VZCZCXRO7031
OO RUEHGR
DE RUEHWN #0204/01 0912204
ZNR UUUUU ZZH
O 012204Z APR 09
FM AMEMBASSY BRIDGETOWN
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7275
RHEHAAA/WHITE HOUSE WASHDC IMMEDIATE
INFO RUCNCOM/EC CARICOM COLLECTIVE PRIORITY
RUEHLO/AMEMBASSY LONDON PRIORITY 0747

UNCLAS SECTION 01 OF 02 BRIDGETOWN 000204 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/CAR AND H 
STATE PLS PASS NSC 
 
E.O. 12958: N/A 
TAGS: EFIN PREL XL
SUBJECT: BARBADOS PM APPEALS TO POTUS RE TAX HAVEN BILLS 
 
REF: A. BRIDGETOWN 195 
     ¶B. 08 BRIDGETOWN 577 
 
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SUMMARY 
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¶1.  (SBU)  Barbados Prime Minister David Thompson sent the 
President a strongly worded appeal to exempt his country from 
any pending anti-tax haven legislation.  Calling on the 
President and Congress to avoid a "broad brush and generic 
condemnation" of international financial centers on the basis 
of "indiscriminate blacklisting" of low tax jurisdictions, 
Thompson delivered a detailed legal and political argument 
against the legislation and against including Barbados on any 
list of targets (documents forwarded to WHA/CAR March 27). 
This latest appeal comes after months of complaints about the 
threat of the legislation in the previous Congress and 
follows close on the heels of similar pleas from other 
Eastern Caribbean countries in the run-up to the Summit of 
the Americas.  Tellingly, Thompson's missive was a purely 
bilateral appeal, making no reference to CARICOM or any other 
regional initiative.  End Summary. 
 
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LAST DITCH APPEAL 
----------------- 
 
¶2.  (SBU)  Barbados MFA delivered to the Embassy March 27 an 
urgent letter from Prime Minister Thompson to President 
Obama, along with a covering diplomatic note and a detailed, 
27-page "aide memoire." (The package was forwarded to WHA/CAR 
that day via fax, with originals to follow via FedEx.)  In 
his cover letter, Thompson notes his "great disquiet" over 
the support for anti-tax haven legislation that seems to be 
growing in the G-20.  His appeal was timed to inform the U.S. 
of Barbados' position prior to the April 2 G-20 meeting in 
London.  Thompson noted his willingness to work with the USG 
to improve global transparency on tax issues, but lamented 
that this cannot be achieved through "unilateral and 
discriminatory action by the large and powerful against the 
weak and small." Intimating that the current global financial 
crisis was precipitated by bad financial regulation in the 
developed world, not in small-state financial centers, 
Thompson noted his intention to raise this issue with the 
President at the Summit of the Americas. 
 
¶3.  (SBU)  The PM's Aide Memoire, a 27-page exhortation, 
details Barbados' efforts to maintain the highest 
international standards of transparency and cooperation with 
partner economies, often to its own competitive disadvantage, 
specifically to avoid the "tax haven" label.  Thompson lists 
all the tax and financial agreements Barbados has with the 
U.S. and around the world, notes the high marks it has 
received from the OECD and IMF, and highlights the many 
sacrifices Barbados has made in terms of lost business in 
order to comply with what he casts as increasingly onerous 
financial information-sharing regulations.  The aide memoire 
also contains a fairly scathing attack on U.S. financial 
transparency problems, noting in particular the lack of 
transparency in many U.S. states, which actually puts the 
performance of America's financial regulatory regime well 
below many of the purported "tax havens" targeted in recent 
Congressional legislation.  Thompson also quotes a recent GAO 
report that criticized the proposed tax haven legislation, 
notably for not having adequately defined a tax haven, and 
highlighted suspicious banking practices in the U.S. that 
would not be possible in many proposed "tax havens."  The 
aide memoire characterizes the proposed legislation, under 
current circumstances, "quite ironic and troubling." 
 
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COMMENT 
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¶4.  (SBU)  The PM's urgent appeal is the latest in a long 
series of complaints and appeals we have heard from 
throughout the Eastern Caribbean in recent months (ref b), 
and several regional leaders have indicated to us that 
engaging the U.S. on tax haven legislation will be one of 
their primary goals at the upcoming Summit of the Americas 
(ref a).  Many of these low tax jurisdictions feel threatened 
by the trend toward stricter regulation of offshore financial 
centers, given their reliance on offshore finance for a 
significant percentage of GDP (along with tourism and 
remittances, which are also being hit hard by the global 
recession).  Despite the shared concern, Thompson's national 
 
BRIDGETOWN 00000204  002 OF 002 
 
 
appeal makes clear that there is not yet a common CARICOM 
position from which to argue against any new legislation.  In 
fact, Thompson's appeal pointedly refers exclusively to 
Barbados, and makes a very specific plea to keep Barbados off 
of any tax haven lists that might be developed.  We 
understand that Barbados is making a similar appeal to Prime 
Minister Gordon Brown either nationally or on behalf of 
CARICOM. 
HARDT