March 2011 Business Journal

ISBN 2218-0826

BusinessJournal

Volume 1 Number 4 March 2011

contents ISBN 2218-0826

BusinessJournal

3

From the Editor

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Caribbean countries have several ways to enhance prospects OP/ED

Volume 1 Number 4 March 2011

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The OAS - towards development for all

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Latin America - growth in 2011 COLUMNS

10 Economic prospects for the Caribbean in 2011

March 2011

GUEST COMMENTARIES 26 Enhancing south-south & triangular cooperation 30 Energy: price and supply 34 Industry Updates 38 News Briefs PERSPECTIVES 29 Garfield King 41 Books 42 The lighter side

18 Turmoil in North America and the Middle East: Latin American Contagion?

22 Tourism and Caribbean development

Is the Middle Eastern turmoil transferable to the Americas?

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Editor: Linda Hutchinson-Jafar

Design and layout: Karibgraphics Ltd.

Contributors: Dr. Anthony Bryan Ambassador P.I. Gomes Garfield King Sirius Mann Ambassador Albert Ramdin Kelvin A. Sergeant Dr. Raymond M. Wright

Business Journal is published by: Caribbean PR Agency #268 Harold Fraser Circular, Valsayn, Trinidad and Tobago, W.I. T/F: (868) 645-0368 hutchlin@gmail.com www.bizjournalonline.com Š 2011. No part of this publication may be reproduced without the written permission of the Publisher.

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From the Editor’s Desk

A

s we swing past the first quarter of 2011, countries in the Caribbean are slowly emerging from the past two-three years of decline as they try to catch up with the world economy which has generally rebounded from the 2008/2009 recession.

But external factors in the more advanced economies – the Caribbean’s main source for tourism, investment and remittances – will eventually decide the fate of the smaller economies at the end of the year.

Several reports are cautious in their outlook and prospects for Caribbean countries in 2011.

In its outlook for 2011, the Caribbean Development Bank (CDB) sees modest recoveries for most economies although there is a high degree of uncertainty surrounding these expectations.

ECLAC’s Economist Kelvin Sergeant says recovery will slow for a number of countries in the Caribbean and points to fiscal compression, lack of private sector expansion and reduced international and domestic demand.

The World Bank’s ‘Global Economic Prospects 2011’ reports that Latin America and the Caribbean after contracting by 2.2% in 2009, GDP is estimated to have expanded 5.7% in 2010, similar to the average growth recorded during the 2004-2007 boom years.

Growth is forecast to slow somewhat to around 4% in 2011 and 2012, largely because of a weaker external environment as growth in advanced economies and China moderates.

You can read in-depth features and commentary on the Caribbean’s economic prospects in the inside pages.

As usual, my team and I welcome your feedback on particular articles and commentary and on issues you’d like us to address in subsequent editions.

Linda Hutchinson-Jafar

Editor

business journal | MARCH 2011

Regional Economic Outlook Caribbean Countries Have Several Ways to Enhance Prospects - Conference

C

aribbean countries, saddled with high debt levels and badly affected by the global economic crisis, need to reduce debt and develop new sources of growth to enhance their prospects, according to participants at a regional conference convened to explore the Caribbean’s challenges and policy options.

The global crisis had a big impact on economies in the Caribbean because of their strong links to the United States and Europe— and their recovery has been sluggish so far.

While governments responded appropriately to the drop in tourism, trade, remittances and capital flows, they now face economic and social challenges that call for fresh ideas and a renewed policy resolve if the region is to reach a brighter, more sustainable growth path.

To discuss these issues, researchers and policymakers gathered at a recent conference in Barbados entitled ‘Caribbean Policy Challenges after the Global Crisis’.

The conference was organized by the University of the West Indies (UWI), the Central Bank of Barbados, and the International Monetary Fund (IMF), and brought together experts from across the Caribbean, Canada, the Seychelles, the United Kingdom, and the United States.

“This conference presented a valuable opportunity to exchange ideas and approaches to common challenges, to search for new solutions, and to develop a shared vision,” noted Dr. DeLisle Worrell, Governor of the Central Bank of Barbados.

Debt and the future of the region One of the most difficult issues facing the region is the high level of public debt, and its implications for fiscal sustainability and growth.

MARCH 2011 | Business Journal

Five of the world’s 13 most indebted nations (as a share of GDP) are now in the Caribbean. Debt has accumulated because of successive years of fiscal deficits and, since the mid 1990s, borrowing by public enterprises and off-balance sheet spending, including financial sector bailouts. With mounting interest bills, the global financial crisis caused serious problems for debt management.

This suggests that fiscal consolidation is critical to ensure macroeconomic stability, and also to ‘crowd in’ the private sector. Conference participants acknowledged that lowering debt would lead to higher growth over time, a finding that is based on considerable research.

They accepted also that fiscal adjustment was inevitable since, like households, countries must―over time―live within their means.

The conference looked at the case studies of the Dominican Republic and the Seychelles, where the impact of the crisis was severe, but where governments had responded proactively, relaxing considerably monetary policy in the Dominican Republic, and pushing through fiscal adjustment and debt restructuring, as well as exchange rate adjustment in the Seychelles.

These efforts, supported by Fund assistance, had helped restore stability, improve confidence, and spur the recovery.

Participants also discussed innovative ideas about how to manage debt, including the recent experience of the debt exchange by

the land. Authorities will need to take a more proactive approach to meet these demands in order to maximize the benefits associated with a more level playing field.

New sources of growth

Jamaica and debt restructuring by Antigua. Some of the important factors behind these successful outcomes included realistic burden sharing, no haircut on loan principal, social consensus, and a strong communications strategy.

Producing more with the same resources Even before the crisis, economic growth in the region had lagged other parts of the hemisphere because of weak productivity growth―not low rates of investment―and weak integration with the so-called new global “growth poles.”

These are the large, vibrant, emerging market economies like Brazil and China with spillovers that drive growth in other countries. Participants agreed that diversification of economic partners and export markets, which some countries are already pursuing, should become a deliberate strategy going forward.

“Like most of the advanced economies, the Caribbean needs to tackle the obstacles to higher growth, and come up with new, home-grown ideas to enhance its prospects,” said Nicolás Eyzaguirre, Director of the IMF’s Western Hemisphere Department, in a lunchtime address.

Tourism remains a core economic activity, having contributed positively to growth without raising volatility. But tourism could play a stronger role if steps were taken to increase the competitiveness of the sector to attract more tourist arrivals.

Also, while evidence suggests that the Caribbean has benefited from offshore financial centers both in terms of revenue and growth, increasing compliance costs associated with a number of global initiatives to strengthen regulatory standards will change the lay of

The conference also explored new sources of growth, including other offshore services, for example, in the areas of health, education, and specialized financial services. Some countries would need to improve the efficiency of key factors like information technology and energy production to make this possible. Presenters also proposed ideas for cost savings from scale economies, particularly in the area of integration of institutional activities like financial sector supervision and regulation.

Ideas about productive development policies (PDPs)―policies that seek to overcome market failures by developing specific products, activities, and enterprises―were also discussed.

“Caribbean economies need to make available greater financing and other incentives to encourage entrepreneurship, innovation, and micro, small, and medium-size enterprises,” claimed Professor Andrew Downes of the UWI during his presentation about PDPs.

Rodrigo Valdes, Senior Advisor in the IMF’s Western Hemisphere Department wrapped up the discussions, noting that “This is the beginning of a closer dialogue about policies that will set the stage for greater private sector engagement, greater economic integration, and diversification of sectors and markets.”

business journal | MARCH 2011

Op-Ed Elections in HAITI

O

n March 20, 2011, the Organization of American States and interest groups from around the world watched as Haitian nationals queued in long lines on dusty roads waiting to vote. Expectation was evident on the faces of those about to cast their ballot.

In Cite Soleil, a young man showed us his thumb, already stained by electoral ink. In Petionville, an old woman peered at an electoral list plastered on a wall, and found her name. Haitian nationals were holding on to the hope that their votes would propel their country into a new era of growth and positive change.

On this day, Haitians made one thing clear to the world: they weren’t seeking pity or handouts; they were seeking a President with a firm plan to take their country forward.

The new President of Haiti will face a difficult road ahead, a road few leaders in the Western Hemisphere will ever travel. This new leader and the new legislature will inherit a country shattered by natural disasters, rooted in instability and poverty, yet defined by the courage of its people.

As this article is being written, the final results of the second round of Presidential and Legislative elections are still being tabulated.

Regardless of who succeeds, the challenges are indisputable. A country must be rebuilt from the rubble, social systems redesigned, institutions strengthened and a plan of action executed.

Haiti has been in an uncomfortable state of limbo for the last year. The outgoing government was dealt a severe blow as the earthquake reduced its already limited capacity, and constitutionally-due elections made it difficult for the old administration to make longterm decisions.

A heavy political mandate therefore, rests squarely on the shoulders of the new President

MARCH 2011 | Business Journal

By Ambassador Albert Ramdin

and Administration. The demonstration of Haitian leadership is critical. Relevant and clear priorities must be identified. Realistic goals must be set and timelines established to achieve these goals.

Through their vote the Haitian people have compelled their new President to find the formula to stimulate economic growth and social progress. In a country of nine million artists, entrepreneurs, senior citizens and students, the new government must find creative ways of generating employment and realising potential.

As Haiti moves to rebuild its physical infrastructure and replace its tent cities with more permanent housing, new opportunities would arise for Haiti’s workforce. The new government must find ways of maximizing these opportunities through training and capacity building programmes.

It is my hope that the new President will also partner in a meaningful way with the international community to more effectively channel the aid flowing into Haiti. In this new period of planning, it is also my desire to see Haiti and CARICOM (Caribbean Community) develop creative new mechanisms to stimulate growth in Haiti’s textile and manufacturing industries.

Through their vote the Haitian people have compelled their new President to find the formula to stimulate economic growth and social progress.

Election day in Haiti Photos: OAS

Education will play a key role in taking Haiti forward. The new government should consider partnerships with international stakeholders, to ensure that more Haitain nationals are trained as teachers, more schools are constructed, and every child in Haiti in possession of basic school supplies.

In this way too, I hope that Haitian people will eventually have easier access to healthcare, in hospitals built by Haitian nationals, with medical care provided by Haitian nurses, medical technicians and doctors, all trained by their counterparts in the Americas.

Haiti’s new leader will also be charged with unifying a nation. The new President must find a way to be inclusive through dialogue with all stakeholders from the opposition to civil society, the private sector and the church. Stakeholders must be willing to put country first to facilitate cooperation and progress.

The new President of Haiti inherits a country of unique complexity. It is a place where opportunity and undeniable potential compete with instability and uncertainty.

As the new leader begins this difficult journey, he or she will know one thing: the people of Haiti are resilient and courageous.

They have survived more tragedy in the last two years than many in the western hemisphere will know in a lifetime. They will expect the same qualities in a President.

The International Community including the Organization of American States stands ready to support the new President of Haiti and the people of Haiti in this journey. The road ahead is long, but Haiti will not travel alone.

Ambassador Albert Ramdin is Assistant Secretary General of the Organisation of American States (OAS)

business journal | MARCH 2011

LATIN AMERICA:

Sustained but Slower Growth in 2011

T

he Latin America and Caribbean region has emerged from the global crisis well compared with its own past performance and the pace of recovery in other regions, says the World Bank’s latest Global Economic Prospects 2011.

After contracting by 2.2% in 2009, regional GDP is estimated to have expanded 5.7% in 2010, similar to the average growth recorded during the 2004-2007 boom years.

Growth is forecast to slow somewhat to around 4% in 2011 and 2012, largely because of a weaker external environment as growth in advanced economies and China moderates. Several countries in the region have been subject to potentially destabilizing capital inflows that have contributed to strong upward pressure on some currencies.

