Wednesday, October 07, 2020

Anguilla in Quarantine

 

Anguilla is a typical small island developing state.  We have a tiny population of twelve thousand persons.  But we are required to provide most of the basic services for our people that large states do.  We have the same number of people as a small village in the UK or Nigeria.  But we are obliged to have a similar infrastructure as London or Abouja, including police, customs, and immigration departments.  While the world’s economy was booming, we were easily able to pay for this luxury.

When the international leisure industry was at its peak, we could pick up the crumbs to meet our public administration bills.  Before terrorism and money laundering became a world-wide issue, we could provide liberal financial services to the international community, and cream off some of the wealth to cover our government costs.  That has all changed now.

Unlike the islands around us, Anguilla has managed to stay Covid-free since the first 3 cases in March 2020.  We have done this by imposing strict quarantine and border control regulations.  So long as we maintain quarantine regulations and border closure, we can be relatively confident that we will remain safe.  At present, we insist that anyone arriving must quarantine, initially at government’s expense, in a secure location for between 10 and 14 days, depending on whether they come from a relatively Covid-free country or not.  They must also pay a charge to cover the cost of their quarantine and the ancillary services, such as food and security personnel.  But, with the economy collapsing, the good sense of these regulations is now being questioned.

From what I hear, hotel guests are cancelling their reservations for the 2020/2021 winter season.  As a result, it seems to me that most of the major hotels of Anguilla will be obliged to shutter for the season.  Restaurants, water sports companies, car rentals, holiday apartments, and other tourism-related businesses will be forced to close.  The excuse being given by some cancelling guests is that Anguilla’s quarantine restrictions prohibit their arrival on our shores.  They say they are going to spend the winter instead in Antigua and Saint Lucia.  There, they say, the Covid-19 regulations are much laxer.  We will have to wait and see.  Personally, I very much doubt there will be much tourism to Antigua or St Lucia in the coming 2020/2021 season.  Reservations in October do not automatically equate to warm beds in December.

Unemployment increases daily.  The hotels, especially the foreign-owned ones on Anguilla’s coastline, are now pressuring government to open.  We read that they accuse us of being unreasonable in our quarantine regulations.  They loudly proclaim in the press, and on TV, and radio that it is government’s fault that staff are being fired.  They say that, if only the quarantine regulations were slackened to be the same as Antigua and St Lucia, the staff would all be back at work.

This is all nonsense, of course.  Any thinking person who keeps up with the international news knows the truth.  It does not matter if every quarantine restriction is removed.  Few visitors will come to the Caribbean this winter.  Only the most reckless US or European traveller, careless of his or her health, will visit us for a holiday.

There is the problem with air lift.  We read that the world’s major airlines are mothballing their planes and laying off their staff.  Air France, Air Canada, American Airlines, Delta Airlines, each are applying for tens of billions of dollars from their governments to help them keep afloat.  They will likely not get it since there is no more money.  The cruise lines have all laid up their ships.  It is not likely they will get any more bail outs.  It seems to me that it will take another decade, if ever, for them to recover.

The bottom line is the leisure travel industry as we knew it pre-2020 is dead.  Few international travellers will be arriving on any Caribbean shores.  In my crystal ball, I see a full one half of the luxury hotels of Anguilla abandoned.  There will be palm trees growing out of their windows before long.  Most of the luxury restaurants will have sold their pots and pans and shut for good.  No more caviar and champagne.  From now on, we dine out on johnny cake and corned beef.  We must find other ways than tourism to occupy our time and earn an income.  And none of it will be due to the strict quarantine regulations now in force.

Perhaps most ominous for Anguilla’s economy, a recent report in the newspaper indicates that government’s revenue from taxes and licences is less than half what was budgeted for this year.  This revenue is needed to pay our bloated public service their salaries and other emoluments.  The situation is not sustainable.  Something has got to give.  Logically, with only half the revenue, we must cut our costs by a half.  Either we let go half of the public service, or they all stay on, but at half of their salaries.

Even with cost-cutting, the Anguilla as we know it is not sustainable.  The nanny-state that Anguilla aspired to be in the good times is now out of our reach.  We cannot afford any more subsidised education, health care, or social services.  These will shortly have to be met by user fees.  We must cease paying the cost of hospitalising in Panama our gunshot gangster youth.  These social services will soon be a thing of the past.  We just have not realized it yet.  And it is nothing to do with the strict quarantine and border control regulations.

Then, there is the possibility of coming international political and economic instability.  Trump has threatened that he is not going to leave the White House in January.  If civil disturbances break out in the United States this winter, there will be no airlines flying out of Kennedy or Miami International Airport to the Caribbean, even without the pandemic.

It may not happen on election day, November 3, or on December 14 when the Electoral College meets.  But, if by January 21, Inauguration Day, there is turmoil all over the United States, there will likely be no leisure travel from the US to the Caribbean.  If this occurs, we cannot blame either Covid or the British for the resulting economic catastrophe.

Then, there is natural traveller caution.  Covid-19 spreads fastest through the air in confined spaces.  In early 2020 at the start of the epidemic, cruise ships were centres of infection.  They are all laid up now.  I expect that, with a few foolhardy exceptions, they will not resume their cruise schedules until 2022.

Everything depends on the availability of a safe and effective vaccine.  The epidemiologists have explained why one will not be approved until early in 2021.  Even then, it will not be widely available to us until mid- to late-2021.  Without being vaccinated, no sensible person will choose to go on holiday overseas by sea or by air.

