Rum Runners

THE STAR Businessweek FEBRUARY 16, 2019

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Rum Runners

Saint Lucia’s Rum Industry Taps into a Taste for Premium Products

By Catherine Morris, STAR Businessweek Correspondent

in this edition of

SBW THE STAR Businessweek

CDB funds transformation Last year the Caribbean region received US$ 280mn from the Caribbean Development Bank (CDB), the bulk of which funded projects in education, energy efficiency and infrastructure Page 3

By the numbers: 40 years of statehood

“St. Lucia Distillers Group of Companies is a small, innovative, quality-driven rum producer.”

— Margaret Monplaisir, Managing Director, St. Lucia Distillers Group of Companies

Rum has come a long way from its humble beginnings as a gut-rotting liquor beloved by pirates. Today, demand for high-quality, top-shelf rum is growing and Caribbean islands are navigating the turbulent trading landscape to provide bespoke brands and distinctive flavours. Saint Lucia is no exception, having carved out a niche thanks to award-winning products, proactive marketing and a strong focus on exploiting linkages between the rum business and the country’s other big money maker, tourism.

Continued on page 4

The story of a nation will, of course, always be told with words. Just the same as everyone at the Saint Lucia STAR is proud of this newspaper’s work in its enduring goal of ‘Bringing the Truth to Light’, so too have so many voices more widely helped tell the story of Saint Lucia Page 7

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FEBRUARY 16, 2019

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Getting Runs on the Board: The Game Plan for Saint Lucia’s Sporting Upgrades

By ED Kennedy, STAR Businessweek Correspondent

The STAR Businessweek

BY Christian Wayne – Editor at Large

According to new figures published by the Office of the Prime Minister, the unemployment rate for Q4 2018 stood at 16.2%, a staggering reduction from the 20.2% measured for the year 2017. With positive indicators like this, one wonders how last month’s utterly unsuccessful vote of no-confidence submitted by the SLP opposition party could be considered as anything but a political sideshow, a cheap stunt that accomplished little in the way of national progress. Then again, when plunged into the throes of political survival, desperate politicians tend to do desperate things that are usually aimed at pleasing both their most loyal sycophants and in the case of the SLP—themselves. To add some context to how ludicrous the LOO’s failed pissing contest was, the highest unemployment rates in Saint Lucia in the past 3 decades were all clocked under the watchful (red) eyes of a Labour Party administration: 23% in 2013, 24% in 2014, and 24% in 2015 (figures provided by the Central Statistical Office). The average youth unemployment rate for those 3 years was a dismal 40.8%. That figure now stands at 36% and is projected to decrease even further.

Interestingly, SLP tenures in office also coincide with the highest ‘non-job seeking’ rates of any period in the past 30 years, which leads this author to concur with the leader of the opposition that the SLP is indeed in dire need of a rebranding . . . because surely, as the numbers above show, mobilising labour is not its strong suite.

In this week’s edition of STAR Businessweek we sit down with the leader of one of Saint Lucia’s most innovative exporters in our lead story “Rum Runners: Saint Lucia’s Rum Industry Taps into a Taste for Premium Products” starting on the cover. Next, journey with us as we revisit Saint Lucia’s decision to finance an extremely ambitious master development plan for its national sporting infrastructure. Will it prove to be a strong and sensible plan for the nation’s sporting life? Or a road map to debt and wasting money that could be better spent elsewhere?

Read more in “Getting Runs on the Board: The Game Plan for Saint Lucia’s Sporting Upgrades” here on page 2.

Also in this edition we take a look at the CDB’s project pipeline, including a US$ 12mn grant to the Sir Arthur Lewis Community College and, as we approach the island’s 40th anniversary of Independence, we’re looking back at the past 40 years of statehood, as told by data and figures published by international development agencies.

It’s Nothing Personal. It’s Business.

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Sports consultant Don Lockerbie, Managing Director of the Sports & Events division of The Parker Company, a global procurement firm, presenting his ambitious vision for Saint Lucian sports development. In 2010 Lockerbie served as chief executive of the USA Cricket Association, a position he was later ousted from due to over-promising and under-delivering on the starry corporate vision he sold to USACA’s board of directors

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there will always be some critics who say money would be better spent in the arts, with many non-sport fans surely dreaming of world-class opera houses and galleries built ahead of a new stadium. But teams and stadiums can prove a huge draw just the same as can a theatre or new art icon.