The report also notes that the world economy is moving from a post-crisis bounceback phase of the recovery to slower but still solid growth this year and next, with developing countries contributing almost half of global growth.

The World Bank estimates that global GDP, which expanded by 3.9% in 2010, will slow to 3.3% in 2011, before it reaches 3.6% in 2012. Developing countries are expected to grow 7% in 2010, 6% in 2011 and 6.1% in 2012. They will continue to outstrip growth in high-income countries, which is projected at 2.8% in 2010, 2.4% in 2011 and 2.7% in 2012.

In most developing countries, GDP has regained levels that would have prevailed had there been no boom-bust cycle.

MARCH 2011 | Business Journal

While steady growth is projected through 2012, the recovery in several economies in emerging Europe and Central Asia and in some high-income countries is tentative.

Without corrective domestic policies, high household debt and unemployment, and weak housing and banking sectors are likely to mute the recovery.

“On the upside, strong developing-country domestic demand growth is leading the world economy, yet persistent financial sector problems in some highincome countries are still a threat to growth and require urgent policy actions,” said Justin Yifu Lin, the World Bank’s chief economist and senior vice president for development economics.

Net international equity and bond flows to developing countries rose sharply in 2010, rising by 42% and 30% respectively, with nine countries receiving the bulk of the increase in inflows. Foreign direct investment to developing countries rose a more modest 16% in 2010, reaching US$410 billion after falling 40% in 2009. An important part of the rebound is due to rising South-South investments, particularly originating in Asia.

“The pickup in international capital flows reinforced the recovery in most developing countries,” said Hans Timmer, director of development prospects at the World Bank.

“However, heavy inflows to certain big middleincome economies may carry risks and threaten medium-term recovery, especially if currency values rise suddenly or if asset bubbles emerge.”

Most low-income countries saw trade gains in 2010 and, overall, their GDP rose 5.3% in 2010. This was supported by a pickup in commodity prices, and to a lesser extent in remittances and tourism. Their prospects are projected to strengthen even more, with growth of 6.5% in both 2011 and 2012, respectively.

According to the report, current relatively high food prices are having a mixed impact.

In many economies, dollar depreciation, improved local conditions, and rising prices for goods and services means that the real price of food has not risen as much as the U.S. dollar price of internationally traded food commodities.

“However, double-digit price increases of key staples in the past few months are pressuring households in countries with an already-existing high burden of poverty and malnutrition. And, if global food prices rise further along with other

key commodities, a repeat of the conditions in 2008 cannot be excluded,� cautioned Andrew Burns, manager of Global Macroeconomics in the World Bank’s Prospects Group.

East Asia and Pacific leads growth, with GDP growth estimated at 9.3% for 2010, the region has led the global recovery. This was on the back of an estimated 10% increase in Chinese GDP and a 35% increase in its imports.

Output growth in the rest of the region was also strong at 6.8%. Loose monetary policy in high-income countries boosted capital inflows, with the Thai and Indonesian equity markets up more than 40% since January 2010.

The inflows have appreciated regional currencies, despite offsetting measures like reserve accumulation and other adjustments. As the pace of the global recovery eases, GDP growth is projected to slow, but remain strong at 8% in 2011 and 7.8% in 2012.

business journal | MARCH 2011

ECONOMIC PROSPECTS FOR THE CARIBBEAN IN 20111

By Kelvin Sergeant

Introduction

W

hile the economic crisis of 2008-2009 was very severe on the Caribbean, some countries were able to withstand the shock better than others. A few of them, such as Guyana and Suriname, benefited from improved commodity prices, which helped to stimulate output, raise revenues and create better fiscal outcomes. The Economic Commission for Latin America and the Caribbean (ECLAC) publication Economic Survey of the Economies of the Caribbean 2009-2010 estimated that the cost of the crisis was some 13.2% of GDP on average despite considerable variation by country. By and large the Caribbean was unprepared for the economic downturn for a number of reasons: • • •

Many countries carried large fiscal and current account imbalances and large public debt burdens which made any fiscal stimuli impractical, and which helped to reduce the fiscal space and dampen fiscal spending even in the face of a recession; The private sector responded by consolidating their balance sheets and investing cautiously in an environment of uncertainty which resulted in a decline in credit to the private sector generally, Caribbean economies are strongly linked to the United States and Europe through a heavy concentration of trade, remittance flows and foreign direct investment, which is a significant part of their foreign exchange inflow. Due to the lack of diversification of exports and markets, the recession in the USA and Europe had a direct impact on the Caribbean especially through a decline in tourism receipts and capital inflows.

In light of these considerations, the recovery of the Caribbean is likely to be slow, and depends heavily in the medium term, on the recovery of the United States and Europe, and putting in place the necessary restructuring to create greater resilience to external shocks. For this reason, the global dimensions of the crisis will have considerable bearing on the Caribbean in terms of stimulating growth.

Global Prospects The global recession which intensified in 2009, especially among developed countries, began to abate in 2010. There is optimism from international agencies such as the International Monetary Fund (IMF) and the World Bank that the positive growth that occurred in 2010 will prevail in both developing and developed economies (See Table 1 below). The US economy expanded in the fourth quarter of 2010, largely supported by an appropriate mix of expansionary fiscal and monetary policies. In the UK, growth was recorded in the second and third quarters, but the economy contracted in the fourth quarter. Meanwhile the Euro zone area grew by 0.3% in the third quarter which was 0.7% lower than the previous quarter.

1 The material used in this feature article is taken from the Preliminary Overview of the Economies of the Caribbean: 2010-2011 published by the Economic Commission for Latin America and the Caribbean (UNECLAC).

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MARCH 2011 | Business Journal

Table 1: Actual and Projected Growth Rates 2009-2011 Actual

Projections

2009

2010

2011

World Output

-0.6

4.8

4.4

Advanced economies

-3.2

2.7

2.5

United States

-2.6

2.6

3.0

European Union

-4.1

1.7

1.5

2.5

7.1

6.5

1.7

5.7

4.3

Emerging and Developing Economies Latin America and the Caribbean

Source: IMF, World Economic Outlook, 2010 (October) and January 2011 The slowdown in the pace of growth among the European countries is partly associated with austerity measures which were implemented to rein in fiscal deficits and rising debt. In the case of the emerging economies, growth of 7.1% was led by China and India with growth rates of 10.9% and 7.6% in 2010, respectively. In the case of Latin America and the Caribbean, the growth rate is estimated at 5.7% for 2010, but for the Caribbean it will be lower than the average.

There is optimism for most economies for 2011 on the assumption that the world economy would have pulled out of the crisis. There are serious downside risks however, given the high debt burdens in Europe, and pressure for fiscal restraint and adjustment, being proffered by the IMF. Some have even argued (Weisbrot and Montecimo) that in light of the fiscal difficulties it is too soon to terminate the fiscal stimulus packages since the recovery of the advanced countries remain fragile.

In terms of Inflation, the international food crisis has already created inflationary spiral in many countries worldwide. But inflation in the region has been on the decline except for a few countries and monetary policy has been fairly loose in trying to reduce lending rates and reduce interest rate spreads. However private sector appetite for risk is still limited and excess liquidity prevails in most countries in the region. The inflation problem needs to be monitored in those countries that are showing inflationary tendencies as this may impact on poverty.

Recovery and unemployment in the Caribbean The prospects for growth in the Caribbean are better in 2010 and 2011 relative to 2009. However for a number of countries the recovery will be slow. The World Economic Outlook produced by the IMF forecasts a growth rate of 2.4% for the Caribbean as a whole, however this is likely to be difficult given the fiscal compression that are being employed; the lack of private sector expansion and reduced international and domestic demand.

Preliminary estimates for 2010 indicate that GDP contracted by 0.7%, compared to a contraction of 3.2% in 2009. Initial forecasts for 2011 indicate that growth should rebound to 1.9% on the assumption of more robust growth outcomes in the United States and the European Union (Table 2).

2 There is a large project currently in Bahamas to expand room capacity with Investment from China which will expand construction activities and create employment. business journal | MARCH 2011

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Some More Developed Countries (MDCs) in CARICOM may fare better than those in the Eastern Caribbean which depend largely on tourism receipts - due to the buoyancy of some primary commodity prices and a better fiscal balance. For example, growth in the Bahamas2, Barbados, Belize, Guyana and Suriname are all expected to perform better in 2011. But the IMF has warned that these countries may be in danger of meeting their targets due to overspending.

The economic conditions in Jamaica is the most challenging of all the MDCs given the limited fiscal space, and a IMF related fiscal consolidation program that points to compressing demand.

The estimates are that growth contracted by 0.9% in the first half of 2010, which suggests that growth will be no more that 0.8% in 2010. For 2011, growth is estimated at 1.0%. Ultimately, Jamaica’s positive performance in the short run will depend on the extent of recovery in tourism services, increased remittance inflows, and an increase in domestic investment coupled with capital inflows from abroad.

In the case of Trinidad and Tobago, growth in 2010 is estimated at 1.0% and 2.5% in 2011, driven largely by the energy sector.

Countries within the Eastern Caribbean Currency Area (ECCU)3, experienced greater difficulty because of their strong reliance on tourism services, financial services and the construction and related activities brought about as a complementary impact of tourism growth. Preliminary estimates for 2010 show a further contraction of 3.0%, albeit better than the contraction of 5.5% in 2009. The performance in most countries in the ECCU is expected to be better in 2011.

Table 2: GDP Growth Rate, 2007-2011 (Percentage; constant US$ at 2000 prices)

Antigua and Barbuda Bahamas Barbados Belize Dominica Grenada Guyana Jamaica Saint. Kitts and Nevis Saint. Vincent and the Grenadines Saint. Lucia Suriname Trinidad and Tobago

The Caribbean (13)

Latin America (16) South America Central America Mexico

Latin America and the Caribbean

2007 9.1 0.7 3.4 1.2 4.9 4.5 5.3 1.4 2.0

2008 0.2 -1.7 -0.2 3.8 3.5 0.9 3.0 -1.3 4.6

2009 -8.5 -4.2 -4.7 -0.5 -0.8 -6.8 2.3 -2.6 -8.0

2010e -6.7 0.5 -0.4 2.0 -0.7 -1.4 2.8 0.5 -7.0

2011f 0.1 2.3 2.0 2.3 1.9 2.2 3.0 1.0 -0.5

8.4

1.1

-2.8

-2.6

1.9

2.2 5.1 4.6

0.8 4.3 2.3

-3.8 2.0 -3.5

0.5 3.0 1.0

4.9 1.1 2.5

4.1

1.6

-3.2

-0.7

1.9

1.0 5.9 6.8 3.3

0.7 6.0 4.3 1.5

-0.4 0.2 -0.5 -6.6

0.3 5.3 3.3 5.0

0.9 7.8 2.8 3.0

5.1

2.4

-3.6

-0.4

2.8

Source: Economic Commission for Latin America and the Caribbean (ECLAC) on the basis of official figures

f = forecast e = preliminary estimates

3

Excluding Anguilla and Montserrat

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MARCH 2011 | Business Journal

Unemployment The decline in economic activity in the 2007-2009 period was also accompanied by increasing unemployment. Unfortunately, unemployment data are only available for a few countries and among these are Barbados, the Bahamas, Belize, Jamaica, Suriname and Trinidad and Tobago (see figure 1). As can be seen in Figure 1, the unemployment rate increased in all of these countries during the period 2007-2009.

In 2010 overall labour market conditions worsened as seen in Table 4. Unemployment increased in Barbados, Jamaica, and Trinidad and Tobago (countries for which 2010 data are available).

In Barbados the unemployment rate increased by 0.80 percentage points to 10.7%, year on year to June 2010. This captured the 35% decline in the number of persons employed in the construction and distributive trades during March to June 2010. The unemployment rate was much higher in Jamaica, increasing to 12.9% in June 2010 reflective of the 86,600 jobs that were lost between October 2008 and April 2010. In Trinidad and Tobago the level of unemployment increased 6.7% in March 2010, the highest level in three years, as total employment contracted by 24,700 persons from the first quarter of 2009 to the first quarter of 2010. The construction sector shed 13,300 jobs, followed by transport, storage and communication sector which recorded job losses of 5,500.

