Bahamas: Time for income tax?

By Scott Armstrong ~ Guardian Business Editor ~ scott@nasguard.com

twitter.com/guardianbiz:



While the news was being digested that The Bahamas was now back on the the international tax white list, one well-known financier called for the government to look again at the nation's tax structure.

Paul Moss, managing director of the financial services company Dominion Management Services Ltd, welcomed the news that The Bahamas had signed the 12 Tax Information Exchange Agreements (TIEAs) he warned that it would only be a question of time before the G20 and the OECD wanted more.

He said: "While the government should be congratulated for having acted appropriately to have the Bahamas removed off the grey list, it is a momentary victory as it will not be long before the OECD coming knocking again with more demands.

"When you give them an inch they take the proverbial mile and this is why I have called for the Bahamas to change its tax structure so that we could avoid these kinds of demands. We ought to now become proactive by introducing income tax with a low flat rate so we are no longer accused of being a tax heaven which makes us at the whim of the OECD.

"I am tired of saying it but sometimes you must repeat until our leaders get it. Only when we become a taxed jurisdiction (income tax) would we be left lone.

"Now is the perfect opportunity for us to engage in this dialog and seek to sign double taxation agreement with every country in the world if necessary.

"This is serious business and we cannot afford to continue to be reactionary in this regard. I now call on the professionals in private practice and the government to sit and maturely map out a new tax regime which will also have the desired affect of bring more money to the treasury as we as making it more equitable for the poor".



Thursday March 11, 2010

thenassauguardian

Bahamas Blog International

CARICOM must adopt new economic model, says Guyana president

PORT OF SPAIN, Trinidad (GINA) -- The Caribbean Community (CARICOM) is seeking international support for a new economic model which President Bharrat Jagdeo says is needed to meet the peculiarities of the region.

Backing for the new model is being canvassed and United Nations Secretary General Ban Ki-moon and the heads of several multilateral financial institutions are to join CARICOM leaders in Dominica in March to discuss it, President Jagdeo told reporters here.

Jagdeo, current CARICOM Chairman and head of the regional economic task force addressing the impact of the global economic crisis on the 15-member community, maintains that the model of economic development the region has been pursuing is not sustainable given its peculiarities.

The impact of the global crisis and climate change were the two major issues before Commonwealth leaders at their 20th summit here, the President told reporters late Saturday.

He said the huge debt overhang and massive sums spent to service debt have affected the community’s capacity to intervene in the crisis which has had a major impact on its members.

He noted that the two largest industries in the region – tourism and the financial sector – have been affected and capacity and fiscal space to do anti-cyclical spending has been limited because of the debt overhang.

“There is no way we are going to build a viable medium term economic strategy without a change in the model”, Jagdeo insisted.

He said that CARICOM heads Saturday advocated a deferential approach to a global economic system.

Most of the large countries were speaking about their efforts to support demand at the global level through the G20 and that’s vital for the future and for those countries to pursue free trade as a way of expanding global GDP, he acknowledged.

“But for countries like ours, many of those things would have sometimes a negative impact – the impact of reciprocity and removal of preferences which have led to the destruction of two major industries in the Caribbean – sugar and bananas.”

He said CARICOM has argued that the model that would be viable for the Caribbean would be one that sees debt relief for middle income countries; special and deferential treatment in the global trading system; dedicated instruments from the multilateral financial institutions (MFIs) to target the special vulnerabilities of the region – like a contingent line of credit to deal with hurricanes and other natural disasters which have a systemic impact on their societies.

The new economic model and climate change were the two big issues for the region, he said, adding, “It was important that we advocated for both and that we seek the support of this broad range of countries across the world because this support would be vital when we get to the WTO (World Trade Organisation) or when we take specific measures to address these issues at the boards of the multilateral financial institutions.”

Jagdeo said the President of the World Bank, the Deputy Managing Director of the International Monetary Fund (IMF), the President of the Inter-American Development Bank (IDB) and the UN Secretary will be at the CARICOM intersessional meeting in Dominica in March.

“I hope that with their support plus the political support, particularly from the countries in the G20, we may be able to get some progress in this regard”, he said.

The President chaired a meeting Saturday between CARICOM and British Prime Minister Gordon Brown and said he dealt with the impact of the global financial crisis on the Caribbean.

“We asked for support of this model that we intend to pursue”, he announced.

He noted that two current British initiatives are counter to the region’s efforts to develop its crucial financial sector and tourism sectors.

The Air Passenger Duty (APD) implemented by the United Kingdom has had a discriminatory impact on the Caribbean by making it far more expensive for British tourists to visit the Caribbean while it is cheaper for them to go to Hawaii or Vancouver which are almost twice as far from London as Barbados.

Jagdeo said CARICOM asked Brown for a rebranding of the Caribbean and he advised that the community work with the British Chancellor of the Exchequer on this matter.

