By David Jessop

CaribWorldNews, LONDON, England, Tues. Oct. 13, 2009: For the most part, the sovereign nations of the Caribbean tend to look past their near neighbours in the non-independent Caribbean.

Occasionally an issue arises, such as the recent decision by Britain to take direct control over the Turks and Caicos Islands, and there is a response; but for the most part, developments in the Dutch Antilles, the French Départements d`Outre-Mer (the DOM) and the British Overseas territories pass with little or no comment.

However, a number of unrelated events over the last months suggest that the independent part of the region might wish to pay closer attention to the difficulties their neighbours are experiencing in what has previously been a largely benign relationship with their respective metropoles.

The case of the Turks and Caicos Islands is now well known. The UK government imposed direct rule on 14 August after a Commission of Inquiry into allegations against elected officials found evidence of `systemic corruption, political amorality and administrative incompetence`.  In response Caricom took the moral high ground, arguing with some justification that there were democratic alternatives to Britain`s decision to take control.

Far more significant though, in the longer term, is likely to be what has been happening in relation to the Cayman Islands and Anguilla. There, Britain is imposing its will in a manner that seems determined to change key aspects of the no-tax, financial-services-with-tourism, economic model that London itself, until recently promoted for their development.

In the case of Cayman, Britain has taken the opportunity presented by a significant decline in the islands` financial services and tourism revenues as a consequence of the global economic recession to be prescriptive. It has refused to approve US$465m of negotiated loans to enable it to meet its obligations to civil servants and suppliers. Instead it has given its permission for Government to borrow US$40.5m at the cost of making spending cuts and the introduction of `new revenue sources, including direct taxation.`

Unsurprisingly the islands leader of government business, McKeeva Bush, who has opposition support on this issue, has said that he will not be pressurised into anything that would destroy the success the islands have worked to achieve. Instead he announced a budget of revenue-raising measures that do not change the island`s income and corporation tax free status.

For his part, the Minister with responsibility for Britain`s Overseas Territories, Chris Bryant, has said that despite this he will not approve borrowings until there is a clear strategy for addressing debt. But more tellingly, he wrote recently in the media: `It is clearly in the interests of all the Overseas Territories to have open, transparent fiscal arrangements and sustainable revenue from a wide and diverse tax base. Mere tax haven status will not pay the bills, nor will an over-reliance on indirect taxation.... If we want to promote action on regulating tax havens worldwide, it is essential that Britain be in a position to lead by example.`

In a separate but now linked exercise it is expected that sometime later this month a UK Treasury commissioned report (the Independent Review of British Offshore Financial Centres) will make far reaching recommendations that seek ways to change the tax status of its overseas territories.

All in all it is hard not to avoid the conclusion that this forms a part of the G20`s wider recent consensus on offshore centres.  Bermuda`s finance minister, Paula Cox, thinks so. She recently told the Financial Times that she suspected that the world`s richest states may be seeking extra-territorial solutions to resolve their economic, fiscal and financial challenges. `There is now a strong suspicion that the G20 has an undisclosed agenda item to drive forward a global corporate tax policy, which may fly in the face of a nation`s sovereign right to set down its own tax policy,` she is quoted as saying.

Uncertainty also prevails beyond the Anglophone territories, albeit on other issues.

In Martinique, there will be a referendum on January 17 to decide whether it continues as a full part of the French Republic or becomes a territory with autonomy, as provided for in the French constitution. In Guadeloupe a similar process may take place eighteen months later and in Guyane, a bill on changing the country`s status within the French Republic was adopted by its assembly by a large majority in September. While these developments do not denote independence or any change in the DOM`s status within the EU, they do indicate a desire for greater autonomy.

In the Dutch speaking dependent Caribbean, something similar is happening. There, after years of often confusing and contradictory debate, the Dutch and Antillean governments have agreed that the Netherlands Antilles will cease to exist as a country within the Netherlands by 10 October 2010. Under the terms of the agreement Bonaire, St Eustatius and Saba will become municipalities of Holland while Curaçao and St Maarten will become independent countries within the Dutch Kingdom. 

However, finding viable new ways to devolve sovereignty is far from easy.

The world is not anxious to see independent micro states; budget cuts are placing more severe constraints on any nation`s ability to devote long term resources to issues and locations that are not essential; and it is hard to imagine any nation wanting to resurrect Associated Statehood, where a metropolitan power is only responsible for defence and foreign policy.

While it is quite possible to see all these developments as parochial events in isolation from the wider region, they probably represent something far more significant in the longer term: a desire by the metropolitan powers to find ways to maintain control in the face of a restlessness for a new status that is neither independence nor incorporation.

France and to a lesser extent the Netherlands seem to be seeking a more devolved relationship. But in the case of Britain it not clear if it has the will to sustain a more controlling approach or whether, as with its now forgotten colonial past, weariness will slowly bring about new thinking and new solutions.

As matters stand it is hard to avoid the conclusion that Europe and its remaining overseas territories in the Caribbean have become estranged, have no appetite for divorce but have still to find a new basis on which they might live together.

David Jessop is the Director of the Caribbean Council and can be contacted at david.jessop@caribbean-council.org. Previous columns can be found at www.caribbean-council.org.