Sealy: CPA conference being held at a critical time

Acting Prime Minister of Barbados, Richard Sealy, is contending that this year’s Annual Conference of the Caribbean, Americas and Atlantic Region of the Commonwealth Parliamentary Association (CPA), in his opinion, is more important than any of the previous 38 that have been held.

Speaking on Monday morning during the opening of the conference at the Hilton Hotel, Sealy suggested that its importance rests in the fact that it gives delegates a chance to review pressing new economic needs of the member states and new opportunities that are being presented.

A group shot of the participants in the
conference on Monday at the Hilton.

“Also because it allows us to review the persistent political and social challenges and contradictions that have to be resolved if we are to pull ourselves out of this devastating recession, and face the future with confidence and a willingness to reach consensus peaceably,” he added.

His comments were in keeping with those made by Speaker of the House of Assembly of Barbados, His Honour Michael Carrington, who urged the delegates attending the conference to use the opportunity afforded by the gathering to discuss some of the more pertinent issues facing the region at this time.

Referring to the theme of the conference – “Forging Ahead in a Hostile Global Environment” – he said it was apt given the tough economic times the region is enduring. As such, the conference created an avenue through which they could share experiences, highlight pitfalls and share ideas as they seek new solutions to old problems. His comments came as he expressed his certainty that their deliberations throughout the conference will be approached with candour and critical, but constructive self-examination which will redound to the benefit of the region.

Meanwhile, President of the Senate, Senator Kerryann Ifill, reiterated that given the challenges facing countries in this region, the conference is the perfect opportunity for the delegates, given their role in upholding good governance of the territories, to examine the issues and learn from each other.

“We are facing economic challenges which stretch all of our resources. The question of violence is one which is plaguing us to a degree of great concern. Environmentally, we are coping with the realities of economic change… It is a time for us to reflect and to learn from each other, to collaborate and exchange ideas to redound to the benefit of all of our people,” she added. (JRT)

Equitable relations between EU and Caribbean possible

A more balanced and equitable relationship. This is what Executive Secretary of ECLAC Alicia Bárcena wants to see happen between the European Union and the Caribbean.

According to her, an opportunity for the two to find more complementarities to overcome old historic, social and trade-related asymmetries would be provided through the renewal of bonds.

She was one of the main speakers at the meeting “New EU development co-operation strategies in Latin America and the Caribbean,” organised by the EU-LAC Foundation and the Development Centre of the Organisation for Economic Co-operation and Development, with the support of the European Union programme EUROsociAL.

Since the economic crisis that began in 2008, the problems that the Euro zone has had to face have led to stagnation in the relationship between the two regions, according to Bárcena. Nevertheless, the European Union continues to be the main collaborator, the main direct investor and the second-biggest trade partner of Latin America and the Caribbean, she indicated.

“For that reason, it is necessary to foster renewed ties between the governments, companies and social actors of both regions,” ECLAC’s Executive Secretary insisted.

According to Bárcena, a deeper partnership between Latin America and the Caribbean and the European Union would allow for accelerated economic growth in the region, progress on the structural change towards more knowledge-intensive sectors, poverty reduction, and greater social inclusion and environmental protection.

In her presentation, Bárcena emphasised that despite recent progress, Latin America and the Caribbean continues to be the region with the worst income distribution in the world, which is compounded by multiple gaps that reinforce each other, including gaps in human resource development, in insertion in the world of work and in access to social protection systems, as well as gaps related to territory, gender, ethnic group and generations, and in access to power.

EU committed to regional support

The European Union remains committed to supporting regional integration and development in the Caribbean.

So says Ambassador Mikael Barfod, Head of Delegation of the European Union to Barbados and the Eastern Caribbean. His comments came as he explained that such commitment will be manifested when they roll out the 11th European Development Fund (EDF) assistance to the member countries of CARIFORUM.

He said while this initiative is still in the programming stages, it is expected to provide funding to the tune of 350 million Euros, of which 110 million Euros has been earmarked for regional integration and the implementation of the Economic Partnership Agreement (EPA).

The Ambassador made the remarks while addressing those attending a press conference to speak to the awarding of grants through the Direct Assistance Grant Scheme (DAGS), which is one of the aspects of the 10th EDF.

