Britain - Beyond the Montserrat relief scandal - the remains of a defunct empire

Oct/Nov 1997

The eruption of the Soufriere Hills volcano, on the southern Caribbean island of Montserrat, and the resulting plight of the island population might have gone largely unnoticed in Britain had it not been for the foul-mouthing of the islanders by Clare Short, the new Labour secretary for International Development. In fact, when the scandal generated by her comments broke out in late August, only a small section of the British population was probably even aware of the continuing existence of the so-called "British Dependent Territory" of Montserrat - to use the official jargon.

Clare Short responded to the islanders' demand for help after volcanic eruptions made thousands of them homeless, by warning that "money does not grow on trees" and that they would soon be seeking "a golden elephant". Finally she blamed their protests on a "culture of dependency". Given the British authorities' appalling record of negligence in Montserrat and the catastrophic situation of its population, this ill-tempered and callous outburst only exposed the criminal contempt and crude arrogance of the British state towards the people of its remaining colonies.

At the same time, it also brought back under the spotlight the existence and fate of the forgotten remnants of the defunct British empire.

For Montserrat is only one among the 13 dependent territories left under British rule. With the exception of Hong Kong, all the other British colonies which had remained after the postwar settlement were eventually granted independence between 1960 and 1983 - needless to say, in the best interests of the British bourgeoisie and on its own initiative in most cases. After 1983 these 13 territories remained, as leftovers of the empire, for a variety of reasons. The Falklands Islands, Gibraltar and the Chagos archipelago retained their status as instruments in Britain's great power games. Pitcairn and St Helena remained dependent due to their total isolation and utter deprivation while most of the others did so simply because so far no British government had found a way to get rid of them smoothly.

These territories were all more or less artificially populated centuries ago, during the colonial era, in most cases with slaves or indentured labour brought in for plantation work. None of them, however, would be economically viable as independent states today, at least not without a considerable reduction in the standard of living of their already hard-pressed populations. Some are too isolated geographically for them to be considered for integration into an existing or potentially larger regional economic entity.

As the case of Montserrat shows, the British government is not even prepared to face its responsibilities towards the population of these territories. As if to drive this point home, they were even stripped of their right to full British citizenship by the 1981 Nationality Act - with the exception of the Falklands and Gibraltar residents who got it back two years later, following the Falklands war.

So what are these remaining outposts of Britain's old and crippled imperial power, and what is their role and status in the machinery of the British bourgeoisie?

Montserrat - a record of criminal neglect

On 18 July 1995, for the first time in recorded history, Montserrat's Soufriere Hills volcano began erupting. Over the following two years volcanic activity continued, producing intermittent flows of steam and hot ashes.

The risks of such eruptions had been known for a long time in the string of archipelagos, stretching from Puerto-Rico to the coast of Venezuela, in which Montserrat is located. As far back as 1902 an eruption left 28,000 dead in the French colonial island of Martinique. Volcanic activity in Montserrat was detected even before it began by the observatories located both in Montserrat and in the neighbouring islands. It was subsequently closely monitored. Soon scientists declared that a devastating full-scale eruption could happen at any time. They argued that vital equipment, mostly located in the threatened southern part of the island should be relocated in the north, which they considered safe. They also recommended that housing and public amenities should be built in the north to prepare for the necessity of relocating the southern population, particularly that of the capital, Plymouth.

Nothing was done however. The northern part of the island was still a much valued money-spinner for the real-estate business, through the selling of plots on this "secluded paradise island". As to the British-appointed governor and the London-based senior civil servants in charge of overseeing the "Dependent Territories", they sat happily in their comfortable offices, ignoring the scientists' warnings and did nothing.

By mid-1996, however, the situation became so bad that the entire southern part of the island was declared a no man's land and the population began moving north, including hundreds of poor farmers. The wealthiest flew to safer horizons, in Britain, North America or other parts of the Caribbean. But the poor, who had neither the money to pay for an expensive air fare nor family to put them up in the north, had to live in makeshift shelters. This too was ignored by London. No funding or equipment was offered to provide the refugees with sufficient food and proper shelters with decent amenities. Entire families were supposed to survive on an insulting monthly allowance of 30 Eastern Caribbean dollars - the equivalent of around £7.50!

