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A Risky Trip on Unification Road

A Risky Trip on Unification RoadHistorically, unification and reunification has proven to be one of the most difficult tasks for nations to accomplish. The Caribbean has been a long time trying. Now it’s the OECS turn.

On the 18th June, 2010, Baldwin Spencer the Prime Minister of Antigua & Barbuda along with the respective Prime Ministers of the Commonwealth of Dominica, Grenada, St. Kitts & Nevis, St. Vincent and St. Lucia signed the Revised Treaty of Basseterre.

In his 2013 ECCU Economic Review Presentation, Governor of the ECC Bank, Sir Dwight, explained his understanding of the Treaty as: ‘[having] created what can be referred to as an Eastern Caribbean State Nation which can be defined as "A grouping of separate sovereign states which pool their sovereignty and resources and coordinate their policies as an instrument for collective decision making and action to achieve the goals of socioeconomic development"’

The Governor went on in the address to spell out the shortcomings of the Union and urged a hasty implementation of the Treaty as the solution to many of the threats facing the Currency Union. One of the threats was no surprise:  ‘The fundamental problem facing governments in small, developing states such as ours is the absolute cost of government. With relatively small tax bases and the need to provide basic services, these states have serious fiscal challenges’

The OECS have followed Antigua’s lead in overstaffing its public sector, while incurring huge debts in order to keep unemployment at a minimum.  The Governor of the ECCB is advising that it is now critically necessary to outsource government to the East Caribbean State Nation, thereby making government much smaller and in essence less costly to manage, in order to reduce debt.

The Governor is, of course, (judging from experience) hedging his bet on a loosing effort. Caribbean style, for show and imagery, the new ECCB government will be formed, but the old structure will remain in each separate territory –making government three times as expensive, while another silky yarn is spun before the public to mask the inflation and irresponsibility of our leaders. None of the governments have the testicles to retrench its employees and outsource government to another body, however regional. So this is more of the hot air that Caribbean integration is made of.

For this reason, these agreements are signed, as it was, in secret, without any input or consultation of the general population. Although the agreements are signed on our behalf, the thinking is, the less we know about them the better. Why is this so? Obviously, leaders are not convinced that the agreements are necessarily in the interest of individual member states.

The Central Bank Governor however, is convinced that this is the right thing to do. “The Economic Union,” he said, “will help us to address one of our fundamental challenges, that of critical mass and scale”. He ignores, however, a fundamental fact that critical mass and economies of scale works both ways. Limited resources spread over large populations may have diminishing returns while it may have large returns if spread over small populations.

Some of the top twenty countries with the highest GDP per-capita in the world are small populations that have tapped into creative and lucrative niches of development that are generating high returns. Two of these countries are in the Caribbean – Bermuda and Cayman Islands. Bermuda in 2007 claimed to have the highest GDP per-capita ($91,477.00) in the world (Royal Gazette, 17 December 2008). Of the top twenty countries with the highest GDP per-capita, only five have a population greater than Jamaica.

The few countries that have zero income tax that are not oil producers are also very small Caribbean states. These are The Bahamas, Bermuda, British Virgin Islands and Cayman Islands – countries with some of the highest standards of living in the world. The Bahamas, the largest, has a population of about 300,000 whereas, none of the others exceed 70,000.  Bermuda’s GDP per-capita actually doubles Barbados and oil-rich Trinidad, the next highest Caribbean contenders.

Qatar for successive years has had the highest GDP per capita in the world. Revenue from oil can completely provide services for its 2.1 million population. Saudi Arabia with a much larger population produces much more oil, but has more poverty. Qatar producing half-million barrels of oil per day with limited reserves is ‘wealthier’ than Saudi Arabia that produces 10 million barrels daily with almost limitless reserves. Bigger therefore is not necessarily always better.

Cayman Islands, with a population of about 60,000, is the fifth-largest banking centre in the world with over 300 banks with over 1.5 Trillion in liabilities. Their niche areas are Captive Insurance, Banking, Investment and Securitisation. These services alone generate about US $1.5 billion of Cayman’s GDP – that is more than the national GDP of Antigua & Barbuda.