CARICOM states have also encountered difficulties in many parts of the world on signing the tax information exchange agreement to get off the `grey list’ and urged Brown to help get these countries to move swiftly to resolve those issues, he said.

Some CARICOM members are facing an adverse impact because of being `grey listed’ and some financial institutions have already moved from those jurisdictions.

He stressed that the continuing global crisis is not splitting CARICOM although several member states are in difficulties because of reductions in tourism flows, revenue from the financial sector and remittances from developed countries.

“These are real problems and while we have to deal with the long term structural issues – debt and its future servicing, the structure of our economies -- we also have an immediate problem of finding enough cash resources to meet the day-to-day needs of the countries.”

“We have to find a source of bilateral funding. Given what’s happening in the world and the difficulties facing many countries, the only access available is through the multilateral financial institutions and many countries did not have any recourse but to turn to these institutions”, he said.

“We have decided to act in concert and I think there’s a greater sense of urgency”, the President added.

He said CARICOM leaders at one time were too complacent and felt that the current crisis was inevitable – whether there was a global recession or not -- because some were accumulating unsustainable levels of debt and using a larger share of the recurring budget to service that debt.

Total factor productivity in the economies was also declining for several years, he said, adding that this was unsustainable in itself.

November 30, 2009

caribbeannetnews

Caribbean Blog International

Commonwealth in danger: Action needed in Trinidad

By Sir Ronald Sanders:

As the Commonwealth Heads of Government meeting is about to take place in Port-of-Spain, Trinidad and Tobago’s capital, there is not much hope among its member states that it will achieve anything more than declarations without the means to implement them.

Indeed, even more worryingly, there is a mood in some of the developed Commonwealth countries that the organisation no longer has relevance in the international community.

Sadly, even though the Commonwealth Summit is being held on the eve of the Copenhagen Conference on Climate Change, there is strong resistance from major capitals to any notion of a Commonwealth initiative on this issue.

I hope my information is incorrect, but it is being said in circles that should know that Canada is one of the countries that is opposed to any initiative being taken on climate change outside of what could be achieved in Copenhagen. And, the world now knows that already diluted declarations have been prepared for the Copenhagen conference and they are non-binding anyway.

If the information about Canada is true, it is much to be regretted, for small states, particularly those in the Caribbean, have long looked to Canada to champion their causes and to stand with them in the Commonwealth especially. In the past, Canada has not shirked this role, and it has not been to Canada’s disadvantage. By championing small states, Canada has been able to count small states in the legions of its support.

No other plurilateral organisation has served the interests of small states better than the Commonwealth over the last four decades. Of the now 52 member states, 32 are small with 12 of them from the Caribbean. Certainly, the G20, despite the membership of five Commonwealth countries – Australia, Britain, Canada, India and South Africa – can not purport to serve small states since not one small state is represented at the table, and, so far, no machinery has been put in place to formally ascertain their views, in advance of G20 meetings, on the global issues that affect them.

As the world has moved increasingly to globalisation and trade liberalisation, the majority of small states, which were from the very outset only marginally capable of economic survival, have found themselves overwhelmed by new challenges such as sea-level rise, drug trafficking and attendant high rates of crime, high migration of their best educated people, and a lack of capacity for negotiating the integration of their societies into larger trading blocs and the new global trading system. While bigger countries have similar problems, they have the resources and flexibility to address these problems, unlike the small states.

This is the context in which this CHOGM is being held. It suggests that the Commonwealth in tandem with the small states themselves should explore ways in which the imperilled societies of the majority of small states could become more viable and so serve their particular interests as well as those of the wider Commonwealth.

What should be the crucial issues? A priority should be Climate Change. The escalation of adverse weather related conditions, especially sea-level rise, challenge the very existence of several Commonwealth countries such as the Maldives, Kiribati, Marshall Islands, Tokelau and Tuvalu. In other cases, sea-level rise and flooding threaten agricultural production and trade for many states such as Guyana, Belize, Ghana, Tanzania and Bangladesh. Both stronger hurricanes and steady beach erosion also threaten tourism and agricultural production in several Caribbean islands. And, for all of the affected countries, the high costs involved in adaptation are simply unattainable on their own.

Why then not a Commonwealth initiative to do something tangible for the most vulnerable regardless of what happens at Copenhagen? Surely, the Commonwealth could resolve to mobilise resources from the World Bank and other organisations to put in place a programme for the countries whose very existence is threatened? If not, what do the leaders of these countries tell their people? What does the Commonwealth tell them? Is it that they must quite literally paddle their own canoe?

A second priority should be the impact of the global crisis on all Commonwealth countries and particularly what should be done for the smallest and most vulnerable economies. It was a welcome development to see the Secretary-General of the Caribbean Community and Common Market (CARICOM) Secretariat make the statement that CARICOM countries “have not seen any significant inflow for that (the US$1 trillion pledged to the IMF by the G20 countries), we have not heard or seen any significant changes in policies of the IMF as an example”. It is time for that kind of frank talk.