Sporting facilities also help establish and grow a sense of community, and raise the profile of the cities and neighbourhoods. For younger fans, a local team that plays in their community can provide a special link that shows a lifelong passion for sport.

They also encourage healthy living, and help foster a spirit of friendly competition, fair play and devotion to pursuing shared goals — the values that can make a great athlete, and a great citizen.

While the benefits of professional sports and their accompanying facilities in a community are real, complications can arise in sporting upgrades. That’s why a strong and Going to Bat for Sports The benefits of sporting events and their enduring strategy to build Saint facilities should not be understated. True, Lucia’s sporting future is vital. he way in which we live, participate, and spectate sport is rapidly changing.

This has considerable impact on planning for the future of sport and its supporting facilities.

One need only look at the lacklustre competition in recent years for hosting rights to the Olympics — in decades prior seen as the centrepiece of a city’s claim to be truly global but in 2017 seeing Paris and Los Angeles agree to split the 2024 and 2028 games between them because they were the only two nations left standing who had wanted the 2024 Games.

That’s why the National Sports Program Infrastructure Development Strategy is a prime candidate for real scrutiny. Is it a strong and sensible plan for the nation’s sporting life? Or a road map to debt and wasting money that could be better spent elsewhere?

The Master Plan In-Depth

Consultant Don Lockerbie’s Master Plan for Saint Lucia is undoubtedly ambitious, providing for a vision of Saint Lucian sport that would see 30-40 facilities around the nation that will either be upgraded or built anew.

By Lockerbie’s own acknowledgement, this is not a plan that will happen overnight. Instead it is a course that will be charted over the next two, or even three, decades.

But that is no bad thing because, save for some of the biggest and fastest growing countries in the world like the People’s Republic of China and India, most nations need to look at major capital works that will be carried out not over years but over decades.

And yet because of the lengthy planning and long period it takes to execute a sporting vision, there is also a rich capacity for Continued on page 5

Development Finance

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FEBRUARY 16, 2019

CDB funds transformation

Energy, education and infrastructure are top priorities for the Caribbean Development Bank as it ramps up funding for the region

By Catherine Morris, STAR Businessweek Correspondent

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ast year the Caribbean region received US$ 280mn from the Caribbean Development Bank (CDB), the bulk of which funded projects in education, energy efficiency and infrastructure.

In 2019 the CDB wants to continue targeting these crucial areas, underpinning island economies by building climate resilience, increasing social engagement and supporting the private sector. “It is clear that the challenges our countries face are becoming even more complex,” said CDB President Dr. William Warren Smith. “This will require change and transformation, at CDB and in our borrowing member countries, but also at the regional level. We have begun to adapt and to ring the changes and we are maintaining this momentum.”

Climate Resilience

For a region still reeling from the devastating 2017 hurricane season, resilience to natural disasters is a top priority. Responding to climate concerns, and seeking to reduce the Caribbean’s reliance on fossil fuels, the CDB has invested in a number of innovative projects.

With energy efficiency in its crosshairs, the CDB partnered with the Inter-American Development Bank in 2018 to help countries in the Eastern Caribbean explore the potential of geothermal energy. Five countries (Saint Lucia, St Kitts and Nevis, St Vincent and the Grenadines, Dominica and Grenada) have received a total of US$ 85mn for “the cost intensive and risky stages of development” which includes exploratory drilling and field and plant development.

Dr. William Warren Smith, CDB President, appears contained and yet somewhat bullish on the Caribbean’s growth prospects

Moving into 2019, the bank has signed an agreement with the Green Climate Fund to deliver more climate finance projects in the region. According to Dr. Smith, this will “mobilise much needed low-cost funding to build climate resilience”.

Education and employment

Projects in the pipeline for the CDB in 2019 include a US$ 12mn grant to upgrade Sir Arthur Lewis Community College in Castries. Education, including vocational training, is a main focus for the bank, which acknowledges the link between high quality and accessible schooling and workplace opportunities. “Youth unemployment continues to be a challenge for Caribbean policymakers,” said Dr. Smith. “This persistent trend belies the great strides made in increasing education investments in the last decade.”

Alongside the need for better training and resources within the education system, the bank is also keen to drive job creation through programmes that support industry.

