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Haiti Agriculture Embargo Raises Costs Five' Times
By NEIL HARTNELL
Tribune Business Editor
Nassau, The Bahamas
THE
Bahamas has been urged to end its embargo on direct agriculture imports
from Haiti, with the current system thought to quintuple produce costs
via Florida-based middlemen as it transits through the US.
Speaking
to Tribune Business ahead of the proposed Bahamas Chamber of Commerce
and Employers Confederation's (BCCEC) likely trade mission to Haiti in
September this year, Chester Cooper, the organisation's chairman, said
the current health-related barrier to direct imports from the Bahamas'
southern neighbour "stifles trade" and drives up costs for consumers in
this nation.
He
suggested that by creating a Bahamian inspection station in Haiti, so
that this nation's officials could examine inspect agricultural produce
for health and safety issues before they were imported here, direct
trade between the two nations would increase to such an extent that it
would open up new shipping routes.
And,
ultimately, Mr Cooper said increased trade could have the effect of
bolstering Haiti's economic stability and reducing the flow of illegal
migrants northwards to the Bahamas, creating a win-win for both nations.
Recalling
that the embargo on direct Haitian agricultural imports had been raised
as a key issue on the last BCCEC trade mission to that country in
2007-2008, Mr Cooper told Tribune Business: "Regrettably, there hasn't
been any advancement on the issue.
"I've
spoken with Phillip Miller at the Ministry of Agriculture, and
understand they have tried to make some moves on the issue, and then
there was the earthquake, the cholera. There's always something that
throws the mission off."
While
a Bahamian team had previously visited Haiti to see if this nation
could establish an agricultural inspection facility there, Mr Cooper
said this had occurred several years ago before the earthquake that
devastated the Bahamas' southern neighbour.
Of
the existing embargo, Mr Cooper told Tribune Business: "It stifles
direct trade itself. If we can generate the volumes, we can get more
efficient shipping routes between the Bahamas and Haiti. But, so long as
the volumes are so low, it creates inefficiencies in pricing."
If
just two boxes of mangos were being shipped from Haiti to the Bahamas,
Mr Cooper said it was more cost effective to send them through the US
anyway, rather than direct to this nation. If volumes rose, the demand
for direct shipping would, too, ultimately leading to the creation of
new shipping companies and routes between the two countries.
Tribune
Business understands that if mangos are sold in Haiti for $0.20 per
product, Florida-based wholesalers may charge as much as $1 for them
once they have reached the US - mark up of five times' or 400 per cent.
"In
effect, produce coming into the Bahamas from Haiti passes the Bahamas,
transits the US as they have US Department of Agriculture inspection on
the ground that facilitates trade to the US," Mr Cooper said.
"A
box of Haitian mangos, for example, might eventually find its way to
the Bahamas after transiting the middleman in Florida, who would've
tacked on their mark-up. This is most inefficient and drives up the
costs to Bahamians unnecessarily. There were no doubt good reasons for
this position, but it has now been several decades and this should be
promptly reviewed."
He
added: "The Bahamas government should put in place its own inspection
protocols and expedite the removal of these restrictions. Ending the
embargo will not only reduce the cost of Haitian products imported to
the Bahamas, and improve trade but, taking it to the logical conclusion,
it might help the Haitian economy and our relations with Haiti by
improving commerce."
Mr
Cooper added that if the Government was to "commit" to removing
obstacles such as the direct agriculture embargo, it would open up more
trade and investment opportunities between the Bahamas and Haiti, and
encourage more businesses to go on the September trade mission.
"It's
important on many levels," he added. "If we can achieve it, obviously
there's the commercial aspect and it would make some contribution to the
Haitian economy. If we take it to its logical conclusion, the more
liberalised the Haitian economy is, the fewer Haitians will migrate
illegally to the Bahamas.
"From
a macroeconomic point of view, down the road the more trade Haiti gets,
the better for everybody. We'll be working hand-in-hand with the
Government on these issues.
"We
live in a very open economy and import the bulk of the goods we use
here. Typically, we import goods from south Florida. The south
Floridians bring them in from elsewhere, and it's important for us to
create diverse linkages where possible to reduce the overall cost of
food."
AGAINST the backdrop of this year's post-election budget debate in Parliament, we thought it would be useful to look at how our economic circumstances have evolved over the past decade.
May 2001
When the first Ingraham administration tabled its final budget, Finance Minister Sir William Allen talked about containing the demands of inefficient, money-wasting state corporations like Bahamasair and ZNS.
He deplored the three-year delay in divesting BTC, which he attributed to the sorry state of the corporation's accounts - meaning it had been allowed to operate incompetently for decades.
But the future looked bright. The Bahamian economy had grown by 5 per cent in 2000, with more of the same projected for 2001. And the government debt-to-GDP ratio was about 30 per cent ($1.5 billion), considered sustainable by most economists.
"The declining debt and lower interest rates have reduced the cost of debt servicing," Sir William said. "Unemployment has been reduced to the lowest levels ever recorded (6.9 per cent), living standards are approaching those of the advanced OECD countries, and Bahamian society is prepared to meet the future with greater certainty and confidence than ever."
