Prime Minister Ralph Gonsalves has accused the European Union of using “hired ruffians” to bully small states into complying with its tax regime.
He made the assertion in Parliament on Thursday as lawmakers were summoned, two days after Christmas, to amend the International Business Companies Act, ahead of an EU review in February, which could have seen St. Vincent and the Grenadines (SVG) blacklisted for non-compliance.
And even as Kingstown attempted to comply with the EU requirements by passing the law, Gonsalves called for creative resistance to the EU on this and other matters, which he said are not in the interest of Caribbean and other small states.
“Mr Speaker, I want to begin this discussion by making an unequivocal and factual assertion that the European Union has been a bully towards small states, including the Caribbean, including St. Vincent and the Grenadines, in our quest to build a viable clean and well-regulated international financial sector,” the prime minister said.
“The European Union has bullied us, small states, into repeated submission by compelling and coercing small sates through unseemly threats,” he told lawmakers.
“The unwarranted bullying by the European Union has had two principal objectives: First, to coerce these small states to enforce or facilitate the enforcing of the tax regime of the European Union member states, and, secondly, to neuter, if not to subvert, undermine, to kill off completely, the quest of any or all of these small states to establish a viable and well regulated international financial services sector.”
Gonsalves said that the EU has “hypocritically and in their own narrow self interest repeatedly proclaimed that the international financial services sector of these small states constitute harmful tax regimes. That is to say, harmful to the European Union.
“They have vowed in all practical ways to crush the international financial services sector.”
The prime minister said that after the terror attacks of Sept. 11, 2001 in the United States, the EU added the issue of the international financial services sector being a medium for financing of terrorism.
“And always, before 911 and at the time when they were focusing on the international financial services as harmful tax regimes, they have always raised the ancillary banner of fighting money laundering.”
He said he wanted to emphasise that SVG and other Caribbean nations “have shown themselves to be practically committed, very seriously, to fighting the financing of terrorism and money laundering. And our record in these matters is outstanding.
“So this leaves the tax issue,” he said.
“And we have the European Union’s unacceptable, unconscionable, and, in my view, illegal, extra-territorial bullying.”
Gonsalves said the actions of the EU were extra-territorial “because they are doing things and enforcing their laws outside of their boundaries on the tax matter and they are doing so in a manner which goes beyond all bounds of diplomatic civility or reasonableness.
“So instead of, in the old days, using arms and espionage to get its imperial way, some in the European Union appear to be employing — the only description I can find for them is employing hired ruffians, that is the classic definition for bully boys, hired ruffians to enforce its policy of bullying.
“We have to speak it as we see it.”
Gonsalves said he used the word “bully” in the precise sense and that he ascribes this name to the EU on this matter.
“On many matters, we see eye-to-eye and we are friends. But when friends go out of the normal bounds to behave in this manner, you have to call it as it is.”
He said any standard oxford dictionary says a bully is a person or entity who uses strength or power of coerce others by fear.
The prime minister said that the EU had spoken of defensive measures they would take against countries that do not do their bidding.
He advised Members of Parliament to look up article 22 of the EU regulation 601 of 2017 of the European Parliament and council, which established the European fund for sustainable development fund guarantee and the guarantee fund.
“And there you will see a link between access to those funds and the question of the European Union’s list of non-cooperative jurisdictions,” Gonsalves said.
“So not only you are not going to have the offshore sector, but they are tying it to where poor countries, small countries, can access sustainable development monies.”
Gonsalves, however, noted that developed countries have an obligation to assist in funding sustainable development as part and parcel of what they agreed at the United Nations.
“But yet, it is being tied to extra-territorial arbitrariness on the part of the European union in relation to declaration of non-cooperative jurisdictions on the matter of taxation.”
The defensive measures were adopted by the EU in the context of the EU’s external strategy on taxation, Gonsalves said, adding that among these measures is a demand that countries reinforce monitoring of certain transactions.
“Well, when you monitor certain transactions, you hold them out longer, it’s a costly matter to trade. They say it is illegal because we have a WTO and regulations or the free movement of goods and services and you are using your own tax system — you are seeking for us to enforce your tax system. Why don’t you change your tax system? You’re keeping your tax system but you want to use defensive measures against us if we don’t do what you are saying.
“I don’t think you all have seen me in this house with such controlled anger, but it is not an anger out of any emotion, but is an anger which has arisen from an analysis of how iniquitous and bullying the European union has been in this matter. And they are our friends. They help us in this or that matter, but, on this one, they are uncompromisingly harsh.”
Gonsalves mentioned a number of the other defensive measures.
“There’s a whole list of them. In other words, cripple you and people who are doing business with you.
“Mr. Speaker this has been a naked power exercise by the European Union in its own interest.”
He, however, said that persons who don’t learn history properly would think it is an episodic happenstance.
“Historically, the countries that make up the European union have always functioned in their self interest with little or no compunction while at the same time, generally speaking, they have been masters at hypocritically proclaiming their values as virtuous and universal.”
He said that Europeans themselves, including Simon Jenkins in his book, “A Short History of Europe: From Pericles to Putin”, which was recently published, have come to the same conclusion.
“Despite the fact, I repeat, that in the complicated world, they are our friends. But, on this matter, our European friends have treated us terribly. We have been wronged.”
Gonsalves said that Europe is important, having 500 million people.
“But 500 million people is not the world. The world has seven and a half billion people. They are important to us historically and for all reasons and we mustn’t break that friendship but sometimes you wonder.”
Gonsalves said that he did not know that a day would come when he would have sympathy for a position taken by U.S. President Donald Trump in its relation to the European Union.
“I didn’t know the day will come when I would have great sympathy for president Erdogan of Turkey when he asserts that Europe doesn’t want to have anything to do with Turkey in the European Union because it is 80 million people who believe in Islam. If it was five million it would be different. Don’t want them on the streets of Paris or Bonn.
“Mr. Speaker, we have to put all of this in a historical context and also in the contemporary context of the oppression of black people, brown people and yellow people. “
He said that SVG has two options: “to surrender, roll over, or play dead before the rampaging bully and some of its hired ruffians. Our creative resistance that involves compromises, accommodation by a many-sided resistance in our own interest.
“And from my discourse, you see I am arguing for a many-sided resistance on matters in our own interest beyond this narrow question of taxation and we have to use all our diplomatic, all our various influences in this world which is no longer a unipolar European world. It is not a unipolar world anywhere at all. There are many centres, many poles of wealth and power.”
The prime minister said that, unfortunately, CARICOM and other small states have not responded in a coordinated or coherent manner.
“It appears as though some have surrendered or are inclined to surrender. Others have compromised and accommodated but without any or much resistance. It is not too late for coordinated creative resistance on a broad range of issues where our interest and those of the European Union do not coincide. Europe must not take the small states and the Caribbean for granted but our actions must speak louder than our words.”