Tuesday, January 13, 1998

1998 Report to Chief Minister on Rifkin Letter

(1)         A reading of the international press over the past several years reveals that there is growing pressure on the UK government to rationalize the status of the British Dependent Territories (BDTs).
(2)         During the year 1998 the Labour Government in the United Kingdom will continue the exercise begun under the previous Conservative regime of reviewing the constitutional status of the BDTs.  The likelihood is that within the next 5 years all BDTs will either be Overseas Territories of Europe (OTs) or will have gone independent.  The British Government will shortly place on the table for the BDTs to discuss a proposal to abolish BDT citizenship and to make all BDT citizens full British citizens.
(3)         Pressure has principally come from the Financial Action Task Force (FATF), headquartered in Geneva, concerned about the extent to which London and the BDTs are used by international criminals to launder hundreds of billions of illegal money each year.  (London is internationally recognised as one of the world’s largest launderers of illegal money.  Among the BDTs, Jersey and Cayman are two of the world’s largest offshore financial centres.  Cayman alone is the world’s 4th largest banking centre.  Bermuda is one of the world’s largest reinsurance centres).  The Anguillian Government, with the assistance of various professionals on the island, is presently striving to develop Anguilla’s financial services industry.
(4)         Anguilla has selected as its chosen tax regime a zero income tax system.  We pay for government services by taxing imports and consumption.  We have no taxes on income, profits, capital growth, dividends, royalties or interest.  Such a tax regime makes us attractive to international business persons as a jurisdiction to establish their trading and investment vehicles in pursuit of their international ventures.  If Anguilla can build on its incipient financial services industry, there will in due course develop in Anguilla a viable alternative and additional industry to the present fragile sole industry of Anguilla, tourism.  All of this is anathema to the bureaucracies of Washington and Brussels.  Especially if, as at present, we refuse to respect, far less enforce, the punitive tax regimes of those countries. 
(5)         Pressure is building up from the European Union bureaucracy in Brussels (EU) to have the Dutch, French and British rationalize and homogenize their OTs.  The Brussels civil servants of the EU do not understand how to deal with OT extensions of their European members, and want to have one rule applying to all of them.  Brussels preferably would like all of the OTs to be treated as homogenous extensions of Europe, so as to present a minimum of complexity for administration.
(6)         The consequence of the above influences and trends is that pressure will inexorably build on the British Government in the years ahead to impose centralized regulation, and to increase and enforce taxation on the BTDs.  Administrative convenience for central regulators, intelligence gatherers, and law enforcers, will be the touchstone of future policy development.  The needs and concerns of small island territories will be brushed aside, as the OTs are more and more marginalized to suit the convenience of the major players on the world stage.
(7)         The package offered to us will be wrapped in something called “good governance”.  We will be told that as OTs we will enjoy the privileges of EU membership, but that privileges come with responsibilities.  We will be told that Britain has obligations to ensure that her OTs meet the high standards of transparency, human rights, and respect for law, expected by her European partners.  We will be told that as OTs we will have to give up some of our rights and customs to be able to meet this high standard expected of us.  We must view all such approaches skeptically, and refuse to be drawn into what may be a baited trap.
(8)         The conferring of full British citizenship on us in place of BDT citizenship will confer some advantages on us.  At present we are not allowed to work in Britain without a work permit.  If we wish to holiday in Europe we have to obtain a visa.  British citizenship will allow the few of us who wish to visit Paris, London or Berlin the freedom to do so.  At present there is full employment in Anguilla, and there are few of us who would want to work in London or Paris.  With British citizenship, that option would be available to the few of us who would wish to pursue a career in those capitals, and who are presently obstructed from doing so.  For the sake of our children, some of us may want to relocate to a part of the worlds where there are more opportunities than in our small island.  In the event of a downturn in the Anguilla economy at some date in the future, increased options for finding employment in Europe through our holding British citizenship will appear an even bigger advantage than it does now.  At present, few if any advantages are apparent to us by our acquiring full British citizenship.
