PROFESSOR Gilbert Morris, scholar-in-residence at the Bahamas Foreign Service Institute, has fired more than a shot across the bow of European interests which are bent on cowing financial services sectors in the Caribbean and Latin American region with blacklisting designations.

Morris contends, in an article entitled ‘Prelude To A Paradigm Shift: A Sustainable Economic Model For Financial Services In The Caribbean,’ written for International Financial Services journal and published on October 12, 2022, that the push to eliminate Caribbean international financial centres (IFCs) has been led by political elites in Europe.

He stated, “the entire edifice of unidirectional, unrelenting, shifting ‘rules’ were aimed at the elimination of international financial centres; an ambition Gordon Brown, British prime minister (2007-2010), and the president of France, Nicolas Sarkozy (2007-2012) made clear at the G20 London meeting in 2009, fresh from their near destruction of the global financial system in 2008.”

Professor Morris is also a former lecturer and professor at George Mason University and is considered one of the world’s leading thinkers on financial centres. He said in his IFCs piece that the aims of political elites in Europe have been pursued with the help of certain journalists, noting, “between 2012 and 2021… a group calling themselves ‘journalists’, with the complicity of international newspapers from OECD [Organisation for Economic Co-operation and Development] member states, initiated a series of cyber crimes…hacking into law firms in IFCs, revealing the recognised names of their citizens holding accounts in IFC jurisdictions, the aim of which was to harden the notion that the mere holding of accounts in IFCs constituted not merely a crime, but was evidence of nefarious intent and every wickedness”.

Morris outlined how this played across the world through the Panama Papers (2016), Bahamas Papers (2016), Paradise Papers (2017) and Pandora Papers (2021).

The results, he said, were “private information configured in printed stories, dramatised to appear as news,” noting that he himself has requested The Economist to “exercise journalistic integrity by withdrawing headline images and magazine covers displaying these criminally obtained, biased stories.”

Financial crimes in Europe

The professor said, “there is a dissonance between OECD, EU and the G20 asserts of legal virtue, whilst imposing on small island states, as financial crimes flourish in their jurisdictions…one story attacking IFCs in the narrative of the OECD; the next story revealing financial crimes at Deutsche Bank or HSBC without a word of reference to blacklisting.”

Morris describes the prevailing Caribbean response to blacklisting as “a false narrative” adding that “IFCs must face their own failures at systematising their business models” and noting also that the problem for small island IFCs is “jurisdictional renting”.

He explained, “They are not financial centres by any degree. They are merely jurisdictions that offer prophylactic financial services, often disconnected from the developmental needs of the real economy. Alternatively, a financial centre is a trade zone, protected by constitutional and trade rules, best governed as a quasi-government entity with commercial management.”

Morris stated, “Nearly all IFCs in the Caribbean region — sovereign and non-sovereign alike — rent their jurisdictions to professionals from OECD/G20 member states by proximate or accidental arrangements, with the results that their domestic populations suffer exposure to and consequences from OECD/EU/G20 impositions because of the systemic anaemia of ‘jurisdictional renting’ and the utter lack of strategic coordination amongst IFCs.”

The professor cites as proof the cities of London and New York. “The British control that British financial services zone and they are themselves exempt from interference from Greater London or the Crown. Manhattan enjoys a less formal but similar role, dramatised in the 2008 financial and economic crisis, where despite obvious criminality, the banking leaders have survived and thrived [leveraging taxpayer’s money or so prospering off the very people they betrayed]. A more instructive example is Singapore, which ‘punches above its weight’ in the global financial system by means of its membership of the ‘FOREX quartet’ [Frankfurt, London, New York, Singapore]. “

Singapore, he noted, does not rent its jurisdiction, noting, “It has formulated a strategy for its role in the global financial system and it executes that strategy as government policy. There are no such organised financial centres in the Caribbean.”

Morris asserts that Cayman Islands is the best managed economy in the Caribbean and the Americas. “Cayman is the nearest approximation we have to a structural financial centre, with Bermuda following in insurance. Cayman’s Singaporean apotheosis comes in the quality of its legal profession, its fund management, efficiency of regulation and the fact that in the last 10 years, it has managed to become — for a time — the world’s largest holder of short-term US Treasury Bonds.

“Between Cayman, Bermuda, BVI and Turks and Caicos Islands, they are responsible for more than one million jobs in the UK, yet, none of them have fashioned a credible foreign policy or strategy to leverage these achievements.”

He observed, “Panama stands on its own, uncertain of its leverages. Barbados was sensible in initiating a series of double taxation agreements, rather than tax information impositions, which merely masquerade as agreements, yet Barbados of a sudden disappeared in the vortex of its own financial crisis. The Eastern Caribbean, Mauritius, Jersey and Guernsey are “marking time” with no notable innovations.

End Jurisdictional renting

Morris, offering a solution, states that IFCs must end all jurisdictional renting. “IFCs must designate free trade zones in their jurisdictions as their financial centres, structured as constitutional and trade nexus, particularly where they are already members of WTO. For overseas territories, Britain has gained no momentum after Brexit for reasons of failed strategic thinking. Therefore, as leveraging wealthy retirees is a US$50 trillion forward option over 20-40 years, Britain has no other option but to coordinate with a group of overseas territories, with ‘world’s leading’ [insurance, funds, luxury villa developments] in their names. As the scale and term of this opportunity is expansionary, strategising with Britain need not be adversarial.”

He also suggested that IFCs must establish an Organisation of International Financial Centres with a secretary general, a research facility and a global media organ. They must also, he said, rescind every “Agreement” obtained by force, where there is no mutual compliance by OECD members in accordance with the Vienna Convention on Treaties 1969.

The future

The professor states that in North America, 100 million people will retire in the next 20 years. Globally, nearly 17 per cent of the populations of the G20 nations will retire in that time frame.

Morris said, “This means the Caribbean and its IFCs are best positioned for the largest economic expansion in our histories, to develop luxury retirement communities, supported by advanced health amenities, with bespoke tax-neutral financial services— all operating on enterprise technology platforms.”

He added, “If imagined at scale and executed properly, this approach could initiate domestic sovereign funds, drive local construction and infrastructural development, whilst motivating a professional skills training imperative across the development space. A sovereign fund’s balance sheet could leverage financial services and ostensibly offer domestic investment instruments — debt and equity — of such a quality as to structure opportunities within our jurisdictions.

The paradigm, he stated, would bring an end to jurisdictional renting, establish a sustainable economic model (not merely as retirement zones, but medical record data centres), defend that business model, diversifies the economies as a trade proposition, whilst opening IFCs to trading in financial services as essential nodes in the global financial system.