There were certainly achievements to brag about. An overall budget balance had been recorded for the first time since the early 1970s, and Allen was predicting that fiscal imbalances would become a thing of the past.
But that optimism was fleeting. Within months, the deadly terror attacks on New York and Washington produced panic in the US and sparked a worldwide recession that halved global economic growth. A sharp fall-off in travel forced The Bahamas to take emergency fiscal measures.
May 2002
So Perry Christie was able to say when he took office in 2002 that he had inherited a big deficit. His new government stressed the importance of containing public debt so that the country's limited resources could be applied more productively.
In the wake of the 9/11 attacks, State Finance Minister James Smith warned that revenue losses and emergency spending, combined with the demands of the loss-making public corporations, were straining the country's resources. And the government promised to complete the sale of BTC by 2003 at the latest.
May 2004
By the middle of his term in office, Christie was decidedly more upbeat. The impact of 9/11 on tourism had been short-lived, Sol Kerzner was investing a billion dollars to expand Atlantis, and the credit boom underway in the US was having a marked spillover effect on the Bahamas.
Although the administration promised to reduce government debt (which now topped $2 billion) to that 30-per-cent-of-GDP sweet spot, this time there was no talk about containing the demands of state corporations. And when Christie left office three years later, the BTC privatisation process was still in limbo - a full decade after it had been launched.
May 2006
As you might expect in what was to be his last year in office, Christie presented a grandiose budget in 2006-07. He talked about transforming the tourism and transportation sectors of New Providence, restoring Grand Bahama's prosperity, ending poverty, and getting crime and illegal immigration firmly under control.
"We have secured the future economic prospects of The Bahamas," he declared, "which are unrivalled in this region and without precedent in the economic history of our country...a scale of inward investment without parallel anywhere in the world..the economy has reached take-off point into what could be the longest, highest and most sustainable expansion of our history."
But ironically, and little noticed at the time, storm clouds were already gathering. Oil prices were about to spike, but energy was simply not on the government's radar. And the housing bubble in the US would soon burst, leading to an unprecedented global financial crisis with severe and long-lasting consequences for the Bahamas.
May 2007
When the FNM returned to office, they appeared to sniff the approaching storm. Hubert Ingraham tabled a balanced budget and promised to eliminate the deficit within five years, in the process bringing government debt down from over 37 per cent of GDP to around 30 per cent.
When Ingraham regained office, the total public debt (i.e borrowings by both the government and state corporations) was $2.9 billion, having grown by $656 million, or 29 per cent, during the Christie administration. At that time, the country was paying an overall interest rate of 7 per cent on borrowed funds, and servicing this debt was costing more than $141 million a year.
"It is crucial that we move quickly to reduce the ratio of debt to GDP and not allow it to drift upwards as it has in recent years," Ingraham said at the time. To do this, the government planned to rely on improved revenue collection and projected growth of more than 4 per cent.
Although state corporations were not mentioned in that budget communication, for the first time energy was a talking point. The government announced a review of alternatives to fossil fuel imports for electricity generation - including solar, wind and wave energy technologies - and set about formulating a national energy policy.
May 2008
But the FNM's honeymoon was brief. By early 2008 the prospect of a deep global recession was looming, as financial markets came under increasing stress. In the second budget of his new term, Ingraham pointed to economic uncertainty and spiralling energy costs as major factors in the government's decision-making.
With the economy suffering "severe setbacks" from the credit crunch and from the surge in energy and food prices, the government sought to provide a targeted fiscal stimulus as unemployment began to rise. A $100 million loan from the Inter-American Development Bank was also secured to complete the much-delayed New Providence Road Project.
And all the loss-making state corporations were still receiving big subsidies - $28 million for Bahamasair, $22 million for Water & Sewerage, and almost $12 million for ZNS. As fuel prices reached record highs, BEC's financial position worsened, and it was exempted from paying import duty on fuel, further impacting the government's finances.
In September, the giant Lehman Brothers investment bank collapsed, sparking a panic in the financial world. It was a seminal event that dramatized the severity of the Great Recession, which had actually begun in late 2007. The fallout shrank the Bahamian economy by 1.5 per cent in 2008.
May 2009
The following year's budget acknowledged the "extraordinary" impact of the financial meltdown. Government debt was now over 38 per cent of GDP, while the deficit had grown to 5.7 per cent of GDP. But more borrowing was necessary, Ingraham said, if the country was to avoid painful adjustments.
Meanwhile, the seemingly never-ending privatisation of BTC was entering its final stages, and the government began to mull the sale of other public corporations. Plans were also drawn up to cut ZNS' bloated staff level by more than a third.
"The financial resources released from propping up these corporations, plus the proceeds of privatization, would provide welcome relief to the Bahamian taxpayer," Ingraham said.
As the vaunted Emerald Bay resort on Exuma closed and other major foreign developments were put on hold, the government sought to cushion the impact of "these deeply troubling times" with unemployment benefits and a national re-training initiative to help laid-off workers find new jobs.