Turning his attention to the EPA, the EU ambassador said his office was very pleased that the Government of Barbados was seeking to pass the EPA Bill, and while the debate had to be postponed, he is hopeful the matter will be concluded in short order. He made the point as he explained that the EPA is of tremendous benefit to those who want to do business with the member states of the EU, but he lamented that many members of the private sector seem unaware of the opportunities available under the EPA.

“From time to time, we still hear comments from the private sector that not enough benefits are accruing from the EPA and that the EPA has not been resonating enough. We at the EU cannot make the EPA work for you, it is you to find ways to make the EPA beneficial; we can set the frame but you have to do most of the work. This surprising lack of knowledge of the opportunities available through the EPA was confirmed in the recent report of the study which reviewed the implementation and impact of EPA during the first five years after its signature, commonly called the five-year review,” Barfod said.

The Ambassador added, “[But] The mere fact that the Caribbean companies can benefit from this Direct Assistance Grant Scheme is proof that funding is available for companies that need assistance in various aspects of trade… it is also proof that despite the tough economic times that we still live in, that the EU is prepared to assist developing countries in their quest for ways out of the crisis.”

With that in mind, he is calling on private sector stakeholders to capitalise on the opportunities presented in the agreement and make use of the provision which have been made available.

Meanwhile, Minister of Industry, International Business, Commerce and Small Business Development, Donville Inniss referring to the EPA Bill on which debate was started in the House of Assembly on Tuesday, said that the debate will resume next week, but contended that the discussion on the EPA must not only take place in Parliament, but also the wider society as well.

“We as a society have an opportunity now to refocus our energy and our mind to the Economic Partnership Agreement – what it really ought to have meant for us in the region; why is it that we have not taken hold of the opportunities presented and what more can be done in the time allocated to do better. One of the things we can start by doing is not complaining, but grabbing hold of the opportunities, preparing ourselves to penetrate the European market,” he said.

Inniss said he is certain there has been no malintent on the part of the EU in terms of the EPA, suggesting that the EU provided the countries of the region with an excellent opportunity to get into their market in a reasonable timeframe. However, he warned time is running out and if the private sector does not grasp the opportunities, they will be like “sitting ducks”. (JRT)

Fluctuating inflows of foreign direct investment expected

Fluctuating inflows of foreign direct investment (FDI) is something Caribbean countries should keep an eye on.

So said Professor Compton Bourne, Executive Director of the Caribbean Centre for Money and Finance (CCMF).

This as he reports that a number of regional countries recorded increases in FDI last year.

“FDI inflows are quite substantial relative to the economic size of CARICOM countries,” said Bourne, who was reflecting on the publication of the World Investment Report 2014 by the United Nations Conference on Trade and Development.

FDI increases were recorded for St. Kitts-Nevis, Jamaica, Antigua and Barbuda, The Bahamas, Grenada, St. Lucia, St. Vincent and the Grenadines, and Haiti in 2013.

Professor Bourne who is a former President of the Caribbean Development Bank said it provided “a welcome opportunity to examine the recent experience of CARICOM countries with foreign direct investment”.

“Between 2008 and 2013, the regional group of countries received foreign direct investment totalling US$25.7 billion. The annual average was US$4.3 billion.”

“Major recipients of FDI inflows are Trinidad and Tobago with US$6.65 billion, that is, 25.5 per cent of the cumulative total, The Bahamas with US$6.25 billion or 24.3 per cent, Jamaica with US$3.48 billion (13.5 per cent), and Barbados with US$2.62 billion (10.2 per cent).”

“The other ten countries together received US$6.85 billion (26.5 per cent) of the cumulative total, with Guyana accounting for 4.7 per cent and nine others having no more than three per cent each.”

Unstable inflows

Bourne said these annual inflows “have tended not to be stable”, and that “While 2008 was a good year for all except Haiti, inflows were considerably smaller in 2009, except for The Bahamas and Haiti where there were sizeable increases.

“Reductions in FDI inflows persisted in 2010 and 2011 in Jamaica, Belize, Dominica, Grenada St. Kitts and Nevis, St. Lucia and St. Vincent and the Grenadines and in 2012 in Grenada, St. Kitts and Nevis and St. Lucia. Guyana attracted larger inflows in 2010, 2011 and 2012; Trinidad and Tobago did so in 2011 and 2012; The Bahamas in 2010 and 2011 but not in 2012; and Haiti in 2010 and 2012,” he said.

