The list of adverse factors is certainly daunting: first of all, the gradual reduction in tariff barriers worldwide has undermined the Caribbean islands' reliance on subsidized exports of sugar and bananas; then, the fierce attacks by the USA, the FATF and other bodies on money laundering and terrorist financing have forced the IOFCs to eschew many of their traditional clientele; the OECD is pressurizing many of the OIFCs to harmonize their offshore and offshore regimes; and to cap it all, a majority of them are dependent territories of the UK, and have been forced to adopt the odious EU Savings Tax Directive.

It's this last problem that may turn out to be the most disastrous, at least in the short term, as investors shy away from the EU's spotlight. Perhaps not coincidentally, the British Virgin Islands saw a drop in revenue from IBC registrations of 20% last year. With such a wide choice of OIFCs available world-wide, the uncomfortable demonstration that Britain's dependencies had no choice but to knuckle under to the FCO can hardly have helped them.

An Economist report last week pointed out that all 14 of the independent countries in the Caribbean Community (CARICOM) are among the 30 most heavily indebted emerging-economy governments, and seven of them are in the top ten. Ratna Sahay, of the IMF's Western Hemisphere Department, suggested in a recent report that a continuation of current policies would endanger the Caribbean's macroeconomic stability. The IMF says that the Caribbean economies have managed an average growth rate of barely 2.5% in the last 25 years.

Still, the gloom and doom may be overdone, at least in many cases. The BVI still managed to grow last year, helped on by tourism, increased business in financial services, and substantial asset flows from booming China. Many other jurisdictions in the region have been reporting increased business, and most of them are well aware that they have to change their fiscal models, if for no other reason than that regional integration is undermining tariff revenues, which underpin budgets in most cases. Ratings agencies have had hard words for Belize and Barbados (disputed in the case of Barbados) but have complimented the Cayman Islands; and the IMF has been mostly favourable in its regional assessments. The dark cloud of the Savings Tax Directive may not persist: in reality, it is easy to escape the Savings Tax in a number of perfectly legal ways, and the convenience of the Caribbean for US and European investors may outweigh their concerns once the dust has settled.