AS time goes by so I become more convinced of the logic of Jersey and Guernsey co-operating much more closely, perhaps even developing a Federation of the Channel Islands or a Channel Islands Economic Community.

The trouble is, as time goes by, so I become equally convinced that nothing will ever happen. Part of the problem is our politicians generally lack vision. That’s not surprising. The problems facing them – at least until fairly recently – have been very parochial ones. Even the major reforms that have taken place have been largely aimed at solving an insular problem. Take the Clothier reform of government, for example. The panel did not take into account any national or international dimension to what they were proposing, because they weren’t asked to.

More recently, both Jersey and Guernsey have been forced to consider international opinion and now both governments are trying to develop their own international relations because, frankly, they don’t have much choice.

So we’ve had a couple of reports about the possibility of the islands being forced to become independent (not many people consider it an option that they would like to take voluntarily) but we’ve not heard much about how the islands see their place internationally and how this is to be achieved.

We were even scared to look into our relationship with the EU for fear that we would upset our current favourable position. No-one suggested that perhaps a new relationship with the EU might be even more advantageous.

So it appears that we only tackle subjects like this when we have to. But even the work that has already been undertaken on developing what the experts like to call an ‘international personality’, has, I believe, been wasted. It’s been wasted because it has failed to address a fundamental point. Would Jersey seriously consider becoming fully independent without Guernsey following suit, and vice versa?

Only after asking this question could we then look at other questions such as whether the islands would be better off working together in developing this international personality? To me it’s what some people annoyingly call a ‘no brainer’.

It’s true that each island is fiercely independent and many residents would probably prefer to go it alone, without getting involved with our dreaded neighbours. But is it practical? No nation, territory or island can remain totally isolated. Most of them join with friends – and sometimes even former enemies – to give them the resources and political muscle to deal with the many international issues facing all communities these days. Even the excessively proud UK has recognised the benefits of joining up with its European neighbours to a greater or a lesser extent.

But what do the Channel Islands do? They apparently don’t need help from any other jurisdiction or alliance and are even beginning to consider the possibility of severing the ties with our mother country (it is our mother country, isn’t it?). That possibility may be a long way off, but there has been no consideration given to what will be put in the place of the UK relationship. It would be wise sooner rather than later to consider the practical implications of becoming independent which, to my mind, inevitably means joining with Guernsey in some kind of alliance or union.

I would go even further and say that regardless of the Island’s relationship with the UK, the islands should work much more closely together. Some States Members might claim that this is happening already, but there’s not much evidence of that. In fact, all we see is politicians taking cheap shots at the other island.

The current banking crisis is a case in point. Both Jersey and Guernsey claim to be working together on a solution. That’s entirely logical as we are in the same boat to such an extent that many international investors don’t even think there’s any difference between us. But the working relationship is more one of consultation, not co-operation.

We also have at least one leading States member in Jersey crowing about the fact that the Icelandic offshore bank which has gone into administration was based in Guernsey, and implied that it would never have got a licence in Jersey. Not so, retorts a minister in Guernsey. The Icelandic bank in question is well within Jersey’s criteria of accepting only the top 500 banks in the world and there would have been no reason to turn it down had it chosen the sister island instead. Some officials, with the wisdom of hindsight of course, have posed questions about the strength of the Icelandic economy, but no-one was too bothered at the time.

As far as I’m aware, no banker, fund manager or lawyer has seriously claimed that one island is superior to the other in the financial services industry. One island might have an advantage for one particular type of business and that’s why the islands would fit so well together, but the practitioners acknowledge that they are both reputable and strong offshore jurisdictions.

Many of them don’t even acknowledge there’s a difference, and it’s only the politicians and those paid to do so, who claim superiority for one island or the other. So if the finance sectors of both islands can work together, why can’t the politicians? It’s even become a bit of a joke watching Jersey and Guernsey venturing out on their own to market their financial products and services. Jersey was promoting its funds in London the other week, only to be followed a few days later by Guernsey.

Attending these events can be quite eye-opening, not because they prove the strengths of the individual jurisdictions, but because they prove how intertwined the Jersey and Guernsey finance sectors are. For example, I was at the Guernsey funds event in London where the panel extolled the virtues of the island as a centre for specialist funds, even though one of the panellists was a Jersey resident. These funds invest in a huge variety of markets and one of the fund managers on the panel spoke about the ground-breaking fund they had launched to invest in uranium. It was only after reading the prospectus that you found that the fund was actually based in Jersey, not Guernsey.

So it would seem to me that the first thing the islands should do is to forget competing against each other in financial services. Competition is good and it keeps each island on its toes, but there’s plenty of competition globally without competing within the tiny Channel Islands.

That could sow the seeds of much closer co-operation between the islands with the possibility of just one regulator, one ombudsman and one promotional body with eventually even some new laws in common.
It won’t be easy getting the islands together in this way because each will protect its own patch and be reluctant to give anything away for the good of the islands as a whole.

Where would the Channel Islands Financial Services Commission be based and who would be on the board, for example? But I have confidence that we are adult enough to overcome these little difficulties, and that the end result would be a stronger finance sector and a stronger Channel Islands. After all it’s at times like this that you need the help of your friends.
Peter Body is editor of
Business Brief magazine