The Global crisis produced the G20 countries to replace the G7, which has controlled the world economy over the last sixty years, to stimulate global demand and supply, but there has been no accompanying measures for the smallest, most vulnerable countries for debt relief, new aid, and sustainable capital flows. It is right that these governments must devise policies that address these issues themselves, but it is also right that the international community should act to provide help.

Essentially small states have been left out in the cold with the IMF still the only mechanism to which they can turn – and no change, despite all the rhetoric, in the prescriptions of the IMF itself.

Yet, the capacity of governments of small Commonwealth countries to service debt that the IMF places as a priority is extremely difficult in conditions in which their main sources of trade and tourism revenues are in decline. The ratio of debt to GDP in several small Commonwealth countries paints the picture: St Kitts-Nevis 178%, Seychelles 151%, Jamaica 128%, Antigua and Barbuda 107%, Barbados 106%, Grenada 87%, Dominica 86%, Belize 80%, St Lucia 70%, Marshall islands 70% and St Vincent and the Grenadines 67%.

The Commonwealth should, at the very least, be considering how it can advance change in the World Bank and other financial institutions for helping small countries to restructure and repay both official and commercial debt on easy terms over the next decade.

Absent practical decisions of this kind, this CHOGM does run the risk of making the Commonwealth irrelevant even to the small states that place such tremendous importance in it. That would be sad for an organisation that retains great potential for serving the world’s interest for economic development, peace and democracy.

caribbeannetnews

Bahamas Blog Bahamas

How realistic is it for the Caribbean to join the G20?

By Dr Isaac Newton and Debbie Douglas:

In the Caribbean, schisms have opened up over such pressing issues as immigration, foreign policy agendas, borrowing from the IMF, implementation of the Caribbean Court of Justice, viability of the Caribbean Single Market Economy, and leadership clarity over regional direction.

More worrisome are: inadequate critical discussions on national and regional issues over the development of the region, preferred worldview that excellence is imported and things foreign are superior, and threats over sub-regional and regional splits on South American alliances.

But excluded from serious public debates are priorities such as ecological security, fiscal scare, die-hard poverty and rising debt. The paradox is that year after year, the Caribbean spends wasteful resources on conferences that do not yield positive outcomes.

Yet, in this climate, some conscientious political analysts and social scholars attempt to differentiate local realities from global trends. They are on a mission to decipher where points of intersection could help clarify, the key variables needed for the Caribbean to forge its own success pathway.

Against this wider backdrop, former Antigua and Barbuda diplomat, Sir Ron Sanders has written two articles: “Can the Caribbean rely on the G20?" and "Who is listening when the Caribbean speaks?”

We have read Sir Ron Sanders’ admirable endeavors to support Caribbean leaders by articulating why they should be given a place at the table where decisions that affect them, directly and indirectly, are made. Such places include the G20, the IMF, and the World Bank.

We know that the Caribbean has played a significant historical role in providing resources that European countries and the USA used to catapult their societies into advanced economies. We are aware also that the Caribbean continues to advance ideals of democracy, with geographic strategic value for Europe and North America. From this angle, we resonate with Sanders’ righteous anger, for rallying against wrongheaded attitudes that arrogantly dismiss the Caribbean and arbitrarily victimizes poor regions.

We particularly embrace Sanders’ enormous optimism, and praise his outstanding passion for envisioning the Caribbean as qualified to enter into the G20 circle. But we are aware of the dizzying nature of how unlikely his goals are to be attained. Added to that, is the unsentimental cost of the possibility of being slighted by the major powers of the world.

There is a difference between a coconut tree and a lamp post-- both are firmly planted in the ground-- one has roots but the other does not. In the same way, Sanders’ desire may be exceedingly earnest but his declaration appears incredibly inaccurate. For the Caribbean to execute its lofty goal of achieving G20 status, it must be willing to put vital steps in place to get there.

At best, Sanders’ articles contribute to our understanding of how geo-politics and ethics are deeply connected to our conceptions of sustainable development and identify. At worst, his ideas illustrate how the Caribbean itself, fails to create added value to penetrate world shaping institutions like the World Bank, the IMF and the G20.

First, the G20 nations deliberately set up structures to protect self interests; they are not too much concerned with building bridges or even recognizing how their fate and the Caribbean’s destiny are interlinked. When shoring up their faltering economies, being charitable towards the Caribbean, is the last thing on their minds.

Second, the very nature of G20 is discriminatory. It is designed for well developed and highly integrated economies both to support each other and to superimpose their collective financial agendas on the rest of the world. The Caribbean’s economies are too meager and far too insignificant to be considered worthy of inclusion.