With one out of every four young Caribbean people struggling to find work, the CDB recently launched its US$ 2.6mn Creative and Cultural Industries Fund to boost growth in those often-overlooked sectors. Calling the fund “a platform for supporting innovation, driving sustainable growth and increasing employment opportunities, especially for our young people,” Dr. Smith said the private sector must do its part to help alleviate unemployment. He added that the bank would roll out more technical and financial support initiatives for MSMEs in the future, saying: “We recognise that it is the private sector which has to increasingly take a lead role in creating opportunities.”

Optimistic outlook

Average growth among the CDB’s borrowing member countries (BMCs) reached 1.9 per cent in 2018. The top performers were Grenada with 5.2 per cent, Antigua and Barbados with 3.5 per cent and Guyana with 3.4 per cent.

Despite a gloomy global outlook

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heading into the new year, Dr. Smith is confident that the Caribbean can hold its own. “The current international economic environment is characterised by escalating trade tensions, volatile commodity markets and policy uncertainty with respect to both Brexit and US trade,” he said. “Despite projections of deceleration in global economic activity, the 2019 economic outlook for our borrowing members is a positive one.”

The CDB is predicting around 2 per cent growth for the region in 2019, aided by expansion in tourism, construction and the gold and oil industries. However, if countries are to fulfil their potential, there must be a willingness to change, and an effective system through which to fully implement those changes.

Dr. Smith said: “Far too many Caribbean countries are still grappling with the challenges of fiscal deficits and high public debt, both of which stymie economic growth and hinder transformation and sustainability.”

Saint Lucia has set an example for the region in this regard, collaborating with the CDB on how to deliver its national transformation agenda. The US$ 5mn project aims to help the government reach its goals in tourism, agriculture, infrastructure, citizen security, education and healthcare. The plan is proving to be a benchmark for other BMCs, and the CDB says it intends to adapt this model to provide customised strategies for other countries.

In 2019 the CDB wants to ensure it is making the most of its resources.

The bank is currently doing intensive research to identify BMC vulnerabilities and resilience so it can channel resources to where they are needed most.

CDB Director of Economics Dr. Justin Ram commented: “Transformation requires fiscal discipline, human development, environmental resilience and an improved business environment.

Rest assured that in 2019 we will continue to carry out research and give policy advice, providing pathways to solutions that meet SBW the needs of our citizens.”

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FEBRUARY 16, 2019

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Rum Runners: Saint Lucia’s Rum Industry Taps into a Taste for Premium Products Continued from page 1

Under the leadership of Margaret Monplaisir, Managing Director of the St. Lucia Distillers Group of Companies, intelligent marketing and the company’s suite of world-class products are driving Brand Saint Lucia to new highs, but will the industry receive the support from government that it needs to remain globally competitive?

A spirited history

Rum has been a fixture of Caribbean life and business since the 17th century when sugar plantations dominated island industry. While molasses was initially viewed as an industrial waste product, it soon became apparent that the sticky by-product from sugarcane had enormous potential when fermented.

Historians believe that the first rum distillery was in Barbados, but the liquor quickly grew in popularity around the islands. It was to become one of the Caribbean’s most important exports, and instrumental in creating well-worn trade routes between the islands, America and Europe. Heavy taxes were imposed on sugar in the 1700s, leading to a decline

in rum production and demand but the downturn didn’t last. Through the 1800s and 1900s, sales of Caribbean rum rebounded, particularly in the dry years of prohibition when rum runners set up shop in the islands to keep desperate Americans supplied.

Today rum is the third biggest player in the US spirits sector, behind vodka and whiskey. According to a report from the West Indies Rum and Spirits Producers’ Association (WIRSPA), global rum sales grew by 40 per cent between 2000 and 2010, with spiced rum and premium brands driving the market. “Internationally rum is the spirit of the times, and demand for premium products is growing fast. We have to position ourselves to take advantage of this,” says WIRSPA CEO Vaughn Renwick.

Tourism linkages

As more drinkers seek out premium-quality rums, the spirit remains a vital part of Saint Lucia’s tourism product, and the Saint Lucia Hotel and Tourism Association (SLHTA) has been quick to jump on the trend for local liquor. The SLHTA hosts several food and rum-themed festivals each year, giving the country’s bartenders and distillers a chance to show off their skills, and last year hosted the first annual Caribbean Rum Awards.

Saint Lucia did well in all categories but taking home top prize in the Best Gold Rum category was Bounty Premium Gold.

Bounty is produced by St. Lucia Distillers Group of Companies, which was formed in 1972 when two family-owned distillers joined forces to offset the loss of sugar cane

production by maximising efficiencies.

