Barbados, Jamaica, Trinidad and Tobago Guyana and other small states, get an annual chance to show why the United Nations (UN) is vital to them.
And they usually use the world body as a platform to articulate their major economic, social and political concerns.
That’s what happened last week during the general debate of the 71st session of the UN General Assembly.
With a hint of chill in the air, signalling the beginning of the fall season and with many Manhattan streets near the world body’s headquarters closed off to vehicular traffic, more than a dozen CARICOM prime ministers, foreign ministers and a president or two took to the podium to deliver their countries’ foreign policy statements.
What they did though was to send a strong regional message to the world’s international financial and development communities.
The united voice focused attention on a looming financial crisis that could be traced to a policy that can block access to the global banking system. That would happen if the banks succeed in eliminating or dramatically reducing corresponding banking partnerships which are vital to the region’s daily economic life.
But as CARICOM nations addressed a half filled UN hall, a nagging question remained: were the rich states, especially the United States, Canada, Britain, France and Germany and their international financial organisations really listening to the Caribbean? Just as important, are they planning to address their complaints?
Only time will tell if they really care. Chances are they don’t give a damn.
Still, Jamaica’s Prime Minister Andrew Holness spoke candidly, not only about de-risking and correspondent banking, but also about the mountain of debt his country and its neighbours owe to foreign lenders and must repay.
“We need to effectively address the emerging crisis of the withdrawal of correspondent banking services to certain financial institutions in the Caribbean,” said Holness.
“De-risking threatens our economies. This trend hinders our participation in the global financial system and in international trade. This in turn creates serious obstacles in our effort toward promoting investment.”
Senator Maxine McLean, Barbados’ Minister of Foreign Affairs, agreed but, unfortunately, was brief, too brief.
Putting her comments in the larger context of the “unilateral and unidimensional policies of international agencies” which were penalising Barbados and others for their success in spurring human development, she spoke about the “negative impact” of the decisions of global financial and “other institutions” that can and do hurt the Caribbean, and she was quick to cite the “consequences of de-risking on corresponding banking activity” as a prime example.
Like Holness, Dr Keith Mitchell, Grenada’s prime minister, who was in New York for a funeral, said that the correspondent banking issue was really a regional matter, a problem which must be tackled head-on by CARICOM member-states.
In an interview with BARBADOS BUSINESS AUTHORITY, Mitchell said “this is a Caribbean issue. We have to approach it as a regional matter.”
That’s precisely what several heads of Caribbean government or their foreign ministers did. Dr Timothy Harris, leader of CARICOM’s smallest nation, St Kitts-Nevis, complained loudly that the Caribbean was being marginalised in the global financial system and suggested that the correspondent banking situation was proof of that.
“Already, in the Caribbean, as of the first half of this year some 16 banks across five countries have lost all or some of their correspondent banking relationships putting the financial lifeline of these countries at great risk,” he declared.
That’s particularly ominous for a group of countries whose economies were dependent on tourism and where remittances were a factor in “national development,” he argued. “Such actions threaten to derail progress, undermine trade, direct foreign investment and repatriation of business profits.”
Much unlike many of his CARICOM colleagues, Fred Mitchell, The Bahamas minister of foreign affairs, went for the jugular complaining about the actions of US banks and their de-risking policies.
“Banks in the developed world, particularly in the United States, are refusing to cash cheques of some Caribbean banks because they say the risk of policing the CARICOM banks on the issue of compliance to the new rules is too high and the business which they get is too low,” he contended. “Thus, the services have been stripped across the Caribbean.”
“De-risking has been defined as the reduction, if not the total elimination of risks of conducting banking business in small states. The financial behemoths are telling the small Caribbean states that they may be pushed over the global banking cliff without a parachute to cushion their landing,” he said.
By collectively taking their case to the UN, the Caribbean has put the international community on notice that the region will not remain silent on such a crucial economic issue.
Undoubtedly, the Caribbean has painted an ugly but accurate picture of the misuse of financial muscle by banks which don’t care about the damage they are doing to the economic systems of emerging economies.
By banding together, Caribbean lands stand a much better chance of stirring interest in their plight, said Grenada’s prime minister.
Another thing. The Caribbean must enlist the backing of lawmakers on Capitol Hill in Washington so they can encourage the banks to reverse their stance.
The Congressional Black Caucus is an influential group that can help make a fundamental difference.
The 40 plus lawmakers can make the case a national issue while the islands themselves can treat it as an international one.
Correspondent banking is crucial because it facilitates international trade and the payment of billions of dollars in remittances to families across CARICOM every year. It ensures that money is easily transferred to and from the Caribbean for foreign and domestic goods and services.
Without this banking partnership the Caribbean wouldn’t have access to the global financial system and that would undoubtedly trigger the crisis of which Holness, Mitchell and Harris spoke.
