THE STAR BUSINESSWEEK APRIL 14, 2018
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LAPTOP DIPLOMACY AND LONG-TERM RESULTS
Laptop Diplomacy is a buzzword often bandied about in diplomatic circles. It’s also an issue particularly near and dear to our Saint Lucia.
BY ED KENNEDY, STAR BUSINESSWEEK CORRESPONDENT
One that right now is at an important point in our history, and is set to be a central pillar in the future of our local tech industry and growing digital economy. Let’s look now at it in-depth. Continued on page 4
Latin America leaders to discuss crucial issues without Trump It is the meeting that few American heads of state want to attend. Donald Trump, for one, cancelled on Tuesday his maiden trip to Latin America for the eighth Summit of the Americas in Lima, saying he needed to oversee the US response to a suspected chemical attack in Syria. Page 3
Swiss authorities tread wary path through ‘Crypto Valley’ “Bitcoin accepted here” reads the sign at House of Wines in Zug. For Albert Osmani, the shop’s owner, allowing payment in the cryptocurrency was a smart move. Page 7
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GREEN GROWTH Making the link between economic and environmental sustainability
BY CATHERINE MORRIS, STAR BUSINESSWEEK CORRESPONDENT
The STAR Businessweek BY CHRISTIAN WAYNE – EDITOR AT LARGE
At the core of this week’s edition of STAR Businessweek is a central question: To what extent will technology and university-level education play a role in the development of this country? We as Saint Lucians are a notoriously sceptical people, with very good reason, but a sceptical group nonetheless. Often, it’s the foreigners who are easier to convince of our country’s potential than the citizens themselves. Why is that? Sure, we’ve seen our fair share of illusions of grandeur turned nightmares of dereliction, but what developing country hasn’t? Hell, what developed country hasn’t? Some may attribute our scepticism as inherent to our Saint Lucianness, but I’m not convinced. Scepticism, as anyone who’s spent more than five minutes with a four-year-old can attest to, is explicitly NOT inherent in us. Optimism is what’s inherent. Scepticism is more like a cigarette habit; it’s something that gets inculcated over time. Could it be that generations of underwhelming leadership and puerile politicians have left us with a nasty smoking habit? I find that more convincing. As we know, left unchecked, a little cigarette habit can grow into something more . . . malignant. For that reason if not any other, let us not allow our healthy sense of scepticism to handicap our ability to dream. Begin with this week’s cover story entitled Laptop Diplomacy and Long-Term Results and work your way to Saint Lucia Bets on Blockchain! on page 8.
The STAR Businessweek Nothing Personal. It’s Just Business. Stay connected with us at: Web: www.stluciastar.com Social: www.facebook.com/stluciastar Email: starbusinessweek@stluciastar.com
MoU signing – Dr. Chanho Park, GGGI’s Director of Large & Emerging Economies (left) with OECS Commission Director General Dr. Didacus Jules
The economy and the environment have always had a fractured relationship. The history of global development has shown that when the former rises, it’s usually at the cost of the latter. But this need not be the case. Caribbean stakeholders are currently working to develop a regional strategy for green growth, one that will mainstream climate change awareness and encourage development without compromising natural resources. The term ‘green growth’ first entered the economic lexicon shortly after the 2008 global recession when a new approach to development began to gain traction among policymakers. It has been defined by the Organisation for Economic Co-operation and Development as: “A means to foster economic growth and development while ensuring that natural assets continue to provide the resources and environmental services on which our well-being relies.” Blending economic advancement with sound environmental management makes sense on a number of levels: boosting income and jobs in innovative fields such as clean energy technology; investing in resilient infrastructure, and upgrading existing industry practices. Green growth is a particularly relevant concept in the Caribbean where natural resources are key to the health of the tourism industry. In addition, the region is highly vulnerable to the effects of climate change, frequently buffeted by devastating natural disasters, and suffers from a significant infrastructure gap. Growth that’s not green is simply unsustainable. “Climate change is the single greatest threat to the entire planet, and it is having a disproportionately severe impact on Small Island Developing States,” says Crispin D’Auvergne, Programme Coordinator for Climate Change & Disaster Risk Management at the Organisation of Eastern Caribbean States (OECS). “The region’s survival and future development requires that we incorporate climate change in our development paradigm.”
