Abstract
Diaspora remittances are a faithful source of capital, a vital social safety net and a source of local economic investment for many households, communities and states across the Caribbean. But recent efforts by powerful interests to exercise control over these flows of capital are beginning to threaten the continuity and accessibility of this lifeline. As financial institutions, fiscally constrained governments and imperializing states have become increasingly attuned to the value of Caribbean remittances, so too have their efforts to gain control over the volume and flow of these private transfers of funds. For governments, remittances promise the possibility of access to funds that can be used to bridge finance gaps, and among financial institutions they offer opportunities to generate profits from the cross-border movement of money. But for imperializing states, remittances are increasingly viewed as a potential threat to their efforts to control the movement of money. I argue that these different and sometimes conflicting views of remittances reflect the complex forms of coloniality and racial subjugation that continue to reproduce economies of dispossession.
Introduction
Across the Caribbean and indeed much of the global south, remittances have become a faithful source of capital, a vital social safety net and source of local economic development for many households and communities. Sent in denominations of USD200–300 at intervals of every month or two, these private transfers of funds, typically finance everything from utility bills, school fees and food, to housing and medical supplies (IDB, 2004; Todoroki et al., 2009). Estimated at USD13.4 billion dollars in 2018 (World Bank, 2019), the Caribbean stands out among remittance economies because the absolute value of these inflows is higher than export earnings, overseas development aid, and even Foreign Direct Investment (FDI) (World Bank, 2019). In countries like Haiti, the Dominican Republic, Jamaica, Guyana and Cuba, remittances remain vital to the capacity of the poorest households to exercise autonomy over their lives in the face of crushing forms of debt-related austerity.
Since the 1990s a vast literature exploring the growing importance of remittance economies has emerged (Basch et al., 1994; Christou and Mavroudi, 2015; Guermond and Samba Sylla, 2018; Kapur, 2004; OECD, 2017; Riddle et al., 2011). Framed within migration and diaspora studies, early research focused on the experiences of dislocation, nostalgia and obligation that shaped how migrants and their families forged life across transnational borders (Bakewell, 2008; Basch et al., 1994; Wong, 2006). Linking these capital flows to the survival strategies of households impoverished by the austerity policies of the 1990s, these scholars drew attention to the power of remittances and their capacity to generate profound transnational connections between people and places. By the mid-1990s, the focus on migrant transnationalism gave way to much more narrowly focussed policy approaches (Kapur, 2004; Newland and Plaza, 2013). While these studies similarly recognized how remittances functioned as a form of social protection for poor households, they also noted how these flows of capital cushioned governments from the impact of external shocks by increasing foreign exchange reserves and improving the balance of payments. Manuel Orozco's analysis of the nature of Latin American and Caribbean remittances at the turn of the new millennium, for example, is indicative of the shift from the study of migrant practices to remittance economies. While much of his earlier work documented how remittances generated multiplier effects in critical sectors like air transformation, tourism and the nostalgic trade in local foods, by the start of the new millennium his attention had turned towards developing targeted policy interventions to maximize their developmental impact. (Orozco, 2004, 2006).
As remittance economies have grown and matured, so too have efforts to reorient them towards financial markets where discourses of ‘efficiency’, ‘productivity’ and liberal concepts of ‘inclusion’ shape and define their value (Pellerin and Mullings, 2013). From hedge fund managers, in the case of Puerto Rico, to international organizations like the World Bank, there is a growing consensus that there is much to be gained from realigning diaspora remittances with the interests of financial markets (OECD, 2005a, 2005b; World Bank, 2011; World Bank/INFODEV, 2013). For many international development organizations remittances have the capacity to offer states access to investment capital, while among private corporations, the latest – Facebook (Surane and Cannon, 2019), recognition of the value of remittances is inspiring the development of new innovative instruments aimed at bringing much of the world's unbanked remittance recipients, into financial markets (van Steenis, 2019; Vigna, 2019).
Described as financialization, scholars argue that this emerging pattern of accumulation is giving financial markets, financial motives, financial institutions and financial elites, unprecedented levels of influence over the functioning of economies and the conduct of economic and social life (Epstein, 2005: 3). Focusing on ‘the axiomatic “invisible hand” of supposedly anonymous, self-regulating financial markets’ (Storm, 2018: 303), much research on financialization examines how debt and risk increasingly shape the contours of peoples’ everyday lives (Federici, 2014). Geographers like (Pike, 2006), Wyly et al. (2009), Aalbers (2008) and Loomis (2018) are also exploring the impact of financial innovation on markets for housing, education and healthcare, drawing our attention to the growing orientation of firms towards private equity investment and the maximization of shareholder value. What has been notably missing in this burgeoning geographical literature, is sustained scholarship on the financialization of remittances that engages decolonial/anticolonial frameworks to do so (but see Soederberg 2013 and Guermond and Samba Sylla 2018). It is my contention that efforts to financialize remittances cannot be disentangled from the technologies of power that have historically governed how racialized populations enter into financial relations. So, as investment banks and other financial intermediaries, international development institutions and governments race to exert greater influence over global remittance flows, it is important to examine the racializing power geometries that are beginning to emerge.
