|The Courier N° 148 - Nov - Dec 1994 - Dossier: Education - Country Reports: Saint Lucia - St Vincent and The Grenadines (EC Courier, 1994, 104 p.)|
|St Vincent and the Grenadines: Pulling the kite back up in the air|
'We are now being driven by the market place'
In ancient times, Prime Minister James Mitchell, now in his early sixties, would have been called a 'homo universalis': a man of many talents. Indeed, while being a keen sailor, he is also an agronomist and while running a hotel on Bequia (one of the Grenadines islands), he holds the dual responsibility of presiding over the Government and supervising its finances. Starting his political career in 1966 as a member of the SVG Labour Party, he soon resigned to stand as an independent. 'Premier' of a coalition government from 1972-74, he was in opposition between 1974 and 1979. In 1975, he created his own New Democratic Party,which he led toe victory in the Parliamentary election in 1984. Five years later, he went on to win a landslide, with his party taking all 15 seats in the legislature. On 21 February of this year, he was resumed again with a comfortable 12-3 majority and embarked on his third term of office. A leader of the 'no no-nonsense'. pragmatic kind, sensitive to the balance between the Grenadines and the main island, St Vincent, he is also a keen advocate of regional cooperation, particularly at the level of the OECS and the Windward Islands. His Caricom colleagues also appointed him to be the chief political negotiator for the sensitive restructuring and ultimate privatisation of the regional airline, LIAT. In the following interview, he comments on some of the most recent developments in the LIAT saga, as well as on the broad range of challenges facing SVG as a result of what he describes as 'the bulldozer of free trade'.
· Prime Minister, what do you consider to be the main challenges that St Vincent & the Grenadines faces in the coming years? Is the banana issue the main one to be solved? In particular, does the uncertainty which has dogged the industry for so long still exist or has it at /east been partly reoulved by the entry into force of the new market regulation and the allocation of a quota of 82 000 tons?
- Well, I agree that the banana industry is the number one concern for St Vincent and the Grenadines. It represents the largest sector of our foreign exchange and is the most important industry in empoyment terms, particularly in the rural areas. The uncertainty you mention seemed to have been resolved when the European Union agreed on the structure of the preservation of the banana protocol and that certainly made a difference. But currently - indeed, in the meeting I have been attending today - the issue is back on the agenda. Can the protocol survive the challenge from inside the EU, from Germany for example, or the external pressures being brought to bear by some Latin American countries and by the United States in the GATT and its successor body, the World Trade Organisation? We still need answers to these questions. But what we have got so far has been satisfactory. Obviously, we would have liked to have had more, but the quota allocated to us was reasonable.
Having said this, we have been suffering economically over the last year. We had our first recession for a decade, caused by the fall in the value of the pound sterling against the dollar. This has reduced our income.
· What about the internal challenge you face to make your banana industry more competitive. Are you confident that St Vincent will be able to respond to this?
- We are certainly doing our best to respond to it. We have a full programme in place to make the industry more competitive but we still require some
· A There is, of course, the big issue of banana marketing. Previously, there was an exclusive contract with Geest but I believe the negotiations, which should have been concluded by now, are still going on and relations are apparently quite strained. Also the Windwards have entered the trading side directly, through the creation of WIBDECO. How do you see the whole marketing scene evolving?
- We have relied on an exclusive arrangement in the past but under the new regime, there is now a licensing mechanism which we would like to have more control of. In the negotiations with Geest, we have been discussing in great detail how these licences should operate and who will benefit from the income directly derived from them, as well as the question of shipping. We have had a rollover contract with Geest which has only really been selling our bananas on the British and, more recently, the European market. This has involved a lot of fixed costs and all the problems have been passed on to us. Geest has continued to make a profit on its shipping and other areas of activity from which we have not benefited. So we have been working with Geest to try and restructure the entire marketing arrangement. The World Bank and the European Union have themselves pointed out certain weaknesses in the arrangements which we had with Geest. The farmers have also worked it out for themselves. We in the governments realised that unless we were directly involved in the negotiations we would have no industry in the long run.
