Of sovereignty and survival

By Kenneth Green, Managing Partner, Advance Global Partners

“We live where you vacation”.

That is often the mantra of those of us in the islands when people come to visit. Many of them envy us, living the dream on these small idyllic paradises, seemingly with no worries and lifestyles that are magazine healthy.

The reality is anything but. Declining tax revenues, high educational and health subsidies by the Eastern Caribbean countries, and high migration of the very human resources who have been subsidised create a cycle where governments are constantly on the backfoot, a situation compounded by frequent external shocks. Maintaining a decent standard of living with small revenues, rising costs of living and increased public debt burdens is creating incredible pressures on these small, fragile economies. The irony is that the nations we most have an affinity to: the UK, the United States, and Europe - the quintessential colonial powers and the current global hegemon - have put systems in place to effectively attack our sovereignty.

We are interestingly regulated by the very people who compete against us for tax and non-tax dollars. The result isn’t difficult to forecast.

The reason is simple. Our independence made us competitors, particularly for financial services, but our size and lack of capital make us dependent. If you want to make an analogy, freedom after slavery did not grant 40 acres and a mule for African Americans in the United States. Indeed, the lack of wealth in the African American community in the United States is directly related to the disadvantage of freedom without financial empowerment from the beginning of the post-slavery era.

That being said, you would scarcely find Caribbean critics to point out this double standard when it is applied to citizenship. One major country indeed holds a visa lottery. Imagine Antigua, Dominica or St Lucia having lotteries for citizenship. The outrage would be palpable.

What we are facing is a struggle for survival, and our citizenship programmes are just the latest tool being harnessed to stave off increased indebtedness and poverty.

With climate change largely caused by the same nations pontificating about taking responsibility without actually doing so, and our tourism industry and our way of life affected by more and more volatile weather cycles, there is no respite.

The 2008 financial crisis was a classic case. A crisis initiated by massive irresponsibility caused by lack of oversight by the financial regulator in the US, resulted in chaos for the Caribbean economies and the entire world.

OUR CULTURE IS SO PERVASIVE THAT FEW REMAIN UNTOUCHED BY IT. IT IS THAT WHICH IS OUR SOVEREIGNTY, AND NOT OUR CITIZENSHIP OR PASSPORT. IT IS WHY OUR FOOD, OUR MUSIC, OUR CARNIVAL AND OUR HABITS REMAIN AS STRONG AS EVER NO MATTER WHICH IMMIGRANTS WE HAVE ASSIMILATED ACROSS THE REGION.

The upshot? The source of the mayhem printed more currency and bailed out the offenders and victims in its own country, and we were left to lick our wounds and find a way to explain why our GDP growth didn’t quite measure up in the post-crisis years.

This is not an essay on victimhood. This is a reality check.

Citizenship by investment (CBI) programmes are tools for survival. They enable non-tax revenue to filter into our governments and allow these same governments to meet recurring expenditure such as public sector wages (Antigua and Dominica), to drawdown debt to GDP (as done by St Kitts & Nevis), to build housing stock across the island (Dominica), and to build hotel and tourism infrastructure (all OECS CBI jurisdictions).

The sugar industry in St Kitts & Nevis was decimated by the downward change in prices resulting from the EU

Common Agricultural Policy. The banana industry in the Windward Islands was similarly decapitated by the US/Germany/WTO lobbying by Chiquita Dole and its then millionaire Republican owner Carl Lindner.

The offshore banking industry has now been similarly swept clean with the OECD/EU push against IBCs in the Caribbean. The offshore gaming industry was bludgeoned by the United States as Antigua and Dominica know all too well. None of this has stopped these very same industries flourishing in the EU and the US. Might is right.

Meanwhile, the IMF has issued recommendations to all these islands that for lending to continue at concessionary rates, our collective debt to GDP must drop to 70 percent or below by 2030 (now revised to 2035 because of Covid). Post-Covid, the average debt to GDP across the sub-region is hovering between 90-100 percent.

The CBI programmes of these islands are valuable because they give our countries breathing room, but we need a new dispensation. Migration of our skilled resources to the usual destinations won’t stop. Climate patterns won’t get better. The cost of living driven by a merchant class who are more allied to their suppliers than to the locals will not come down.

THAT NEW DISPENSATION?

A new citizen, resident in our islands, contributing to the GDP growth and investing in these islands long term, not simply in a transient form, gives us the sustainable solution we need to stay alive and build resilient solutions for development.

The United States became great on the backs of absorbing immigrants into a nation that was open to both innovation and new ideas, even whilst it subjugated others to do so. The United Kingdom became great by utilising free labour in its colonies to produce goods it sold across its empire.

We can hone our survival with two variations on this theme: providing a home for innovators worldwide who relish the Caribbean reputation as a zone of peace to settle or building infrastructure that is self-sustaining for our own populations and provided at a premium for those who want to utilise but not belong.

The move to residences by investment (RBI) should be a natural graduation that sits alongside our existing CBI platforms. We are mainly underpopulated and underinvested. The exit of the Canadian banks said it all. The gravy train is over, and they are moving on.

The increased solidarity with China is more positive than many would realise. In many ways, China is proof of the model espoused by our own Sir Arthur Lewis. We have to produce, to innovate, to develop.

But how do we do that whilst retaining our sovereignty? Sovereignty isn’t to be retained. It evolves. What sanitises that evolution? Culture. Our culture is so pervasive that few remain untouched by it. It is that which is our sovereignty, and not our citizenship or passport. It is why our food, our music, our carnival and our habits remain as strong as ever no matter which immigrants we have assimilated across the region.

RBIs allow us to create a new paradigm for a new type of citizen. For the people who choose to help us build our countries against a so-called international rulesbased order that seemingly only works for those who make the rules. And for the people who choose to pay our VAT, eat at our restaurants, use our schools, and buy and rent homes locally. As the saying goes, those are the real MVPs (most valuable players) because then they truly become vested in the long-term survival of our economies.

It is counter-productive to become insular at this seminal moment in history. Even undocumented immigrants in the Western world contribute immensely to their economic growth. We are looking for a few good men, women and families to help us fight the good fight.

To do this we need to open ourselves up to a diversified CBI/RBI programme or to inevitably watch as one day our programmes as they are, will be targeted like every other platform for our development.

We in the Caribbean know how this works.