OT 410: Letter to the Chairman of the Committee from Chris Bryant MP, Parliamentary Under- Secretary of State, Foreign and Commonwealth Office


overseas territories: memoranda


The Clerk of the Committee has requested up-dates on recent developments in the Overseas Territories ahead of the Committee's meetings with Overseas Territory leaders on 10 December and with the Governor of the Turks and Caicos Islands on 8 December. I am replying as Minister responsible for the Overseas Territories.


I attach two memos addressing the issues that you asked us to cover together with additional information that the Committee might find helpful.


I am having bilateral meetings with all Territory leaders while they are in London and will be chairing the Overseas Territories Consultative Council meeting on 9 December. I am also hosting a reception for Territory leaders and guests at Lancaster House that evening to which you and Committee members have been invited. I hope you will be able to join us.



30 November 2009


recent developments in the uk's overseas territories


This memorandum is provided in response to a request from the Foreign Affairs Committee for information on recent developments in the UK's Overseas Territories in preparation for the Committee's meeting with Overseas Territory leaders on 10 December 2009.




Anguilla Paragraphs 1-3


Bermuda Paragraphs 4-10


British Virgin Islands Paragraphs 11-12


Cayman Islands Paragraphs 13-18

Falkland Islands Paragraphs 19-28


Gibraltar Paragraphs 29-40


Montserrat Paragraphs 41-44


Pitcairn Paragraphs 45-50


St Helena Paragraphs 51-52


Ascension Island Paragraphs 53-55


Tristan da Cunha Paragraphs 56-59


Antarctic Paragraphs 60-61


South Georgia and South Sandwich Islands Paragraphs 62-64


British Indian Ocean Territory Paragraphs 65-68


Economic & Financial Issues Paragraphs 69-76


Cenotaph Remembrance Service Paragraphs 77-78


Overseas Territories Consultative Council Paragraphs 79-81


Turks and Caicos Islands (Points if raised) Paragraphs 82-83



Constitutional Negotiations


1. No formal discussions are scheduled at present. The Government of Anguilla have requested that we wait while they undertake local consultation on their proposed amendments to the constitution. We have prepared a position paper and this was handed to the Chief Minister in July 2009.


Public Finances


2. The global economic crisis has badly affected the Anguillian economy with a reduction in tourist numbers and an impact on the construction industry. Anguilla did build up its reserves, but not sufficiently. It is now faced with a difficult economic situation and it has sought borrowing permission, despite already being in breach of agreed borrowing guidelines. The UK agreed to allow some flexibility in the guidelines to alleviate the crisis on the understanding that the Government of Anguilla would pursue widening its tax base to provide more revenue predictability. The FCO is supporting an independent revenue study to ensure this is dealt with urgently and effectively. The Government of Anguilla is also seeking to restructure existing debt through concessional borrowing from the Caribbean Development Bank.


Money Laundering


3. The Government of Anguilla passed a Proceeds of Crime Act in 2009 to help combat financial crime. The UK Government continues to encourage Anguilla to make progress on those tax, regulatory and anti money laundering/counter terrorism financing issues identified in the recent Foot Review and also the Caribbean Financial Action Task Force evaluation completed in July 2009. The Government of Anguilla are committed to meeting international standards on tax transparency. They have signed four Tax Information Exchange Agreements to date and have sufficient texts initialled to allow them to meet the standard once signature has taken place.




4. The bilateral relationship between the UK and the Government of Bermuda is generally good but has come under some strain this year as a result of the Uighurs issue.


Royal Visit


5. HM The Queen and HRH The Duke of Edinburgh visited Bermuda from 24-26 November 2009, en route to CHOGM, to help Bermuda to celebrate the 400th anniversary of the first settlement of Bermuda. The Foreign Secretary accompanied. The visit was enthusiastically received by the people of Bermuda.


Transfer of Former Detainees from Guantanamo Bay


6. In June 2009 the Government of Bermuda (Premier and Immigration Minister only) negotiated secretly with the USA the transfer of four former detainees ("Uighurs" - Chinese Muslims) from Guantanamo Bay to Bermuda without consulting the UK. The released detainees arrived on 11 June and have been housed in a guesthouse under Bermuda Government supervision since. The former detainees are not subject to travel restrictions on the island but do not have travel documents enabling them to leave. They have been given (temporary) work at one of the island's golf clubs.


7. The Government of Bermuda acted outside their competence, as external affairs and internal security are matters reserved to the Governor under Section 62 of the 1968 Bermuda Constitution. HMG has also reviewed the 1968 General Entrustment which delegates authority to the Government of Bermuda to conduct external relations in certain limited areas. In addition to notifying and consulting the UK on any plans to engage in bilateral negotiations, the Government of Bermuda is now also required to provide an annual report summarising the activities which have taken place under the entrustment. The new entrustment takes effect from 1 December 2009.


8. The arrival of the Uighurs from Guantanamo led to much public concern on the island, culminating in an attempted vote of no confidence in the Bermuda Government in the House of Assembly, which the Government survived by 22 votes to 11. The Social Affairs Minister, Mr Dale Butler, resigned.


