Cayman needs global allies

Fidelity conference kicks off

Fidelity Cayman Business Outlook

Attending the Fidelity Cayman Business Outlook Wednesday were, from left, Secretary of the General Caribbean Tourism Organization Vincent Vanderpool Wallace, Chairman of Immigration Business Staffing Planning Board Sophia Harris and Director General Centre for Global Economic Growth and Director Cayman Islands Monetary Authority Richard Rahn. Photo: Jewel Levy

The private sector in the Cayman Islands should aggressively develop global allies to help fight international opponents in their efforts to diminish Cayman’s competitiveness, CIMA director Richard Rahn wrote in a paper on which his address at the Fidelity Cayman Business Outlook on Wednesday was based.

Propounding his personal views, Mr. Rahn said other nations with stagnant economies will try to find scapegoats for their own problems, and enlist international organisations such the United Nations, the International Monetary Fund and the Organisation for Economic Co-operation and Development to help them hurt the competitiveness of successful jurisdictions like Cayman.

‘As far as these opponents are concerned, Cayman can never raise taxes high enough, share sufficient financial information about its customers, and increase its regulatory burden sufficiently to meet their always increasing demands, until Cayman is not longer competitive,’ he wrote.

The Cayman Islands has been subjected to regulatory guidelines of OECD, such as the Know-Your-Customer requirements, and to the European Union Savings Tax Directive in recent years, but Mr. Rahn said the battle is not over.

‘Specifically, the OECD is trying to interfere with the right of states to control their own corporation laws.

‘The OECD has sided with the unions in a campaign against a competitive market for ocean shipping.

‘The UN and OECD are supporting schemes to tax international airline tickets – which the French Parliament just endorsed – and international currency transactions, as well as other international taxes,’ he wrote.

In addition, Mr. Rahn said certain EU members are saying they want to expand the Savings Directive.

‘I have personally heard bureaucrats at FATF (Financial Action Task Force on Money Laundering) say their ultimate objective is to make sure every financial transaction made by everyone on the globe is known to all the world’s governments,’ he wrote. ‘What a scary thought.’

Because of its success with low tax and reasonable regulatory policies, Mr. Rahn said Cayman is an embarrassment for the socialist politicians and bureaucrats around the world.

‘It makes the failure of their economic model all too apparent,’ he wrote. ‘I point this out in rather blunt terms, because if those with a vested interest in Cayman’s success do not understand – or are in denial about – the real agenda of their international opponents, they will be killed by it.’

Mr. Rahn said the Cayman government is limited by what the British government will allow it do to prevent the erosion of its competitive advantages.

There are also not enough financial and human resources available in Cayman to fight a global battle, he wrote.

‘There are some talented and able people within the Cayman financial secretariat, but they… are spread too thin, and without sufficient troops to wage the battle on their own.’

Mr. Rahn said the lobbyists and public relations firm hired by the Cayman Island government were limited in what they could do to help as well.

‘The best hope for Cayman to slow the erosion of its competitive advantages is a much more active and aggressive private sector, which actively seeks out and works with the natural allies of Cayman,’ he wrote.

Some of those allies could be other countries.

‘Switzerland, for instance, has views on many issues similar to Cayman,’ he said at the conference Wednesday.

Beyond the business association in the free market and public policy, organizations are other allies.

Mr. Rahn noted that in Cayman’s current negotiations with the International Organisation of Securities Commissions, Cayman had merely asked for a level playing field.

‘But the government, even through its paid agents, is limited on what it can do, unless there is a broader public awareness of how Cayman is being discriminated against,’ he wrote.

‘If the private sector in Cayman had fostered more allies in the global business and public policy community, the struggle for a level playing field would be much easier.

‘But unfortunately, since these alliances have not been adequately developed, Cayman stands too much alone.’

Mr. Rahn said the public sector could not sit and take a free ride forever.

‘You’ve done remarkably well. Now is not the time to become complacent,’ he said Wednesday.