· Is WIBDECO really going to become the commercial arm of the Windwards' banana industry?
- Definitely. It is a company that we have organised in the islands and established in the United Kingdom.
· Geest's usual response is that it is all very well for the Windwards to tell them to become more effective, but there is also a need for the land-based banana production activities to become more competitive. Do you agree?
- We agree that there is a need to increase competitiveness on both sides.
· They also argue that their contract arrangements offer long-term marketing security.
- We are not interested in that any more. This idea of long-term reliability has turned out to be a fiction. There are other people who are keen to take our bananas, especially now that there is an annual European licence. We could benefit by having a better regime on marketing.
· Is this a negotiating position?
- We have notified Geest that the contract with them has ended. Now we are negotiating afresh and if they do not come up with a new contract we will sell our bananas to somebody else. We cannot carry on, I am afraid, on the basis of a simple historical relationship. We are now being driven by the market place and we have to respond to the prevailing market conditions, within the framework of what we have worked out and negotiated carefully with the European Union.
· Is this you mentally adjusting to the 'free trade bulldozer' as you called it in this year's budget speech?
· If you look at the world scene today, you see the formation of large economic blocs and groups of states around you. Do you have a sense, in the Windward Is/ands, of being marginalised and that perhaps your interests are not being properly taken into account?
- We have to look at our position in the world and make a realistic assessment of the market opportunities available to us. As the world changes, we have to change with it, and this is what lies behind our economic restructuring. It is not just a question of agricultural diversification. We also need wider economic diversification. We have already made good progress in upmarket tourism. A World Bank study has revealed, for instance, that we in St Vincent and the Grenadines attract the highest expenditure and income per visitor in the Eastern Caribbean. And so while we realise that we may not be able to compete with Latin America on bananas, we certainly have an exclusive tourism product and we clearly want to maximise our income from that. That is why we have gone into the development of shipyards and yachting facilities. This is an area where we have a comparative advantage that we can exploit.
· Looking at the question of diversifying the economic base, you have succeeded in attracting a number of large-scale investments, such as the Union Island one. Do you intend to take this approach further?
- Yes. We are pursuing it at the moment with a proposal for a big coastal development on St Vincent designed to strengthen our 'upmarket' tourism product. This in turn should allow us to achieve greater agricultural diversification because, obviously, home-based tourism generates a lot of additional demand for food and vegetables.
· Is there also an intention here to redress some of the imbalances?After all, tourism is heavily concentrated in the Grenadines rather than on the main island of St Vincent
- Yes, we certainly want to do that and perhaps relieve some of the pressure on the Grenadines.
· Talking of pressure, what about ecological concerns such as the dumping of wastes from cruiseships. Is preservation of the natural environment becoming more and more of an issue?
- There is certainly a big problem regarding the cruiseships that come to the Caribbean. We are one of those territories that have a charge for visitors, levied at 10 US$ per head. We feel that ifsomeone is not prepared to pay this modest amount, they might as well stay at home. Nor do the cruise ship companies spend much money in our countries. Under pressure, they are now beginning to purchase some goods locally, but basically they still get most of their provisions and supplies in Miami. And they don't have much of an impact in terms of labour either. So they have relatively little positive economic impact.
We are currently trying to redress this situation and we are not the only ones. Institutions like the World Bank are very concerned about the dumping of waste at sea and about applying the international rules that govern this. If these west" are to be disposed of in our islands, there must obviously be additional charges for that. We are only prepared to take cruiseship waste if we have a proper regime for dealing with our own solid wastes.
