Caribbean & Central America - July 2016 (ISSN 1741-4458)

There were three issues in particular that endowed the 4-6 July Caribbean Community (Caricom) heads of government summit with more than usual significance: security issues; the crisis with correspondent banking; and the desire to reaffirm the members’ commitment to further regional integration, particularly given the developments in Europe.

The security issue was highlighted in opening remarks by Keith Rowley, the prime minister of Trinidad and Tobago. He argued that security was central to the economy as well as to the well-being and quality of life of Caricom citizens. The assembled leaders concurred, and they agreed to institute a review of the Caricom Crime and Security Strategy (CCSS), which had been introduced with much fanfare in February 2013.

The 2013 adoption of the CCSS was categorised at the time as “an historic and defining moment” for Caricom, and it was portrayed as being not just a security initiative but a potentially significant contribution to “improving the economic viability” of the region.

The CCSS identified four “tiers” of threat, and in the “immediate significant” category it included “transnational organised criminal activities involving illicit drugs and illegal guns; gangs and organised crime; cyber-crime; financial crimes and corruption”. It noted that it was these “immediate significant” threats that were responsible for the Caribbean having one of the highest homicide rates in the world, at 30 people killed per 100,000 inhabitants per year (the world average, the CCSS noted, was five).

Importantly, the CCSS admitted that the criminals responsible for these Tier-1 threats were “supported by…unscrupulous and corrupt professionals within key sectors of the economy such as the financial, legal, justice, law enforcement and security [sectors], public officials, and even government officials who help them to secure and conceal their assets”.

There were big ambitions for the CCSS from the outset. At its launch, Caricom claimed that “with sufficient political will and bold and courageous leadership, the implementation of the [CCSS] could significantly reduce crime within the next three years”.

But that doesn’t seem to have happened, or at least not consistently. In Jamaica, for instance, while the number of murders dropped from 1,200 in 2013 to 1,005 in 2014, which was the lowest rate since 2003, it jumped back up to 1,192 in 2015. This is a rate of 45 murders per 100,000 inhabitants, which is still very high. Also, it can be noted, the major decline in murders in Jamaica came from 2005 (when there were 1,674 murders, or 58 per 100,000 inhabitants) and again after the 2010 arrest of notorious drug kingpin Christopher ‘Dudus’ Coke. These declines predated the CCSS initiative.

The second focus of concern for the Caricom summit, namely the crisis in correspondent banking, has direct links back to the crime question. Correspondent banking is the process that makes possible payments by non-bank customers across national borders and which gives banks in any one country access to services and products available in another. Now, however, the strict requirements for US banks to avoid any taint from money laundering or the funding of terrorism has led to many of them withdrawing from correspondent banking relationships (CBRs) with their Caribbean counterparts.

This withdrawal of CBRs has prompted the International Monetary Fund (IMF) to warn that the process “has reached a critical level in some affected countries, which can have a systemic impact if unaddressed”. It adds: “Coordinated efforts by the public and private sectors are called for to mitigate the risk of financial exclusions and the potential negative impact on financial stability.”

Belize is one of the worst affected countries. According to the IMF: “Only two of the country’s nine domestic and international banks…have managed to maintain CBRs with full banking services.” Even the Central Bank of Belize has lost two of its CBRs.

The Caricom leaders warned that “trade, economic welfare, and the transfer of remittances [are] gravely affected by the de-risking strategies of foreign banks”. And in response to the threat, the leaders agreed to host a “Global Stakeholder Conference” to assess the impact of the withdrawal of correspondent banking on the region. The conference is to include banks and regulators from the Caribbean, the US, Canada, and Europe.

In a speech to the Financial Stability Board (FSB) in Tokyo in March, Dr DeLisle Worrell, the governor of the Central Bank of Barbados, listed the problems faced not just by Belize but also by Barbados, Jamaica, Guyana, the Organisation of Eastern Caribbean States (OECS), the Cayman Islands, and the Bahamas. Dr Worrell argued that there needs to be a reduction in “the burden on banks of collecting and reporting detailed information for a variety of purposes…There also needs to be consistency among regulators about the information that is required as well as limits to banks’ liability to fines and penalties in cases of inefficiency where there has been no proven illegal activity.”

The third area of major concern for the 4-6 July Caricom summit was the commitment to further integration, particularly given the recent vote by Britain to withdraw from the European Union (EU), but also in the light of Jamaica’s decision to launch a review of its Caricom membership.

The summit received an update on progress with the Caricom Single Market and Economy (CSME) and agreed to institute a comprehensive review for February. The leaders also agreed to convene a meeting of chief immigration officers and other relevant officials “to address the challenges experienced by Community nationals travelling throughout the region”. Free movement is an area of particular concern to Jamaica, and it was raised by Jamaica’s Prime Minister Andrew Holness in his opening remarks to the summit. Jamaicans generally feel that they are discriminated against when travelling within Caricom.

It was only a week before the summit, on 28 June, that Holness launched Jamaica’s Caricom Review Commission, which is to be chaired by former Jamaican prime minister Bruce Golding. Announcing the commission, Holness sought to reassure other Caricom members by saying: “We cannot pre-empt what the commission will say, but it was never the intention to lay any groundwork or chart any path out of Caricom. This is about strengthening Jamaica’s position within the regional integration process, which is absolutely important for Jamaica’s economic growth and development for the next 50 years.”

Nevertheless, given the advent of Brexit, some nervousness on the part of Jamaica’s Caricom partners is understandable. After all, it was a referendum in Jamaica in September 1961 that was the catalyst for Jamaica’s withdrawal from, and the subsequent demise of, the West Indies Federation.