In a blog-post of mine back in September last year (2011 – House of Cards) I wondered whether Britain might be preparing to pull the plug on Cayman’s tax-haven, and maybe encouraging our local politicians to go independent. (Which would in effect transfer us to US administration, since the US would never allow an independent little village-state to exist in such a strategic spot.)
At the time, our local rulers had just passed a law exempting them from producing audited government financial statements for the preceding six years. Our colonial masters in London had instructed our Governor to give his formal assent to the Law.
I wrote: If the Governor’s assent didn’t signal Britain’s intention to let Cayman go its own way, nothing will. The disclosure in a lawsuit that our Monetary Authority was no longer monitoring the behaviour of hedge-fund directors constituted another sign... The UK’s meek response to all the open contempt shown to the Governor and his superiors recently, puts the matter beyond all reasonable doubt. In years to come, these won’t be remembered as straws in the wind so much as whole forests blowing away before our eyes.
In light of our recent political shenanigans, it is fair to wonder, again, whether our tax-haven is being set up for destruction. Our present minority government of five elected MLAs and three ex-officio Civil Servants, opposed by the other ten elected MLAs, must try to hang together for the next three months until the scheduled elections.
The recently dismissed Premier and his three MLA cronies seem to be blaming the FCO and its local agents (the Police and the Governor, mainly) for the coup: “Enemies of Cayman!” “British imperialists!” “We will not be told what to do by London!” It all sounds like the slogans of the 1960s, when demagogues led half the British Empire into independence – not abandoning Britain’s authoritarian system of colonial governance, but appropriating it holus-bolus.
That kind of sloganising puts our prosperity at risk. Half a century ago, Britain rarely resisted the demands for independence; one wonders whether she would resist now. Many FCO clerks in London must be muttering to their political masters, “Oh, for God’s sake, let the silly buggers go!”
Cayman has been useful to Britain. As hosts to Britain’s overseas intelligence services, these Islands have for forty years been her eyes and ears in the Caribbean region, and her bankers, too. But there are limits to her patience. From our side of the fence, Britain is crucial to Cayman. She guarantees all our government’s loans, and keeps the interest-rates much lower than they would be otherwise. Even more important: as our colonial power, her presence guarantees that “the rule of law” applies here, safe from any corrupt practices that our local officials might attempt. Well, that’s the theory...
Independence from Britain would kill our tax-haven stone dead, and our prosperity with it. We have a flourishing tourism industry, but it is not nearly enough to keep us in the style to which we have all become accustomed. Without the tax-haven, our Public Revenue would be a quarter of its present level, as would our Public Expenditure, and our population.
Without the tax-haven, we would quickly cease to be the richest little community in the region. We would become indistinguishable from all the other English-speaking Caribbean islands – except for this: that whoever remained here would never forget that they once had it all, and threw it away in a fit of pique. They would be inconsolable for a long, long, time.