9. On 29 September the Premier met the Foreign Secretary briefly at the Labour Party Conference. The Foreign Secretary told the Premier that he expected him to work with the UK to resolve the issue of the four Uighurs. On 1 October, the Premier met Chris Bryant MP, Minister responsible for the Overseas Territories, who expressed his "anger and profound disappointment" at the way the Government of Bermuda had acted. We are in touch with the US authorities about a longer-term solution and have made it clear to the Premier that we expect him to support this work.


Operational Control of Bermuda Police Service (BPS)


10. The Premier has campaigned for operational control of the BPS, and criticised its performance in dealing with the current spate of gun/gang related crime, noting that under the Constitution the Governor has responsibility for policing. The Governor is aware of public concern and takes this responsibility seriously. However, it has been made clear to the Premier that the FCO has no plans to change control of the police in Bermuda or any other Overseas Territory. The Governor works closely with the BPS and the Bermuda Government to tackle crime. Police performance is improving. The Governor is also encouraging assistance to the BPS from the West Midlands Police whose Birmingham Reducing Gang Violence Group could provide the BPS with valuable best practice. US police forces with experience in tackling gun/gang crime are also being approached.



British Virgin Islands


Deputy Governor


11. We continue to impress upon the Premier the importance we attach to the British Virgin Islands Government engaging constructively with the Deputy Governor. The Premier has opposed the appointment of the Deputy Governor since she took up office in September 2008 and there has been no evidence that he or his Government intend to cooperate with her in the Governor's absence, when she has been prevented from holding Cabinet and National Security Council meetings in the absence of a quorum. Gillian Merron visited in April and raised this issue and urged reconciliation, and spoke about good governance in general, with the Premier.


Sri Lankan Asylum Seekers


12. Six Sri Lankan migrants, three of whom have been in detention in the British Virgin Islands since March 2008 and three who have been in detention since January 2009, sent a message to the Governor's Office on 16 August claiming asylum. Although immigration is a matter for the British Virgin Islands (BVI) Government, the FCO is in touch with the UK Border Agency about how best to provide support to the BVI Government to enable them to process the applications as quickly as possible, given the length of time the Sri Lankans have already spent in detention, and in line with international standards. A representative from the United Nations High Commissioner for Refugees visited the Territory in October to carry out initial interviews with the detainees.


Cayman Islands




13. There was a general election in the Cayman Islands on 20 May 2009. The opposition United Democratic Party (UDP) won 9 of the 15 seats in the Legislative Assembly against the incumbent People's Progressive Movement (PPM), who kept five seats. The one successful independent candidate elected to join the UDP. The results therefore constitute a reversal of the 2005 election, when the then UDP administration was voted out, with the parties taking 5 and 10 seats respectively. The next elections are due to be held in 2014.


14. The UK/Cayman relationship has come under some strain recently. Criticism of our position over Operations Tempura and Cealt and government borrowing (paragraphs 17 and 18) has been strong. Combined with our concerns about the way the government is managing the port development project (paragraph 19), this has led to public accusations by the Premier that the UK Government is micro-managing and seeking to halt progress towards economic recovery. The Director for the Overseas Territories, FCO, visited in November and met, amongst others, the Premier and the Deputy Governor. He conveyed clear messages about the UK Government's policy on the key issues, including good governance related topics (eg. transparency and accountability) and confirmed UK government support for the Governor.


Constitutional Review


15. The Cayman Islands Constitutional review, which started in 2001, concluded in February 2009. The Constitution, which includes for the first time a Bill of Rights, was put to a public referendum at the time of the elections on 20 May and was accepted by 63% of those who voted. All six electoral districts voted in favour of the Constitution. The Constitution was approved by the Privy Council on 10 June and came into force on 6 November. The Bill of Rights will not enter into force until 2012 (three years after the Appointed Day). This will give the Cayman Islands Government sufficient time to complete the necessary preparations to get it in place and to provide training for public servants. In the meantime the UK Government and the Cayman Islands Government will continue to monitor human rights compliance.


Police investigation - Operations Tempura and Cealt


16. Operation Tempura, the first phase of an investigation into corruption within the Royal Cayman Islands Police Service, which began in September 2007, concluded on 7 October with the acquittal of a Deputy Police Commissioner on charges of perverting the course of justice and misconduct in public office. On 12 October the Auditor General published his review of expenditure on the police investigation. This combination of non-guilty verdicts and criticism of the costs of the investigation attracted some criticism, including by members of the Legislative Assembly (and in particular the opposition party, who were in power and therefore party to the decision to request the investigation) of the Governor's role in overseeing the investigation. This led to the tabling of a motion calling for Cayman Islands Government (CIG) to consider taking legal action against the UK Government and suggesting that the Governor may have committed misfeasance in public office. The motion was rejected. Chris Bryant issued a statement on 23 October welcoming this decision, supporting the Governor and rejecting the suggestion that the UK Government should meet the costs of these investigations, which are a matter for CIG.


