Transforming The Economy In The Age Of Liberalisation: Mr. Owen Arthur Spoke

Former PM, Owen Arthur, has not let his time not being party leader and PM dull his appreciation of matters affecting the Barbadian economy, of which he is seen by many as the current master, position notwithstanding. He has also not lost his wit and ability to find the raw nerve, as the current PM and some journalists who asked questions would have found. But, all's fair in love and politics, and his kiss to Miss Mottley should not be ignored. [Photo from the lecture, courtesy of Bajan Reporter, http://bajanreporter.com/.)

Mr. Arthur had ample opportunities last night to strut his stuff as he gave a lecture entitled 'Transforming The Economy In The Age Of Liberalisation', at the Errol Barrow Centre For Creative Imagination at the University of the West Indies (UWI) Cave Hill Campus. Clearly, Mr. Arthur is a draw, as the full car park signalled that the centre would be 'standing room only'. He was eagerly listened to by a set of local dignitaries, who included Opposition Leader, Mia Mottley, as well as Cuban ambassador Pedro Garcia Roque. The auditorium had the feeling of a political rally as people cheered each dig at the current administration or hissed their teeth as figures how the economy had turned for the worse were listed. Groans were very loud when Mr. Arthur mentioned that the government plans to increase licences and fees.

The core of his lecture was to point out that current PM David Thompson's policies and his government's new medium term fiscal strategy were not "proportionate to the circumstances surrounding the crisis". He likened them to a vegetarian-turned-meat eater, who felt he had to revert to cannibalism. In looking at the crisis, its causes, effects, and possible solutions, he was especially concerned that little had been done by the government to take account of changes in world trade and business legislation that are already in train and would impact on Barbados over the next five year. They were especially the EPA with the EU, bilateral trade arrangements with Canada, and the need to bring national investment incentives into line with WTO guidelines. While the recession was wreaking a certain havoc, these other factors would also wreak damage when and if the recession is past.

In fairly clear language, Mr. Arthur, stressed that the current government was leading Barbados on a catastrophic path, economically, socially, and in terms of regional integration. The country needed immediate and urgent fiscal solutions because the private productive sectors and households of Barbados are facing catastrophic failure. To support that he gave an array of financial and economic statistics, including that which showed that the private sector is getting strapped for cash (reflected in its falling domestic bank deposits). That, while the public sector looks set to contract sharply: as evidence, he cited the medium term objective of an overall budget surplus by 2015. All of this would "bear heavily and adversely on the structure and performance of our economy."

He criticised the current government's apparent fetish with economic indicators and for what appeared to be taking moves from the IMF's play book, which he characterised as austerity based. Mr. Arthur noted that policies intended to correct fiscal problems could easily, and inadvertently, lead to more vulnerabilities like a deeper recession and rising unemployment. "The trade-offs, therefore, have to be carefully measured and calibrated," Arthur said.Overall, he felt that a counter cyclical approach to crisis was needed to ensure future development.

He gave a stunning array of data and I'm sure that no one could follow it all, but it showed his mastery of the finance portfolio. But his vision for Barbados came through without numbers. He was ready to pay a levy to ensure that future generations had access to tertiary education: one graduate per household was too conservative in his view. That said, he argued that Barbados needed to educate better for the next step up the development ladder: he saw that as being more 'knowledge based', so that the country could produce more competitive people on an international stage.

He talked passionately about regional integration. Barbadians who went to Panama to help dig the canal gave the country a big boost to help develop a middle class. In like fashion, it was churlish for the current government to ignore the role Barbados played in giving other countries in the region the chance to pull themselves up by taking in its workers and the same time keep its own economy thriving--a win-win situation, in his eyes. Citing the current PM, he wondered what would have happened if Guyana had taken an anti-Barbadian attitude in years past. In addition, he saw moves such as that by OECS countries to build common governance structures as the way to go, and Barbados not being part of that could later come to haunt the country. Linking to structures such as ALBA would not bring about a solid regional presence for Caribbean countries. On trade, he pointed out why CSME was important to Barbados, who exported over 50% of its goods and services to the Caricom region.

Mr. Arthur stressed the need for measures to bring industry up to the best international standards and cited how that had already been done by Mount Gay, much to his great personal satisfaction. He also stressed how Barbadian companies needed to gain regional strength before they could tackle a wider international field, citing how the Barbados Mutual Life Assurance Company had developed to being eventually quoted on the London Stock Exchange as Sagicor.

He dealt well with questions and questioners, however, one wants to interpret dealt. One journalist who was criticised for always having it in for the BLP, got short shrift when asking about the legacy of debt left by the BLP. Mr. Arthur listed the developmental assets that had been left by taking on that debt, and asked what could the current government show for the "mind-boggling" increase in debt over the past two years.

One questioner tried to sweet up Mr. Arthur by asking if legislation should insist on future PM's being trained economists, and certainly not mere accountants. Citing George Bernard Shaw, he remarked "If all economists were laid end to end, they would not reach a conclusion." I must say that I snickered: people seem to think that having an economist in charge of a nation's financial affairs will bring success, yet the world is littered with economic catastrophes in countries that have been led for years by economists. As Mr. Arthur said, it's important to have good advisers. To put it another way, an economist-leader can often be his or her own worst advisor.

There will be much to take from the speech. It should not be lost on many that this economic tour de force was made by a former finance minister, but not by his party's current Parliamentary spokesperson on economic affairs, Miss Mottley. It was clear that Mr. Arthur has no intention of disappearing from the current political scene and it was manifestly clear that this speech had elements of an economic manifesto. For what purpose? There, dear Watson, we will have to think hard if not long.

