Caribbean Trade Law and Development

Tag: 71st UNGA

  • Is the UN ‘essential’ for Small States? Singapore Minister makes the case

    Is the UN ‘essential’ for Small States? Singapore Minister makes the case

    Alicia Nicholls

    “In an uncertain world, small states have to work much harder just to stay afloat. Small boats on a rough sea will be tossed and turned much more than a tanker with heavy ballast. For our survival and prosperity, small states have to stay open and connected to the world. But our very openness makes us vulnerable to external shocks and threats.”  – Singapore Minister for Foreign Affairs, Dr. Vivian Balakrishnan at 71st UN General Assembly, 2016

    As a policy nerd, I enjoyed listening to, and reading the speeches given by the representatives of the 193 members at the 71st United Nations General Assembly. However, one speech stood out particularly to me. It was the poignant statement made by Minister for Foreign Affairs of the Republic of Singapore, His Excellency, Dr. Vivian Balakrishnan entitled “Small states in an Uncertain world” in which he argued why the United Nations was important for the survival and prosperity of small states.

    Questions about the 21st-century relevancy of the UN stem not only from the unsuitability of its organisational structure to current geopolitical realities, but also its peacekeeping failures and the fact that so many members, including prominent ones like the United States, are frequently behind on UN membership fees. Dr. Balakrishnan’s intervention on this issue is, therefore, timely.

    In less than fifteen minutes, Dr. Balakrishnan convincingly and succinctly  laid out the well-known challenges faced by small states in an increasingly uncertain global economy marked by sluggish growth, growing protectionism, terrorism and health epidemics. The learned Minister reiterated that in this harsh external environment,”small states have to stay open and connected to the world”, and that our “very openness makes us vulnerable to external shocks and threats”.

    He outlined three elements which he saw as crucial for the survival and prosperity of small states, namely, a rules-based multilateral system, international partnership and cooperation and sustainable development. On each of these points he reiterated why the UN was right for the job.

    In the decades since the UN’s formation in the mid-1940s, its membership has grown from only the “Great Powers” to include numerous former colonies which have become independent states. Small states now make up about two-thirds of the UN’s membership. Noting that small states are “usually at the receiving end of the decisions and actions of large powers”, Dr. Balakrishnan explained that the concept of “one country, one vote” gives small states a voice they would otherwise not have. After all, the vote of the small island developing state of Barbados has the same weight as a vote by the United States, the world’s most powerful country. In concluding, Dr. Balakrishnan proffered that [u]ltimately, small states need the United Nations to provide the framework for building partnerships, promoting development and pursuing peace and security within a rules-based system.”

    I quite enjoyed Dr. Balakrishnan’s speech. One cannot deny that there are flaws in the United Nations system which need to be more expeditiously addressed if it is to continue serving the needs of small states in years to come, including reform of the Security Council which still reflects the geopolitics of the 1940s. There is also concern over some of the actions of the UN’s peacekeepers, including the UN’s role in the cholera outbreak in Haiti which it has only admitted to recently.

    I agree with former UN Secretary General, Kofi Annan’s assertion in 2002 that “the United Nations exists not as a static memorial to the aspirations of an earlier age but as a work in progress – imperfect as all human endeavours must be capable of adaptation and improvement.”

    Despite its imperfections, the UN is an important forum for global cooperation on issues of international development. The 2030 Agenda for Sustainable Development is just one of these initiatives. The “one country, one vote” has given small states the opportunity to have their voices heard on global diplomacy and policy despite their size disadvantage.

    Several initiatives have been spearheaded by small states, including the UN Convention on the Law of the Sea and the International Criminal Court. Small states have also left an indelible mark on the UN’s work by raising the global spotlight on climate change and other development issues, including the sustainable development goals (SDGs). It is little wonder, therefore, why Caribbean countries in their national statements before the UN General Assembly pledged their continued support of the UN, while also supporting calls for reforms.

    The full National Statement by Singapore’s Minister for Foreign Affairs, Dr. Vivian Balakrishnan may be read here.

    Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

  • Caribbean States raise de-risking concerns at the 71st United Nations General Assembly

    Caribbean States raise de-risking concerns at the 71st United Nations General Assembly

    Alicia Nicholls

    De-risking was one of the myriad of developmental issues raised by small states of the Caribbean Community (CARICOM) at the 71st Regular General Assembly of the United Nations in New York over the past few days. The theme of the general debate of the 71st session was “The Sustainable Development Goals: a universal push to transform our world.”

    De-risking practices by banks involve the avoidance of risk by discontinuing business with whole classes of customers without taking into account their levels of risk. This is in direct contradiction to the risk-based approach advocated by the Financial Action Task Force (FATF). The major manifestation of bank de-risking has been the restriction or termination by large banks (particularly in the US) of correspondent banking relationships with banks and discontinuing relationships with money transfer operators (MTOs).

    While countries across the world have been affected by de-risking in varying degrees, a World Bank study published in 2015 found that the Caribbean region appeared to be the most affected by a decline in correspondent banking relationships. This situation is even more vexing considering CARICOM countries’ adherence to international regulations and best practices, including the recommendations of the Financial Action Task Force.

    Arguing that correspondent banking services are a public good, CARICOM countries launched a high-level diplomatic offensive over the past months to raise awareness and mobilise action on this serious issue. The restriction and loss of correspondent banking relationships not only threaten the region’s financial stability but also threaten to de-link Caribbean countries from the global financial and trading system, undermining their sustainable development prospects. There has, however, been limited international progress on this front despite strong advocacy and a myriad of studies on the issue by regional and international development agencies.

    Singing from the same hymn sheet, CARICOM representatives consistently raised the issue in their national speeches before the UN General Assembly.  In perhaps one of the most comprehensive and impassioned statements, Minister for Foreign Affairs of the Bahamas, H.E. Frederick Mitchell,  made de-risking the starting point in his speech, emphasizing not only the difficulty being faced in opening accounts, but also the impact on tourism, remittance and financial flows. Calling it a “moral imperative,” he reiterated Caribbean countries’ adherence to anti-money laundering rules, while condemning the over-regulation which has had led to the de-risking phenomenon. He also termed the attacks on the Bahamas and the CARICOM region as “inaccurate and unfair”.

    Touching on the sustainable development implications of de-risking, representative of Trinidad & Tobago, Senator the Honourable Dennis Moses, Minister of Foreign and CARICOM  Affairs, poignantly stated as follows:

    “The 2030 Sustainable Development Agenda recognizes that national development efforts need to be supported by an enabling international economic environment through international business activity and finance, international development cooperation, and international trade. However, the issue of financial institutions terminating or restricting correspondent banking relations in the CARICOM Region has destabilized the financial sectors of our Member States and has disrupted the Region’s growth and economic progress.”

    On behalf of Trinidad & Tobago and CARICOM, Senator Moses further called on “international banks to engage collaboratively with affected Member States to restore normal financial relationships between domestic banks and international markets.”

    Prime Minister of St. Kitts & Nevis, the Hon. Timothy Harris noted that “[a]lready, in the Caribbean, as of the first half of this year, some 16 banks, across five countries have lost all or some of their correspondent banking relationships putting the financial lifeline of these countries at great risk”. Highlighting Caribbean countries’ dependence on tourism and remittance flows, he further explained that “such [de-risking] actions threaten to derail progress, undermine trade, direct foreign investment and repatriation of business profits.”

    Laying the blame for de-risking on “heavy-handed” FATF regulations, Prime Minister of St. Vincent & Grenadines reiterated the potential of de-risking to disconnect Caribbean countries from global finance and “a shifting of potentially risky transactions to institutions that lack the regulatory wherewithal to handle them”. He further explained that “these [FATF] regulations must be revised urgently before legitimate transactions in the Caribbean–from credit card payments to remittances to foreign direct investment–grind to a halt.”

    Besides de-risking, CARICOM representatives raised several other development issues, including climate change, graduation policies of international development agencies, United Nations reform, the US embargo of Cuba, the attack on international financial centres by OECD countries and the on-going border disputes between Guyana and Venezuela and Belize and Guatemala. CARICOM states also congratulated newly elected UNGA President, Peter Thomson of Fiji, and thanked outgoing UN Secretary General Ban Ki-Moon for his service, particularly his support of SIDS.

    Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.