Meanwhile, doubts and confusion about vaccinations are being spread by anti-vaxxers and other conspiracy theorists.  These operate both locally and internationally.  Recent surveys in the USA and Europe reveal that the result is that, even when a vaccine does become available, it will not quickly be taken up by everyone.  It may take years for most of the public to enjoy the benefits of vaccination.  Which one of us is going to be so negligent as to travel unvaccinated to a foreign country with medical services of an unknown quality for a holiday, amid a pandemic?  Even if Anguilla opened promiscuously, abandoning all health precautions, I do not believe that a single additional passenger will risk arriving on our shores at this time.

The conspiracy theorists are not helping.  Anguilla’s more racist conspiracy theorists are now filling the airwaves with dire warnings.  To hear their panicked voices, the UK public health system is putting pressure on Anguilla to shut our borders.  They express certainty that the white British are out to punish poor little black us.  Quite why the British would want to do such a thing to Anguilla is anyone’s guess.  But anti-British feeling, fuelled by a pernicious and ingrained racism, is prevalent among certain elements in our society.  As if the British have the slightest interest in causing Anguilla any harm!  They would probably have to pay to bail us out of it in the end, anyway.  But, there never had to be any good reason for conspiracy theories to flourish in the best of times.

Anguillians must face a new reality.  Nothing will be the same when this pandemic is over.  Public services will be pared down to a minimum.  The days when the Anguilla public service was used as a sponge to mop up the unemployed and the unemployable are over.  We can no longer afford to employ five persons to do the job of one as we presently do.

There is the little matter of our failure to enforce our own tax laws.  No enforcement proceedings have ever, to my knowledge, been brought against a single tax defaulter in the modern history of Anguilla.  We can no longer afford to continue forgiving persons who neglect to pay their taxes, as we have done for decades past.  If we do, why should any foreign taxpayer contribute to our self-created folly.

One last prediction.  The next time our government appeals to the British government for another hundred-million-dollar bail out, we will finally lose our entitlement state of mind.  The British deficit is presently about £300 billion.  I see the British PM responding to our Premier with these words, “Colonialism has been over for a long time.  We have looked at the books.  It appears that Anguilla has never in its history contributed anything to the British Treasury.  Do you not think it is about time that you helped us with our fiscal deficit?  We were thinking of a token contribution from you in the region of ten million US dollars.  How about it?

If my cautionary words appear exaggerated to some, hopefully they will serve to counterbalance the ridiculous claim that our health quarantine regime has been imposed on our government by an oppressive and uncaring British government.

Friday, September 18, 2020

Sandy Ground Marina MOU

 

Effective 31 May 2020, the outgoing Anguilla United Front government signed a memorandum of understanding (called “a Definitive Agreement” but referred to in this article as “the MOU” or “the Agreement”) with a Swiss Group to develop a marina in the Sandy Ground’s Road Salt Pond.  The objective of the project is said to be the development, construction, and operation of a mixed-use mega-yacht marina, waterfront, and resort at a cost of some US$270 million.

A few short weeks later (on 29 June) the AUF lost the general election and was replaced by an Anguilla Progressive Movement administration.  The APM administration inherited the MOU.  Residents of Sandy Ground are calling on the new administration to repudiate the MOU.  They oppose the MOU on several grounds including that it will disrupt the village, poison the people, and produce no benefit to the country.

A first look at the MOU reveals that it is essentially a real estate development project.  The document says that the Developer will build a 150-berth marina.  Crucially, it will also build a hotel and sell ocean estate lots, port town villas, seafront residences, sea view town homes, and commercial space.  The real estate units are to be sold as condominium and time share-type properties.

Some of the objections advanced by residents of Sandy Ground include engineering, environmental, feasibility, and amenity issues.  Let us look at some of them.

The engineering objections to the development of a mega-yacht marina in the Road Pond are formidable.  The pond was apparently created in prehistoric times by a sand bank forming across the middle of the bay.  Experts can tell us approximately when this happened.  It is likely to have been many thousands of years ago, perhaps as long ago as a hundred thousand years.  During the intervening period, and from time to time, glaciers covered large areas of the earth causing sea levels to lower.  Subsequent melting of the glaciers  resulted in rising sea levels.  The result was that the sand bank was sometimes above and sometimes below the surface of the surrounding sea.  The present village of Sandy Ground is constructed on this sand bank which is no more than 10 feet above sea level.

During the periods when Sandy Ground was above sea level, sea water permeated through the sandy bank and filled the trapped bay behind.  This formed the familiar Road Salt Pond.  As the water in the pond evaporated, crystals of salt precipitated out and sank to the bottom.  For thousands of years, this salt lay unmolested on the bottom of the pond, gradually becoming compressed as more and more layers formed on top the previous ones.  Presently, the water in the pond is no more than some six inches deep.  Below that is a thin layer of mud and a much thicker layer of fossilized salt.

The old-timers among us recall when, some thirty years ago, the US TV entertainment billionaire Bob Johnson owned a villa at Cove Castles Resort in West End.  He first proposed to the then Government a project for converting the Road Pond into a Marina.  He is supposed to have had a geological survey of the bottom of the pond done to determine the feasibility of dredging it.  This survey is said to have found that there was a layer of some forty feet of rock salt overlying the deepest part of the rocky limestone basement.  One of the reasons why he was said to have dropped the idea of a marina was the advice that it would take a great deal of blasting to remove this rock salt layer.  Sandy Ground village would have to be vacated, and the people located elsewhere for a period of up to two or three years, while the blasting was carried out.  This proposition was too expensive even for a billionaire, and the project fell through.  With increased development in Sandy Ground village since that time, temporary relocation of the villagers is likely to be more expensive now than it was at that time.  No doubt Government has a copy of this feasibility study, or with a little effort can get access to it.