Figure 1: Unemployment Rate 2007-2009 Figure 1: Unemployment Rate 2007-2009 16

14

12

%

10

8

6

4

2

0 Bar

Bah

Bel

Jam 2007

2008

Sur

T&T

2009

Source: Economic Commission for Latin America and the Caribbean (ECLAC) on the basis of official figures.

Table 3: Unemployment Rates, 2006 – 2010 (Percentages) Countries Barbados Jamaica Trinidad & Tobago

2006

2007

2008

2009

2010 1

8.7

7.4

8.1

10.0

10.7

10.3

9.7

10.6

11.4

12.9

6.2

5.5

4.6

5.7

6.7

Source: Economic Commission for Latin America and the Caribbean (ECLAC) on the basis of official figures. business journal | MARCH 2011

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Conclusion The emergence of the world economic crisis exposed the structural fragility of Caribbean economies and forced many to seek external assistance from the IMF and other International Financial Institutions in order to adjust. Their weak fiscal situation, together with large public sector debt made the extension of their limited stimulus packages difficult.

The expectations for continued growth among emerging economies may not be borne out for the entire Caribbean given the need for these economies to begin a process of fiscal consolidation in the short run. Countries that are part of IMF agreements such as Jamaica and Antigua and Barbuda, have already begun this process of adjustment within the context of medium term programs. The upturn in tourism in 2010 will lead to improved performances in many small tourist-dependent economies in the ECCU while the increase in oil process will benefit Trinidad and Tobago. But there would be added costs to the rest of the Caribbean from the increased oil prices.

Unemployment has increased in most countries and job losses have been significant, especially in tourism related activities, construction and other service related sectors, including government services. Except for one or two countries, employment decline is directly tied to the decline in output due to weak international and domestic demand. There is therefore need for better social welfare programmes in these economies.

The greatest impact of the crisis was noted by the increased deficit in the current account of the balance of payments in 2008 and an adjustment in 2009 which, continued into 2010.

This is evidenced by falling imports and exports, but with imports falling more rapidly for some countries. This adjustment has had a severe impact on incomes and domestic demand and will eventually show up in increasing poverty and unemployment rates.

In the short term, the ability of the Caribbean to grow rapidly will depend on the performance of the United States and the European Union due to the heavy concentration of exports in these markets. Thus, while the regional market may offer some opportunity for absorbing exports, in the long run its small size is a limitation. Growth prospects will depend on increased diversification, including venturing into new or different areas such as Information Communication and Technology (ICT) and other service related sectors.

Kelvin Sergeant is an Economics Affairs Officer attached to the Economic Affairs Unit at ECLAC subregional Headquarters for the Caribbean in Trinidad and Tobago.

Grenada Assumes the Presidency of the OAS Permanent Council The Permanent Representative of Grenada to the Organization of American States (OAS), Ambassador Gillian Bristol has assumed the presidency of the permanent council of the 33-member states of the hemispheric organization.

Making reference to development and security, Ambassador Bristol said, “it is a happy coincidence that El Salvador has chosen the topic of citizens security for this year’s General Assembly because as we all know, in the Small Island States of the Caribbean we are very concerned about the multifaceted nature of the threats that are posed to the security for the integrity and stability of our nations�.

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MARCH 2011 | Business Journal

An amended version of a statement on the performance of the Caribbean economies in 2010 and the outlook for 2011 by Dr. Denny Lewis-Bynoe, Director of Economics at the Caribbean Development Bank.

Regional Economic Developments Overview In 2010, economic conditions in the Caribbean region remained depressed, even as the world economy rebounded from the 2008/09 recession.

While the global recovery has largely been driven by growth in developing and emerging economies, the recovery in the more advanced economies – the Region’s main source markets for tourism, investment and remittance flows – has been more muted.

Consequently, despite a resumption of growth in key sectors, aggregate output in most regional economies has been slow to recover.

Of CDB’s eighteen Borrowing Member Countries (BMCs), twelve recorded contractions and six recorded growth in 2010.

Among the twelve that contracted, the contractions were marginal in Barbados, Jamaica, Dominica and Trinidad and Tobago (under 1%), moderate in Grenada and St. Vincent and the Grenadines (1–3%) and ranged between -3.9% and -8.5% in Anguilla, Cayman Islands, Montserrat, Antigua and Barbuda, St. Kitts and Nevis and Haiti (in that order).

Dr. Denny Lewis-Bynoe

The six countries posting growth, ranging from 0.5% to 3.6%, were The Bahamas, St. Lucia, Turks and Caicos Islands, Belize, British Virgin Islands and Guyana.

The protracted weakness in economic activity has been reflected in severe labour market dislocation in terms of employment and wages, dampening domestic demand.

Resurgent international commodity prices have exacerbated these effects, pushing up import costs, with negative implications for the balance of payments and domestic prices.

Sluggish activity and rising cost pressures have also placed acute strain on public finances and worsened already-large debt overhangs, necessitating fiscal consolidation measures and limiting the scope for economic stimulus by regional governments.

Meanwhile, reduced economic activity and foreign inflows, together with the ongoing fallout from the CL Financial Group collapse, continue to dampen financial markets. Natural disasters have also had an adverse impact on economic conditions, most notably the earthquake that devastated Haiti on January 12th, as well as the destruction wrought by Hurricane Tomás in St. Lucia and St. Vincent and the Grenadines at the end of October. business journal | MARCH 2011

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Prospects The regional outlook for 2011 hinges mainly on external developments. In this regard, the fact that downside risks to the global outlook are still elevated and that the recovery is expected to remain somewhat asymmetric, with lingering weakness in advanced economies, is critical.

Taken together with the fact that the business cycles of regional economies tend to be highly correlated with those of advanced economies, especially key North American and European export markets, these factors imply modest recoveries for most economies in the region.

However, as with the global outlook, there is a high degree of uncertainty surrounding these expectations.

The nascent recovery in stay-over arrivals could be bolstered by attempts at market diversification to tap into the robust growth in emerging economies. For example, Barbados – a regional hub for the southern and eastern Caribbean – has facilitated the introduction of direct flights from Brazil.

The growing economic strength of emerging economies should also continue to be reflected in rising investment flows to the Region, such as planned Brazilian investments in Guyana. Indeed, the gradual resumption of foreign investment flows observed in 2010 is likely to pick up pace and further boost construction, in particular.

In addition, the agricultural sector should rebound strongly from the weather-related challenges of 2010, unless similar challenges arise in 2011. Inflation is set to increase further, as emerging economies continue to fuel global demand, pushing up international commodity prices, which should benefit both the agriculture and mining and quarrying sectors.

Nevertheless, based on past experience with economic shocks in the Region, job growth is likely to lag output growth and unemployment levels are therefore expected to remain elevated.

Apart from their inflationary impact, rising international commodity prices also have negative implications for regional import bills.

However, increased foreign exchange earnings associated with the anticipated growth in tourism and export production should have some offsetting effect. The expected increase in foreign investment, as well as remittance

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inflows, along with increased borrowings, should also have positive impacts on the overall balance of payments.

Activity in the financial sector should pick up in line with the projected recovery in output and improvement in foreign inflows.

However, with the expected lagged recovery in employment, a higher incidence of nonperforming loans may remain a feature of commercial banks’ loan portfolios, which will require strong risk-management on their part and close supervision by the authorities.

The authorities are also expected to further strengthen supervisory and regulatory frameworks related to the non-bank financial sector and continue to collaborate on plans to resolve the CL Financial Group issue with minimal fiscal impact.

The expected return to growth, as well as the introduction or upward adjustments of ad valorem taxes in various territories, should have positive effects on fiscal revenues. Cutbacks in capital expenditure are likely to continue, in accordance with budget commitments, and with a view to reducing debt levels to meet strategic fiscal targets or satisfy borrowing guidelines.

However, given the impact of rising prices on expenditure, together with the unavoidable costs associated with hurricane rehabilitation, fiscal consolidation will remain a serious challenge for most regional economies.

As a result, with the exception of a few countries, deficits are likely to widen further and debt levels are expected to continue to rise, unless greater efforts are made to control expenditure (particularly current expenditure), optimise the composition and size of PSIPs and improve debt management than are currently envisaged in countries’ fiscal strategies.

Trinidad and Tobago’s Prime Minister Highlights Challenges of Democracy to Women’s Equality

The Prime Minister of Trinidad and Tobago, Kamla Persad-Bissessar highlighted the existing challenges of the democratic system to equality of women in Latin America and the Caribbean during a keynote lecture at the recently-held First Hemispheric Forum organized by the Inter-American Commission of Women (CIM) of the OAS, UN Women and the IberoAmerican General Secretariat.

She emphasized that the underrepresentation of women in decision-making mechanisms must be addressed “if we truly yearn for that level of democracy which will support and sustain the true economic and social well-being of our peoples.”

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Column Turmoil in North America and the Middle East: Latin American Contagion?

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ome countries in North Africa and the Middle East are on a slippery slope. Unprecedented popular uprisings have rocked a number of countries -- Tunisia, Egypt, Libya, Syria, Yemen and Bahrain. The scale of the revolts have startled even some of the most perceptive analysts and prompted discussions about the possibility of similar uprisings in Latin America. But circumstances vary and it is by no means clear that such contagion is likely.

Starting with Tunisia’s so-called January 14 “Jasmine Revolution” street demonstrators refused to be silenced and eventually the presidents of Tunisia and Egypt were driven from power. As of this writing, Libya is still in civil war. The uprising that began in February against Colonel Gadhafi’s 42-year rule has reached a stalemate, with the control of a series of towns along one stretch of Mediterranean coastline changing hands multiple times between the two sides.

Though the regime’s forces are larger and more powerful, they have been unable to decisively defeat a poorly equipped and badly organized rebel force consisting of defected army units and armed civilians (backed by NATO air strikes). The rebels were able to retake the strategic oil town of Brega, but have been unable to advance toward the capital, Tripoli.

In Syria the Cabinet has resigned amid a wave of popular uprisings that have threatened President Bashar Assad’s 11-year rule in one of the most strategically important but authoritarian countries in the Middle East.

Assad, whose family has controlled Syria with an iron hand for four decades, is trying to calm the growing dissent with a string of concessions.

Many in Syria see him as a young, dynamic leader credited with opening up the economy.

But he may no longer be in Vogue. The violence has brought sectarian tensions into the open 18

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for the first time in decades. The country’s Sunni majority is ruled by minority Alawites, a branch of Shiite Islam.

In Yemen, pro-democracy protests have been going on for months. Using “non violent” tactics such as sit-ins and civil disobedience, the opposition, with its plan for a peaceful transition of power, is steadfast in its objective to remove President Ali Abdullah Saleh.

The pro-democracy movement has refused his offer of amnesty to military and government dissenters and there is an emerging countermovement supporting Saleh that has engaged in violence with the state security forces. The outcome has international significance since Saleh is one of the frontline allies of the U.S. in its proxy war against Al Queda.

In the island nation of Bahrain, an uprising against the Sunni al-Khalifa ruling dynasty stoked by the Shia majority faces a struggle to regain momentum following a violent government crackdown (bolstered by Saudi Arabian troops) and the arrest of key leaders and activists. Bahrain’s opposition has moderated its demands (including resignation of the Cabinet and a re-writing of the Constitution) in order to try to end the political crisis.

Although causes are hard to pinpoint in the heat of these various crises, the uprisings in the four countries have been prompted by broadly similar circumstances: high unemployment rates among the young and educated where economic advancement seems unrelated to talent or hard work, growing gaps between rich and poor, suppression of free speech, closed political systems, repression of the opposition, widespread corruption among those close to the regime, domination by a monarchy or a political elite who have clearly overstayed their terms in office, and continuing autocratic control behind a veneer of democratic openings.

