To a first-time visitor, the Seychelles look like a peaceful paradise. Lush green hills give way to white sandy beaches lapped by a warm turquoise ocean. The weather is great, the people are friendly and the local rum’s a treat. But things are not all that they seem. The islands have seen their fair share of foreign threats and new dangers again loom on the horizon.
It’s easy to understand why the Seychellois are so laid back – one can hardly keep up a normal pace with temperatures pushing past 30 degrees. But while I was told normally life on Mahé, the main island, is quiet after sunset, I saw impromptu parties everywhere: in football stadiums, parking lots and on street corners. That’s because the presidential elections were in full swing and candidates were on the final leg of campaigns to rally voters.
The ruling People’s Party, or Parti Lepep, has been in power since 1977 and everyone I spoke to in the days leading up to the elections told me that the incumbent President James Michel was going to win another term. The predictions proved to be accurate, but by a very slim margin. While in the end no candidate was able to take on Michel, who has been in office since 2004, the boisterous campaign rallies seem to have won over many supporters for the opposition parties. In late December Michel was sworn in for a third term as President. He must now prove that he deserved the victory.
As a country that has had the same party ruling for nearly 40 years, the Seychelles is hardly a beacon of democracy. But the continuity of rule has brought stability and, latterly, prosperity. Tales of past coup attempts by mercenaries seem at odds with the islands’ current reputation as an exclusive holiday destination renowned for pristine beaches and luxury resorts.
Although it has been years since mercenaries landed on the country’s shores, the Seychelles are now facing another, more elusive threat. Besides the honeymooners, in recent years the islands have attracted another breed of visitors: wealth managers. As traditional offshore jurisdictions such as Switzerland, Luxembourg or Singapore have come under increasing pressure from regulators, private bankers and tax planners have been looking for new havens for their clients’ money. The Seychelles fulfill some of the key credentials: existing financial infrastructure and political stability.
Developing the Seychelles’ financial services industry is a goal worth pursuing but it needs to be done properly. If the country’s institutions fail adequately to monitor financial flows, the Seychelles could join the infamous club of other exotic islands that are now better known for laundering money or hiding assets of the super-rich than for their natural beauty. Worse still, the country could risk being blacklisted by the Financial Action Task Force or other international bodies.
With proper organisation and discipline, the Seychelles could develop a sophisticated financial services industry to complement its already vibrant tourism and fishing sectors. Fortunately, the Seychellois government seems to be acutely aware of the dangers of its position and might just be able to turn the flow of foreign cash into an opportunity rather than a threat. Now that the elections are out of the way, the government can focus on developing its exiting financial surveillance structures.
The Seychelles have done this before. The country’s environmental laws – some of the most stringent in the world – have enabled it to protect its pristine environment from pollution. Now the islands should adopt the same approach towards the inflows of foreign money.