Even if the residents of the village do not have to be relocated, questions have been asked about the quality of the air once the mud on the bottom of the pond is disturbed.  We are all familiar with the great stink that comes from the pond from time to time.  The question is asked if a disturbance of the mud layer will result in the air flow over the village being poisoned.  Only a feasibility study of the mud layer and its qualities will reveal the true situation.

Residents doubt that another marina in the Leeward Islands is feasible.  Why would any boat owner choose to dock his mega yacht in an expensive little island like Anguilla when the established marinas of nearby St Maarten, Tortola, and Antigua are willing and able to provide all their necessities?

Reading the MOU, one gets the impression that the main interest of the Developer is not the marina but the sale of condominiums.  The proposed marina appears no more than the hook to bring in purchasers of the luxury units.  If that bait fails, the feasibility of the real estate aspect of the project also fails.

What evidence do we have that this Developer has US$270 million to invest?  The question must be asked, whether after the “great financial success” of Starwood (remember them?) and other failed projects, any other than an idiot would take this project on?  Could this project be another case of a penniless “developer” obtaining a licence or agreement with a view of going into the market to find money?

Hurricanes pass through the Leeward Islands (of which Anguilla is the most northerly) nearly every year.  Any boat (whether berthed or beached) remaining in an Anguillian harbour during a hurricane will suffer catastrophic damage.  We have seen what happens in the existing nearby marinas.  For this reason, luxury boat owners sail their vessels to Trinidad or Aruba for safety during the hurricane season which lasts for some six months.  The existing marinas in St Maarten (where they have an international airport and marine supply and diesel repair infrastructure in place) remain half-empty for much of the year.

It is notorious that insurance companies do not insure boats that remain in these waters between June and November.  Which mega yacht owner will choose to leave his valuable boat in Anguillian waters uninsured during the hurricane season?  Any new marina built in Anguilla must plan to close for six months in every year for want of business.  The associated hotel and condominiums will probably be unoccupied during this period.

With the onslaught of the Covid-19 pandemic, the holiday and cruise industries have collapsed.  The number of people who will venture overseas by ‘plane or by boat for leisure in the foreseeable future will be limited.  Mega yachts are more likely to remain safely moored in Florida or in Monaco than sailing across the seas to under-resourced destinations like Anguilla.  It is not likely there will be any market for the projected marina, hotel, or condominium units until the world-wide economy has recovered.  This must take at least the next three to five years.  Investors are not all stupid people.  The economic feasibility of such a situation is much to be doubted.

Article 8 of the MOU provides for Environmental Impact Assessments to be carried out.  Government is obliged by the MOU to approve all construction subject to adequate environmental and engineering studies.  If the Developer fails to commence work within 3 years of the effective date, Government has the right to revoke the Agreement.  It is likely that this provision will operate to save the people of Sandy Ground from the planned economic and other inconveniences that they were facing.

Article 11 provides that in the event of any disagreement between the parties, they will submit the issue to arbitration.  Government may only terminate the Agreement if the arbitration process concludes that it has the right to do so because of a material breach by the Developer that cannot be amicably resolved.  It is likely that the failure to carry out the planned development in the coming three years will provide Government with the opportunity to bring this misconceived project to an early end.  It would be quite wrong for Government to give in to public pressure and terminate the Agreement without a good reason as contemplated by the Agreement.  They will probably lose any resulting lawsuit and be obliged to pay the Developer damages.

The new administration has been lumbered with this MOU by the outgoing one.  There is probably little or nothing they can do at this time to get out of their obligation to let the preparation and planning move forward.  What the Government’s expert advisers must look out for is the opportunity in due course to use the escape clauses in the Agreement.

Thursday, August 13, 2020

Necessary Cost Adjustments

 

Under the Quarantine Act and the Regulations made under it, Anguillians and residents of Anguilla returning home from certain countries that are experiencing dangerous levels of the Covid-19 disease, such as the USA, must be taken directly from the port they arrive at to an authorized place of quarantine.  There, they are provided with lodging, medical attention, security, food, and drink, all at the public expense.  This lasts for a period of approximately two weeks.  They are not allowed to pay for it.  Even if they wish to pay for their board and lodging, they are not permitted to do so.  The rules, they are told, require that this be a public expense.  Millions of dollars, I understand, have been disbursed by the past and present government on this venture since quarantines started in March.  This is an expense that was never budgeted for.  It is money that we can ill afford.  Our economy has tanked with the failure of our tourism industry since the start of the year due to the pandemic.

The House of Assembly should be asked to vote on a Bill to require persons who are detained, quarantined, or placed in isolation, to pay the costs of their quarantine.  Most if not all Anguillians will agree that this is a necessary reform.  It is unfair to the Anguillian public that we should have to pay the costs incurred by persons who choose to return to Anguilla at this time, and put us all to the risk of contracting the disease.  If returnees wish to enjoy the comfort and safety of home, they should be willing to pay for all associated costs incurred by their return from abroad.  This has become the international standard, and we will not be doing anything unusual in having our law ensure this.

Care must be taken to ensure such a provision does not offend against our constitutional right to freedom of movement.  There is an exception in cases of public health and safety.  The necessary Orders must first be made by the Governor and Executive Council under the Constitution and the Public Health Act.