A REGIONAL BLUEPRINT
The OECS is now working to develop a green growth strategy for the region, with the support of the Global Green Growth Institute (GGGI). “Some countries in the Caribbean have previously developed green economy or similar strategies [but] this is the first time that member states of the OECS are to become involved in a
collective approach to green growth,” says D’Auvergne. In February, the two organisations came together to sign a green growth Memorandum of Understanding (MoU) which will enable the OECS to undertake green projects and activities with GGGI’s support. Plans include strengthening national and local green growth planning and developing financing and institutional frameworks in OECS member states. The MoU will also give the OECS access to GGGI’s knowledge and research—gathered from years of working with countries around the world—to implement green growth policies. The Caribbean has a lot to learn from trail-blazing nations who are further down the road, but a ‘one size fits all’ approach isn’t adequate for tackling the region’s specific challenges. Developing countries and small island states need a customised blueprint that takes into account high-cost barriers, social concerns, limited resources and the growing informal economy. D’Auvergne says OECS members can pick and choose what works for them from a range of countries—not just developed nations but also smaller states with similar challenges. Under the green growth initiative, knowledge doesn’t just flow one way. “The sharing of best practices does not have to be confined to a one-way flow from developed to developing countries (north-south). Opportunities also exist for sharing between developing countries (south-south), such as between the Pacific and the Caribbean,” D’Auvergne explains. “Opportunities exist, also, for triangular cooperation (northsouth-south) and even south-north learning should not be discounted. “There is a great deal to be shared in terms of, for example, technology, policies and legislation, processes, stakeholder engagement, success stories and failures. It will be up to member states to identify those practices and lessons that are most applicable to their national circumstances.”
READY FOR CHANGE
Having a green growth plan is essential for the Caribbean’s long-term security and will deliver a host of benefits. Not just at a regional level, but trickling all the way down to every Caribbean citizen. Green growth can deliver more equitable distribution of GDP, economic diversification, higher incomes, more opportunities, and enhanced social and human capital. “Inclusive green growth is critical as the environment is the basis for all wealth generation and is like the proverbial goose that laid the golden egg,” says D’Auvergne. “If the environment is cared for, it will continue to generate goods and services indefinitely.” There is already a high level of awareness among policymakers of the need to be more mindful of the environment, and the private sector has begun channelling investment into a range of eco-friendly areas such as climatesmart agriculture and renewable energy initiatives. D’Auvergne says that, with government support, further green investment can follow, provided there are clear guidelines, fiscal incentives and appropriate legislative structures. Green growth isn’t a radical new policy but merely an improvement of existing structures. Seen as a way to upgrade familiar practices, it becomes less intimidating and easier to facilitate. But it will be a long road. The Caribbean has to do the work before it is green growth ready. D’Auvergne says: “For many Caribbean countries, adopting a green growth approach will require a fundamental shift in development planning, definition of national priorities and in the operation of government service. It will require consultation with and meaningful engagement of stakeholders. “[The MoU] is a new partnership that will take time to evolve. Nevertheless, it will begin laying the groundwork for building a new approach to development.”
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© The Financial Times Limited [2018]. All Rights Reserved. Not to be redistributed, copied or modified in anyway. Star Publishing Company is solely responsible for providing this translated content and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation
LATIN AMERICA LEADERS TO DISCUSS CRUCIAL ISSUES WITHOUT TRUMP US president stays at home as Pence aims to woo Peru summit on trade and Venezuela crisis BY FT CORRESPONDENT
It is the meeting that few American heads of state want to attend. Donald Trump, for one, cancelled on Tuesday his maiden trip to Latin America for the eighth Summit of the Americas in Lima, saying he needed to oversee the US response to a suspected chemical attack in Syria. Nicolás Maduro will be another noshow after he was disinvited for his failure to heed calls for democratic reform — although the Venezuelan president has threatened to gatecrash the event “by air, land or sea”. One reason why presidents from around the hemisphere may feel lukewarm about attending the summit on Friday and Saturday is its official theme — “democratic governance against corruption”. Brazil’s Michel Temer is under investigation for graft, while officials in the government of Mexico’s Enrique Peña Nieto are ensnared in corruption allegations. Pedro Pablo Kuczynski, the former president of summit host Peru, had to resign last month because of corruption allegations. Mr Trump, meanwhile, is under investigation for alleged collusion with Russia, which he denies. With the president’s eyes on Syria, US vice-president Mike Pence will travel in his stead.
WHAT ARE THE MAIN ISSUES?
Pan-American solidarity is unlikely to be among them. At the first summit, in Miami in 1994, the region agreed to create a continental Free Trade zone, an initiative that went nowhere. Neither did the highlight of the last summit in 2014, which was the budding rapprochement between Cuba and the US, an initiative since partially reversed by Mr Trump.
six months of talks, the US, Canada and Mexico want something to show. The Mexican government wants to nail down an agreement in principle before its July 1 presidential election, especially as leftwing populist Andrés Manuel López Obrador leads opinion polls. The White House also hopes for a domestic political win before November’s US midterm elections. On Monday, Mexico’s economy minister Ildefonso Guajardo said the odds of an “agreement in principle” by the first week of May were 80 per cent.