“FDI inflows increased in Jamaica, Antigua and Barbuda, The Bahamas, Grenada, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines and Haiti in 2013 but decreased in Guyana, Belize, Trinidad and Tobago, Barbados, and Dominica.”

Bourne said a major part of the reason such investment was vial was because it was “quite substantial relative to the economic size of CARICOM countries”.

“FDI inflows for 2012 expressed as percentages of gross domestic product in the same year were between 12.2 per cent and 16.4 per cent in Antigua and Barbuda, Barbados, Belize, and The Bahamas, and between 6.7 per cent and 11.7 per cent in St. Lucia, Trinidad and Tobago, Guyana and St. Kitts and Nevis. The smallest percentages were in Suriname (1.2 per cent), Haiti (two per cent), Jamaica (3.3 per cent) and Grenada (4.2 per cent),” he added.

Embrace women, youth

Regional countries are being told that increased involvement of women and the youth in their development will help to strengthen their capacity to face the future.

The observation was made by Acting Prime Minister of Barbados, Richard Sealy, as he delivered the feature address at the opening ceremony of the 39th Annual Conference of the Caribbean, Americas and Atlantic Region of the Commonwealth Parliamentary Association at the Hilton Hotel on Monday morning.

The flag-raising ceremony at the start of the conference on Monday.

Speaking specifically to the involvement of women in politics, the Acting Prime Minister noted that women have moral, human, constitutional and demographic rights to electoral office. He made the point as he noted that the issue of the under-representation of women in regional parliaments is expected to be addressed during the 7th Regional Conference of Commonwealth Women Parliamentarians, which forms part of the conference.

“Indeed, one of the noble objectives of the Commonwealth is the fuller participation of women in parliamentary procedure and involvement in the po-litical life of our nations. Even though Caribbean women are world-renowned for having been the backbone of our societies for several centuries, there are still several challenges facing their selection as candidates and their election as Parliamentary representatives,” he noted.

To that end, he has challenged the women in the region to “dig deeper” into this matter during the conference, and where possible to look at the support systems necessary to enable women to exercise political careers, and come up with some fresh ideas that can solve this recurrent topic.

Turning his attention to the youth, he noted that in 2012 Barbados completed its National Youth Policy, in keeping with the pledge made in 1995 at the Commonwealth Youth Ministers Meeting held in Trinidad and Tobago, to formulate and/or review their National Youth Policies in anticipation of technological changes that would transform economies and societies of the region. His comments came as he noted that one of the recommended implemen-tation mechanisms of the National Youth Policy was the establishment of the National Youth Parliament of Barbados, which was recently created. He added that its members have been challenged to come up with solutions to the pressing issues, economic and otherwise, that are facing young Barbadians.

Speaking further to the policy, the Acting PM indicated that it found that in the wake of the recession, the primary concern of young people was the high levels of unemployment and under-employment.

“Naturally all the stakeholders in youth development saw enterprise, and in particular the spread of the entrepreneurship to all categories of citizens, as the only means of diversifying and growing our economy. Young people, by virtue of their numbers, their energy, their education, their creativity were expected to drive this entrepreneurial movement. But first they had to change the mindset that had propelled them to use education as a means of finding employment to one of using their intelligence to create their own employment and develop wealth,” he added.

With that in mind, he contended that all the countries of the region have an obligation to provide the youth with the technical and management skills to develop businesses and help diversify our economies. He said that even though it is unrealistic to expect everyone to become a business entrepreneur, research has shown that an enterprising employee is also an asset to his or her employer. (JRT)

The BRICS and the Caribbean

As this is being written a series of summits have been taking place in Brazil which may have a lasting effect on the way in which the Caribbean and other small indebted nations come to address their future.

The first and perhaps most significant of these meetings took place between Brazil, Russia, India, China and South Africa (the BRICS) on July 16 in La Fortaleza. The atmosphere surrounding the meeting, which brought together the Presidents of the five countries concerned, suggested that much of what was discussed and announced was intended to confirm the gradual emergence of a new world economic and possibly political order.

The message was that here were five relatively new world economic powers – there are, of course, others – that are beginning to put in place institutions that might determine an alternative economic order. That is to say, one that does not necessarily embrace the way in which Washington, Europe and more generally the other members of the OECD see the world and its future.

For the Caribbean this has obvious attractions, not least because one of the new powers, China, has become a significant regional development partner, the major investor in infrastructure, and the funder of Chinese private sector led ventures across the region.