Third, although ‘a little leak can sink a big ship’, Caricom seems inept, to reverse president Jean Bertrand Aristide’s ousting, when outside powers, unseated a democratically elected leader, from amongst its rank. It took an African country to offer him a place of refuge.

Fourth, until the Caribbean gets its strategic intelligence, market integration, immigration freedom, and innovative educational practices act together, our future seems dismal. Caribbean leaders must concentrate on internally derived development solutions, and on the capacity to ignite the genius of its people, both at home and abroad, to facilitate its growth. Since these dynamics are not in place, why should the most powerful countries in the world, listen to the Caribbean or take our issues seriously?

The fact that so much is at stake, yet we continue to fight ever so often, over narrow terrain of resources and interests, knowing full well, that such infighting has dire consequences for our collective future, suggests that our moral compass is not set in the direction of self-empowerment.

We have our internal work cut out for us, and maybe feelings of being flatly ignored, is a clarion call to explore possibilities for sustainable unity, which is essential for regional advancement.

Perhaps the time to shift strategy and begin to rethink, how to fashion our destiny, from the inside out, while not dismissing the supreme value of finding relevant global partners, to harness mutually beneficial interests, has come.

Sanders’ highly ambitious enterprise, and remarkably, in these difficult economic and social times, places the cart before the horse. Therefore, we read his unique advocacy, more as an investment in encouragement, than as a signature of regional readiness and achievement.

The sentiments in his articles imply that our self-promoting agendas, (we can’t even get the China/Taiwan issue straight) that foster regional hierarchies and that work counter to the need to be critically conscious about the way forward, must be first clarified.

Invisibly and thence consciously, until we nurture a strong sense of ‘regionhood,’ which is indissolubly tied to the power of representation, we will be left out of important decision making processes.

Essentially, the Caribbean must find productive methods of listening to each other. We must speak with one voice by packaging indigenous issues in convincing frameworks to the G20, the World Bank and the IMF. This will increase our clout.

There is plenty of merit for the Caribbean wanting to have its own representation in international gatherings. We can no longer simply react to policies. We must provide intelligent input to shape and implement them. But to have our concerns addressed realistically, depends on our perceived and real weight.

For example, what are we bringing to the international table and how are we communicating added value? Do we have the leadership to build a sustainable regional economy to earn a place at the G20? Do we invite our most competent people to represent our views at the World Bank and the IMF?

No one will listen to us, if we continue to be disunited and needy. In short, we have a lot of growing to do, before we develop the capital to get the deference and high regard needed to wield influence on the global landscape. We wonder, what will quicken in our souls, given how far from the G20 mark we are, for us to realize that seven requests, of wanting to be included, do not an invitation make?

Ultimately, the Caribbean needs to cultivate a robust self-confidence to excel at prosperity-generating ideas. We must also learn to model a quest for excellence through virtues of mutual affirmation, cultural creativity, justice and fairness, critique and rejuvenation.

In essence, the Caribbean must find strategies to ensure that its place in the global-mix is not compromised. Preserving our best cultural features, should involve arresting the attention of global players, in our pursuit of ambitious exploits.

While some amongst us are worrying about the big questions—like, ‘How to develop the Caribbean as a major world force?’ Caribbean leaders have smaller concerns to tackle—‘How to harness and unify the Caribbean’s best energies (human and natural) for its own survival?

Perhaps we must earn inclusion, before we demand it. We need to unite, define our regional interests, build our economies to attain G20 status, and carve out a strategy that advances our needs/wants effectively, to rightly gain the possibility of a place at the table.

Dr Isaac Newton, an international leadership and management consultant, is a graduate of Harvard, Princeton and Columbia, and Debbie Douglas, a legal analyst and government relations consultant, is a graduate of McGill University, Stockholm University and University of London.



caribbeannetnews

Bahamas Blog Bahamas

Who's listening when the Caribbean speaks?

By Ronald Sanders:

In Turkey, where meetings of the IMF and the World Bank were held during the week of October 4th, Caribbean Finance Ministers raised with the First Deputy Managing Director of the International Monetary Fund, John Lipsky, their concerns about “the need for better representation and participation of small, developing countries in key meetings and fora such as the G20, where decisions that can significantly impact these small economies are frequently made”.

But, Caribbean representation in the already overcrowded G20 will not happen without a strong case being made and accepted by governments currently at the table.

Similarly, much needed reform of the IMF and World Bank to benefit the Caribbean appears remote.

At the Bank/Fund meetings, the President of Guyana, Bharat Jagdeo, as current Chairman of CARICOM, led a team of Prime Ministers from the Bahamas, Barbados and St Lucia to make a case to the President of the World Bank, Robert Zoellick, that special attention should be paid to relieving and restructuring the debt of the highly indebted, vulnerable, middle income countries of the region.