WHAT ABOUT VENEZUELA?
Only 16 per cent of Latin Americans approve of the US president, according to a Gallup poll
This year’s event is more likely to be shaped by open disagreement than feigned harmony. There are likely to be three main issues on the table. First, corruption and transnational crime, especially as the Odebrecht corruption scandal has scarred dozens of political business leaders around the region. Second, trade with China and the re-negotiation of the North American Free Trade Agreement (Nafta). And third, how to deal with Venezuela’s deepening economic and political crises. Only on Venezuela is there likely to be anything resembling consensus.
WHY DID MR TRUMP CANCEL?
The better question is why he wanted to go in the first place given his unpopularity in the region. Only 16 per cent of Latin Americans approve of the US president, according to a Gallup poll. Mr Trump has complained about US job losses to Mexico, pulled out of the Trans-Pacific Partnership, threatened to rip up Nafta and ban Canadian imports of steel and aluminium. He has described Hispanic immigrants as “rapists” and drug dealers, and threatened to cut off aid to Colombia and Peru, two of the US’s most stalwart allies in the region. A backlash may be looming: on Monday, Mexico ordered a review of all its US
co-operation agreements. Mr Pence will instead take any heat from regional leaders. His main message is likely to centre around trade, although whether he will be able to convincingly argue that the region should trust the US as its preferred partner over China is moot. China is now South America’s largest trading partner, and Beijing has promised $250bn in direct investment by 2019. Mr Trump’s decision to pull out of the summit was criticised at home on Tuesday. “Since its inception, every US president has attended the summit,” said Elliot Engel, a Democratic member of the House committee on foreign affairs. “If the president of the United States is indeed the leader of the free world, that person should be able to walk and chew gum at the same time. “Unfortunately, today’s announcement should come as no surprise from an administration whose policy towards the region begins with building a wall between our country and our southern neighbours.”
WILL A NAFTA DEAL BE ANNOUNCED?
Almost certainly not, which is another reason Mr Trump may have decided to cancel. After
The country’s growing authoritarianism, humanitarian crisis and role as a source of regional instability are things that everybody agrees on. The question is what to do about them. The US plus the Group of Lima — an informal grouping of the region’s 12 biggest economies, including Canada, Brazil and Mexico — may escalate individual sanctions against Mr Maduro and his cronies, as Panama did last week. Reportedly, Washington is also considering barring the 350,000 barrels per day of oil that Venezuela exports to the US. For Latin America, the most immediate problem is how to deal with up to 4m Venezuelans who have fled their country since 1999, with well over half a million refugees in Colombia alone. “By staying behind, President Trump risks sending the message that the US relationship with Latin America is not a priority,” said Roberta Braga, assistant director of the Adrienne Arsht Latin America Center at the Atlantic Council. “This is especially problematic given the dire and escalating humanitarian crisis in Venezuela. “With the potential for a trilateral meeting with Mexico and Canada, it was also a chance to show continued momentum around a successful Nafta renegotiation.”
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LAPTOP DIPLOMACY AND LONG-TERM RESULTS Laptop Diplomacy is a buzzword often bandied about in diplomatic circles. It’s also an issue particularly near and dear to our Saint Lucia. Continued from page 1
ECONOMIC DIPLOMACY ABOVE ALL ELSE
An understanding of laptop diplomacy begins with a recognition that the world of diplomacy has rapidly changed in recent decades. Decades do appear a long time to someone counting birthdays but are a mere blink of an eye in the thousands of years nations have been dealing with one another. And the shift has come far closer to our time than Ancient Rome or Greece. At its core, nations in 2018 see the inherent value of economic diplomacy above all others. Since the end of the Cold War, and the rise of the online age, the capacity for one nation to curry favour and seek influence with another has come far more often via economic stimulus than weapons of war. This, as well as the shift in our world that today sees the risks of digital espionage and other cyber-attacks increasingly outpace skirmishes between fighter planes and submarines. Alongside this shift, the rapidly rising economic power of numerous Asian nations - most notably the People’s Republic of China - has seen Beijing and rival nations look to the economic front as a new frontier for competition. Many nations have been the beneficiaries of this new landscape but, so too, have not all initiatives been welcomed, or ultimately useful in the long term.
WHY LAPTOP DIPLOMACY?
