Editorial | Leveraging the Commonwealth
In the post-Cold War dynamic, there are many doubters of the relevance and usefulness of the Commonwealth. But for small, developing states like Jamaica and our neighbours and partners in the Caribbean and elsewhere, its potential - and why members in this region should recommit to the group - was highlighted in Kingston recently.
Like many poor countries across the globe, several in the Caribbean face the prospect of their domestic financial institutions losing corresponding banking relationships with big international banks - part of their so-called de-risking. That is, major banks, having enhanced regulatory arrangements to prevent money laundering and tax evasion, sometimes deem it easier to exit developing country markets rather than exert the effort to determine which countries and partners are compliant, or help them become so. Or, their returns from their correspondent relationships in developing country markets, though not unprofitable, do not meet predetermined ratios.
In other words, markets like those in the Caribbean may be small beer, easily confined to catafalques, without mourning. But the demise of these relationships is a big thing for developing countries. They risk disengagement from the global, and increasingly interconnected, economy. Indeed, so important is this matter to this region that it commanded a not insignificant portion of the time, and deep attention, of Caribbean Community (CARICOM) leaders at their summit earlier this month. Most of the community's 15 members have met, or are close to meeting, international regulatory standards but are being de-risked.
CARICOM is engaged in its own lobbying efforts on this matter. However, the Commonwealth's still new secretary general, Baroness Scotland, publicly pledged to steer the weight of the organisation behind these efforts. This potentially means 53 voices from all quarters of the world, concerted and coordinated in a campaign. Jamaica has a substantial stake in any such venture. As CARICOM's lead on foreign relations, Kingston should grab ownership of this matter.
Further, the issue is deeply related to another initiative in which the Commonwealth is already engaged on behalf of small developing states, in which Jamaica and several other CARICOM states ought to have a special interest - the
matter of debt. The Caribbean is among the most indebted regions of the world. Although it has declined nearly 20 percentage points over the past four years, Jamaica has a debt-to-GDP ratio of around 125 per cent. In St Kitts and Nevis it's 80 per cent, against 160 per cent five years ago. In Antigua and Barbuda it is around 99 per cent, having been in light see-saw in recent years.
Indeed, in a 2012 survey, the Commonwealth found that 14 of its 28 small state members had debt-to-GDP ratios in the 60 per cent and over danger zone. Of this group, 10 of the 14, or 71 per cent, were in the Caribbean. Despite this crisis of debt, having been classified as middle- or high-income developing countries, they, and a handful of other Commonwealth states, are locked out of concessionary financing and debt-forgiveness initiatives. The Commonwealth, with the Caribbean at the centre of the project, took the matter to the World Bank in 2013.
Now, these highlight-indebted nations, mostly island and costal states vulnerable to the threat of climate change, face the prospect of exclusion from global financial arrangements. Lone, disparate voices will hardly be heard. An energised Commonwealth, including its developed world members, where some of the big banks are domiciled, can talk loudly and, hopefully, persuasively.