And, Barbados Prime Minister, David Thompson, speaking at the formal meeting was emphatic that “limited access to World Bank funding has forced many middle income Caribbean countries to borrow in the private capital markets at substantially higher rates and shorter repayment terms”. Mr Thompson recommended that “further consideration be given to this issue of access by middle income countries to financing from the multilateral financial institutions.”

All of this is right. The entire Caribbean region is facing a serious reversal of its economic and social progress arising from a number of factors. It is true that one of the significant factors is poor economic management and decision-making by some of their governments, and this is a concern that Caribbean countries must themselves address.

The external factors are also real. Not least among them is the point raised by both Jagdeo and Thompson that the classification of Caribbean states as middle-income countries disqualifies them from concessionary financing from the international financial institutions and forces them into the commercial market for borrowing.

But, is anyone really listening? The moment for effective reform of international institutions is fast receding. Those industrialised nations that pledged themselves to reform in the wake of last year’s financial crisis are quickly retreating from their pledges as their economies begin to pick-up. The creation of the G20 and the provision of some additional resources to the IMF appear now to be the most they will do.

The new resources for the IMF are insufficient and, in any case, are not targeted to middle income countries such as those in the Caribbean; they are focussed on low income countries and on bigger countries such as those in Europe and Mexico.

A so called Flexible Credit Line has been introduced by the IMF “for countries with very strong fundamentals, policies, and track records of policy implementation”. Caribbean countries will not qualify for among the criteria are: a track record of steady sovereign access to international capital markets at favourable terms, and sound public finances including a sustainable public debt position.

Why these criteria should be relevant instead of ones that recognise the need to stimulate stagnant economies and provide support for social welfare programmes speaks to the anachronistic role of the IMF which still operates as an agency of the victors of World War 11, despite all the rhetoric.

As for the World Bank, the Turkey meeting deferred any increase in its capital until next year. Therefore, the Bank is faced with a limited lending capacity, and in this scenario, countries such as those in the Caribbean that are designated middle-income are not a priority.

Caribbean Heads of Government and Finance Ministers raising their concerns with Heads of the International Financial Institutions and in the formal sessions of the Bank/Fund meetings was absolutely right. They do not get much chance to do so, Caribbean countries have no seat of their own on the Boards of these bodies where they are represented by Canada. And, while Canada may be a sympathetic ally, there is no substitute for authentic argument from high representatives of Caribbean countries themselves.

In this connection, the prospect of any reform of the international financial institutions that would benefit the Caribbean in terms both of representation at the highest levels and change in IMF conditionalites and World Bank criteria for concessionary financing, does not appear to be on the cards anytime soon.

This is why Caribbean countries should adopt a collective and cohesive approach to this issue devoting resources to a joint and continuous diplomatic effort to put their case forcefully to the international community at every opportunity.

It is well within the region’s capacity to establish a task force of public sector and private sector professionals, under the umbrella of a special unit of the CARICOM Secretariat, to undertake this task. The task force could be mandated to produce documentation with all the necessary rigour for presentation to the Boards of the International Financial Institutions and to influential governments. Much of this work has already been done by a group established last year under Caribbean Development Bank President, Compton Bourne.

In turn, high regional representatives led by one or other of available Heads of Government could be appointed to engage the international community in an intense campaign on the basis of a well-debated and agreed CARICOM strategy.

The Commonwealth Heads of Government Conference in Trinidad in November presents a unique opportunity to make the Caribbean case to five Heads of Government of G20 countries – Australia, Britain, Canada, India and South Africa. They may not get far with Australia and Britain, but India and South Africa with whom they have close links, and Canada with whom they share a common neighbourhood should listen.

The Commonwealth Secretariat has itself done a great deal of work on small states and reform of International Financial Institutions. The November Commonwealth Summit, therefore, is an excellent forum for the Caribbean to advance a cohesive campaign.

October 9, 2009

caribbeannetnews

Bahamas Blog Bahamas

The G7 passes the buck to the G20

• Impossible to certify the end of capitalism’s global crisis

Joaquín Rivery Tur

THEY may be the 20 countries with the most economic weight in the world, but they are not wizards, nor are their computers fortune-tellers. Nobody on the planet can sign the death certificate of capitalism’s global crisis. What just took place in Pittsburgh, in the United States, is best described as buck passing.

The Group of Eight (G8: United States, Canada, Japan, Germany, Britain, France and Italy plus Russia) was unable to deal with the global crisis, much less with controlling the tangled neoliberal financial web of the capitalist system, and had no choice but to pass it on to the Group of 20, possibly to dilute the responsibility of the world’s most developed countries for the economic turmoil into which the planet has sunk, and to look to another 12 nations to share the blame.

In reality, the Pittsburgh Summit represents the total failure of the richest nations in their desire to rule and exploit a world that is totally ungovernable for two reasons; one, the social movements are increasingly up in arms over the generalized injustice and, two; the large financial corporations have rooted their power within the highest layers of officials, so as to have free reign for their profit ambitions and, therefore, they cannot be controlled. Governments have always been accomplices.