Decolonial and anti-colonial scholars argue that emerging forms of finance-driven capitalism are producing new patterns of racial dispossession (Byrd et al., 2018; Mignolo and Escobar, 2009). Tracing the dispossessive logic of financialization within conceptual frames that foreground race, makes it possible maintain the theoretical tension between the making of racial categories and the expansionary imperative of capitalist systems. For as I believe, frameworks that foreground capitalism, even if attentive to race, easily lose sight of the historical dispositions, conventions, relations and practices that mark racialized subjects as already more vulnerable to, and intimately familiar with loss, risk, pain and death.
As Chakravarrty and Ferreira da Silva (2012) state, an analytics of raciality allows us to interrogate how racial and cultural differences are “deployed to reconcile a conception of the universal (as encapsulated by the notion of humanity) with a notion of the particular (of difference as marked in bodies and spaces)” (370). I concur with them that what is easily lost in accounts that foreground capitalism over racialization is an appreciation of the power of previous racial and colonial forms of subjugation to render the capital, labour and lives of racialized populations more disposable, replaceable and collateralizable (Kamugisha, 2019).
Remittances are becoming financialized through a range of technologies aimed at orienting these capital flows towards the interests of financial institutions and financial elites. These include the use of remittance capital to create tradable financial instruments such as diaspora bonds (IFAD 2015; Johnson, 2019), and the use of digital technologies to transform unbanked recipients of remittances into consumers of financial services. As the value and stability of global remittances have become apparent, however, a tension has emerged between efforts to open up remittances to the rationalities of financial markets and attempts to subject them to the securitization policies of powerful nation states. While this tension speaks to the common concern for the organization of risk, how these concerns are imagined and spatialized cannot be divorced from the longer histories of extraction and racial dispossession within the global financial system. In exploring the relationship between the financialization and securitization of remittance flows, I aim to draw attention to the longer history of coloniality in Caribbean finance and banking and its role in the construction of the Caribbean as a racialized space of risk and threat. In doing so, I draw attention to continuities among the forms of economic and financial control that were exerted over the region during the period of formal colonialism, and those that control the region today.
Grounded in critical policy analysis I explore some of the ways that the financialization of Caribbean remittances are creating what, Byrd et al. (2018) call new ‘economies of dispossession’ which they define as ‘multiple and intertwined genealogies of racialized property, subjection, and expropriation’ (2). Recognizing policymaking as a space of struggle over meaning, where language serves a political purpose, I draw on secondary data – texts produced by states, international development institutions, and financial interest groups, to draw attention to the contradictions between what policies say and what they do. More specifically, I rely on extensive electronic searches and close readings of selected published policy documents to map how remittance economies are imagined, discursively articulated and ultimately, governed by national governments, financial institutions and international development organizations. I have also searched these texts for policy proposals rooted in racializing ideologies, with a view to documenting how racial categories and imaginaries are imbricated in the forms dispossession that are emerging alongside the financialization of remittances.
This paper is divided into two sections. In the first section, I examine the relationship between finance and the creation of economies of dispossession drawing on frameworks that interrogate the co-constitutive relationship between racialization and capitalism, as well as its attendant forms of coloniality. I make these connections through an historical examination of finance and banking in the Caribbean, the importance of remittance economies to wealth creation in particular Caribbean states and the racial roots of the dispossessive logic that has begun to shape how remittances are imagined by Caribbean governments, financial elites and imperial states. In the second section, I examine two inter-related examples of the financialization/securitization dynamic that is shaping the direction, flow and benefits of remittance economies in the Caribbean. In the first example, I examine the dispossessive logics embedded in recent efforts to develop innovative debt instruments in Haiti and Jamaica that are geared towards their diaspora. In the second, I examine the phenomenon of de-banking, and the impact that Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regulations are having on banking in the Caribbean in general and on remittances specifically. In both cases I draw attention to the coloniality of the dispositions, policies and practices that historically excluded racialized Caribbeans from access to financial markets, and those that define the terms of their inclusion today. I conclude with a call for more critical approaches to the study of remittances, and for research committed to uncovering and challenging the economies of dispossession that the financialization/securitization dynamic has the capacity to produce.