A much larger eruption finally took place this year, on 25 July. Although not a major eruption in volcanic terms, it left 10 dead and nine missing, mostly poor farmers who had gone back to their plots of land in threatened parts of the island - to grow the food which their food allowances could not buy them. By early August the whole of the former capital Plymouth was reduced to charcoal with ash deposits 4 feet high, while minor volcanic explosions were taking place almost every day. Soon the central region of the island was evacuated and declared unsafe. The exclusion zone now covered two thirds of the island.

By then, between 4 and 5,000 people, out of the original population of 11,000, still remained on the island, in its most northern part, the only area declared safe by scientists even in the event of a major eruption. The situation in the refugee shelters was becoming dramatic. While speedboats and helicopters were busy removing expensive equipment belonging to private companies, with all expenses paid by the British government, no- one in authority seemed to be thinking about the refugees' needs. Demonstrators took to the streets, demanding a clear commitment from Britain to provide relief and the removal of the island's chief minister and governor. There were angry clashes with the police.

Then came Clare Short's outburst. Adding insult to injury, George Foulkes, Short's under-secretary, suggested that everyone should leave the island for neighbouring Antigua, a former British colony. The arrangements then announced by Short went along the same lines. She reiterated a long-standing pledge that £41m had been set aside for the island, but only to rebuild the infrastructure, once the volcanic danger was over. She offered £2,400 plus air fares to every adult islander wishing to relocate elsewhere in the Caribbean (to be paid in instalments over six months) and a two- year work permit with full access to benefits for those wishing to come to Britain (but no citizenship). There was no money and no plan to provide the refugees remaining on the island with additional relief, let alone a decent permanent settlement in the safe part of the island. For the Montserrat poor it seemed as if the British government was simply jumping on the opportunity to finally dump them away from Montserrat without any hope of return, before rebuilding the island into a millionaire's paradise at some point in the future.

The scandal caused by Short's outburst had led foreign minister Robin Cook to take over from her ostentatiously. But while Cook did state that no-one would be compelled to leave the island, he did not move one inch from Short's plans. This hypocritical charade reached a climax when it was stated that in this field too, the Labour government intended to stick to the spending targets defined by the previous Tory administration. The £41m pencilled- in under John Major would not be increased. As Short said shamelessly, "it is not our fault if the volcano has blown up" - of course, not even a volcano, let alone the plight of a few thousand islanders in Montserrat, will be permitted to endanger Labour's spending pledges to the British bourgeoisie. And if, by the same token, the island's complement of impoverished families could be scattered across the Caribbean, so much the better, no doubt... for British business.

British money-spinners in the Caribbean

Britain's ambivalent attitude to Montserrat, and more generally to many of its Caribbean colonies is not new. In the postwar world market, colonial control was no longer necessary in order to allow the British bourgeoisie to carry on milking its smaller colonies. At the same time, these colonies were proving expensive to the British state, costing millions of pounds in subsidies.

Hence the various attempts by British governments to create some sort of framework for their independence, like the various attempts to put several of the Caribbean colonies into an artificial federation. All these attempts were also aimed, of course, at creating a pro-British Caribbean bloc which would be less likely to be absorbed in the American sphere of influence. In any case, they all failed, often because the local wealthy families - like the Bramble family which virtually runs Montserrat as its private property - preferred to remain kings in a small colony rather than become medium fry in a larger federation.

For all her rhetoric about reviving the grandeur of the British empire, between 1981 and 1983 Thatcher did at least as much as her Labour party predecessors, if not more, to dispose of the smaller British Caribbean colonies: Antigua and Barbuda, St Kitts and Nevis, and Belize all became independent during these three years, while similar attempts failed with Anguilla and the Turks and Caicos Islands.

After this there were no more attempts to push Caribbean colonies towards independence. On the contrary, with several of them, including Montserrat, the links with Britain were tightened. Again, the main reason for this change seems to have had little to do with imperial grandeur. Rather it was linked to the huge financial bubble which developed in the British Caribbean colonies in the 1980s.

Contrary to common claims, the massive amount of capital which flew out of Britain after Thatcher relaxed currency controls, in 1979, was not used for long-term investment in the US economy. Capitalists and finance companies were merely looking for ways of evading taxation. So a large chunk of this outflow went straight to those British colonies where these funds could enjoy tax-free capital gains and income, almost no financial controls and tight bank secrecy laws. And they preferred the colonies closest to the USA, the world's largest capital market. This initiated the sudden and fast expansion of the business and finance sectors in the British Caribbean dependencies. This trend got another boost from 1984 onwards due to two additional factors: the financial deregulation worldwide, which increased the fluidity of capital, and the flow of British-owned capital out of the USA when the very advantageous mutual tax arrangements on financial gains between the USA and Britain came to end.

