Bermuda has been removed from the European Union blacklist. This is a good thing, but before Bermudians celebrate or breathe too deep a sigh of relief, there are some important issues that remain outstanding.

About a month ago, I wrote an opinion-editorial on a number of issues relating to Bermuda being placed on an EU blacklist. In that piece I wrote: “The Government of Bermuda, its people and the business community must ask the question, ‘Why?’ The consensus is that we made concessions to the EU that other Overseas Territories did not, yet we were the ones blacklisted, not them. A review of all factors that may have contributed to this bad outcome must be performed.”

First of all, it is helpful to understand the process in such matters. There is always a dual track: the technical track, in this case carried out by members of the Civil Service and sometimes agencies such as the Bermuda Monetary Authority; and the diplomatic/political track, carried out at the ministerial level. Both tracks are vital to the success of the mission. In this case, the mission would have been to avoid the EU blacklist.

Of the two tracks, the diplomatic/political track is by far the more important. It’s so important, there is a term for it — “Engagement”. If good and favourable relations have been established at the ministerial level, via engagement, a technical glitch would not be perceived with suspicion and would not be viewed as “Bermuda playing games”. A mere phone call would have resolved the problem.

Why did this mission fail? We are told by the Government that the failure was because of an inadvertent omission of important wording at the technical level. This explanation is not consistent with my almost five years’ experience with these same EU officials.

While I was Minister of Finance, I travelled to Brussels about twice a year to meet with various members of the EU bureaucracy: commissioners and their key cabinet officials, as well as Members of the European Parliament and the various committee members that dealt with matters that affected Bermuda.

Each time I was there, I told “The Bermuda Story” — how well we screen people who want to do business here; how we have a zero tolerance for international criminals; how co-operative we are with onshore countries on sharing information relating to tax and criminal activity; how we have been early adopters of all new international initiatives; how we have met all anti-money-laundering standards, etc; and, most importantly, how Bermuda provides a tangible value proposition to the global and EU economies through our insurance industry.

This is all well known to us here, but, incredibly, it is still either unknown over there, or known, but perceived sceptically through the tax-haven lens. Without repeated and skilful engagement in telling the “Bermuda Story” by us, officials over there will always default to the sceptical, tax-haven perspective.

Telling the “Bermuda Story” requires considerable skill. Above all, we must recognise our audience’s perspective. While we like to consider ourselves as “the mouse that roars”, we must remember that we are still a mouse, and the Brussels official sitting across the table will regard us as such. If we attempt to roar like a lion — arrogant and proud — then the official is likely to take offence. If that happens, the entire purpose of engagement would be nullified and the EU perceptions of Bermuda would return to its default position — that is, through the hostile, tax-haven lens. When carrying out engagement, a careful balance must be struck.

When a last-minute technical glitch resulted in the EU concluding that “Bermuda was playing games”, a catastrophic failure in the diplomatic/political relationship must have occurred. It’s like saying that a man is admitted to hospital for food poisoning and the police immediately arrest his wife for attempted murder. The conclusion that the wife deliberately tried to kill her husband is not logical, unless there was evidence of a deterioration in their relationship.

Bermuda being blacklisted for “playing games” is evidence of a deterioration in the relationship between the two parties. The minister who was responsible for the diplomatic/political engagement, ie, the relationship, must be held to account. It was this failure that has resulted in our blacklisting and the jeopardising of our international business sector.

In my previous op-ed, I also stated: “... even if we are removed from this list in a month’s time, this is not over”. There is likely to be a lasting cost to the blunder of getting on the list in the first place.

On April 29, 2018, I wrote to the Premier stating: “I am writing you regarding the clear threat posed to Bermuda, its economy and the standard of living of its people, by the moves in the UK Parliament to attempt to force overseas territories, including Bermuda, to adopt public beneficial ownership registers. I’m sure you would agree that this threat is very serious and imminent.

“On matters such as this, I think that internal political or partisan differences that exist between the party that I once represented and the party you lead must be put aside in an effort to thwart Bermuda’s external opponents. It may sound trite, but this really is ‘Us against the world’.”

I stand by that statement. However, this does not preclude criticism of ministerial performance that may have, in fact, assisted Bermuda’s external opponents, instead of thwarting them.

On May 4, 2018, the Premier made a ministerial statement in Parliament, referring to my support and also strongly declaring: “There will be no public register of beneficial ownership in Bermuda until this Honourable House, elected by the people of Bermuda, votes to implement one! The Government rejects the regressive colonial mindset that some in London hold, that a Parliament 3,000 miles away can impose anything on Bermuda that does not fall under the areas of defence, internal security, the judiciary and external affairs.”

Well, things have changed since May of last year. Then, we were not on anyone’s list and stood on solid legal ground regarding public registers. Now, we’ve been on a blacklist and, no doubt, have needed the British Government’s co-operation to get off. What is the cost of that co-operation? This is the same British Government that wants to impose public beneficial ownership registers on us. Now, I have stated publicly many times that the best thing about our relationship with Britain is that we don’t owe her anything. Bermuda taxpayers even pay the British governor! They have not had any leverage on us, until now. Now they do!

While public beneficial ownership registers will have no effect on (re)insurance, it will be highly damaging to the trust, legal, investment and corporate administration sectors. These sectors directly employ hundreds of Bermudians and indirectly employ hundreds more.

Leverage by one entity over another can be explicit or implicit. For example, removal from the blacklist puts us on the EU greylist. The greylist carries with it an implied threat that if we make a wrong move, we can be demoted to the blacklist. Again! No one explicitly will spell this out, but the leverage, although implied, is no less real. The great advantage of implicit leverage over explicit leverage is that implied leverage is perfectly deniable.

The leverage the British Government now has over Bermuda enables it to avoid any nasty and potentially embarrassing, public, legal, constitutional confrontations. Our bungling of the blacklist has given the British all the high cards in the poker game involving public beneficial ownership registers. It appears, therefore, that Bermuda’s kowtowing to Britain’s demands for public beneficial ownership registers of some kind is now only a matter of time.

How publicly humiliating this change will be largely depends on internal British politics. The Conservative government will likely take the more subtle approach, such as what we are seeing now. However, unless the Conservatives dramatically improve their performance, there will soon be a Labour government in Britain. Our chief tormentor, Dame Margaret Hodge, will then have the power of government behind her, and she will surely commence wielding a heavy cudgel in our direction.

Therefore, the management or mismanagement of the external affairs for Bermuda has had, and surely will have, profound effects on the future economic success of the island and the future prospects of everyone living in this island.

• Bob Richards was the Minister of Finance and Deputy Premier between December 2012 and July 2017