Euro-Caribbean Societies in the 21st Century: Offshore Finance, Local elites and Contentious Politics by Sebastien Chauvin & Peter Clegg & Bruno Cousin

Author:Sebastien Chauvin & Peter Clegg & Bruno Cousin [Sebastien Chauvin & Peter Clegg & Bruno Cousin]
Language: eng
Format: epub
ISBN: 9780367590567
Google: dl-TzQEACAAJ
Goodreads: 53909344
Publisher: Routledge
Published: 2020-06-30T00:00:00+00:00

The objective here is not to suggest that the second-order effects arising from global financial governance initiatives are specific or unique to OFCs, and especially not for the Euro-Caribbean OTs. It is merely to unveil them for consideration and analysis, to encourage an awareness for the exogenous impact that travels through global networks of finance in a manner entwined with the transnational flow of capital through those same networks. It must be acknowledged that all actions have not only first-order but also second-order consequences, even if these are not immediately apparent or recognized.

Consequently, one conclusion to draw from the preceding discussion is a need to look past the initial source of the impact experienced by one’s object of study. Global financial governance may be the ultimate source of the impact felt in the offshore finance sector, but it may not be the immediately identified causal factor. In particular, and as seen with the consequences arising from the action of Hong Kong-based banks for the BVI, the ultimate source was in fact a global financial governance initiative, yet that initiative was not concerned specifically with the BVI. Nevertheless, the BVI experienced the consequences from that anti-money laundering initiative mediated through the Hong Kong banks’ response to the efforts intended to address the perception that BVI-registered companies were used for activities deemed elsewhere as potentially criminal (involving capital flight and money laundering). Similarly, the OECD’s BEPS project holds the potential to limit if not eliminate the use of OFC-registered subsidiaries by the MNC as a mechanism to ‘own’ and manage its intellectual property. If the OECD/G20 succeed in producing a global corporate income tax revenue distribution regime that is independent of the jurisdiction of corporate registration (and if it is implemented globally), then the desire to use an OFC-registered subsidiary in the MNC international structure will be substantially reduced. In turn, that reduction will lead to less fee revenue for the BVI and any other OFC with an international business company registry.

The Panama Papers revelations have produced once again a first-order effect for OFCs, and in particular those in the Euro-Caribbean space. The response to these revelations has reinforced global financial governance initiatives under development concerning the reporting and use of an offshore-registered company. The prominent presence of BVI-registered companies in the leaked documents returned attention to this OT and may be expected to lead to further reductions in registration numbers as those customers shift their activities to locations under less scrutiny. The presence of the Cook Islands, for example, as a ‘by-way’ of foreign direct investment to China (see Vlcek, 2010) underscores the point that the Euro-Caribbean space is and remains not simply a relationship of the post-colonial territory to Europe but also those jurisdictions with an OFC are much more transnational in terms of being pivotal sites for the transactions and transfers that comprise global networks of capital. As a result, they remain subjected to the impacts produced by global financial governance, first-order and second-order, with consequences for economic development in the Euro-Caribbean space.

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