· But what about this issue of the cruiseship tax? The OECS countries agreed to apply the same levy but the cruiseship companies, in what seems to have been a 'divide and rule' strategy, succeeded in breaking the whole thing up. Some countries are now applying the tax while others are not
- That is unfortunate. It is an area where collectively we could be very strong, if we stood our ground, because 75 % of the cruiseship business comes into the Caribbean. When you look around the world, there is no area quite like the Caribbean where cruises can be offered for an extended period. In Norway, they have a season of just six weeks. The same is true for Alaska. The Mediterranean is very polluted and in the Far East, the distances are too great. So the primary area for this business is the Caribbean and, if we stand together, I think the cruiseship companies will come to understand our position. I think we will get to it in time.
· Air access is another important question, particularly for the Windwards. The privatisation of LIAT, which you have been heavily involved in, seems to have been left hanging although there has been some restructuring. In the meantime, some of the OECS countries, together with Barbados, have set up a new company, Sunrise. Are we seeing a breakaway movement here and what sort of feelings have been aroused by the issue?
- Well, the press loves it when governments differ from each other, whether in Europe, Africa, the Caribbean or elsewhere. They thrive on that sort of thing. I have spent a lot of time on the LIAT privatisation. In fact, it was me who advanced the basic idea. I complained more than anyone else because the people of St Vincent and the Grenadines have suffered particularly from the poor service. People have had to sleep in terminals overnight because of lack of connections, and visitors have had difficulties as well. Up to now, unlike other territories, we have not had an international airport. Our concern, therefore, was about better communications and transport services. For some other governments, the prime interests have been employment and prestige, not the basic question of good communications.
So it has long been a serious problem that we take very seriously. I put forward proposals for the privatisation of LIAT. These were accepted, on a step by step basis, by various CARICOM Heads of Government meetings. I went so far as to get the Caribbean Development Bank involved. Money was set aside for studies and we hired the Paribas Bank which analysed LIAT and produced a report. Everybody saw the recommendations that were put forward and was aware that the European Investment Bank had earmarked EC$ 15 million for the LIAT restructuring. Then the privatisation ground to a halt. But the market opportunity remains. I was requested at our meeting in Nassau to carry forward the privatisation exercise. In accordance with the CARICOM mandate, I had meetings with British Airways. The Prime Ministers of Jamaica and Trinidad also met with them. BA was asked to look at the situation and come up with recommendations. Some of us responded to their analysis while others did not, but at no time was there any question of creating a monopoly on air transport in the Caribbean. As a matter of fact there are several different airlines operated by different governments.
We must do what we can to improve our air transport networks. Given the problems we have with bananas and other agricultural exports, and with NAFTA, it is vital that we ensure there are no impediments to tourism.
· If you are aiming for agricultural diversification, so as to export high-value products in what must be relatively small volumes, you will presumably need runway facilities for wider-bodied aircraft. There seems to be no way round it. What is the current state of play?
- We are studying the idea. We have had various proposals but haven't yet reached the stage of being able to determine what can be done. We are still awaiting technical responses to the studies that have been done. We will also have to see what is feasible in terms of financing and I hope we can reach some conclusions before the end of the year.
· You have always been a keen advocate of some form of political integration at /east at the level of the Windward Islands. Is this still on the agenda and do you think it is achievable in the Caribbean?
- I would never be one to write off the subject, even though it looks as if it is in suspense at the present time. We in St Vincent and in the New Democratic Party have pushed this issue but I would like to see initiatives from other political parties as well. I am also waiting to see what kind of initiative might come from other governments to carry the matter forward.
· Both you, in your budget speech, and Prime Minister Compton in St Lucia, have expressed disappointment about the apparent lack of response of the private sector to efforts made by your governments in improving the infrastructure. They still appear to be concentrating on trade rather than moving into production or investment
- That problem certainly does exist. Some entrepreneurs are moving slowly in the right direction but in general I don't think the private sector has sufficient resources to embark on risk-taking ventures. Where there are market opportunities, we have seen changes for the better. For example, when we amended the hotel concessions, a lot of hoteliers improved the quality of their product and they are continuing to do so But there has not been any big move towards industrialisation. Of course, there are always the problems of marketing given the small size of our islands.