Economy and public finances


17. The Cayman Islands economy is heavily dependent on financial services, tourism and related construction activity. The global economic slowdown has affected all three, with the result that the CIG's revenues were severely reduced. This led to a large and unforeseen deficit putting CIG in breach of borrowing guidelines which are agreed between the FCO and Overseas Territories Governments. In October, following assurances from CIG about its plans to address the economic downturn and restore public finances, and subject to a number of conditions, including that CIG undertake an independent assessment of options for new revenue measures, the FCO approved a request for further borrowing of CI$275m. This permission was granted on the clear understanding that, other than in very exceptional circumstances, the UK Government would be unlikely to be prepared to agree any further borrowing within this financial year.


Port Development Project


18. The Cayman Islands Government has announced plans to develop cruise ship and cargo berthing facilities. Whilst we welcome initiatives to reinforce one of the Territory's key revenue streams, and understand CIG's desire to achieve this as quickly as possible, we are concerned about the way this project has been managed, in particular the tendering process and the impact that it will have on the marine environment. Latest reports indicate that the first phase of work may start in the first quarter of 2010, although an Environmental Impact Assessment (EIA) has not yet been completed.

Falkland Islands


Constitution and Elections


19. The new Falkland Islands Constitution, on which the FCO Minister for the Overseas Territories was in correspondence with the Committee, came into force on 1 January 2009. Elections were held on 5 November 2009 under the terms of the new Constitution and all eight elected members changed on the back of manifestos largely based on domestic issues.


Relations between the Falkland Islands and Argentina


20. Argentina continues to challenge the UK's sovereignty of the Falkland Islands at every opportunity, and have reiterated their position of not wishing to co-operate on areas of joint economic interest, such as fisheries and hydrocarbons.


21. However, two long-planned Argentine next of kin visits took place on 3 and 10 October 2009. The governments of the UK, Argentina and Falkland Islands worked extremely closely to ensure that the visits passed off well and with humanitarian objectives in mind. There was positive media coverage both locally and in Argentina, with consistent praise for the warm welcome, handling and organisation of the events by the Falkland Islands Government, MOD and the islanders in general.




22. The Government remains committed to supporting the Falkland Islands in developing their hydrocarbons sector.


23. In 2008, the UK Government approved the Falkland Islands Government's request to resume Open Door licensing for offshore oil exploration and production in five blocks. Companies have completed 2D, 3D and, in some cases Controlled Source Electro Magnetic (CSEM) surveys in preparation for drilling exploration wells.  They have also conducted environmental surveys to assist with the preparation of environmental impact assessments that require approval before exploratory drilling consent is given.


24. Desire Petroleum exchanged a letter of intent with Diamond Offshore Drilling (UK) Ltd on 10 September 2009, for a unit to undertake an exploratory drilling campaign in the North Falkland Basin, starting in February 2010.




25. Both the FCO and the Ministry of Defence (MOD) recognise the airbridge's importance to the social and economic development of the Falkland Islands and south Atlantic Overseas Territories. However, the MOD is required to recover the costs of providing the airbridge service to the South Atlantic Islands. The under-utilisation of seat allocations by South Atlantic Islands resulted in a MOD review in mid 2009. After consultation and negotiation with the FCO, the decision was made to increase fares, albeit a lower increase than initially planned. These fare increases will apply from 1 December 2009, but will continue to be reviewed quarterly.


UK submission to UN CLCS for Falkland Islands, South Georgia and South Sandwich Islands


26. On 11 May 2009, the UK submitted a claim to the UN Commission for the Limits of the Continental Shelf (CLCS) for an extended continental shelf around the Falkland Islands, and around South Georgia and the South Sandwich Islands. Argentina also submitted a claim to the CLCS, in respect of its extended continental shelf, on 21 April 2009. The Argentine submission contains data which covers the Falkland Islands, and South Georgia and the South Sandwich Islands and an area appurtenant to the Antarctic.


27. On 6 August 2009, the UK lodged a note verbale with the United Nations, containing our observations on the submission made by Argentina, and reaffirming our sovereignty position. The CLCS announced on 1 October 2009 that it will not examine the Argentine data in respect of the Falkland Islands, South Georgia, South Sandwich Islands or the continental shelf appurtenant to Antarctica. Effectively those parts of the submission will be put on hold.




28. In November 2008, other States Parties to the Ottawa Convention (anti-personnel mine ban convention) granted the UK a ten-year extension to our March 2009 deadline to clear the mined areas in the Falkland Islands. The Government decided to proceed with the clearance of four mined areas in the Falkland Islands. A procurement process began almost immediately. The Falkland Islanders were fully consulted during this procurement process, and they have a seat on the National Mine Action Authority (NMAA) which oversees the project. Following a rigorous procurement exercise, the government signed a contract with BACTEC International Limited on the 9 October. The government also appointed C. King Associates (through competitive tender) to set up a De-mining Project Office (DPO) in the Islands.  Their job is to run the accreditation process for BACTEC before work starts and to carry out quality control and assurance checks during the project to ensure the land is cleared safely and to the required depths.  The DPO is an important link between the Falkland Islands community, the FCO and the project. Both teams recently arrived on the Islands and are undergoing accreditation procedures, with work expected to start in the last week of November.  The project should be complete by April 2010.