Of particular interest in Brazil was the announcement that the BRICS will establish a new development bank based in Shanghai to rival the IMF and the World Bank.

The objective of the group in setting this up is to establish a counterweight to Western-dominated financial institutions in the form of a new development body able to fund infrastructure projects, and a reserve fund to support economies facing currency and balance of payments crises.

The New Development Bank, as it will be known, will have capital of US$50 billion with each country contributing US$10 billion, while the reserve fund will have US$100 billion at its disposal. Once established, it is likely to become a mini-IMF with China being the biggest overall contributor. The effect will be, though a form of geo-political competition, to gradually bring to an end the post Cold War consensus on what constitutes economic orthodoxy and the present dominant approach taken by the US, Europe and Japan in existing international financial institutions.

As such the establishment of the new bank and the thinking that goes with it attempts to reconstruct the post Second World War global financial infrastructure and rebalance world power in a way that offers different assumptions about development, and a break with the type of conditionalities on economic development that have prevailed since the Bretton Woods agreement was signed in 1944.

In this context China took the unusual step before President Xi arrived in Brazil of releasing a document setting out its global development policy.

This China State Council policy paper makes clear that China’s approach will be South-South in nature and that China will not impose any political conditions or interfere in the internal affairs of the recipient countries, respecting, it says, “their right to independently choose their own path and model of development”.

Unusually, the policy paper includes specific language on the Caribbean that makes clear that it has been actively implementing the assistance measures agreed at the 2011 Third China-Caribbean Economic and Trade Cooperation Forum.

By the end of 2012, the document notes, China within this framework provided the Caribbean with concessional loans totalling 3 billion Yuan (approximately US$1.5bn) mainly for the construction of infrastructure projects. It also observes that it has trained over 500 officials and technical staff for the Caribbean and held courses on earthquake and tsunami early warning and monitoring systems. China said it had also built schools in Antigua and Dominica, sent medical teams to Dominica, trained local medical staff, and carried out technical cooperation in agriculture and fisheries with Dominica, Grenada and Cuba.

As to China’s overall objectives, the document indicates that its longer term development goal is to endeavour to build moderately prosperous societies in “an all-round way” and that it remains on a global basis “committed to realising the Chinese dream of national prosperity and renewal, and happiness of the people.”

Just as tellingly, given that the Chinese leadership only ever says what it means, President Xi made clear last week in an address to the Brazilian Senate that China intends through CELAC (the Comunidad de Estados Latinoamericanos y Caribeños) promoting a “strategic alliance” with the Latin America and Caribbean region. “Our objective is to strengthen and take a leap forward in China’s relations with Latin America and the Caribbean,” he said.

This is language that goes far beyond what China has said previously and paradoxically seems to place it in a BRICS-Caribbean context, as a first among equals.

These are all developments that were scarcely conceivable a decade ago.

However, away from the media excitement surrounding the emergence of the BRICS as a new global power bloc, less certain in practical terms is whether its members, and specifically China, will be prepared to make the compromises necessary for an effective multilateral approach, and whether the BRICS will be able to bury their political and military differences and jealousies.

While the developments in Brazil last week do not as yet do much more than herald the potential of a new world order, it does raise difficult questions for the OECD and the prescriptive economic approach its members have developed unchallenged since the collapse of the former Soviet Union.

For the Caribbean it is yet another challenge in relation to future positioning. Governments will have to consider how and where to insert themselves into not just the expanding and overlapping relationships implied by the various meetings in Brazil, but also decide how to balance this with traditional relationships, the political potential of CELAC, the bilateral economic significance of China, the growing importance of more proximate neighbours in Latin America, and the smallness of much of the Anglophone part of the region.

(David Jessop is the Director of the Caribbean Council and can be contacted at david.jessop@caribbean-council.org. Previous columns can be found at www.caribbean-council.org)

The New Development Bank: What’s in it for small economies?

It is news that should awaken the World Bank and the International Monetary Fund (IMF) from their complacent attitude toward developing countries. It is also news that should confirm to the G20 that what used to be the G7 – a group of the seven industrialised nations – no longer controls the world’s financial affairs.

On July 16, Brazil, Russia, India, China and South Africa (BRICS) established the New Development Bank and alongside it a Contingent Reserve Arrangement (CRA). The two institutions will serve the needs of the five countries for financing infrastructure and industrialisation, and to provide support in the event of a balance of payments crisis.

