles range and blocks Guyana’s access to the Atlantic Ocean. Allowed to stand, Guyana would be trapped by Venezuela as the map shows.

    President Maduro’s decree is, of course, illegal and would not stand-up in international law. The Venezuelan government would know this. It would also know that the only way it could enforce the decree is by military action that would be condemned by the international community with appropriate sanctions taken against an aggressor. So, why take this course of action, particularly as it is one that his predecessor and former leader, Hugo Chavez, had spurned?

    The answer lies, to some extent, in the hostile domestic politics of Venezuela which have intensified in the wake of deteriorating economic conditions, creating widespread hardship. 

    Part of the opposition’s campaign against the Maduro government is that it is “giving away” the country’s patrimony to Guyana. The latter assertion is based on the mythology, perpetrated for decades in schools in Venezuela, that the country was “robbed” by Britain of the Essequibo region of Guyana. 

    Two further factors are: the Venezuelan government’s resentment of Exxon Mobil that has recently declared an oil find in the Guyana waters that Venezuela now claims by the May 27 decree; and the attitude of a section of the navy that is keen to flex its muscles.

    On the latter point, after Guyana’s then President Donald Ramotar joined President Maduro on August 31, 2013 in expressing “optimism for the potential that exists for an enhanced relationship between Caricom and Venezuela that would redound to the benefit of their peoples” , El Universal—a major Venezuelan newspaper—carried a story on the Internet claiming that the Venezuelan Navy had “raised the alarm” about an oil concession granted by the Guyana government “in front of the Venezuelan Atlantic front of Orinoco Delta” . 

    The newspaper quoted only “a spokesman who asked not to be named” , thereby raising misgivings about the motives behind the story. But it said the unnamed source “revealed that the Navy was concerned about the way this issue is being tackled, namely, Venezuela's claim over the Essequibo and its silence over multiple actions carried out by Guyana in the area.”  

    According to the newspaper, its unidentified source “also remarked that some officials at the Venezuelan Foreign Office were worried about this issue, particularly in the Border Division. 

    Two months later, the Venezuelan Navy evicted the RV Teknik Perdana from Guyanese waters. The survey boat was being used by Texas-based Anadarko Petroleum Corp to carry out seismic surveys. At that time Guyana sought negotiations with Venezuela on maritime delimitations, but the authorities in Caracas took it no further.

    Against this background it is not surprising that, under the decree, the Navy has been given authority to monitor the area and force international vessels, including those from Guyana, to identify themselves and request permission to navigate them. 

    The oil find by Exxon Mobil would also have irritated the Venezuelan government. The two have a long-standing dispute arising from the oil company’s properties in Venezuela nationalised by the government in 2007. 

    Last year, an arbitration court awarded Exxon Mobil US$1.6 billion in compensation.

    President Maduro is a man who, in his present circumstances, feels under siege. Apart from the economic difficulties his government faces, on June 9, he expressed anger that the former prime minister of Spain, Felipe González, had left Venezuela in a Colombian armed forces jet sent to collect him by the presidency of Colombia. He denounced “a Madrid-Bogotá-Miami anti-Venezuela axis”. González was in Venezuela to meet and offer his support for imprisoned leaders of the local political opposition. All of this may account for what seems to be an irrational act in issuing the May 27 decree.

    A number of Caribbean countries are beneficiaries of the Petro Caribe arrangement with Venezuela under which they pay for oil on a part cash-part loan basis. Guyana is one of the beneficiary countries. Regional governments have been grateful to the Venezuelan government for its assistance and they have all stated this in giving political support to both the Chavez and Maduro governments. Nonetheless, there will be regional, Commonwealth and international concern over the implications of the May 27 decree which flies in the face of the 1897 treaty that obliged Venezuela and Britain (now Guyana) to accept the result of an Arbitration as a “full, perfect and final” settlement of the Guyana-Venezuela boundaries.

    The award, given in 1899, set the boundaries that now exist between the two countries. They were boundaries fully accepted by Venezuela for 63 years until 1962, as British Guiana moved towards independence, when the then Venezuelan President, Romulo Betancourt, sought to re-open the issue on the spurious claim that Venezuela was “robbed.” 

    Both the Caribbean Community (Caricom) and the 53-member Commonwealth of Nations have repeatedly affirmed “their unequivocal support for the maintenance and preservation of Guyana’s sovereignty and territorial integrity” . The Guyana government has already alerted these two bodies and the UN Secretary-General of its alarm over the decree which its Foreign Minister, Carl Greenidge, described in parliament on June 10 as a “baseless and shameless attempt at usurping Guyana’s territory.”