May 2010
The 2010-11 budget prescribed the most stringent fiscal retrenching of recent times, against a backdrop of 15 per cent interest on the nation's $2.9 billion public debt. Unemployment rose to more than 14 per cent.
Ingraham acknowledged that the country could not sustain more deficit spending. This was in line with the IMF's view that emergency fiscal measures should now be withdrawn, to signal a credible commitment to contain debt.
Spending was essentially frozen at 2009 levels and the government said it would pursue tax reform to raise revenue collection to 20 per cent of GDP to slow the growth of debt. After contracting by about 7 per cent in 2008 and 2009, the Bahamian economy barely grew in 2010 - by less than half a per cent - while government debt soared to 48 per cent of GDP.
May 2011
By 2011, the debt had climbed to 53 per cent of GDP, as the government borrowed more to strengthen the social safety net and continue major infrastructure investments.
"Reforming and modernizing tax administration will be crucial to deal with future changes in the tax regime that may flow from a much-needed and overdue reassessment of the revenue structure of the government," Ingraham noted.
Meanwhile, revenue was bolstered by $210 million received from the sale of BTC in April, which reduced the deficit somewhat. Government debt was put at $3.8 billion, or 46 per cent of GDP, while revenue collection was 18.5 per cent of GDP. And the economy grew by a modest 1.6 per cent in 2011.
May 2012
In the first budget of his current term, Prime Minister Christie said the financial picture was worse than anticipated and promised to maintain fiscal prudence, while forecasting major new spending on mortgage relief, education, urban renewal and healthcare. He also undertook to explore ways of re-nationalizing BTC.
Christie said tax revenues would have to rise, suggesting they should be 25 to 30 per cent of GDP - a significant jump over previous revenue collection proposals. "Our tax base is much too narrow, focusing as it does on goods to the exclusion of services," he said. "This is simply unacceptable in a modern economy."
The government said it would appoint an economic advisory council and prepare a White Paper on tax reform, along with a centralized tax administration system. "The current structure is disjointed, inefficient and inequitable in many respects," Christie said.
Unemployment spiked at 16 per cent in late 2011 and economic growth this year is projected to be about 2.5 per cent, driven by tourism and foreign investment, especially the Baha Mar development on New Providence. Similar modest growth is expected next year.
Government debt was just over $4 billion in May, over 50 per cent of GDP, and the IMF has warned that delaying tax reform will raise financing costs and threaten the economic recovery. This year's budget includes spending of $1.82 billion against revenues of $1.55 billion, producing a deficit of $550 million - or 6.5 per cent of GDP. Debt servicing is now $328 million, or just over 18 per cent of total recurrent expenditure.
Conclusion
This potted history makes it clear that, from the beginning of the 21st century - when the US economy to which we are firmly attached had just experienced the longest economic expansion ever - successive governments have been ratcheting up the national debt, no matter what they said to the contrary.
There are valid reasons for this - the country needs better social and physical infrastructure to achieve orderly growth and improve the quality of life. This requires investment that has to be paid for. Simon Townend of KPMG (Bahamas) has said we need to spend more than $2 billion over the next few years in transport, health, education and other sectors to remain competitive.
The upshot is that the Bahamas has a serious infrastructure deficit - despite significant recent investments in roads, electricity and water supply, air and sea ports. There are still large backlogs of needed work on existing systems, together with new demands that go unmet. Meanwhile, scarce public funds are being poured into dysfunctional state corporations that provide very little public value.
Successive governments have also known for years that they have to tackle tax reform - changing revenue collection from an outdated system based on import duties to one based on consumption or income. But they have postponed all the hard decisions. Prime Minister Christie appears set to grasp this nettle, but it is critical that we achieve the right balance between revenue, spending and borrowing. And that requires the considered input of civil society, not just the pontifications of politicians.
One of the biggest contributors to deficit spending (and to the national debt) over the years has been the public sector. Despite the sale of 51 per cent of BTC last year (after 13 years of trying), inefficient state corporations continue to absorb hundreds of millions of tax dollars. Is it really necessary for the government to own and operate all these corporations?
And although energy is a critical problem for both the public and private sectors, it does not appear that urgent steps are being taken to (in the words of the National Energy Policy) "aggressively re-engineer our legislative, regulatory, and institutional frameworks and implement a diverse range of sustainable energy programmes."
Back in the good old days of 2001, Sir William Allen warned that unless fiscal deficits were curbed, "the resources required to service the increasing debt will eventually bankrupt national programmes." He added that "increasing the share of GDP taken in taxation above 20 per cent...would adversely impact the competitiveness of the economy and eventually...destroy jobs."
According to PLP Senator Jerome Gomez, the days of borrow, borrow, borrow and spend, spend, spend are over. Well, let's give him a raincheck on that.
In the meantime we should focus on this: many experts say that an economic shock from Europe, which is quite possible in the months ahead, could push the US and most of the rest of the world into another big recession.
Sometimes I wonder what we really know about Africa, since we live in the Diaspora as people of African origins. Since our ancestors were taken from Africa by force, we the children of oppressed slaves have become creolised and, although we dream about Africa as our home, we have lost the true ingredients of African culture.
