Friday, March 29, 2024

WILD COOT: Dangerous happenings

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FROM AS FAR BACK as my articles in July 2014, August 2015 and April 2016, the Wild Coot has been warning Barbadians of the impending tsunami that will cover Barbados with its wave. The same threat of which I spoke has acquired urgency since then.

My friend up north, Mr Tony Best, highlighted it in the BUSINESS AUTHORITY of June 20. He emphasised the thoughts of our ambassador in Washington, Mr Tony Marshall, who stressed the impact that the action will have on pensioners whose remittances come from abroad; Sir Ronald Sanders’ confirmation of efforts to properly police our shores in the Caribbean from money laundering and associated ills; Prime Minister of Antigua Gaston Brown’s insistence that no financing of terrorism exists in the Caribbean, and our Prime Minister Freundel Stuart’s carrying the case to UN Secretary General Ban Ki-moon. Actually, while the secretary general has no jurisdiction over the private sector banks, nevertheless his word goes a long way in influencing governments. It is this influence over governments that can bring results. Why?

President Obama in his efforts to reduce the deficit of the United States by US$1 trillion, got his administration to introduce FATCA (Foreign Accounts Transactions Act) to the world. While it was a worldwide proclamation, it really only had influence over minions that acquiesce to the whims and fancies of the US – like Barbados and the wider Caribbean.

I am speaking about the iniquitous FATCA laws that are now causing grief to the indigenous banks with respect to their correspondent banking arrangement with US banks. By the way, I see that The Bahamas has been designated a centre for payments in Chinese currency. Strange! This may be the thin edge of the wedge in respect of worldwide payments and a challenge to the US dollar. Indigenous banks may want to take a hard look at this.

The challenge is real, and the Wild Coot has personal knowledge of the contortions experienced by indigenous banks occasioned by this FATCA legislation. In Jamaica for example, the cutting of correspondent arrangements, according to the article from up north, will jeopardise the yearly remittance of US$5 billion to the island and over $1 billion to Haiti.

While we all have to live in this piece of world called earth, it must be shared with some consideration for all the people. We in the Caribbean experienced the north-south Atlantic trade during the 17th, 18th and 19th centuries imposed on us by mostly European nations. The US fought many battles in order to escape from this dragnet. Now it ought to be ashamed to be imposing such a situation on Caribbean nations. One feels that the ambassadors residing in the Caribbean ought to make our feelings known to the powers that be and stop worrying about flying the LGBT flag in Jamaica.

Such bullying should also concern our lawyers – if they have any “cojones”. The agreement passed between a customer and a bank is secrecy that should be maintained of their business. Can you then pass legislation to trample on that secrecy in the name of compliance? Yes, I suppose. Like the people up at Bush Hill, you may have no choice. Just as our Prime Minister found out when he first heard of FATCA.

But bullying does not stop at correspondent arrangements forcing governments to pass legislation. It also enters the field of negotiating investments when you are a beggar. Take, for example, the giveaway of our sovereignty in wanting to attract tourists. Sandals was given a tax break “fada” in Barbados. The prime minister of Antigua is now showing some spunk in that he is contesting the arrangement made by the previous administration. “Those tax breaks given are iniquitous to the country and we want them renegotiated.” Sandals is contesting that it is a breach of faith. But how can a country fighting repayment of debt just willy-nilly forfeit $15 million of taxes? Antigua contends that the country “has a right to renegotiate the clearly inequitable agreement”.

Is our agreement in Barbados equitable? Do we have a level playing field? Sandals has got to be careful in negotiating these types of contracts where governments change. The Wild Coot, in spite of bold assurances of increased tourist numbers, questions increased foreign exchange. Yes we have construction activity for a while, and hotel employment, but do these things equate to a tax relief for 20/30 years when a country’s interest rate on foreign loans keeps spiking up at each downgrade?

  Harry Russell is a banker. Email quijote70@gmail.com

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