Notably, in all of these uprisings, technology widespread about Cuba, Bolivia, Nicaragua, and is playing an important role as activists have Venezuela.

In Cuba the Castro brothers have used Twitter and Facebook to mobilize street demonstrations and warn of police tactics. In governed for more than five decades. The addition, reporters from the Arabic news channel economy is still not viable, while political Al Jazeera, have sent freedom and the ability out regular stories from to express dissent within the ranks of the remains constrained. demonstrators with Yet the regime is not in dynamic effect on the danger of falling! But region’s public. Efforts what if today’s personal to shut down these communications electronic avenues have and social networks not yet succeeded. were to penetrate

Writing in Cuba’s blockade on the current issue information sharing? of Foreign Affairs, One can speculate Robert H. Pelletreau about the outcome.

Fidel Castro (left) and Raul Castro (right) an experienced former Would Raúl Castro’s career diplomat (who “totalitarian-lite” served in nine Arab governance model countries and was be able to suppress U.S. Ambassador sustained dissent successively to Tunisia, or rebellion without Egypt and Bahrain terrible loss of life?

In Bolivia, during the 1980s and 1990s,) notes that President Evo Morales in trying to pinpoint was elected president the causes of revolt in 2005 and reelected observers should be in 2009. He has moved aware that there are also to strengthen state significant differences control over gas and Hugo Chávez in the internal political oil production and dynamics of each distribute benefits to country, and in the relationship between its the poor. Bolivia’s poverty rate has declined, government and its citizenry and military. but some 80 percent of workers reportedly

The dynasties of Tunisia and Bahrain did have no formal jobs. The military ranks have not appear weak but the internal cracks were been stripped of officers who might challenge more fundamental than imagined. Egyptians him. Protests against recently attempted were moved by the media and social network reductions in fuel and food subsidies have coverage of Tunisians’ success in ousting resulted in flash points that reflect growing their dictator. The Egyptian regime could not public disenchantment.

In Nicaragua in 2009, Daniel Ortega was have been expected to collapse as easily as Tunisia’s had, and indeed, it did not. Egypt is exempted by partisan supreme court judges now undergoing two transitions: the first from from a constitutional ban on serving more than Mubarak to a more inclusive government; the two terms as president, and he has registered second from direct military rule to a diluted to run for a third term in 2011. He has been but still powerful military influence in Egyptian able to consolidate his party’s control over most affairs. government institutions. His regime claims that

In the world press, speculation has been it has been able to reduce poverty through social rife about which countries will be next in the line programs financed by Venezuelan oil. Still one of fire. What are the possibilities for contagion man rule and economic mismanagement and in Latin America?

Speculation has been corruption could erode his support base.

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Venezuela’s Hugo Chávez has been in office 12 years, elected by popular vote in 1998.

Chávez rewrote the constitution to permit reelection and later won changes to eliminate term limits and permit him to rule by decree. He took control of the nation’s lucrative petroleum industry, directed revenues to the poor through subsidies and handouts and created a new class of “Bolivarian” capitalists.

His government has seized hundreds of businesses, nationalized the telecommunications and electricity-production sectors, shut down or censored private media outlets, and undermined foreign investor confidence in Venezuela’s system of contracts and property rights. Inflation, food rationing, power shortages, and high crime rates have become features of daily life. Yet, even while popular discontent grows, Chávez still enjoys good support among Venezuelans who have benefitted from his social programs.

As Libya slid into civil war, Chávez was uncharacteristically quiet; but in recent weeks he has venerated his ally Gaddafi for his revolutionary credentials and zeal and asserted that the U.S. will invade Libya to seize its oil.

He also tried to put together a peace mission to end the conflict. In the meantime the Venezuelan government is benefitting from the Middle East drama. Oil prices are rising and the crisis has temporarily distracted international scrutiny away from Chávez’ own authoritarian practices.

...unlike North America and the Middle East, religious or tribal divisions are almost non-existent in Latin America.

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Evo Morales

Gaddafi’s brutal crackdown on Libyan citizens has startled public and government nerves in Latin America - a region that has had its own historic share of military and authoritarian governments. Peru was the first to break off diplomatic relations with Libya and call for the implementation of a no-fly zone.

Strategically, Bolivian President Evo Morales, faced with protests over food shortages and rising prices, has been more restrained than Chávez in his support of Qaddafi. But Gaddafi’s friends in Latin America are still rooting for him. By supporting Gaddafi, presidents Chávez, Morales and Ortega are swimming against the tide because the bulk of public opinion in Latin America is in solidarity with opposition forces in Libya and with the people’s movements in Tunisia, Egypt and elsewhere. Such are the dilemmas that can be attributed to conflicting loyalties which have their origins in geopolitical complexities.

The bottom line is that unlike North America and the Middle East, religious or tribal divisions are almost non-existent in Latin America. In a majority of countries democracy - even if fragile - is still the norm! Economic growth in most countries in the region is good.

Moreover, Chile, Colombia, El Salvador and the Dominican Republic are strong examples of states that have emerged from dictatorships and become strong democracies.

While there is no basis for assuming that the dramatic events in the Arab world could be replicated in the Americas, the leaders of Cuba, Bolivia, Nicaragua and Venezuela can hardly take comfort from the wave of protests

in North Africa and the Middle East. As current events demonstrate, the economic distress, autocratic rule, and attempts to cling to power that increasingly mark those countries today are not a long term winning formula anywhere.

Finally, the ill-advised intervention in Libya, by the U.S. and NATO is not so far about oil. Libya accounts for only 2 percent of world oil production. The coalition partners have defended their aerial intervention as “humanitarian” though the scale of the humanitarian crisis is not unique. Unfortunalely, by becoming involved in Libya’s civil war and insisting on Gaddafi’s removal and a regime change toward “democracy”, the Obama administration is sealing his fate while simultaneously denying

itself of any diplomatic corridors for an exit strategy from Libya.

While the struggle over oil can eventually be a decisive element in current Middle East geopolitics, it is less so in the Americas. If any lessons are learned, some Latin American governments and others elsewhere will be obliged to pay more attention to public opinion, be more responsive to citizens’ aspirations in particular those of the young and educated, and allow greater participation in national decisionmaking. In sum, while we have witnessed rebel advances to the shores of Tripoli, it is unlikely that there will be any contagion on the oil soaked shores of Lake Maracaibo!

CHINA/CARIBBEAN ECONOMIC AND TRADE CO-OPERATION FORUM

Trinidad and Tobago and China will co-host the third China/Caribbean Economic and Trade Cooperation Forum in mid-September.

This was one of the areas of discussion between Trinidad and Tobago’s Minister of Trade and Industry, Stephen Cadiz and China’s Assistant Minister, Ministry of Commerce, Li Rongcan when they met in the Caribbean country recently.

Minister Li headed a delegation to discuss a range of economic co-operation issues with particular emphasis on the Economic Forum whose theme is “Co-operation, Development and Win/Win.” The Forum was held in Jamaica in 2005 and in China in 2007.

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TOURISM AND CARIBBEAN DEVELOPMENT Following is an abridged version of a speech delivered by Ambassador Lolita Applewhaite, acting Secretary-General of the Caribbean Community (CARICOM) at the Annual Caribbean Tourism Summit in Brussels earlier March.

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ourism is important to the economies of the Caribbean and has been one of the major economic development drivers providing investment, employment and foreign exchange earnings for most of the Members of the Caribbean Community. Furthermore, while most of our countries experience a deficit in trade in goods; this is offset by a surplus in trade in services, fuelled mainly by receipts from tourism and travel-related activities.

During 20082009, for example, the deficit in trade in goods averaged 3.1 billion Euros.

In that same period, the surplus generated from tourism and travel related activities averaged 2.5 billion Euros.

In the wider context, the tourism industry accounts for 12.8 per cent of the Caribbean’s GDP, making it the most tourism-dependent region in the world. That dependence is manifested in the negative impact on our tourism arrivals that inevitably occurs in the wake of major global upheavals. Thus, the initial turnaround of the tourism sector after the ripple effect of the global economic and financial crisis could now be threatened by the current volatility of oil prices, spawned by the unrest in the Middle East.

These upheavals, which ultimately drive up the cost of travel, threaten the very existence of our tourism-based economies, since many other fuel-based operating costs will also be increased.

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Caribbean tourism employs more than 2.1 million people directly and indirectly, with the figure rising in some of our countries to as much as 25 per cent of the workforce. This makes tourism the biggest employer after the public sector.

The World Travel and Tourism Council has predicted that by 2021, the direct contribution of travel and tourism to Caribbean GDP will be 16.4bn Euros; its wider economic impact will be 50.83 billion Euros; and its total contribution to employment is projected to be 2.76 million jobs. The industry is also forecast to generate 27.17 billion Euros in export earnings with total investment in tourism reaching 6.o billion Euros or 12.5 per cent of total investment.

Tourism in the Caribbean provides opportunity in many areas, including enhanced capacity to address unemployment, and rural poverty reduction, for example, through sport, culture and heritage tourism. There is also significant opportunity to be derived from downstream activities of time-specific events, such as Carnival and jazz festivals, as well as cultural art forms, such as reggae and the steelpan.

We need to find ways to support people who are involved directly or indirectly in the sector – be they Caribbean entrepreneurs or community-based groups –in order to enable them to take advantage of the opportunity to deliver new and exciting tourism-related

services that will not only offer more choice to the consumer, but also ensure that local communities share more equitably in the wealth that tourism brings.

For the development of tourism goes beyond tax receipts. Tourism has the capacity to play an enormous transformative role in our societies and our economies, creating new entrepreneurs in the industry as well as in other sectors. This requires human resource development through innovative education and training programmes. It also requires specific financial and other facilities to be developed to support the growth of new business.

While tourism undoubtedly offers great opportunity, it is a highly competitive industry.

Our entrepreneurs therefore need to respond creatively not only to new and emerging tourist centres, but also to provide innovative products for traditional markets.

Today, our countries are paying greater attention to strengthening linkages between tourism and other sectors of the economy, such as, agriculture, health, education, sports, culture and the natural environment.

For Caribbean tourism to become even more competitive, investments in the industry must be increased. We will continue to seek private sector foreign direct investments in the industry, including from our European partners.

We will continue to seek, equally, to provide access to financing on reasonable terms for the industry.

The public sector will continue to facilitate investments, marketing and other initiatives necessary for the survival, growth and expansion of the industry. It is only through continuous retooling, expansion, modernisation and adjustments that the Region’s tourism industry will remain competitive.

In that regard we will continue and intensify our quest for development finance, including through, Aid for Trade from our international development partners, to provide support for the industry.

David Dodwell – Hotelier of the Year David Dodwell, owner of two widely acclaimed resorts, The Reefs Hotel & Club in Bermuda and Nisbet Plantation Beach Club on Nevis, has been recognized as the 2010 “Caribbean Hotelier of the Year.”

Mr. Dodwell was honored with the award at Caribbean Marketplace 2011 hosted at the new Montego Bay Convention Centre in Montego Bay, Jamaica. The Caribbean Hotelier of the Year Award is co-sponsored by the Caribbean Hotel and Tourism Association (CHTA) and Ypartnership.

David Dowell (centre) flanked by Jamie Holmes, Nisbet Plantation’s General Manager (left) and the Nevis Tourism Authority CEO John Hanley (right).

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Industry Expects 800 Million More Travelers by 2014 China IS Biggest Contributor

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he industry consensus forecast released by the International Air Transport Association (IATA) indicates that by 2014 there will be 3.3 billion air travellers, up by 800 million from the 2.5 billion in 2009.

By 2014 international aviation will handle 38 million tonnes of air cargo, up 12.5 million tonnes from the 26 million tonnes carried in 2009.

