2013 – CARICOM irrelevant or essential?

THE curtain rolls down on 2012 with the Caribbean Community and Common Market (CARICOM) institutionally weak and its 15 member governments doing little more than paying lip service to the process of economic integration.

It seems that the only reason that several governments do not declare CARICOM irrelevant and walk away from it is that they dare not. To do so, they would have to explain their action to their people. It is a discussion few government leaders would relish.

One of the things they could not say is that CARICOM – as an integration instrument – is a drag on their development or a hindrance to their prospects. In recent years, Governments have simply opted not to utilise the benefits of regional arrangements, preferring instead to pursue separate deals in the hope that such deals would allow them to maintain national power.

Just a few weeks ago at the opening of a meeting of CARICOM Trade Ministers, the Deputy Secretary-General of CARICOM felt constrained to say: “While as individual sovereign States we would be preoccupied with the responsibilities within our national borders, it would also be to our advantage to look to our regional arrangements as supportive even when they seem to add additional responsibilities”. That Lolita Applewhaite found it necessary to make this statement is indicative of concern over the failure of governments to seek a solution to their current grave economic problems through CARICOM’s integration machinery.

It is not as if the economic conditions in the majority of CARICOM countries are good. Barbados and the six independent countries of the Organisation of Eastern Caribbean States (OECS) have dangerously high debt to GDP ratios of over 65 percent and some are well over 100 per cent. Jamaica’s economy has been in dire straits for years and there appears little hope of a dramatic improvement anytime soon.

Indeed, many of these countries are already failed states, surviving only by grants and assistance given to them by external agencies.

As 2013 dawns, apart from Trinidad and Tobago, Guyana and Suriname, the prospects for the national economies of CARICOM states are bleak. None of the 12 other CARICOM members has the means to provide the financial stimulus to grow their economies and stem the rate of unemployment which is expanding and will get worse in 2013.

It is not a convincing argument for CARICOM governments to constantly point to the global economic situation as the principal cause for their countries’ economic decline. Many of them were already on a slippery slope before 2009 when the financial crisis began to bite. Further, other countries in Africa, Asia and Latin America have done well despite being subject to the same global crisis. Economic growth in many of these countries has exceeded 7 per cent at the same time that the economies of the majority of CARICOM countries shrunk.

Making matters worse, with the exceptions of Barbados and Trinidad and Tobago, CARICOM countries have become reliant on Hugo Chavez – Venezuela’s President – for deferred payment for their oil needs under the Petro Caribe scheme. With President Chavez’s illness casting grave doubt over his ability to continue to lead Venezuela, even if he manages to be sworn-in as President on January 10, the likelihood of continuing benefits under Petro Caribe is not at all certain.

To add to this troubling scenario, the Caribbean Development Bank – long respected internationally and trusted with funds from international financial institutions and donor governments for on-lending to CARICOM states – was downgraded twice in 2012 by Standard & Poor’s, dragged there by the failure of borrowing governments to repay loans.

Then there is the EU which has been a generous aid donor to CARICOM countries for over three decades. Faced with its own debt problems among some of its member states, the EU has introduced austerity measures domestically. In that situation, it has announced that upper-middle income developing countries will no longer be eligible for EU aid. While, so far, CARICOM countries, as part of the African, Caribbean and Pacific (ACP) Group, have been shielded from ineligibility by the Cotonou Agreement, there is no guarantee that this will continue after 2015 when the Agreement is reviewed. At that time, all but Guyana (lower middle income) and Haiti (low income) will be adversely affected.

But, aid agencies such as the Canadian International Development Agency, the British Department for International Development and the EU complain regularly that while tens of millions of dollars are available for regional projects on an annual basis, Governments show little interest in them, opting for national projects for which many lack the absorptive capacity, including the skills necessary to submit “bankable” applications.

The question that poses itself is: Haiti apart, why should a region of 6 million people with vast natural resources such as oil, gas, diamonds, gold, bauxite, uranium, tourism, financial services, fisheries, agriculture (including sugar and rice), forestry and huge potential for renewable energy, be poor and suffering? The answer lies in the failure of our governments to perfect a single market and to work steadfastly toward a single economy.

No one pretends that this task is easy. Secretary-General Irwin LaRocque has said that: “Many of our member states face constraints both technical and political which cannot be ignored or easily overcome”. Given the validity of that statement why has the Secretariat not sought a mandate to establish a team of competent persons to examine these constraints wherever they exist and to identify practical measures to deal with them within an agreed time frame? It cannot be sufficient to acknowledge the problem and yet to take no meaningful action to solve it.

If this backward march continues, many CARICOM countries will go over the cliff, and eventually CARICOM will be abandoned by those member countries that can do better by economic and political arrangements with others. In particular, Trinidad and Tobago, Guyana and Suriname may well find it beneficial to integrate their own economies more deeply and to jointly pursue arrangements with Brazil, Venezuela and other Latin American nations.

2013 can be the year of CARICOM’s final slide to oblivion with disastrous consequences for the majority of its member states, or it can be the year when leaders recognise the folly of shunning deeper regional integration and so take positive steps to re-enliven and deepen CARICOM.

It is down to leadership.

(Sir Ronald Sanders is a Consultant and a Visiting Fellow at London University. Responses and previous commentaries: www.sirronaldsanders.com)