In this western world, we have been Christianised and those among us who reject Christianity have jumped on some versions of other ideological teachings without looking at the historical facts. For example, some black folks embrace other religious ideologies that are not indigenous to Africa, as a means of emancipating themselves from mental slavery, but in reality the new religions they embrace have no connection with African spirituality.
The dream of returning to Africa will always remain in us as a sort of utopia, as some famous blacks in the United States and the Caribbean advocated that we must go back to the motherland, while they too were creolised and did not understand the complexity of African people and society. Great Pan Africanists such as Sylvester of Trinidad and Tobago and later on Marcus Garvey of Jamaica, who preached back to Africa.
However, these two great black Caribbean activists could not see the bigger picture, why Africans on the continent are so disunited. Additionally, they could not analyse the power and control of African people by the colonisers was more forceful and ruthless than in the Americas, due to the great wealth and resources the African continent possesses that the colonisers want.
In my youthful years I experienced the Bob Marley era and the Rastafarian movement that advocated repatriation of Africans in the Diaspora back to Africa. The Rastafarian movement spread the message of back to Ethiopia and they praised former Ethiopian Emperor King Haile Selassie as the God-sent saviour of African people.
As a youth I enjoyed the reggae music, but I never accepted the Rastafarian teachings about Africans in the Diaspora going back to Africa. At an early age I had an understanding of African and Caribbean history and the geographical location of the slave trade from the west coast of Africa to the Americas. Therefore, I always had the suspicion that we black people in the western world did not come from that special African country, Ethiopia.
In addition, I observed the Rastafarians’ diet, which is vegetarian, and I began to do my own research to find out if there are in tribes in Africa that are vegetarians, and I could find none. Continental Africans eat a lot of wild meat because they have a long history of centuries hunting buffalo, deer, antelope and other wild animals as a source of food. As a matter of fact, Africa has the largest species of wild and domesticated animals and meat as a protein diet is always available for Africans to eat.
The advocacy of smoking marijuana as a holy herb also had me puzzled. Based on oral tradition history handed down to us by our parents and grandparents, they never told us that our ancestors participated in smoking marijuana. However, my parents told me at an early age that marijuana was used by East Indians when they were brought to the Caribbean to work on the sugar plantations. The East Indians used marijuana as a form of ritual when they worshipped a particular Hindu god. However, black people were never involved in Hindu worship.
As we black people in the Americas continue to search for greater connection to Africa, some among us seem to embrace the teaching of Islam, without reading and doing any research to see there is a parallel between Islam and Christianity, as religions used by foreign colonisers to control and conquer land and resources on the African continent. Being as we are a creolised people searching for our African roots, culture and identity, many among us grab at ideologies that seem to be anti-western culture, without understanding the real living experience of the other foreign cultures we embrace.
Now that the Rastafarian movement and teachings have spread widely throughout the western world, it has not really make a big impact on the lifestyle of continental Africans, because they are grounded in some forms of indigenous culture that we blacks in the Americas lost during slavery and colonisation in the past centuries. For example, blacks in the western world do not have any idea how palm wine taste. We never chew khat as some Africans on the Horn of Africa do on a daily basis. Yet still, some blacks among us smoke marijuana and praise Africa with the hopes of repatriation in the future.
Unfortunately, as we continue to dream about going back to Africa and to be more Africanised, we are basically destroying the African culture that remains within our society. The majority of young blacks in the Americas today do not participate in the old Negro spirituality as our grandparents did. They lack the knowledge of the African spirituality that our grandparents held on to during the days of colonisation, when black people used to congregate and pray in one voice, with one goal, for the same cause.
Today as I look around, I see my black sisters wearing artificial straight hair, while covering the beautiful coarse curly African hair they are genetically born with. Some young black youths have rings pierced in their nose, lips and eyebrows. In addition, they have tattoos all over their body without a clue why they are piercing their skin with life-lasting marks that one day they might greatly regret.
Unfortunately, as we people in the western world dream about going back to our African roots, the further we are distancing ourselves from mother Africa. It is a shame. It is sad but that is a fact. While we keep searching for Africa, we are losing our African roots.
Economists and policymakers in Europe are divided over whether public policy should pursue austerity or economic growth for countries in the current recession. With the election of the pro-growth François Hollande to the French presidency, there has been daily speculation in the press about an imminent clash with the pro-austerity German Chancellor Angela Merkel.
The immediate concern is the Greek economy, but because of the contagion that can spread through the integrated European banking system, the concern is also for the economies of Italy, Spain, and Portugal, and, by extension, the whole European Union. At the recent G8 meeting, President Obama sided with the pro-growth forces, isolating Chancellor Merkel into apparently softening her position on Greece somewhat.
