An interview with OECS Director-General, Dr Vaughan Lewis

The OECS: making 'small is beautiful' come true

Ask any politician in the smaller Caribbean island states what is the most effective regional organisation and you will discover that, without hesitation, they all mention the OECS. The Organisation of Eastern Caribbean States certainly seems to live up to Schumadher's famous adage that 'small is beautiful'. Set up under the 1981 Treaty of Basseterre, its membership today consists of eight small island states and territories - Antigua & Barbuda, the British Virgin Islands, Dominica, Grenada, Montserrat, St Kitts & Nevis, St Lucia and St Vincent & the Grenadines. Over the past 13 years it has succeeded in forming a solid and active sub region within the wider Caribbean. Dr Lewis from St Lucia has been the widely respected Director-General of this body since 1982. In an interview with The Courier at his headquarters near Castries, he puts into perspective the many challenges which have suddenly emerged to confront the OECS Member States. Political union may be off the agenda for the time being but, in his view, enhanced domestic harmonisation, going hand in hand with closer cooperation in the international arena, are vital for survival at a time when protection has fallen away.

· Dr. Lewis, most politicians here seem to agree that, among all the Caribbean regional organisations, the OECS is one of the most effective. What are the specific reasons behind the relative success of OECS regional integration? Is it because the countries are smaller, because they are more or less at the same [eve/, that they find it easier to work together or what?

- Well, part of it has to do with the fact that the OECS was founded on the basis of a certain defensiveness, if I can put it that way. It was organised originally as the West Indies Associated States Council of Ministers after the Federation of 1958 was dissolved. The dissolution of that Federation left us with a number of functional organisations, in particular our Supreme Court, our monetary system - what was then the Eastern Caribbean Currency Authority - which included Barbados, and the Directorate of Civil Aviation, which is responsible for the management of civil aviation, telecommunications and navigation activities in the region. When the Federation broke up, and as the other countries - Barbados in particular - became independent, it was necessary to hold together the assets which I have just mentioned. And so, in a sense, the foundations of the OECS are our bank, our judicial system and our Directorate of Civil Aviation to which, over the years we have added a number of other institutions. In addition, it was necessary to preserve our external economic relations system, particularly the protection of our agricultural commodities - sugar and then bananas. To do this, we established a number of trade commissioner-ships. When the OECS was formally established, these became high commissonerships - in other words, we established embassies in the UK and Canada, countries with which we had a preferential relationship at the time.

We also had to try to ensure that we had some counterbalance to the larger Caribbean countries. Once the Caribbean Free Trade Area had been formed, our governments felt it necessary to organise the Eastern Caribbean Common Market system. This was in order to protect the interests of what were then seen as the less-developed countries of the English speaking Caribbean and to strengthen our capacity to operate within CARICOM. It was a way of giving us viability within the larger system.

From that essentially defensive starting point, and particularly since the organisation of the OECS in 1981, we have moved towards a more positive, activist approach. We have substantially widened the sphere of functional cooperation in areas such as education, health, fisheries, export development and agricultural diversification. And we have also given ourselves a more significant profile in international relations. The West Indies Associated States Council of Ministers, the institution that was the forerunner to the OECS, did not have international personality but the OECS does. The governments found it necessary to give greater prominence to the sphere of external economic relations. This, of course, was reinforced when we joined the ACP Group. The OECS secretariat had the job of dealing with the regional allocations under the various Lomonventions. And we are taking a very active role in that today. We have projects under Lomelating, in particular, to export development, agriculture and education. So the OECS has moved from a defensive to a more active stance.

Finally, I agree that the fact we are smaller, and have a greater sense of cohesion than one might expect in a larger grouping, gives us some degree of strength. Unlike CARICOM, the OECS has a strong political component. It is not a system based on political integration or unification, but there is a certain basis of political understanding that underpins the organisation and allows us to function perhaps in a more direct way than some other regional organisations.

· One of the weaknesses of CARICOM that is frequently identified is the difficulty in translating political decisions into concrete action. It appears that the OECS suffers less from this problem than the larger organisations.