What this demonstrates is that there is room for development of small states if it is accompanied by long-term strategic planning and reputable trustworthy institutions.  However, this can never be accomplished without a structured agenda underscoring a deliberately conjured and articulated vision.

The current vision revolves around under-education and low-paying jobs. The investments that we cater for, and eventually attract, do not require more than one or two percent of the staff compliment having a university degree; But a high turnover of maids, room attendants, waiters, cleaners, bartenders, security guards, and  hawking sellers of beads, trinkets and shiny things. Positions for university graduates, on the other hand, are limited to non-existent.

Theoretically, and in principle, what the ECCB Governor is advocating has some merit. The practicality of it though needs to be examined. His advice should be taking into account the signs on the risky integration road along with interrelationship of Caribbean countries with each other. The signed agreements would seem to suggest some measure of benevolent cooperation and fraternal harmony. This though is just a disguise for the constant, self-centered, parrying and thrusting at each others’ throats behind the scenes.

The current tug-o-war between Antigua and Barbados over LIAT is not new. It is indicative of the modus operandi of Caribbean countries on the whole. Some countries may be supporting Antigua openly and supporting Barbados secretly and visa versa. Others from time to time support other airlines entering the market on account on some negotiated trade off. Each island has something to trade.

Trading persons is high Jamaica’s agenda. The political slogan of the 1960s, “Salt-fish is better than education”, seems to have permeated, and remain residual in rural Jamaica today, resulting in hundreds of thousands of under-educated and semi-literate persons. Territories that are catering for under-education suit Jamaica fine, because there are hundreds of thousands of such persons to export.

Like Hamlet’s lady, the one in Jamaica, ‘protests too much methinks’ over one lost sheep deported while the ninety-and-nine in Jamaica who are: not attending school, subject to homophobic attacks, living in fear of crime, in acute poverty, or suffer violent deaths, do not attract the same dissent.

In the article ‘Jamaica Doggedly Pursues Free Movement of Labour in Caricom’, Balford Henry of the Jamaica Observer has this to say (Monday, July 08, 2013): “DESPITE the reluctance of some Caribbean territories to do so, Jamaica continues to pursue the dream of freedom of movement among Caribbean Community (Caricom) states”. He further goes on to elaborate on an act before parliament, which has penalties for non-compliance, to ensure that Jamaicans are prepared with certificates to access Caricom jobs.

The truth is, Jamaica has now learned the math – one from ten leaves naught. Jamaica’s second largest industry next to tourism is remittances.  It is fifteen percent of GDP and worth US $3.5 billion dollars. Certainly, remittances, by any means, must be sustained. But in this era when the developed countries of the world are attaching education and degrees as prerequisites for acquiring work-permits and visas, Jamaica has encountered a huge, disturbing boulder in the remittance road. 

The large proportions of undereducated Jamaicans are in dire need of an escape route to Europe, Canada, the United States and other developed countries – if the remittance scheme is to remain a vibrant contributor to Jamaica’s economy.  The carefully contrived solution is to get them there as Antiguans, Barbadians and Kittians etc. While in transit in the Lesser Antilles, some of the remittances will continue to trickle in until they jackpot when the pilgrimage is complete. Hence, the flood-gates of the Caricom communities ought to be opened for Jamaican immigrants.

Therefore, Jamaica may be lobbying others to support Antigua in its bid to keep LIAT. On the other hand, with sufficient Myrie’s already freely travelling to Antigua, Jamaica may be putting its weight behind Barbados as an inducement to get that closed door slightly open.  That is the reality of Caribbean rat-race politics. St. Vincent has flour, Grenada wants it too; St. Kitts has CIP, Antigua needs it too; Antigua has LIAT, Barbados must have it also.

The initial framework for unification was inadequate and inadequately funded.  It never attempted to get member states up to required levels of performance in areas such as education, crime, debt to GDP ratio, good governance, independent judiciary, democracy and so on. The regulations and arbitration process is without mechanism to enforce rules and sanctions.