Racial capitalism, finance and the making of economies of dispossession
In the last 20 years there has been increasing interest among a new generation of scholars, in mapping the relationship between capitalism, racial categories, domination and dispossession. Scholars are revisiting the works of writers like Robinson (1983), Cox (1948) and Williams (1944) with a view to understanding capitalism's continued reliance on the dispossession of the rights of racialized groups to the resources needed, as Melamed (2015) observes, to sustain collective human life. Motivated perhaps by rising levels of anti-Black violence, or by the resurgence of global white supremacy, new generations of scholars with interests in capitalism studies, are drawing attention to the centrality of racial categories and racial orders to the expansion of capitalist systems (Bhandar, 2018; Coulthard, 2014; Hudson, 2017). As both Cox (1948) and Robinson (1983) (almost 40 years later) argued, racialization and capitalism are inseparable and co-constitutive of each other. Both rely on material and epistemic forms of violence that are infinitely creative in their capacity to dispossess communities of the means to socially reproduce themselves. Both Cox and Robinson saw capitalism as ‘racial’ because in its evolution from European feudalism it retained the practice of transforming regional and subcultural differences into ‘racial’ ones, to justify the domination and exploitation of subjugated others. Thus, by the 16th century when capitalism emerged as the dominant world system, the creation of hierarchical racial categories based on new exploitable differences was already a practice that determined the value attached to the bodies and labour power of the peoples now being colonized by Europeans (Wynter, 2003). As Caribbean theorist Sylvia Wynter argues, race was the code through which Western bourgeois biocentric conceptions of homo economicus: the rational utility-maximizing political subject, came to represent all possible genres of what it means to be human, a code for which Caribbean people ‘came up' deficient (Wynter, 2003; also see Scott, 2000). Recent scholarship by modernity/coloniality scholars also captures the underlying logic and spatial articulation of power expressed in the idea of racial capitalism (Mignolo, 2011; Quijano, 2000). Focused primarily on Latin America, these scholars examine the structures of power, control and hegemony used to create hierarchical systems that racially and socially classify non-European populations. More than a set of material practices, these authors argue that discourses of modernity and progress have been equally powerful in discursively producing racialized subjects whose dispossession can be naturalized and justified. Mignolo (2011) argues that modernity – expressed in the rhetoric of salvation/emancipation; coloniality as effected through the logic of racial oppression; and capitalism through material processes of dispossession, when combined, ‘dispensed with human lives, and justified racism and the inferiority of human lives that were naturally considered dispensable’ (6). Focusing on expressions of coloniality in the anglophone Caribbean, Kamugisha (2019) views the region as caught in a state of tragedy and crisis, due to the failure of its governing elites to address the enduring racial and gender ideologies that continue to consign the majority of the region's Black and Indigenous populations to lives marked by poverty, violence and early death. It is this politico-economic architecture, Chakravarrty and Ferreira da Silva (2012) argue, that has created an enduring moral text that questions the legitimacy of racialized others as juridical, economic and ethical entities, capable of self-determination.
While scholars writing within Black radical, anti-colonial and decolonial traditions all agree that racist and hetero-patriarchal knowledge practices provided justifications for the direct conquest and appropriation of resources since the earliest phases of capitalism, geographical studies of their role in shaping today's financialized policy landscapes are only recently begun to emerge (Bhandar, 2018; Bledsoe and Wright, 2019; Loomis, 2018; Wyly et al., 2012). Yet, as Ruth Wilson Gilmore warns, today's forms of racial capitalism continue to rely upon ‘all kinds of scheming, including hard work by elites and their compradors in the overlapping and interlocking space-economies of the planet's surface. They build and dismantle and reconfigure states, moving capacity into and out of the public realm. And they think very hard about money on the move’ (Wilson Gilmore 2017). Byrd et al. (2018) similarly alert us to the importance of rationalities of abstraction and commensurability to processes of financialization. As they explain: “These are the rationalities that enact and disavow racial and colonial violence by constituting people, land, and the relations of social life as translatable into value form, making incommensurate histories, experiences, and forms of social being commensurate by reducing them to their meaning and value within ‘the capital relation’” (p. 7). Byrd et al. (2018) argue that like the slave-backed bonds used to raise capital against the bodies and labour power of unfree persons in the US antebellum period, the contemporary leveraging of shares in ventures that rely on the coercion of human bodies, or the warehousing of ‘remaindered life’ in prisons and detention centres, have the effect of transforming specific human lives into abstracted kinds of human capital and in some cases, into digital ‘blips’ within the algorithms of complex financial instruments. Focussing on remittances, I seek to examine how contemporary forms of racial capitalism are shaping how these flows of capital are abstracted into tradable financial instruments, and how they are managed and controlled. Examining how the governing interests of states, and the profit seeking interests of financial capital are converging through ‘the spectre of race’ – a term that Jodi Melamed uses to describe a type of threat that animates forms of counter violence, I ultimately aim to examine how the financialization of remittances ultimately threatens collective life in the Caribbean.
