The Conservative Party’s overwhelming victory last week in the United Kingdom elections is largely good news for the Virgin Islands, but it could also bring some challenges to the territory in the coming years.
To prepare, the VI should pay close attention to developments across the Atlantic.
Before the elections last Thursday, the ruling Tories were neck and neck with Labour in the polls, but they emerged with a majority, rubbishing widespread predictions of another coalition government.
The VI’s financial services sector doubtlessly breathed a sigh of relief. Former Labour leader Ed Miliband, who stepped down last week after the loss, had promised to push through a measure widely opposed by financial services practitioners and overseas territory leaders: forcing the OTs and Crown dependencies to publicly identify the beneficial owners of companies registered on their shores.
Mr. Miliband added that he would ask the Organisation for Economic Cooperation and Development to blacklist any OTs or CDs that didn’t comply within six months of a Labour victory.
This peculiar threat suggested a fundamental misunderstanding of the international financial system. It also made us wonder whether Mr. Miliband understands the degree to which many of the OTs, including the VI, depend on their financial services sectors.
As OT leaders have rightly pointed out, larger countries such as the United States don’t always require the identification of beneficial owners. Forcing the OTs to go first with such measures could be disastrous for them.
To be sure, the Conservative Party is also pushing for public ownership registers, but its position seems more reasonable: that for now the OTs should be encouraged, but not forced, to adopt them. This position should give the VI more wiggle room as it follows though with plans to implement alternative measures.
Though beneficial ownership was probably the most important UK election issue for the VI, last week’s result could prove unfavourable for the territory in another respect: The Tories have promised a referendum on the UK’s membership in the European Union by 2017.
If UK voters decide to leave the EU, the VI could feel various negative effects: loss of grant money; loss of some travel privileges for citizens; and potentially diminished standing in some international organisations.
The Scottish National Party also made a strong showing last week, increasing the chances of another referendum on Scottish independence. Here again, the VI could feel negative effects in the future. An independent Scotland would remove about five million of the UK’s 63 million people, potentially weakening the influence that London wields on the VI’s behalf on the global stage.
Preparing for such possibilities is largely a matter of ensuring that the territory is able to react quickly to events beyond its control. But there are also proactive measures that can help ensure that the VI’s voice is heard: lobbying the UK legislature through the BVI London Office, for example, or collaborating with other OTs and small island states.
As the VI elections loom on June 8, we call on all candidates to clearly state their ideas for ensuring that the territory succeeds on the global stage. In an increasingly international landscape, outward-looking leadership is essential.
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