    The first opportunity that Guyana and its regional partners will have to explore the issue at the international level comes up at the Caricom Heads of Government Conference to be held in Barbados in early July at which UN Secretary-General Ban Ki-Moon will be a special guest. For more than 25 years, successive Secretaries-General have appointed a “Good Offices” person to promote a settlement to the problem, but these efforts have been to no avail and are now fully exhausted. Secretary-General Ban now has the option to choose another of the means of peaceful settlement in accordance with Article 33 of the United Nations Charter.

    The most effective would be to refer the matter to the International Court of Justice (ICJ) to determine once and for all the Venezuelan claim that it was robbed and the binding arbitral award of 1899 is null. 

    Guyana will obviously be encouraging the UN Secretary-General to take this course of action even as, in the words of Foreign Minister Greenidge, it “stands ready to continue discussions with Venezuela with respect to our bilateral relations”.

    In the interest of peace, prosperity and development in the Hemisphere, all countries should be encouraging the Venezuelan government to withdraw the May 27 decree and to seek a final settlement in the ICJ where the world’s most experienced and talented jurists would make a determination binding on all.

    (The writer is a senior fellow at the Institute of Commonwealth Studies, University of London and a senior fellow at Massey College, University of Toronto)


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  • 07/02/15--06:12: The Commonwealth’s future
  • Questioning the relevance and value of the Commonwealth of Nations is nothing new for such has occurred ever since the modern Commonwealth was created in 1949. However, doubts have intensified in recent time about the voluntary association of now 53 countries. Claims are repeatedly made that the organisation is no longer relevant or useful. Its persistent portrayal is that of a relic of Britain’s colonial past or a hypocritical grouping which declares commitments to shared values but fails to uphold them.

    The Commonwealth is now, once again, at a crossroads. Its member states can allow it to continue a slow march to oblivion, or they can rejuvenate and re-energise it to make it work in their mutual interest and for the benefit of the global community. 

    While the Heads of Commonwealth governments are at the centre of these options, the organisation’s Secretary-General and the Secretariat have very special roles. Heads of Government are busy managing the affairs of their own countries, and responding to pressing challenges within their regions and internationally. 

    Therefore, the task of creating a vision and purposes for the Commonwealth that would appeal to leaders of the Commonwealth and invoke their support falls substantially on the Secretary-General. 

    If the Secretary-General does not proffer a vision of the Commonwealth that is politically appealing to, and motivational for, Heads of Government, and if the Secretariat does not deliver work that excites the imagination of governments, non-governmental organisations, the media, academia and the people of Commonwealth countries, the association could wither and die.

    For Britain, the single largest contributor to the budget of the Commonwealth Secretariat and its technical assistance arm, the Commonwealth Fund for Technical Co-operation (CFTC), the Commonwealth will have to find a broader base of relevance—other than an association of Britain and its former colonies—to sustain commitment. 

    As for its former dominion members, Canada, Australia, New Zealand and India, the Commonwealth, as it now stands, holds little attraction for advancing their interests in today’s major issues; such as increasing trade, enhancing security, safeguarding against terrorism, and managing the challenges of climate change. 

    Largely, this is because, apart from climate change, the Commonwealth has not taken on these issues; not even as a facilitator of inter-governmental discussion and a catalyst for international initiatives. 

    Even on climate change, the effort made to focus attention at the 2009 Summit in T&T has not been followed-up in ways that stimulated governments to see the Commonwealth as a beneficial forum.

    The governments of bigger developing Commonwealth countries in Africa and Asia are also struggling to find meaning for their priorities in the work of the Commonwealth. With the exceptions of South Africa and India, they continue to be side-lined in the major economic and financial decision-making bodies of the world and they have had to engage non-Commonwealth countries, such as China, to progress their development agendas.

    The small member states of the Commonwealth—now numbering 31 and defined as having populations of 1.5 million or less—increasingly question the attentiveness of larger Commonwealth countries to their severe challenges. 

    Low attendance by Heads of Government and Ministers of the big Commonwealth countries at meetings create misgivings in the minds of leaders of small states about the usefulness of the Commonwealth as a mechanism for addressing their concerns.

    Small states are at a critical juncture in their history.