The coloniality of finance and banking in the Caribbean
Historian Peter Hudson argues that the history of banking in the Caribbean should be seen as a history of racial capitalism because the history and financial practices of foreign banks in the region have always been embedded in and shaped by ideologies of white supremacy (Hudson, 2010). He argues that Canadian and US banks in the region were never set up to serve local financial needs. They were founded to meet the imperial interests of the United Kingdom and later the United States as American firms sought to incorporate the region into their expanding sphere of influence through trade. In documenting how the Caribbean, as early as the 1920s became ‘inscribed in the account ledgers of Wall Street’ (Hudson, 2017: 13), Hudson details the racial foundations of finance in the region. He argues that it was through the activities of its bankers that the intimacy of finance capital and racial capitalism could be most clearly discerned. As he states: “White rogue bankers not only carried US racial prejudice to the Caribbean but instrumentalized white racism in imperial banking policy and practice through their everyday encounters and transactions with Caribbean peoples” (2017: 13). Hudson offers an exhaustive account of the racial colonial logic that brought bankers, colonial administrators, business interests, local elites, military troops and the region's peasant populations into colonial relationships aimed at facilitating the smooth transfer of capital from these former plantation economies to an ambitious and expansionary United States. In her study of the lending policies of the Barclays Bank (Dominion, Colonial and Overseas) between 1926 and 1945, Monteith (2000) also documents how banks in the region relied on racially coded policies to exclude or limit the access of segments of the populations to capital. As she states: ‘while economic criteria was an important factor in the decision to extend or deny credit to any class of person, assessments of risk and creditworthiness were also based on assumptions of ethnicity. These assumptions were that non-whites in general lacked monetary responsibility and business acumen and therefore were unsuitable clients’ (Monteith 2010: 142). To the extent that banks in the Caribbean served the imperial interests of the United Kingdom and the United States, even after independence, speaks to the limited opportunities and systemic barriers to financial inclusion that have long been a characteristic of the region's financial norms (Deneault, 2015). Thus, as the accounts demonstrate, finance in the Caribbean has historically been governed by a colonial logic that viewed the region's peasant populations as too ignorant to make productive use of capital and hence undeserving of access to finance. The reluctance to serve the needs of the general population is a characteristic of banking in the region that is evident even today in the high cost of remittance transactions across the region.
To what extent are current efforts to align remittances with financial markets shaped by similar logics of coloniality? How significantly different is the logic of coloniality within finance today, from earlier historical periods when the region's racialized populations were more explicitly financially excluded? Recent studies by Hossein (2019) suggest that the patterns of financial exclusion of the majority of the region's Black populations still remain and are instrumental to the continued importance of informal banking practices across the region. Thus, examining the financial instruments, finance policies and financial discourses around remittances that are beginning to emerge, offers some answers to these questions.
Caribbean remittance economies
While Caribbean remittance economies are small compared to countries with larger populations like India, China or Mexico, the region stands out because of their importance relative to other inflows of capital. Estimated at USD13.4bn dollars in 2018 (World Bank, 2019), the absolute value of remittance flows to the Caribbean region is now more than double the value of inward FDI – the external form of investment capital that governments have sought to attract since the 1980s, with varying levels of success (Trotz and Mullings, 2013). Across the region there is great variation in the importance of remittances to national economies. While remittances accounted for 23% of the GDP of Haiti, 16% of the GDP of Jamaica and 8% of the GDP of the Dominican Republic (Figure 1), they accounted for less than 1% of the GDP of the oil, gold and bauxite resource dependent economy of Trinidad and Tobago. These statistics provide a snapshot of the role of remittances in each country, but they do not provide a complete account of the importance of remittances to families and communities. Studies conducted by INFODEV (a World Bank program that promotes entrepreneurship and innovation) indicate that 48% of Caribbeans abroad regularly send remittances back home to family and friends, while 68% regularly donate money through churches, and invest actively – often in land purchases (World Bank/INFODEV, 2013). The importance of remittance economies to Caribbean landscapes is inescapable and can be seen materially in the landscape in the form of real estate and local small business development, as well as textually in the virtual and real adscapes of money transfer operators seeking to profit from the movement of remittance capital across international borders. Remittances in this regard have restored the capacity of many households to exercise a degree of autonomy over their lives in the face of crushing forms of debt-related austerity. Remittances have also afforded some of the region's governments greater room to exercise expenditure choices over expenditures that would otherwise have been subject to the conditional lending requirements of agencies like the IMF (Wenner, 2015).
Remittance inflows to the Caribbean 2019.