29. The Trilateral Forum of Dialogue on Gibraltar met at Ministerial level in Gibraltar on 21 July. This represented the first visit to the Rock by a sitting Spanish Minister in 300 years. The three Ministers (Caruana for Gibraltar, Moratinos for Spain, Miliband for the UK) reaffirmed their commitment to the Trilateral process, and formally signed off a framework document detailing six new areas for cooperation. They also agreed a list of 8 'concrete' outcomes to be delivered before the end of the year. We have since held the next round of official level talks in London on 16 October. At this meeting the three parties agreed a work plan for delivery of July's commitments and the wider trilateral agenda. 


Sites of Community Interest


30. The Government of Gibraltar (GoG) has lodged a legal case against the European Commission seeking annulment of a Commission Decision to the extent that it lists a Site of Community Interest proposed by Spain (under the EU Habitats Directive) which overlaps an existing UK designated site and overlaps with British Gibraltar Territorial Waters. The UK has been granted permission to intervene in support of the Government of Gibraltar's legal case and Spain that of the Commission. The Commission has argued that GoG's case is inadmissible on the grounds that Gibraltar cannot show 'direct and individual concern'. The Court has indicated that it will consider admissibility as a preliminary issue in January.


31. At a Habitats Committee meeting on 15 October a Decision to update the list of sites (including the Spanish site) was discussed and voted on. We voted against the Decision but were unable to prevent its adoption as voting was by QMV.   We have continued to express our views to the Commission and Spain on the Spanish site which the UK does not recognise as valid.


32. This issue remains highly sensitive and high profile in Gibraltar


State Aid


33. Two cases brought in the Court of First Instance (CFI) by the Government of Gibraltar and the UK respectively against the Commission's decision (under the EC's State aid rules) on Gibraltar's proposed tax corporate reforms resulted in the Court finding in Gibraltar's favour. The Commission and Spain have appealed the CFI's findings to the ECJ. Spain is challenging the CFI's findings in relations on both regional and material selectivity whilst the Commission's appeal focuses solely on material selectivity. The case is of considerable importance not just to Gibraltar but also to the UK and the UK has intervened in support of Gibraltar.


Age of Consent


34. In Gibraltar, a Private Member's Bill in the summer aimed at equalising the age of consent was defeated. In November, the Chief Minister and Attorney General issued Court Proceedings in which they seek a declaration from the Supreme Court as to whether, and if so how, the difference in treatment between homosexual men on the one hand and heterosexuals and lesbian women on the other, as regards the differing ages of consent for sexual intercourse, buggery and sexual activity in the Criminal Offences Act, violates the Constitution. The case awaits a hearing.


35. HMG continues to take a close interest in this matter. We continue to encourage all Overseas Territories to take steps where they are in breach of international obligations.


Chief Justice


36. Following complaints from the Gibraltar Bar about the Chief Justice's conduct and suitability for office, in accordance with Gibraltar's Constitution the former Governor decided in accordance with the Constitution in 2007 to establish a tribunal to advise on whether there were sufficient grounds to refer this matter to the Judicial Committee of the Privy Council for determination. He suspended the Chief Justice from office pending outcome. In November 2008, the tribunal, chaired by Lord Cullen, concluded that the Chief Justice's conduct "repeatedly fell far short of what befitted the dignity of his office" and that there were grounds to refer the matter to the Privy Council to determine whether he should be removed from office. Following the tribunal's report, the Governor requested that Her Majesty refer the matter to the Judicial Committee of the Privy Council to determine. 


37. In November 2009, the Privy Council delivered their majority advice that the Chief Justice be removed from office.  In accordance with Gibraltar's Constitution, the Governor asked Gibraltar's Judicial Service Commission for advice on whether the Chief Justice should be dismissed or required to resign.  The Commission recommended that he be dismissed.  The Governor, on consideration of that advice, wrote to the Chief Justice to inform him that he was dismissed from office.


Financial Regulation


38. Gibraltar has recently concluded 13 Tax Information Exchange Agreements and thus substantially implemented the OECD's internationally agreed tax standard.  As a consequence it has been removed from the OECD's 'grey list'.  HMG continues to support the Government of Gibraltar's efforts to sign further agreements.


39. Gibraltar's successes and achievements were recognised in the recent UK-sponsored Independent Review of British Offshore Financial Centres. Gibraltar is compliant or largely compliant with 65% of the FATF recommendations and participates in the EU's Third Anti-Money Laundering Directive. We continue to work with the Government of Gibraltar on the introduction of counter-financing of terrorism legislation.




40. The Lisbon Treaty comes into force on 1 December 2009, one of the effects of which will be a shorter infractions process.  This has both procedural and resources implications for the Government of Gibraltar.  They are aware and we are working with them to ensure the systems are in place to deal with these requirements.






41. Montserrat held a general election in September 2009 following a request from the former Chief Minister for the Governor to dissolve the Legislative Council. The former Chief Minister felt that his cabinet did not support him or his policies. At the elections the Movement for Change and Prosperity (MCAP) party won 6 out of 9 seats in the Legislative Council. The leader of MCAP, Reuben T Meade, became Chief Minister.


Constitutional Negotiations


42. The constitutional negotiations between HMG and the Government of Montserrat are at an advanced stage. The process is currently on hold due to the pressing need to focus on development of the island. The Chief Minister, Reuben Meade, has been provided with the latest draft of the constitution following the last round of talks in 2008 so that he and his cabinet can familiarise themselves with the current status.


