GEORGETOWN, Guyana -- When Caribbean Community (CARICOM) heads of government meet in Georgetown, Guyana, next week, they will do so against the background of a number of threats to the region’s financial and economic stability.
Chief among these are the threats posed by international banks limiting or terminating their relationships with regional financial institutions, and the yet to be determined implications of the British decision to leave the European Union (EU), a key partner in the Community’s development. The Brexit vote has sent Britain and the rest of the world into a tailspin. The pound sterling fell in value to the lowest in 30 years, and international financial markets took a downturn, as the implications hit home.
The Caribbean is not immune from the potential fallout, and economists and politicians alike are assessing the situation. The majority of CARICOM member states were former colonies of Britain, which was a key ally of the region within the EU.
While some have adopted a wait and see stance, confident that any domino effect will not occur in the short-term, others are predicting immediate consequences and want the CARICOM member states to appreciate the value of regional integration and band firmly together to chart the way forward.
The concerns range from a drop off in arrivals in tourist dependent member states such as Saint Lucia and Barbados where the UK is a major source market, a decrease in development assistance, to effects on trade agreements the region has with the EU.
Talking with journalists in Guyana last weekend, CARICOM secretary-general, Irwin LaRocque, said that though the breakaway was not on the agenda of the meeting, it would undoubtedly be discussed next Tuesday and Wednesday in Georgetown.
“We have to, of course, be concerned because the United Kingdom is a significant player in the arrangements in the European Union in terms of a voice, that also being a Commonwealth country but a voice as well in the European Union and the fact that it is a significant contributor to the European Union and of course the budget of the European Development Fund,” the secretary-general said last Saturday.
Pointing to the strength of CARICOM’s relations with both Britain and the 28-member EU, the secretary-general said he did not anticipate any “diminishing of the relationship with the United Kingdom or with the European Union in any way at all”.
Assessing the situation shortly after the vote, the head of the delegation of the EU to the Eastern Caribbean Countries, OECS and CARICOM/CARIFORUM, Ambassador Mikael Barfod, acknowledged that there could be some consequences for the Caribbean, such as renegotiations of trade deals with the United Kingdom. Barfod noted that the UK was a major trading partner for many CARICOM member states.
From prime ministers, many of whom are their countries’ finance ministers, to the heads of regional banking institutions, the assessment of de-risking scenario is that it is unfair and the predictions about its impact on the region are dire, and the call to action is extremely urgent.
De-risking is international banks’ withdrawal from their relationships with indigenous banks because of fears of money laundering and questionable sources of funds which would cause the international banks to receive heavy fines from their regulators.
Regional banking institutions rely on such relationships in order to allow residents to conduct international financial transactions. The issue has been occupying the attention of regional policy-makers, following signals by international banks that they are unwilling to continue carrying the business of regional banks.
Transfers of remittances, cheque payments, international trade and the facilitation of credit card settlements for local clients are among the areas that have been affected by de-risking.
“If you want to take it to the extreme, you and I will not be able to shop in a supermarket because the supermarket will not be importing the stuff we like to buy,” deputy governor of the Eastern Caribbean Central Bank (ECCB), Trevor Brathwaite said recently. “You and I will not even be able to buy shoes and clothes … cars, tyres and parts.”
The Caribbean Development Bank (CDB) quoted a November World Bank survey as saying that about 75 percent of international banks have experienced a reduction in correspondent banking services, with the Caribbean being the worst affected.
Reports are that eight financial institutions in Barbados, about seven in Jamaica and five in Belize and others in Antigua and Barbuda, Montserrat and other member states have been affected by a termination of or restriction in correspondent banking relationship.
The heads of government, at their intersessional meeting held in February, decided to establish a high level advocacy team headed by Antigua and Barbuda prime minister, Gaston Browne. Browne’s mission is to represent the Community’s interest at all levels, including with the United Nations, the World Trade Organisation (WTO), and the United States Congress. A meeting has since been held with US Treasury and State Department officials in April 2016 and the matter was also discussed with the UK foreign secretary.
A report on the UN-Caribbean Public-Private Dialogue on Correspondent Banking held in Jamaica, also in April, was presented to the meeting of the Council for Trade and Economic Development (COTED) held in Georgetown later in the month. the public-private dialogue brought together bankers in both the onshore and offshore sectors from the US and the Caribbean, as well as central bankers and government officials from both parties.
Trade ministers at the COTED meeting reiterated that the correspondent banking issue was a troubling one that was not limited to pure banking, but had trade and economic implications, and had the potential to lead to an upsurge in illegalities. They also underscored that the threat was being made even as all CARICOM member states were compliant with all international financial regulations. The ministers agreed that a comprehensive consistent and diplomatic offensive should be launched.
The trade ministers also supported a declaration of the Permanent Council of the Organisation of American States (OAS) that was tabled for adoption 30 March 2016 at a special meeting summoned by the then chair of the Permanent Council, Ambassador Sir Ronald Sanders. The declaration addressed the severe threat posed by the severing of correspondent banking relationships to the economic growth, social development and political stability of small economies.
The declaration also called for urgent action to ensure that banking regulations designed to foster transparency and accountability and prevent money laundering and terrorism financing do not create financial exclusion and economic decline of small economies by cutting off their access to international correspondent banking.
The heads know that there will be no easy solution to this matter.
One solution proffered by Prime Minister Dean Barrow of Belize was the pooling of business to achieve “critical mass” and to make it worthwhile for the correspondent banks that are weighing risks and returns. The governors of regional central banks, and the committee of ministers of finance on correspondent banking, that the heads of government have established, will consider the modalities of that recommendation.
Further action on correspondent banking will be determined by the reports presented to the heads of government during the two-day conference.
