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Venezuela World’s Largest Holder of Proven Oil Reserves
By Saudi Gazette:
JEDDAH –
Venezuela surpassed Saudi Arabia to become the world’s largest holder of proven oil reserves, the BP "Statistical Review of World Energy 2012" said.
Saudi Arabia now trails Venezuela with a 16 percent share of world proven oil reserves, according to the report. Canada ranks third with 175.2 billion barrels, or 11 percent of total, unchanged from the revised number for 2010.
The South American country’s deposits were at 296.5 billion barrels at the end of last year, data from BP Plc show. Saudi Arabia held 265.4 billion barrels, BP report said. The 2010 estimate for Venezuela increased from 211.2 billion in the previous report.
"These reserves are quantified and certified by third parties and recognized by the entire world as being the biggest proven reserves of the world," Venezuela’s Oil Minister Rafael Ramirez said today in Vienna. "We have always said that in the future the natural resources will become scarce and when the economy recovers and demand will come back then we will be one of the few countries able to respond to that."
President Hugo Chavez of Venezuela wants to more than double the country’s oil- production capacity to 6 million barrels a day by 2019, according to a government plan released June 12. The world’s biggest oil-exporting nations faced a 15 percent slump in crude prices last month, the biggest decline since December 2008, on speculation Europe’s debt crisis would derail the global economic recovery.
Ramirez has said oil prices need to be higher than $100 a barrel. The recent slump in crude is dangerous for producers, the Oil Minister said June 12 in Vienna, where the Organization of Petroleum Exporting Countries is meeting today to decide production quotas.
Brent futures fell 14 cents, or 0.1 percent, to $96.99 a barrel on the ICE Futures Europe exchange at 4:04 p.m. London time Friday.
Global reserves advanced to 1.65 trillion barrels at the end of last year, a 1.9 percent increase from a revised 1.62 trillion in 2010, BP said. Venezuela now holds 18 percent of the world’s reserves, according to BP data.
BP revised its estimates on reserves in part because the company publishes its report in June, before most governments issue their annual reserves figures, said Robert Wine, a BP spokesman. Last year’s record average oil price also had an effect, increasing the commercial viability of hard-to-reach deposits, he said.
Venezuela’s deposits may be difficult to extract, according to Strategic Energy & Economic Research. "People still know that a lot of that is very hard to develop and is not as readily accessible the way Saudi reserves are," Michael Lynch, the researcher’s president, said today in Vienna. "It’s the same with Canadian oil sands."
Russia boosted its deposits to 88.2 billion barrels from a revised 86.6 billion a year earlier, according to BP. Russia’s share of the total is 5.3 percent. Reserves in Norway increased last year, snapping 11 years of declines, according to BP. The country’s deposits rose to 6.9 billion barrels, compared with a revised figure of 6.8 billion in 2010.
BP said the estimates in the report are a combination of official sources, OPEC data and other third-party estimates. Deposits include gas condensates and natural-gas liquids, as well as crude.
Global oil consumption increased 0.7 percent or 0.6 million barrels a day to reach 88 million barrels a day in 2011, marking the weakest global growth rate among fossil fuels in BP’s statistical review. Oil consumption in member countries of the Organization for Economic Co-operation and Development, or OECD, declined 1.2 percent to its lowest level since 1995, while oil consumption outside the OECD grew 2.8 percent in 2011, BP said.
"Despite strong oil prices, oil consumption growth was below average in producing regions of the Middle East and Africa due to regional unrest," the oil giant said.
China was the largest contributor to a rise in global oil demand growth in 2011, increasing its total oil demand by 505,000 barrels a day or 5.5 percent in 2011, although the growth rate was below its 10-year average, BP said. Meanwhile middle distillates were again the fastest-growing refined product category by volume, for the seventh time in the past 10 years, the oil major added.
In non-OPEC countries, output was broadly flat, with increases in the US, Canada, Russia and Colombia offsetting continued declines in mature areas such as the UK and Norway, as well as unexpected outages in a number of other countries. The US registered the largest increase among non-OPEC producers for the third consecutive year, driven by continued strong growth in onshore shale liquids output, which pushed US oil output to its highest level since 1998, BP said. – SG/Agencies
Within the last few weeks, Grenada was once again consumed with a scandal that touched on admitted campaign funds received in Grenada for the National Democratic Congress (NDC). As the evidence indicates, funds were received and deposited into various personal accounts of known individuals who hold elected and appointed important offices in Grenada. There were many verbal and one written admission, which emanated in a statement from the Prime Minister’s Office.