Money Laundering


43. The Government of Montserrat have drafted a Proceeds of Crime Act. They are currently passing this legislation through the House of Assembly in preparation for their Caribbean Financial Action Task Force evaluation scheduled for February 2010. The UK Government continues to encourage Montserrat to meet the highest international standards in their (small) financial services industry. HM Revenue and Customs is providing technical assistance to facilitate the signing of Tax Information Exchange Agreements with other countries. Montserrat, however, is not a priority country for other jurisdictions so finding sufficient partners to negotiate agreements is proving difficult.


Infrastructure Development


44. Work continues to progress on the development of a new capital town (Little Bay) in line with the Government of Montserrat's Sustainable Development plan 2008-2010. The Department for International Development is supporting a number of projects under the Tourism Development Plan to help attract the tourist market. These include the preservation and restoration of historical buildings and the development of walking tours. These projects are implemented by the Montserrat Tourist Board and the Montserrat National Trust. In addition, DFID through the Government of Montserrat continues to provide support to the Montserrat Development Corporation in the development and sale of land to allow developers to begin building houses, condominiums, a hotel and other businesses.  A new long-term ferry service is due to begin in December 2009 for the tourist season, and the construction of a port continues to be of importance to enable private craft and larger tourist boats to arrive on the island. There are other smaller infrastructure projects continuing alongside these which are important for the people of Montserrat including education, health and roads infrastructure.






45. We are currently consulting with the Pitcairn Island Council on a new Constitution for the island. The new Constitution would replace a 1970 Order (as amended) with a document that is better able to serve the modern needs of Pitcairn. It includes a Bill of Rights, and recognises the role of the Island Council. The Minister wrote to the Committee on 15 September providing more detail and attaching a draft copy of the Constitution. We will contact the Committee again when next steps are clear.


Government Reform


46. At the beginning of April 2009 a new governance structure was established for Pitcairn. The new structure devolves more local government responsibility to the Island Council. Systems have been established to improve government recruitment and introduce performance management, and policies covering child safety and other important areas have been refined.


Access and Infrastructure Development


47. The Pitcairn Island Government has entered into an agreement with a contractor to provide a new, more frequent and predictable shipping service to Pitcairn. The service will make eight passenger calls at Pitcairn each year, and four freight services direct from New Zealand. The new service will substantially improve access to the island.


48. HMG (led by DFID) continues to work with Pitcairners to plan two major infrastructure projects: a wind power system for which DFID expects to sign a design and installation contract with a Tasmanian firm early in 2010, and a new harbour development project to be co-financed with the EU.


Child Safeguarding


49. We commissioned a further review of child safety on Pitcairn, which was undertaken by independent UK expected in January - March 2009. Their report made clear that more work needed to be done to ensure the safety of children on Pitcairn and made a number of recommendations for improving safeguarding measures. We have already implemented several of their recommendations and are actively working on the others.


Compensation Scheme


50. The Pitcairn Compensation Scheme awarded a total of just over 160,000 to eight women who suffered criminal sexual abuse on Pitcairn, and who cooperated with the authorities in bringing the assailants to justice. The Minister wrote to the Committee on 21 July to inform them of the successful conclusion to the scheme.



St Helena




51. A new Constitution Order for St Helena, Ascension and Tristan da Cunha was approved by the Privy Council on 8 July 2009, following extensive consultations on the three islands and expressions of support from the three Island Councils. The support was unanimous on Ascension and Tristan da Cunha and a majority in the case of St Helena. The Order came into force on 1 September 2009. Under the new Constitution, the Territory is no longer known as St Helena and Dependencies but is known as the Territory of St Helena, Ascension and Tristan da Cunha. For the first time, the Constitution contains a Bill of Rights and has separate chapters for Ascension and Tristan da Cunha. Ministers for the Overseas Territories wrote to the Committee with more details on 18 May and 2 July this year.


Air Access Project


52. On 8 December 2008 the Secretary of State for International Development announced a pause in the negotiations on the airport project to allow consideration of issues of concern in the light of the changed economic climate. A consultation exercise was then held from 9 April 2009 to 30 July 2009 with all interested parties invited to participate. The Consultation Report was published on 29 October 2009. The Secretary of State for International Development is now considering the results of the consultation carefully and it is his intention that a decision will be made by the end of the year.


Ascension Island




53. See Para 51 St Helena Constitution.


Island Council


54. A new Ascension Island Council was elected on 14 October 2008 and sworn in on 27 October 2008. The Council approved the new Constitution Order, has been working on a review of Ascension Island Government, and has been active in giving advice on various pieces of legislation.