It is a simple enough measure to enforce.  One of the conditions for permitting the return to Anguilla should be a payment of a deposit, say US$10,000.00, per person into the Treasury.  That would give the provision teeth.  The deposit will be refunded, less the cost of all disbursements associated with their quarantine, at the end of their quarantine.  If this proves too expensive for any would-be returnee, he or she is not obliged to make the payment.  They can simply stay where they are and save the cost of returning.

The duty to refund government’s costs should not be limited to persons who return to Anguilla with the permission of the Quarantine Authority.  It should extend to persons who enter illegally.  In the case of persons who are caught illegally entering Anguilla in breach of the Quarantine Act or any Regulations made under it, the Act should provide that one of the conditions for their release from custody is the payment of a cash bond, say US$10,000.00, to secure the refund to government of all costs incurred in their arrest and detention and medical treatment including but not limited to transportation, board, lodging, medical and other.  It should cover all costs of tracing and treating the persons who have encounter the illegal entrant.

Nor should this bond be limited to persons who want to return in the future.  There is nothing legally impossible or morally wrong in the law being drafted to authorize Government to demand a refund of part or all the past costs paid in maintaining earlier returnees in quarantine at the public expense.  Every effort should be made to recover the past costs incurred in relation to persons who have been given permission under the Quarantine Act and its Regulations to enter Anguilla since January 2020.  This may be hard on some of the persons and families affected.  They can be given time to meet the refund, and other terms.  In suitable cases, perhaps certified by the Department of Social Development after the application of a Means Test, the law might even provide for exceptions to be made.  In my view, most if not all the persons who have had their quarantine expenses paid for by government should be obliged to refund all the costs that were paid out of public funds.

What is certain is that we cannot continue to meet this expense.  We simply do not have the money in the public purse.  In one of his last speeches in the House of Assembly, the outgoing Minister of Finance revealed that our projected tax revenue for the year 2020 will be about one half of the amount budgeted.  Further, we do not know how long the quarantine provisions will have to continue into the future.  Given the irresponsible behaviour of the US and certain other governments in dealing with their own infections, it might last until well into 2022.

Since I wrote the above paragraphs, someone has pointed out to me a draft Quarantine (Amendment) Bill on the Order Paper for debate on 11 August.  It is a noticeably short Bill.  It provides,

“(1a) Notwithstanding subsection (1) the Quarantine Authority may require persons who are detained, quarantined or in isolation pursuant to this Act to pay in part or in full the expenses incurred by the Quarantine Authority in detaining, quarantining or isolating such persons.”

This is inadequate.  It is a token provision.  It is for show only.  It lacks teeth.  It is filled with loopholes.  It gives a power to charge the costs without any mechanism for collection. 

Bearing in mind that the Constitution limits the power of the Assembly to pass an Act restricting our freedom of movement, care must be taken to ensure that the necessary State of Emergency and Public Health Orders and Proclamations are renewed from time to time.  The ones made earlier this year all appear to have expired without being renewed.  Without care being taken, any law restricting entry into Anguilla by Anguillians may be unconstitutional and unenforceable.

And, while we are on cost cutting measures, is there any reason why a 40% tax cannot be imposed on all pensions previously paid to Ministers and Parliamentarians?  These payments have been a huge drain on our Treasury.  They have met with universal condemnation in Anguilla.  I do not have the exact figures at hand.  We have all seen various sums circulating in the media.  If these are correct, we have paid out tens of millions of dollars in the past several years in gratuities and pensions to retiring parliamentarians.  They need to do their part now that we are in crisis.  They need to refund some of this undeserved largess they paid themselves.  A 40% tax should be immediately imposed retroactively on the pensions and gratuities of every living parliamentarian who benefitted.  Retired parliamentarians and Ministers should be happy to agree to refund 40% of the very generous pensions and gratuities paid to them.  To answer the question at the start of the paragraph, care will have to be taken to ensure that such an Act does not offend against the protection of private property provision in the Anguilla Constitution.  If it does, then retired parliamentarians will need to be shamed into making a voluntary return of their ill-gained pensions.

Such an essential reform, if legal, is not intended to be retroactive only.  Entitlement to pension and gratuity for future retirees should be reduced accordingly, ie, by 40%.  Those who are presently in the House of Assembly and in Government would be aware of how untenable and unsustainable their overly generous pension provisions are.  There is no possible legal or moral objection that can be made to such a reduction.

While we are on the topic of curtailing benefits, why not extend the cuts to parliamentary salaries and allowances?  Anguillian politicians are in receipt of a high level of remuneration that is not matched in any other West Indian nation.  We have heard a previous Minister of Finance make a boast of the fact.  The levels of salaries were set during the 1980s and 90s when money was flowing into the Treasury like water under a bridge.  Those days are now long gone.  We cannot afford these excessive salaries any longer.  Ministers and Parliamentarians should agree in the public interest to reduce their salaries and allowances by 40% with immediate effect.  Such a contribution would meet with universal acclaim and appreciation in Anguilla.

Anguillians join in calling on Dr Ellis Lorenzo Webster, the Hon Premier and Minister of Finance, to move the necessary actions in the Executive Council.  We urge all Ministers and Ministerial Assistants to support these initiatives.  We call on all members of the Opposition to support these measures when they arrive before them as a series of Bills for debate.  We call on all members of the House of Assembly to pass the reforms into law without undue delay.

