It has been a battle that Barbados and other offshore financial centres in the Caribbean have been confronting for more than two decades. And finally someone has had the intestinal fortitude to tell the European Union that its actions against us look and smell to high heaven.
Regional economist Marla Dukharan, stood tall, even in her diminutive stature and had the gall to raise the “r” word in her recent editorial comment in the Caribbean Monthly Economic Report she produces.
Dukharan, who now calls Barbados home, questioned whether the EU policy of blacklisting mostly non-white, former European colonies might even be racist in its origin.
“Recently, much of the feedback received from Europeans in particular cautioned against labelling this discriminatory stance as racist, suggesting perhaps the reason that every single country on the list is a relatively small, weak, non-white former-European colony, is either pure coincidence, or that we are in fact the world’s most criminal, corrupt, money-laundering, tax-shielding shady people, who deserved to be named, shamed, and schooled by those who know better,” she drew to our attention.
But these unfair actions go way back. From the moment jurisdictions like Barbados offered major companies in metropolitan centres the opportunity to domicile here and benefit from lower tax rates, all hell broke loose.
Never mind that places like London and the American state of Delaware decided if they could not beat us they would join us. Despite reports of money-laundering in many metropolitan jurisdictions, they have never appeared on any anti-money laundering (AML), harmful tax, or financing of terrorism list.
As Dukharan, the former Royal Bank of Canada economist argued, EU member states and their allies, even if they have been cited by the Financial Action Task Force (FATF) as having deficiencies in their AML) and counter financing of terrorism (CFT) practices in their financial systems, these countries surprisingly are always on the EU’s white list.
The EU, which by the way is not a regulator, has presumptuously anointed itself to such a position, shaming small island states into submission. What has made matters worse is that players in the international business sector have rightfully complained that the Europeans keep moving the goal posts.
This has been a full financial year since Barbados took the bold, but forced step to converge its corporate tax rates, removing most distinctions between domestic rates and those applied to international business companies, even though international business companies were barred from conducting their business activities locally.
After being accused of employing a “harmful tax regime”, Barbados took what some said was a poison pill. Either charge international companies the same high tax rate applied to local companies or lower the rate for local companies to match that of those operating in the offshore sector.
The EU got what it wanted. We took the latter option. The Mia Mottley administration immediately saw a dramatic fall in corporate tax receipts.
“The EU’s methodology to identify high-risk third countries having strategic deficiencies in their regime on AML and CFT goes well beyond the standard definitions to include non-legal criteria such as ‘International offshore financial centres’, ‘strength of economic ties with the EU,” Dukharan says. And we agree with her.
Come 2021, when Barbados hosts the 15th quadrennial ministerial conference of the United Nations Conference on Trade and Development (UNCTAD), Dukharan says that is the perfect time to use our home-court advantage and tell the EU to their faces, their actions against jurisdictions like us are unilateral, unfair and discriminatory.
And do not just politely raise the issue. Seek to have some teeth behind the words and push the EU into action. Ask the questions. Why have financial centres such as London, New York and Zurich not face the shame of being blacklisted? Why is it always the tiny, non-white nations that are forced to skip over ropes and jump through the hoops that are always moving?
We, like, the regional economist believes UNCTAD has a “duty to address with the EU, their ongoing grossly disproportionate discrimination and further marginalization of these most vulnerable and unstable countries”.