Thus, from only three banks in 1980, the small island of Anguilla found itself with 96 registered banks in 1983, only one of which ever had a vault. In addition, by 1989, the island's register included 3,500 companies, for a total population of 8,000 at the time! By that time Montserrat had 347 banks, Turks and Caicos 6,729 registered companies (14,000 population), the British Virgin Islands 22,000 companies (12,700 population). The top of the tax-haven list, however, was by far the Cayman Islands, with 515 banks and 18,000 companies, with total assets of over $200bn. All but four of the world's 50 largest banks had subsidiaries registered in the Caymans. But out of the total 515 banks, only 60 or so had actual offices and employees on the island.

As it turned out, this huge flow of capital into the British Caribbean colonies was not all that respectable. Soon it became obvious that a significant part of this feverish activity was due to the casual laundering of drug-money. This led to a long series of scandals, not the least of which was the arrest in Miami of the chief minister of the Turks and Caicos Dependent Territory, together with a member of his cabinet, on major drug offences. These scandals triggered a series of high-level investigations which resulted in the tightening of the colonies' financial controls and the closure of 400 banks and finance companies in Montserrat, and all but one of Anguilla's offshore banks.

These investigations and closures did not stop the wave of scandals, however. In 1991 came the collapse of the Bank of Commerce and Credit International, which exposed the largest bank fraud ever, in the history of international finance. As it happened, BCCI's headquarters were split between two tax havens - Luxembourg and... the Cayman Islands.

Did this long string of financial frauds and scandals bring to an end the role played by the British colonies in Caribbean finance? Not at all. At the beginning of 1997, the total assets deposited in the Cayman Islands alone reached over $500bn, making it the world's fifth largest offshore financial centre, with almost 10% of the estimated total of offshore deposits in the world. The British Virgin Islands have become an established centre of operation for international life insurance conglomerates. As to the Bermudas, they are now home to one of the world's major secondary share markets, with the recent acquisition of the secondary listings of some multinational giants, including Jardine-Matheson, the Hong Kong-based and British-owned conglomerate. Does it mean that British Caribbean finances are now healthier? Certainly not, judging by a recent report of the National Audit Commission on the Dependent Territories which points to "widespread laxity and a failure to administer government finances with due respect for the law" and warns of the risk to Britain of exposure to "financial sector failures, corruption, drug trafficking, money- laundering".

Nor is the state of the finance sector equally rosy in all British colonies in the Caribbean. British financial papers did shed a few tears over the situation in Montserrat - not over the plight of the refugees, but over the recent decision of Barclay's Bank to close down its subsidiary in Montserrat, leaving the island with only one remaining international bank. And the banking situation in Anguilla is said to be gloomy too.

But healthy or gloomy, money market games in most of the British Caribbean colonies remain extremely profitable for the British bourgeoisie, specially in view of the likely loss of at least some of the advantages of tax havens such as the Channel Islands and the Isle of Man due to European integration. Besides the legion of financial consultants offering what they call "asset protection" (i.e. sophisticated tax evasion) all agree that one of the best selling points of the British colonial tax haven is their "political stability", due precisely to British rule. So, for the time being, it is unlikely that the British government will want to pull out and deprive its capitalist masters of such money- spinners.

Leftovers of great power games

Fifteen years ago, Thatcher sent out the Navy in a war "for the Empire", or so she claimed. But was it?

When Argentina occupied the Falklands Islands in April 1982, no- one had the slightest doubt as to the actual value of the island's sheep-based economy to the British bourgeoisie and its state. In fact it was an absolute loser, certainly not worth the massive expenditure of sending a large Navy task force to the other side of the globe, and neither was it worth the political risk involved in a war which resulted in a thousand casualties.

On the other hand, it is clearly the case that Thatcher was able to make political capital at home out of this war. Her success in this war was instrumental in allowing her to gain additional support among the electorate and to emerge, for the subsequent seven years or so, as an all-powerful and undisputed leader in her own party.