· St Vincent and the Grenadines have attracted a number of major industrial investments from the USA in the past but these have all since left.
- There was a time when the kind of factory assembly you refer to was fashionable in the Caribbean because wages were low compared to other countries. But as a result of the devaluation around us, in Central America and elsewhere in the world, the manufacturers can now make products more cheaply elsewhere. Operations of this kind have all moved out as a result.
· Are you optimistic that you can attract companies back again?
- At the moment, we are building a container port beside the industrial estate at Campden Park. We hope to make the facility more competitive and get more people involved in that area in producing goods for export.
· Politicians must always be conscious of the need to strike a balance in catering for different sections of the population. Have you succeeded in maintaining a balance between the interests of the Grenadines and those of the main island of St Vincent? You, yourself, are from one of the smaller islands. Is there competition for investment and infrastructure?
- There was a time when the Grenadines were ignored. They were effectively dependencies and very little attention was paid to their infrastructure - airports, roads, jetties, electricity and so on. When I was in the opposition, we had no electricity in Bequia, for example, for long periods. That now is a thing of the past. Both the quality and coverage of the electricity network have been improved and we have maintained a sense of balance. As Minister of Finance I have made sure that the resources are fairly spread around. If we hadn't done that, we would not have won all the seats that we did, and maintained a good working majority in Parliament.
· On a very different issue, do you find it difficult, as a small country with limited human resources, to service all the different regional and international organisations to which you belong.
- Yes, it is very difficult. That is one reason why I have tried to push the idea of political union. If we could have one person, speaking with one voice on our behalf, we would have more weight in the international community. But you put your finger on the basic issue in your question. We have all these agencies that need to be serviced and only a small number of people capable of doing it. At the same time, we have a lot of people without the right qualifications unemployed in our countries.
· Your unemployment rate is obviously fairly high. Is this a priority for you and what can you do to create new jobs?
- Our unemployment, according to the most recent figures, stands at 19 %. I see in the paper today that it is something like 12 % in France and youth unemployment is much higher. Obviously, it is a worldwide phenomenon. What one has to do is not just seek to restructure our economies, but also to get away from jobless growth. You want economic growth of course, but it must create new employment in the form of jobs that are sustainable. This takes us back to the question of human resource development and training.
· How do you see the future of the Lomonvention from a Caribbean point of view?
- There is a difference between what we would like and what we see as being the actual prospects. We would certainly like to see a continuation of the Lomonvention into the next century. We think that it has been good both for us and for the Europeans. But I recognise that with the expansion of the European Union and the new associations with the former east bloc countries, the Caribbean could well be marginalised. We also see the problems facing Africa, where there is not much progress. I do not know what is going to happen to that continent. But even if the Lomonvention has to be changed or restructured, we would like to see a continuing framework of linkages between Europe and the Caribbean. I think it has been in the interests of all parties concerned.
· What sort of St Vincent and The Grenadines would you like to see in, say, five years time, at the end of your current term of office?
- I would hope that the banana situation will have stabilised and that our economic diversification, especially in tourism, and the creation of more employment, will be advanced more.
· On tourism, you currently offer a product at the top of the market range. Isn't there a danger that if you go for numbers, you might lose out in the high-quality, high-spending sector?
- No, I don't think so. There is a big market out there and we think that with the increasing wealth in the world, there are a lot of people seeking the kinds of things we have to offer. We have to make sure that we build on our natural assets and not destroy them. That means things like good quality architecture. What we do must be compatible with the environment. We have to protect it and keep it attractive.
I am not just talking here about the physical environment. Visitors come to the Caribbean for peace and tranquility and we have to get our people to understand that those who seek privacy and relaxation do not, for example, want to be bombarded by noise. They don't want to be harrassed when they go shopping. We have to ensure that visitors are comfortable and that they continue to feel they are getting good value for their money in our part of the Caribbean. After all, everybody is going for quality these days.
· And you think that St Vincent has the most to offer.
- That is right.
Interview by R.D.B.