    Increasingly, they are marginalised in the international community. Both large developed countries and International Financial Institutions behave as if small nations are not only irrelevant, they are a nuisance. Hence the concerns of small states are either ignored or barely tolerated. 

    Development assistance is drying-up; terms of trade are worsening; access to concessional financing has virtually disappeared. This is occurring at a time when climate change and sea level rise are threatening the existence of some small states and materially affecting the economic life of others. In these circumstances, it is urgent that the causes of small states be advocated strongly and effectively in the Commonwealth and the wider international community. 

    The Commonwealth Secretariat must, therefore, become machinery for such strong and effective advocacy. For the Secretariat to do so, the Secretary-General must be someone who has fought in the diplomatic and negotiating front line for small states and who has not only the sensitivity to their plight, but the knowledge of their circumstances born of experience.

    The Commonwealth is the most important of all multilateral organisations for small states because it is the only forum which provides the opportunity for leaders of small states to meet regularly (and as equals) with leaders of larger and more powerful countries. No other organisation provides the chance for the Head of Government of small Caribbean states, for instance, to meet the Head of Government of Britain, Australia, India and South Africa as an equal to discuss frankly and openly his/her country’s challenges and opportunities. That is why small states cannot allow the Commonwealth to wither and die. Small states need the Commonwealth to be vibrant and effective so that it can advance their interests. 

    In recent years, an increasing focus by Australia, Britain and Canada (ABC) on democracy, human rights and the rule of law in Commonwealth countries, has led to a widening division within the organisation. 

    The argument is raised continuously by representatives of developing countries that the ABC’s emphasis on these matters is at the expense of economic development upon which the governments of developing countries place high importance. While this perception is mistaken, there have been inadequate efforts to demonstrate that the great portion of resources is indeed spent on development. 

    These fractious and divisive conditions have arisen from years of neglect in which the Commonwealth could have been reformed and inspired by its leadership. Its slide away from its fundamental purposes should have been arrested and new ways created to maintain its collegiality. 

    The absence of vibrant initiatives to keep Heads of Government fully engaged in preserving and strengthening the association has led to the inertia and lack of enthusiasm in which it now languishes.

    (The Commonwealth: Part 11 will deal with the role of the Commonwealth and the Secretary-General)

    (The writer is a Senior Fellow at the Institute of Commonwealth Studies, University of London and at Massey College, University of Toronto. He is also a candidate for the post of Commonwealth Secretary-General)

     


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    Once again, Commonwealth Caribbean countries are under attack as “tax havens,” even though they are nothing of the sort. This time, it is not only the usual countries that have been listed. T&T has been included, and we can bet that Jamaica and Guyana will be added unless immediate action is taken.

    The so-called “tax havens” lists are unfair, unjust and downright wrong. Yet, they have been produced by the Commission of the European Union (EU) and now, completely inappropriately, by individual state governments within the United States of America (US) and even by the District of Columbia. 

    I use the words “ completely inappropriately” to describe the naming of sovereign nations by individual state governments of the US, because these nations conduct their relations with the Federal Government of the US and not with its individual states. 

    It is the Federal Government that has responsibility for, and authority over, the external relations of the US. By naming foreign countries as tax havens the State governments in the US have exceeded their power. They also create confusion among sovereign states and erode confidence in the US Federal Government with which they expect to conduct their relations.

    Normally, there may be an inclination to ignore the tax haven lists produced by states such as Oregon and Montana, particularly as similar lists formulated by Kentucky, New Hampshire and Maine never made it into law. But, there are dangerous consequences in simply turning a blind-eye to the lists of these states.

    The first is the reputational damage that they do to the countries that are named. There is more than a whiff of unpleasantness that attaches to the term, tax haven. People and organisations doing legitimate business shy away from anything that might taint them. Hence, the branded Caribbean countries could lose much needed business and revenues. 

    And, here it may be worth detailing the Commonwealth Caribbean jurisdictions that appear on the these State government lists: Anguilla, Antigua and Barbuda, Bahamas, Barbados, Bermuda, the British Virgin Islands, Cayman Islands, Dominica, St Lucia, St Kitts-Nevis, St Lucia, Montserrat and T&T.

    A second and potentially more dangerous consequence of the tax haven lists is that banks in the US and Europe might chose to end correspondent relations with financial institutions in all these Caribbean jurisdictions. If they did so, the offshore banking sector and the local indigenous banks in all these countries could collapse with detrimental effects on their economies. 

