CARICOM Secretary-General, Ambassador Irwin LaRocque, has expressed concerns that the European Union’s Economic and Financial Affairs Council (ECOFIN) is “bent on destroying” Member States’ “attempts at ensuring economic viability” and “efforts at building resistance”, through blacklisting.
LaRoque made these remarks yesterday, during the International Conference on Building Resilience to Natural Disasters, held in Bucharest, Romania.
According to website consilium.europa.eu, ECOFIN is “responsible for economic policy, taxation matters, financial markets and capital movements, and economic relations with countries outside the EU.” Additionally, “It also coordinates EU positions for international meetings, such as the G20, the International Monetary Fund and the World Bank”, and is “responsible for the financial aspects of international negotiations on measures to tackle climate change”.
In LaRoque’s speech, he touched largely on how critical access to disaster funding is for Small Island and Low Lying Developing States (SIDS) in times of crises, and noted that the blacklisting of countries restricts this access.
“Blacklisted jurisdictions face major reputational damage and disruptive controls on their financial transactions. Blacklisting influences the strategies of international banks, resulting in de-risking and their withdrawal of crucial correspondent banking relationships…” he noted.
In this regard, LaRocque pointed out that it is difficult for CARICOM Member States—among the most vulnerable of groups— to build resistance given their economic standing. As such, he declared blacklisting “an attack on our economies”, and ECOFIN’s intention to continuously update its criteria, “an infringement on the sovereign right of affected States to self-determination”.
“While the CARICOM States are supportive of global initiatives to promote tax good governance, we continue to be concerned about the lack of transparency, dialogue and consultation, the extent of the reforms that have been demanded and the ambitious timeline for executing such reforms,” he said.
He had noted that the need for building resilience has been highlighted by the fact that natural disasters which affect the region result in finances being diverted toward recovery and rehabilitation and away from planned development.
He also established that the majority of CARICOM’s Member States are middle-income, and that according to an International Monetary Fund (IMF) study, CARICOM countries “exhibit extreme versions of long-term low growth, high debt, significant vulnerabilities and limited resilience to shocks which set them apart from other middle-income states”. On top of this, they display a high ratio of government debt to GDP, often at unsustainable levels.
“Being labelled as middle-income countries, we cannot access concessional development financing, since the principal criterion for such funding is GDP per capita,” he noted.
“I cite, for example, the case of The Bahamas, classified as an upper middle-income country, which sustained cumulative damage and loss of US$700 million by hurricanes that hit between 2015 and 2017. Yet, there was no access to concessional financing due to their classification.
From our perspective, there is an urgent need for the international community and international financial institutions to change the criteria for access to concessional development financing by middle-income SIDS. Sub-stantial weight must be accorded to our vulnerability in this regard. The OECD has begun looking at the issue. We need the support of all OECD Member States,” La Roque stated.
“There can be no question that for us in the Caribbean, climate change is an existential threat. It has been recorded that between 2000 and 2017, Member States of our Community suffered at least seven major disasters in which damage ranged from 33% to 226% of the affected country’s GDP…The estimated cost of reconstruction after the 2017 devastation by Hurricanes Irma and Maria has been put at US$5 billion region-wide,” he related, adding that the sum is “way beyond the capacity of the Caribbean Catastrophic Risk Insurance Facility (CCRIF)”.
The CCRIF, he stated, was established as the first multi-country risk pool in the world to provide quick, financial relief following a disaster, however, that pool is currently in need of recapitalisation.
Taking care to note that members are appreciative of the assistance they receive after catastrophic events, he concluded that they must have access to concessional development financing “well in advance of a disaster”.
“The events of recent years have clearly demonstrated that climate change and its effects are wreaking havoc in our Community. We must prepare for the next catastrophic hurricane, flood or drought since climate change is our new normal…Building resilience requires significant investment to reduce risks and vulnerabilities to prepare for the impact of such intense climate-based events. It demands serious and urgent action. Our very existence is at stake,” La Roque stated, making reference to devastation in the past brought on by hurricane activity.
“I welcome this initiative by Romania which demonstrates your support of, your interest in, and your concern for our Community, as we face the existential challenge posed by climate change. Despite the relatively recent establishment of formal ties with CARICOM, Romania has demonstrated a keen interest in the issues that affect our Region, and has been very supportive of our efforts to combat our challenges,” the Secretary-General said of the forum.