Crunch time: The Caribbean in 2012
2012 dawns on a gloomy horizon for the 15 countries of the Caribbean Community (CARICOM). It is a dawn whose breaking, although foretold, was largely ignored. If the inertia continues in the vague hope that external conditions will improve to the extent that global buoyancy will lift the region, it is a hope without basis.
According to the International Monetary Fund (IMF), apart from Guyana, Suriname and St. Lucia – each of whose economies grew by 4.4 percent in 2010 – the other 12 CARICOM countries experienced no meaningful growth and the economies of most of them contracted, including oil-rich Trinidad and Tobago (-0.6 percent).
Although official figures are not yet available for 2011, it is clear that economic and financial conditions continued to deteriorate, with rising debt and weak fiscal performance in the majority of countries. In the seven Organization of Eastern Caribbean States (OECS) there is increasing concern about the quality of assets in the banking system, particularly of indigenous banks, with urgent action required to improve the situation.
The debt burden of many CARICOM countries – and the region as a whole — is quite alarming. Apart from Suriname, no CARICOM country has a debt-to-gross domestic product (GDP) ratio below 50 percent. The ratio is over 100 percent in St. Kitts-Nevis, Jamaica, Barbados and Grenada. It is pretty close to that figure in Antigua and Barbuda and Belize.
It is significant that, while Caribbean countries watch, with increasing unease, the unproductive debates in the European Union (EU) over its crisis in sovereign debt, and in the U.S. on its rising debt and fiscal weaknesses, regional authorities have not even started a discussion about their own encircling predicament.
Of paramount importance is how can CARICOM countries achieve a higher sustainable rate of growth to help reduce their serious debt burden and improve their peoples’ living standards? IMF programs are in place in Antigua and Barbuda, Grenada, Jamaica and St. Kitts-Nevis, but these are aimed at preserving economic stability, they cannot produce the required economic growth.
The solution to the problem lies in both national and regional approaches. The government of each country has to devise programs of recovery and growth linked to creative utilization of its resource endowment. They also have to stop the pretense that, acting alone, they have the capacity to overcome their overwhelming difficulties.
The seven small member-states of the OECS, in particular, have to turn words into action by intensifying their proclaimed integration arrangements at every level. Not one of them will recover or prosper by clinging to barren sovereignty. For them, it should be more not less integration, including joint regulatory authorities for onshore and offshore banks, and for insurance companies. They should also establish joint missions for overseas representation and, where this cannot be achieved at institutions such as the U.N. agencies and the World Trade Organisation, joint support offices should be put in place, manned by the best available persons.
Donor countries and regions, such as the E.U., Canada and the United States, have grown tired of waiting for the region to propose sustainable projects and programs for which they could provide financial support. They are unwilling to continue to prop-up the region’s traditional uncompetitive production in circumstances where they too must be watchful of the cost of living in their own countries, and the use of tax dollars.
The region has to forget the idea that Europe, America or anywhere else owes it help because of past relationships. The decision of the British government to maintain the oppressive Air Passenger Duty (APD) on travel to the Caribbean despite regional protestations should have made that reality crystal clear. Even if it is true that some European countries do owe the region, they feel that debt has been paid and, while they remain willing to be helpful as part of their assistance to developing countries, they want Caribbean countries to demonstrate that they are overhauling their arrangements to make themselves more competitive and less reliant on aid. They would also like to see the Caribbean put up regional projects to utilize 200 million Euros (US$258 million), set aside for the area over the period 2006 to 2011, that has been languishing in the European Development Fund.
CARICOM as a whole requires new external diplomatic/economic planning strategies and initiatives in order to be effective. Old ways of doing business are no longer viable.
These strategies and initiatives, including re-thinking the priorities of the Caribbean Single Market, should be part of a new policy direction that takes full account of the changed global dynamics. But, where is the leadership to produce them coming from? Where is the new thinking responsive to the new realities? In 2011, both the technical and political leadership of CARICOM failed to inspire the people of the Caribbean with a sense of hope in fulfillment of their desire for improved standards of living, for more employment, for greater food security, for personal safety and for the assurance that their countries could compete in the world and be respected.
Regional authorities, such as the CARICOM Secretariat, the OECS Secretariat, and the Caribbean Development Bank (CDB) should have already provided new policy directions for the consideration of the political leadership. At least by now, they should have posed the relevant questions about what new direction, and how its elements can be financed. But, this has not happened. The regional private sector has also not produced proposals for new arrangements that could diversify and expand the region’s production and make it competitive. Too many companies continue to rely on governments to protect them from competition and to subsidize their operations either directly or through donors.
The regional ship needs extensive overhaul and the regional journey needs a revamped chart to guide it through the turbulence which lashes it on every side. It also urgently requires dedicated captaincy at the highest political level not only to pilot it, but also to inspire all its crew and all its passengers to work together for its safe passage.
In 2012, it cannot be business as usual. The passengers on the regional ship – the Caribbean people – expect better.
Sir Ronald Sanders is a business executive and former Caribbean diplomat who publishes widely on small states in the global community. Responses to: www.sirronaldsanders.com.