As the prime minister’s press secretary comforted himself in the media room at the Botanical Gardens, Grenada’s airspace was once again circulated by a Qatar Airways Airbus 320 aircraft, which sought clearance to land at the Maurice Bishop International Airport in Point Salines. Permission for landing was quickly granted and the Airbus made it way to the tarmac and took up a well located parking spot.
As the Airbus landed, numerous and unsubstantiated rumours and speculation surrounded the nation. There was no welcoming diplomatic entourage on the ground and the flight did not appear to be a presidential flight. Those of us who have taken the time to become aware of the diverse political habits of Arab leaders will know that they travel in pomp and ceremony, usually on a modified 747 similar to Air Force One of the United States of America. In conversation with regional aviation experts, they all agreed that there is indeed a vast difference between an Arab presidential personal 747 and a 320 Airbus.
As the curiosity and speculation about the Qatar Airbus at MBIA continued, it was necessary to contact the press office of the Embassy of Qatar in Washington to determine whether the emir was on an official visit to Grenada. After checking many other reliable sources, it became evidently clear that the emir was not in the Caribbean region, although there was a sanctioned Qatar delegation in the region. With no official statement from the Thomas administration, it will be unfair to promote any further speculation.
Grenadians have been left in the dark as to whether there is any connection between the Qatar-Saudi Arabia-British Virgin Island monetary contribution to the ruling NDC and the follow up visit to Grenada by Saudi and Qatar officials. What is very clear to Grenadians at home and in the Diaspora, is that money passed, money went into personal accounts and it has now been determined that it is an internal NDC matter that will be addressed by party officials. With such an undertaking, it is hoped that at some appropriate time after the issue has been dealt with, the NDC will accord the necessary respect to Grenadians by sharing with them the outcome of the party’s internal adjudication task on this shameful and embarrassing episode to Thomas and his loyalists.
While the debate persists amongst local and leading legal minds, there seems to be a unanimous position that there was no law broken. As a lay person, I concur with the legal minds. However, there remains the issue of transparency, accountability and good ethical behaviour. Given Thomas’s persistent denial and change of stories, only later to admit that funds from unknown persons had in fact arrived in Grenada and some made its way into his personal account, this behaviour by Thomas and his NDC loyalists raises many troubling questions and concerns. If this unethical and roguish behaviour is evident within the ruling party, what stops it from being practiced and embraced in the government domain as it now seems obvious?
In my view, the current Grenada situation should give added impetus and expediency for regional institutional reforms and genuine capacity building initiatives. In recognizing this urgent need, it would appear that the Organization of Eastern Caribbean States (OECS) should take the initiative. Why the OECS? Available information indicates the MDCs within CARICOM have already taken some initiatives. For example, it was only a couple of weeks ago that Jamaica’s National Security Minister, Peter Bunting announced the formation of a joint initiative to be known as MOCA to address corrupt practices across the Board.
The OECS, in its ongoing quest for fulfilling its multilateral mandate, needs to go beyond just the raking in of euro dollars and other pittances for environmental and other initiatives. The OECS and its members are highly recognized and appreciated throughout the Commonwealth. It would appear that, given the existing recognition, initiatives and other activities to implement transparency reform and good governance do not at all times have to carry a huge dollar tag. It is also the responsibility of many OECS leaders to recognize and understand that, if they are truly and honestly committed to the building of the transparency and accountability process, working collectively and in a committed manner there is much that can be achieved.
My vision and understanding for building and sustaining a viable and effective transparent model in member states must be taken seriously. There is much needed assistance that can be derived from Canada in health and legal governance, development of policies on sexual harassment and campaign financing.
Australia and the United Kingdom can assist in local government development; judicial planning and public sector human resource development.
Prior to beginning the task of building a strong and viable transparency model, it is incumbent upon OECS governments to settle the long outstanding and shameful resistance of full CCJ membership. Once the CCJ membership is settled, each member state must comply with the old promises and posturing of appointing strong Ethics Commissioners with the necessary legislative powers to be independent and the right it investigate, expose and rule on all forms of unethical behaviour.
A good starting point should be the declaration of assets and their retirement to a blind trust. OECS governments should not vacillate any further but to emerge and join collectively in building a strong transparency and accountable model.
I was raised a Roman Catholic. So I am not supposed to play around with the creation theory. However, I have a scientific background, and I also like to play around with figures. And, in any case, evolution does not preclude the Creator.
The universe has been around for some 4,500 million years. That's a long, long time. Now let's say that evolution started when the first forms of life appeared some 3,000 million years ago (most say earlier than that). And let's say that they evolved at a snail's pace. At a rate equivalent to virtually no rate at all. That's, for argument sake, a rate of 'improvement of quality/complexity' of doubling once in a million years. Now, that's dead slow. That would be at a rate of improvement of 0.000001 per year.