According to the news agencies, the leaders of the G20 — within which the seven richest nations have greater ability to exert pressure, more influence and the power to coerce — agreed that the new group is to be transformed into "a principal forum for international economic cooperation."

That is an ambiguous sentence. It assumes that the fundamental purpose of the meeting was to collectively attain greater control over financial corporations in order to avert – as far as possible – the risks of a crisis as profound as the one humanity is currently experiencing. In fact, in order to do so, the seven richest countries demonstrated their will to increase by at least 5% the voting power of emerging countries — such as China, India, Brazil and others — within the International Monetary Fund (IMF), as if that could actually change the relationship of forces, and above all, as if the move signifies a major change in the international financial architecture, which the underdeveloped countries have been demanding.

The summit called for stricter regulations on banking activities and limiting bonuses paid to banking/financing executives, who had the power to raise their own bonuses by millions, even in cases where their companies were showing losses that resulted in bankruptcy.

The problem is that a 5% increase in voting power for emerging countries does not mean, for example, that the United States will lose its veto power in the IMF or the World Bank. Instead, it retains a strong lever of pressure, mostly on the Third World, which desperately needs help and investments to pull it out of underdevelopment, but without those nations becoming part of the crazy model of U.S. consumption, which is leading the world to environmental destruction due to climate change and the depredation of nature.

The measures approved in Pittsburgh are an attempt to avoid the phenomena that led to the formation of financial bubbles with a tremendous capacity for explosion and the creation of new crises, but the most serious problem will be how to really control the financial giants, and how to dictate mandatory regulations to govern their fraudulent operations. Is that possible in unbridled capitalism?

It is very difficult not to hold the IMF responsible in good part for what is happening internationally, because its experts should have realized that the financial bubble was about to burst.

On top of the repeated affirmations about how everybody is supposedly emerging from the crisis, in a contradictory fashion, the G20 agreed not to withdraw government aid packages to the major corporations because of a risk of another downturn. Even Chinese President Hu Jintao stated that the alleged recovery "is not as yet solid," and he wasn’t exactly referring to his own country, where not even the crisis has been able to deter its booming economic growth.

Apparently, nobody has learned anything. The G8 (which still exists) has incorporated another group of countries into its vicissitudes, but even that is not a solution, because it is a question of agreements within capitalist globalization, whose neoliberal character is incompatible with government controls. Nevertheless, protectionism is still growing.

The big banks want deregulation, absolute freedom to cheat and take risks in order to satisfy the adrenaline needs produced by financial speculators’ ambition for profits.

With respect to the famous bail-out, in early September, the Federal Deposit Insurance Corporation in Washington revealed that in the second quarter, banks with capitalization and bad loan problems (impossible to collect) totaled 416; in other words, 111 more than in the previous period. A very befogged atmosphere.

The IMF put the frosting on the cake of the crisis a few days ago, when it announced that the planet-wide financial hurricane will affect economic growth for at least seven years, and suggested — now! — the implementation of structural reforms. The result of the crisis forecast by everybody is less employment, less growth, less investment and less productivity. The problem is not one of phenomenon, but of essence. It is called capitalism, no matter how many times you spin the wheel.

granma.cu

Bahamas Blog Bahamas

G20 may blacklist Caribbean regulatory havens

ISTANBUL, Turkey (Reuters) -- The Group of 20 major nations may blacklist countries that have lax financial regulation and impose sanctions on them, mirroring its crackdown on tax havens, Chancellor Alistair Darling was quoted as saying.

"Just as we want to go after tax havens, we want to go after regulatory havens as well," Darling told Emerging Markets magazine in an interview published on Saturday.

"It is not good for financial stability that some companies can operate out of a Caribbean island, and shelter behind a veil of secrecy, and we don't know what they are up to."

Darling's remarks, some of the strongest yet on the issue by a senior G20 official, suggested the group was determined to impose financial reforms comprehensively around the globe to reduce the risk of another credit crisis.

The G20, which groups the United States and other rich countries along with developing nations such as China and India, is pushing for wide-ranging changes in financial regulation -- from bank capital standards and bankers' pay to corporate accounting rules and supervision of financial institutions.

Emerging Markets magazine said the Financial Stability Board, which coordinates the G20's regulatory initiatives, would prepare a "provisional blacklist" of regulatory havens by a meeting of G20 finance ministers in November, as well as a grey list of countries that also should tighten standards.

The FSB will suggest the use of positive sanctions, such as help with improving a country's regulatory capacity, as well as negative sanctions, such as raising the cost of doing business with banks in a blacklisted area, the magazine reported.

Darling, visiting Istanbul for a meeting of finance officials from the Group of Seven rich nations and the International Monetary Fund's semiannual meeting, was quoted as saying big institutions which triggered the credit crisis had traded in every corner of the globe.

