Blacklist threat part deux

| 27/10/2008

An interesting but predictable follow-up to the threat by some EU countries to have the OECD blacklist Switzerland (itself an OECD member) as an uncooperative tax haven occurred over the weekend.

 

The Swiss Foreign Minister chastised Germany and warned the German Finance Minister not to pursue this.

“It would not be the approach one expects from a state bound by the rule of law” she said. On Monday, the EU ambassador to Switzerland said that the EU does not envisage putting Switzerland on a tax haven blacklist.

So what can Cayman glean from all this? Switzerland has always been treated with kid gloves by its European neighbours. It has excellent diplomatic relations and a good network of treaties and agreements with them. It has also been a bastion of democratic freedoms for centuries. But most importantly, it occupies a strategically vital geographical location. It controls key road and rail links both North-South and East-West. The Germans, French, Italians and Austrians in particular know this very well. The odd “technical” problem with the tunnels can bring a large part of European commerce to a halt. So there will be some rhetoric, some little chats behind closed doors and calm will be reestablished, at least for the time being.

Would that the same would happen for Cayman. Unfortunately, the Germans (and perhaps the French) will feel aggrieved that they have not been able to nail the Swiss this time round. So they will be looking for some easier scalps. And the other EU countries will feel that they should help their German and French colleagues. So we should expect Liechtenstein and Cayman to be firmly in the EU and the OECD sights so they can show “they are doing something”.

Do not expect the UK to help Cayman. Indeed, it is likely that the UK will, as before, use Cayman as a bargaining chip to protect its own interests and Cayman will yet again be a “casualty of war”. If anyone has any doubts as to the UK’s attitude towards its territories, the Chagos Islands experience stands as a stark reminder. There are some things Cayman can and should do. But there is not much time.     

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Comments (2)

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  1. JC Calhoun says:

     Tim Ridley is right on the money, and the probable election of Obama in the States will make matters worse for Cayman in this regard.

  2. Anonymous says:

    Bulls-eye again, Tim! We await your next article. I hope Govt. is paying keen attention.