The argument for austerity is that the State must reduce its deficit by cutting expenditure to match the public revenues. Public revenues have been either stagnant or declining because the economy has been contracting in the global recession. Recession means that economic activity slows down, employment and incomes decline, and with them, taxes also decline. The pro-growth criticism of the austerity approach is that reduced public expenditure will cause further contraction of the economy and reinforce the tendencies for recession. In the worst-case scenario, the downward spiral of the economy continues.
greek horror stories
The situation in Greece is already very bad, with unemployment at almost 22 per cent and social services cut drastically. There are daily horror stories of extreme hardships being faced by the Greek people. The Italian unemployment rate is still only about 10 per cent, but the economy is quite fragile and investor confidence is weakening, as is evident in the rising cost to the government of borrowing.
The situation in Spain is much worse, with the unemployment rate estimated at about 25 per cent. Five of Spain's banks were downgraded recently by Standard and Poor's, and its fourth-largest bank is seeking a bailout of about US$23 billion. Italy and Spain already have governments committed to and implementing austerity programmes.
The current Greek political crisis turns on whether the new government will support the austerity programme that had been agreed by the previous administration as a condition for a German-led bailout fund. While the economists and the policymakers argue, the personal tragedies of households are mounting, and all four countries have been experiencing popular demonstrations against the cutbacks in public expenditure.
By contrast, the pro-growth argument proposes expanding public expenditure with 'stimulus packages'. That is, increased government expenditure of the appropriate type - generally, public investment in infrastructural maintenance and construction - will expand incomes and consumer spending, which, in turn, will stimulate private investment to meet the demand for goods and services.
Higher incomes will also lead to increased payments by taxpayers, which can offset at least some of the deficit caused by the original government spending. In this case, the economy begins to recover from recession, and the spiral is upward in a renewed process of growth.
Part of the recent robust economic growth of China, India and Brazil is caused by the pro-growth posture and fiscal commitments that have helped these economies escape the recessionary tide sweeping the globe since 2008.
This was the theoretical issue with which John Maynard Keynes, the famous English economist of the 1930s and 1940s, engaged the traditional orthodox neoclassical economists. The triumph of his ideas was in part linked to the success of public expenditure under the New Deal policies of the government of President Roosevelt in stimulating the recovery of the USA economy from the Great Depression. For the next 40 years, the Keynesian revolution in economic thought guided both economic analysis and public policy, especially with respect to issues of economic development.
Neoclassical orthodoxy, however, began to regain respectability in the USA and the United Kingdom in the 1970s with the support of the political programmes of Reagan and Thatcher, and by the 1990s, it had re-established its hegemony of economic thought. It spawned the ideology of neoliberalism and the associated economic development strategy called the Washington Consensus. Many of the ideas were first tried out on Jamaica in the 1970s to counter the attempt to chart an alternative path to dependent capitalism.
The debate between proponents of austerity and proponents of economic growth has also framed the discussion about the 2012-13 Budget in Jamaica that was recently tabled by the minister of finance and planning. Finance Minister Peter Phillips defended the austerity approach on the grounds that the Government had to curtail expenditure to levels that would meet the approval of financial markets.
That is, given the recent failed IMF agreement, Jamaica needed to restore the confidence of the financial markets by containing the deficit, and committing itself to a range of fiscal reforms.
Containing the deficit requires trimming Government's expenditure, except for debt repayment, which is given priority over everything else.
The proponents of economic growth anticipate that this will tend to contract the economy, taxes will be less than projected and, ultimately, the Government will not be able to achieve its deficit targets anyway.
Growth necessary for development
The Government shares this concern as well. Its critics cite the contractionary nature of the Budget to call for cuts in public-sector employment, to counsel reducing debt payments, to propose a slower adjustment of the fiscal deficit for the IMF agreement being negotiated, or to enhance the efficiency of public expenditure, depending on their political and/or ideological perspectives. All are united in the recognition that economic growth is necessary for economic development and probably political stability and social peace.
The anticipated IMF agreement is expected to trigger funds for budgetary support from multilateral institutions, primarily the World Bank and the IDB, and bilateral flows from the EU and others. As with the expenditure from revenue, the Government should maximise the efficiency and effectiveness of each dollar of international assistance that it spends. Efforts to streamline administrative processes as envisaged in the MOUs between the Government and trade unions representing public-sector workers should be accelerated. It will take a lot of political skill and goodwill to secure the cooperation of public-sector workers against the background of a wage freeze and fractious relations with the last Government, and in the context of a current wage freeze.
The only other sources of financial stimulus for the economy are foreign and domestic private investment. It is imperative that the Government does everything in its power to facilitate investment flows, especially in areas of export potential and/or the creation of employment. The urgency requires an approach of treating investment projects on a case-by-case basis, sequenced by their readiness and potential impact, instead of trying to formulate a general approach to facilitating all investments under all circumstances. Put bluntly, the Government should select the projects with the highest priority, and facilitate their smooth and quick passage through the bureaucracy.
In doing so, the authorities have to anticipate how each project will impact the economy. At a recent SALISES conference on climate change and agriculture, a senior executive of COMPLANT, the Chinese company that has invested heavily in sugar, made a case for support from the Government by way of allowing the imports of cheaper chemicals, machines and other inputs from China for cane production. The Government has to balance the gain to cane production from cheaper inputs with the loss to the importers, the distribution sector and its own coffers, in both the short and the long run, if cheaper Chinese imports displace traditional sources.
