By Sir Ronald Sanders:
Owen Arthur, the former Prime Minister of Barbados, is probably one of the best Commissioners of a Caribbean Commission that the region does not have but ought to have.
Indeed, had Caribbean Community and Common market (CARICOM) governments implemented the recommendation of the 1992 West Indian Commission to establish a Caribbean Commission, we may today have as its President, PJ Patterson the former Prime Minister of Jamaica, Owen Arthur as one of its Commissioners and someone from the OECS of the regional calibre of say, Ralph Gonsalves the present Prime Minister of St Vincent and the Grenadines, or Vaughan Lewis former Prime Minister of St Lucia, as the third Commissioner.
Had such a Commission been in place and operating, CARICOM countries may have been dealing with their current financial and economic crises in a collective and cohesive fashion, and much better than they are currently.
As it is, each country has struggled to deal on an individual basis with the walloping effects not only of the global financial crisis, but also of the consequences of the collapse of CLICO and British American.
While it is true that in mid-June, the governments of the seven small members of the Organization of Eastern Caribbean States (OECS) signed a Treaty to establish an Economic Union among themselves, that treaty is not yet operational and while, once it is operational, it will represent progress, it remains insufficient. It is the wider CARICOM region that has to deepen its integration arrangements and especially its machinery for joint decision-making and implementation.
Regrettably, Owen Arthur is not looking for a job as a Commissioner or even Head of a Caribbean Commission. Indeed, one interpretation of a comment he made recently in the Bahamas suggests that he may be interested in being Prime Minister of Barbados once again.
In a very important speech to the Institute of Chartered Accountants of the Caribbean at its annual meeting in the Bahamas on June 25, Arthur said: “You should allow me to begin by stating how very pleased I am to be able to share the same platform once again with Prime Minister Hubert Ingraham who until recently, like I do now, carried the title of Former Prime Minister. His presence fortifies my belief in the concept of the second coming”.
Whatever Arthur meant by that comment, the rest of his statement was a telling analysis of the present financial and economic condition of the Caribbean Community, and a blistering revelation of the lack of support from the International Financial Institutions (IFI’s).
It has to be said, however, that while the IFI’s have not been as responsive to the Caribbean as they could have been, and the IMF in particular has applied the usual prescriptions for providing Stand-By arrangements to Jamaica and Antigua and Barbuda, CARICOM countries failed to provide the IFI’s and major world economies with a clearly defined plan of what they need, for what, and how they plan to repay it.
It should be recalled that when the global financial crisis erupted, the world, and the Caribbean Region within it, faced an economic crisis of unprecedented proportions. Globalisation threatened to overwhelm the Caribbean with a world-wide recession, and indeed it did. Growth in every country except Guyana (according to the IMF) declined in 2008 and 2009. In some cases, there was negative growth. The ratio of debt to GDP escalated everywhere even in normally cautious Barbados. Tourism, on which the entire region (except Guyana and Trinidad and Tobago) now relies, declined everywhere if not in numbers, certainly in spending.
No State, no Government, no society within the region was immune from the economic consequences of the global financial crisis and the effects of the collapse of CLICO and British American. In that context, CARICOM societies expected their governments to come together to explore measures they could take in concert to enlarge the capacity of the region. Indeed, several regional commentators urged such action in very specific terms. As it turned out, CARICOM governments set up two separate task forces and both reported, but no joint plan was put to the IFI’s and none to the major world economies.
Owen Arthur reminded his audience in the Bahamas that “in April 2009, the G20 countries pledged provision of an additional $1.1 trillion to the IMF and the Multilateral Development Banks to enable them to carry out a programme to restore credit, growth and jobs to the world economy”, and he observed that “we have witnessed the carrying out of a rescue and recovery programme for the world’s developed economies, involving an unprecedented commitment of financial resources and the incurring of fiscal deficits on a scale that has hitherto been unimaginable”.
But, while the developed countries were bailing themselves out, they failed to deliver on the pledge “to make available an additional $850 billion of resources through the IMF and the multilateral development banks to support growth in emerging market and developing countries by helping to finance counter-cyclical spending, bank recapitalization, infrastructure, trade finance, balance of payments support, debt rollover and social support”.
Arthur pointed out that the IMF introduced a new Flexible Credit Line through which the bulk of additional IMF financing was to be channelled. As he said: “It was also especially intended to herald a fundamental change in the procedures for accessing IMF funds and meeting IMF programming tests”.
However, it could not be used by Caribbean countries and the facility into which $500 billion was pledged to support recovery in the developing world was used by countries in Latin America, Africa, Eastern Europe and Asia.
In the Caribbean, the IMF has agreed to two Stand-by Arrangements, one for $1.3 billion with Jamaica, and the other for almost $120 million with Antigua and Barbuda for which all the traditional IMF conditionalities apply.
As Arthur concludes: “It however cannot fairly be said that IMF response has or will assist in any major material way in achieving the grand overarching objectives stated on April 2nd, 2009 of fostering counter-cyclical stimulation, spurring employment creation nor attending to the needs of structural diversification in Caribbean economies”.
The space allowed in this commentary does not permit discussion of Arthur’s analysis of the lack of adequate response by other IFI’s to the Caribbean. But, his statement should be compulsory reading for all.
His conclusion is also extremely important. He said: “Where there is common threat, we must devise and pursue a common response. Should this global crisis engender such a common response to the common threats faced by the societies of the region, it will have served to usher in a better way of doing things in the Caribbean and will help to ensure that our best days are still ahead of us”.
In simple terms, Owen Arthur has made the case for a Caribbean Commission. If it were in existence, and if someone of his calibre – if not he himself – was Commissioner for the Community’s finance and trade negotiations, the region as whole might have got from the IFI’s a reasonable share of the resources it has been denied – largely because it failed to produce a clearly defined plan that could be effectively argued.
July 2, 2010