Exploring the financialization/securitization dynamic in remittance economies
In this section I want to focus on the ways that remittances have become part of a financialization/securitization nexus where remittances are increasingly indexed as both a condition of possibility for investment starved governments, and as a potential threat to imperializing states, subject to extraordinary security measures. As Aitken (2011) observes, it is becoming increasingly clear that ‘finance’ and ‘security’ have become enmeshed in ways that are creating: ‘a kind of securitization of finance in which financial practices of all sorts have become subject to the surveillance and pressures associated with anti-terrorism techniques’ (126). But what is rarely interrogated are the logics of coloniality that lie at the core of both financialization and securitization practices and the ways that they create deeply racialized divisions between what Aiken describes as populations governed as rational political subjects, and those governed in terms of ‘bare life’. I shall begin this section by examining assumptions about the Caribbean diasporic experience that have been instrumental to the design and architecture of diaspora debt instruments. Closely reading the texts of World Bank policy advocates, I explore how discourses that mark Caribbean communities as habituated to dispossession and loss have shaped the terms and conditions under which the government and private financial institutions have sought to transform diasporic remittances into lucrative tradeable financial assets.
Financializing remittances through debt-backed securities
In the Caribbean, international lending institutions like the World Bank have been instrumental in helping governments who face difficulties attracting FDI or securing loans because of their low by credit ratings, to create financial instruments based on remittances (Mullings, 2012; Trotz and Mullings, 2013). With their assistance, governments have been encouraged to translate the myriad of emotions that drive remittances – loss, family separation and care into an abstractable value form – the diaspora bond. A diaspora bond is typically a long-dated fixed-income debt-backed financial instrument that is targeted at diaspora communities. Israel and India are often cited as countries that have successfully utilized this financial instrument to raise capital. In the case of Israel regular bond issues since 1951 have raised over USD32 billion, while in India approximately USD11 billion was raised over the course of three bond issues in 1991, 1998 and 2000 (Wenner, 2015). Often yielding lower returns, international financial investors would typically not be attracted to these types of securities. So, these bonds instead target diaspora members who are assumed to be more likely to accept a lower yielding financial instrument because of the ‘patriotic discount’ that their emotional ties to place enable (Ketkar and Ratha, 2009). As Ngozi Okonjo–Iweala and Dilip Ratha explained in a 2011 Foreign Policy article: ‘Diaspora bonds can tap into the same kind of emotion migrants feel when cheering on their national team in a football match, a long way from their homeland. Patriotism could in effect become the effective tool for helping a developing country fulfill its development dreams’ (Okonjo-Iweala and Ratha, 2011). Abstracted from the relations, emotions and forms of care that typically generate remittance flows, these debt-backed securities draw instead upon nationalist sentiments to redirect the capital of populations already economically dispossessed by systemic racisms abroad, towards investment seeking states (Henry, 1994; Khan, 2020).
Promoted as a potential source of cheap and stable external finance, Ketkar and Ratha (2010) advocated for the issue of a Haitian diaspora bond in the aftermath of the 2010 earthquake. With a diaspora population of approximately one million, they estimated that a 5% tax-free dollar interest rate could potentially generate millions of dollars. Such an offer would surpass the close to 0% interest that remitters would have likely received on savings deposits. But they also acknowledged that, even the offer of a higher rate of interest might not overcome the feelings of distrust for public institutions, including government, across the diaspora. To overcome lack of investor confidence, Ketkar and Ratha advised that any Haitian diaspora bond issue would likely require a guarantee structure, one that would support and enhance the credit value of this financial instrument. In 2010, they calculated that a USD100 million grant provided by donor agencies would offer the sort of guarantee needed to make a diaspora bond issue successful. It would appear that Ketkar's and Ratha's proposal was not taken up because the case for an IFC-backed diaspora bond continued to be made as late as 2019 (Duroseau and Jean, 2019). It may the case that in the aftermath of the 2010 earthquake, as Western governments and donor agencies directed their financial support to non-governmental organizations rather than the Haitian state (Klarreich and Polman, 2012; Pierre-Louis, 2011), the idea of a credit guarantee structure to support a government bond issue was no longer of interest to these institutions.
In the case of Jamaica, the government's efforts to raise USD1 million in Diaspora Bonds to correspond with Jamaica's 50th year of independence in 2012, were abruptly shelved when it became clear that the government had not found a way to structure the bond so that it didn't become part of its already odious stock of debt (The Jamaica Observer, 2014). Crafting the instrument as a government bond issue, would have attracted not only higher levels of public debt but also the disciplinary oversight of the IMF, a prospect that Girvan so clearly demonstrated would have served to further dispossess the island of its freedom (Girvan, 2012). But the shelving of the idea of a bond issue was only temporary. Bolstered by Jamaica's improved credit ratings in 2017 (due to declining debt to GDP ratios and increased Chinese investments), one of the island's private banks – Jamaica National Bank (JN) issued a Certificate of Deposit (CD) targeted at diaspora members and geared towards supporting businesses in the Bank's Social Enterprise Boost Initiative (SEBI) – a USAID-funded /JN Foundation-implemented project aimed at assisting social enterprises to become profit making businesses between 2012–2017 (SEBI, 2021). Issued at the end of the SEBI project, the JN Diaspora CD had the potential to sustain JN's social enterprise mission because 2% of the earned interest earned by individual investors was to be retained by the Bank and reinvested along with JN matching funds in the businesses nurtured by the Social Enterprise Boost Initiative. In 2017 JN also announced its intention to create its own social enterprise - Social Enterprise Jamaica (SEJA) to continue the work of supporting the social enterprise model without resource to further government, corporate or philanthropic assistance (JN Foundation, 2018).