Yet, beyond the political dividends which Thatcher drew out of it afterwards, the Falklands war was not about Britain or the remnants of the British empire. It was primarily a war about the imperialist world order as a whole, a reminder that nothing can be altered in this order, not even the ownership of a barren piece of rock, without the prior agreement of the imperialist powers - just as, in the early 1990s, the Gulf war was about policing Iraq's challenge to the imperialist world order and not about confronting Saddam Hussein's dictatorial regime. Compared to the stakes involved in Kuwait, the strength of the Iraqi army and the explosive context of the Middle-East, the stakes involved in the Falklands were negligible and the weakened Argentinian military were only small fry. This was why, unlike in the Gulf war, the American leaders remained on the sidelines, confining themselves to providing logistic and diplomatic support to Thatcher's task force.

Having gone to such extremes under the pretext of "saving" the 2,000 British Falkland Islanders from the "evil" of Argentinian occupation - moreover, on the basis of a cross-party agreement - it would be politically difficult for any British government to abandon the Falklands while the memories of this war are still vivid. Even if this means footing the bill for a permanent garrison which is larger than the island population itself, and even if, despite frantic hopes to the contrary, it is now likely that no major oil finds will be made in the vicinity to justify the war retrospectively, 15 years afterwards. Ironically, although a symbol of Thatcher's ultra-liberalism, the Falklands are, among all the inhabited British colonies, most dependent on the state - not just due to its garrison, but also due to the fact that the island is so poor that the British state remains by far the largest landowner and employer, as well as the only provider of all forms of energy, water, etc..

Besides the Chagos archipelago, which includes the US naval base of Diego Garcia - conceded in 1967 to the US Navy for 50 years - and St Helena - a tiny impoverished island lost in the middle of the Atlantic, but attached to the British naval base of Ascension, which was given a new lease of life by the Falklands war - Gibraltar is the other main remaining testimony of British imperial grandeur.

Up until the 1980s, Gibraltar was primarily a British military base inherited from the 18th century, in which the army employed half of the workforce and represented 65% of the economy. With the drastic defence cuts of the early 1990s, the army has shrunk to the point where its presence is now largely symbolic, accounting for under 6% of the colony's workforce. Yet no British government has been prepared to suggest the slightest concession over the status of Gibraltar, which is justifiably claimed by Spain. Even today Labour's foreign minister Robin Cook is embroiled in an absurd quarrel with Spain, threatening to veto Spain's accession to full membership of NATO unless the Spanish government allows British planes in and out of Gibraltar to fly over Spanish territory. In theory the UN have decreed the mandatory decolonisation of Gibraltar by the year 2000, but there is no sign of the British government being prepared to hand it over to Spain - using the pretext of a referendum dating back to 1967, in which Gibralterians voted to retain British nationality - nor is there any sign of Spain being prepared to allow an independent Gibraltar - on the grounds that the 1713 treaty conceding Gibraltar to Britain gives them priority in case of British withdrawal. So the charade will probably go on for some time still.

Forced into "dependency"... for the time being

The folding up of the British empire, like that of the other colonial powers, left a long trail of drastically impoverished, often unviable countries across the Third World. In some cases, it left powderkegs which resulted in catastrophic explosions, as was the case in India, Sri Lanka and Nigeria for instance - and there are still a few others which are simmering but have not exploded yet, in the former British African colonies in particular.

Today the few last remaining outposts of the British empire may not represent such explosive potential, if only for reason of size. Some, like Gibraltar or the Falklands verge on the ridiculous - although in the latter case, an extremely costly absurdity in every respect. Others are merely colonial scars dotted around the world, each with its particular legacy of corruption and poverty. This is true even of the most "successful" among these colonial remnants. Not only are they plagued with corruption as pointed out by the British authorities themselves, but even their glossy GDP/head figures only hide the poverty of the vast majority of their populations, their enslavement to international financial bingo and their exposure to the potentially dramatic consequences of even the slightest blip in the merry-go- round of floating capital.

This means that, indeed, the poor populations of Britain's last colonies have no other option, for the time being, than to live in "dependency" (as Clare Short would put it), as long as the entire world is not welded together into a single rationally organised economic entity. That is not their own choice, however, but what they have inherited from the criminal policies and blind search for profits of British colonialism. So why should they put up with the contemptuous insults of arrogant London politicians?

The British state squandered several billion pounds and hundreds of lives under the fraudulent pretext of caring for the "freedom" of 2,000 Falkland Islanders, in 1982. And Blair's government should be allowed today to use the pretext of budget constraints to refuse a few dozen million to help out twice as many Montserrat poor whose livelihood has been devastated by a volcanic eruption? The islanders would be right not to go along with this outrageous penny-pinching and they deserve the unreserved solidarity and support of the British working class.