It’s here that ‘laptop diplomacy’ has loomed large. As a diplomatic tool, laptop diplomacy ticks all the boxes. The gifting of laptops and other mobile computer equipment from a benefactor nation to a beneficiary nation can deliver the former a number of benefits. It usually offers an economical way to connect directly with citizens in a nation beyond the rarefied air of a government’s foreign affairs department. It signals that the gifting nation is technologically advanced and it also provides an avenue to boost the relationship between governments in a way that is risk-free diplomatically.
An opposition party or sizeable community group may be at the ready to protest the supply of weaponry, or other potentially odorous goods, but nobody can fairly resist the gift of goods that will allow a local community faster and more universal access to the digital economy. However, for all the theoretical virtues of laptop diplomacy, there has been a significant disconnect in its implementation.
LAPTOP DIPLOMACY IN SAINT LUCIA
This is something that has been seen in Saint Lucia. A whole newspaper could be devoted to its history, step by step, but the major milestones will be recalled by anyone who has followed the establishment of ICT centres here, and can be quickly recognised by anyone coming up to speed now. The most recent incarnations have been seen via Venezuela in 2015 when 6,000 laptops were set for distribution to students throughout Saint Lucian schools, and via the Republic of China (Taiwan) in 2017 with the finalisation of the National ICT Centre in Castries, a project begun in 2012. These are fine starting points for the growth of local tech, but it is the follow-through that is important. And it is in this regard that Saint Lucia has dropped the ball. The failure of these initiatives, and countless others, has been the prevailing perception amongst overly-eager politicians that once the computers have been powered on, the project is complete. Lip service may have been put forward suggesting otherwise, but the reality is that Saint Lucia’s national portfolio of ICT centres is a grossly underutilized asset. This determination is readily observable if you go see them for yourself—most are shuttered. This attitude has undermined the potential for all Saint Lucians to harness the existing technology as a powerful vehicle for development. A vehicle that could drive business growth and our tech sector certainly, but at its heart the capacity for individual Saint Lucians
“The future of learning and the future of work are deeply interconnected, but most of the world hasn’t yet realized it. The hyrbid learning programme has the potential to leapfrog Saint Lucians to the head of the pack.” – Jake Weissbourd, Higher-Education Advisor, TeleCarib Labs
and families to grow their own skills and opportunities. Saint Lucians have never struggled to take to the field and compete, but what’s been missing in the ICT centres is a clear strategy to drive that competition and deliver real and enduring success as a result. With the recently established Innovation Unit within the Ministry of Education, a change in course may now be afoot. This augurs well for the ICT centres, especially when a new education policy for their use is developed beyond government, and in partnership with the wider community.
A NEW CHAPTER WITH TELECARIB LABS
Fixing the flaws of laptop diplomacy is also a cause near and dear to us at the STAR. In tandem to his corporate development role at the parent company of this newspaper, STAR Publishing, Christian Wayne is also founder and director of TeleCarib Labs, Inc.—a capacity building firm focused on spurring economic development in Saint Lucia through positioning the country as a test-bed for disruptive technologies and innovative businesses.
THE STAR BUSINESSWEEK
Christian Wayne (right), Director of TeleCarib Labs, at a Hybrid Learning community engagement session hosted in Anse La Raye, Saint Lucia
2nd year A-level students attending a Hybrid Learning community engagement session in Vieux Fort
What does our future look like when high-quality education is available to all Saint Lucians, not just the rich ones? This is the future we are working towards
The failures of laptop diplomacy have always occurred when there is the provision of technology, but not the technologists. When cutting-edge computers have not been accompanied by contemporary training and education. It’s a difficult fact that this disconnect has not only been seen abroad but closer to home. In the halls of Parliament, you can still hear some politicians spruiking the benefits of new ‘state-of-the-art’ facilities constructed in their electorate, but very little in-depth discussion on what actual benefits they will provide to Saint Lucians when it comes to new training, education and meaningful outcomes for the target audience. The achievement is not merely securing a payload of 25 donated computers, it’s using them to deliver quality education to their users. It is exactly here where TeleCarib Labs wants to bridge the gap the country’s underutilization of its ICT centres and the government’s chronic underinvestments in higher-education pathways for Saint Lucians. “What we are doing here is not only building a recognition of the value of these ICT centres when used in an effective and ongoing way, but also a national conversation,” says Wayne. “We cannot expect to develop as a nation if the only way to get a meaningful education is by emigrating to another country after secondary school or community college. “What does our future look like when high-quality education is available to all Saint Lucians, not just the rich ones? This is the future we are working towards. The evolution of higher-education is not taking place in traditional, sprawling college campuses; it’s taking place online. And these changes have made access to it drastically cheaper.” Wayne’s team plans to work with the government of Saint Lucia to begin a oneyear pilot programme that seeks to turn each community ICT centre into a miniuniversity campus. TeleCarib Labs calls this its Hybrid Learning Programme. “On one hand, the government has these underutilized community ICT centres, scattered throughout the country, that they’re trying to find a sustainable purpose for. On the other hand, there’s now an abundance of extremely high-quality and very affordable education pathways available online. The Hybrid Learning
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Programme is designed to use the ICT centres as host facilities where members of the community can enroll in a variety of online-based education pathways specific to their interests and goals. The programme couples online education with in-person support and employability training to deliver a blended learning experience that’s both more social than traditional online programmes, but also more career-aligned,” commented Wayne. TeleCarib Labs plans to pilot this initiative in Castries, Anse La Raye, Vieux Fort, and Soufriere. Over 80 persons from these constituencies have signed-up to join. “Now that we’ve conducted several successful community engagement sessions, we have the testimonies and evidence to prove to the government that Saint Lucians are eager to take their education into their own hands. We’re hopeful the government will hear us. “It’s a wide range of offerings. If you want to pursue a bachelor’s degree in accounting, earn skill-based credentials in construction management or electrical engineering, or become an expert in emerging technologies like blockchain or artificial intelligence, the programme is flexible enough to accommodate you,” says Wayne.