Located in the Roseau Valley and awarded ‘Distillery of the Year’ at the 2017 World Spirit Awards, St. Lucia Distillers now produces over 20 branded rums and has an annual turnover of around US$ 18mn.

Managing Director Margaret Monplaisir says tourism is responsible for around 20 per cent of sales. St. Lucia Distillers sells to hotels and airport duty-free vendors.

The group also offers factory tours and has a heavy presence at festivals both at home and abroad. Last year St. Lucia Distillers launched its Bounty rum range in the UK with a presence at the world-famous Notting Hill Carnival.

“Our brands, Chairman’s Reserve and Bounty, have always been strongly linked with big events and festivals,” says Monplaisir. “These events are important in showcasing Saint Lucia to the rest of the world and give us direct access and exposure to international and local consumers. The response has always been positive. We have earned the reputation of being a small distillery making quality innovative rums.”

More can be done to build profitable crossovers between the tourism and rum industries however, according to Monplaisir who says: “Government should incentivise the tourism sector to support local manufacturers. Every hotel, restaurant and bar should be serving local rum as their pouring spirit, allowing guests to experience the ‘spirit’ and culture of our country.”

Challenges and opportunities

Being a major export, Saint Lucia’s rum is vulnerable to global trade issues, and the economic environment has been tumultuous over the past decade. US subsidies for Puerto Rico and the US Virgin Islands have put some Caribbean countries at a disadvantage and created an uneven playing field. In addition, factors such as logistical challenges, the high cost of production and increased competition from international players with more resources are squeezing Caribbean producers.

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Renwick says: “The industry is up against global players whose marketing budgets are larger than some of the economies of our countries. Additionally some of the biggest players receive subsidies that dramatically reduce their production costs.

“We do not benefit from any subsidies so we have to present ourselves as authentic and premium. As the home of rum, we can present a diverse group of brands with authentic origin and provenance. We have an amazing rum heritage in the Caribbean and when we tell our story it adds real value to our brands. Recently we’ve seen a lot of brands with dubious credentials presenting themselves as authentic, and we expect this to be even more of a challenge in 2019.”

To protect the industry, Monplaisir would like to see regional governments lobbying for improved trading arrangements with international competitors, but says there are also steps that can be taken closer to home to assist Saint Lucia producers, such as removing the requirement to give Customs 48 hours notice, saying this is too

rigid for shipping schedules which can change at the last minute.

Looking ahead to 2019, Saint Lucia Distillers is preparing for more growth in the premium category. This year, it will bring its “super premium” new Admiral Rodney range to market and expects to launch its flagship brand Chairman’s Reserve in 10 new countries. The group is also making “a significant investment” in a new visitor experience to build on its factory tour. Monplaisir is optimistic about both the company’s fortunes and the industry’s outlook saying: “Quality and innovation are at the centre of our strategy in order to remain competitive with other brands.

“Caribbean rum is a competitive sector, but it is also a very dynamic sector.

Today international rum drinkers are more knowledgeable and place strong importance on quality, authenticity and heritage. In this regard, Saint Lucian rums enjoy well-deserved recognition from rum enthusiasts all over the world.”

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Getting Runs on the Board: The Game Plan for Saint Lucia’s Sporting Upgrades Continued from page 2

mismanagement and waste to leave a long, long legacy.

Three venues in particular serve as key points of interest in the master plan: the existing Soufriere Mini and George Odlum Stadiums, and the current absence of a true national stadium. A national venue would provide a new home not only for events currently held at Soufriere Mini Stadium, but would go beyond this, offering upgraded facilities that could be enjoyed

by Saint Lucians first and foremost, while also serving as a springboard for luring regional sporting competitions and new tourism. But it’s no secret that big stadiums have often brought big problems elsewhere.

Lessons from Abroad

Chairman’s Reserve, the company’s flagship brand, will be launching in 10 new markets in 2019

FEBRUARY 16, 2019

New capital works with huge expenses are so often justified with the old adage ‘build it and they will come’. But recent history has shown that this is not the case with so many sports facilities, and this should give Saint Lucians pause for thought.

The 1992 Olympic Games in Barcelona were widely seen as a successful venture in infrastructure and global profile that helped propel the Spanish city onto a new level as a sporting capital. However,

the return on investment seen to stadium upgrades for Sydney 2000 and London 2012 are far less clear. Then there are the huge setbacks and debt that Athens faced hosting the 2004 Games, and Rio in 2016.