55. A dispute between the MoD and Ascension Island Government (AIG) is having a serious impact on AIG's budget. The dispute is a long running dispute over the amount of property tax paid by MoD. The FCO is doing all it can to facilitate a resolution to the dispute, including a dialogue at Ministerial level. AIG is making a series of efficiency savings but more drastic cuts to services will be needed to prevent insolvency if no resolution is found to the dispute. More details were given to the Committee in an email dated 3 November 2009 to the Second Clerk of the Committee.[1]


Tristan da Cunha




56. See Para 51 St Helena Constitution.


Strategic Sustainable Development Plan


57. The Tristan Government developed a Strategic Sustainable Development Plan (SSDP) in March 2009 with the support of an FCO funded consultant. The plan includes a number of objectives for securing long-term financial self-sufficiency. Priorities include increasing existing income streams (including tourism, stamps and coins), renegotiating the lobster concession on more favourable terms, and restructuring Government. A comprehensive review of the Tristan public sector was completed by an FCO funded consultant in May 2009. This is now informing Government reform work.


Access to EU Markets


58. The Tristan Government, supported by the FCO, is making good progress towards gaining access to EU markets for the sale of Tristan lobster. This is an important goal for Tristan as it looks to get the best return from its primary export.


Infrastructure Developments


59. A DFID-funded contractor successfully completed some further rehabilitation work on Tristan's harbour in August 2009. This work followed the emergency repairs that the MOD Joint Task Force completed in March 2008. It is anticipated that further European Development Fund money will become available in 2010 for more rehabilitation and maintenance work.




Draft Antarctic Bill


60. A draft Antarctic Bill was published for pre-legislative scrutiny and public consultation on 10 November and runs until 12 February 2010. The draft Antarctic Bill implements a new Annex to the Protocol on Liability Arising from Environmental Emergencies (Liability Annex), and enhances the provisions of the 1994 Act to provide additional protection to the Antarctic environment and those travelling to the continent. Early ratification of the Liability Annex will help maintain the UK's influential status and also reaffirms the UK's strong commitment to the Antarctic Treaty and its Environmental Protocol.


South Orkney's Marine Protected Area


61. The UK proposal for a marine protected area (MPA) in the South Orkney Islands was endorsed by the Commission for the Conservation of Antarctic Marine Living Resources (CCAMLR) at its meeting in November. This is the world's first high seas MPA and, at over 90,000km2, is about four times the size of Wales. Fishing activities and discharge or refuse disposal from fishing vessels will be prohibited which will allow scientists to better monitor the effects of human activities and climate change on the Southern Ocean.


South Georgia and South Sandwich Islands (SGSSI)


62. The Total Allowable Catch (TAC) for the South Georgia fishery is agreed and set at CCAMLR. The UK secured a good outcome for the fishery at CCAMLR this year. South Georgia received a reduced catch limit for both toothfish and icefish, in line with the UK's own assessment of fishing stock. These catch limits will help ensure the future economic and ecological sustainability of the South Georgia's fishery, while safeguarding her sovereign integrity. 80% of SGSSI's revenue is generated through sale of commercial fishing licences, making the fishing industry the most important sector to the Island's economy.


Marine Stewardship Council Toothfish re-certification


63. In September 2009, the Marine Stewardship Council (MSC) re-certified the South Georgia toothfish fishery awarding an average score of 93%, making it the third highest scoring MSC certified fishery in the world. South Georgia has established a market for sustainable toothfish, making MSC re-certification important to the economic viability of the fishery, as well as reinforcing the Government's reputation for sound environmental management.


South Georgia Legislative Review


64. The Government of SGSSI is currently in the process of carrying out a Legislative Review, in order to provide effective safeguards for the management and protection of the Territory's rich natural heritage. The GSGSSI hope to enact a Wildlife and Protected Areas Bill in the New Year, subsequent to obtaining FCO advice on the draft and following that, a targeted public consultation.


British Indian Ocean Territory


Legal proceedings


65. The Committee will be aware that on 22 October 2008, the Law Lords gave judgment in the Judicial Review of the 2004 BIOT Orders in Council and upheld the validity of the BIOT (Constitution) Order 2004. The two Orders in Council made for the British Indian Ocean Territory in 2004 therefore stand and provide that no person has a right of abode in BIOT or the right to enter the Territory unless authorised. Following the judgment of the Law Lords, the Government has no plans to resettle the Chagossians in the Territory.

The Committee will also be aware that the Chagossians have since taken their case for the right of return to BIOT and for further compensation to the European Court of Human Rights (ECtHR). The Government is defending its position at the ECtHR because:


UK courts have previously ruled that the ECHR is not applicable in BIOT, that fair compensation has been paid and that the UK has no legal obligation to pay any further compensation.


The highest UK court has also already ruled on the issue of right of abode in BIOT and decided that the BIOT Constitution is lawful.


The Government concluded on the basis of the 2002 independent feasibility study that lasting resettlement would be precarious and, if sponsored by the Government, would entail expensive underwriting by the British taxpayer for an open-ended period.


Full immigration control over the entire territory is necessary to ensure and maintain the availability and effective use of the territory for defence purposes of both the UK and the US, particularly in light of a change of security circumstances since 2000 and our treaty obligations to the US.


British citizenship has been granted to a large number of Chagossians under the British Overseas Territories Act 2002 who have a right of abode in the UK.


Given the Government's assessment as to the admissibility and merits of the case, it had no proposals to make in regard to a friendly settlement.