China will be the biggest contributor of new travellers. Of the 800 million new travellers expected in 2014, 360 million (45%) will travel on Asia Pacific routes and of those 214 million will be associated with China (181 million domestic and 33 million international). The United States will remain the largest single country market for domestic passengers (671 million) and international passengers (215 million).

“Despite some regional differences, the forecast indicates that the world will continue to become more mobile. This creates enormous opportunities but also presents some challenges. In five years we need to be able to handle 800 million more passengers and 12.5 million more tonnes of international cargo. To realize the economic growth potential that this will bring, we will need even more efficient air traffic management, airport facilities and security programs. Industry and governments will be challenged to work together even more closely,” said Giovanni Bisignani, IATA’s Director General and CEO.

“The shadow of the global economic recession is expected to remain over parts of the industry for some time to come. Sluggish growth rates in Europe and North America are not only the result of being mature markets.

Lingering consumer debts, high unemployment and austerity measures will dampen growth rates,” said Mr. Bisignani.

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Forecast Highlights: passenger numbers are • International expected to rise from 952 million in 2009 to 1.3 billion passengers in 2014. This 313 million traveler increase reflects a compound annual growth rate (CAGR) of 5.9%.

• The fastest growing markets for international passenger traffic will be China (10.8%), the United Arab Emirates (10.2%), Vietnam (10.2%), Malaysia (10.1%) and Sri Lanka (9.5%).

• By 2014, the top five countries for international travel measured by number of passengers will be the United States (at 215 million, an increase of 45 million), the United Kingdom (at 198 million with an increase of 33 million), Germany (at 163 million with an increase of 29 million), Spain (123 million with an increase of 21 million), and France (111 million with an increase of 21 million).

• Domestic passenger numbers are expected to rise from 1.5 billion in 2009 to over 2 billion in 2014. This 488 million passenger increase reflects a CAGR of 5.7%.

• China will record the highest CAGR of 13.9% and contribute an additional 181 million passengers. Other countries with double digit growth include Vietnam (10.9%), South Africa (10.6%), India (10.5%), and the Philippines (10.2%).

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By 2014 the five largest markets for domestic passengers will be the United States (671 million), China (379 million), Japan (102 million), Brazil (90 million) and India (69 million).

International freight volumes are expected to grow at a CAGR of 8.2% over the forecast period. Excluding the impact of the rapid post recession rebound in 2010, for the 2011-2014 period, the consensus view for air freight is that it will stabilize at 5% CAGR. This is slightly below the forecast growth in world trade (6%) suggesting a still conservative outlook after the recession shock and possibly some loss of market share to sea shipping.

The top five fastest growing international freight markets over 2009-2014 will be Hong Kong (12.3%), China (11.7%), Vietnam (11.4%), Chinese Taipei (11.3%), Russian Federation (11.0%).

By 2014, the largest international freight markets will be the US (8.8 million tonnes), Hong Kong (5.4 million tonnes), Germany (4.4 million tonnes), Japan (4.4 million tonnes) and China (3.8 million tonnes).

The volume growth expected in China and Hong Kong will account for a third of global volume growth over the period to 2014.

Regional Outlook over the 2009-2014 forecast period Pacific’s International passenger • Asia demand is expected to grow 7.6%. By 2014, China, Japan and Hong Kong will be the biggest international passenger markets in the region, with China being the largest international and domestic market in Asia.

The region will see the highest growth rate for international freight at 9.8% with Hong Kong, Japan, China, South Korea, and Chinese Taipei comprising the region’s top five markets.

• The Middle East is expected to have the fastest growth rate at 9.4%. The UAE, Kuwait, Jordan will be among the top 10 fastest growing countries, with the UAE ranked 7th for international passengers at 82.3 million. International freight demand will grow 8.1% as freight links to and via the region continue to develop. The UAE will lead the region, handling 2.7 million tonnes of cargo.

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Africa is expected to see international passenger growth of 7.7%, the second highest of the regions. International cargo demand is expected to be 5.8%, the lowest among the regions.

Europe: Europe will see international passenger demand growth of 4.7%. The United Kingdom, Germany, Spain, France and Italy will remain among the top ten largest international passenger markets.

International freight demand for the region will grow 6.5%, with Germany, the UK and the Netherlands leading the region in size.

The Russian Federation will see the fastest growth rate of 11%.

Latin America will see international passenger demand grow 5.7%. International freight demand will increase 6.4%, with Peru leading the region freight growth at 9%.

North America will grow 4.9% for international passenger demand and 7.6% for international freight. The US will continue to be the largest international and domestic passenger market in the world, and is expected to remain the largest international freight market by some margin.

“The focus of the industry continues to shift eastward. By 2014, 1 billion people will travel by air in Asia Pacific. That’s 30% of the global total and a 4 percentage point increase from the 26% it represented in 2009. The same is true for cargo where Asia Pacific will account for 28% of global volumes,” said Mr. Bisignani.

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Column Enhancing South-South & Triangular Cooperation: an ACP Perspective Extracts from Opening Remarks at a Symposium convened by the African, Caribbean & Pacific (ACP) Group of States and the Organisation Internationale de la Francophonie (OIF). Brussels, 31 January 2011

Dr P .I. Gomes, Ambassador of the Republic of Guyana and Chairman of the ACP Committee of Ambassadors highlights the issue of closer and more effective cooperation among the Member States of the ACP Group and with other developing countries as deserving greater attention in the planning and allocation of official development assistance (ODA) with a view to achieving the abolition of poverty in developing countries.

Background

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he Symposium, recently convened by the African, Caribbean and Pacific (ACP) Group was designed as “a marketplace for an exchange of views”- to share experiences and thereby enrich, expand and deepen the value of the social-cultural capital, the lived experience and time-honoured practice that the ACP had acquired and assimilated over more than three decades in their engagement with the European Union and multilateral agencies in the area of international development assistance.

At the outset, some historical background can help to set the stage for moving beyond conventional donor-recipient relations of North-South Cooperation between “rich and poor nations” to what are more horizontal engagements among and between developing countries of the South.

The accumulated experience and expertise within the 79 Member States of the ACP Group ought to be periodically and systematically reflected upon to provide an intellectual platform on which to energise a process with new partners and innovative thinking that can bring developing countries in general, and particularly ACP member States 26

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closer to the goals so clearly stated in the founding document, the Constitution, as it were of the ACP Group of States- the Georgetown Agreement.

As presented in that Agreement of June 1975, the then countries of Africa, the Caribbean and Pacific unequivocally set themselves the overriding task to eradicate poverty from the lives of their citizens. That was in 1975, some 25 years before the Millennium Development Declaration and its eight MDGs. The 46 African, Caribbean and Pacific States with the 9 Member States of the European Economic Community (EEC) had four months earlier signed the first “Lome ACP-EEC Convention” for a five-year period.

ACP’s Global Commitment: solidarity and poverty eradication From its inauguration, as stated in the Preamble of the Georgetown Agreement, the ACP Group while

“DETERMINED to ensure that the ACPEC Partnership Agreements contribute to the realization of the common aspirations of developing countries, to self-reliant, endogenous and self-sustained development based on their systems of cultural and social values; COGNISANT of the need to maintain and expand multifaceted relations with other States, groups of States and international organizations;

and RECOGNISING the importance of solidarity and unity in cooperation among the ACP States; and while DESIROUS of enhancing the political identity of the ACP Group to enable them to act and speak with a single voice in all international fora and organizations”, they fully realised that a primary objective would

Delegates at the ACP/OIF Symposium.

be to transform the relations of dependency associated with “aid” from the rich to the “poor” by ensuring ownership of development policy grounded in the optimum value of the cultural, natural and human resources with which their societies were endowed.

These unambiguous and visionary convictions have been the basis and rationale on which some 36 years of consistent engagement by the ACP in its partnership with the European Union constituted an exceptional and unique process of North-South Development Cooperation.

Accompanying this “vertical” experience, there has been a less formally structured but invaluable exchange of knowledge, expertise and technology in various forms of South-South Cooperation.

Cuba in medicine and health services, Nigeria in engineering and technology are cases that readily come to mind as much as the worldrenowned information and communication technology shared by India in almost every ACP country.

Recently, therefore it was no surprise that when celebrating the 35th Anniversary of the ACP Group with the theme: “Regional Integration and Good Governance”, the exciting exchanges of that occasion recognised the need for the highly valuable experience of the ACP Group to be utilised to explore and enrich prospective areas of South-South and Triangular Cooperation in which the ACP might play a leading role.

Photo: ACP Press and Communication

This is a task the ACP has embarked upon, fully cognizant of the vision and expectations of the founding Member States.

But deeply conscious that increasing numbers of citizens of the developing world remain embedded in persistent poverty recently intensified by the impact of multiple crises of food, fuel and financial speculation originating in the “developed” North. The history of “aid” programmes from the reconstruction of Europe, after World War II, through the “development decades” of the last century remains of dubious value in the structural transformation of developing economies, save for few exceptions and failed to rely significantly on the indigenous knowledge, culture, innovation and experience of the South.

Aid Effectiveness, Development Assistance and Cooperation In the 2005 Paris Declaration on Aid Effectiveness, attempts to correct the narrow conception and incoherent practice of “aid” gave rise to emphasis on the shared responsibility by both developed and developing countries in the management of “development assistance”. Five principles were adopted: ownership; alignment; harmonization; managing for results; and mutual accountability.

Taken as mutually reinforcing elements for a systemic approach to development financing, these are useful and the ACP has taken due account of their value in the business journal | MARCH 2011

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Photo: ACP Press and Communication

programming of resources under the European Development Fund (EDF), especially for IntraACP programmes.

Similarly, the Accra Agenda for Action (AAA) arising from the 3rd High Level Forum on Aid Effectiveness in Ghana in 2008, marked another effort of developed and developing countries together to reform and increase the value and impact of traditional “development assistance.” In the AAA the important role of emerging economies, global funds and civil society enabled the policy space for innovative use of experience from countries of the South and to erase a neocolonial, patronizing arrogance long associated with donorbeneficiary practice.

The current initiative of the ACP Group to actively engage in South-South Cooperation as a critical instrument for poverty eradication is both a logical outcome and moral duty rooted in the founding principles of the Georgetown Agreement.

Ours is a modest but determined approach to make a difference and this is so because there has been considerable attention and concern on how to deepen and widen the scope of our contribution to the global debate, progressive thinking and practice for “self-reliant, endogenous and self-sustained development.”

Much in-house reflection has been ongoing on development financing with our traditional partnership in the Cotonou-based approach utilizing multi-annual Financial Perspectives for Cooperation with Europe. This process has been enlarged by the participation of the India, Brazil and South Africa (IBSA) countries in today’s Symposium.

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The experience of those countries and possibly their technical assistance will contribute enormously as the ACP in our Annual Action Plan (2011) formulates effective management systems for 340mn Euros in the Intra-ACP 10th EDF allocation.

“Ownership” and “mutual accountability” will be effectively translated into substantial support for the Global Fund for Aids, Tuberculosis & Malaria (GFATM), Science & Technology, Agriculture Policy and Food security linked to NEPAD of the African Union, an Energy Facility, Climate Change, the Film & audio visual sector and SMEs to name a few.

The ACP brings a distinct comparative advantage to South-South Cooperation from the more than three decades of the extremely valuable North-South Development Cooperation experience with the European Union.

This rests on principles of comanagement, structured authorizing modalities and now parliamentary oversight with emphasis on principles of subsidiarity, timely and targeted delivery of assistance for a coherent and cumulative impact at country, regional and intra-ACP levels.

Clearly stated in principle, these have not been sufficiently observed in practice but we must hope that with an enlarged partnership our countries will be better served.

Today is an historic moment for the ACP as we embark on enriching cooperation between countries, organizations and institutions of the South and seek a convergence for the North and South in Triangular relations between and among institutions and agencies in a central nucleus.