However much the Saint Lucian government may relish the addition of new facilities across the nation, there are lessons here as it looks to the future. Just like a playing roster must be finalised before a game begins, so too must the financing of these future facilities be considered carefully; once plans are in place, there’s often little prospect for an easy revision.

When done well with private investment, it can be an asset that speeds progress and optimises outcomes. When done poorly, it can be an ongoing headache for the government. Conversely, the experience of multiple NFL teams, and the constant pressure put on public authorities to build and perpetually upgrade facilities at taxpayers’ expense, shows an expectation that it is a government’s responsibility alone to maintain public facilities. These can generate enormous private profit but don’t pass the smell test for so many sports fans, even the keenest among us.

Finding a Game Changer

An approach here that could be agreeable to many is where sporting facilities are also mixeduse locales. Sports remain as the central use of these stadiums, but gone are the days when surrounding amenities such as a pub or restaurant are afterthoughts; now they are on-site attractions in their own right.

Put simply, mixeduse facilities go beyond the hosting of sporting events, to become real epicentres of the community — venues that draw crowds even when sport isn’t being played.

This approach has been advocated in major cities where a sports team is pushing for a new stadium, but a citizenry is weary of the cost. It is also a form of insurance against a stadium being under-used.

Saint Lucia may not have a population that rivals those of Los Angeles, Rio or similar cities, but it does have an opportunity here to learn from prior chapters in this dynamic.

There is a long way to go with the implementation of the master plan. But if a vision can be pursued that creates lasting value for the future while learning from the mis-steps of other nations in the past, then it’s game on!

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FEBRUARY 16, 2019

How to buffer the Caribbean from financial storms

The IMF's Alejandro Werner and Krishna Srinivasan argue that the Caribbean needs climate-resilient debt instruments.

T A flooded street near the Malecon in Havana, Cuba, on September 10, 2017. Deadly Hurricane Irma battered central Cuba and other Caribbean nations, knocking down power lines, uprooting trees and ripping the roofs off homes as it headed towards Florida

Regional

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he Caribbean is considered one of the most disasterprone regions in the world.

Recent hurricanes, such as Irma and Maria, have led to widespread destruction and heart-wrenching human suffering.

Further, the economic impact of natural storms continues to weigh heavily on these smaller island economies — with annual damage averaging about 2.4 per cent of GDP, compared to 0.4 per cent of GDP for larger states.

As frequent and destructive natural disasters continue to put the Caribbean in harm’s way, countries are increasingly looking to financial instruments as a way to help meet their debt needs, while freeing up much-needed scarce resources for poststorm recovery.

Indeed, Caribbean countries have already invested in bolstering their financial

resilience using an array of instruments.

This includes limited self-insurance, through small fiscal buffers built by putting aside windfall revenues, contingent credit lines, and insurance through regional risk pooling mechanisms, such as the Caribbean Catastrophic Risk Insurance Facility (CCRIF).

But with the overall level of financial protection still relatively low in the region, there is a clear and pressing need to explore new and cost-effective instruments to transfer risk. Policymakers from the region and the G7 have urged exploring climate-resilient instruments that could help Caribbean countries transfer risks more cost effectively.

To this end, we lay out two ideas, which could complement ongoing efforts to build financial resilience in the Caribbean.

The first idea is to embed “hurricane-linked clauses” in debt contracts, to allow for an extension of maturity in the event of a natural disaster. Under this option, depending on the existing structure of debt of the issuing country, the occurrence of a natural disaster could defer either principal or interest payments or both for a specified time period.

This would materially reduce gross financing needs in the context of natural disasters, allowing countries to avoid missing payments and defer decisions on debt restructuring until their solvency position is clear.

Creditors would bear the risk of their payments being deferred, but the maturity extension could be made neutral in net present value terms to keep the cost of the instrument comparable to a “plain vanilla” instrument.

The introduction of collective action clauses (CACs) in sovereign bonds beginning in 2003, confirms that hurricanelinked clauses are feasible. Once markets adjusted to CACs, the sovereign bonds did not carry an additional premium. Hurricanelinked clauses have also been successfully tested in the context of sovereign debt restructurings in Grenada and, more recently, Barbados.

There are, of course, some limitations.

Hurricane-linked clauses would only apply to new debts and may not provide meaningful relief following hurricanes, at least until a substantial share of the existing debt stock has matured and been replaced by debt containing such clauses. But this is only a matter of time, and the process can

be expedited by active debt management policies by countries.