    This notion is by no means far-fetched. The penalties for US and EU banks are draconian should they be found to have facilitated money laundering and tax evasion; even if they did so unknowingly. Therefore the US and EU banks now weigh the risks they run against the rewards they get from providing correspondent relations to Caribbean financial institutions. 

    Since the totality of Caribbean banking transactions for offshore and local indigenous banks is small in comparison with their total income, the EU and US banks could choose to avoid the risk by not doing business with banks in listed tax havens.

    In the case of the tax havens list produced by the EU Commission, that list was formulated on the basis that at least 10 EU nations identified a jurisdiction as a tax haven. So, even though a number of Commonwealth Caribbean countries, such as Antigua and Barbuda, Bahamas and Barbados, have tax information exchange agreements with 18 of the 28 EU nations, they were unfairly and wrongly branded by the EU Commission.

    Remarkably, one EU government that the EU Commission identified as among the 10 that named Caribbean jurisdictions, has indicated that it was not consulted in the formulation of the tax havens list and it has disavowed it. Nonetheless, the damage has been done, and the Caribbean’s task is now to expose the wrongfulness of the branding and to seek immediate correction. 

    With regard to the state governments of the US that have branded Caribbean jurisdictions, one of them has stated that it based its listing on “criteria originally established by the Organisation for Economic Cooperation and Development (OECD) in 1998.” But, the world, including the OECD, has long since gone past the erroneous criteria used 17 years ago. The principal criteria applied back then for determining a tax haven was two-fold: is there no tax or low tax by the jurisdiction and is payable tax hidden? 

    The Caribbean fought the OECD’s notion of “harmful tax competition” and eventually it was agreed that tax competition is a legitimate form of competition and that sovereign states have the right to set their own rate of tax. 

    Indeed, EU countries, the US and many other nations openly compete with each other for investment and in production costs through tax rates. Further, within the US individual States also compete with each other through the tax rates they set. Therefore, no country can be defined as a tax haven because it has no or low tax.

    If the country hides payable taxes from other countries, that is arguable ground for saying it is a tax haven. But, no Commonwealth country hides payable tax from the US or from the EU. 

    Tax information exchange agreements exist and are enforced. And, even now Commonwealth Caribbean countries are working with the US government and its Internal Revenue Service to implement FATCA—US law requiring financial institutions to report all US persons and companies that have accounts with them. Clearly, payable taxes are not hidden in these jurisdictions.

    Caribbean countries are defending themselves against these outrageous slings and arrows, including by pointing out that the two internationally recognised bodies—the Financial Action Task Force and the OECD’s Global Tax Forum—have found them compliant with the standards they set. 

    The statement by Antigua and Barbuda’s Prime Minister, Gaston Browne, himself a former banker, to the United Nations General Assembly about the tax havens list resonate with a compelling truth: “International principles, to which small states readily adhere, should not be overturned by bigger countries that seek to impose their will on smaller ones. It is not fair; it is not just; it is not democratic; and it is patently wrong.” 

    (The writer is Antigua and Barbuda’s ambassador to the United States and a candidate for the post of Commonwealth Secretary-General)


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    Caribbean governments, indigenous banks and offshore banks located in the Caribbean are extremely concerned about the withdrawal of correspondent relations from Caribbean banks by banks in the United States of America (US). 

    Caribbean Heads of Government at a meeting in Belize in February made their concern very clear. The Caribbean Association of Banks have done so in separate statements. Their sense of alarm arises from the fact that, if all correspondent banking relations are withdrawn, the region will be isolated from the rest of the world and will be unable to carry out the most basic of bank transactions.   

    In many Caribbean countries there has been a steady decline in such correspondent banking relations, and there is no sign of an early abatement. 

    Caribbean governments and banks are not alone in their concern. Other regions of the world are also similarly affected. Countries in East Asia, the Pacific, Eastern Europe and Central Asia with significant offshore banking activities, are also affected.

    What has caused the withdrawal of correspondent relations to the Caribbean and the other regions identified above is the huge penalties that US banks would have to pay if any incidence of money laundering, terrorism financing, or tax evasion passed through them from their respondent banks. Regulatory and enforcement agencies have dealt harshly with such incidents, creating a strong deterrent to taking risks. The simplest form of “de-risking” is to terminate correspondent banking relations.

