O'Neill: Forced OECD stay of execution

The deadline is 30 November, and only half a dozen countries have signed up so far.

Originally the cut-off point was 31 July. But pressure from US Treasury Secretary Paul O'Neill - following a concerted campaign by US right-wingers who favour swingeing tax cuts and see the small states as a stalking horse for their aims - forced a delay and some concessions.

Aside from Nauru, the Cook Islands, Niue and the Marshall Islands also stand accused of being conduits for financial crime.

Pacific Forum

During the opening session of the Pacific Islands Forum, which groups 14 mostly small states in the Pacific along with OECD members Australia and New Zealand, Mr Harris acknowledged the risks posed by international financial crime.

OECD list of tax havens

Andorra Anguilla Antigua & Barbuda Aruba Bahamas Bahrain Barbados Belize British Virgin Islands Cook Islands Dominica Gibraltar Grenada Guernsey Isle of Man Jersey Liberia Liechtenstein Maldives Marshall Islands Monaco Montserrat Nauru Dutch Antilles Niue Panama Samoa Seychelles St Lucia St Kitts & Nevis St Vincent & the Grenadines Tonga Turks & Caicos US Virgin Islands Vanuatu

"Such activities affect the islands' economic and financial stability," he told his fellow leaders. "Weaknesses in our financial systems allow international criminals to exploit them and undermine our national credibility."

Nauru has promised the OECD to reform its banking system, but has failed to do so since Mr Harris' election in March.

The president said it will do so on its own terms, rather than terms imposed from outside, and the OECD initiative in particular went too far.

Fear of competition

"The small islands of this world do not have much in terms of natural resources and industry," he said.

"It is alarming that now we have identified a viable, legitimate and competitive economic opportunity, the rich states of the world have labelled it harmful competition simply because they choose not to compete.

"Instead of assisting small islands to harness our competitive advantage and economic opportunity, the developed states want to shut it down."

Much of Nauru is taken up with worked-out phosphate mining operations, and the island is almost bereft of other economic goods.

Introducing offshore finance is a tactic followed by many countries in the same position. Indeed, many - such as Barbados, the de facto leader of the blacklisted countries - point out that the policy has been encouraged by donor countries.

Analysts say that the resistance from blacklisted countries might be less severe had the OECD not indicated earlier this year that talks between members and non-members would not lead to any substantive changes.

They also say that promises of technical assistance to reform banking and oversight systems have yet to be fleshed out.