In contrast, when the United States was forming a union every state had to conform to common ideals.  Even though Utah had a common language and heritage as the rest of the United States, and also bordered six states, this was not considered sufficient to join the union. Utah had to conform to the established ideals. With Caricom a common sea and history is sufficient.

In the EU, the horse was put in its rightful place before the cart. Information sharing and cooperation on crime and criminals was a priority. Some countries do not issue passports to criminals until after a number of years after serving sentence. Caribbean governments, in comparison, are happy to have criminals move to another country undetected. It’s a situation of each nation for himself. Similarly, debtors may just skip to the country next door in order to escape their debt, especially child support.

No studies have been done to determine the impact of the freedom of movement on the community. But even with the best studies things may go wrong.  In England studies were conducted that confirmed that only 13,000 Poles and other immigrants would arrive when they joined the EU. Home Secretary, Jack Straw, admitted making a ‘spectacular mistake’, because at peak over 100,000 Poles alone arrived in the UK each year. There is provision for a ceiling to be put in place, but not so in Caricom.

Instead of studies, numerous hyped slogans are thrown about: “CSME – opportunities for you and me”; “Just the sea separating us”; “One people, on the same ship dropped off at different locations”. One hundred years after slavery was abolished in the United States, there was critical mass, freedom of movement and a single economy. President Lyndon Johnson commissioned the Kerner Report into race relations in the nation.  The findings were released in a 426 page best seller on 29 February 1968. Martin Luther King Jr. declared the report as a, "physician's warning of approaching death, with a prescription for life”.

The report found that "Our nation is moving toward two societies, one black, one white—separate and unequal”. Thirty years later the former Senator and Commission member, Fred R. Harris released findings of another study. The study found that while America had made progress in the goals of the Kerner report in the following decade, the nation had retrogressed thereafter. The racial divide had increased with inner-cities unemployment at crisis levels. Harris reported, “Today, thirty years after the Kerner Report, there is more poverty in America, it is deeper, blacker and browner than before, and it is more concentrated in the cities, which have become America’s poorhouses”.

If any contend that the blacks and whites came on different ships and were dropped off at different places I will have to concede that is true: Whites came on the Mayflower and were dropped of at Plymouth Rock; while blacks arrived on The Zong and La Amistad, and were thrown overboard or dropped off on the auction block.

However, between the two reports, the United States became the third largest nation of Spanish speakers next to Mexico and Spain. If the second report found that there were two Americas, then beyond all expectations it would be, ‘one mixed and one Hispanic’. Not such a thing – still one black and one white. Unification is not easy. It takes much more than slogans and agreements – the signs on the road are evident.

Even reunification throughout the world has been extremely difficult. The United States civil war is such and example. The Korean and Vietnamese wars are other modern examples. Even with the return of Hong Kong to China, while Taiwanese and Macao residents travel to Hong Kong visa-free, there are measures to prevent freedom of movement into Hong Kong by citizens of China. Certainly, the Caribbean has a lot to learn from these risks on the road.

One nation of interest is Germany. East and West Germany were separated after World War II in 1945 and formally reunited forty-five years later in 1990.  There is no doubt that they are one people, with one language and had never been on any ships. But after 45 years of separation, reunification is proving almost impossible after over twenty years.

In the words of Peer Steinbrück to the German parliament: "Over a period of 20 years, German reunification has cost 2 trillion Euros, or an average of 100 billion Euros a year. So, we have to ask ourselves 'Aren't we willing to pay a tenth of that over several years for Europe's unity’?” Caricom has to ask also, what is the result of the 2 trillion Euros, and how much does the Caribbean have to spend on integration?

Twenty-five years ago the great wall of divide, separating East and West Germany, was torn down. There was a great hype, hope, expectation and anticipation at the creation of a new unified German Republic.  An ecstatic, intoxicating craze transfixed the nation: one people, one language, one nation, one wall – prodigal son has returned.

