Flying the flag: The offshore islands that feel more at home with a Budweiser than a taste of the mother country

Phil Davison continues our series, in the Caymans
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Grand Cayman - These islands are a long way from Hong Kong. But if the residents of the Caymans had any doubts about Britain's commitment to them, the SAS put their minds at ease the other day.

It was all kept hush-hush. Part of the Cayman Islands, one of a dozen British Dependent Territories that will remain after the Hong Kong handover, was taken over by a group of Middle Eastern Islamic terrorists. Well, actually, the "terrorists" were policemen acting the parts. As were the hostages.

But the rest of "Operation Blue Triangle", an exercise including an SAS assault backed by United States Special Forces, was dramatically close to the real thing.

Foreign Office, Scotland Yard and intelligence officials flown in from London conferred with FBI and CIA men. The White House, the Cabinet room in London and the Cayman Governor's office linked up on emergency communications. There were even phony journalists - Scotland Yard police officers acting the parts - being pushed behind cordons by real-life Yard men - with some relish.

As the American Special Forces watched in what they later admitted was awe, the men from Hereford ended the hostage crisis in five minutes flat. All hostages safe. All terrorists in "paradise".

The Caribbean island exercise was aimed at testing a US-British "memorandum of understanding" under which the Americans agree to send an advance team of Special Forces to secure the islands until British forces get here in any emergency.

Oddly enough, despite the Caymanians' expressed desire to remain a British colony, long-term thinkers might venture that the Americans themselves could be the greatest threat to the islands' Britishness. The Americanisation of the Caymans is in full swing, from Budweisers and Burger Kings and the prevalence of American banks to the high percentage of American tourists (80 per cent of the total) and the tendency to look to the US for higher education and health care.

In an emergency, Caymanians dial the American-style 911, not 999. The popular local Ska music station Z-99 is pronounced Zee-99. There are more and more left-hand-drive cars, imported directly from the US,

although islanders still drive on the British side of the road.

"There's a saying that if the US sneezes, we catch a cold here," said Pat Ebanks, spokeswoman for the Cayman government. "Our parents brought us up British-style, with discipline, kind of 'be seen but not heard'. But we now tend to be more American in our lifestyle.

"We travel to the US. More of our students go to US rather than British universities. If we want medical care, we go to the US. But there's still a very strong connection with being British. During the Falklands war, people here started a "Mother Needs Your Help" campaign and sent money to the war effort.

"There's always the idea that down the line we'd like to be able to stand on our feet. But it's not a thing that's uppermost in our minds. Being British has definitely helped us," said Ms Ebanks.

"This island is 99 per cent Americanised," said Harold, a Jamaican barman at the Sleep Inn motel on Grand Cayman, the largest of the three islands, as he gyrated to the sound of a reggae band on Z-99. "People prefer it that way."

The closeness to the US - Florida is closer to Grand Cayman than Glasgow is to London - is one reason that few Caymanians publicly complain about the 1981 immigration law which bars them from settling in Britain; the law was introduced to prevent an influx of immigrants from Hong Kong.

For one thing, Caymanians are granted a special "waiver" by the US, allowing them to enter without a visa, though they receive no preferential treatment on Green Card work permits. "The Immigration law has never been an issue here," said Ms Ebanks. "The Caymans is not a nation of emigrants. Unlike Jamaicans, there was never a tradition of Caymanians emigrating to Britain. When we go abroad, we always come home. After all, it's safe here and our per capita income is second in the world only to Switzerland, roughly on a par with Sweden."

Per capita income here is close to $30,000 (pounds 18,000). On three islands, totalling only 100 square miles, there were 572 banks or trusts at the last count, sitting on more than $500bn. There are close to 34,000 registered companies, just over one for every resident. How many of those companies adhere to legitimate business, and how much of the money in the banks is laundered drug cash, is anybody's guess.

Movies such as The Firm, based on the novel by John Grisham, starring Tom Cruise and Gene Hackman and featuring a plot involving money-laundering, corrupt lawyers and related murders in the Caymans, keep the focus on the islands' sleazy side and rile the authorities here, who insist they are "tidying up".

"As with all major financial centres, we are vulnerable to international commercial crime," the London-appointed British Governor, John Owen, said at a recent crime-prevention conference.

"Our message must be clear. Dirty money is not welcome here. We recognise the fact that, as Thomas Gresham, an English financier of the 16th century, said: bad money drives out good money."

"If you give a dog a bad name, he goes by it," said the Chief Secretary (and acting governor) of the islands, James Ryan, a Caymanian who has retained his ancestors' Irish accent over several generations.

"There's no doubt that in the Sixties, a lot of US currency came into this country, but we have gone a long way towards tightening up. We run a very tight ship.

"Other countries in the region may try to smear us but the Cayman Islands will have no mercy with dirty money. It's just not on and we're not going to tolerate it."