CONNECTING THE COMMUNITY
A strong beginning has been made, and good progress has occurred. The issue here is not commencement but continuation. And however one looks at it, the failure to properly ensure that the launch of a new tech initiative is followed through with a long-term plan, is a huge issue. It does a disservice to those individuals and communities who would benefit, and it is a waste of time and money if an enduring result is not seen. The frustration for all involved is when the potential exists but is not permitted to progress. That has been the story with laptop diplomacy in Saint Lucia in recent years, and that’s why the current dynamic must be a candidate for change. Progress here doesn’t require beginning on a whole new journey, just a readiness to take the wheel and continue what’s been started. TeleCarib Labs represents a tremendous initiative in this field, and its aspiration to continue on the work begun is inspiring but also inherently practical. It can be done, and progress made soon.
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SMALL FARMERS ARE TOP CONCERN FOR NEW OECS-BRAZILARGENTINA AGRICULTURAL KNOWLEDGE EXCHANGE The Commission of the Organisation of Eastern Caribbean States (OECS) is building upon progress to safeguard the Eastern Caribbean’s agricultural sector through greater access to applied farming technology from South America in the face of climate change and food security concerns. Representatives from the Commission joined eleven high level officials from Caribbean Agricultural Ministries, CARICOM Secretariat and CARDI in Brasilia, Brazil and Buenos Aires, Argentina from 12th-15th March to strengthen ties and agricultural technology transfers between the Caribbean, Argentina and Brazil The mission was led by Dr. Manuel Otero, Director General of the Inter-American Institute for Cooperation on Agriculture (IICA) and included a working session in Brasilia, Brazil prior to an Argentine Senate visit with the President of the Agricultural Commission, Mr. Alfredo De Angeli, as well as various technical site visits to institutions to gain firsthand knowledge of innovative technologies and research in the agricultural sector that promote food security and build resilience. Representatives also visited the National
Agricultural Technology Institute (INTA) to examine research facilities that specialize in natural resources, climate and water and domestic agriculture to experience the latest technologies being applied to enhance food security. OECS Commission Head of Development Cooperation and Resource Mobilization, Ms. Beverly Best said the programme to access new farming technologies, especially for small-holders, would complement other regional advancements such as the OECS agri-shipping initiative. “We see this as an important first step in strengthening cooperation between the countries of the Organisation of Eastern Caribbean States, the governments of Argentina and Brazil and IICA,” said Ms. Best. “The initiative provides a platform through which we can enhance south-south cooperation and knowledge and skills-sharing with Brazil and Argentina that have made significant strides in agricultural development and the inclusion of family farmers. “Most farmers in the OECS are smallholders and we look forward to further collaborations to learn about new technology
“Agriculture should be the industry that attracts youth and investors and it should unite technology and investment.” - Desiree Field-Ridley, Officer-in-Charge, Trade and Economic Integration
and best practices and to then share these with our agriculture sector,” said Ms. Best. Desiree Field-Ridley, CARICOM’s Officer in charge of Trade and Economic Integration, explained that agriculture is one of our key sectors, but it has not grown as
needed or expected, and therefore were seeking some kind of assistance that will allow us to offer the necessary support to this activity. “IICA’s work is very important in this regard and we realize that we can cooperate with Brazil and Argentina,” she said.
The Saint Lucia Government Gazette Company Registration Name: Verve Inc.
Name: Glam Box Inc.
