About 4,000 miles away from the Virgin Islands, voters across the United Kingdom will head to the polls in two weeks and elect a new government to lead their country through a time of historic upheaval following a string of failed UK efforts to exit the European Union.
Though the VI has no say in the election, the result could have dramatic effects here and in other overseas territories for generations to come.
“The big issue in the UK election is Brexit,” said Benito Wheatley, a special envoy of Premier Andrew Fahie and a policy fellow for the Centre for Science and Policy at the University of Cambridge. “That is the focus. That’s what makes this election different from the others.
“Now, what that means is that other issues have either been neglected or overlooked. … What’s important for the British Virgin Islands and other overseas territories is to begin to consider what relationship they want to have with the UK when the dust settles after the election.”
Though the Conservative Party is ahead in most polls by double digits, Labour has been gaining ground in recent days, and a previously hung Parliament could swing in several directions, each with potential socioeconomic effects in the VI.
The Conservatives’ plan for a hard Brexit could sever the overseas territories’ connections with the EU, for example, and a Labour Party with a history of campaigning for corporate transparency could usher in a potential crisis for the VI and other OTs that are heavily dependent on financial services, according to Dr. Peter Clegg, a professor of politics and international relations at the University of the West of England.
“If the Conservatives get in, I think the implications of a hard Brexit will be quite significant for the overseas territories,” said Dr. Clegg, who studies the OTs. “On the other hand, the Conservatives’ view in terms of beneficial ownership and the role of offshore financial services will be more effectively de- fended and protected by a Conservative government.”
The Conservative-led government took a hard reset Nov. 6 by dissolving Parliament after recently appointed Prime Minister Boris Johnson, like his predecessor Theresa May, failed to navigate a Brexit deal through Parliament.
The coming election is expected to be a match largely of the Conservative and Labour parties, but the uncertainty surrounding Brexit may have strengthened the hand of other contenders such as the pro-EU Liberal Democrats and the year-old Brexit Party, especially if one of the main parties has to form a coalition after failing to win an overall majority in Parliament.
Parties’ Brexit views differ markedly. The Conservatives are promising to “get Brexit done” and exit the EU by the end of January.
“If you vote for us, we have a deal that is ready to go: approved by every one of the 635 Conservative candidates stand- ing at this election,” Mr. Johnson said during a Nov. 19 debate with Labour leader Jeremy Corbyn. “As soon as we can get that deal through Parliament, as we can in the next few weeks, we can get on with the people’s priorities.”
Labour is taking a more cautious approach. Mr. Corbyn promised a legally binding referendum, saying that citizens can either vote yes to a new deal that the party plans to negotiate within the first six months of taking office, or they can choose to abandon Brexit altogether.
Until then, he said, he is taking a neutral position on Brexit.
“That idea that the Prime Minister Boris Johnson’s deal can be dealt with and finished by the end of January is such nonsense,” he added during the debate last week. “What he is proposing is a trade deal which will take at least seven years to negotiate whilst at the same time saying he will negotiate a special trade deal with the European Union. The two things are actually incompatible.”
With self-imposed deadlines on both sides, Brexit is likely to play an important role in driving the composition of the new Parliament.
Prior to the dissolution, the Conservative Party held the most seats in the House of Commons at 298 of the total 650, but it fell short of the 326 seats needed to win an overall majority and thus made a deal with the small Democratic Unionist Party under the leadership of Ms. May. The Labour Party held 243 seats, and the remaining MPs belonged to smaller parties.
Brexit in the VI
Ever since UK citizens narrowly voted for Brexit in a 2016 referendum, VI residents have expressed varying views about the potential impacts here.
Some fear negative repercussions stemming from the loss of UK influence on the world stage, but others have suggested that the territory’s financial services industry could get a boost after a split from the EU.
Dr. Clegg said change could come soon after the election. If Parliament immediately implements Brexit to the fullest extent, the OTs will likely lose their ties with the EU, he said.
Free movement throughout the EU would become more difficult for OT residents, if not end entirely, and certain financial support from the union may end as well, he explained.
He also predicted territories would find it more difficult to pursue potential trade opportunities, and they may see links weaken with other countries overseas.
Currently, the VI is part of the Overseas Association Decision, an arrangement that links overseas countries and territories of EU member states with the EU and works to promote economic and social development. Dr. Clegg said membership gives OTs benefits including free access to European markets and more favourable rules of origin for exported goods.
The EU-controlled Euro- pean Development Fund also provides financial aid to OTs. Though ineligible for such funding as a standalone territory, the VI benefits from the €40 million the EDF has designated for the Caribbean region’s environmental projects.
“There’s significant political access as well,” Dr. Clegg added.
This access includes representation within the European Commission, which defends the rights of all the territories, and from members of the European Parliament who help voice issues in the territories.
“So for the 12 UK territories which are part of that grouping and part of that arrangement, it’s likely — although things haven’t been absolutely clarified — that those 12 will have to come out of the Overseas Association Decision, ending their formal links with the European Union … and other territories,” Dr. Clegg explained.
Mr. Wheatley, however, said OTs have been working to prepare for this possibility. Though EU project dollars would likely disappear, he said, leaders have been negotiating with the UK to help make up for the shortfall.
“If Brexit happens before 2020, the UK government will guarantee funding for the continuation of the programmes until 2020,” Mr. Wheatley said. “What happens there- after is a question for the BVI government and other OT governments to discuss with the UK government. The question is, will the UK provide replacement funding for sustainable development for the overseas territories?”
