BRITAIN AND THE OVERSEAS TERRITORIES -- A MODERN PARTNERSHIP 1.1 Britain's links with the Overseas Territories are long-standing and important. The relationship is rooted in a shared history: but it moves forward, too, in partnership. For Britain, the Overseas Territories are a significant element in its national and international identity, and an important responsibility. For the Overseas Territories, their links with Britain are significant too: but so is their individual character and diversity. This intertwined relationship is strong and constant. But it is subtle and changing too. A new and modern partnership between Britain and the Overseas Territories must reflect this relationship. It must be a partnership for progress and prosperity.

1.2 The Government is committed to modernisation. Modernisation is at the core of its vision, its direction, and its policies. We are applying this process of modernisation systematically -- to the economy, to the health service, to education, to crime prevention and to jobs. Modernisation is at the heart of our approach to renewing the framework of Britain: to new representational arrangements in Scotland, Wales, Northern Ireland and London, and to new administrative arrangements in England. We are recasting the constitutional settlement to bring power closer to people.

1.3 We are also reforming our relations with the rest of the world. We have ended Britain's isolation in Europe, with increasingly tangible results. We have re-established Britain as a leading international player, prepared to take tough decisions to deal with complex and pointed international difficulties -- and where necessary, to back them up with action.

1.4 Britain's mutual relationship with the Overseas Territories must be seen in this context: within the overall framework of modernisation and reform, and within Britain's new international role. As participants in the new global order and the new global economy, the Overseas Territories themselves must embrace reform and modernisation. And in its relationships with the Overseas Territories, Britain must ensure that its structures and its practices are reformed and modernised. The relationship between Britain and the Overseas Territories needs to be effective and efficient, free and fair. It needs to be based on decency and democracy. Both Britain and the Overseas Territories have much to contribute to each other. They have done so in the past. They must continue to do so now, and in the future.

The Territories 1.5 The British Overseas Territories comprise Anguilla, Bermuda, the British Virgin Islands, the Cayman Islands, the Falkland Islands, Gibraltar, Montserrat, the Pitcairn Islands, St. Helena and its dependencies Ascension and Tristan da Cunha, and the Turks and Caicos Islands; the territories of the British Antarctic Territory, the British Indian Ocean Territory and South Georgia and the South Sandwich Islands, which have no indigenous population; and the Sovereign Base Areas of Akrotiri and Dhekelia in Cyprus.

1.6 The Overseas Territories retain their connection with the UK because it is the express wish of their peoples that they do so. They have a substantial measure of responsibility for the conduct of their own affairs. Local self-government is generally provided by an Executive Council and elected legislature. Governors or Commissioners are appointed by the Crown on the advice of the Foreign Secretary, and retain responsibility for external affairs, defence and, usually, internal security and the public service.

A new partnership 1.7 In August, 1997 we began a review of Britain's relationships with what were then called the Dependent Territories. In addition to the arrival of a new government following the election result of May 1997, a number of specific factors combined to prompt this fresh look. These included: escalating volcanic activity on Montserrat; increased awareness of the isolation and economic problems of some of the poorer territories -- notably St Helena; the growing significance of the offshore financial centres in some territories -- in particular, Bermuda, the Cayman Islands and the British Virgin Islands.

1.8 The purpose of the review was to ensure that the relationship reflected the needs of the territories and Britain alike, and to give the territories confidence in our commitment to their future. The review covered policy towards all the remaining territories, although particular circumstances applied in the cases of Gibraltar and the Falkland Islands. The Sovereign Base Areas in Cyprus were excluded from the review because of their specific character as military bases and are therefore not included within the scope of this White Paper.

1.9 The basis of the review was that Britain's links to the Dependent Territories should be based on a partnership, with obligations and responsibilities for both sides. The territories should administer themselves in accordance with their constitutions and in full respect for those of the UK's international obligations relevant to them. Within that framework the UK should uphold the right of the individual territories to determine their own future and to enjoy a high degree of autonomy, while assuring their defence and external relations and providing governance of high quality.

1.10 The last major review of policy towards the territories took place in 1987, but was limited to the Caribbean Dependent Territories and Bermuda. The review concluded that the UK should not seek to influence opinion in the territories about independence, but should remain ready to respond positively when independence was the clearly and constitutionally expressed wish of the people. The reasonable needs of the Dependent Territories would continue to be a first charge on the UK's aid funds.