Tuesday, August 11, 2020

The Economy Improves

 

I learned at breakfast in town this morning that Anguilla has a new tourism-related activity.  This one is even more incredible to me than the one about us paying for overseas medical treatment for victims of drugs-turf shootings.  In fact, I am really distressed over this one.

Apparently, one of our residents returned to Anguilla recently from the USA accompanied by several family members.  The existing bar on arrivals from the USA does not apply to returning residents.  But they are required by the Quarantine Regulations to spend 14 days in government-controlled quarantine.  This is provided at a local luxury hotel.  They were all put up at government expense for the duration.  Never mind their mode of travel back to Anguilla was the most expensive there is, private jet.  There was no question of them having to pay the cost of their own quarantine.  Indeed, we were told their offer to pay their own way during the quarantine was summarily rejected.

From what we learned, once one is an Anguilla resident returning to Anguilla from the USA, not only is the bar on visitors from the USA lifted.  Your compulsory quarantine will be spent in a local hotel at public expense.  Over the past five or six months and continuing, this generous public facility has been extended to hundreds of Anguillians and Anguilla residents regardless of their means or their need.  In the early stages of the pandemic, other countries used to cover this cost.  Most have long stopped that waste of government funds.

I wonder if to enjoy this treat, we have only to make our way to the USA.  When we return home, maybe we too will be put up at public expense in a first-class local hotel for the quarantine period.  Now that we have British taxpayer money to assist, it seems there is no holding back on the spending.  Other countries with a quarantine rule oblige travellers to pay the cost of their own quarantine.  But, not Anguilla.  We are too generous with public funds to contemplate such a burden.  Not even a means test is applied.

What a blast!  More of us should be encouraged to take advantage of this generosity.  This project deserves the widest publicity.  We must ensure it is taken up by everyone in need of a free holiday.

Also, at breakfast, I learned that the Government of Anguilla does not spend unbudgeted public funds only on quarantining returning residents.  For years, we have been sending young men who have been either shot during drugs-turf and other disputes or suffered serious accidents abroad for medical treatment.  We jet these patients by air ambulance to hospitals in Central America free of charge.  We cheerfully pick up their hospital bills.  There is no question of obliging the patient or his family to cover the cost.

It seems that persons have long quarrelled over this abuse with the department responsible for making the arrangements.  It has been explained that the service is rendered on political instructions.  For decades, you and I may have spent a small fortune paying for health insurance and the cost of medical evacuation costs for ourselves and our families.  But, in Anguilla no question of either medical insurance or means test arises once a “medical emergency” is discovered by a Minister.  It costs us millions of dollars each year, and not a cent of it appears in the budget.  Nor is any serious attempt made to recover the cost.

Some people think this is wrong, and they are labelled unkind.  On the contrary, I think this is an example of public service we should show to the rest of the world.  We should give this programme more publicity.  We ought to broadcast its details more widely.  It could be professionally advertised.  How about the theme, “Get yourself shot in Anguilla, and stay in a first-class Panamanian or Costa Rican hospital for months while seeing the world at public expense.”  Of course, not every country is as rich as we are and can afford such largess.

Finally, at breakfast we heard another story related to our tourism product.  One of the breakfast group took a drive to Blowing Point last Friday evening to see what was happening for Carnival.  He parked in the area to the east of the ferry terminal where there is a car park.  It was dusk.

All the August Carnival festivities were over.  There was no sign of life anywhere.  No Immigration, Customs or Police Officers were in sight.  There were several other cars parked in the car park.

He says he heard a small engine coming from the direction of the entrance to the harbour.  He observed an inflatable dinghy with several persons in it.  It did not go to one of the jetties.  It carried on a further couple of hundred yards to the beach where he was.  Its passengers came ashore without the benefit of a Customs of Immigration interview.  They got into a grey car and drove off.  As he drove home, he followed them behind two or three other cars.

It drove to a well-known place of male relaxation in George Hill.  When he arrived home, he called the police number given for reporting suspicious activity.  There was no one at the other end.  Instead, he got an answering machine with a recorded woman’s voice.  The voice did not say she was a police officer, so he hung up.  He went on to the government’s website and then to the page for making reports.  He typed in his anonymous report there.  The police now have the car registration number and the address the car went to.  It is up to them to follow through.

For the life of me, I cannot think of any legitimate reason why there would be no “first responders” attending Anguilla’s main passenger port at 6:00 PM every day of the year whether a holiday or not.  To a suspicious mind like mine, it is almost as though it was pre-arranged for there to be no Officer present monitoring the port at the very time the dingy was coming ashore.

I have previously written about this famous place of business in George Hill:

https://donmitchellcbeqc.blogspot.com/2018/01/anguilla-brothel-keeping.html

https://donmitchellcbeqc.blogspot.com/2018/01/is-anguilla-civilised.html

One thing is for sure.  Anguillians are an enterprising people.  We are natural entrepreneurs.  We have a history of smuggling and ignoring the law going back hundreds of years.  The outlaw life is stamped into our DNA.  Now that government is giving us a little help in developing these natural skills, nothing can hold us back.

Saturday, July 25, 2020

Reopening Villa Tourism


 

Anguilla’s borders have been closed to visitor traffic since mid-March 2020 because of the Covid-19 pandemic.  Hotels and villas have had to close, and staff have been let go.  The island economy has collapsed.  Both employers and employees are close to the limit of what they can bear.  Government revenue has shrunk to half the budgeted amount.  Public expenses, meanwhile, have more than doubled.