The solution to reunification was perceived to be simple: lots of aid, one currency, freedom of movement, and break down the wall.  Twenty-five years later, the premier economy of the nineties has begun to wane, buckle and totter, and after two trillion dollars in aid to the former East Germany; the conclusion is that the Aufbau Ost (the program to reconstruct East Germany) is not working. There is critical mass, freedom of movement, a single market and a single economy, yes, but still two Germany’s – one somewhat well off and one not so well off, one the richer and one the poorer, one with jobs and one without jobs— separate and unequal, distant and apart. 

The former West is holding the East responsible for the decline in its fortunes, while the former East yearns for the old system again. With the honeymoon over, the cracks have begun to open up in the union.

A curious ‘Tale of two Germany’s’ would go something like this:  The Federal Government has had to subsidise the East to the tune of 100 billion Euros annually; Only about 60 percent of East Germans capable of employment are employed; Aid (to the tune of 4% GDP annually) is no longer effective; and most weird of all, overturning basic principles of conventional economics: even though Unions are stronger in the West and wages there are higher, the new jobs are being created…guess where?  In the West.

When the German economy was growing at more than 4% it was sustainable to provide aid. But now, besides not working, the aid has become unsustainable, and social problems have intensified and are anticipated to incur great cost in the future.  The critical mass, breaking down of the wall, slogans and the hype just did not work.  There are risks on unification road.

The Caribbean is making many of the same mistakes, but more fatal.  The funding for Caribbean unification is only limited to a mere US 250 Million dollars. It is possible to break down walls, but the Caribbean nations are separated by deep, prohibitive seas which are impossible to part without Moses. Institutions like LIAT are very integral to bridging this divide. The way LIAT goes is the way Caricom goes. The signs on the road suggest it’s risky – but are we paying any attention to them?

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9 Comments In This Article   

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tenman

#9 leonart matthias » 2014-04-15 00:36

i have mentioned antigua's migration in four opinion pieces already. no need to belabour it here. regarding csme studies done: Downes study is specific to antigua and not the community. remitttances: even if your figures were correct with antigua remittances, jamaica does not have any budget that does not refer to remittances. it signifies its importance. i have quoted two years below.

2012/13 -Modest increases in remittance flows and increases in real wages during the year influenced the strengthening of domestic demand.The
continuing increase in private transfers (remittances) exceeded the
decline in transfers to Government by US$32.6 million.

2010/11 - 2009/10 was a difficult year: we saw the full effects of the global recession. Domestic demand was weak as unemployment grew, real income
declined.Remittance flows declined.Falling real incomes, increased unemployment and reduced remittance flows led to weak domestic demand and lower consumption.

dr. newton and jumbee picknee am quick to get swell head so easy on the praise. jumbee picknee u dont have to break my name spiritually. it actually means lionheart. thats why it spell with a 't' at the end and not a 'd'. ur satellite work real good, seem like you have me covered.
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leonart matthias

correction

#8 tenman » 2014-04-13 16:43

The figures I gave for Anu were monetary figures(wrongly put them as percentage of GDP) So we are talking of inward remittances accounting for about 2.5 percent of our gdp. Outward remittances accounted to 1 million usd of our 1.1 billion usd gdp
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tenman

...very artful...

#7 Jumbee Picknee » 2014-04-13 12:37

@ Caribarena I appreciate the artful, artistry, of your visual depiction.
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Jumbee Picknee