The New Bank will be headquartered in Shanghai, with India as its President for the first term of six years. It will be capitalised initially with US$50 billion. Each BRICS member state will subscribe an equal share. The CRA will be funded with US$100 billion. China is contributing the largest share of about US$41 billion while Russia, Brazil and India will put in US$18 billion each and South Africa US$5 billion.

The creation of the New Bank and the CRA is motivated by frustration with the pace of reform of the IMF and the World Bank to give a greater voice to the BRICS. In the Fortaleza Declaration after their meeting in Brazil, the five BRICS leaders – Brazilian President Dilma Rousseff, Russian President Vladimir Putin, Indian Prime Minister Narendra Modi, China’s President Xi Jinping and South Africa’s President Jacob Zuma – stated that international governance under its current structure and power configuration show increasing signs of losing legitimacy and effectiveness.  They said: “The BRICS are an important force for incremental change and reform of current institutions toward more representative and equitable governance capable of generating more inclusive global growth”.

The BRICS are also concerned that the new vision for global economic governance, articulated by the G20 in 2009, has not materialized. And, while Brazil’s President Rousseff was careful to say that the world should not see the Bank and the CRA as a desire by the BRICS to dominate, she made it clear: “We want justice and equal rights. The IMF should urgently revise distribution of voting rights to reflect the importance of emerging economies globally”.

Whether the New Bank and the CRA remain open only to the BRICS or they widen their lending to all other developing countries, their establishment signals that it cannot be business as usual for the World Bank and the IMF, and that decision-making in the G20 will have to change.

BRICS represent 42 per cent of the world’s population and roughly 20 per cent of the world’s economy based on GDP. Total trade between them is US$6.14 trillion, or nearly 17 per cent of the world’s total. Importantly, together they are the world’s largest market and their combined GDP grew by more than 300 per cent in the last 10 years. Those are not figures to be scoffed at, and the BRICS have now shown that they are serious about demanding change.

Other developing countries, including those in CARICOM, should applaud the BRICS for creating their two new institutions. They have all endured the harsh terms, rigid conditionalities and unyielding dictates of the IMF and the World Bank. They would welcome any move that rattles the Washington-based institutions, which are controlled by the US and Europe, and encourages them to reform and to be more flexible in the treatment of developing countries that are confronted with crises.

At the same time, the BRICS would make a serious error if they kept the Bank and the CRA as a closed shop for their subscribing members only, or for other large developing countries such as Mexico and Indonesia that might be encouraged to join. For the two new institutions to command support from the wider community of developing countries, they should not repeat the mistakes of the IMF and World Bank.

The New Bank could be a much needed source of financing to developing countries for infrastructure, industrialization and productive development that many nations, such as those in the Caribbean Community (CARICOM), are now denied. Except for Haiti, CARICOM countries (13 of them) have been ‘graduated’ from access to concessional financing by the World Bank. The CRA could also allow developing economies to draw on pooled reserves in the event of balance of payments crises on terms that are more appropriate and more sympathetic than those now applied by the IMF.

Risk management, a high-quality loan portfolio that improves development but keeps default to a minimum, surveillance and profits are all crucial to any bank’s successes, and they will be vital to the New Bank’s survival – so standards will have to be high. But within those important parameters the BRICS should devise ways in which they could allow other developing countries, particularly small and medium-sized ones, to buy into the New Bank and the CRA on terms they can afford.

Arrangements should also be made for borrowings by developing countries on less onerous and more sympathetic conditions than the requirements of the IMF and World Bank.

In other words, the BRICS institutions should create competitive conditions for lending that would cause the Washington-based financial institutions to soften their criteria for lending and their terms and conditions, thus giving developing countries particularly small and vulnerable economies, more acceptable access to financing and a better chance to survive and prosper.

While the IMF and the World Bank may be aroused by the BRICS creation of the New Bank and the CRA, they will continue to be influential players in the wider world economy. It is significant that the BRICS remain members of the IMF and World Bank where, undoubtedly, they will use the alternative of their new institutions to try to leverage larger voting shares for themselves.

Small economies, in particular, should not be left as mere spectators to the competition between the Washington-based financial institutions and the newly created BRICS Bank and CRA.

(The writer is a Consultant, Senior Fellow at London University and former Caribbean diplomat. Responses and previous commentaries: www.sirronaldsanders.com)