By RICHARD COULSON
The present shutdown of a large part of US Government operations is no minor blip in how the country is run. With 800,000 civil servants abruptly without pay for a period entering its third week, it is a self-imposed disaster previously unknown in the nation’s history. Bahamians should not kid themselves into believing we will be exempt from this catastrophe in the world’s largest economy, our neighbour and main source of our tourism and commerce.
Nor can we ignore that this calamity must be blamed strictly on President Donald Trump and his obsession with building “The Wall”, a sop to his ego with no function in solving immigration problems or defending national security. There is no need to list here the many policy mistakes he has committed ever since his inauguration, or the racial and anti-feminist prejudices he has displayed from far earlier. They have been amply documented for public consumption. Some Bahamians preferred him to Hillary Clinton. That may have been a rational choice at election time, but his record to date must be giving his local believers serious doubts.
His latest threat to declare a “national emergency” to obtain funds for the Wall without Congressional approval will create an unprecedented dispute over basic principles of the US Constitution. In the history of American presidents, Trump is not just different, but unique – a true outlier from all the previous 44 men who have led the nation, well or poorly, to survive for 243 years. Although I have no professional training in human psychology, Christian ethics, marital relations or sexual priapism, I cannot accept that public performance as a statesman is totally divorced from private behaviour, particularly when it no longer remains “private”. They must be related.
Consider the hard facts of his personal life:
Aside from Ronald Reagan, he is the only president who has been divorced (twice), and Reagan’s one re-marriage was a firm romance that lasted to his death.
Only two presidents were chronic “womanisers”, Jack Kennedy and Bill Clinton, neither of whom advertised the habit, while Trump has been blatant about his affairs and his cavalier attitude towards the female sex.
All the presidents chose mates from solid American background, several of whom were remarkable women who provided strong support or became intellectual or charitable leaders in their own right, such as the wives of FDR, LBJ, Ford and Carter while Laura Bush is a professional librarian who saved her husband from alcoholism.
Which of Mr Trump’s three “ladies” whom he chose to marry can even approach these qualities?
Mr Trump’s personal style and approach to the presidency is so eccentric and impulsive that one could take odds that he will serve only one term, if that:
• He could simply get fed up with the effort and resign.
• He could suffer a fatal stroke.
• He could be declared unfit under the 25th Amendment and removed.
• He could be impeached.
• He could lose support of his base and the Republican presidential nomination.
• He could be defeated in the 2020 general election.
• He could be assassinated by a crazed fanatic.
The final alternative would be a dark day, bringing unpredictable political turmoil to the US , but the other six possibilities would simply mark the welcome end of a bizarre interlude that could lead to a brighter national future.
Our financial services – change, not crisis
We have recently seen alarming and conflicting press reports about the health of our financial sector. On the one hand we read about the $200 billion decline in banking assets over the last six years, and the end of IBCs (International Business Companies) linked with new legislation imposed by the EU and OECD. Former Central Bank Governor James Smith mentions a “death knell”, backed up by financial executive Paul Moss. On the other hand, Minister of Finance Peter Turnquest reassures us there’s still plenty of business for traditional IBCs, as long as they remain “passive”.
Let’s separate apples from oranges. “Banking assets” are only relevant for the age-old commercial banking business of lending against deposits. They have been shrinking for many reasons, but we can be well served with just three foreign-owned (Canadian) and two locally owned banks, surely adequate for a population of 400,000, without the useless addition of Bank of Bahamas, whose struggling business and staff should be sold to a stronger operative. There’s no evidence for the stated fear that foreign banks will squeeze out local ones – it has not happened to date. What’s needed is more efficiency by the whole commercial banking sector, whose bureaucratic and dilatory ways infuriate its customers.
Commercial banking is only one segment of our total financial services sector, which includes private banking and related trust administration; securities dealing; investment management and counselling; direct and captive insurance; mutual fund administration; corporate services and special transactions; accountancy, computer and IT services; even ship and aircraft registration and (maybe someday) international arbitration.
We maintain a good grip on private banking, trusts and investment management, with many smaller firms, both bank and non-bank, both local and foreign owned, active in this field with the growth of “family offices”. The Central Bank’s recent sensible decision to permit multi-currency business by any financial institution will not drive away this business and may in fact enhance it and add to local employment.
Unfortunately, we have dropped the ball on other financial services. Many years ago the PLP government took steps that closed our captive insurance companies, causing their move to Bermuda and becoming its second largest industry with highly profitable international links that can never be recaptured for The Bahamas.
Over many years, the blind obduracy of our legal community (with a few honourable exceptions) has made us a back-water in international business.. By imposing a “closed shop” against foreign lawyers setting up practice here, they have encouraged multi-partner legal factories in Cayman, Bermuda, BVI and elsewhere that attract lucrative fee-earning services for cross-border deals, hedge fund management and financial holding companies for major clients. While our Bar Council and Association focus on the bewhigged ceremonial of English traditions, our economy loses million dollar fees to practitioners in the fly-speck of Road Town, Tortola.
The future of IBCs is a side issue. While many thousands were incorporated, they were always ingenious legal fictions that bought little tangible wealth or employment to The Bahamas. We can see that thousands have already been liquidated, a process that will continue as their utility becomes doubtful. Even if a “passive” IBC is non- taxable, why go to the trouble of registering for a business licence and preparing financial statements when its affairs can be conducted by a domestic company with a local office and dedicated personnel and no threat of retaliatory measures?
The future of the Bahamian economy lies with businesses, including lawyers, accountants and financial advisers who have firm “boots on the ground” here while serving both local and foreign markets. A good example is Cloud Carib, a Bahamian IT communications company with its active base at Sandyport and a growing network of international branches —a template for hi-tech start-ups based in Grand Bahama.
The recent news that Netherlands (alone) will place us on a blacklist simply because we do not levy an income tax of at least 9 percent, must be forcefully opposed, as an unacceptable violation of our sovereignty. Fortunately, we don’t do much business with that little country, who seems to defy broader EU policy.