Some of the villa owners are pressuring government to begin opening Anguilla up to tourist arrivals.  In a memo of 23 July from the Anguilla Hotel and Tourism Association to its members, there is a suggestion that villa owners and their guests be allowed in by private jet or charter from 1 August.  This is to be a soft opening preliminary to a full opening of the tourism plant this coming winter.

I have some thoughts on the suggestion that we now pull the plug on the measures that have kept us safe.

Covid-19 continues to rage throughout the world, including both the USA, our main catchment area, and Antigua, Puerto Rico and St Maarten, the hubs through which our airline passengers arrive.  The USA has the worst statistics for the disease in the entire world.

Canada and other countries that depend on tourism are not permitting anyone from the USA to enter their countries.  The USA is Europe’s biggest tourism market.  The Europeans have banned US tourists even as they open to other visitors.

Anguilla’s main defence against widespread sickness, hospitalisation and death is the availability of a safe and effective vaccine.  The likelihood is that there will not be such a vaccine this year.  The earliest would be eighteen months from the date the research institutes began to work on vaccines, ie, January 2020.  If so, this means that we cannot realistically expect to have a vaccine for Covid-19 before July 2021.  It follows that the earliest we should be considering reopening Anguilla’s borders to tourist arrivals is winter 2021.  Anything before that will almost inevitably result in our being re-infected and having to close our ports and our hotels again.

Under President Trump’s misguided leadership over the past six months, the virus has been allowed to rampage through the USA.  Why would Anguilla let any US resident in before mid-2021 when they are so evidently careless about their health?  What do they care about our health if they care so little about their own?  It would be different if we were to allow in tourists from countries where they had suppressed the Covid-19 epidemic.  But, to allow into Anguilla visitors from the USA currently is unimaginable to me.

If we do open our ports for guests of villa owners, will we be able to make them take the necessary health precautions?  Will visitors be made to produce a Covid test result that is not more than three days old showing they are clear, or be sent back on the plane they arrived on?  If they turn out later to be infected, will we be able to make them self-quarantine for 14 days?  Do we have the means or the will to police a quarantine?  These are rich and “entitled” people who are accustomed to buying their way out of any situation.

If any of them later turns up positive, we shall have to trace all their contacts and confine them to quarantine if we are to stop social spread of the virus.  Do we have adequate amounts of testing equipment?  Do we have the capability to produce timely results?  Are our health personnel trained in contact tracing?  Do we have the resources to conduct a proper tracing programme, and to enforce the resulting quarantines?

What about our stocks of Personal Protective Equipment?  Will our supplies of masks be adequate before the borders are opened?  Do we have the gowns and other PPE needed for the medical staff?  Do we have the latest models of ventilators for when we are committed to the Intensive Care Unit?  Do all the villas have adequate stocks of PPE in advance of opening for the use of staff and guests in appropriate circumstances?  Will our villa staff be trained in the correct use of this PPE prior to opening?

If we admit in visitors from the USA, and as is inevitable, the virus catches and begins to spread in Anguilla, we shall be obliged to lock the island down again for a couple more months at least, until it is contained. 

Of course, repatriation of Anguillian nationals from any country remains a continuing necessity.  Fortunately, the testing and quarantine protocols and safeguards put in place by the Health Department for dealing with repatriated Anguillians are now well practised.  Such repatriations have not resulted in any local spread of the virus since the first three cases in March.

It is arguable that the last administration suffered politically, and lost the June general election, at least partly because they chose health over economic interests.  They totally closed the island to visitors in March.  Our borders are still closed today.  The result was they limited Covid-19 cases in Anguilla to three mild ones in March.  We are free of infection today.  But the previous administration suffered serious political damage.  Many businesses closed, some permanently, and large numbers of us became unemployed.  Schools closed, and the children struggled with distance learning.

Opening our borders to visitors from a country where the infection is surging out of control will likely destroy all that our sacrifice has accomplished.  Is the present government prepared for the political backlash that will follow if they allow the virus back in to flourish for the sake of a few villa owners’ financial interests?

If we open the island to US visitors, we can expect numbers of us, not only to be committed to the ICU, but to die.  What answer will the administration give our families when they are accused of opening before the USA could flatten its own curve?  Are they ready to deal with the accusation that they allowed the villa owners to kill us off?

Other than for a short period in August, July to November are dead months for tourism in Anguilla.  It is the Hurricane season.  This is the low season for West Indian tourism.  Why open the island in this quiet period when there will be few or no tourists (other than the highly risky ones from the USA) coming by air or by sea to Anguilla?  Opening our borders to tourists of any kind now will contribute hardly a penny to either government revenue or to the economy.  There is no real economic point in reopening before late November or early December.

Are the Anguillian public prepared to deal with a new surge?  We have been safe for so long that we now all ignore the social distancing rules we used to practise in March.  People lean on shop counters, despite the printed signs; stand in line in the supermarket pressed up against each other, despite the spacing marks on the floor; and not one of us wears a mask in public.  When we let in tourists, we will need to relearn the social distancing precautions.  Will our health authorities engage us citizens in an intense social distancing revision course in the months before we let in tourists?

Finally, as Dr Fauci reminds us, we must ask what is the recommendation of the Health Authority?  What is the expert advice our Ministry of Tourism has received?  Is the recommendation that it is safe to let in visitors to villas from the USA?  Or should we wait until after a safe and effective vaccine is generally available?