- Of course, that difficulty faces all regional organisations to some extent but I think perhaps the difference in our case, which has meant that it is less of a problem, is that in the areas of functional cooperation that we deal with, the governments have felt that there was more at stake. There was a very direct interest in working together to acquire new assets or to preserve those that we had. There was more at stake for us, for example, in trying to undertake major education projects under the Lomonvention. The same is true of export development. We do not have the substantial infrastructure for promoting investment and exports that the larger Caribbean countries have. So there was a greater material interest in ensuring that we could undertake something on a regional basis that worked. It was a question of ensuring our viability. To illustrate the point, our Export Development Agency is currently staging an exhibition in Grenada entitled OECS EXPO-1994. This is designed to demonstrate what the OECS can do collectively, what volumes it can produce, the quality of the goods on offer and so on.

· Continuing on this theme of translating good intentions into deeds, what are your views on the fate of the famous cruiseship tax? It was agreed by everyone but it appears that on/y St Lucia implemented it That doesn't seem to be a very good advertisement for Caribbean solidarity.

- As I said, that sort of thing is not peculiar in economic integration systems. Countries break ranks and are more prone to do so at a time like this when they are searching for new business and struggling to adapt their structures.

Having said that, there is a belief that, in the longer term, revenue has to be generated to help repay the loans that have been taken out for investment in tourism facilities (notably the ports) and to protect the marine environment, which is our key tourism asset. It is only right that the resources should come from the enterprises which benefit from these assets. It is not yet clear that all the cruiseship companies understand this. But we believe that progress is being made and that we will eventually find common ground as to what should be expected of the industry. The OECS countries are currently discussing a project with the World Bank on solid waste management, which relates to the disposal of cruiseship wastes. We don't want our Caribbean Sea to end up like the Mediterranean. A project like this, which would involve a contribution from the cruise companies, makes great sense and I think they will come to understand the importance of what we are trying to do.

· You stressed earlier the political role of the OECS. Is political union, as such, still an official objective?

- We may as well speak frankly. I think that political union has run aground to some extent. Many people, myself included, felt that there was a window of opportunity in the 1980s for closer integration. We went through a process of in-depth consultation, in particular through the so-called regional constituent assemblies which were composed of all the interest groups and political parties in our sub-region. Although we pushed it fairly hard, I think some of the momentum was lost when we reached the point of having to stage referendums. Referendums are a good thing in democratic systems but they can also pose problems, as you know only too well in Europe. Our political leadership came to realise the difficulties involved, particularly given the form of political organisation that we currently have. There would have to be a referendum in each country for the people to decide whether they wanted political integration. There would also need to be a referendum to decide on the nature of the new constitution. Each element would have to be approved - by a weighted majority of two-thirds, three-fifths or three-quarters in both houses (House of Assembly and Senate) of every national parliament before the process was completed. With so many elements in our constitutions needing to be changed in order to achieve unification, the process was bound to be extremely prolonged and I think this caused some of the political leadership to hesitate. There was also the fact, of course, that with six to eight countries involved, there was always an election coming up in one or other of them. As you know, elections get top priority in democratic systems and political union ended up on the back-burner.

· You seem to be talking here of a top-down process. Isn't political union a subject that should be driven from the bottom-up?

- That isn't really the way it happened. The first initiative taken by the countries was the establishment of the regional constituent assemblies - there were four, one in each of the Windward Islands - but that was preceded by a series of consultations on the issue in the various countries. And the assemblies brought together all the interest groups as well as the political parties. They were given free reign and their proceedings were broadcast on television for a whole week.

· Now you seem to be talking about the four Wind ward Islands and not the OECS as a whole.

- That is because there was a point at which Antigua and St Kitts decided that they could not go forward with political union and the four Windward Islands chose to take it further. There was a certain logic in that - they were all islands that were deeply concerned about the future of the banana industry which largely dominates their economies. What I would say is this: There is still a realisation that it is only through some form of closer integration and policy harmonisation that we can create a viable basis for economic activity in the modem world, particularly given the changes in the international environment. The approach governments are now taking is to place more emphasis on achieving what is called the OECS single market. In other words to rid the subregion of the remaining tariff and non-tariff barriers, to allow greater freedom of movement of people and to create a system including, for example, a stock exchange, which will allow for the free movement of capital.

