The long road to Baha Mar’s approval
After years of tumultuous negotiations with successive administrations and struggling with financing, Baha Mar Development Company officials confirmed late this year that the ambitious project to redevelop the Cable Beach strip will finally begin construction in early January.
But the road to get to that announcement was a rocky one.
Even though Baha Mar brought significant prospects of job creation in a still struggling economy, the foreign labor component of the project after it secured a$2.6 billion loan from Chinese partners sparked a public and political debate that would rage for months.
Many questions have been left about how good Baha Mar will really be for The Bahamas.
When Baha Mar’s request for 8,150 work permits for Chinese workers to build the project was met with widespread contention, Prime Minister Hubert Ingraham made the issue a political one by stating in June that his government would not approve the massive influx of foreign labor without the unanimous consent of Parliament.
“The Government of The Bahamas is committed to ensuring that foreign direct investment in our economy benefits Bahamians,”said Ingraham at the time.
“It would be unconscionable for large numbers of foreign workers to be engaged in The Bahamas if large numbers of similarly skilled Bahamians are available to take up those jobs.
“[Progressive Liberal Party Leader Perry]Christie, while certain to seek credit as the father of the Baha Mar project, is already seeking to find shelter from becoming a part of a tough decision on the labor component for the construction of that project.
“I make it abundantly clear that my government will not approve any extraordinary foreign labor component for the Baha Mar project without the support of the Official Opposition. We are not going to born this PLP baby by ourselves. After all, this is a baby conceived by them.”
However, Christie initially refused to involve the party in a decision that did not require parliamentary approval.
He claimed that if the Ingraham administration had not”stopped, reviewed and cancelled,”the Baha Mar deal after it came to office in 2007, the project would have already started without the Chinese labor component.
“With respect to[the Chinese labor issue], the prime minister is on his very own,”Christie said.
However, Christie later had a change of heart and while announcing that the PLP would consider its stance on the issue, accused Ingraham of having an”un-prime ministerial”attitude toward the project.
The PLP eventually announced its support for the deal.
In September, Ingraham maintained that he had serious concerns about the project and while it could be beneficial, it was no savior for The Bahamas.
“We are not going to die if Baha Mar doesn’t come,”hesaid.”We’ve been here from the time Christopher Columbus came in 1492 and we’ll be here 500 more years plus, plus, plus. So[let’s not]do that to ourselves. If that was the case the Government of The Bahamas would have nothing to consider. Just rubber stamp it because I want to be saved. I don’t want to die.”
For weeks, the project’s fate hung in the balance.
In order to finalize arrangements with its Chinese partners, Baha Mar needed to satisfy its outstanding loan with Scotiabank.
As this issue remained unsettled, the government shelved the planned debate on the Baha Mar labor resolution in Parliament and awaited word on when the issue would be settled. In early October, Baha Mar and the government announced that the loan issue was resolved.
Later in the month, the prime minister traveled to China to meet with officials of the Export-Import Bank of China and the China State Construction Engineering Corporation Baha Mar’s partners.
The nation waited to hear whether there was a compromise struck on the controversial labor component and on whether the project would be phased as the prime minister was pushing for.
Upon his return, Ingraham announced that the Chinese had agreed to increase the value of contracts being made available to Bahamian contractors from$200 million to$400 million.
But Kerzner International Chairman and CEO Sol Kerzner said the deal would violate the deal The Bahamas government has with Kerzner.
Under the most favored nation clause given to Kerzner, no other developer should get more favorable terms, something Kerzner said was apparently happening.
“Baha Mar proposes employing thousands of foreign Chinese workers, which would represent far more than 30 percent of the total labor force,”said Kerzner, in a rare public statement prior to the passage of the resolution.
“Approval of this arrangement by government would be a clear breach of an investment agreement with a developer that has become its largest private employer, and an investor who took a risk on The Bahamas when its economy was struggling far more than it is today.
“When we made our largest single investment of approximately$1 billion for Phase III, we did so based on a heads of agreement signed with the PLP government in 2003. Among the many requirements that government imposed on Kerzner under this and prior agreements was a strict rule that at least 70 percent of the total construction labor force would be Bahamian.”
The prime minister later indicated that he did not expect the issue to be a problem.
Members of Parliament finally passed the Baha Mar resolution in November.
Work is expected to begin on the project by the middle of January, directly impacting Cable Beach businesses and residents who have expressed mixed views on the project.
Baha Mar CEO Sarkis Izmirlian maintains that the project will be beneficial for The Bahamas.
“The foreign component of the labor is only going to be here for a short period of time,[and]the average foreign worker number is only going to be about 1,800,[and]once they leave we’re going to create 7,000 Bahamian jobs[and]opportunities for small businesses,”he said.”All I can say is what I hear from Bahamians. They want this to happen.”
Baha Mar has since awarded more than$50 million in contracts to Bahamian contractors to begin infrastructural work on the massive project.