Visits by Chagossians to the Territory


66. The Committee will wish to be aware that following the Law Lords' judgment and Ministerial pledges to consider carefully future visits to the Territory by Chagossians, there have been two such visits. In November 2008, a group from the Diego Garcian Society in Crawley visited Diego Garcia and the outer islands of Peros Banhos and Salomon. In October/November 2009, a group of Chagossians from Mauritius led by Mr Olivier Bancoult of the Chagos Refugees Group visited the Territory and laid wreaths in the cemeteries on Diego Garcia and Peros Banhos and Salomon on the occasion of All Saints Day.


Marine Protected Area


67. The Foreign Secretary wrote to the Chairman of the Committee on 8 November about the public consultation into the possibility of creating a Marine protected Area in BIOT. The consultation began on 10 November and will run until 12 February 2010. The British Indian Ocean Territory Administration is arranging for a facilitator to travel to Mauritius and the Seychelles to listen to the views of the Chagossians. A meeting will also be held in Crawley to hear the views of the Chagossian community resident there. As the Foreign Secretary assured the Chairman in his letter, the consultation and any decision that might follow on the establishment of a Marine Protected Area in BIOT will be without prejudice to the legal proceedings currently underway at the ECtHR in Strasbourg. There will be no impact on our commitment to cede the Territory to Mauritius when it is no longer needed for defence purposes.


Talks with Mauritians


68. While the UK has no doubt about its sovereignty over the British Indian Ocean Territory, the Prime Minister agreed in 2008 to establish a dialogue between UK and Mauritian officials to discuss issues relating to the Territory. Two meetings have taken place. The first was held at the FCO on 14 January 2009, and a further one in Port Louis on 21 July. The delegations discussed the latest legal and policy developments relating to BIOT. Both delegations set out their respective positions on sovereignty and the UK also set out how the UK needed to bear in mind its treaty obligations with the US and our ongoing need of the British Indian Ocean Territory for defence purposes. There was mutual discussion of fishing rights, the environment, continental shelf and future visits to the Territory by Chagossians.


Economic Development and Public Finances in the Overseas Territories


69. All the Caribbean Overseas Territories' economies are suffering in the present economic climate.  Most Overseas Territories built up their cash reserves over the preceding period of economic growth, but the severity of the recession made mitigation difficult for such fragile economies.  Expenditure grew in line with revenue, and borrowing increased rapidly. The Territories are especially vulnerable to economic downturn due to their narrow economic bases (a high proportion of their economic activity is due to tourism and financial services), and over-reliance on indirect taxation.


70. While Overseas Territory governments are responsible for their own economies and financial management, the FCO warned them where their public financial management was unsatisfactory, or budgets unrealistic. There are agreed borrowing guidelines in place between the Overseas Territories and the FCO and, if these are breached, the Territories are required to request permission from the FCO before increasing their borrowing. All borrowing is the responsibility of the Overseas Territories. The UK government has made clear to Overseas Territory governments that it does not accept any liability for their borrowing.


71. In 2009 we have refused to permit Anguilla, Cayman and (before the change in governance arrangements) the Turks and Caicos Islands to extend their borrowing by as much as they had requested. They argue that the FCO is holding back their development. They also argue that they cannot access funding from institutions such as the IMF. The UK Government explained that we were not convinced that they would be able to pay off such levels of debt, especially if economic recovery was sluggish. The Territories argue that they expect economic growth to return rapidly, despite the generally bleak global economic outlook. The FCO has asked the Territories to reprioritise current and capital expenditure to realise cuts, and to focus on revenue generation. Increasing revenue predictability by widening the tax base is necessary to improve budgetary processes. Studies are being carried out in these Territories to examine the impact of different options for widening the tax base, including via direct taxation. Once completed, the UK will work with the Territories to take these recommendations forward, where appropriate.


72. We are considering reviewing Overseas Territory borrowing guidelines in light of the recent economic crisis.


Independent Review of British Offshore Centres


73. HM Treasury announced in the 2008 Pre Budget Report its decision to review the business strategies and long term opportunities and challenges facing the Overseas Territories and the Crown Dependencies. Only those Overseas Territories with significant financial services industries were included in the scope of the Review: Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, the Turks and Caicos Islands and Anguilla. The independent consultant, Michael Foot, was asked to consider financial supervision and transparency, taxation in relation to financial stability, sustainability and future competitiveness, financial crisis management and resolution arrangements and international cooperation.


74. During the Review, Mr Foot visited all the Overseas Territories covered by the Review except Gibraltar. His report was published on 29 October. It sets out a number of benchmarks that Territories (and Crown Dependencies) should expect to meet on tax information exchange, financial regulation, anti-money laundering and countering the financing of terrorism. It also recommends they put their public finances on a firmer footing by diversifying their tax bases.


75. The Government and most of the Territories have welcomed the publication of the report. Some Territories have made good progress especially with regard to signing Tax Information Exchange Agreements. Bermuda, the British Virgin Islands, the Cayman Islands and Gibraltar have all met the internationally agreed standard. The Turks and Caicos Islands and Anguilla expect to meet the standard by the end of 2009. All Territories need to keep pace with increasing international standards. There is still work to do across the whole spectrum of financial and economic issues but some have a longer journey to make than others. The report notes that the economic landscape is shifting and all jurisdictions must adapt if they wish to maintain internationally active financial centres. The conclusion of Agreements is a joint action between two consenting jurisdictions. It is not just up to the Overseas Territories. They are also dependent on internal procedures of other jurisdictions.