Typically less risky, with shorter periods to maturity, and at higher rates of interest than the average (1.3%) for 5-year CD accounts in the USA at that time (The Gleaner, 2017), the US and UK denominated Diaspora CDs appeared at first glance to overcome the problem of the unfavourable patriot discount, that required investors to accept lower returns and higher risk. But the plan to appropriate a portion of the interest earned, like the government's diaspora bond, also required potential investors to be driven by non-market rationalities than by a desire to maximize profits. At the time of writing, there was neither public documentation, nor informants who could comment on the outcome of the launch of the diaspora CD, or the reason why the plans to create SEJA did not materialize. In this respect, like so much of the literature on Diaspora Bonds, beyond the often-quoted successes of Israel and India, the promise of these remittance based financial instruments seemed to exceed the reality of their limited success (see also Gevorkyan 2021).
While most who write about diaspora bonds focus on their potential as a source of much needed capital (Ketkar and Ratha, 2009; Wenner, 2015), few question the logics upon which diasporic bonds are built and the racial imaginaries that animate them. It remains ironic that although dominant neoliberal discourses encourage populations to behave like homo-economicus, these instruments with their lower rates of return and higher levels of risk require diaspora populations not to behave like rational economic actors at all. That diasporic populations would be expected to take on levels of risk that no other rational financial investor would, speaks to their already devalued status in the eyes of the architects of these instruments. Like the predatory lending practices that targeted Black and LatinX communities for subprime mortgages (Wyly et al., 2012), diaspora bonds utilize a similar logic by capitalizing upon past histories of racial exclusion to create new financial instruments of risk.
The policy frameworks that inform the design of financial instruments like diaspora bonds provide insights into the instrumentality of racializing discourses that construct diaspora populations as non-rational actors, inured to loss, to the success of these financial instruments. But these insights provide only one dimension of the economies of dispossession that efforts to financialize Caribbean remittances have enabled. The other dimension speaks to the securitization impulse that has been amplified since remittances have come to the attention of financial markets. As the next example demonstrates, circulating discourses linking Caribbean remittance flows to transnational crime are also rooted in racializing logics that have justified the creation of new technologies that aim to assert control over the flow of remittance capital to the region.
De-Banking …. or simply ‘letting go’
Correspondent Banking refers to the range of services that global banks can offer to smaller ones on account of their size and greater international presence. Typically, correspondent banks enable smaller financial institutions to conduct cross-border financial transactions in places where they do not have a physical presence. Most Caribbean banks and financial intermediaries rely on correspondent banks to be ‘their bank abroad’, serving as intermediaries who enable the transfer of international funds associated with services like check clearance and settlement, or international wire transfers and trade finance between institutions that do not have an established financial relationship. For these reasons correspondent banks are vital to the economic health of the Caribbean because, as the IMF (2016) explains, they ‘facilitate the re-allocation of capital in the global financial ecosystem and cross-border payment systems which are essential for international trade’ (1). Caribbean correspondence banking relationships, however, begun to fall apart in 2014 when many of the international banks that clear smaller banks’ foreign-currency transactions began to terminate their provision of correspondent banking services such as wire transfers, credit card settlements, and even the provision of hard foreign currency (Caribbean Policy Research Institute, 2016; Torbati, 2016). Also called ‘de-risking’ the practice of de-banking is directly linked to the post 9–11 efforts of governments, led by the United States to control cross-border flows of money for terrorism financing or from the sale of illicit drugs through a rigorous regime of enforcement and regulation. Key to the securitized infrastructure that emerged in the post-9/11 context has been the creation of a complex network of laws and procedures designed to monitor and detect illicit flows of money (FATF, 2012–2019). Known as Anti-Money Laundering/ Combating the Financing of Terrorism (AML/CFT), these regulations require financial institutions to comply with enhanced reporting requirements aimed at identifying and investigating suspicious financial flows. In relation to the Caribbean, all monies moving in and out of the Caribbean by people with relationships to US banks are now subject to scrutiny by the US Treasury, and there are significant financial penalties for financial institutions that fail to comply with the requirement to know the financial histories of their all their clients and in some cases the clients of their clients. Since 2008 banks that have pulled-out or reduced their presence in the region include the Bank of America, Scotiabank, Royal Bank of Canada and CIBC, many of which have had deep colonial footprints across the region (MacDonald 2019).