· In other words, along the lines being followed by the European Union, although you already have a common curreny.

- Yes. The slight difference is that we have a common currency and that has enabled us to take initiatives in respect of the banking system for example; a home mortgage banking system throughout the area. It also further enhances the possibilities for free movement of capital and allows us to move on to estabilishing a stock exchange. These are the kinds of issues that are being emphasised, although there is also the perception that to pursue them effectively we need a greater degree of policy harmonisation and political commitment.

· What do you say to the criticism, often voiced by politicians in the smaller islands, that the burden of servicing all the regional and international organisations they belong to is too heavy? After all, in addition to the OECS, you also have CARICOM, the ACS, the OAS and indeed the ACP Group. Very often, it is the same problems that are discussed in all these groupings and it is only the number of participants that varies.

- It is certainly true that the limited human and financial resources at our disposal do not allow for very active participation in the various regional institutions, not to mention international bodies, to which we are committed. Nonetheless, I think there is the feeling that a number of them - certainly the OECS, CARICOM and the Commonwealth - are crucial to our viability and to our activity in international affairs.

There is also a degree of uncertainty stemming from the fact that we are having to prepare for a kind of economic adjustment. We have the development of the European single market, the changes that are taking place in the banana industry, the estabilishment of NAFTA and the general liberalisation of trade to contend with. We are witnessing the removal of the protectionism under which we have functioned for so many years. It is understood that we have to prepare for that and there is a view that resources have to be conserved for investment in activities related to economic adjustment, without our having to borrow too extensively. And so l think our countries are beginning to look again at the kinds of institutions that they ought to belong to. Priority is given to the regional institutions but, at the same time, it is understood that we derive benefits from organisations like the Commonwealth, and that we need to preserve our membership of them. There are institutions now coming on to the scene like the proposed Association of Caribbean Stat" which the governments are looking at closely. There are institutions like SAILOR, the Latin American Economic System. Most OECS countries are not members of this but we obviously have some interest in the wider sphere of Latin American cooperation.

It is clearly the case that many countries have difficulties in functioning effectively in all the different organisations. They have to decide which ones should be given priority - and I think it is fair to say that the OECS ranks quite highly, especially if one looks at it in terms of the personnel they allow us to have.

· Looking at it from the level of the OECS sub-region, are you going to be able to survive in the changing global environment without some form of protection? One hears from many quarters, for example, that the private sector, with its mercantile as opposed to production-oriented mentality, is lacking in entrepreneurship and is not geared towards taking risks.

- In a sense, the changes that are happening have come upon us quite suddenly. The OECS countries have never really had a substantial manufacturing system. We did start, within the framework of CARICOM, on some forms of industrial development, mainly with a view to exporting to the larger CARICOM states. Up until the early 1980s, that process was going quite well. Countries like Antigua, St Kitts and St Lucia, for example, began to develop an industrial infrastructure and to export goods to Trinidad, Jamaica and, to a lesser extent, Barbados.

Then the economies of the larger countries - Trinidad, Jamaica and Guyana - went into decline and the markets started to disappear. There were two reasons for this. First, in order to protect themselves, some of the larger countries put up protective barriers - quotas, licensing systems and so on. Second, they simply did not have the resources to purchase the goods. And so the whole basis on which CARICOM was built as far as we were concerned, which was to provide a market for our exports, while the larger countries themselves increasingly exported to the rest of the world, began to disappear in the 1980s. And the infrastructure for industrialisation that we had begun to develop was damaged in the process. That set us back and left us unprepared for the largely unforeseen events of more recent times - that is to say, the substantial liberalisation of international economic relations. Whether we like it or not, that process is going ahead, particularly here in the westerm hemisphere. We see it in the NAFTA agreement between the USA, Canada and Mexico, and it is happening increasingly in South America as well. America is effectively forcing our own protective systems out of existence. As you know, the tariffs in CARICOM are progressively being reduced. And we are doing this at a time when the circumstances are not particularly favourable to us - when our agricultural commodities, which have always had international or, to be more accurate, 'metropolitan' protection, are themselves under attack. So the climate in general is not very good for the kind of economic adjustment that we, and in particular our private sectors, need to undertake to survive in the future. This has inevitably caused anxiety but I think there is a realisation that the progressive liberalisation of global economic relations is inevitable, that that process obviously includes the Caribbean, and that we will therefore have to find a way of dealing with it.