    Paradoxically, the very rule-making bodies, such as the Financial Action Task Force (FATF) and the Financial Stability Board (FSB) that created the rules and penalties that now terrify US banks and encourage them to “de-risk”, are themselves becoming concerned about the decline in correspondent banking relations.

    Last November, the FSB released a statement saying: “At the extreme, if an individual bank loses access to correspondent banking services, this may affect its viability and if a country’s banks more generally face restricted access then it may affect the functioning of the local banking system. 

    In addition, loss of correspondent banking services can create financial exclusion, particularly where it affects flows such as remittances which are a key source of funds for people in many developing countries.” 

    The report rightly observes that: “The ability to make and receive international payments via correspondent banking is vital for businesses and individuals, and for the G20’s goal of strong, sustainable, balanced growth.”

    In the statement, sent to the group of powerful nations, the G20, the FSB stated that a World Bank survey of jurisdictions and banks finds that roughly half of the emerging market and developing economies surveyed have experienced a decline in correspondent banking services. Three quarters of the 20 large correspondent banks participating in the survey responded that the number of correspondent accounts they hold for other banks had declined between end 2012 and mid-2015.

    The FSB report did not end there. Significantly, it stated that “the main drivers given by the large banks for their reduction in correspondent banking were concerns about money laundering and terrorism financing risks in the jurisdictions of their counterpart banks”. 

    In other words, even though US banks are aware that, in the case of the Caribbean, organisations such as the FATF and the OECD Global Forum on Tax Matters have found jurisdictions to be compliant with rules and enforcement, they are unwilling to take the risk.

    The FATF has given an undertaking to the FSB that it will “clarify regulatory expectations, as a matter of priority, including more guidance, on the application of standards for anti-money laundering and combating the financing of terrorism (AML/CFT) to correspondent banking, especially on the customer due diligence expectations for correspondent banks when faced with respondent banks in ‘high-risk scenarios’, as well as additional work on remittances, financial inclusion and non-profit organisations”.

    That work will be ready in two stages in June and October 2016. Whether it will make any difference to banks in the US is left to be seen. 

    In any event, at the rate at which correspondent banking relations are being withdrawn, any FATF recommendations in October 2016, even if they are helpful, may come too late to help some Caribbean banks that are already reduced to tenuous relations with just one correspondent bank.

    In this scenario, it is imperative that Caribbean banks cease their reliance on US banks alone for their correspondent relations in the US. It is time that they jointly, in groups, or individually establish an agency of their own in the US to be their correspondent bank and handle their transactions in the US and beyond. 

    They have to ensure that they will be able to do business if US banks abandon them. And, it must be the banks themselves—not Caribbean governments—that undertake the establishment of such an agency. Governments can advocate for the agency with us authorities and provide any non-financial assistance than may be helpful, including diplomatic and political spadework, but it must be the banks that look after their own business. 

    Establishing a Caribbean-owned agency in the US to provide correspondent relations for regional banks is not impossible, though it is difficult and will require investment in time, money and professional advice. 

    An application for such an entity would have to be made concurrently to the Federal Reserve Bank and the Office of the Comptroller of the Currency (OCC). If the application is approved by these two bodies, a license to operate can then be sought from the Northeast District Licensing Division in New York. 

    There are strict and onerous criteria that would have to be satisfied in each case, including extensive background checks on the banks and their affiliates and reviews of the effectiveness of the regulatory regimes of the jurisdictions in which they are located. The procedure could take longer than six months and would require the banks to dedicate staff or employ qualified consultants to see them through the process.

    But, there is no swift or easy solution to the present problem. If Caribbean banks believe that there is no risk to US Banks in the provision of correspondent relations, then they should be prepared to take the risk themselves by setting up their own agency to facilitate their business. They might even make more money. 

    The writer is Antigua and Barbuda’s ambassador to the US and the OAS. He is also a senior fellow at Institute of Commonwealth Studies, University of London and Massey College, University of Toronto.

     


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  • 06/23/16--09:47: Governments failed the OAS
  • The 46th General Assembly of the Organisation of American States (OAS) was not a successful event. This judgement is in no way related to the government of the Dominican Republic (DR), the organisers and hosts of the assembly, that did a superb job. The DR deserve every credit for demonstrating that one of the smaller and less well-off countries of the Hemisphere has the capability to meet international standards in conference organisation, including simultaneous interpretation in the four official languages of the OAS.