At first glance these regulations appear to be rational and even necessary given the evidence of widespread money laundering, terrorism financing and tax evasion detailed in leaked documents like Wikileaks and the Panama papers 1 (Deneault, 2015). These elaborate regulatory frameworks, however, should be understood as yet another offensive against remittances in terms of the indirect impacts that they have had on the behaviour of international banks. Recipients of foreign currency must now comply with regulations that surpass many of the requirements governing banking services in the global North. Not only are financial intermediaries in the region now required to collect and keep extensive information about the lives of their clients to satisfy ‘Know Your Customer’ (KYC) guidelines, they are increasingly also obliged to collect and know the details of each person who has the authority to act on a customer's behalf. As a number of reports show, faced with a choice between severely squeezed profits given the cost of compliance with KYC requirements, and the risk of regulatory fines worth billions of dollars, litigation costs and potential reputational damage for violations, large global banks are choosing to retreat to safer markets and are terminating their provision of correspondent banking services to the Caribbean, in effect, excluding the region and its citizens from full participation in the global financial system (Rice et al., 2020; World Bank, 2015). It might be tempting to see de-banking as a phenomenon that has little effect on remittance economies given the preference that most remitters have for the services of Money Transfer Operators (MTOs) over Banks. Indeed, as a 2010 survey conducted by the Bank of Jamaica found, 73% of remittance recipients in Jamaica received all their money via MTOs and only 10% from Banks (Ramocan, 2011). Yet, as studies show, de-risking has also had a major impact on Money Transfer Operators whose cash-intensive operations are also increasingly considered too risky because most collect and transfer remittance transactions in batches that cannot be easily matched to individuals (Nicoli, 2018). While this practice allows MTOs to be competitive in remittance markets, it is viewed by powerful states as an area of weakness in the quest to account for the financial and social relationships of every remitter and every recipient of remittances (Nicoli, 2018; Orozco et al., 2015; The World Bank Group, 2018). As Orozco et al. (2015) found, MTO's have been significantly negatively affected by the closures of their bank accounts by the larger global banks they depend on. They noted that whereas in the early 2000s MTOs experienced one or two bank closures per year, by 2010 the rate had increased to at least four closures per year. Similar findings were made in a 2014 World Bank survey of governments, banks and MTOs within G20 countries. In this study it was found that 46% of MTOs had received notifications by their banks that their accounts were going to be closed. It is important here to recognize that if global banks consider the operations of MTOs to be risky, it is because they offer services to customers who themselves are considered ‘high risk’ under AML/CFT regulations. And ‘high risk’ in this context is defined as persons who are not active participants in regulated financial systems (i.e. who don't possess a bank account), or who, to use AML terminology ‘lack an obvious economic or lawful purpose’, or who simply reside in countries categorized as higher risk (FATF, 2012–2019). It is for these reasons, global banks offering correspondent banking services to the Caribbean attract elevated levels of regulatory scrutiny. While policy makers uniformly agree that de-banking is an unintended consequence of AML/CFT regulations. It is largely treated as an unfortunate form of collateral damage that need not change the levels of scrutiny or perceptions of criminality that permeate these securitization policies.
Since May 2016 at least 16 banks in five countries across the Caribbean have already reduced or withdrawn their correspondence banking services, severely limiting the region's access to global finance. In the case of Belize Bank, the largest domestic bank in that country, Bank of America its sole correspondent bank for the last 35 years, provided only a 60-day notice before terminating its relationship with the country. The implications for MTO's have been equally dire because they require bank accounts to receive and deposit funds from agents and payers, respectively, and as Orozco et al. (2015) note, local banks are increasingly under pressure from global banks to close their accounts given the perceived higher risk of their largely cash-based operations. While global banks utilize the language of risk to justify their decisions to financially exclude the Caribbean, a more accurate rationale might be the simple fact, as one Reuters investigative article concludes, that: ‘Caribbean states – with their small populations and economies – offer miniscule profits for banks and are seen as hubs for offshore banking, susceptible to money laundering, tax evasion and the narcotics trade flowing from South America. Most banks simply do not see it as worth their while to do business against these risks’ (Torbati, 2016). In other words, in the world of securitized finance, the Caribbean is a region that is simply too small to save.