(9)         It has been estimated that some 3% only of BDT citizens remain after the departure of Hong Kong.  There are fewer BDT citizens who would wish to emigrate and go to live in Europe in any one year than there are East Europeans, Asians and Africans that land illegally on the beaches of Europe each day.  Giving the people of our small island full British citizenship does not pose any kind of cultural or social threat to the UK or to Europe. 
(10)     British citizenship with full reciprocity, by contrast, poses an immense threat to the people of our small territories.  Anguillians have as an example of what to avoid the neighbouring island of French St Martin.  In 1970 the population of French St Martiners, mainly native-born, was probably less than 15,000.  By 1997 that population had increased to over an estimated 50,000, most of them from Metropolitan France.  Hardly a native St Martiner is to be seen in the streets of French St Martin today.  Native St Martiners are a disgruntled and displaced minority in their own country.  The very peddlers in the market-place are metropolitan Frenchmen.  Anguillians are resolved that such a fate will not befall us.  We will accept British Citizenship only on the basis that there is not reciprocity, and Anguillians are permitted to preserve our culture and society.
(11)     In the event that the conferring on us of British Citizenship would in our view have the consequence of doing harm to our identity, culture, society, and legal and constitution systems, then we would opt to retain our existing BDT Citizenship.  If the disadvantages of full British Citizenship outweigh the advantages, then it would be pointless for us to give up the advantages we presently have.  The bureaucracy in Brussels might find it more convenient not to have to deal with us on our terms.  But, the convenience to Brussels is far outweighed by the right of us Anguillians to retain our legal, constitutional, social and cultural systems.
(12)     The concerns of the FATF over money laundering and the international drugs trade are noted.  However, we in Anguilla have learned over the years that the sensationalist international press has blown the involvement of the BDT banking system in illegal money laundering activities out of all proportion.  We suspect that the real target is not the drugs trade, but the many financial refugees from the litigation racket and tax burdens of European and North American states, who seek refuge for their hard-earned and at-risk assets in our offshore financial centres.
(13)     Anguilla has few natural resources besides the sea, sand and sun that surround us, and the skills and wit of its well-educated population.  We exploit the first of these two “natural resources” through the tourist industry. We have determined to apply the second of our “natural resources” to our lack of income, gift, profit, and death taxes, to develop a viable international financial services industry.  Anguilla is already a regional financial centre.  According to Eastern Caribbean Central Bank reports, Anguilla banks two-thirds of the foreign currency circulating in the Eastern Caribbean.  Anguilla is determined within the next 20 years to be a major financial services centre, recognised world-wide, not just regionally.
(14)     The provision of offshore financial services will offer our young people a variety of professional, business and employment opportunities that do not presently exist.  We as a government and the private sector have embraced offshore financial services as an acceptable industry for Anguilla.  No other industry offers young Anguillians so many career opportunities and produces so few industrial pollutants as the international financial services industry.  Anguilla has resolved not to impose any system of direct taxation on its people or on those who use our jurisdiction to effect aspects of their international trade and business.
(15)     With the above in mind, what are some of the basic, non-negotiable, elements of Anguillian society and community that our leaders should keep in focus at all times in discussions with the Europeans on the coming change of status of Anguilla as a BOT?  The following list is not exhaustive.  It includes:
(a) Retention of the Anguilla Constitution (as amended by Anguillians from time to time) as the supreme constitutional document of the land;
(b) Retention of the House of Assembly to enact allows, other than those that can constitutionally be enacted at Westminster, that will be enforceable on the people of Anguilla;
(c) Retention of full internal self-government;
(d) Retention of our present right that no taxation be imposed without the consent of the people of Anguilla;
(e) Retention of the constitutional status of Anguillian Belongership with all the rights and privileges of Anguilla Belongership;
(f)  A reduction of the reserved powers of the Governor, and an increase in the powers of the locally elected government;
(g) Allowing Anguillians the constitutional right to secede or withdraw as an OT and from the EU at any time its people should agree to do so, eg, to join a wider West Indian nation should that development ever arise.
Don Mitchell QC (Chairman)
Hon Hubert Hughes
Ms Ijahniah Christian
Dr Phyllis Fleming-Banks
Ms Josephine Gumbs
Mr Alistair Richardson
Pastor Cecil Richardson
19 January 1998