A changing world
Recent discussions about the movement of capital and offshore accounts have to be a major cause for concern.
During a Central Bank seminar recently, Minister of Industry, International Business, Commerce and Small Business Development, Donville Inniss, sounded the warning that compliance with the recently passed Foreign Account Tax Compliance Act (FATCA) will impact those who have dual citizenship with the United States of America, have property and other assets or who conduct financial transactions in the USA could have their bank or insurance accounts targeted for review. The point was made by the Minister that one of his main concerns surrounding the law, which requires financial institutions to report to the US Internal Revenue Service information about financial accounts held by US taxpayers or by foreign companies in which US taxpayers hold a controlling interest, was the effect which it could have given the fact that most people might not be aware of the impacts which the laws may have on them. He advocated that Government play a role in a public education campaign.
It speaks to the dynamic of a changing world and the shrinking global economy. We often hear that if the United States of America sneezes then we will all catch the resulting cold. Now we also have to contend with all the multi-lateral agreements in place, the Economic Partnership Agreement (EPA), the economic arrangements which deal with trade and other agreements which include sharing of information and other partnerships.
The recent issues with Russia and Ukraine illustrate the problems with economic arrangements and how they impact relationships. The European Union itself was hamstrung initially in its response to the movement of Russian troops into Crimea simply due to the fact that Russia provides the majority of natural gas and other items which are critical to the development and functioning of their economies. So, Russia has a tremendous sphere of influence on Western Europe and former Soviet countries, which made it so that what can be termed as Russian aggression in Ukraine could not be so easily addressed by other nations.
It puts the United States in a particularly interesting position.
The threat of military force is not the usual deterrent that it once was. The growing economic presence of China on the global stage means that countries have an additional market with over a billion people representing a lucrative market which has a growing hunger for input products. Add to the mix, the role of India and the Asia-Pacific Rim countries which have showed interest in the African countries and the raw materials which they provide; it shows that the economic landscape has changed. The traditional economic powerhouses have emerged from the global recession, albeit slower and weaker that they have ever been at any point in the last half-century. Brazil has emerged in the last few years as a Western powerhouse, growing in its influence, while Canada has remained viable. It should be noted that Barbados has pushed its relationship with China, Brazil and CARICOM is working towards enhancing its relationship with Canada.
All of our partnerships have implications. All future agreements with other countries must look at maximizing the potential of bilateral arrangements whilst making linkages within the sectors of impacted countries.
The world has become smaller, yet more complex. Information is being shared after the global recession of 2008 has showed the need for greater controls over the movement of monies and the use of said funds. We cannot hide our heads in the sand but must work to ensure that this integration of financial systems does not catch us leaden-footed. We have always stood up and stood out in this country. We should not allow this to change now.
Credit: Barbados Advocate