Description: Events &
Description: Nail and hair salon
Entertainment Management
Directors Tscina Clarke
Directors Shameela Rambally; Lamar Sifflet
Date Incorporated: 4-Apr-18
Date Incorporated: 23-Mar-18
Chamber: Lydia Faisal’s Chambers, Saint Lucia
Chamber: SEDU, Saint Lucia Name: Amin’s Cabinet, Woodwork & Construction Inc. Description: Construction Directors Shervon Charley Date Incorporated: 26-Mar-18
Name: Metropolitan Networks Caribbean Ltd. Description: IT solutions Directors Karla Edwards Date Incorporated: 5-Apr-18 Chamber: Mary Charles’ Chambers, Saint Lucia
Chamber: SEDU, Saint Lucia Name: Ultra Auto Repairs Ltd. Name: UPHS Inc. Description: Educational training Directors Joshua Yusuf; Janet Yusuf Date Incorporated: 26-Mar-18
Description: Auto body repairs Directors John Fernand Date Incorporated: 5-Apr-18 Chamber: Lydia Faisal’s Chambers, Saint Lucia
Chamber: Ace Corporate Services, Saint Lucia Name: CGM Gallagher Agency Ltd.
Name: ACALA Striping Ltd.
Description: Registered agents
Description: Road painting
Directors Thomas Pragnell; Saundra Bailey;
Directors Mandiana Auguste; Charles Daher
Christopher Sibblis; Camara Francois
Date Incorporated: 6-Apr-18
Date Incorporated: 27-Mar-18
Chamber: Nicholas John & Co. Chambers,
Chamber: Andie George Chambers, Saint Lucia
Saint Lucia
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SWISS AUTHORITIES TREAD WARY PATH THROUGH ‘CRYPTO VALLEY’ Officials seek balance between encouraging new technologies and risking reputation BY FT CORRESPONDENT
“Bitcoin accepted here” reads the sign at House of Wines in Zug. For Albert Osmani, the shop’s owner, allowing payment in the cryptocurrency was a smart move. He pulled off a public relations coup in the tiny Swiss Alpine town — and found a new profit source. In the time taken to convert payments into Swiss francs, the value of bitcoin often jumps, netting a gain. “I have had only positive experiences,” says Mr Osmani. Whether Zug has been so smart is less clear. The town has become a global hub for cryptocurrencies and the blockchain technologies they use, creating headlines two years ago by agreeing to accept bitcoin for small payments for some council services. The area has earned a reputation as “Crypto Valley”, with almost 200 blockchain companies. It hosts the foundation behind Ethereum, the second biggest cryptocurrency after bitcoin. Johann Schneider-Ammann, economics minister, this year hailed Zug as a model for Switzerland to become the “crypto nation”, stealing a march on global rivals as technology spurs more developments. Thanks to Zug, Switzerland last year ranked second after the US in funds generated from “initial coin offerings” — when startups sell tokens or coins — to investors. The strategy has obvious risks, however. Cryptocurrencies have seen wild price swings, threatening big losses for investors. Worldwide, regulators warn that ICOs and crypto ventures may prove frauds, flops, fronts for criminal organisations or threats to the financial system. Zug must show its cryptocurrency credentials can outlast local marketing tricks and stave off regulatory threats. “My big worry is that the whole intransparency will lower Zug’s standing worldwide,” says Andreas Hürlimann, a local Green party councillor. “You don’t know from where to where the money is flowing, whether it is drug money for instance.” One Swiss finance specialist says: “I’m just waiting for Washington to call Bern and ask, ‘What are you doing down there in Zug?’” Zug’s modest size and tranquil setting beneath snow-covered peaks belie a buccaneering business spirit. For decades, low tax rates have attracted entrepreneurs, hedge funds and bankers. International companies in the canton of 124,000 people include Glencore, the global commodities trader. One of the first into the cryptocurrency wave was Johann Gevers, a South African technology entrepreneur who launched Monetas, a digital payment system, in 2013. At the time cryptocurrency and
Zug has become a global hub for cryptocurrencies and the blockchain technologies they use
blockchain pioneers feared raids by legal authorities, he recalls. In the US, bitcoin pioneer Charlie Shrem was jailed in 2014 for his involvement with Silk Road, a black market website. A month after the Monetas launch, Danish computer entrepreneur Niklas Nikolajsen set up bitcoin Suisse, a cryptocurrency brokerage that last year carried out SFr3bn of transactions. Ethereum was launched by 20-year-old Russia-born Vitalik Buterin in 2014. Switzerland’s reputation for stability and its highly devolved political system — as well as strong libertarian streak — were attractive for the nascent industry. “Back then, you had to really fear you might be persecuted and shut down, and imprisoned by various governments,” says Mr Gevers. At a recent rally in Zurich, Steve Bannon, the firebrand former adviser to US president Donald Trump, argued that