1.11 We sought views on three principal issues: Citizenship Whether people in the Dependent Territories who did not have it wanted British citizenship (carrying with it the right of abode in the UK) and if so on what basis -- whether or not people in Britain and people in the territories should have reciprocal rights, including the right of abode? The consultation found that there was interest in British citizenship - but only on the basis of non-reciprocity.

Constitutional status What degree of interest was there in changing the territories' constitutional relationship with the UK? Apart from some limited reference to Crown Dependency status similar to that of the Channel Islands, there was no widespread interest in a change in the current constitutional relationship.

Name Was there significant support for changing the name of the countries concerned from `British Dependent Territories'? The consultation found there was support for a change of name to British Overseas Territories, or something similar.

1.12 A number of other exercises have contributed to the preparation of this White Paper.

NAO Report on Contingent Liabilities in the Dependent Territories 1.13 On 30 May 1997 the National Audit Office (NAO) published an updated Report on Contingent Liabilities in the Dependent Territories. The report identified a wide range of areas in which there had been progress since its last report in 1992, but called for continuing action to minimise future risks to the Exchequer.

1.14 As in 1992, the Public Accounts Committee (PAC) held hearings on the basis of the NAO report. The Permanent Under Secretary of the FCO, Sir John Kerr, gave evidence. The PAC published its conclusions and recommendations in a report to Parliament on 21 May 1998.

1.15 The timing and substance of this review were a considerable help in the preparation of this White Paper. Its recommendations -- particularly those relating to financial regulation and the control of public borrowing -- have been addressed.

Foreign Affairs Select Committee enquiry into the Overseas Territories 1.16 Separately, the House of Commons Select Committee on Foreign Affairs (FAC) embarked on its own review of the territories. It took evidence from Baroness Symons on 25 November 1997. The FCO also submitted two memoranda to the FAC.

The Committee published its interim report on 3 February 1998, recommending that: the Government's review should cover the difficulties Dependent Territory passport holders experience when travelling and others related to education and training; coordination in Whitehall should be strengthened; good governance and the rule of law in the territories should be promoted and their constitutions revised; the proposal to change the name to Overseas Territory was right.

The Government's response to the enquiry was published on 13 May 1998.

Select Committee on International Development enquiry into Montserrat 1.17 In the light of the continuing threat to Montserrat from volcanic activity, the International Development Committee of the House of Commons announced in August 1997 its intention to conduct an enquiry into the Government's conduct of the crisis. The Committee published its conclusions on 27 November 1997.

The Government's response was forwarded to the Chairman of the Committee by the International Development Secretary on 2 February 1998. The Committee produced a further report on 28 July 1998. The Government's response was published on 29 October 1998.

A new partnership -- the new way forward 1.18 We announced the interim findings of the review in February 1998. In a speech to the then Dependent Territories Association -- now known as the UK Overseas Territories Association -- the Foreign Secretary set out the principal elements of the new relationship between Britain and the Overseas Territories.

1.19 The new relationship would be a modern partnership tailored to the needs of both sides, and based on four fundamental principles: self-determination; mutual obligations and responsibilities; freedom for the territories to run their own affairs to the greatest degree possible; a firm commitment from the UK to help the territories develop economically and to assist them in emergencies.

1.20 The key areas for change in the new relationship would be: Coordination The Foreign Secretary would work with the International Development Secretary on the details of new arrangements to ensure the best possible management of the UK's links with, and responsibilities for, its territories. A Minister for the Overseas Territories would be appointed. There would be a new structured dialogue between the Overseas Territories and the Government.

Name The territories would in future be known as United Kingdom Overseas Territories - for short, Overseas Territories.

Citizenship The sense of injustice felt in many Overseas Territories from not enjoying British citizenship was understood. We would look sympathetically at the possibility of extending citizenship.

Financial regulation A check-list of regulatory measures for the territories to bring their financial regulation up to internationally accepted standards would be drawn up. The Overseas Territories would be invited to present proposals for independent and properly resourced regulatory authorities.

Human rights The record of many Overseas Territories was positive, but further work would be needed to ensure compatibility with the commitments which Britain has made on their behalf.

1.21 We said we would press ahead with action in priority areas, like better regulation of offshore activities. Separately, it was decided that action would also be taken to deal with harmful tax competition issues, which were attracting increased international attention. The Foreign Secretary said that the next stage would be to develop the details of these proposals in a White Paper.

PARTNERSHIP FOR PROGRESS AND PROSPERITY 2.1 Britain's policy towards the Overseas Territories rests on the basis that it is the citizens of each territory who determine whether they wish to stay linked to Britain or not. We have no intention of imposing independence against the will of the peoples concerned.

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