"If there were any scheme designed to destroy the economies of several countries without a military war, then this is such a scheme. It is erroneous; it is pernicious; and it is vicious". That was how Antigua and Barbuda's Prime Minister Gaston Browne described the way in which US banks, under pressure from US regulatory agencies, are cutting off correspondent relations with Caribbean indigenous and offshore banks unilaterally and with very little notice.

No wonder then that the Prime Minister of Belize, Deane Barrow, who restricts travelling to the minimum because of spinal challenges, was in Washington DC for much of the week beginning January 25th to meet senior representatives of the US government and regulatory agencies.

Of all the Caribbean countries, Belize has been the hardest hit by US banks terminating correspondent relations. But, other Caribbean countries are also feeling the squeeze of what is obscurely called "de-risking". Indeed, the problem is so acute that no foot-dragging on the issue could be excused. The matter should be the highest priority for regional governments, diplomats and the entire private sector, not only banks for whom the issue has become one of immediacy.

Even as the Belize Prime Minister was knocking on Washington doors that were closed until mid-week because of a snow storm, Antigua and Barbuda's Gaston Brown was explaining to his colleague heads of Latin American and Caribbean governments at a Summit meeting in Ecuador that "the economies of many of our countries, particularly in the Caribbean, now face a serious threat to our banking and financial system". He explained that the the region has been branded a "high risk area" for financial services and added that "this allegation has been made without a shred of evidence to support it, and without any consideration of its grave effects on our countries". The Belize Prime Minister had earlier warned that US de-risking was causing a crisis in the Eastern Caribbean and that the region's financial and trade architecture cannot survive the withdrawal of U.S. correspondent relationships.

These two Prime Ministers had been the principal interlocutors when regional heads of government met US President Barack Obama last April in Jamaica. At that time Caribbean leaders understood President Obama to have committed to examine their complaints and to explore ways in which the governments could work together to resolve the issue. However, no word has been forthcoming from US authorities.

Instead, last April, Bank of America, which has a wide network of correspondent relations with banks throughout the Caribbean, cancelled its correspondent banking operation with the domestic and international branches of the Belize Bank. Since then, it has closed – or given notice of terminating – relations with banks throughout the region.

Prime Minister Browne, without naming any US bank, said in Ecuador that the unfair branding of the Caribbean as a "high risk" area "made repeatedly by representatives of the United States Government and Congress – and in the European Union - has frightened the financial regulatory bodies and the financial institutions in the US especially. In turn, the regulatory bodies in the US have falsely warned their banks that the Caribbean is a "high risk area" for financial services. Threatened with huge fines if one minor incident of money laundering escapes their scrutiny, the US banks have been intimidated into severing correspondent relations with Caribbean banks".

No less an institution than the World Bank has put its name to a report that describes the threats that "de-risking" poses to Caribbean financial institutions. "Withdrawal from Correspondent Banking; Where, Why, and What to Do About it" was prepared by the Finance and Markets Global Practice unit of the World Bank Group. Among other things, the report observes that relationships are terminated with only 30 days' notice and argues that "a longer notice period is of greater importance in smaller jurisdictions or where options for alternatives are limited".

Importantly, the World Bank report stresses that" the loss of a foreign correspondent banking relationship without replacement can result in only a few channels being available to a respondent bank, thus becoming dangerously dependent on only a few or sometimes just one institution". In fact, many Caribbean banks are now in the dangerous situation of having only one correspondent bank in the US, and then only tenuously.

The report also went on to urge that "large international banks that are the providers of foreign correspondent banking services should consider placing appropriate credit and other limits/conditions on their client banks, rather than terminating the relationships". That has not happened so far. The effect, as Antigua and Barbuda's Prime Minister said, will be: "first, remittances from our diaspora which are important to the foreign exchange earnings and the welfare of the poor in our society, will be adversely affected; second, businesses will not be able to pay for the goods and services which they import and which are necessary for human existence; third, the tourism industry on which many of our countries are reliant will be fatally injured when payments cannot be made and revenues received, and fourth, sooner rather than later, our indigenous banks and offshore financial sectors will collapse and close down, causing all of the problems that I have just described, in addition to adding to unemployment and the break-down of our financial system".

The Prime Minister of Belize has been beating the streets in Washington while the Prime Minister of Antigua and Barbuda has been beating the drum to Latin American and Caribbean leaders with a strong message: "If the industrialised countries, such as the US and the European Union, sincerely care about the development of our area and the well-being of our people, they should re-examine this outrageous "de-risking" system and replace it with something that is proportional and balanced and in whose formulation our countries are involved".

Caribbean governments and the private sector, not only the banks, cannot be silent on the issue. "De-risking" could mean destruction.

Responses and previous commentaries: www.sirronaldsanders.com

(Sir Ronald Sanders is Antigua and Barbuda's Ambassador to the United States. He is also a Senior Fellow at the Institute of Commonwealth Studies, University of London and Massey College, University of Toronto)