Cayman Islands (10/01)

For the most current version of this Note, see Background Notes A-Z.

PROFILE

OFFICIAL NAME:
Cayman Islands

Geography
Area: 259 sq. km. (100 sq. mi.) on three islands: Grand Cayman (76 sq. mi.), Cayman Brac (14 sq. mi.), and Little Cayman (10 sq. mi.).
Capital: George Town (pop. 15,000).
Terrain: Flat.
Climate: Tropical.

People
Nationality: Noun and adjective--Caymanian(s).
Population: 35,530 (est. 2000).
Annual growth rate: 2.12%.
Ethnic groups: Afro-European 40%, African 20%, European 20%, other 20%. Religious Affiliations: United Church, Anglican, other Protestant, Roman Catholic.
Language: English.
Education: Years compulsory--to age 16. Literacy (age 15 and over)--98%.
Health: Infant mortality rate--10.16/1,000. Life expectancy--79 yrs.
Work force: 20,000.

Government
Type: British Overseas Territory.
Constitution: 1972; called the Cayman Islands Order.
Branches: Executive--Governor and President of the Executive Council (representing British monarch), Executive Council.
Legislative--unicameral Legislative Assembly (15 elected, three appointed members).
Judicial--Summary Court, Grand Court, Cayman Islands Court of Appeal, Her Majesty's Privy Council.
Subdivisions: Eight districts.
Political parties: No formal political parties.
Suffrage: Universal at 18.

Economy
GDP: $937 million (1997).
Growth rate: 4.9%.
Per capita income: $24,500.
Natural resources: Scenic beaches and underwater attractions, favorable climate.
Agriculture: Products--Minor production of vegetables and livestock, turtle farming.
Industry: Types--tourism, banking, insurance and finance, construction.
Trade: Exports--$2 million: turtle products, manufactured consumer goods. Major market--United States. Imports--$508 million: machinery, manufactures, food, fuels, chemicals. Major suppliers--U.S., Trinidad and Tobago, U.K., Netherlands Antilles, Japan.
Official exchange rate: CI $0.80=U.S.$1.

U.S.-CAYMANIAN RELATIONS
Although the United Kingdom is responsible for the Cayman Islands' defense and foreign affairs, important bilateral issues are often resolved by negotiations between the Cayman Government and foreign governments, including the United States. Despite close historic and political links to the United Kingdom and Jamaica, geography and the rise of tourism and international finance in the Cayman Islands' economy has made the U.S. its most important foreign economic partner. About 550,000 U.S. citizens traveled to the Cayman Islands in 2000; some 1,000 Americans are resident there.

For U.S. and other foreign investors and businesses, the Cayman Islands' main appeal as a financial center is the absence of all major direct taxes, free capital movement, a minimum of government regulations, and a well-developed financial infrastructure. The Cayman Islands is the world's fifth-largest banking center.

With the rise in international narcotics trafficking, the Cayman Government entered into the Narcotics Agreement of 1984 and the Mutual Legal Assistance Treaty of 1986 with the United States in order to reduce the use of its facilities for money laundering operations. In June 2000, The Cayman Islands was listed by multilateral organizations as a tax haven and a noncooperative territory in fighting money laundering. The country's swift response in enacting laws limiting banking secrecy, introducing requirements for customer identification and record keeping, and for banks to cooperate with foreign investigators led to its removal from the list of noncooperation territories in the anti-money laudering fight.

U.S. Representation
The United States does not maintain diplomatic offices in the Cayman Islands. Diplomatic relations are conducted through the U.S. Embassy in London and the British Embassy in Washington, DC.

The Cayman Islands are, however, part of the consular district administered by the U.S. Embassy in Kingston, Jamaica. Inquiries regarding visas to the U.S. or other consular matters should be directed to the consular section of the U.S. Embassy, 2 Oxford Road, Kingston 5, Jamaica; tel: 876-929-4850; fax: 876-935-6019.

There also is a U.S. consular agent, Gail Duquesnay, in the Cayman Islands to assist in providing services for American citizens; tel: 345-945-1511.

HISTORICAL HIGHLIGHTS
The Cayman Islands remained largely uninhabited until the 17th century. A variety of people settled on the islands: pirates, refugees from the Spanish Inquisition, shipwrecked sailors, deserters from Oliver Cromwell's army in Jamaica, and slaves. The majority of Caymanians are of African and British descent, with considerable interracial mixing.