    Satisfyingly, the failures of the conference were not due to the 14 nations of the Caribbean Community (Caricom) whose representative showed a remarkable cohesion in standing up for the sub-region’s interests and in arguing for the strengthening of the OAS and the entire inter-American system.

    The theme of the conference was “Institutional Strengthening for Sustainable Development in the Americas”. The OAS is at the primary institution of the Americas; it is the only organisation that represents all the sovereign nations of the Hemisphere, except Cuba. But it is broke and unable to carry out the many mandates entrusted to it by its 34-member governments. That situation has been so for some time, and has remained neglected.

    During my period of Presidency of the Permanent Council of the Organisation from January to April this year, I made addressing the critical financial circumstances a priority of my work.  Barbados’ Ambassador, John Beale, as chairman of the Finance Committee, also did sterling work in trying to focus the attention of all governments on the urgency of rectifying the financial difficulties.

    In my statement on behalf of Antigua and Barbuda in the plenary session of the Assembly, I said: “We are at a defining moment in the history of the Organisation of American States. My delegation is aware that that statement has been made in the past in relation to other organisations. But, it is a compelling reality for this Organisation, and it has all the urgency of now. Were the OAS a company, it would be declared bankrupt and put into liquidation. The budget on which it currently exists is a fiction. It needs $115 million to operate properly, but its budget is only $84 million. In effect, the budgetary shortfall between what the Organisation should have to fulfil its many mandates and its income on paper, is $31 million this year alone. The situation is worsened by the arrears due by a few member states, totalling just over $27 million”.

    I concluded the statement by saying, “If the OAS is to continue to deliver benefits for the peoples of its 34 member countries, its financial situation has to be addressed meaningfully and seriously”. 

    “Regrettably, the majority of member states chose not to treat ‘meaningfully and seriously’ with this vital issue; the Assembly returned the issue to the Permanent Council which has no capacity to commit the financial resources of governments. Therefore, this dire situation of the Organisation will continue until June of next year when the General Assembly will convene in Mexico. What will be left of the OAS by then is anybody’s guess, since the Secretary-General has to cut $14 million from the budget. As I stated to the Assembly, “That draconian cut is in flagrant contrast to the theme of this general assembly. We are not strengthening the institution; we are weakening it”.

    Caricom countries can absolve themselves of any responsibility for the financial circumstances of the organisation. Not only did they continuously argue for the issue to be tackled urgently, at the Assembly they also offered to increase their own quota contributions as a model for others to follow. 

    Why did Caricom countries go so far? 

    This was my explanation at the Assembly in the DR. “The OAS is the only organisation in which all the remaining States of our hemisphere are members as equals, and in which we are able to address the issues that concern us individually and collectively. For a small state, such as mine, that is marginalised in the world because of our size and lack of military might and economic clout, the forum provided by the OAS is of immense value.

    “Within the councils of the OAS, we can advance our interests through diplomacy and negotiation; by creating understanding; and by challenging misunderstandings and misconceptions. Again, for small states, such as mine, which are suffering from unfair trade practices by larger and more powerful countries, and whose economies are knocked by harmful actions towards our financial services, the development role of the OAS is extremely important. We would like to see that role expanded and strengthened”.

    I concluded my statement on behalf of Antigua and Barbuda by stating that contribution to development “is the basis on which the peoples of our countries judge this organisation and the benefits of their tax dollars that governments invest in it. The Organisation must make a difference to gaining knowledge; to growing crucial sectors of our economies; and ultimately to reducing poverty and increasing employment. If the OAS is to remain relevant to people; it must deliver for people.”

    Inter-hemispheric politics and rivalries between some Latin American countries, mixed with the wider geo-political interests of the US and Canada, contributed to the paralysis on this matter.  Two countries owe arrears of contributions totalling $27 million; almost the total of the present Budget shortfall. Some countries won’t commit to increasing contributions until those countries pay up. 

    But, it is clear that three things need to be put in place without further delay to allow the OAS to continue to play its essential role of promoting peace and development in the hemisphere.

    Member states that owe arrears must make substantial payments; the contributions of each member state has to be increased; and the operations of the organisation have to be streamlined to make them more cost efficient and productive. There can be no cherry picking of elements of that is a single solution. Each is intertwined with the other, and together they configure the doorway to the continuation of the OAS as an instrument for good in our hemisphere

    At the DR General Assembly, Caricom countries apart, the OAS was failed by its member states.

    (The writer is Antigua and Barbuda’s Ambassador to the United States of America and the OAS. The views expressed are his own)