Similarly, the mining companies have been calling for an urgent strategy to reduce energy costs as a condition for the expansion of the output of bauxite and alumina. While the transition to a new mix of energy sources will take time, the Government must start the process now.
It is well known that construction costs are significantly impacted by the length of time to process approvals. Some progress in reducing red tape has been made by the Jamaica Chamber of Commerce's 'Legs and Regs' project that entailed "the surveying of regulations, legislation and processes which impede the efficient administration of business processes". The immediate challenge is to transcend and speed up even these revised processes for the selected high-priority projects that meet the criteria of employment and income generation, and foreign-exchange earning.
subsector support
Simultaneously, policymakers, leading technocrats and bureaucrats must find time to address the business and survival needs of small and medium enterprises. This subsector is both an important employer and a private pillar that supports the social safety net. Small farmers need markets for their produce, and small manufacturers and service providers in the Kingston Metropolitan Area and other urban centres need even temporary relief from tax and other regulations. These forms of support come to mind immediately, but the most effective interventions should be selected on the basis of proper research into the subsector's needs.
Too often, the Government delays action until a policy is found to cover all possibilities, instead of acting on the known issues while the policy is being fine-tuned. I recall the unwillingness of the authorities to implement exchange controls until policies that covered all eventualities were settled, while a handful of traders were pursuing their own interests, and in the process, drove down the value of the Jamaican dollar.
One advantage of a small society is that the number of instances that require government intervention are small. Governments can and should act on these rather than wait to formulate general solutions that may be elegant but impractical.
In Jamaica today, the dilemma of either austerity or growth has to be recast as a synthesis of both austerity and growth, especially since the Government has already conceded to the austerity and other pro-cyclical policies of the IMF. New and different as the IMF claims to be, its policies do not promote growth. It continues to expect that growth will come spontaneously from the investments by profit-seeking, innovating entrepreneurs hunting opportunities in free markets. Our entrepreneurs will need a bit of hand-holding and other forms of support to take the risks that are involved in investment. With a little bit of imagination, and lots of action, our political and business leaders can and must chart a path of economic recovery and social stability.
Michael Witter is senior research fellow at the Sir Arthur Lewis Institute of Social and Economic Studies, UWI. Email feedback to columns@gleanerjm.com and michael.witter@uwimona.edu.jm.
June 03, 2012
Research Associate at the Council on Hemispheric Affairs
The recent discovery of offshore oilfields in the Gulf of Mexico has given Havana new hopes of establishing rich deposits of its own, thereby decreasing Cuba’s present dependence on foreign energy sources.
Fidel Castro began to look for new energy suppliers immediately upon coming to power in 1959, and he soon found one. The Soviet Union was Cuba’s largest supplier of energy resources during the Cold War, but Moscow’s collapse in the early 1990s, coupled with the longstanding American embargo, drove the Cuban economy into a deep depression. Havana, in response, has begun implementing market-based reforms, including intensifying efforts to open the country to tourism,[1] as well as encourage strategic partnerships with other Latin American countries, most notably Venezuela.[2]
In 2011, Cuba produced about 55,000 onshore barrels of oil per day, mostly from the northern province of Matanzas, refining it at the island’s four refineries (in Cabaiguán, Cienfuegos, La Habana, and Santiago de Cuba). Consumer needs, however, call for over 170,000 barrels per day, making the island a net importer of oil.[3] Currently, the bulk of these imports come from Venezuela, which meets two-thirds of Cuba’s daily requirements thanks to an energy agreement the two countries signed in October 2000. Cuba has become a crucial partner for Venezuelan President Hugo Chavez, as reflected in both countries’ membership in the rising Alianza Bolivariana para Amèrica Latina (ALBA) trade bloc.
In early 2012, a deepwater drilling rig was built in China by an Italian company, Saipem, which is owned by the oil and gas multinational Eni, and then leased to Spain’s Repsol. The Spanish company began offshore oil exploration 22 miles north of Havana, in the Jaguey block of the Cuban Exclusive Economic Zone (EEZ), as early as 2004, and is hoping to find between 5 and 9 billion barrels in that area.[4] Yet Repsol will hardly be the only foreign company operating in Cuban territory, as it will be working in just six blocks within the EEZ, and will be doing so in cooperation with Norway’s Statoil-Hydro and India’s Ongc.
Twenty-two other blocks, meanwhile, have been awarded to other foreign companies, including Petronas (Malaysia), PetroVietnam (Vietnam), Gazprom (Russia), Sonagol (Angola), PDVSA (Venezuela), and CNOOC (China).[5] While each is eager to hit black gold in the region, it would take three to five years of drilling before real production could begin even if the deposits live up to expectations.[6]
The United States, which is not taking part in the drilling because of its embargo against Cuba, could nevertheless not be more interested. Washington, alarmed by the drilling site’s location just 60 miles from Florida’s coast, has been expressing its concerns about the potential environmental risks posed by the explorations, and has commissioned a panel of environmental and energy experts to discuss possible solutions to any potential disaster in the region.