Balls of Confusion.

I have had a very sick feeling in my stomach for a very long time. I heard about something called the EPA when I came back to the region some 20 months ago, and tried to find out what it was. I have to admit that, even though I think that I am reasonably intelligent and can understand a lot of complex issues, I was at a loss to really understand the details of the EPA. But, I have had this experience before with so-called trade agreements, and their web of arcane language. What I could understand left me with a strong feeling that the region was going to see little that could be called unequivocally gains, and probably experience what most people would feel were losses, in terms of economic activities. The nature of the EPA as I read it accepts that the region will suffer as it provides for funding to help the region's countries "adjust" (see, for example, Gleaner article on banana trade).

I had to hold back a deep throated chuckle yesterday when one of the local papers heralded September 10, 2008 on its front page as "EPA Day", as if this was a time for celebration and party. CARICOM heads of government had been convened to a special meeting in Barbados in an effort to eliminate the "dissonance of viewpoints". Many sectors of the regional public had recently started to voice loudly their concerns about the EPA. Maybe that headline was merely to warn people that the reason for traffic problems was due to a constellation of regional head of government running around the yard.

Well, let's get past the acronym, and get to think about some of the acrimony. EPA stands for Economic Partnership Agreement; not Environmental Protection Agency as many of you might have thought. In broad terms, it sets out a new arrangement for the trade in goods and services between the Caribbean region and the European Union (EU) countries. Broadly, the region's goods and services will get duty-free and quota-free access to the EU market: that's good news for our principal crops, bananas and sugar, and another major manufactured export, rum. But, my understanding is that the door will be similarly open for EU goods and services to gain access to the region, which is not good news for our other economic activities, where we are not at all competitive. The Caribbean region is odd. We rarely engage in wars that involve weapons and the loss of life, but we are often engaged in struggles with other nations that amount to war because they often involve a loss of our livelihood.

I had the experience of reviewing a draft EPA while I worked in an African country and could not for the life of me see how the potential gains for the African country would ever be realised, given its starting point as a very underdeveloped agricultural economy, with few manufactured goods and virtually no services that could compete with any of the EU countries individually or the EU collectively. But other things could come from the EPA, in the form of access to funding, and maybe that would be what might attract bureaucrats and politicians to go ahead with negotiating the agreement.

In the Caribbean region, one thing is for sure. The bureaucrats and politicians have done little or nothing to really try to explain to the populations they serve the pros and cons of the EPA. Except that is towards the end of the process, when there have been flurries of panicky attempts to "bring people on board". Like when you try to haul someone back onto a ship after he/she has fallen into the water, the body is heavy and struggles and is often hard to manage, and frequently is let go to fall back into the water and be a gift to nature.

Given that the populations were not entrusted with any real information that might bolster a particular position, it's no wonder that most people are bewildered. What is more disturbing, though, is that it seems that many of the political leaders who are entrusted with signing the agreement, do not fully understand what the agreement means, or if they do cannot lucidly explain it, or have different understandings of what it means. No wonder then, that like a couple who find themselves at the altar and doubts are still unresolved, the marriage ceremony is an awkward affair. So, it was yesterday at Barbados' splendid Sherbourne Centre. Guyana's President had adamantly said for sometime that he would not sign the agreement as it stood, and he seems to be sticking to his word, adding that his country had much to gain from EPA but that it was a bad agreement. He is not convinced that the agreement makes much sense if it includes goods AND services, given that the region has few if any services apart from tourism that we could try to trade with the EU; in any event "trade" in tourism is free. I have met and worked with President Jagdeo several times and I know he is far from a fool, and can understand many very complex issues. Haiti, too, will not sign. My understanding is that African and Pacific countries have already made a precedent for the Caribbean by initialling "goods only" agreements.

Nothing I have heard is really reassuring about what the deal will mean, and remarks such as those attributed to Jamaica's PM, Bruce Golding, that it did not represent everything that the region wanted but was the "best possible arrangement" sounds like a curate's egg: at best, good in parts and bad in others, and is really meaningless to most people. If two sides are negotiating and one is much stronger than the other, when the latter says it got the best possible, what on earth is that?

Bureaucrats who were part of the original group of negotiators, such as Sir Shridath Ramphal, the first chief negotiator and director general of the Caribbean Regional Negotiating Machinery (CRNM) and former chairman of The West Indian Commission have muddied the waters by suggesting (logically) that the EPA spells the death knell of the CSME (Caribbean Single Market and Economy)--a baby that many believe is at best still-born--and also adding that the region should wait to see what position is taken by our African partners, when the ACP summit that has the EPA on its agenda is held on October 2-3 in Accra, Ghana.

There are many issues that are only surfacing in the public and political consciousness at this past-eleventh hour. One other revolves around in what state the region has come to agreement with the EU--as one or as several? My understanding, and the signing fiasco supports that, is that this is not a regional agreement on the Caribbean's part: individual countries have signed or not. We are only appearing to move under one flag when the West Indies play, and we know that is a lot of appearance and much less substance. So, who we trying to fool this time? Moving in lock step is not a natural dance for the region. If the EPA is signed, good and bad consequences will be set in train. If the EPA is not signed, from NOvember 1, different bad and good consequences will be set in train. Damned if you do; damned if you don't. Again, the knots stay tangled.