...but, are We paying attention...II

#6 Jumbee Picknee » 2014-04-13 12:31

As I speak of economics, I know, think, is sure, that We still posses what it takes to not only survive physically, but to thrive in the future economically as well. We have some systems which are working, some are in need of an overhaul, some need to be replaced all together, and most important we need to create new one's and, "...Yes, We have to...".
Tourism is one such industry which we in Redonda, Barbuda & Antigua, have to revive and do so with a passion and vigor, as in the 1950's to the 1990's yet with our own local, indigenous flavor which, by the way in unique unto itself; from our speech, mannerism, intelligence, fortitude and of course natural beauty, not many can match this Region of Our World in these regards. LET'S CAPTURE, SECURE, CONTROL this resource.
Other sectors of our world have recreated it, transplanting it into their own cultures, aesthetics, etc. all we have to do, in manicure, pedicure, fertilize, feed, prune Ours and voila, the flamboyance will shine like a time lapse beauty of the enjoyment of a flower, plant which we enjoy.
Antigua, Barbuda & Redonda, we have it.
Mr. Leonart Matthias, I break your name spiritually/jumbee style to mean...
A Lion's heart, thou posses...whilst your mane, elegantly stands, as, an artful masterpiece; asking for love, harmony, peace, as does that of a Christ.
Caribbean, are we paying attention...of course we are.
Jah Guide
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Jumbee Picknee

...but, are We paying attention...

#5 Jumbee Picknee » 2014-04-13 12:08

Mr. Leonart Matthias, you have shattered the vase which holds the bouquet(the Caribbean Islands) in its elegance.
[i]..."but are we paying any attention to them?"
Of course we are, this is why you wrote such an insightful article which moves the senses to action and interaction...it's like looking at a painted masterpiece like an artist who uses paint, brush, palette, colors, etc; to time lapse Our existence on canvas, except you have used words, phrases, insightful though processes, to bring to fruition a Picasso with words.
It will take years, if "We..." who consider ourselves to be of one Community don't take heed and implement, revise, structure proper systems for longevity, that is hundreds of years, then we just might be extinct, economically of course...
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Jumbee Picknee

some facts part 2

#4 tenman » 2014-04-13 11:47

While Mr. Mathias laments remittances where JA is concerned, he ignores the fact that more Antiguan's as population percentage have migrated to places like the US, than Jamaicans have migrated to such places. The 3.5 billion USD is wrong if you look at the actual data for mostly 2013. From April 2013 to Jan 2014 (10 months), the figure for inward flows remittances, was 1.7 billion usd (see www.boj.org.jm/uploads/news/remittance_report_january_2014.pdf). We are therefore talking of about 2 billion a year, not 3.5 billion as the writer asserts. While he shows a "15%" of GDP figure for Jamaica remittances, the remittance info for Antigua show us having inward flows of some 24% in 2009 and 26% in 2008 (see siteresources.worldbank.org/INTPROSPECTS/Resources/334934-1199807908806/Antigua&Barbuda.pdf). The outward flows are no more than 2%. Based on those numbers alone, it shows Antigua being more dependent on remittances than Jamaica. Seems we are more guilty of exporting our labour for remittances purpose. The problem which CARICOM and OECS hopes (perhaps in vain) to solve is to keep this labour in the region. The brain drain more benefits the countries our people are leaving for, than it benefits us, since the remittances are mostly spent on consumption. Single mothers who leave for "better" places, when they leave their children in home country, leave high societal costs

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tenman

RE: A Risky Trip on Unification Road

#3 Just Saying » 2014-04-13 10:39

Isn't this the "central Bank" that took the net assets of Bank of Antigua witgout compensating it's owners?
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Just Saying

some facts part 1

#2 tenman » 2014-04-13 10:36

Quote:
No studies have been done to determine the impact of the freedom of movement on the community.
The truth is studies have done. There was even one specific to Antigua and Barbuda, done by Andrew Downes, initiated by the current government ( Professor to Undertake Migration Study,13 January 2010, press release, CA).

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tenman

Refreshing to the soul, head and hand!

#1 Dr. Isaac Newton » 2014-04-13 08:07

A deeply insightful article! Your prophetic search for truth is both evident and sincere beyond mere facts and figures. The challenges of regional unification are as promising as the opportunities are inviting. But visionary thinking supported by precision planning with socio-economic benefits built into systems, processes, people improvement and implementation will generate hope and promote fortitude. Historian Leanart Matthias your articles reflect a mind on a page, each one is a joy to read. Praying that we listen and act on your warnings and solutions for our own thriving! Keep the faith!!
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Dr. Isaac Newton

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