This document, was issued originally in 2003 for Overseas Territories Consultative Council. It has been updated in light of developments since the March 1999 Partnership for Progress and Prosperity White Paper was published, looks ahead to the coming decade, and considers whether there is a need to build on the principles and mechanisms established in the White Paper.

Developments since the 1999 White Paper

Most of the recommendations in the paper have now been implemented:

• Successive Ministers for the Overseas Territories in the FCO have worked closely with DFID and other ministers to take forward the UK's links with, and responsibilities for, the Overseas Territories.
• The Overseas Territories Consultative Council, which provides a political forum for UK Ministers and Overseas Territories Chief Ministers to discuss issues of topical interest, is now well established: the eighth meeting was held in November 2006. 
• Overseas Territories citizens have been granted British Citizenship, with the right freely to settle in the UK (on a non-reciprocal basis).
• Constitutional Reviews are underway in most of the Territories, and new Constitutions have now been agreed for the Turks and Caicos Islands, and the British Virgin Islands.
• DFID has continued to provide substantial development and emergency assistance, particularly to Montserrat where the volcano has remained active, and to St Helena.
• Progress has been made in bringing financial regulation in the Territories up to internationally accepted standards.
• Human rights legislation in the Territories has been brought more into line with the international obligations to which the UK is subject.
• Environmental Charters have been signed with most of the Territories, and a  FCO/DFID programme supports their implementation.  The Charters will be reviewed later this year.

Challenges facing the Overseas Territories

Although each is different, the Overseas Territories face a range of challenges arising from their size and, in some cases, geographical isolation:

• Some challenges are common to all small island economies: globalisation is tending to spread its impact unevenly, with smaller countries in danger of being marginalised;
• Many Overseas Territories are vulnerable to natural disasters, especially hurricanes;
• The economies of some Overseas Territories are fragile because of dependence on one or two sectors (often tourism and international finance);
• There are issues about the extent of Overseas Territories engagement in regional organisations, where there are likely to be pressures for further regional integration over the next decade;
• A range of problems are posed by the small populations in the Overseas Territories, particularly in recruiting people to hold key positions in Overseas Territories administrations, resolving conflicts of interest, and managing immigration and residence status;
• In certain Territories there are governance issues which need to be addressed - including corruption,  financial management and regulation of financial services;
• In some cases, the lack of developed civil society, strong legislature and/or vibrant press mean there are few checks on the executive;
• The geographical location and size of some of the Overseas Territories make them vulnerable to drug-trafficking and associated crime.

More generally we are moving into a world which is becoming ever-more interconnected, in which the distinction between domestic and foreign policy will become less and less clear.  This is true in areas such as contingency planning, aviation and maritime safety/security, financial regulation, management of the economy, the environment and human rights.  International obligations applying to the Overseas Territories are likely, over the next decade, to become more demanding in many of these areas, in some of which the Overseas Territories themselves lack technical expertise and institutional capacity.  In essence the UK is acting as the transmission mechanism by which an ever growing corpus of global regulation is applied to the territories.  Were an Overseas Territories to choose independence (where this is an option), the implementation of international rules would be a matter between them and the organisation concerned.  But while the Overseas Territories choose to remain British, the UK has the obligation to ensure that they implement such measures.

Principles and mechanisms

Many of the Overseas Territories have made great strides in their own development.  In some, standards of governance and implementation of international standards are equal to, or in some cases exceed, the standards in the UK.  In others governance and implementation issues have given rise to concern.  If not addressed, as well as having serious implications for the well-being of Overseas Territories citizens, they could give rise to significant contingent liabilities for the UK. 

The White Paper made clear that Britain has a right to expect the highest standards of probity, law and order, good government and observance of Britain's international commitments.  For as long as those territories in a position to do so choose not to go independent, the responsibility to ensure that these standards - which should be met by all countries, whether independent or not - are in fact achieved lies with Overseas Territories Governors working in partnership with the Governments of the territories concerned.  In day to day terms this means that UK Ministers expect Governors to keep a close watch on areas of importance to the UK with a view for example to ensuring:

• reflection as necessary in local legislation of applicable international obligations (including in the areas of human rights, the environment and counter-terrorism);
• adherence to established international standards (eg over aviation and maritime safety and security, and regulation of financial services);
• good governance (including the conduct of free and fair elections, transparency eg in the sale of Crown Lands and awarding of large government contracts, and the unimpeded use of the police and criminal justice system in the face of corruption);
• sound financial management (including adherence to responsible borrowing limits and prudence in entering into public private partnership agreements); and
• appropriate and prompt response to audit criticism. 

Some of these issues are in areas which Overseas Territories Governments might consider to fall outside the specific responsibility of Governors.  But for as long as the UK bears ultimate responsibility for the territories, and has a contingent liability if things go seriously wrong, UK Ministers see an important role for Governors in monitoring developments, and reporting to them areas of concern.  In Territories which are well-managed, this may mean that Governors may simply need to sustain full and productive dialogue.  In Territories giving rise to greater concern, Governors may need to play a more proactive role in these areas than hitherto.  The aim throughout will be to deliver high standards of governance to the benefit of all Overseas Territories citizens.

We are not proposing that Governors should be given new powers: these issues are better handled in a collaborative way wherever possible.  Governors need to work together with Overseas Territories Governments to ensure the highest standards of governance and the full and speedy observance of international commitments.  But, given the position described above, Overseas Territories Governments should not expect that in the Constitutional Reviews currently underway the UK will agree to changes in the UK Government's reserved powers, or which would have implications for the independence of the judiciary and the impartiality of the civil service.

This paper is not intended to cover Gibraltar.

Date: June 2007