Great Britain took formal control of the Caymans, along with Jamaica, under the Treaty of Madrid in 1670. Following several unsuccessful attempts, permanent settlement of the islands began in the 1730s. The Cayman Islands historically have been popular as a tax haven. Legend has it that Caymanians in 1788 rescued the crews of a Jamaican merchant ship convoy which had struck a reef at Gun Bay and that the Caymanians were rewarded with King George III's promise to never again impose any tax.

The Cayman Islands, initially administered as a dependency of Jamaica, became an independent colony in 1959; they now are a self-governing British Overseas Territory.

ECONOMY
Although Caymanians enjoy one of the highest standards of living in the world, about 90% of the islands' food and consumer goods must be imported.

From the earliest settlement of the Cayman Islands, economic activity was hindered by isolation and a limited natural resource base. The harvesting of sea turtles to resupply passing sailing ships was the first major economic activity on the islands, but local stocks were depleted by the 1790s. Agriculture, while sufficient to support the small early settler population, has always been limited by the scarcity of available land.

The advent of modern transportation and telecommunications in the 1950s led to the emergence of what are now considered the Cayman Islands' "twin pillars" of economic development: international finance and tourism. In 2000, there were more than 40,000 companies registered in the Cayman Islands, including almost 570 banks and trust companies.

Banking assets exceeded $500 billion. Tourism has grown to represent about 70% of gross domestic product and 75% of total export earnings. Unspoiled beaches, duty-free shopping, scubadiving, and deep-sea fishing draw almost a million visitors to the islands each year.

Education is compulsory to the age of 16 and is free to all Caymanian children. Schools follow the British educational system. Ten primary, one special education, and three high schools are operated by the government. In addition, there is a technical school, a law school, and a community college.

GOVERNMENT AND POLITICAL CONDITIONS  
The Cayman Islands' physical isolation under early British colonial rule allowed the development of an indigenous set of administrative and legal traditions which were codified into a constitution in 1959. Although still a British Crown Colony, the islands toady are self-governed in nearly all respects. The constitution, or Cayman Islands Order, that now governs the islands came into effect in 1972 and was amended in 1984.

The Cayman Islands' political system is very stable, bolstered by a tradition of restrained civil governance, sustained economic prosperity, and its relative isolation from foreign policy concerns by virtue of its colonial relationship with the United Kingdom. Public discussion revolves around public sector expenditure and social services, the pace of additional economic development, and the status of the large foreign national community on the islands.

Government Structure
The British Crown appoints a Governor of the Cayman Islands, who is recruited from the U.K. government service and serves as the British representative. Daily administration of the islands is conducted by the seven-member Executive Council.

The chief secretary, financial secretary, and attorney general are appointed by the governor. Responsibility for defense and foreign affairs resides with the United Kingdom; however, the chief secretary has the portfolio for External Affairs, and the Cayman Government may negotiate certain bilateral matters directly with foreign governments. The remaining our members of the Executive Council are elected by the Assembly and divide the remaining administrative portfolios.

The 18-seat unicameral Legislative Assembly is composed is presided over by an independent speaker. Elections are held at the discretion of the governor at least every 4 years. Members of the assembly may introduce bills which, if passed, are then approved, returned, or disallowed by the governor. The U.K. Government also reserves the right to disallow bills approved by the governor.

The four-tiered judicial system is based on English common law and colonial and local statutes. The Cayman Islands Court of Appeal is the highest court on the islands, but a final appeal may be heard by Her Majesty's Privy Council sitting in London.

Political Coalitions
Political parties have operated infrequently in the past, and public officeholders tend to be independents. Since the 1970s, groups of candidates have organized themselves into ad hoc coalitions called teams and run on platforms of shared concerns. In November 2000 elections, voters ousted the leader of the government and two other ministers because of legislation enacted to weaken bank secrecy. Seven new members were elected to the Legislative Assembly.

Principal Government Officials
Head of State--Queen Elizabeth II
Governor--Peter J. Smith, since May 1999
Chief Secretary, Executive Council--Kurt Tibbets, since November 2000

The Cayman Islands are represented in the United States by the United Kingdom Embassy at 3100 Massachusetts Avenue, Washington DC 20008; tel: 202-462-1340; fax: 202-898-4255.

The offices of Cayman Airways, located in Miami, Houston, Atlanta, and Tampa, also may provide travel information.