VZCZCXRO6840
PP RUEHGR
DE RUEHBH #0149/01 0702037
ZNR UUUUU ZZH
P 112037Z MAR 09
FM AMEMBASSY NASSAU
TO RUEHC/SECSTATE WASHDC PRIORITY 6192
INFO RUCNCOM/EC CARICOM COLLECTIVE

UNCLAS SECTION 01 OF 02 NASSAU 000149 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/CAR 
 
E.O. 12958: N/A 
TAGS: ECON EFIN BF
SUBJECT: BAHAMIANS WORRIED OVER IMPACT OF STOP TAX HAVEN 
ABUSE BILL ON FINANCIAL SECTOR 
 
¶1.  (U) Summary:  News concerning the proposed Stop Tax Haven 
Abuse bill, which names The Bahamas as one of 34 secrecy 
jurisdictions, has generated considerable discussion in local 
media and amongst politicians.  The financial services sector 
makes up 15 percent of the country's GDP and, tourism is down 
and  unemployment is up.  Some predict the collapse of the 
entire financial services sector and others say The Bahamas 
should aggressively lobby Washington against the bill.  The 
GCOB is still deciding how it will address the issue, but has 
indicated that it already cooperates with the U.S. on 
anti-terrorism issues in the financial realm and will not 
"overreact" to the situation.  End Summary. 
 
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IN THE MEDIA:  ALL TAX HAVEN, ALL THE TIME 
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¶2.  (U) News about the Stop Tax Haven Abuse bill dominated 
local headlines last week, reporting on the negative 
financial consequences such a bill would have in The Bahamas. 
 One paper ran a political cartoon depicting a smiling 
President Obama saying "yes we can" while a nervous and 
sweating Prime Minister Ingraham wonders if the U.S. will 
crack down on tax havens like The Bahamas. 
 
¶3.  (U) The opposition Progressive Liberal Party (PLP), 
always in the hunt for an electoral issue, has been vocal in 
opposing the proposed Stop Tax Haven Abuse bill.  Former 
Attorney General Alfred Sears called on the GCOB to 
aggressively lobby the USG to stop passage of the bill and 
educate policymakers and the public about the "true nature" 
of the Bahamian financial industry and their commitment to 
fighting terrorism financing.  Others say the GCOB should 
engage with neighboring countries worried about the bill and 
present a united front against the bill to Washington. 
Minister of State for Finance Zhivargo Laing told local media 
his office is vigilantly monitoring the situation and pledged 
that the GCOB will not overreact.  Laing appeared hopeful 
that the TIEA, which The Bahamas signed in 2002, would serve 
as an advantage for the island nation.  Laing also noted that 
The Bahamas already cooperates fully with the U.S. on 
anti-terrorism financing matters, pointing out that the 
established 
positive working relationship with the U.S. could show 
Bahamian bonafides as the tax haven issue is discussed in the 
U.S. 
 
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BAHAMIANS WORRIED ABOUT EMPLOYMENT 
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¶4.  (U) Local radio stations and websites have reported many 
Bahamians worried about what kind of impact a blow to the 
financial services sector will have on their daily lives. 
Many appear worried about the impact on employment, as the 
financial services sector makes up 15 percent of the 
country's GDP and employs the largest group of people outside 
of the tourism sector.  The tourism sector experienced a 
significant decline in 2008 as a result of the global 
economic downturn, resulting in 1000 laid off hotel employees 
and an increase in the unemployment rate from 8.7 percent in 
2008 to 12.1 percent at present.  The threat of additional 
job losses in the financial services sector as a result of 
the Stop Tax Haven Abuse bill has many Bahamians worried 
about their own financial status. 
 
¶5.  (SBU) In a meeting with Econoff on March 5, local 
attorney and PLP advocate Ryan Pinder noted that the 
inclusion of The Bahamas on the Stop Tax Haven Abuse bill 
could jeopardize plans to join WTO or "any other ambitions to 
be in the financial business sector."  Pinder said the bill 
presumes that all money being kept in The Bahamas is 
unreported income, which is not usually the case.  He further 
highlighted that a tax haven bill would not "chase away EU 
banks" or prevent EU banks from maintaining their privacy 
laws.  In addition, he predicted the addition of The Bahamas 
on the OECD blacklist later this year. 
 
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COMMENT 
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¶6.  (U) If a Stop Tax Haven Abuse bill passes, that includes 
The Bahamas, it will be a major blow to the Bahamian economy. 
 There is a real anger that lax regulations by OECD countries 
such as the UK are to blame for the ripple effect of a 
crackdown on Caribbean offshore banking destinations. 
British Prime Minister Gordon Brown recently addressed the 
U.S. Congress, saying tax havens represent a threat to world 
savings, effectively passing the buck to jurisdictions such 
as The Bahamas that offer offshore financial services. 
Despite this, little attention has been paid to the EU role 
 
NASSAU 00000149  002 OF 002 
 
 
in this issue by the local press.  For the moment, The 
Bahamians are focused on the possible passage of the tax 
haven bill in the U.S. 
ZUNIGA-BROWN