cryptocurrencies were part of the global populist antiestablishment movement and a reaction against central banks “that debase your currency”. One local insider is more cynical: “They say they are different to banks, that they are Robin Hoods — but we have Robin Hoods driving around in Lamborghinis.” Nevertheless, cryptocurrency pioneers see an affinity between revolutionary decentralised blockchain technologies and the Swiss tradition of local decisionmaking. “Nobody is here because they can get away from governments. They are here because there are gentle, helpful government structures,” says Marcelo Garcia, co-founder of CryptoExplorers.org, a global community of Blockchain experts who hold conferences in Zug. “If your payback is going to be only in 10 years, you don’t want things changing haphazardly.” The country’s historic neutrality also helps. “If someone says I have lost my
[crypto] key, you need a mechanism for resolving the problem — maybe it is not such a bad idea to have the back-up keys held safely in Switzerland,” says Luzius Meisser, founder of the bitcoin Association Switzerland. In addition, Switzerland’s mountain bunkers are ideal for the “cold storage” — cut off from the internet for security — of cryptocurrency assets, says Arthur Vayloyan, chief executive of Bitcoin Suisse. Zug is not yet a crypto idyll. One problem is how to transact with local banks that mistrust wealth earned in the crypto world. Instead crypto pioneers have turned to banks in Liechtenstein or smaller private banks prepared to break ranks. “If they [the Swiss] don’t get that solved within the next six months, they risk the success of the [crypto] eco-system,” warns Mr Gevers. More crucially, Crypto Valley’s fortunes also depend on keeping investors happy. Many coin offerings are in effect donations; if promises were made to investors, strict securities market rules would probably apply. “These ICOs require blind trust in the founders. You can’t do much if the raised funds are misappropriated,” says Mr Meisser. Last year Tezos, which is developing a new blockchain technology, raised US$232m in one of the largest ICOs to date, with proceeds managed by a Swiss not-for-profit foundation under the direction of Mr Gevers. The project became embroiled in rows between Tezos’s founders and Mr Gevers, who stepped down as the foundation’s president. Mr Gevers says he cannot comment given legal action started by those who put money into the project and have been angry at delays. Then there is the risk of politicians tightening the rules — perhaps in response to foreign pressure, such as the US-led action a decade ago against Swiss banks that helped overseas clients evade taxes. Local industry experts dismiss the possibility of foreign governments forcing a crackdown. “I don’t really see that coming.
Crypto is a different beast — and the money would just go to offshore havens or somewhere,” says Mr Garcia. Nevertheless Swiss authorities have had to strike a balance between encouraging new technologies and risking the country’s reputation. “Switzerland remains under pressure to follow a ‘clean money’ strategy. It was hard work to get Switzerland off the blacklists — and there is of course no appetite for it to be back on them,” says Jan Seffinga, blockchain expert at Deloitte, the consultancy. Heinz Tännler, Zug canton’s finance director, says: “The risk is when you have ‘black sheep’. We have our eyes open. But there is never an opportunity without risks.” Finma, the Swiss financial regulator, last month issued new guidelines on ICOs, setting out how entrepreneurs would have to apply anti-money laundering and securities laws. While that has provided more clarity, and supported Switzerland’s “crypto nation” ambition, Zug authorities are wary about being too ambitious about their blockchain projects. Accepting bitcoin for council payments was “clearly a marketing gag,” says Mr Hürlimann. Dolfi Müller, Zug town council president, says: “We play the background music . . . We don’t have great plans — we don’t want to be a ‘smart city’ like Dubai. It’s step by step. It’s Asterix against Rome.” For some local crypto pioneers and analysts, that wariness is a concern when other cities are also promoting their credentials as crypto hubs. “Hong Kong and Singapore have also done a lot of the right things — and have big marketplaces on their doorsteps, lots of entrepreneurs and smart regulators,” says Daniel Diemers, Zurich partner at PwC Strategy&, the consultant. Richard Olsen, founder and chief executive of Lykke, a Zug-based blockchain financial exchange, says the town — and the country — needs to seize the moment to follow through on its leadership while it can. “People come to Zug to see Crypto Valley and they just see letter boxes,” he says. “With every project there is on the federal, canton or city level, they should ask: ‘What could we do with blockchain?’”
