No one can say with certainty whether Bermuda's exemption from the EU Savings Tax Directive will continue for much longer, according to an expert in the field.

Richard Hay, the lunch speaker at IBC's sixth annual Global Life Insurance Forum at the Fairmont Southampton Princess yesterday, made the comment during his analysis of recent developments in the tax and regulatory environment offshore.

After his comments, speaking to The Royal Gazette, Mr. Hay refused to be drawn further on the subject of Bermuda's accidental exemption.

With a grin, however, he referred the questioner to Mr. Donald Scott, Bermuda's Financial Secretary, who is not known for wide-reaching public announcements.

What caused broader grins was Mr. Hay's explanation of why Bermuda was exempted from the Directive in the first place. It was agreed that the directive would apply to all Britain's Caribbean territories, Mr. Hay explained.

The lunchtime audience then joined him in a chorus of “but Bermuda's not in the Caribbean”. How odd, then, that the Bermuda Government has decided otherwise, but has not informed Mr. Blair and his tax-happy cronies. An oversight, perhaps. We assume that the Premier has informed the well-known Caribbean dictator Fidel Castro. For the most part, Mr. Hay stuck to matters less controversial in Bermuda's book. He clearly detailed the background to the attack on the offshore jurisdictions by the G8 and its many agencies, such as the OECD, FATF, FSF, IMF and all the other alphabet-soup sub-sets of the same power bloc.

Mr. Hay is among the architects of the (actual) Caribbean's response to the G8's war on low taxers. He helped draft the landmark opposition document and has been instrumental in advising the ITIO, the organisation that was fighting the wave of new tax regulations the G8 would like to see enforced on everyone other than their own members. Mr. Hay's timing could not have been better. Last Friday, the Financial Action Task Force released a revised list of its 40 rules for how not to launder money. On Tuesday this week, in the grandest folly thus far, Switzerland was threatened with international sanctions for not ending its love affair with bank secrecy.

No one expects Switzerland to fold its cards and concentrate on selling cuckoo clocks, however, with the possible exception of those great international spoilers, the French.

Mr. Hay told us something about France: the country is actuarially bankrupt, he said. This elicited a comment from my luncheon partner to the effect that the country was morally bankrupt, too. My companion was referring to France's bizarre us-first politics, Mr. Hay to the fact that within a few years, there will be one retired French worker for every employed worker. In France, of course, the term worker has a loose meaning, akin to the same term when used of the imported gentlemen who are repairing the Causeway.

An hour here, an hour there, and a week's pay, with eight weeks' annual vacation, apparently constitutes a full-time job in France and on the Causeway.

Mr. Hay correctly identified that the financial world is going through a period of dramatic change following the events of September 11, change which has “seismic implications for (the insurance) industry”. He asked why the offshore community has gone like lambs to the slaughter in the face of intervention by the G8 and its satellites, and answered his own question with refreshing candour. “The member countries of the OECD control 80 percent of the business in the world,” he said. “They can turn off the lights (in any offshore jurisdiction) with the stroke of a pen.” It's blackmail, then.

That is as true for Bermuda as it is for, say, Antigua and Barbuda, who have recently told the G8 approximately where they may put their tax initiatives. Turning out Switzerland's lights may take a little more effort, but not much; it would not be beyond the wiles of the French and Germans - whose professionals have caused all this trouble in the first place by cheating on their ridiculously high taxes - to ban Swiss goods around the world.

Mr. Hay spoke, as he had to, of the “level playing field”, the code words invoked by the smaller offshore nations to ask why, if their financial feet are being held to the fire, the member States of the OECD are not subject to the same regulations. Four OECD countries have been given a seven-year hiatus during which time they must decide how to tax individual savings across borders. Antigua's withdrawal from the process is predicated on bad faith on the part of the OECD, a notion with which everyone agrees, but about which no one has thus far been willing to do very much.

Much UK legislation ends up on Bermuda's books, since this once relatively rule-free paradise has now become a civil servant's wet dream. Mr. Hay alluded to moves in the UK to force cell phone companies to maintain records of all calls for five years, and to make those records freely available to the authorities. From this information, it will be possible to know exactly where everyone was, at almost every moment of the day. This will apply equally to the overwhelming majority of the innocent, as well as the tiny number of evildoers.

“I have nothing to hide, but that doesn't mean I post my balance sheet on my front door or ask my neighbours to listen in to my phone calls,” Mr. Hay said. Ah, common sense on the subject of civil liberties, a rare commodity. Mr. Hay is with Stikeman, Elliott, a global law firm whose Bermuda roots are very deep. Howard Stikeman, a founding partner, was a good friend and colleague of David Graham at Conyers Dill & Pearman in the late 1940s and 1950s; the two made possible a lot of what Bermuda takes for granted today. The G8 is doing its damnedest to undo that good, for no better reason than that its most vociferous members cannot even collect their own taxes.