In this regard, our intentions already have been put into practice by the invaluable collaboration and financial assistance the International Organisation of the Francophonie (OIF) has given to the ACP Group, without which this and many related activities would not have been achieved. To the OIF, the ACP expresses deep appreciation as we offer experience, expertise, organizational structures and an open mind to join forces in the abolition of global poverty.

Perspectives Some build up ... some cut down

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mbition plus fair and honest competition are very useful in one’s journey up the ladder of success. But have you noticed how some people believe that the only way to move forward is by holding others back?

Instead of endeavouring to hone their own skills, they would rather blunt the other person’s blade. Perhaps we could name such people M.O.W.E.R.s (Moving Ahead With Extreme Ruthlessness).

Their planning is geared towards finding ways of denigrating the opponent, making the public feel that the competition is incompetent, and cruel. Even if their competitors produce something of worth the MOWERs will find a convoluted way of illustrating an imagined hidden agenda.

Who are these MOWERs? They are everywhere; in fact if we look closely we can often see a little MOWER inside ourselves.

By trying to make others look bad in order that we should appear good, could well be an indication of our shallowness. By extension, whatever we have to offer would also likely be superficial.

Appreciating the good that others do goes a long way in the development of mutual trust. It is so easy to take everyday occurrences for granted that we no longer recognise their importance. This can be observed in the political arena, in work place and even in the home. In the world of business this behaviour surfaces often not only between competitors, but also within individual companies.

Picture the following scenario. Mr. Smith is troubled by the youth, vitality and creativity of Mr. Jones. He is fearful of the sharpness and innovation shown by Jones.

Instead of retraining and grooming himself to be up to date and more efficient, he chooses to step on Jones’ foot.

Jones cannot move forward any longer, but it is also clear that in order to maintain Jones’ stagnation, Smith has also to remain on the same spot mashing the foot of Jones. What we have here is a clear case of stalemate.

To impede the progress of Jones, Smith has to sacrifice his own growth. If he raises his foot he knows that Jones will race ahead.

Maybe Smith’s basic difficulty is insecurity. Because he has an underdeveloped or inaccurate selfimage he is in constant fear of being toppled from his position. He cannot afford to let the bosses, or the public, develop too much affinity with Jones for then they may forget him. If Smith experienced greater security both men could share the best of what they have. Smith could share the wisdom of his experience and Jones could infuse Smith with new ideas and methods.

There are many people like Smith who feel threatened by what they perceive as competition, regardless of its origin. They refuse to co-operate in case the competition learns too much, even if the competitor is on their own team.

Maybe there is truth in the often held view within spiritual circles that the ills within the world and within our homes are due to the ills within ourselves. Many of the problems facing us are of our own making and require a change of perspective; a vision of development that spans more than the four or five years of a political term in office and the understanding that personal greed leads to national need. When the nation is in need ill gotten wealth loses its value.

Some may label such thinking as naive and idealistic. Well that may be so, but surely we have to start somewhere. We can choose to be GROWERs or MOWERs.

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Guest Commentary

ENERGY: Price and Supply

By Dr. Raymond M. Wright

E

nergy prices will be a critical component of the parameters involved in the economic growth of all countries. It is critical to both the countries that provide energy as well as those that are dependent on imported energy. We will discuss briefly the price trends in conventional and unconventional fuels over the short and medium term.

COAL Coal has been regarded as having extensive reserves at relatively low cost. Whereas the reserves of coal will continue for many decades the price is expected to increase with consumption rates. Take coking coal for example. In February 2011 the price of coking coal was approximately US$2.10 per tonne. It is expected that this will rise to US$2.50 per tonne by year end. This is because of strong demand in China, Brazil and India.

India’s reserves of coking coal are of poor quality and much of it has to be imported.

China’s demand continues to increase in tandem with their manufacturing expansion.

In a recent article in Nature, Lawrence Berkeley National Laboratory scientist David Fridley argued that coal prices around the world will likely escalate in coming years, due partly to increasing demand from China, and that energy policies relying on the conventional wisdom of plentiful cheap coal need to be reconsidered.

(Nature, November 18th 2010)

Published as a comment titled “The End of Cheap Coal” in an issue of Nature, Fridley and co-author Richard Heinberg state, “The inevitable result of increasing demand and dwindling supply will be a rise in coal prices globally, even in countries that are currently self-sufficient in the resource.” One of the problems is the poor quality of data on coal reserves which affect accuracy with regards to global reserves. Most of the research studies are decades old and need to be updated.

Figure 1 shows the global total of world reserves. It indicates that the USA has the largest reserves and is the largest producer followed by Russia, China and Australia.

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Figure 1: World coal reserves

Source: 2010 Survey of Energy Resources (World energy Council)

Coal continues to be the fastest-growing energy source worldwide particularly in Asia.

For instance, since 2008 China has moved from being a net exporter of coal to being a net importer.China estimates that it has approximately 62 years of reserves and the USA approximately 200 years. However these figures imply the present rate of consumption which is likely to rise rapidly with economic growth.

Another area affected by lower-thanassumed coal reserves is a technology known as Carbon Capture and Storage, or CCS, which aims to reduce greenhouse gas emissions by capturing the carbon dioxide emitted from power plants and other polluting sources and sequestering it underground. Some emissions projections are already assuming reductions based on deployment of CCS over the next couple of decades.

“Clean coal” technologies aim at resolving environmental concerns, including that of global warming due to carbon dioxide releases to the atmosphere.

This includes, amongst others: • coal cleaning by ‘washing’ which reduces emissions of ash and sulfur dioxide when the coal is burned; • electrostatic precipitators and fabric filters for removing fly ash from the flue gases; • flue gas desulphurization (FGD) for reducing emission of sulfur dioxide; • use of Low-NOx burners to reduce nitrogen oxide emissions; • increasing efficiency of plant to reduce emissions per kwh; • advanced technologies such as Integrated Gasification Combined Cycle (IGCC) and Pressurized Fluidized Bed Combustion (PFBC) for increasing thermal efficiencies; • ultra-clean coal (UCC) such as Gasification, including underground coal gasification (UCG) in situ, for reducing ash and sulfur.

However, those projections and plans for CCS are also based on abundant cheap coal. In fact, Fridley points out, because CCS can be costly and inefficient—even with improvements in the technology, it will be very expensive to scale up because of the need to build large amounts of infrastructure to transport the CO2—it may not be economically practical to deploy given that coal will no longer be cheap. “It really calls into question the viability of assuming huge amounts of CCS being a major climate mitigation option in the future,” Fridley says. “It would likely make more sense to go straight to renewable energy sources.” CCS has yet to be successfully deployed on a commercial scale.

World coal reserves, amount to some 860 billion tonnes, of which 405 billion (47%) is classified as bituminous coal (including anthracite),260 billion (30%) as sub-bituminous and 195 billion (23%) as lignite.

The USA, the Russian Federation and China continue to lead the way, with nearly 60% of global reserves between them. Other important producers are Australia and India.

Since 2000, coal consumption has increased by about 4% per year.

The use of coal is expected to rise by over 60% by 2030, with developing countries responsible for around 97% of this increase.

China and India alone will contribute 85% of the increase in demand for coal over this period.

(WEC 2010). According to the International Energy Agency (IEA), global demand for energy

is expected to grow at a rate of 1.5% a year to 2030.

Coal is the most abundant and economical of fossil fuels; on the basis of proven reserves at end-2008, coal has reserves to production ratio of about 128 years, compared with 54 for natural gas and 41 for oil.

NATURAL GAS 2011 prices are trending just a bit lower than 2010 prices.The EIA expects the Henry Hub spot price to average US$4.33 per MMBtu in 2011.

A gas over supply that has kept prices low is expected to continue for another five years.

At the end of 2008, 103 countries were identified as possessing proven reserves of natural gas, with an aggregate volume of approximately 6 550 trillion cubic feet.

The world’s largest reserves of natural gas are held byRussia, Iran and Qatar. Looking forward to 2030 Natural Gas consumption will increase by about 1.6% per year.

Current developments in unconventional gas, especially shale gas in the United States, arespectacular and have led to upward revisions for the prospects in North America.

High steel prices, high engineering costs and limited human resources (engineers) havecaused an increase in the cost of LNG production, now estimated at around US$ 1 000(and above) per tonne per year.

CRUDE OIL Global oil production is approximately 82 million barrels per day. Of the proven world reserves about 1% per annum is depleted by production. Oil prices will gradually increase in tandem with demand. Moreover, the cost of production is gradually rising as exploration moves to frontier provinces and deep horizons in deep water. As a consequence, by 2012, the platform for oil prices will probably be around US$100 per barrel. There will be spikes in oil prices due to geopolitical events as may occur in the Middle East, and oil prices will continue to be influenced by OPEC production policies for at least the next two decades.

Oil production is expected to peak between 2015 and 2020. That is, the world will begin to find that oil production may not necessarily be matching consumption. This imbalance can be redressed in large measure by finding new oil in frontier provinces such as

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the Artic as well as producing from deep water basins and from tar sands. All of these new sources will inevitably have higher production costs. As a consequence, oil prices by 2015 may have leveled out at approximately $120 per barrel, about which it will fluctuate.

NUCLEAR POWER The level of global nuclear electricity generation has been slipping slightly during recent years owing to reactor closures, decommissioning and lengthy shutdowns for maintenance and repairs (e.g. the Kashiwazaki Kariwa units in Japan, owing to an earthquake).

Uranium is the basic nuclear fuel. The leading countries, ranked in order of 2008 production of uranium, are Canada, Kazakhstan, Australia, Namibia, the Russian Federation, Niger, Uzbekistan, and the United States.

Together these countries provided almost 93% of the world’s uranium.

The last five years have witnessed somewhat contradictory nuclear power trends, specifically a substantial increase in interest in the use of the technology and, at the same time, a slow but steady decline in its share of global electricity supply. There were eleven construction starts in 2009 and eight in 2010.

In 2010, there were 437 nuclear power reactors in operation worldwide, with a total capacity of 370 GWe. Nuclear power can be produced depending on the size and scope of a project at cost ranging from US 4-7 cents per kWh. RENEWABLES A generic price comparison of renewable energy technologies is shown on figure 2. One will note that the cost of solar energy is still high when compared to most other renewable energy technologies.

Figure 2: General cost of electricity production from renewables compared to nuclear power.

(NB: These costs are dependent on project size and location and are for comparative purposes only) Given the sunshine resources that exist in its latitude, Caribbean countries should develop and implement a solar manifesto.

Solar energy is an alternative to fossil fuels in providing grid connected electricity in all Caribbean countries once its economic viability is shown. The economics of a small domestic photovoltaic system depend not only on the cost of designing and installing the system, which can vary considerably, but also the expense of maintaining and operating the system over the course of its serviceable lifetime, which usually spans between 25 to 30 years.

At US$3,000 and US$5,000 per kilowatt of wind-generating capacity, or around $40,000 for a 10kW system, a small wind-energy system is generally less expensive than its solarpowered counterpart.

Other renewables that Caribbean countries need to develop are biomass and hydropower while they await the future economic implementation of Ocean Energy.

CONCLUSION The need for energy is increasing, as are the requirements for reduced adverse environmental impact. It is imperative that new and cleaner energy resources be developed. Nuclear Energy and Hydrogen could become an important part of the future energy matrix regionally and globally.

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The world economies should begin to plan for higher fossil fuel prices and to make optimal investments in energy efficiency and economically viable renewables. Governments will continue to play a leading role in energy supply, while public private partnerships will grow as the energy sector increasingly becomes an important business for private investment.

UWI and China sign new Agreement

A new three-year Memorandum of Agreement (MOA), signed between the Confucius Institute of the People’s Republic of China and the UWI St Augustine Campus, provides for the Government of China to provide a Lecturer in Mandarin language and Chinese culture to the UWI Centre for Language Learning (CLL) for a period of three years, starting in January 2011.