In this context, it is encouraging that a draft term sheet for debt contracts with hurricane-linked clauses has been prepared by the International Capital Market Association, to facilitate use by interested sovereigns.

The second idea is akin to sovereign insurance against natural disasters, where countries purchase insurance to cover a specified amount of debt service payments following catastrophic disasters.

Specifically, countries would take insurance cover, from a private insurance company or the CCRIF, for a “predefined set of debt obligations,” including scheduled amortisation, interest payments, or both.

The precise structure and coverage could be tailored to the specific needs of the country.

If a disaster occurs, the insurer would pay the country the predetermined amount for servicing the debt. The corresponding payout will directly reduce the stock of debt, since the debt service will not be financed by the country but by a payout provided by the insurance policy.

There are advantages to this option. It is broad and not limited to a specific type of debt and can apply to new and existing debt, including external and domestic, short-term or long-term. The cost of buying such insurance could be at the lower end of the insurance pricing spectrum, since the amount of the payout is predetermined, and could be further trimmed if risks are pooled across countries.

But there are also clear drawbacks. In particular, it requires countries to finance insurance premiums, when many have onerous debt burdens and little or no fiscal space. But this is where the international community could play an important role by helping countries secure such insurance cover.

With the frequency and severity of natural disasters expected to intensify with climate change, preparedness is key. Action is needed now. Countries in the Caribbean should consider new and innovative approaches to transfer risks associated with natural disasters, including to allow them to meet debt service obligations in the aftermath of disasters and create additional fiscal space for recovery. The two ideas laid out here merit consideration.

The Saint Lucia Registry of Companies & Intellectual Property Company Incorporations Name: Jobs, Training and Counsultations (J. T. C.) inc.

Description: Human resource development Directors: Matthew St. Paul Date Incorporated: 1/22/19 Chamber: SEDU

Name: Auto Solutions inc.

Description: Automechanics and related business Directors: Robert Anthony Small, Sherma O Small, Keitha St. Prix Joseph Date Incorporated: 1/23/19 Chamber: Self incorporated

Name: Reveal West Indies Inc. Description: Magazine, advertising, and marketing platform Directors: ONWERA Group INC., Antonius Clarke- Eleuthere Date Incorporated: 1/23/19 Chamber: SEDU Name: Treetop Restaurant & Bar Ltd. Description: Restaurant and Bar services Directors: Michael Louis-Fernand, Solange Lenihan Date Incorporated: 1/24/19 Chamber: Self incorporated

Independence

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FEBRUARY 16, 2019

By The Numbers: 40 Years of Statehood

By ED Kennedy, STAR Businessweek Correspondent

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he story of a nation will, of course, always be told with words. Just the same as everyone at the Saint Lucia STAR is proud of this newspaper’s work in its enduring goal of ‘Bringing the Truth to Light’, so too have so many voices more widely helped tell the story of Saint Lucia. At the very core of this are always the conversations, praises and occasional critiques that citizens of Saint Lucia make of the nation each day.

Alongside the value of words is the rich understanding that can be gained from numbers and statistics. So much of what it means to be a citizen is subjective and emotive, but economic advancement can be assessed in clearcut data, and tells a story in its own way. That’s why now, the month of the country’s independence anniversary, is a fantastic time to look back on 40 years of Saint Lucia’s national life by the numbers.

The Past’s Impact on the Present

Today Saint Lucia’s economy is in a state of great transition. It is influenced not only by the four decades that the nation has pursued as an independent state, but most recently an era of the global economy post-GFC that continues to produce aftershocks as well as lasting change.

years since. Prime Minister Chastanet’s vow earlier this year, that he would not permit the debt burden to increase, is a bold declaration. If he can keep to it, not only will it help steer Saint Lucia away from future problems that would arise with greater debt accumulation, but it would also surely assist his government’s electoral fortunes at the end of this term in office.

The next 40 years

The Past 40 Years Around the World

The USSR has come and gone, as have forecasts that Japan would be the next economic giant of the world. In 1980 China was not even in the top 10 of global economies when ranked by GDP; today it is the second largest, and predicted by many to overtake the United States if its current rate of growth continues.

There has also been a distinctive cultural change, offset by certain exceptional factors. While the Brexit issue may signify an end to Britain’s closest years of engagement with Europe, undoubtedly the memorable reign of Queen Elizabeth II has seen former UK territories retain a close personal kinship with her, the historic era in which she ascended the throne, and London by extension. This may not hold so strongly once the current monarch’s reign ends.