Heads will consider the border issues between Guyana and Venezuela, and Belize and Guatemala. The Community has consistently expressed it full commitment to the preservation of the territorial integrity of all member states.
Belize-Guatemala: Guatemala has had a longstanding claim to Belize dating back to the 18th century. At the center of Guatemala’s claim is the 1859 treaty between Britain and Guatemala. From Britain’s viewpoint, this treaty merely settled the boundaries of an area already under British dominion.
In November 2000, the heads of the delegations of Belize and Guatemala signed an agreement to adopt a comprehensive set of “confidence-building measures to avoid incidents between the two countries.
The OAS-mediated agreement seeks to resolve by peaceful means and through a specific agenda of measures to be implemented, a territorial differendum that originated two centuries ago between Britain and Spain over their colonial territories in Central America
CARICOM heads of government have encouraged both Belize and Guatemala to continue their efforts at constructive engagement and the building of friendly relations for the betterment of their peoples.
At their 27th inter-sessional meeting, in Belize in February 2016, heads of government “recognized the important role of the Organization of American States (OAS) in support of the efforts of the Belize and Guatemala governments to secure lasting peace and development. They “called on the international community to support the efforts of these two countries, and to be especially generous in their support for the sustained involvement of the OAS in these efforts”.
The heads “reaffirmed their unequivocal support for the maintenance and preservation of Belize’s sovereignity and territorial integrity”.
Guyana’s border controversy with its western neighbour Venezuela, relates to the more than a century-old dispute, which arose as a result of Venezuela’s contention that the Arbitral Award of 1899 is null and void. (The 1899 Award had conclusively settled the boundary between the two countries.)
Guyana’s pursuit over the years for a peaceful settlement has yielded mixed results. A founding member of the 43-year old integration movement, many of its diplomatic interventions have rested on the pillar of foreign policy coordination, one of five pillars which underpins CARICOM integration.
In its more recent act of aggression, Venezuela on 6 July 2015 announced presidential decree 1859, which lays claim to all the Atlantic waters off the Essequibo coast. This effectively reversed the 1899 agreement that settled the border dispute.
In response, CARICOM reiterated its position of “total support for the integrity of Guyana’s territory and maritime space, as well as that of all CARICOM states”, even as it emphasised the need to maintain peace and stability as the basis for enhancing regional cooperation and development for both these countries.
Speaking at the 36th regular meeting of the conference, in Barbados, in July 2015, then chair of the Community, Freundel Stewart, prime minister of Barbados stated –
“We [CARICOM] are committed to assisting Venezuela and Guyana in this dispute, preferring at all times a peaceful solution… But as of now, having regard to the fact that there was an arbitral award in 1899 and having regard to the fact that the Geneva Agreement of 1966 has not yielded the kind of results that either Venezuela or Guyana expected, CARICOM’s formal position has to be a commitment to the territorial integrity of Guyana,” he said.
At their 27th inter-sessional meeting in Belize, in February this year, heads of government “reaffirmed their unequivocal support for the maintenance and preservation of Guyana’s sovereignty and territorial integrity”. They also expressed their “full support for the role of the United Nations secretary-general and his efforts, in keeping with the provisions of the Geneva Agreement, to bring the controversy to a definitive and judicious conclusion”.
Plight of Persons of Haitian Descent rendered Stateless in DR
Heads will revisit this long standing, unresolved matter, as CARICOM continues to advocate for a resolution to the crisis which makes approximately 250,000 Dominicans of Haitian descent and Haitian migrants in the Dominican Republic stateless.
A 2013 Constitutional ruling by the Dominican Republic (DR) Government effectively renders stateless anyone with foreign ancestry born in 1929 or later. The international community’s response to this decision, established as the largest case of statelessness in the Western hemisphere, resulted in the DR Government instituting a regularisation system to enable Dominican Haitians and Haitian migrants to register and to be issued with identification cards.
The 17 June 2015 deadline set for this process was not met by many Dominicans of Haitian descent and Haitian migrants. This was due mainly to their inability to raise the required fees as well as the difficulty in acquiring the necessary documents which in many cases did not exist, such as ID cards that were confiscated by authorities. As a result, the DR government has indicated it will begin deporting non-registered migrants. “Up to 250,000 people are at risk of being deported to a country where many of them have no family members, no job prospects and no current ties.”
CARICOM has firmly “called out” the Dominican Republic for its treatment of Dominicans of Haitian descent and Haitian migrants in the recent immigration crackdown at the end of the June 2015 deadline. In a statement issued at the conclusion of the 36th regular meeting of heads of government, Stuart strongly indicated CARICOM’s condemnation of behaviour that enshrined “barbarity into the constitutional practices of the Dominican Republic”.
In June 2015, at the high-level dialogue between the European Union and the Caribbean Forum of African, Pacific and Caribbean (ACP) States, the Dominican Republic representatives had agreed that their country would undertake a new approach. The CARICOM statement also expressed concern about this breach.
At their 27th inter-sessional meeting in February, in Belize, heads “expressed concern at the continuing grave human rights situation of Dominicans of Haitian descent threatened by statelessness and the precarious humanitarian situation of undocumented Haitians in the Dominican Republic who have been deported to Haiti”. They concurred that “the human rights situation… must form part of the agenda of the CARIFORUM-EU policy or political dialogue.
In its advocacy process at every level, CARICOM has invoked the assistance of the United Nations, particularly its human rights agencies, as well as the OAS to help resolve this matter In July 2015, LaRocque also raised this issue when he accepted the credentials of Archbishop Nicola Girasoli, Plenipotentiary Representative of the Holy See, on the occasion of the establishment of diplomatic relations between CARICOM and the Vatican, in July 2015.
Courtesy: Caribbean News Now