"We have an interest in making sure that the regulatory regime is robust, so that you don't end up with banks falling between stools," he said.

"I am concerned about countries that don't have such robust regimes. As it becomes less and less clear what exactly their arrangements are, that could have quite a destabilising effect on other countries."

The G20's crackdown on tax havens has had considerable success. G20 leaders agreed in April to name and shame the world's tax havens with a public list, and threatened sanctions for countries not falling into line.

Since then, some European countries, such as Switzerland, have made concessions on bank secrecy laws in an effort to get off the list. On Thursday, the government of France said French banks had promised to close all their branches in jurisdictions considered to be tax havens from March 2010 onwards.

October 5, 2009

caribbeannetnews

Bahamas Caribbean Blog International

CARICOM seeks voice in G20

GEORGETOWN, Guyana -- The Caribbean Community (CARICOM) would like a voice in the Group of 20 (G20). This was one of the issues raised by the Community’s Foreign Ministers during a meeting with United States Secretary of State Hillary Clinton in New York, USA last Friday 25 September.

Assistant Secretary-General at the CARICOM Secretariat for Foreign and Community Relations Ambassador Colin Granderson said that Secretary Clinton was informed of the concern by CARICOM countries of not having a presence in the Group of 20 (G20) global policy arena where many of the issues on the global economy are discussed and decided. He added that the concern of the Region was ‘taken on board”.

“It is believed that the views of vulnerable states with peculiarities such as ours need to be heard,” Granderson emphasised.

The latest meeting provided yet another opportunity for follow-up discussions arising from the meeting between CARICOM Heads of Government and United States President Barack Obama at the 5th Summit of the Americas in Port of Spain, Trinidad and Tobago in April 2009 and a previous meeting between the Ministers and Secretary Clinton in Honduras in June during the Organisation of American States General Assembly.

Granderson revealed that discussions were dominated by the continuing global financial crisis and trade. With regards to the global financial crisis, the Region expressed continued concerns about accessing funds that developed countries had made available for developing countries to assist in offsetting some of the fall out from the financial crisis.

The Assistant Secretary-General said that it was stressed that the graduation of some CARICOM Member States to the level of middle income countries had made it quite challenging for them to access these much needed funds.

On the trade front, Granderson said the Region pressed home the point that it is anxious to meet with the US Trade Representative as there are several issues in this arena to be ironed out and on which the Region needed clarity.

The CARICOM Assistant Secretary-General also informed that developments on a planned Caribbean-US Regional Security Framework was also discussed. He informed that a Joint Working Group which was established earlier this year had already met and planned a second meeting in the coming weeks.

The Dominican Republic also participated in last week’s discussions.

October 1, 2009

caribbeannetnews

Bahamas Caribbean Blog International

Saint Vincent speaks out at UN debate on efforts to clamp down on tax havens

29 September 2009 – The efforts of major and industrialized economies to crack down on so-called tax havens are just an excuse to spread the blame for the global financial crisis on small nations’ legitimate attempts at development, Saint Vincent and the Grenadines told the General Assembly today.

Camillo M. Gonsalves, the Caribbean archipelago’s Permanent Representative to the United Nations, told the sixth day of the Assembly’s high-level segment that is country faces “being stigmatized out of our transition into financial services” by the Group of Twenty (G20) major economies, the Organization for Economic Cooperation and Development (OECD) and what he called “other non-inclusive bodies.”

Speaking at UN Headquarters in New York, Mr. Gonsalves said the crackdown on tax havens were actually “a pathetic effort to cast a wide and indiscriminate net of blame across a swath of legitimate and well-regulated countries’ development efforts.

“We note the irony of these paternalistic prescriptions from the same countries that are unable to stem corruption and mismanagement within their own borders, where corporations recklessly squander trillions of dollars and a single buccaneer investor can make $50 billion disappear into thin air – an amount greater than the combined annual budget expenditures of the entire CARICOM [Caribbean Community] sub-region,” he said.

Mr. Gonsalves took aim at the G20 for describing itself last week, at a summit in the United States city of Pittsburgh, as the premier forum for international economic cooperation.

“Saint Vincent and the Grenadines is not a member of the G20, nor were we consulted on its ascension to the ranks of arbiters of our economic fate… The G20 faces a serious legitimacy problem: aside from being non-inclusive and unofficial, many of the countries at that table represent the champions of the financial and economic orthodoxies that led the world down the rabbit-hole to its current economic malaise.”

The Permanent Representative also cast doubt on recent reports from some observers that the economy is returning to normal.

“The invisible hand of the market is still clasped firmly around the throats of poor people and the developing countries of the world. We see none of the so-called ‘green shoots’ that populate the fantasies of discredited economic cheerleaders.

“Indeed, the seeds sown by this crisis may produce the strange and bitter fruit of increased poverty, suffering and social and political upheaval. The crisis itself, with its disproportionate impact on the poor, will only widen and deepen the yawning gap between developed and developing countries.”