The operation of these events is external to Saint Lucia in the day to day, but has informed the story of the nation, and the perspective of the government in Castries as it has looked out upon a world that today offers unparalleled economic profitability — provided the hazards of pursuing it can be avoided.

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‘The Father of Saint Lucia’ — Former Prime Minister Sir John Compton

Plans for an upgraded airport, a slew of public capital projects and numerous hospitality investments, plus a growing Citizenship by Investment programme, new methods of public sector management, and the Pearl of the Caribbean project are all set to drive new economic growth.

Recent years have seen strong growth occur nationally. In 2012 Saint Lucia’s GDP was US$ 1.44bn. It is predicted that in ten years from that date, following strong progress in intervening years, GDP will rise to US$ 2.07bn. By every measure this is a tremendous story of growth from the annual GDP of just US$ 130mn in 1979.

Saint Lucia has trailed the fastest growing Caribbean nations in recent years, such as the Dominican Republic and St Kitts and Nevis, yet with 2018 seeing the nation record a strong shift from annual GDP growth of 1.5 per cent to 2.7 per cent — almost doubling annual growth — the nation’s back to back record-breaking years in tourist arrivals should be cheered all over.

With Caribbean and Latin American economies projected to grow 1.7 per cent

in 2019, the World Bank’s predictions that Saint Lucia will grow over 2 per cent (even though slightly lower than the 2.7 per cent high of 2018) signifies the nation is officially outpacing the growth rate across the region — something every Saint Lucia can be proud of.

Industries and Issues

In decades prior, Saint Lucia has seen its manufacturing and banana production industries decline. The nation is, of course, still producing goods, and still exporting bananas, but the highs of exporting 132,000 tonnes of bananas in 1992 looks colossal compared to the 20,000 tonnes exported in 2017. It points to a reality that must be observed alongside celebrations this month: that while there is indeed much to celebrate, there is also work ahead for achieving greater fiscal balance.

In 2017 Saint Lucia had a negative trade balance of US$ 1.63bn, ultimately exporting US$ 77.6mn while importing US$ 1.71bn. Public debt also remains a key issue. In 2012 it was 77 per cent of GDP, and debt has continued to rise in the

Presently the world is seeing a textbook example of great power politics at work with the US-China trade war. This runs alongside the perceived democratic deficit, the existence of the greatest global rich-poor gap since the early 1900s and the dual challenge seen in so many economies of rising property prices but diminishing full-time jobs. Such huge and diverse issues could understandably see many people cynical and even fearful of the future.

Yet, compared to 40 years ago, the world (despite what it may seem at times) is a more peaceful place. Cold War tensions that once encircled the Caribbean are gone, and countless people have risen out of poverty and into the middle class, thanks to opportunities in the free market.

The shift to a digital and online global economy is also empowering little nations to follow the trailblazing done by others like Estonia, the Republic of Ireland and Singapore in positioning themselves for greater economic engagement globally, and the rewards that come with it.

Despite the challenges ahead, the story of Saint Lucia’s past 40 years, in tandem with opportunities in the future, affirms that the next 40 years can be even bigger, better and bolder. There’s every reason to learn from the past but we are justified in celebrating it this month, with delight over the progress made by this island nation over the past four SBW decades.

Today Saint Lucia’s economy is in a state of great transition.

It is influenced not only by the four decades that the nation has pursued as an independent state, but most recently an era of the global economy post-GFC that continues to produce aftershocks as well as lasting change

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FEBRUARY 16, 2019

FOREIGN POLICY

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Venezuelan Crisis Needs A Planned Humanitarian Response

By David Jessop

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n the years following the Arab Spring, Europe learnt that without prior planning and consideration, large numbers of people fleeing instability can rapidly create political, social and economic tensions in ways that polarise national discourse, change politics, affect foreign relations, and redefine social thinking.

Without clear policies and a well-planned response to the accelerating humanitarian disaster in Venezuela, there are good reasons to believe that similar consequences could follow in the Caribbean.

Read the February 1 report produced by the International Federation of the Red Cross and it is immediately apparent that the refugee crisis in Venezuela will have hard-to-manage consequences, particularly for smaller nations.

In its report, the Red Cross says that by December 2019, an estimated 5.3 million Venezuelans will have left their country, migrating “to improve the socio-economic conditions of themselves and their families”.