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THE STAR BUSINESSWEEK
APRIL 14, 2018
WWW.STLUCIASTAR.COM
SAINT LUCIA BETS ON BLOCKCHAIN! BY CHRISTIAN WAYNE, STAR BUSINESSWEEK EDITOR-AT-LARGE
At an intimate gathering convened earlier this week by the Ministry of Finance and Big Four accounting firm Ernst & Young, I joined a group of local bankers, lawyers, and financiers for an informative one-day seminar devoted entirely to blockchain—the underlying technology used to power cryptocurrencies like bitcoin—and its potentially broader commercial applications promised to ‘up- end’ entrenched industries. While it’s surely impossible that anyone at this stage isn’t at least vaguely aware of what cryptocurrencies like bitcoin are, it’s likely that the enormous media coverage and hype surrounding the technology has confused, or worse, dissuaded you of their powerful implications for business moving forward. Led by a balanced panel of speakers including cryptocurrency entrepreneurs, known as ‘cryptopreneurs’, and evangelists from the Global Blockchain Business Council (GBBC), this oversized room of less than 15 people have begun, at least in earnest, a national discussion on how this little underdog of a Caribbean island could potentially carve out a micro-niche for itself in this rapidly growing global industry. When it comes to attracting rapidly evolving
“We must make Saint Lucia an incubator for technology. But we must do it responsibly.” - Prime Minister Allen Chastanet (standing)
technology-based businesses like these, the large, developed countries are usually the least attractive. In fact, it’s usually a nimble, forward-thinking city—or in our case,
hopefully, a forward-thinking island—coupled with committed, visionary leaders, who end up winning these versions of popularity contests. It is here where one eager audience member
stood out more than others: Prime Minister of Saint Lucia Allen Chastanet. Guiding the discussion, Chastanet revealed his optimistic views on the potential applications of blockchain technology, but also shared his concerns that manoeuvres to attract the growing industry may, in turn, compromise Saint Lucia’s reputation among its international regulators. These concerns are not trivial. Countries like Switzerland and Gibraltar, certainly no strangers to niche finance and regulatory finger-wagging, have already embarked on this experiment. Saint Lucia would be wise to watch how these experiences play out in the coming years, and deploy their learnings to our advantage. Cautiously enthusiastic as he may be, Prime Minister Chastanet, also the country’s Minister of Finance, recognizes that these decisions need to be made sooner rather than later. When asked how long it will be before Saint Lucia articulates a business attraction strategy targeted at the industry, Chastanet noted that there is still more work to be done in exposing our young people and entrepreneurs to the industry before we can seriously talk about a way forward. “Cryptos have been around since 2008. We’re in 2018 now. We’re passed the teething stage on this thing. It’s time for action!”
FINANCIALLY SPEAKING Financial Literacy 101 presented by Bank of Saint Lucia
INVESTING IN FIXED INCOME SECURITIES IN THE ECCU A fixed income security is a financial security that provides returns in the form of fixed periodic payments/coupons with the principal being paid at maturity. Fixed income securities range from a tenor of 91 days to one year (Treasury bills), one to five years (Treasury notes) and from 5 years and beyond (bonds). On a monthly basis there are a number of fixed income securities available to both institutional as well as individual investors in the region.
of notes and bonds). However these rates are normally driven downwards as priority in the auction is given to investors who are willing to accept the lowest rates on the security. At close of the auction, the rate at which the security is fully taken would be the closing rate of the security. The auctions are uniformly priced which means that successful bidders will get the closing rate even if the initially bid rate was lower. Investors who bid above that closing rate would not be successful. Sounds complicated? It really is not. All you need to do is provide your licensed broker with your minimum acceptable rate.
The Eastern Caribbean Securities Exchange (ECSE) through its Regional Government Securities Market (RGSM) makes investing in various Eastern Caribbean Currency Union (ECCU) government fixed income securities seamless. One can stay in any of these jurisdictions and easily purchase securities of member states governments such as Antigua, Dominica, Grenada, St. Lucia and St. Vincent and the Grenadines. These are done through competitive bidding auctions for these securities on the RGSM.
Fixed income securities are also available through private placement issues. These are issues done via a licensed broker instead of through the RGSM. Unlike on the RGSM where the rate is decided through an auction, with the private placement securities the rates are known beforehand. The securities are sold on a first come first served basis.
How do these auctions work? These auctions normally start with a maximum discount (in the case of Treasury Bills) and maximum coupon (in the cases
A secondary market exists for all fixed income securities whether purchased through an auction or via private Faster, safer, more convenient
placement. One does not have to hold the security until maturity. There is no penalty for selling before maturity as interest will be paid to the security holder up until the day of the sale. To take advantage of these investment opportunities one firstly needs to establish a brokerage account with one of the many licensed brokerage houses located in various jurisdictions in the ECCU. BOSL Investment Banking Services is one such Licensed Broker Dealer firms.
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