However, given the nature of compounding, that figure, over a long period, multiplies itself exponentially. Thus, for 10 million years, that would amount to an improvement of 22,026 times. A seemingly minuscule improvement given the very long period involved. Ten million years is unimaginable.
So what about 100 million years? This figure compounds to 2.68798E+43. That is:
2.68798 x 1 followed by 43 zeros. Or a 26,879,800,000,000,000,000,000,000,000,000,000,000,000,000 improvement on the very first single-cell creatures.
But that's just 100 million years. What would it be at 500 million years? It would be 1.4032E+217, or 1.4032 x 1 followed by 217 zeros or 14,032,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000. My finger is getting tired just typing these zeros. But by now you should be getting the picture.
Remember, the first forms of life appeared over 3,000 million years ago, and we have only calculated for 500 million years. Recall, also, the exponential increase going from 100 million (43 zeros) to 500 million years (217 zeros).
GOOGOLPLEX
So you can see that this would be an extremely, extremely, extremely large figure. Probably approaching over one googolplex. A googolplex is a very large number - 1 followed by a thousand zeroes.
Nevertheless, let's acknowledge that the rate for the vast majority of this period up to 250 million years ago was even slower than dead slow, so that, let's say, the first 2,750 million years amounted to just 100 million years as far as the evolutionary clock is concerned.
For the last 250 million years, however, it is acknowledged that this same evolutionary clock has speeded up. Let's say this rate was increased to just 0.000002 per year. Thus, 1.000002 to the 250 millionth power would be 1.4029 x 1 followed by 217 zeroes; 3.7709 X 1 followed by 260 zeroes would be the compounded effect of these 350 million years.
Number of Stars
In fact, that number makes the number of stars in the universe look minuscule (even insignificant) by comparison. A new study suggests there are a mind-blowing 300 sextillion stars, or three times as many as scientists previously calculated. That is a 3 followed by 23 zeros or 3 trillion times 100 billion. That is just 30 times all the grains of sand on the world's beaches and deserts. The improvement in the first forms of life has 260 zeros and counting, according to my playful hypothesis.Isn't it at least possible (indeed probable) that we (and all living things we see today) evolved from these early life forms?
And what is to come?
According to contemporary cosmologists' best guesses, the universe will continue to last for an extremely long time, something over a googolplex years. Some estimates are even longer.
Whether us, or our descendants, or that of another species on some distant planet, what will eventually evolve is many googolplexes of improvement/complexity on what exists now. That is truly mind-boggling. In fact, whatever we imagine of life, one million years from now, it probably won't be like that.
Come to think about it, it must be a fact that God created man. For how else would anyone other than Him appreciate the enormity of His works.
REVELATION & KHAMA
I 'Googled' my last column titled 'An Unusual Friendship: Botswana' and found that this article was referenced by more than 30 newspapers and websites from around the world. From the Kalahari News to South Africa Republic to Botswana News to Worldnews.com; IPTV Caribbean, World Africa Business News and The World News Network (CHOGM News), among many others.
Incidentally, and for those interested in the meaning of names, I was reminded that Tshenolo means 'revelation'.
Interestingly also, it appears that interracial friendships took on a political face with a Jamaican twist when the British, in 1950, conspired with tribal leaders in Bechuanaland (later independent Botswana) to remove Seretse Khama as the chieftain of the Bamangwato tribe and exile him because he had married a white English woman.
This was brought to my attention by Ambassador Audley Rodriques, who emailed me the following on the same day of publication, May 20, 2012:
Egerton,
You may know that the British, in 1950, conspired with tribal leaders in Bechuanaland to depose Seretse Khama as their chief and send him into exile because he had married a white English woman, Ruth Williams. Plain racism it was. The apartheid government in South Africa, which had banned interracial marriages, was not happy with a black chief married to a British white woman and living next door. And there were concerns that South Africa would invade Bechuanaland. Of course, there were other more complex geopolitical factors at the time, including South Africa's enormous mineral wealth, British post-war indebtedness, and uranium for the atomic bomb.
Interestingly, Seretse Khama (who subsequently became prime minister and president of Botswana) was, at the time of his exile, offered a small job in Jamaica by the colonial office to "keep him quiet". In refusing the kind offer, he reportedly said he would not want to take bread out of the mouth of any Jamaican. There is, of course, much more to this story, including the support Khama received from Jamaicans (and other West Indians) in Jamaica and the UK.