He added the VI government submitted a budget proposal to keep such projects going in the future with fund- ing from the UK, which legislators will consider after Parliament reconvenes and completes its spending review.
Though a Labour victory would decrease the likelihood of Brexit, the OTs could have another major economic concern to consider under a Corbyn-led government.
For years, Labour leaders have campaigned vigorously for greater corporate transparency in offshore jurisdictions, advocating for public registers of company ownership that the VI and other OTs have vocally opposed.
During the run-up to the 2015 and 2017 elections, Labour politicians went so far as to threaten to impose direct rule on OTs that refuse to implement a register, or to ask the Organisation for Economic Co-operation and Development to “blacklist” them.
Dr. Clegg said landing on such a blacklist could have wide-reaching fallout.
“If the EU decided that parts of the BVI banking system were not meeting international requirements, then it would make it more difficult, perhaps, for the BVI to engage in European business,” Dr. Clegg said.
Since the 2017 election, however, the landscape has changed: In 2018, a cross-party group of Labour and Conservative MPs forced Ms. May’s reluctant government to agree to require the OTs to implement public registers by 2020, a deadline that was later bumped to 2023.
Supporters claim the registers will help fight financial crime such as tax evasion, but some OTs — which have found backers among Conservative leaders — defended their financial industries and accused the UK of colonial overreach for requiring a measure that is not a global standard.
In the wake of the 2018 law, offshore financial centres have not re-emerged as a top campaign issue this year, and the candidates did not mention them during last week’s debate.
Mr. Corbyn, however, echoed the party’s previous position this month during an election rally in Shropshire, according to The Guardian.
“We will be chasing down tax evasion, tax avoidance and tax havens because at the end of the day if you’re doing some very clever wheeze, which somehow or other is avoiding your levels of taxation, you should be paying,” Mr. Corbyn said. “Go further away [and] what happens then? You’ve got an underfunded school, hospital and public services as a whole.”
Labour’s 2019 manifesto, which was published last week, reiterated Mr. Corbyn’s pledge promising that the party “will launch the biggest ever crackdown on tax avoidance and evasion and reform the inefficient system of tax reliefs.” However, unlike the 2017 manifesto, the new one makes no mention of requiring public registers in OTs and crown dependencies.
Though Labour leaders have threatened in the past to impose direct rule in OTs that refuse to implement public registers within six months after a Labour win, Dr. Clegg said this step would prove challenging, especially with other priorities pulling focus.
“If Labour got into power — which I don’t think they will — … it would be such a difficult thing to do in terms of time, manpower and resources to do what they did in the Turks and Caicos Islands, and then replicate that four or five times over,” Dr. Clegg said.
Mr. Wheatley stressed VI leaders’ often-repeated position that the VI will adopt a public register when it becomes a global standard, meaning that countries including the United States — where states such as Delaware and Nevada are less transparent than the VI in some respects — would have to come on board.
“The Conservative Party’s policy is that a public register should be a global standard by 2023,” Mr. Wheatley said. “That would coincide with the implementation deadline that they have set for the overseas territories. If everyone adopts public registers by 2023, then the impact would be minimal. But that will not be the case.”
Mr. Wheatley said if Parliament makes public registers a priority, it will have to decide whether to attempt to incentivise OTs to implement them or to mandate them outright, and what the consequences for noncompliance would include.
“The UK position thus far has been to try to persuade, encourage the territories to adopt public registers,” Mr. Wheatley said. “But a number of them have not been persuaded as of yet.”
The Conservative Party — some of whose leaders have opposed mandatory public registers in OTs — released its 2019 manifesto this week. The party promised to create a “new antitax avoidance and evasion law” but made no mention of public registers.
Dr. Clegg said one challenge OTs face in UK general elections is having bigger forces at work around them, but little representation. The British electorate is likely less interested in the OTs than in domestic issues like taxes, the National Health Service, education and security, he said.
“On the other hand, that doesn’t mean the outcome of the election is not important for the territories,” Dr. Clegg said.
Mr. Wheatley said it is important to remember the VI is a separate jurisdiction from the UK. Even if the islands don’t have much sway in determining if Brexit happens or how other political forces play out, he explained, residents do have a say in how their local government responds.
“Of course, we’ll all watch closely what happens, because we can’t ignore the politics of the UK election,” he said. “But we will have to see what the outcome is and then navigate the relationship from there.”
As election day nears, Dr. Clegg anticipated that the parties will focus on more specific policy issues. He said it is difficult to predict the election’s outcome at this point, though the Conservatives had a slight majority in the last election.
“The Conservatives are clearly in front,” Dr. Clegg said. “Now whether they get enough seats to win the election and have [an overall] majority in Parliament, that’s the big question.”
Dr. Clegg said there is a strong possibility of another hung Parliament, with no party winning the overall majority, in which case Mr. John- son would remain in power and get the first chance to try to create a new government.
With the election only 14 days away, Dr. Clegg said there is still time for larger factors to come into play — for example, if officials released reports of potential Russian interference in the previous election, or if there is a strong reaction to the UK’s close call with an economic recession this year.
“But really I think it’s about the debates,” he said. “And it’s about how united the parties remain up until the election.”
“How do you think the United Kingdom election outcome — including the potential Brexit deal — could affect the Virgin Islands?”
Ms. Kampa reported this article from Wisconsin.