UN News

Bahamas Caribbean Blog International

News Tracker: past stories on this issue:

Dominican Republic calls for tax on tax havens to fund UN humanitarian goals

Caribbean tax havens talk back against G20 'finger pointing'

By Alan Markoff:

GEORGE TOWN, Cayman Islands (Reuters) -- Caribbean and Atlantic offshore finance centers are hitting back against attempts to portray them as shady tax havens and say world leaders are making them scapegoats for the global downturn.

Leaders of the Group of 20 economic powers, meeting in Pittsburgh on Friday on global economic issues, launched a campaign in April to name and shame tax havens and penalize those who failed to tighten tax standards and transparency.

Spurred by public outrage over big bonus-earning bankers and high-profile frauds by wealthy financiers, G20 governments have pointed accusing fingers at tax havens across the globe, many of them on tiny, beach-rimmed islands in the Caribbean.

As US investigators probe Swiss bank accounts held by suspected US tax cheats, leading offshore jurisdictions say they resent being cast as hide-outs for tax evaders and crooks.


"It's not fair," said McKeeva Bush, political leader and Minister of Financial Services of the Cayman Islands, the tiny British overseas territory south of Cuba that is one of the world's largest domiciles of hedge funds.

He and other policymakers and business chiefs from prominent Caribbean and Atlantic offshore centers say the anti-tax haven "finger pointing" by the world's richest and most powerful governments is hypocritical and seeks to shift blame away from their own failed policies and lax regulation.

"It's the fault of the onshore centers who taxed their own people ... money is running away from them now," Bush said.

"Cayman had nothing to do with the investing in sub-prime derivatives, US housing bubble or gross over-leveraging of the main banks ... It's a nice diversion to blame the evil guys in the Caribbean instead of laying blame where it belongs," said Grand Cayman real estate developer Michael Ryan.

"There is a lot of finger pointing at the offshore world," said Cheryl Packwood, chief executive officer of the Bermuda International Business Association. Bermuda, a tiny Atlantic island that is also a British territory, is a center for the global insurance industry.

But in the United States alone, offshore tax havens are estimated to deprive the Treasury of $100 billion a year. Official efforts to track down tax dodgers have gained pace as the US government seeks to collect more revenues without raising tax rates to offset its vast and growing budget deficit.

After G20 leaders this year declared a crackdown against tax havens, the Organization for Economic Cooperation and Development (OECD) in April published a "gray list" of jurisdictions they said fell short of full compliance with internationally agreed tax standards. More than a dozen Caribbean jurisdictions, and Bermuda, were on the list.

But while Caribbean and Atlantic offshore financial centers reject what they see as a one-sided witch hunt against them, their governments have nevertheless scrambled to get themselves dropped from the damning OECD noncompliance list."

The Caymans and the British Virgin islands achieved this in July after signing at least 12 bilateral tax agreements in line with OECD standards. Bermuda has also moved up to the "white list", and other Caribbean states are signing tax treaties.

Anthony Travers, chairman of the Cayman Islands Financial Services Association, sees an attempt by the G20 nations to impose what he calls a "new world order predicated on a global one-size-fits-all higher rate of taxation".

Bermuda's finance minister, Paula Cox, also suspects the world's richest states may be seeking "extra-territorial solutions to 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 said.

Timothy Ridley, former chairman of the Cayman Islands Monetary Authority, believes the crackdown on tax havens stems largely from fear of competition by "those ... who wish to retain control of the world's capital and to tax it".

Some experts in the Bahamas suggested the offshore sector should ensure its future by shifting away from clients in the United States, Europe and Canada to new wealthy customers in emerging powers like Brazil, China, Nigeria, Russia and India.

"If you can provide new services to these markets, you will swim, not sink," said Julian Malins, a London-based barrister who has acted as counsel for cases originating in the Bahamas.

While insisting they have put their finance sectors in order from the regulatory viewpoint, political and business leaders of these offshore jurisdictions admit their territories have not escaped the battering of the global financial crisis.

"Fewer tourists, lower tourist and consumer spending, the squeeze on business profits, redundancies and lay-offs are all the result of the global recession," said Bermuda's Cox.

This has led to some companies leaving the Atlantic island insurance center. This week, directors of global insurance broker Willis Group Holdings approved moving its domicile from Bermuda to Ireland, citing economic factors.

But both Bermudian and Caymans business leaders felt their finance centers could weather the economic storm and prosper.

"Money is going to find the right place to be," said Cayman's Leader of Government Business Bush, who is embroiled in a dispute with Britain over the islands' financial management.

"No matter what (the United States and EU) try to do, the more regulated places will survive and the Cayman Islands will survive," he said.


September 26, 2009

caribbeannetnews

Bahamas Caribbean Blog International