· Time and again in the Caribbean you seem to stumble upon the problem of management at all levels. With this in mind, what are your feelings about the banana industry and about its prospects for survival in a commercial setting?

- What the governments have tried to do here is to tackle a future problem before it actually arises. Earlier discussions about the management and commercialisation of the banana industry really began in anticipation of the changes brought about by the European Single Market. I believe that there is sufficient capacity within the Windward Islands and certainly within the wider Caribbean for the proper commercial management of the banana industry. The people of the Windward Islands have tremendous experience in bananas and I am sure that we have a sufficient human resource base to manage the industry. The key thing is to put greater emphasis on the commercial environment - the importance of the market in determining policy. Up to now, the preferential system has been the key policy determinant but that has now to be adjusted. In some respects, the industry's main problem is not the commercial management or marketing aspect, although that needs to be dealt with, but rather the domestic management. To some extent, the banana sector suffers from the same problem that affects all other industries and systems in these islands, namely the shortage of capable middle management. This is a crucial element in keeping the systems running. Some emphasis is being put on that now in the OECS generally in our educational systems. Of course, there also has to be a proper understanding of what the international market requires. For many years we have been operating, not just under commercial protection, but also under a form of institutionalised British protection. Now it is recognised that, with increasing liberalisation, we need independent producers to have a more profound understanding of the commercial aspects. Our market is no longer restricted to the UK - it is Europe as well - and that means we need a greater degree of participation in the marketing and promotion of our bananas, and even in the shipping arrangements. Discussions about this are currently under way. We need to develop new skills in this area because, even though the industry is nearly 50 years old, we have never really been involved in the international marketing side of it.

· To conclude, how optimistic are you about the future of the region, given what you say about the ending of the benefits of the protectionist era?

- I believe there are substantial problems ahead of us. These are both domestic and, of course, international in character. The fact that our economies have always been open means that all the trends in the international economic arena have a speedy impact on our domestic systems. Although we have had formal protection in certain sectors, overall our economies feel the effects of changes in the international system very quickly. But we have not developed the instruments for dealing with the international economy. As I said earlier, we have relied on the institutional protection of the United Kingdom but that has now gone and we need to develop our own instruments instead. What this points to, of course, is a greater degree of collaboration. I say this particularly for the OECS but I believe it is important for CARICOM as well.

There must be closer collaboration between countries in the whole business of international negotiations, international marketing, international exports and international investment. We need to have a more collective use of the human resources at our disposal and this is hard to organise. The countries are sovereign. They believe themselves to have particular interests which need protection. But more and more we find, as we are confronted with NAFTA, the European single market and so on, that the problems facing us are largely the same ones. So l think a greater degree of collaboration in the international sphere is what our governments need to concentrate on right now.

They also need to focus on closer harmonisation at the domestic level, particularly in the areas of monetary and general macro-economic policy. When we were colonies, we had a greater degree of macro-economic harmony - because the British ran us - than we have today. We need to work together to build up our capacity to supply quality products in sufficient volume. That means, for example, coordinating the development of our human resource base. We need a greater emphasis on creating region-wide companies producing goods of a consistent high standard, so that we can make our impact on the international system.

The challenge is, therefore, twofold: domestic harmonisation and working much more closely together in the international sphere. I believe those two approaches should take us through the foreseeable future. Our problem today is in finding ways to create institutions that will allow us to achieve this. There is a sense that our established integration systems are not completely up to the task. They have not moved with developments in the international economy. That was something that emerged from the report of the West Indian Commission with which you may be familiar.

So we need new instruments. What I am not sure about is whether our governments have come to terms with what is required to create these new instruments and to have them work properly.

Interview by Roger De Backer