According to William K. Reilly, former head of the Environmental Protection Agency under George H.W. Bush, “the Cuban approach to this is responsible and appropriate to the risk they are undertaking.”[7] But should an accident similar to the BP disaster of 2010 occur, the absence of a bilateral oil spill agreement between the US and Cuba, in conjunction with strict American regulations freezing the transfer of technology between the two countries, would threaten American interests in the region, as well as pose a real environmental danger to the entire Gulf of Mexico.
The matter is further complicated by the fact that offshore explorations are not taking place in US territorial waters, within Washington’s legal reach, and are therefore not governed by the Clean Water and Oil Pollution Acts. Thus, any US effort to take control of the situation in the event of an oil spill would be much more difficult, and would be bound to cause a diplomatic incident. Clearly, Washington must begin to consider a possible adjustment or elimination of the restrictions imposed upon the Caribbean country, and ask itself whether the embargo truly still represents American interests.
Economically, it must not be forgotten that if the investigations of Repsol and others reveal that there is a considerable amount of oil in the Cuban EEZ, Cuba could be transformed from an oil-importing country to one of Latin America’s largest oil producers almost overnight. Such a stark transition would undoubtedly affect relations between Havana, Caracas, and Washington, as well as completely change the geopolitical equilibrium of the region, possibly producing explosive results.
Another crucial issue is the conflict between the Argentine and Spanish governments over Argentine President Cristina Fernández de Kirchner’s nationalization of YPF, a now-former Repsol subsidiary. On April 19, the Castro administration announced its support for the takeover, stating that Argentina has the right to exercise permanent sovereignty over its natural resources. Such a controversial declaration, even if coherent once one takes into account Argentina’s alliance with Havana, could end up being a risky and counterproductive step for Cuba.
A potential geopolitical turning point for the region, the discovery of oilfields in the Cuban EEZ could represent Havana’s ticket to the further liberalization of Cuban institutions, an escape from poverty and underdevelopment, and the end of Washington’s disdain for their Caribbean neighbor.
Still, the Cuban position on the Argentinian YPF seizure could prove problematic, and Havana would do well to reformulate its position in order to ease tensions with the Spanish oil company.
At the same time, however, if the United States is interested in benefiting from this discovery and in staving off a potential ecological disaster mere miles from its southern coast, then it, too, must work to ease tension and adapt to the post-Cold War world.
The Council on Hemispheric Affairs, founded in 1975, is an independent, non-profit, non-partisan, tax-exempt research and information organization. It has been described on the Senate floor as being "one of the nation's most respected bodies of scholars and policy makers." For more information, visit http://www.coha.org/ or email coha@coha.org
By Jeffrey Todd
Guardian Business Editor
jeffrey@nasguard.com
Nassau, The Bahamas
The company hired by the Bahamas Petroleum Company (BPC) to plan and execute an exploratory well in Bahamian waters says it believes it will be drilling by the end of next year.
Applied Drilling Technology International (ADTI), based in Texas, is a division of Transocean, one of the largest offshore drilling contractors in the world with thousands of employees and billions in annual revenue. While ADTI refers to itself as a turnkey operator, providing an all-inclusive approach to drilling, top executives revealed to Guardian Business that, in this case, they will only provide project management services for the Bahamas Petroleum Company.
"We're doing the pre-planning and design of the well. We design it with our people here, on our staff. Once the design is done, we move into the logistics planning stage," said Jess Richards, managing director at ADTI. "Once that is done, we will have a small team of engineers that will manage the day-to-day operations on the ground in The Bahamas. There will be supervisors on the rig.
Between our base teams and offshore teams, you're looking at around 12 people."
While not wishing to comment on the geological makeup in The Bahamas, Richards said, "We believe there is an incentive to drill a well. We believe we will be drilling by the end of next year. We're working as directed by BPC. All indications that we have received show we're on track."
According to BPC's drilling licenses, the company is required to spud an exploratory well by April of 2013. The ADTI director said his company, compared to other areas of the world, has not done a lot of exploration in the Caribbean. ADTI does manage wells all over the world, he added, especially in the Gulf of Mexico, which holds many similarities to Bahamian waters.
"It'll be a challenging well, but that's our forte," Richards told Guardian Business.
Research fellow at the Center for International Energy and Environmental Policy at the University of Texas, Jorge Pinon, called Transocean, and by extension ADTI, "a quality outfit with a high level of experience and expertise".
He said Repsol's failure to strike oil off the northern coast of Cuba was unfortunate. But he emphasized that this setback has nothing to do with prospects in The Bahamas.
"The fact Repsol came out dry is not an indication you also don't have other opportunities in Cuba or The Bahamas. So no, the fact it failed does not mean The Bahamas is not a geologically attractive area," said Pinon, who is also the former president of Amoco Oil in Mexico and Latin America.
The comments echo similar assurances made by Simon Potter this week, the CEO of BPC.
Potter said BPC's target represents an "entirely different structure". According to the company's 2012 annual report, also released this week, 3D seismic surveys have yielded very positive results.
