A special relationship
Eachyear the elected leaders of Britain’s overseas territories (OTs) gather fromaround the world to meet with British Ministers in London. Their objective is to discuss the continuingpartnership with the UK, to establish priorities and to try to resolvedifferences.
For themost part the issues covered at this year’s December 1-2 Joint MinisterialCouncil (JMC) while significant, were largely functional and unexceptional; butthere were four areas in a Caribbean context where important commitments weremade by both sides.
Thefirst was in relation to the vexed question of Britain’s insistence on beingable to obtain the details of the beneficial owners of offshore trusts andfunds registered in its OTs through the establishment a central publicregistry. Here, progress was made. Both sides were able to agree, after adiscussion described by the Cayman Premier, Alden McLaughlin, as being at times“intense and strained”.
Prior totheir arrival in London both he and the Premier of the BVI, Orlando Smith, sawBritain’s prescriptive approach as potentially undermining their robust andwell-managed financial services economy.
At themeeting however, a ‘shared understanding’ emerged which suggests a new more flexibleview by the UK on the provision of such information. What was agreed, in the words of thecommuniqué, was an approach that will enable the UK’s OTs to hold beneficialownership information in their respective jurisdictions ‘via central registersor similarly effective systems.’ It was also agreed that in order to make thiswork, technical discussions were required with UK law enforcement agencies todevelop processes enabling the safe and secure exchange of information.
What thedeclaration suggested was that the OTs, and in particular the Cayman Islandsand BVI, have for the time being prevailed against London’s wish to have a central public registry which withopen public access. Instead, the OTs agreed to have national systems that willbe accessible to tax and law enforcement agencies when needed. At the meetingthe OTs declined to match the UK’s commitment to make such information public.
Despitethis, a reading of the relevant carefully worded part of the communiqué, thestatement made to the House of Commons by the UK’s popular new Foreign andCommonwealth Minister for the Overseas Territories, James Duddridge, andconversations with some of the OTs leaders participating, makes clear that whatwas agreed was a step along a road that Britain sees as leading eventually to aglobal agreement on public registers of beneficial ownership.
It seesthis as the way to tackle tax evasion, aspects of jurisdictional arbitrage, andthe use of offshore financial centres for corrupt, criminal or terroristpurposes; thinking that could eventually require that all countries, includingBritain, to regularly verify and make public, information on beneficial ownership,with the unlikely outcome of the US doing the same for the 0.8m virtuallyanonymous companies reportedly registered in Delaware.
A secondarea of significance to the OTs and potentially to the whole Caribbean regionthat the meeting discussed was the OTs growing concern about the implicationsfor the relationship should the UK people vote to leave the EU in a referendum tobe held sometime in the next two years.
Thissensitive political matter – about which there is much more to be written in aCaribbean-wide context – as well as the importance of the ‘strong’ relationshipthat exists between the EU and the OTs, was acknowledged by the UK. ‘We agreedto continue to consult in order for the views of Overseas TerritoriesGovernments on reform to be taken into account’, the communiqué cautiouslynoted; referring to the intention of Britain’s Prime Minister, David Cameron,to renegotiate some aspects of the UK ‘s membership in return for recommendingstaying in the EU.
Another importantissue that was discussed that has wider implications was the problem thatCaribbean OTs (and others) are having in relation to merchant and commercialbanking, money transfer, and their previously unremarkable internationalrelationships with correspondent banks. At the meeting the recent withdrawal ofsome banking facilities in countries like Cayman and the closure of local branchesby international banks, concerned about risk and the cost of compliance withnew international financial legislation, was highlighted. In response Britain agreedto ‘support the Overseas Territories in liaising with UK banks’ to ensure thatthe OTs have full access to banking services. The UK also committed to workingtogether with its OTs to maintain viable banking and financial sectors.
A fourtharea of significance was a discussion on the security relationship. Here the communiqué not only made clear thecontinuing co-operation and commitment the UK has in relation to buildingcapacity and tackling serious organised crime, but also welcomed thecommitments in relation to the OTs in the UK’s recent Strategic Defence andSecurity Review.
This referenceto the Defence Review is significant as it is a document that demonstrates theextent to which Overseas Territories form an important part of the UK’s defenceposture. While this in part relates to the Falkland Islands, the Review makesclear that ‘the strategic location of our Overseas Territories’ is an aspect ofthe UK’s special relationship with the United States, described as Britain’s ‘pre-eminentpartner for security, defence, foreign policy and prosperity’. The implication forthe rest of the region is that the UK will through its OTs retain a long termrole in the Caribbean.
Speakingafter the Council to some of the participants, what is apparent is that ahigher degree of trust between the UK and its OTs now prevails, despite differences,and much of the dissonance of a few years ago has dissipated. In part this isabout issues and personalities, but it also demonstrates that the UK-OTsrelationship, as the relatively informal style of the communiqué indicates, isnow more about equals, and largely accepts interdependence withinadvanced constitutions that provide for uniquely local forms ofself-government.
Britain’s also seems to have worked out how toencourage the Overseas Territories to endorse its norms,whether they relate to security, financial services or social issues, and hasdeveloped a better understanding of the territories unusual, and not wellunderstood mix of god-fearing conservatism, self-confidence, and economiclibertarianism.
What wasnot specifically discussed, despite it being trailed, was where the UKrelationship with its OTs will be by 2030 and how this might relate to the restof the region. According to one OT participant at the working dinner where thiswas to have been considered, other issues were discussed. It is a pity: this mighthave been a positive moment to do so.
DavidJessop is a consultant to the Caribbean Council and can be contacted at
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