Island must act urgently to harness Brexit opportunities
There are so many issues flowing from Brexit that will affect Bermuda very positively, but the island needs to act urgently to harness the opportunities.
Yet I get a sense that the Government doesn’t know how to strategically position itself to harness the explosive growth that will come from Britain’s departure from the European Union.
So here are some clues:
First — I agree with the increase in budget for the London office, but is the amount of just under $400,000 enough to fulfil the requirements of expertise and talent needed for Brexit?
I don’t think so. Nor do I think that the London office is properly staffed to be effective when dealing with Brexit. For the staff of the London office consists of a director, secretary, protocol officer and a part-time intern. With the director being the individual who deals directly with Whitehall, Britain’s Civil Service, and the UK Overseas Territories as they interface to bring forth the issues that affect the British Overseas Territories en masse.
Second — Government House in Bermuda makes the introductions to the British secretaries of state, government ministers and the Prime Minister.
Third — A consultant in London averages about £240,000 per annum — and note that is pound sterling not dollars. So $615.00 for a consultant in Brussels, where the Bermuda Government intends to open another office shortly, isn’t unrealistic nor too expensive — at least not for this type of expertise in Europe, where the business rewards are tantamount to new frontiers in business opportunities.
Fourth — As Theresa May starts the trade negotiations phase of Brexit in earnest, the complexities of leaving the EU are brought forth as every department in Whitehall is focused on the negotiations under the sheer enormity, complexity and details of the negotiations.
Fifth — As Britain leaves the EU, the European Union Withdrawal Bill otherwise known as the Great Repeal Bill, will have to reinterpret thousands of laws and directives from European law into UK laws and regulations, and that mammoth task falls upon the British legislature — House of Commons and House of Lords — who will scrutinise, amend, repeal, revoke, debate and finally pass them into English law. But owing to the sheer volume and details, some legislation will come into effect via “Henry VIII” powers — amended by minister rather than by legislative process.
Sixth — As Brexit is negotiated in the main, there will be spin-offs as new bilateral agreements must be struck between the UK and the EU; bilateral agreements such as cybersecurity, as noted in May’s Munich Security Conference speech, and now financial services, as noted in May’s Mansion House speech.
So as the trade negotiations constantly evolve, it will be an opportunity for the financial services sector in Bermuda to add its expertise to a new bilateral agreement as it relates to some key factors that will affect our industry.
Seventh — The Government of Bermuda does not have the expertise or knowledge to negotiate the details on behalf of financial services. It is the leaders within the financial services sector who should be offering their expertise here so that the bilateral agreement reflects the trade issues that are bespoke to their sector of the industry.
Note, carefully, it will be bilateral agreement(s) that will dictate growth, expansion and/or contracts throughout the UK and the EU in financial services.
However, Bermuda’s financial services industry, minus the tax haven sector, can benefit Bermuda twofold: first by demonstrating that beyond Bermuda’s tax haven dominance and prominent status there is a very viable sector of our financial services industry that holds its own in business integrity, business volume and multijurisdictional reach.
Eighth — Although I sincerely applaud the Progressive Labour Party government for moving to open an office in Brussels, however, even if it is opened by April 1, 2018, the toxic “reputational damage” that it has to overcome from the revelations of the Paradise Papers will make their efforts ineffectual to be of value on Brexit or to be actively listened to by the EU; as noted from the scathing rebukes that the 28-member state trading bloc, with the exception of fewer than five MEPs including Nigel Farage, when they urgently debated the Paradise Papers in the European Parliament in November 2017.
Has the EU Parliament forgotten about the Paradise Papers and the many, many allegations made alleging the “collusion’ between the Bermuda Government and Appleby? I think that the damage to Bermuda’s reputation will take years to repair from the EU’s standpoint. So, certainly, a Brussels office is needed.
Moreover, as the UK leaves the EU, its influence within the EU ceases to exist. So Bermuda can exercise influence only within the EU through any bilateral agreement that is struck between the UK and EU.
Succinctly, rather than attempting to approach the EU on our own terms, without sovereign standing and with a shaky and toxic reputational background, Bermuda should be looking to shape the terms within any bilateral agreement applicable to our national interests, rather than wait to merely sign on to the agreement once the negotiations have been sealed between the UK and the EU.
Then the Brussels office becomes relevant because there is a clear starting point as defined within the bilateral agreements to build a lobby campaign.
Ninth — Yet, Bermuda’s financial services sector may not have that type of restriction, as the UK may welcome the input and expertise on a bilateral agreement that will be very far-ranging for regulatory effectiveness, far-reaching in signing with a trading bloc of 27 countries, and predicted to last for at least the next 40 years.
Tenth — The financial services sector needs to rally its own lobbying cause and offer to engage with the British Government to bespoke the relevant sections of the bilateral agreement(s) relevant to their sector that will flow from Brexit.
Honestly put, it is the financial services sector, not the Bermuda Government, which should take the lead here.
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