The MOA was signed by Ambassador for the People’s Republic of China in the Republic of Trinidad & Tobago, Yang Youming (right) and UWI Pro Vice Chancellor and St Augustine Campus Principal, Professor Clement K. Sankat (left).

REFERENCES 1.

Heinberg R, Fridley D (2010), “The end of cheap coal” Nature, Volume 468 pg 367-369 2.

World Energy Council 2010, Survey of Energy Resources; available at http://go.nature. com/hde5r7 Dr. Raymond M. Wright is Special Projects Manager of the Petroleum Corporation of Jamaica

Jamaican Warren Smith to become 5th President of CDB

Jamaican national Dr. William Warren Smith will take up his new job as the President of the Caribbean Development Bank (CDB) on May 1 after being elected by the Board of Governors.

Dr. Smith is currently acting in the capacity of Vice-President of Operations and previously served as Director, Finance and Corporate Planning.

Dr. Smith replaces Dr. Compton Bourne who has been the CDB President since 2001.

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Industry Updates CITI ARRANGES BOND ISSUE FOR GUARDIAN HOLDINGS Citi announced that it acted as Sole Arranger in an historic corporate bond issuance by Guardian Holdings Limited (GHL) for TT$1 Billion (US$157 million).

This landmark capital markets transaction, representing both the largest local currency issue and the longest tenor made available to a private sector entity in Trinidad and Tobago, is a testament to the growing maturity of the local market for long-term funds and the confidence that investors place in GHL as an issuer.

In June 2010, A.M. Best affirmed the Financial Strength Rating of two of GHL’s flagship companies, Guardian Life of the Caribbean Limited and Guardian General Insurance Limited, as A- (excellent).

GHL intends to use the proceeds from the issue and sale of the Bonds for the purpose of optimizing its capital structure by re-profiling existing debt.

Dennis Evans, Managing Director of Citibank (Trinidad & Tobago) Limited and its regional franchise, stated “Citi is pleased to continue our tradition of being an important strategic partner to Guardian Holdings Limited. Notably, this transaction represents the third time that Citi has successfully taken GHL to the capital markets. This strong track record is a combination of the strength and depth of the local capital market, the leadership position of GHL, the strong response by the investor base and Citi’s commitment to finding innovative solutions for our clients. ”

Group CEO of Guardian Holdings Limited, Jeffrey Mack, expressed his high level of satisfaction with the transaction.

“With the current low interest rate environment, GHL felt that the timing of this debt re-profiling solution from Citi was excellent.”

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First Citizens (St. Lucia) Limited Closes on $175 Million Private Placement of Notes

First Citizens (St. Lucia) Limited, a special purpose subsidiary of First Citizens Bank Limited, recently closed on a $175 million Rule 144A/Resolution S placement of notes. First Citizens Bank Limited, based inTrinidad & Tobago, guaranteed the notes. Akerman Senterfitt advised First Citizens Bank Limited throughout this placement. The notes will not trade on any exchange in the U.S. The sole book running manager for the financing was J.P. Morgan.

“First Citizens is a leading financial institution in the Caribbean and found a strong and receptive market for this placement,” said Carlos MendezPenate, Co-Chair of Akerman’s Latin America & Caribbean practice.

“We were very pleased to work with our valued long standing client First Citizens on this important transaction. We have seen a growing interest in capital financings in the Caribbean and Latin America with the rebound of the world economy.”

First Citizens’ notes carry investment grade ratings from both Moody’s (A2) and Standard & Poor’s (BBB+), notable among Latin American financial institutions and a testament to First Citizens’ leadership position in the region.

The bank, which has $4.7 billion in total assets, has been named “Bank of the Year”

by World F i n a n c e m a g a z i n e , T h e B a n ke r a n d L a t i n Finance and is the highest rated indigenous bank in the English-speaking Caribbean region.

CCRIF Selects New Reinsurance Broker

LIAT announces same day cargo movements to Cuba

The Caribbean Catastrophe Risk Insurance Facility (CCRIF) announced the appointment of Guy Carpenter & Company, LLC as the new Placing Broker for the Facility.

A call for expressions of interest was issued by CCRIF in November 2010 for eligible firms interested in providing the services of Placing Broker. This re-tendering process was in accordance with CCRIF’s internal procedures and based on World Bank guidelines for the selection of consultants. In keeping with maintaining the cost-efficiency and full transparency of the Facility, the positions for the various service providers associated with CCRIF are re-tendered at regular intervals.

The Placing Broker works closely with CCRIF’s Facility Supervisor in the execution and subsequent management of the risk transfer programme for CCRIF on an annual basis. Services also include provision of expert advice to the Facility Supervisor and Board of Directors in the development of the risk transfer strategy and provision of general intelligence and other relevant information on individual risk transfer markets (both traditional and capital markets).

Guy Carpenter will commence work immediately on preparation for the renewal of CCRIF’s reinsurance programme on 1 June.

CCRIF wishes to extend sincere gratitude to the team from Aon Benfield for the exemplary service they provided during their tenure as CCRIF Placing Broker.

Guy Carpenter thus becomes the newest member of the CCRIF Team which provides services to the Facility. Other members of the Team are: Caribbean Risk Managers Ltd – Facility Supervisor; Sagicor Insurance Managers Ltd – Insurance Manager; London & Capital Ltd and EFG Bank, Cayman Branch – Asset Managers; and Sustainability Managers – Corporate Communications Manager.

LIAT which recently launched its Dedicated Freighter Service announced that it can now move Cargo from its Eastern Caribbean destinations to Cuba with same day delivery.

LIAT’s Director of Cargo and Quikpak, Wilbur Edwards said that LIAT’s partnership with COPA Airlines of Panama now makes possible same-day movement of Cargo from the Eastern Caribbean to Cuba and from Cuba to the Eastern Caribbean via Santo Domingo.

Mr. Edwards noted that persons interacting with Cuba such as students, businessmen, regional and Cuban diplomats, citizens as well as businesses and nationals from all of the countries in LIAT’s network now have a convenient way to move Cargo to and from Cuba.

“With so many students from the islands now studying in Cuba and with the many Cuban doctors, nurses and diplomats throughout the Caribbean, we think they should be aware that there is a very efficient way of transporting goods including personal effects to and from Cuba,” Edwards said.

“Further, with LIAT’s recent launch of its dedicated Cargo Freighter service with 3,400 kilos capacity, large shipments can be accommodated without any difficulty. We are eagerly waiting to serve the many Cubans in our network as well as the large student community in Cuba.”

LIAT Cargo operates five days a week throughout the airline’s 22 destinations.

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ALTA Member Airlines Passenger Traffic Increases 11.3% in 2010 The Latin American and Caribbean Air Transport Association (ALTA) announced that its member airlines carried 136.4 million passengers in 2010, up 11.3% from the previous year.

In addition to passengers increasing 11.3%, traffic (RPK) also grew 11.3% and capacity (ASK) increased 6.4%. The load factor climbed to 73.3%, 3.2 percentage points higher than in 2009.

According to ALTA’s Executive Director, Alex de Gunten,” Latin America has reemerged dynamically as a success story for efficiency, growth and positive changes in aviation. We have witnessed an industry that’s safer, greener and working progressively towards becoming even more customer focused. We expect this trend in increased passenger demand to continue well into 2011 and beyond.”

The number of passengers carried in December increased 2.5% versus December 2009, reaching 12.0 million passengers. During the last month of 2010 traffic (RPK) rose 3.2%, capacity (ASK) increased 0.7%, and the passenger load factor reached 75.5%, 1.8 percentage points higher than in December 2009.

Freight ton kilometers increased 24.2% in 2010 and 2.5% in December.

CHTIC SET FOR MAY 10-12, 2011 IN JAMAICA

On the heels of a successful Caribbean Marketplace event in Jamaica, the Caribbean Hotel and Tourism Association (CHTA) returns to the brand new Montego Bay Convention Centre in Montego Bay, Jamaica, from May 10-12, 2011, to stage the 15th Annual Caribbean Hotel & Tourism Investment Conference (CHTIC).

“The 15th staging of the Investment Conference bears special significance as

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tourism is key to the economic development of the Caribbean now more than ever before,” said Josef Forstmayr, president of CHTA.

“In order to move our product forward to meet the demands of today’s travellers, we must attract top level investors to finance these projects,” noted Mr. Forstmayr. “CHTIC 2011 will be where the decisions are made and the leaders of tomorrow’s tourism and hospitality industries are chosen.”

Building on the momentum achieved in recent years with a growing interest in Caribbean tourism development, CHTIC is staged by two not-for-profit organizations – CHTA and the Caribbean Tourism Organization (CTO).

CHTA represents the regional hotel and tourism associations and CTO is the public sector tourism body which represents the countries of the region.

All funds from the conference are being reinvested in the region for the benefit of the Caribbean tourism industry. CHTIC was founded

by CHTA and CTO in 1997 with the specific objectives of improving the tourism investment and operating climate in the Caribbean, raising awareness of development opportunities and stimulating a continuing flow of equity and loan capital into the region.

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Delegates will learn about: cc Changing Caribbean energy policy and new legislation cc Essential information on project finance requirements cc New renewable technologies available on the global market cc Regional and international sustainable energy projects currently underway

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Prime Minister of Grenada, Tillman Thomas (left) meets with Ambassador Valeriano Diaz (right), Head of Delegation of the European Commission to Barbados and the Eastern Caribbean.

German Energy Company keen on Trinidad and Tobago Trinidad and Tobago is one of the countries that German company, RWE Promoters has been keeping its eye on as a destination for its investment.

“Trinidad made it through the checklist. We’ve looked at Trinidad for some time and it has a lot of the attributes for RWE,” David Fuller – Head of LNG RWE told Business Journal.

“It has a good investment climate; we looked at its history – it’s a place that honours contracts and has a successful record. The second reason is what I think is abundant further reserves so that is interesting for us in the exploration mode.

“I think the new government that has just come in is encouraging for other companies to come (into the country) and for us, we see that as a very positive signal so it’s not just the existing companies but opening up for new companies,” he said.

RWE teamed up with Canada-based Voyager to offer a bid in the competitive round for shallow water blocks.

“We’ve looked at it from a gas perspective. Part of our strategy for coming into Trinidad is gas. Our position is we wanted to make a first move in Trinidad. It’s not a massive move but it is a statement of intent.

“We’ve just arrived in Trinidad and we’re hopeful that we will find significant gas and we would certainly be looking at further investments in the upstream in Trinidad.”

Mr. Fuller runs the group’s LNG business. Excelerate Energy in which RWE hold a 50 percent take utilises Energy Bridge on board its LNG fleet of nine vessels which is a proprietary offshore LNG regasification and delivery technology.

The company can deploy purposebuilt LNG vessels for the transportation and vaporisation of LNG through specially designed offshore and near-shore receiving facilities.

The company is looking at over 20 new projects initiated and under construction which stretch from the Caribbean to Southeast Asia, the Middle East and South America.

“We participate in the whole value chain so we’re looking at investment right through to markets. We’re not a company that would just buy LNG,” said Mr. Fuller.

“We want to invest in the LNG business given the right encouragement and the right opportunities. One of the things we’re very good at is markets. Our trading business turns over a billion Euros in profit. I think that we can bring amongst all those things is a deep understanding and knowledge of the markets.”

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NEWS BRIEFS IMF EXECUTIVE BOARD APPROVES US$3.26 M FOR ST. VINCENT AND THE GRENADINES The Executive Board of the International Monetary Fund (IMF) has approved a disbursement of about US$3.26 million under the Rapid Credit Facility (RCF) for St. Vincent and the Grenadines to help the country manage the economic impact of Hurricane Tomas.

The late-October 2010 hurricane inflicted significant damage to agriculture, housing and infrastructure. The initial assessment conducted by the government estimated the cost of damage at 5 percent of gross domestic product.