76. Financial services are, to varying degrees, a matter for Overseas Territory governments. However, failure to meet the highest international standards in financial services, which the Report helps to identify, carries a reputational risk to the UK

Government which has to defend actions taken by Territories in a range of international fora. The Territories need to make demonstrable progress on those issues identified in the Report. We want to work with the Territories to take forward the recommendations. The

Minister for Overseas Territories has written to territory governments to open discussion

on how to implement the recommendations. The issue will be covered at the Overseas Territories Consultative Council in December.


Cenotaph Remembrance Service


77. In its July 2008 report on the Overseas Territories, the Committee recommended that Overseas Territory representatives in London be allowed to lay a wreath at the Cenotaph Service on Remembrance Sunday. The FCO noted in our response that we understood the wish of Territory representatives to participate in the Service and that we would consider the matter further.


78. We have since reviewed the situation again with relevant Whitehall departments and the Palace. The Government fully recognises the contribution and sacrifice made by citizens of the Overseas Territories during time of conflict. However, after careful consideration and consultation with all concerned, it has been decided that there should be no change to existing arrangements at the Remembrance Sunday Service. The Foreign Secretary, as a senior member of the Cabinet, will continue to lay a wreath on behalf of all the British Overseas Territories at the Cenotaph Service on Remembrance Sunday.


Overseas Territories Consultative Council


79. The eleventh Overseas Territories Consultative Council (OTCC) will take place in London on 8 and 9 December. Leaders from all the populated Territories, except Gibraltar and the Cyprus Sovereign Base Areas, will attend. At the request of Territory leaders at last year's OTCC, the first day of this year's conference will be devoted to a Forum to discuss the 1999 White Paper "Partnership for Progress and Prosperity" - ten years on. The White Paper set out the principles on which the UK's relationship with the Overseas Territories is based.


80. The OTCC will be on 9 December. Issues to be covered include the need to ensure the highest standards of governance, improved economic management and financial regulation and greater political commitment to comply with international human rights obligations, including the need to equalise the age of consent between homosexual partners. We intend to make the point that if the Territories are not prepared to act on this issue, we will legislate on their behalf where that is an option (the UK cannot legislate for Bermuda, except by primary legislation, but will monitor closely their current review of their Human Rights Act to see if relevant provisions are included).


81. In the past two years, Territory leaders have helped set the OTCC agenda and led many of the sessions. Their closer involvement was a major factor in the success of those meetings. We have again consulted Territory governments about the format and agenda for this year's OTCC.


Turks and Caicos Islands (Points if raised by Territory Leaders)


82. Briefing is being provided separately for the Committee's meeting with the Governor of TCI[2] on Tuesday, 8 December. The following points are provided in case TCI issues are raised by Territory leaders.


- The suspension of parts of the TCI Constitution was a serious step which the UK Government did not take lightly.


- It was essential to ensure that the principles of good governance, sustainable development and sound financial management are restored, allowing elections to take place as scheduled in 2011, if not earlier.


- The former TCI Government is responsible for the present financial crisis in the Territory. When the Interim Government took over in August, it inherited a Territory debt of $135 million. Dealing with TCI's financial problems and restoring sound financial management has been its top priority.


- In the three months since the Interim Government took office, an enormous amount of work has been undertaken by the Governor with the help of the public service and with the advice from the Advisory Council and Consultative Forum.


- Since August a number of significant steps have been taken:


Full review of TCI government financial management practices completed. Stabilisation Plan now being implemented (restructuring public service, strengthening government finance management and control systems, revenue study, updating legislative framework)


2009/10 budget completed. Public sector expenditure cut by $74 million compared to 2008/9


Introduction of strict expenditure controls


Payment of dues and taxes monitored and enforced


Discussions with banks to secure consolidated loan facility to enable Government to manage its repayments over a longer period


Review of existing revenue system started in November.


Overall collection efficiency and capability of the Customs Department is being improved


Work begun on new Crown Land Policy and order being restored to Crown Land Unit


Arrears identification exercise completed and procedures put in place to begin proceedings to recover unpaid arrears (over $3m of arrears for conditional purchase leases)


Backlog in Land Registry being processed


New multi agency Informal Development Task Force to tackle the spread of informal settlements on Crown Land.


Working Group on tourism promotion established


Major restructuring exercise of Public Service to improve efficiency and value for money completed.


Inspection and review of police force completed.


Helen Garlick (ex UK Serious Fraud Office) appointed as Special Prosecutor of the Special Investigation and Prosecution Team, and management team in place.


37 hurricane reconstruction projects totalling over $3.5 million have been approved.


Advisory Council and Consultative Forum created and established regular meetings.


83. But much work remains to be done. To support the efforts of the TCI public service the UK has provided a number of UK funded advisers: experts in tackling the types of challenges TCI is currently facing (eg customs, crown land, good governance). Their appointment is part of the UK's commitment to assist TCI.


[1] See OT 406.

[2] See www.turksandcaicosislands.fco.gov.uk/resources/en/pdf/nov-statement.