It observed that what is now happening “is the largest migration in the history

Colombian police officers stand in front of people lining up to try to cross into Colombia from Venezuela through Simon Bolivar International Bridge in Cucuta, Colombia, on January 24, 2018

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of the Americas” and that “there is no indication that the influx of Venezuelans to other regional countries will slow any time soon”. It warns this “will overwhelm the host countries’ limited local and national capacities”.

The scale of what now needs to be done, and the complexity of doing so in a region with limited resources, is staggering, as the Red Cross indicates.

In Argentina, it observes, there are now 130,000 registered refugees and a national emergency has had to be declared. In Ecuador around one million Venezuelan nationals have entered either to transit or to

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stay in urban areas, with recent migrant related criminal acts leading to growing tension and xenophobic sentiment.

Peru has received 700,000 Venezuelan refugees. There are 10,000 living in Uruguay, 76,000 are seeking to remain legally in Panama, and about 150,000 have crossed into Brazil’s northern state of Roraima where many have requested asylum. This is in addition to up to 1.2 million living in Colombia and the thousands who enter the country every day to begin a hazardous trek north.

What is clear from the developments of the last seven days is that this situation is going to get much worse.

The next likely flash point will be around the attempted delivery of humanitarian assistance across the border into Venezuela by the United States and other nations before recently introduced US oil sanctions start to create even greater shortages of food, medicine and fuel.

President Maduro and the leadership of Venezuela’s military and National Guard have so far been adamant that the supply of humanitarian relief in this manner is unacceptable, and, as this is being written, the international bridge from Colombia, that was to have been used, has been blocked, indicating that a highstakes confrontation and an international test of wills has begun.

It is a development that suggests that the hemisphere is now just one miscalculation away from what, at worst, could end in hostilities followed by a borderless civil war. If this happens it is likely that there will also be a surge in the already large numbers of refugees arriving in Trinidad & Tobago, Guyana, Curacao and Aruba, and other locations around the region. Unlike those who came in the first middle-class wave and who largely moved on, or who have been assimilated, newer arrivals will be families who have very little or nothing at all to offer immediately.

In Trinidad, which has the highest proportion of Venezuelan migrants in relation to its population, the Red Cross already reports serious concerns about their health and physical security. It notes that a significant proportion of the 40,000 or more Venezuelans who have fled to

the Republic are continuing “to experience stigma and discrimination, with acts of resentment regarding employment and access to health services further threatening their security”.

Although Trinidad says that it is moving to regularise the situation of refugees and asylum seekers, it is doing so at a pace that seems blind to the impending human tsunami. Its Attorney General, Faris AlRawi, recently told parliament that a draft bill had been prepared, but there were still issues to be addressed connected to national security, the number of asylum seekers in the country, and whether government could afford to bear the costs of housing, education and health care. He also said that domestic legislation could only be developed after two international treaties were ratified.

In contrast, in Guyana where the Red Cross says there are now an estimated 24,000 Venezuelans in the country (other reports say 36,400), migrants are entering and leaving to access health care, food and schooling and the government is moving to provide greater humanitarian relief.

Also at risk from any eastward refugee surge is Curacao where reportedly there are already 26,000 Venezuelan migrants, and Aruba where there are 16,000, with the real possibility of an unpredictable Venezuelan response should they, like Colombia, Brazil and Puerto Rico, become supply points for the delivery of humanitarian assistance.

For the most part, Caribbean nations have belatedly, to a greater or lesser degree, unified behind an approach led by Mexico and Uruguay which aims to foster a political dialogue between the various parties. Haiti and the Dominican Republic have a different view, as does Cuba, for quite different reasons.

Any attempt by CARICOM to achieve a negotiated solution is welcome, but it is to miss a just as important point. What is happening is not about ideology, oil or even democratic or constitutional norms, but about how any state treats ordinary people, their hopes, their children and their lives, whether they are citizens or refugees.

As the economist Marla Dukharan observed in a recent impassioned commentary, for too long the developing humanitarian tragedy in Venezuela has been ignored by neighbours that have been only too happy to benefit uncritically from Caracas’ PetroCaribe programme.

This should be the moment when the Caribbean prepares for what may happen next.

Responsible politicians in the region should couple their desire for a negotiated political solution with a well-planned robust and measured humanitarian response. If they do not, they may find themselves, before long, being bounced by local demagogues into rhetoric and actions that represent values they, and one hopes most citizens, do not hold.

David Jessop is a consultant to the Caribbean Council

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