The strained relationship between the Cayman Islands and the UK was one of the issues discussed during a visit by a senior Foreign and Commonwealth Office official last week.
Director for the Overseas Territories in the UK Foreign and Commonwealth Office Colin Roberts visited the Cayman Islands on a tour of the Caribbean and met with members of the Cayman government and the opposition.
In a media roundtable he explained the nature of his visit by the conjuncture of several events, notably the new Cayman Islands government, the new constitution, the change of governor and the Overseas Territories Consultative Council meeting to be held in London next month.
At the Council meeting representatives from OT governments and the Foreign Office will take stock of their relationship 10 years after the White Paper of 1999 outlined the strategic vision for the partnership between the UK and its Overseas Territories.
The Consultative Council will hold an open forum on the day before the meeting to discuss the experience of the past 10 years and subsequently determine in a strategic review how to proceed over the next decade.
‘This is the beginning of a process of discussion and review and I have been talking to the government and the opposition here about that process,’ Mr Roberts said.
The ‘degree of turbulence’ in the relationship between the British government and the Cayman Islands was also addressed in these conversations, Mr Roberts added.
He said his intention was to speak with a range of people in Cayman to understand how the situation has arisen and explain the policy and approach of the British government.
Mr Roberts stated the UK and Cayman governments had a shared objective in the sense that ‘the Cayman Islands should be secure, prosperous and well governed’.
The notion that it was the UK’s objective to divest of the Cayman Islands ‘has no substance’, he said.
Saying that he was aware of the premier’s comments that Cayman independence is on the way, Mr Roberts confirmed that the British government is neutral with regard to the future of the Cayman Islands. ‘This is for the people of Cayman to decide.’
Britain’s closer interest in the Overseas Territories recently was due to a significant shift in global strategic issues such as climate change or the world economy, Mr Roberts stated.
He explained the review of British offshore financial centres by Michael Foot, published earlier this month, helped both the UK and the Overseas Territories in approaching strategic issues such as the regulation of financial services, improved planning and the diversification of revenue sources to make the Overseas Territories more resilient.
He further cited the Foot review, to argue that, in commercial terms, there is essentially a positive relationship between the UK and offshore financial centres.
The report stated that offshore financial centres channel significant amounts of capital and investment to the UK.
The report also found the UK would not benefit from more business, if the ability of offshore financial centres such as the Cayman Islands to compete in the financial services sector was restricted or further regulated.
Much of the Deloitte paper investigates the scope for broadening the tax base of offshore financial centres, a topic also addressed by the Cayman Revenue Commission.
Mr Roberts said he was unaware of a delay to the publication of the Revenue Commission’s findings, but said this was not the only factor to consider. He expects the publication of data early in 2010 on the impact of new budget revenue measures and the size of the reduction of expenditures.
‘So we will be beginning to see whether and, if so, how large a deficit is emerging in the government’s budget,’ he stated.
‘And therefore we will be beginning to see whether it is likely that the government of the Cayman Islands needs to come to the British government to seek the approval for further borrowing in order to manage the deficit in the budget of 2010.’