Later on Friday, I was pleased to see what amounted to a Government response to the AHTA initiative on behalf of villa owners.  This was a press release titled “Covid 19 Update 13”.  It advised that Anguilla’s borders will remain closed until 31 October.  An exception is made for visitors from countries with active cases of less than 0.2% of the population, who will be allowed into Anguilla on condition.  They must comply with all relevant protocols and quarantine regulations.  That rules out visitors from the USA.  The US (with 4% of the world’s population and 25% of all Covid-19 infections) cannot meet the less than 0.2% benchmark.  We all anxiously await the arrival of a safe and effective vaccine.  I need not have worried.  No doubt, it helped that we have a physician as Premier.

24 July 2020

Revised 27 July

 


Friday, July 24, 2020

The Covid-19 MOU

Anguilla’s airwaves are filled with doom and gloom broadcasts.  Apparently, as a country and a society, we are finished.  According to one commentator heard recently, the financial position of the Government of Anguilla (GoA) is so dire that the British government is about to suspend the Constitution and take over the day to day administration of the island.

I decided to look at the available information on our public finances.  I started with the most recent document, a copy of the Hon Premier, Dr Webster’s, address of 9 July 2020 as printed in the Anguillian Newspaper of 10 July.  There, he writes that, because of the Covid-19 pandemic closing our tourism-based economy, our Treasury is projected to suffer an EC$97 million revenue shortfall (our highest ever revenue was EC$207 million in 2007).  This will make us unable to satisfy either our debt obligations or our monthly expenses.

The previous Administration on 11 June 2020 signed an MOU with the British Government for the receipt of an aid package of EC$100 million (US$37 million) offered to avert the impending bankruptcy of the island.  It is rather grandly titled the “Anguilla Covid-19 Emergency Financial Aid Programme.”

It is this MOU that is the subject of so much public grief.  In brief, the FCO’s conditions for the EC$100 million grant to us are,

(1). All disbursements must be made on submission of a claim in the form provided and accompanied by supporting documents.  The Accountant General must certify that the claim is correct.  It seems right that the Accountant General of Anguilla should be the one responsible for justifying the claim for these funds.

(2). Disbursements from the EC$100 million fund will be made monthly to reimburse us for the previous month’s recurrent revenue losses.  Support will meet proven losses, not imaginary future ones.  This seems a sensible provision.

(3). GoA should continue to meet debt amortization payments from its sinking fund.  This is a sensible provision.  We cannot be defaulting on our debt while the British taxpayer pays our public service commitments.

(4). The aid ceiling is set at EC$100 million for the 9-month period April to December 2020.  Recurrent revenue loss in any given month will be supported up to 70% of the forecast recurrent revenue (Control 1).  In other words, as I understand it, the $100 million will not be used to make up the total amount lost.  Support is limited to 70%.  This appears designed to encourage frugality and is to be commended.

(5). Revenue support will be reduced by the value of any revenue foregone in that month due to discretionary concessions approved by GoA (Control 2).  If GoA grants a duty-free concession to a hotel or other taxpayer and, therefore, looses $100,000.00, that loss is entirely voluntary and within our control.  That seems only fair.  There is no justice in having the British taxpayer make up that loss.

(6). Expenditure must remain within the overall three-month rolling expenditure envelopes set out in the cash management worksheet (Control 3).  This is a technical control, which no doubt is understood by the Inland Revenue staff, though it is meaningless to me.

(7.) The programme will be reviewed on a three-monthly basis and the grant will be automatically discontinued once recurrent revenue variances return to a manageable level of 5% or less (Control 4).  This seems only fair.

(8). Any virements/reallocations greater than $100k will be deducted from the grant (Control 5).  A virement warrant is the mechanism that permits the Minister to reallocate surpluses from one head of the budget to another.  This seems only fair.  GoA cannot redirect revenue from one head to another and then claim a shortfall.

(9). The draft Public Expenditure and Financial Accountability report will be used by the FCO as a preliminary assessment of the public financial management systems (Control 6).  This is a technical matter and no doubt the Inland Revenue people understand its significance.

(10). The FCO can request and review any GoA financial information.  It can audit the programme at any time (Control 7).  This is an obvious and sensible control, given the Chief Auditor’s repeated complaints about the negligent way in which the GoA’s accounts are kept.

(11). The House of Assembly must pass a Supplementary Budget for 2020 reprioritizing spending to meet pressures arising from Covid-19 (Provision 1).  The previous Administration pretended to do this a few days before the House dissolved, but there was no attempt to reprioritize spending.[1]  To comply with this condition the new Administration will be required to go back to the House with a more realistic Supplementary Budget.

(12). No new revenue or expenditure policy with material financial implications can be adopted by GoA unless the FCO first accepts it (Provision 2).  This seems reasonable.  The FCO has a real interest in ensuring that we do not fiddle our financial policies to unfairly take advantage of this grant in aid.

(13). We commit to maintaining progress in implementing a Goods and Services Tax (Provision 3).  We will prepare a draft Bill and Regulations regarding the implementation of GST phases 2 and 3.  This is not new.  We have previously agreed to implementing GST in stages.

Personally, I have difficulty in seeing how GST can be implemented in Anguilla.  Other than the banks, law firms, and major corporations, few Anguillian businesses keep audited accounts.  In Anguilla we raise revenue mainly through indirect taxes such as customs duty on imported goods.  There is little or no direct taxation on income.