It found that the basement is deeper than previously mapped, implying a thicker source rock.
An event that could more accurately predict the fortunes of BPC is another well being spearheaded by Zarubezhneft, a Russian operator in Cuba, immediately adjacent to BPC's "southern blocks".
Share price for BPC, listed on the London Stock Exchange, ended yesterday's trading down more than seven percent, finishing at 6.91 pence.
On Tuesday, Adrian Collins, non-executive chairman of BPC, acquired 200,000 ordinary shares in the company at a price of 7.12 pence each.
Shares have suffered so far this year, registering a marked decline compared to when they were worth as high as 16 pence earlier this year.
THE LOCAL faith-based community is pushing back against the advance of the gay agenda, with the recent staging of a forum by the Jamaica Coalition for a Healthy Society, which was formed in January.
The coalition's mission of ministry, advocacy and education is strategic in the cosmic struggle between religious and secular forces for predominance - a struggle that has been given added impetus with the recent endorsement of same-sex marriage by United States President Barack Obama.
The theme of the forum, 'Confronting the Secular Agenda and the Church's Balanced Response to the HIV/AIDS Epidemic', reflects the concern of the local faith-based community that gay-rights advocates in Europe and North America have overreached. Indeed, this has been underscored by the experience of Eunice Johns - a Jamaican who was prohibited from operating a foster home in Britain because of her religious views against homosexuality.
Having taken a 12-year break from foster parenting, Mrs Johns and her husband were alarmed at changes in UK laws that now required foster parents to avow homosexuality.
"It's as if these things were coming through the side door. So the Church needs to get organised and the people of Jamaica need to get ... active," warns Mrs Johns, who attended the forum in Kingston last Tuesday.
Mrs Johns' experience, as well as other cases of persecution by pro-gay laws, cited by Shirley Richards of Lawyers' Christian Fellowship, underscores the issue of overreach of the gay agenda. Laws are being passed that infringe other people's rights such as freedom of conscience and religious beliefs. In some jurisdictions, free speech has been made subject to the tyrannical acceptance of homosexuality.
Indeed, the criminalisation of biblical teaching on sexuality is one of several 'logical consequences' that have occurred in countries after the repeal of their buggery laws, according to Mrs Richards. Other likely consequences, she contends, include:
Incorporation of alternative sexual lifestyles into the educational curriculum.
Human-rights legislation (Equality Act) which establishes monitoring committees and punishes dissent.
Legal sanctions for public criticism of homosexuality.
Progressive endorsement of same-sex marriage with attendant pressures on religious institutions.
Legal adoption of children by same-sex couples.
Establishment of homosexual clubs in schools via the avenue of protection from bullying.
the new norm
This relentless push by the gay lobby to make homosexuality the new norm is what bothers many heterosexuals within and without the faith community.
The overreaching of the gay community seems also to be the concern of Dr Wayne West, another speaker at the Jamaica Coalition for a Healthy Society's forum.
Dr West dismisses the claims by HIV advocates that the availability of antiretroviral therapy, as well as the relaxation of sodomy laws, will guarantee reduction in the spread of the HIV/AIDS epidemic. He argues that the number of new HIV cases is rising fastest among gay men, compared to other groups, in France where there have been no buggery laws for centuries.
Dr West also points to research by the Centers for Disease Control and Prevention in the United States (US) indicating that, despite the availability of antiretroviral therapy, HIV incidence remained high among gay men in that country.
But neither Dr West nor the Rev Peter Garth, vice-president of the Jamaica Association of Evangelicals, has signalled that the Church is prepared to take unconventional approaches such as promoting safe-sex (use-a-condom) messages to congregants to fight the AIDS epidemic.
"Monogamous heterosexual marriage is the ONLY form of partnership approved by God for full sexual relations in our and every generation," declares Rev Garth, despite the instances of polygamy practised by several biblical icons. The Church, he says, will insist on abstinence, as well as faithfulness in marital relationships. However, that unbalanced approach will leave faithful spouses exposed to contracting sexually transmitted infections (STIs) from spouses guilty of infidelity - highlighting the victimisation of many women whose partners are undeclared bisexual men.
The Church is also guilty of overreacting to homosexuality. The Church's apparent fixation on this issue has been at the expense of being silent on perhaps more egregious sexual atrocities, such as rape and the sexual abuse of children.
In this regard, Archbishop Donald Reece, president of the Jamaica Council of Churches, must be commended for his enlightened comments made at the forum. He suggests that, perhaps, the Church in general has not done enough to promote the sacredness of life.
"Programmes that would have informed our men and women - our boys and girls - of their Imago Dei (image of God) status and, consequently, the sanctity of life and the sacredness of sex are, by and large, lacking or too scant," the archbishop laments.
Correctly so, he condemns the Jamaican society for its selective morality in condoning some acts of violence - such as abortion - while disapproving of others.
It is this sacredness for life why Christians, individually and collectively, should not condone violence against homosexuals.
Clearly, there is need for consensus between pro- and anti-gay advocates.
Byron Buckley is associate editor of The Gleaner. Send comments to columns@gleanerjm.com.
