Theresa May appears to have been hoisted by her own petard.

The United Kingdom prime minister’s snap elections — which she called on April 18 after claiming for months they wouldn’t happen — unexpectedly resulted in a hung parliament, plunging upcoming Brexit negotiations into a world of uncertainty.

Ms. May’s Conservative Party still managed to win 316 seats in the UK’s 650-seat House of Commons, the most overall. But voters swung left, giving Jeremy Corbyn’s Labour Party 30 additional seats — up to 262 — and denying Ms. May a majority.

Though it is almost certain that Conservatives will make a pact with Northern Ireland’s Democratic Unionist Party to form a government, the damage is already done: Ms. May will proceed with a weaker mandate from the UK populace, changing the dynamic of the UK’s departure talks with the European Union.

“There has been a lot of talk, particularly in the last couple of days, about bringing together, across party lines, some kind of party agreement for a way forward in terms of Brexit,” said Dr. Peter Clegg, a senior lecturer of politics at the University of West England, Bristol. “I think the idea of a hard Brexit is perhaps gone. So it’s about how far back from that point can we possibly go. I think everything’s back on the table now.”

Softer Brexit negotiations could benefit the Virgin Islands.

The territory’s EU privileges — like duty-free trade, free movement, access to EU funding, and policy dialogue with Brussels — are more likely to be preserved under a softer break, as is the UK’s membership in the European single market, according to Dr. Clegg, who studies the UK overseas territories.

Premier Dr. Orlando Smith has emphasised the importance of retaining these benefits, and, along with other OT leaders, has pushed for them in meetings with UK officials in London.

VI election supervisor observes UK snap vote By CONOR KING DEVITT Juliette Penn, the Virgin Islands supervisor of elections, travelled to the United Kingdom to observe last Thursday’s snap elections. While there, she served as part of the Election Assessment Mission of the UK, which made recommendations that will contribute to future elections. The EAM consisted of 34 Commonwealth parliamentarians, as well as election officials from 23 countries and territories. Ms. Penn observed the vote in Norfolk County, overseeing balloting in 14 different polling stations. “All in all, it was a good experience for me in that I was on the other end of the spectrum and I was looking at somebody else and not somebody looking at me for a change,” she said. Ms. Penn has observed three other elections abroad — in the Turks and Caicos Islands, Canada and the United States — but said last week’s were the most impressive. “The people were professional,” she said. “I didn’t experience any lines. One person took no more than perhaps two to three minutes to vote. It was amazing to me, because they don’t use voter’s ID or anything of that sort. You just come in and give your address and give your name.” Before the vote, reminders are sent out to people informing them of which polling station they should go to, Ms. Penn explained. Voters carry those reminders with them on election day, making it easy for presiding officers at polling stations to check people off. “They say all of their elections are based on trust,” she said. Going forward, Ms. Penn said she would like to work to bring that level of trust to the VI elections. Doing so could help speed up the territory’s voting process and lay the groundwork for alternative voting options like proxies, which are used in the UK, she explained. In the 1990s, the VI government allowed people who were away from the territory to vote by proxy, but that option was removed after it was abused, according to the elections supervisor.

The election results could also open the door for more stakeholders at the Brexit negotiating table since it’s likely that Ms. May, in an effort to move away from losing politics, will want to expand her vision for the departure, Dr. Clegg explained.

“The weak condition of the UK government might give the OTs, and also the regions of the United Kingdom, more of a role and a stronger voice in the discussions going forward,” he said. “That may give them a stronger opportunity to try to influence the stakes more effectively.”

Colin Riegels, managing partner at the VI office of Harneys, argued that a weak UK government would have less time to focus on regulating the overseas territories.

That, he guessed, could benefit the territory’s financial services industry.

“Less is more when it comes to interference from the UK,” he said.

 Additionally, Conservative austerity measures were largely perceived as vote-losers, increasing the likelihood that they will be repealed, according to Dr. Clegg. This could increase funding to the UK Foreign Office, which in turn could cause a little more money to trickle down to the OTs.

“Probably, as things stand, this was the best outcome for the territories,” Dr. Clegg said.

Not everyone, however, agrees that Ms. May’s clipped wings are good for the VI.

“A weaker Britain in the Brexit negotiations is not good for Britain and then not good for the overseas territories,” said Robert Briant, head of the Virgin Islands office of Conyers, Dill & Pearman.

Mr. Briant argued that the Conservatives diminished negotiating position could have a negative effect on the global economy and London, which in turn would hurt the territory’s finances.

The cloud of Labour

While it’s up for debate whether the VI will benefit from the Tories’ weakened mandate, many OT stakeholders have reason to be grateful that Mr. Corbyn’s surge didn’t go far enough to actually hand him the keys to a government.

In the wake of the Panama Papers last April, the far-left MP said the UK should implement direct rule over offshore financial centres like the Cayman Islands and the VI if they choose not to follow UK tax rules such as establishing public registers of beneficial ownership.

Despite the impending Tory-DUP agreement, Labour’s strong showing and the lack of a Conservative majority means a Mr. Corbyn-led government is still a risk the territories could face in the near future, according to Dr. Clegg.

If Ms. May’s agreement with the DUP fails to produce a reliable government, she could be forced to call another election within the year, he explained.

“I don’t think [the Tories] would want to do that too soon, because I don’t think the British people would be very happy about that, and certainly because of the momentum behind the Labour Party in the final weeks, which could potentially carry on to the next election,” Dr. Clegg said.

Mr. Reigels, however, was confident the Tories would be forced to call another election within six months to a year.

“Historically, no one lasts longer than a year [in the UK] with a minority government,” he said.

Mr. Reigels also believes Ms. May will likely be replaced atop the Conservative Party within the year.

Should Mr. Corbyn’s party take power, on the other hand, the territory could face outcomes ranging from reduced sovereignty to tightened financial services regulations, Dr. Clegg explained.

The pre-election Labour manifesto pledged to “act decisively on tax havens, introducing strict standards of transparency for Crown dependencies and overseas territories, including a public register of owners, directors, major shareholders           and beneficial      owners  for all companies and trusts.”

Corbyn and the OTs

Despite Mr. Corbyn’s age — he’s 68 — and his potential to retire before the next scheduled general election in 2022, his party’s ideological currents seem to have shifted in a way that could scare OT financial services stakeholders.

“Their programme is more socialist in many respects, in terms of a greater role for the state, a greater role for redistribution, greater progress in terms of dealing with inequality,” Dr. Clegg said. “So I think that sort of agenda does tap into some vulnerabilities the territories might have in terms of their role in international finance.”

Though Mr. Reigels acknowledged that Mr. Corbyn could make things very difficult for the territory, he did not see the prospect of a socialist regime as entirely negative for the VI.

“Historically, offshore finance markets tend to do well during socialist governments because people tend to be more protective of their assets,” he explained.

In order to protect themselves from further Labour gains, the Tories will have to re-examine the main issues of the snap elections and their approaches to each of them, which Dr. Clegg argued were Brexit, austerity and youth policy.

Benito Wheatley, director of the VI’s London Office, could not be reached for comment regarding the elections and their potential effects on the territory.

This article originally appeared in the June 15, 2017 edition.

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