Few employers keep accurate payroll accounts.  Businesses keep such accounts as they consider necessary for their own internal purposes.  Profit or loss is calculated based on whether the business needs to show either a profit or a loss for some reason, such as applying for a bank loan.  In the absence of accurate accounts, Social Security payments are calculated and paid by the employer with no system for checking the accuracy of the calculation.  Hotel calculations of receipts and payments of Accommodation Tax are taken on trust by the IRD.  The Interim Stabilization Levy (a minimal payroll tax) is always calculated and paid by employers based on the assumed honesty of the payee.  it is difficult to see how our businesses can be expected to calculate and pay GST with any degree of accuracy. 

The FCO cannot seriously expect our Mom and Pop businesses to suddenly purchase computers, learn to use Quicken, open bank accounts, and begin to hire accountants.  We will have no difficulty passing a GST Act, once the FCO understands that this tax will be (like many others) entirely voluntary and generally incapable of verification.

(14). We will begin the process of collecting overdue taxes by court process (Provision 4 and 5).  So far as I am aware (after 40 years of the practice of law in Anguilla) no prosecution or civil suit has ever issued for the collection of an unpaid tax.  We have instead used “administrative measures” to collect tax.  The most we could do to satisfy this condition is to carry out one or two prosecutions a year of the most egregious offenders.  There must be low-hanging fruit in the odd hotel or guest house that does not pay its Accommodation Tax that we can pick.  Political backlash can be minimized if we take the easy way out and start on a foreign owned business.  Admittedly, it is mainly the local ones that have figured out how to game the system.

(15). By 31 December we will begin on-site tax audits on at least 20 businesses and take the necessary action within 3 weeks after the audit is completed (Provision 6).  This is a manageable condition.  Law firms are required by the Legal Profession Act to have their accounts audited to maintain their legal practice certificate.  Between the Banks, international insurance companies, and local law firms, it should not be difficult to find 20 targets.

(16). We undertake to submit by 30 June 2020 a report on the expected impact of Covid-19 on the revenue and subventions of statutory bodies (Provision 7).  As the Chief Auditor never tires of complaining, many of the statutory bodies and other government agencies in Anguilla do not submit the audited accounts that are required by law.  His constant chiding in his Annual Reports did not improve this situation.  It would be a good thing for this programme to finally provide the impetus for this much desired improvement to be made, even if we have almost certainly missed the deadline.

(17). Statutory bodies must present their budgets and work plans to Executive Council by 31 July 2020 (Provision 8).  This is an existing obligation, but it is not certain how many bodies meet it.  Government’s threat of non-payment of the annual subvention should suffice to ensure compliance, even if the deadline will be missed.

(18). Each statutory body will be reviewed for contingent liabilities by 31 July.  Each should prepare a plan to improve financial sustainability and reduce expenditure arrears over the following 12 months (Provision 9).  This condition will no doubt be a hardship to many good causes such as the National Trust and the Health Authority.  But in this difficult time we must cut our discretionary expenditure to the bone.

(19). We will ensure the preparation by all statutory bodies of quarterly financial reports by 30 September with publication by 30 November (Provision 10).  Once the IRD prepares a common template for this purpose and provides a minimum of training, it should not be difficult for the Boards and Executive Directors of these bodies to comply with this condition.

(20). GoA will achieve and maintain an overall “largely compliant” rating from the Global Forum’s review of Anguilla’s implementation of the Exchange of Information on Request standard.  We will deliver an action plan to the UK by 31 December to show how we will meet any resulting recommendations (Provision 11).  This international tax transparency provision is a long time coming.  In the present environment it can hardly be contested any longer.

(21). We shall grant UK Revenue access to data on Anguilla’s residency by investment programme by 30 September 2020 (Provision 12).  If we are going to accept the benefit of these UK taxpayers’ funds, we can hardly object to giving the UK tax collector access to information about potential UK tax dodgers.

(22). By 30 September 2020 we shall begin sharing suspicious activity reports appropriate to UK civil and criminal cases (Provision 13).  At present, these reports go only to local and regional bodies such as the Central Bank and the Financial Services Commission.  If we are going to accept UK taxpayers’ funds, we can have no reasonable objection to sharing them with the UK authorities.

(23). We shall allow by 28 February 2021 UK Revenue to obtain beneficial ownership information under the Exchange of Notes signed on 19 April 2016 (Provision 14).  We have already agreed to this.

(24). We shall provide UK Revenue direct and cost-free access to our new company registry, once in place (Provision 15).  We can have no valid objection.  This is an international tax transparency objective which when implemented will place Anguilla in the forefront of company formation destinations.  Besides, it will not be long before it is an international standard.

(25). We undertake within 2 months of the last elections of 29 June to complete and submit to the FCO a credible and achievable plan to reduce net debt to recurrent revenue to below 100% by 2025 and below 80% by 2030 (Provision 16).  This condition may fairly be described as a pipe dream.  Who in their right mind is going to travel to Anguilla for pleasure by ‘plane or by boat?  If there are a foolhardy few, they certainly will not be in the numbers needed to support our hotels, restaurants, and related businesses.  We can expect the hard times that are coming to last for years.  The new normal will call for ingenuity and creativity for our people just to survive.  As with the UK Government, our public debt must inevitably increase.  There is little hope of its reduction in the foreseeable future.

I do not consider these conditions onerous or unreasonable.  We should embrace them. They provide a welcome opportunity for us to improve our shoddy public accounting of the past.  Dr Webster says he wants to renegotiate the MOU.  In my opinion, there is nothing worth renegotiating, save for the now obsolete timetabling which was made inoperative by the intervening general elections.