Audley Rodriques
[Jamaican ambassador to Kuwait and former high commissioner to South Africa] Egerton Chang is a businessman. Email feedback to columns@gleanerjm.com and e_rider69@hotmail.com.
THE Spanish political activist, José Luis Centella, is far from the stereotypical figure at the podium. He speaks deliberately, exemplifying the adage that there is no need to shout when speaking the truth.
The party he has led since 2009 has a 90-year history of struggle, beginning
with the defense of the Republic against fascism through the difficult times
around the fall of the Berlin Wall. Centella is aware that the party is facing
a new challenge today, given the economic and social crisis which is gripping
Europe and especially Spain.
"For a period of 15 or 20 years, capitalism appeared to provide answers to
Spain’s problems. There was employment, economic growth and a certain level of general well-being. And the socialist camp had disappeared. Even then, we said that was all fraudulent and based on speculation," the leader said in an interview with Granma.
"In Spain today we have an unemployment rate of 24%, while one of every two youth is without work. In regions such as Andalusia, where I come from, the figures are even worse. All of this added to a level of poverty which has increased five times over, in just a few years.
"That other capitalism was, in reality, a fraud. And now people are in a state of uncertainty, leading to expressions of rebellion.
"Given this situation," Centella affirms,
"the PCE (Communist Party of Spain) appears as an instrument which can
organize those affected by the crisis, to give the workers an instrument of
struggle.
"At this time we are recovering the party’s strength. One of the keys to this has been reinitiating a clearly anti-capitalist and revolutionary discourse. Previously we went through a very difficult stage during which we lost our social base and strength, but in the last two congresses we have committed ourselves to strengthening our organization, to the
displeasure of those who were rubbing their hands in glee, thinking that we
were going to disappear."
In the midst of a serious social and economic crisis, channeling discontent along a revolutionary path is crucial, since as Centella said, "The danger exists that this [discontent] could be used by
fascists."
"What fascism attempts to do is to identify the immigrant, your neighbor, as the enemy, to leave capitalism unscathed. The role of our party is to show who the real enemy is: a system which has plundered Spain, as it has many other countries."
LEARNING MORE
The nature of the struggle in which they are immersed has obliged revolutionary movements in Europe to seek unity. Thus Centella spoke of the alliances the PCE has made within the United Left (IU).
"The party is participating in elections through this alliance, but maintaining its independence and structure in the rest of its work. The other groups within it are not all communists, but they are anti-capitalist, nationalist or environmentalist. The Spanish left, as is the case in the rest of Europe, faces the
challenge of showing that there are alternatives to capitalism. Doing this
requires learning from all previous historical processes, but not copying them.
Centella believes that today Latin America is leading the confrontation with capitalism, where Marxism is in the streets, and said, "What is at stake in the coming elections in Venezuela is not whether Chávez or Capriles will be President, but rather whether socialism will be constructed or the previous system returned.
"The European left must be conscious that at this time in history, Europe is in the rearguard in this confrontation with capitalism. Today we have to learn, as opposed to teach."
I FEEL AT HOME HERE
With respect to attempts by certain forces on the Spanish right to push a more aggressive anti-Cuban policy, Centella commented, "There is one fact which they have never been able to change. The Spanish people feel a great deal of solidarity for the Cuban people; despite many attempts, the right wing has never been capable of building anti-Cuba
sentiment. They have never mobilized more than a couple of gusanos."
What is increasing every day is solidarity with Cuba. Centella said, "In Spain, the case of the Five is increasingly known, it is no longer taboo. This is an issue that must be made known; it shows the injustice
of a country which boasts about democracy and combating terrorism."
"The movement in solidarity with the Five is very solid and many people have even been drawn closer to Cuba and its history after learning about these anti-terrorist fighters.
"The PCE has also waged a battle around the issue of the U.S. blockade of Cuba. Through an intervention in Congress, we were recently able to get the Spanish government to issue a statement condemning the blockade. It is very difficult to justify when faced with direct questions."
Centella’s long-standing relationship with Cuba has even turned him into a
baseball fan. His team? Industriales. But his affection for the country goes
much farther and he doesn’t hesitate to say, "I feel very much at home
here."
The terminology “commoners” is often construed to refer to a wide ranging social division of regular people who are members of neither the perceived noble or religious classes. It is no news, therefore, that in any society the so-called commoners comprise the majority of the electorate and countries’ populations. Logic leads us to a conclusion therefore that the power rests with the commoners in any society and The Bahamas is not an exception.