Once reconstruction is factored in, the costs are expected to be much higher. The RCF-supported program aims to address the urgent balance of payments need arising from the hurricane.

The RCF, which provides rapid financial assistance for low-income countries with an urgent balance of payments need, does not require any program-based conditionality or review.

However, economic policies are expected to address the underlying balance of payments difficulties and support policy objectives including macroeconomic stability and poverty reduction.

Financing under the RCF carries zero interest (until end 2011), has a grace period of 5 ½ years, and a final maturity of 10 years. The Fund reviews the level of interest rates for all concessional facilities every two years.

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CDB’S PERFORMANCE IN 2010 The adverse effects of the global economic and financial crisis on Caribbean economies persisted in 2010.

Fiscal and debt problems as well as natural disasters caused many countries to seek financial assistance from the Caribbean Development Bank (CDB). The Bank was able to respond positively. Altogether 12 countries accessed loan and grant resources. Financial resources were also provided to regional bodies, academic institutions and non-governmental organisations, said CDB President Dr. Compton Bourne.

Loans and grants approved in 2010 totalled US$299 million approximately which is a 79% increase on the amount approved in 2009. Funds actually disbursed in 2010 totalled US$323 million approximately, which is 54% greater than in 2009. The Bank’s Less Developed Countries received 60% of approvals and 62% of disbursements.

Within this country group, the members of the Organisation of Eastern Caribbean States received almost 25% of loan approvals and almost 7% of grants, while Haiti received 63% of grants.

The purposes for which the Bank lend are determined partly by the kinds of requests emanating from its Borrowing Member Countries (BMCs).

In 2010, budgetary support through policy-based loans was the largest component with US$95 million (39% of the total), next was economic infrastructure (including roads, drainage, energy, ports, bridges and water supply) with USD70 million (29%), followed by financial sector stabilization (USD37 million or 15%), and education and training (USD32 million or 13%).

REMITTANCES HELP FAMILIES, BOOST ECONOMIC AND SOCIAL DEVELOPMENT

M

oney sent home by economic migrants working in foreign countries exceeded US$300 billion in 2010, and this vast and growing tide of income needs to be safeguarded and channeled so that it does the most good for families and economies in the world’s poor nations, experts said at a two-day UNCTAD meeting in February.

The session, titled “Maximizing the development impact of remittances”, heard the Deputy Secretary-General of UNCTAD, high officials of migrant-sending and migrantreceiving countries, and high representatives of several international organizations, as well as members of the Global Migration Group, civil society and the private sector sound a common theme: that remittances are now a major economic force, and they must be better understood and harnessed for development.

Discussions during the expert meeting dealt with such topics as the opportunities and challenges posed by trends in migration and remittances; the ways, means, and preconditions needed in order to enhance the development impact of remittance flows; surmounting the practical difficulties of sending remittances home; and addressing barriers to remittance flows, including through trade and cooperation agreements facilitating temporary and circular migration.

More can be done to ensure that families and developing-nation economies derive lasting benefit from these wages earned overseas, speakers said. They stressed that less of this money should be lost in transmission, and more should be invested in the stable, broad-based

social and economic growth of economies that originally were weak enough for citizens to feel compelled to leave and work elsewhere.

“Remittances account for about 2 per cent of the gross domestic product (GDP) of all developing countries, and for higher percentages in many,” UNCTAD Deputy Secretary-General Mr. Petko Draganov said in opening the meeting.

Referring to Lesotho, Nepal, Samoa, Haiti and Bangladesh, he said these money transfers make up more than 8 per cent of GDP. Although the effects across countries are varied, remittances have reduced poverty at the household level in many developing countries.

“A recent UNCTAD study found that in countries where remittances make up 5 per cent or more of GDP, on average a 10 per cent rise in remittances leads to a reduction of 3.9 per cent in the poverty headcount ratio,” Mr. Draganov said adding that evidence shows that a significant amount of remittance transfers to developing countries is spent on household consumption and human capital.”

Such emphasis on food, education, housing, health and related purchases can ripple outwards through the domestic economies of poor nations and – if managed well – can create jobs and business opportunities that raise living standards and keep future potential migrants at home.

However, Mr. Draganov and others added that the costs of sending money from overseas could be high – the current average fee was around 8.7 per cent – and that there was “still a lack of safe, reliable, accessible transfer systems for remittances….” business journal | MARCH 2011

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ASIA’S SHARE OF GLOBAL ICT EXPORTS SURGES TO RECORD HIGH

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ew UNCTAD data reveal that Asian economies in 2009 accounted for 66.3 per cent of global exports of information and communication technology (ICT) goods, up from 63.8 per cent in 2008. That supports recent findings that the global financial crisis has led to significant shifts in world trade of ICT goods towards Asia. More than one third of world ICT goods exports now originate in China and Hong Kong (China).

Global ICT exports, which represented 12 per cent of world merchandise trade in 2009, are increasingly dominated by Asia. Seven of the top ten exporters are Asian economies. China is by far the largest, with ICT goods exports amounting to $356 billion in 2009, followed

by Hong Kong (China) ($142 billion), and the United States ($113 billion).

ICT goods are of great significance for many developing economies, especially in Asia.

Reliance on ICT products is most pronounced in the case of Hong Kong (China), where such items represent more than 43 per cent of all merchandise exports. Other economies in which ICT goods make up 30 per cent or more of exports include China, Singapore, the Republic of Korea, Taiwan Province of China, and the Philippines.

While ICT exports from most major exporters fell in 2009 as a result of the financial crisis, the decline was particularly pronounced among several European countries. For example, ICT exports dropped by more than half in Portugal and Finland, by 36 per cent in Ireland, and by more than 20 per cent in the Czech Republic, France, Germany, and Sweden.

Japan and the United States also saw sharp declines. At the other end of the spectrum, a few economies saw increases. India’s exports increased by a whopping 244 per cent, and those of Malaysia by 18 per cent. Moreover, declines in exports experienced by China, Hong Kong (China), the Philippines, the Republic of Korea, and Thailand were relatively modest.

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In terms of ICT goods imports, the United States tops the list, followed by China and Hong Kong (China). Among major importers, declines of more than 35 per cent were registered in 2009 by Finland, Ireland, Portugal, the Russian Federation and Spain. India, on the other hand, experienced a rapid increase in ICT goods imports, moving from 28th to 17th in the global ranking of importers.

Economies for which ICT goods represent large shares of their imports are mainly found in East and South-east Asia, which are part of global value chains related to ICT products. A few Latin American countries also report a high reliance on ICT goods imports, including Costa Rica (17 per cent), Mexico (20 per cent) and Paraguay (26 per cent).

Books SOILS OF THE CARIBBEAN Nazeer Ahmad

Soils of the Caribbean presents a comprehensive survey and detailed analysis of the soils of the Caribbean region.

The work covers the entire region with the exception of the French overseas territories, the Dutch Antilles and Suriname and the Bahamas, but significantly includes the CARIFORUM countries of Cuba, the Dominican Republic and Haiti.

The book is divided into two parts: Part One provides a general overview of the regional geographical setting and identifies the common features of the soils and their management, land use and land capability classification.

Part Two presents detailed studies of the soils of each of the countries of the Caribbean incorporating the geology, relief, climate and vegetation.

For each country study, Professor Ahmad briefly reviews the history of past studies before breaking down soil classification, mineralogy, physical properties, chemistry and fertility, erosion, degradation and conservation, land capability and use.

Trinidad’s Finance Minister authors book on Development for Small States “In a fascinating collection of essays of ideas which span the gamut from Thomas Hobbes to Mahatma Gandhi and, against the backdrop of writings from Machiavelli to Marx; the diligent authors of Power, Politics and Performance, have outlined a convincing case that the best route for optimum Development of Small States requires the dynamics of a Partnership Approach—with its citizens, regional institutions and the global community”, writes former Jamaican Prime Minister Percival Patterson in the Foreword.

“Power, Politics and Performance - A Partnership Approach for the Development of Small States” is written by Trinidad and Tobago’s Minister of Finance Winston Dookeran. It is coauthored by Prof. Manfred D. Jantzen, Senior Advisor and Lecturer at the Business Development office, Office of the Principal, University of the West Indies, St. Augustine Campus, Trinidad.

“Power, Politics and Performance” contains eight chapters: Paradigm Power, Getting Development right, Politics, Development and Sovereignty, Foundation for Politics and Leadership, Politics and Culture of Corruption, Coalition Politics and Good Governance, Entrepreneurial Economy and Human potential, Breaking the Anti-Growth Coalition.

Writing in the Preface, Dookeran argues for partnership approach, expressing a philosophy of collaboration and consensus based on political economy for small states.

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The Lighter Side...

There are many varieties of mania afflicting the world at the moment. One that seems to be widespread is megalomania that insane self-exaltation, that lust for power. The expression “Power Hungry” conjures up the vision of a dictatorial figure systematically destroying resistance to his quest for domination. Demonic laughter echoes through blitzed streets as opponents are terminated with extreme prejudice. He is never satiated.

Such a scene is not reserved for the melodrama of a third rate movie, badly scripted and tenuously held together with worn clichés. History is filled with examples of men and women who have embarked on a manic quest for power and authority. After a respectable amount of time has lapsed, the supporters of these individuals often promote them as heroes. This promotion occurs after the required instruments of misinformation have been put in place to convert acts of malevolence into deeds of benevolence.

A glance at the present productions taking place on the world stage reveals that the Power Game remains a vibrant pastime. It is played with frightening vengeance. The stakes are high. As the interdependence of people increasingly weaves us into a tightly woven fabric of humanity, the activities of the powercrazy conversely rip us apart. Nations lose their sovereignty, countries are devastated, innocent people murdered and mutilated, economies slingshot into recession and a people proud and free, left broken-spirited and enslaved. It 42

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is going on all around us and it occurs within us also.

There is little need to look afar. The lust for power manifests in the most common of our interactions. Take a look at the jostling for position; the cheating and lying so as to gain favour with the boss; the distortion of truth to improve one’s image while destroying that of another. There are also the power struggles within politics, religious institutions and even our own family.

Power lust is similar to drug addiction. The megalomaniac tastes a few drops of the power potion and becomes intoxicated.

The high offsets any feelings of inadequacy he may have previously felt. We find him going back for more until he becomes drunk with power. Perhaps we can call him a “powerholic”.

It’s not long before he becomes a victim as his will power is weakened by his lust.

It is a sad irony that while craving power to control other people he loses the power to control himself. The more he tastes the substance (power) the more he is prone to substance (power) abuse. Centuries ago British statesman and philosopher Edmund Burke said “The greater the power, the more dangerous the abuse.” Here the endangered is not only the addict, but also those who exist within the parameters of his control.

There are many who are unable to walk a straight line in the corridors of power for they have become inebriated with the power potion. Their addiction often forces them to adopt unsavory tactics to ensure a regular

dose. It is not power that corrupts, but rather the fear of losing power that forces individuals to be less than noble. A tremendous amount of maturity and responsibility must be exercised if one wants to wear the mantle of power, there are few who can wear it well. Achievements in educational institutions; personal wealth; relatives and friends in high places are not the only criteria to review when considering giving power to an individual.

Most of us find ourselves in positions of power at least once in our lives, be it in the family, religious or social groups, sports, jobs, politics. It would be wise to remember that when you feel compelled to advertise your power, you are more afraid and vulnerable than you are powerful.

Perhaps it is time to re-discover the power that enables us, among other things, to develop and maintain high moral standards; integrity; the understanding of being a server rather than a ruler; the ability to humbly communicate with all and the wisdom to pass on the mantle, at the appropriate time, to the one it fits best.

If we learn to increase this kind of power we can surely better equip ourselves for the responsible roles we may be called upon to play at various stages in our lives.

I leave you with the observation of George Bernard Shaw‌

“Power does not corrupt men; but fools, if they get into a position of power, corrupt power.�

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