You don’t have to be an economic guru to recognise that Barbados and other Caribbean nations are in a financial mess.
Wall Street credit ratings of Barbados and the Bahamas have fallen to some of the lowest levels in a decade after occupying dizzying heights before the onslaught of the “Great Recession” in 2007; unemployment rates once below ten per cent are stuck in double digits; some nations, Jamaica for instance, are in the arms of the International Monetary Fund and its stringent conditions; the debt burden of Jamaica, St Kitts-Nevis and Barbados have skyrocketed to the mountain top; and economic growth is anaemic at best and non-existent at worst.
That’s not all. Budget deficits have forced governments to take drastic steps, such as the laying off of thousands of workers in order to cut spending.
A steady stream of bad economic news and a reduction in the inflow of foreign direct investment make it imperative that the Caribbean’s major trading partner, the United States should extend a helping hand in three key areas: financial stability; export-import trade; and investment.
That explains why American Congresswoman Yvette Clarke, a Brooklyn Democrat with strong Caribbean family ties, has complained about US neglect of the region and is urging the Obama White House to help the struggling economies.
“I have mentioned to both Vice President Biden who has been given the portfolio of the Western hemisphere, as well as to our Special Trade Representative (Michael Froman) about the fact that these (Caribbean) areas have been neglected,” Clarke, the daughter of Jamaican immigrants, told BARBADOS BUSINESS AUTHORITY recently.
“I believe there have been missed opportunities for trade and investment in the Caribbean and we have to come up with a plan to assist these nations outside of the standard protocol. I used the fact that other countries in different parts of the world are seeing these island nations as worthy investment areas to stir Washington’s interest.”
Clarke, a four-term member of the House of Representatives, made it clear China was a foreign country on her radar screen.
“We must look at how much China is investing in the Caribbean and it should certainly sound an alarm in the United States, particularly given the region’s proximity to our country,” asserted Clarke. “We are falling behind. I raised the issue that the Caribbean (states) have a preference and an affinity for the United States but now feel like a spurned lover in a situation where they have to survive.”
Clarke was right on the money when she spoke out against the neglect that has characterised American policy in the Caribbean in recent times. Ever since the end of the Cold War almost a quarter of a century ago, America’s interest in CARICOM’s economic and social well-being has been falling.
Washington’s financial assistance has plummeted from the levels which existed when Ronald Reagan was in the White House; the US pushed the World Trade Organisation into dismantling the lucrative preferential access given to Eastern Caribbean bananas exported to Europe; and in more recent times, there has been a systematic and ongoing attack on the offshore financial sector in the Bahamas, the Cayman Islands, Barbados, the British Virgin Islands and Panama.
The US is undermining an economic sector that has brought some prosperity to several countries and is using tax evasion by Americans as an excuse to drive these countries out of the global financial sector. What a pity!
What the Congresswoman seems to have in mind is a plan that is centred on an economic and financial pillars designed to promote growth in the Caribbean. Her emphasis, quite rightly isn’t on handouts from Washington.
It would be the kind of initiative that encourages private firms to make profitable investments in the islands. It can also help by doing what China is undertaking: financing for development schemes – roads, bridges, seaport and airports and agriculture, health and education programmes – through loans that have manageable payback terms.
Clearly, many of the financial concessions Washington either engineered or is strongly backing for the Ukraine and the rest of Europe in the face of Russia’s takeover of the Crimea should be considered for the Caribbean and Central America. A few days ago, American President Barack Obama spoke forcefully in Brussels about the need to guarantee Europe’s financial stability.
We know the Caribbean doesn’t command the strategic importance that the Ukraine and Europe have but it is our region which a decade ago was being described as America’s third border shouldn’t be left alone to fend for itself. The US used the international financial institutions to help Greece when its economy went into a tailspin and it certainly can undertake a somewhat similar strategy for the Caribbean.
The Caribbean Development Bank is an excellent vehicle that Washington, London, Paris, Tokyo and rich capitals can use to help kick-start economic growth and encourage fiscal discipline in the Caribbean where loose fiscal policies of the past six years now threaten to sink the islands’ financial ships of state in a sea of red ink. The G7 states should boost the CDB’s finances so it can lend more to its borrowing member countries.
Tony Best is a veteran journalist and NATION New York correspondent.