Manuel Orozco came to the same conclusion in testimony that he submitted to the Subcommittee on Financial Institutions and Consumer Credit of the US House Financial Services Committee in 2018 (US Government, 2018). He argued that rather than a response to increased financial risk, the pattern of account closures coincided with the exponential growth in consumer use of nonbanking financial services in the early 2000s. His testimony pointed to profitability rather than risk as the motivation for the increasing withdrawal of correspondent banking services by global banks. Yet, to fully understand the phenomena of de-banking and its disproportionately negative effects on small Caribbean states, requires more than the refutation of claims to heightened risk. It requires refusal of the naturalizing discourse of criminality and risk, or what Mignolo (2011) refers to as epistemic disobedience, and a commitment to interrogating the logic of coloniality, even in domains where its racializing foundations appears to be absent.
Conclusion
In mapping how the financialization of Caribbean remittance economies have become linked to questions of securitization I have sought to outline the contours of a mode of governance that is colonial in orientation, and that is producing new forms of racial dispossession. Understanding how financialization and securitization are structuring remittances flows across the Caribbean is therefore key to mapping the forms of benefit and loss that are produced when remittances are financialized. Only by examining both processes can we grasp the dispossessive logic has become part of the structure and organization of remittance economies, and the role of racial imaginaries within them. These are logics that distort the original motivations behind remittance economies – supplanting concerns for the social reproduction households, with the goals of market gain and financial control.
At the heart of migrant remittances, is a fierce desire and commitment to sustain households and communities – desires that are imbued with emotions such as love, care and responsibility – the very opposite of the investor logic that is driving Caribbean governments, international policy makers and private corporations to devise new technologies to gain a greater share of remittance economies. That these transnational flows have come to represent new opportunities for the rentier class is not altogether surprising given the extent to which finance capital has become unhinged from the real economy. But what is rarely made explicit in the literature on financialization are the new forms of coloniality, racial dispossession and imperial control that financialized markets bring to life. For while the language of financial inclusion promises new opportunities for poor or unbanked populations to get their fair share of remittance flows, the promise quickly fades when we consider the discourses of illegality and criminality and surplus that are increasingly used to justify the appropriation, the regulation and exclusion of the poorest from these capital flows. That fact that the Caribbean has become a space of threat, and a high-risk zone of illegality requiring strict surveillance, regulatory oversight, and ultimately financial exclusion, speaks not only to the growing relationship between financialization and securitization, but also, to the forms of racial dispossession that remains foundational to these emerging strategies.
As decolonial scholars argue, uncovering the racializing logic of coloniality, such as the ones that have historically governed finance in the Caribbean region, is not an easy task because these logics are embedded in policy frameworks that obscure how coloniality and racial capitalism operate as a matrix of power. Thus, questioning how Caribbean diasporic populations have come to be seen as non-rational economic actors, or predisposed to crime, is especially difficult given the ‘common-sense’ appeal that discourses of threat and risk wield across all capitalist domains. Remittances, like microfinance and sub-prime loans are subject to the predations of financial markets because they are pools of money bound up in the hopes and aspirations of populations who historically have been conscripted to lives marked by dispossession. The remarkable consistency of remittance flows makes them even more attractive to financial markets because unlike microfinance or sub-prime loans their continuity as a source of capital relies on obligations driven by emotion rather than debt. How global banks have chosen to respond to declining profits, particularly in places deemed too small and too marginal to the global economy to service, speaks not only to the thin line between financial inclusion and exclusion, but also the value of examining the financialization of remittances through de-colonial and anti-colonial frameworks.
Tracing how efforts to financialize remittance economies operate through social relationships configured through coloniality and racial capitalism draws our attention to the role that Caribbean economies have historically played in the circulation of finance capital, the interests served by the integration of Caribbean remittances into financial markets, and the threat, particularly to the United States that these private flows represent. Whether viewed by policy makers, or financiers as the resources of non-rational economic actors, or by imperializing states as an ungoverned security threat, Caribbean remittances are subject to a logic of propriation that naturalizes the act of profiting from, devaluing or denying access to these financial resources. That many of the forms of financial innovation designed to capture remittances in the Caribbean have not been successful, points to the reluctance of diaspora members to relinquish autonomy over the ways that their hard-earned capital get spatially fixed within economic landscapes. But these failures should not diminish the urgency of efforts to call attention to the forms of dispossession upon which they are built. It is only by explicitly linking efforts to financialize remittances to neoliberal, racial and heteropatriarchal structures of power, that opportunities for epistemic de-linking – thinking beyond the coloniality of free-market financial inclusion, liberal democracy and Western modernity, can begin.
Footnotes
Acknowledgements
I would like to thank the Rahel Kunz, Julia Maisenbacher, Lekh Nath Paudel for their invitation to contribute to this special issue and, along with Brett Christophers, for their patience and support in bringing it to fruition. I am also grateful to Kasmine Forbes and the scholars who attended the SNID talk where some of the ideas in this paper where shared, for their insights and input. As always, any errors remain entirely mine.
Declaration of conflicting interests
The author declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This work was supported by the Social Sciences and Humanities Research Council of Canada (grant number 435-2012-1330).