On May 7, 2012, the Bahamian people for the eleventh time since 1967 went to the polls and voted into power the Progressive Liberal Party (PLP) and ousted the governing Free National Movement (FNM). This victory represents the eighth of its kind for the PLP since 1967 which governed for 25 consecutive years under the late Sir Lynden O. Pindling until its first defeat by the FNM in the 1992 general election. This is compared to the FNM’s three terms of governance and 15 non-consecutive years under the leadership of Hubert A. Ingraham.
The commoners of The Bahamas from year to year have made these decisions presumably based on their convictions and political persuasions to determine the party they wish to govern the country. Further, it is interesting to note that recent elections evidence a divided electorate who has failed to give administrations a clear majority as it relates to the popular vote.
The class divide
The fact that incumbent governments have been voted out of office in the last three general elections appears to be a testament that within a democracy, true power rests with the people – the commoners. It is noteworthy to state that the term democracy comes from the Greek word “demokratia” which means rule of the people. In spite of this well-documented and proven power of the people, a school of thought suggests that democracy is just an illusion which sells an idea to the masses that they have the power to elect individuals of their choice to high office. The proponents of this school argue that the undeniable truth is that power ultimately rests in the hands of a small elite group.
The reality within the context of The Bahamas is that local aristocracies, oligarchies and political dynasties abound regardless of which political party is in power. As can be expected, the interests and sometimes greed of a small and select few outweigh the interests of the common man. This is indeed the tragedy of the Bahamian commoners who supposedly have the power and should control their destinies. Official oppositions from one political cycle to another, it seems, only fight against the government of the day and most of such government’s policies not necessarily because they have the interest of the people at heart, but primarily because power has slipped away from them even if only for a fleeting moment. Their motivation seems to be driven by a reduced status in society either socially, professionally or politically and a deflated ego.
The dilemma of the common man within the Bahamian democratic framework is that the major political parties have been successful in creating an effective divide in Bahamian politics either through oppression or manipulation. A certain class of Bahamians are oppressed either because of political persuasion or social and economic background. Meanwhile, there are those who are manipulated to suit the needs of the elite ruling class. The end result is that the masses remain divided and fight at the lower end to support their respective parties at any cost while the select few wine, dine and enrich themselves. In the midst of the division, the commoners’ lives are not necessarily improved by the governments and politicians they have hired. The elite who “call the shots” always maintain their drive, focus and unity to maintain power both politically and economically while the victims left holding the bag almost always are the masses.
It is rather unfortunate that a select few have convinced themselves that the governing class of The Bahamas is a “members only” club with entry requirements not based solely on merit, qualification and patriotism. The small elite have resorted to treating The Bahamas like a private company – they sit as the directors and preference shareholders while the masses who are the common shareholders sit back and accept their dictates. As a result, governance is reserved for the chosen few who are considered worthy, thereby perpetuating the prosperity and expansion of established political dynasties and special interest groups. In order to achieve this objective, they seek to manipulate the electorate by keeping voters uninformed about many political and economic issues to ensure that emotionalism and sensationalism determine the outcome of elections.
The commoners must demand what is theirs
Last week the Bahamian people mourned the death of the late William Cartwright. Cartwright was one of the three founding members of the PLP along with the late Cyril Stevenson and the late Sir Henry Taylor. The party, which is the oldest party on Bahamian record, was formed in 1953 by the gentlemen during a time when it was unpopular to stand up against the ruling oligarchy. The overall platform of the PLP was to erase social, economic and racial inequality for all Bahamians regardless of their class or status. Today, both the PLP and the FNM have members who are either founding members of those respective parties or who are second or third generation descendants of founding members and those who fought in favor of the PLP’s founding philosophy. Unfortunately, it is sad to note that both these parties have become guilty of the same evil that they fought against decades ago to bring so-called liberation to the masses.
The power that the masses possess in choosing the people that govern them ultimately vests power in the government. The power vested in the government and leaders it seems fair should then be exercised for the benefit and betterment of the commoners. However, it is sad that questions remain as to the identity and location of the champions of the commoners today. The average Bahamian who is classed among commoners has been taught by the actions of successive governments not to aspire for higher office or leadership within his/her own country. Appointments are made for the most part along party lines and from the elite as opposed to choosing from the pool of talented, intelligent and skilful Bahamians across the archipelago.
The time has come for the commoners to fully appreciate the extent of the power they possess. After all the common shareholders can vote in, vote out or re-elect individuals to the board to govern the affairs of what is deemed “Bahamas Ltd”. The commoners need not accept this tragedy that has been assigned to them and must flip the script demanding what is rightfully theirs as owners of our Bahamaland.
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.
