Taiwan's Charm Offensive

THE STAR BUSINESSWEEK AUGUST 3, 2019

WWW.STLUCIASTAR.COM

TAIWAN’S CHARM OFFENSIVE

Taiwan’s President Tsai Ing-wen met with Caribbean leaders last month, making official visits to St Vincent and the Grenadines, Saint Lucia, St Kitts and Nevis, and Haiti. She also made a brief stop in the United States as the diplomatic party transited through North America. The trip, which was announced with great fanfare and widely covered by international media, is part of a bigger effort — Taiwan’s diplomatic mission to shore up its ties across the globe.

BY CATHERINE MORRIS, STAR BUSINESSWEEK CORRESPONDENT

IN THIS EDITION OF

SBW THE STAR BUSINESSWEEK

The Call to the Caribbean for Brazil and Mexico’s New Presidents As Latin America’s two biggest economies, the performance of Brazil and Mexico will always have a tremendous impact on the economic health of the region as a whole.

Page 3

Continued on page 4

Like two giant cruise liners that sail our seas, Brazil and Mexico are the two economic giants of Latin America.

Can the Caribbean draw new trade from them with two new presidents at the helm? (Image: Pixabay)

Can A New President Help Guatemala Turn the Page?

On August 11 Guatemalans will take part in the final stage of the nation’s presidential election.

Page 7

Taiwanese President Tsai Ing-wen (centre) with Prime Minister Allen Chastanet (left) and Guy Joseph, Minister for Economic Development at the St. Jude reconstruction sod-turning ceremony last month.

2

THE STAR BUSINESSWEEK

AUGUST 3, 2019

CITIZENSHIP BY INVESTMENT

WWW.STLUCIASTAR.COM

The STAR Businessweek CHRISTIAN WAYNE PUBLISHER & EDITOR OF STAR BUSINESSWEEK

3 WAYS TO FIX THE CARIBBEAN BANKING PROBLEM OF CBI

BY PETER MACFARLANE, NTL TRUST

SWIFT Headquarters, La Hulpe, Belgium

A

s someone who has helped many people acquire new Caribbean citizenships and who worked in the “offshore” banking world back in the day, it never ceases to amaze me why governments don’t make it easier for people to pay for their citizenship investments.

It is a common-sense rule of business that if you make things easier for the client (citizenship applicant in this case) then you will be more successful.

I constantly hear from CBI consultancies how their clients have problems paying. A typical case is Mr X. who has already undergone exhaustive due diligence to be approved under one of the Caribbean CBI programmes, but then the “National Co-operative Bank” (the existence of which is, of course, pure fiction for the purposes of illustration) refuses to co-operate in accepting his money on behalf of the national treasury.

Other variations to this problem are even more bizarre but true. A year’s bank statements translated into English. Every debit card purchase of groceries has to be translated by a courtcertified translator. Thereupon follow requests for affidavits about individual transactions, with bureaucrats seemingly oblivious to the fact that notaries in foreign countries might not want to certify affidavits in English in exactly the format they require.

Unfortunately, requests like this demonstrate a fundamental lack of understanding of compliance at

Caribbean banks. It is widely recognised in the industry that compliance officers who focus on checking boxes are likely to miss out on the big — actual — risks. We are talking about clients who have already been investigated at length by large, reputable international due diligence agencies, yet it sometimes seems to practitioners that the banks are more focused on the date on an electricity bill.

Banks are, of course, private companies and what risks they are willing to take is entirely their decision. Their main concern, understandably, is what their US correspondents will think. With so much derisking in the region over the past few years, being cut off from international trade in US dollars is a clear and present danger for all the banks in the region.

There are, however, plenty of alternatives that Caribbean banks and governments are amazingly failing to pursue.

1. RECEIVE FUNDS IN EC DOLLARS, RATHER THAN US DOLLARS Probably the most obvious is to carry out transactions in Eastern Caribbean dollars instead of US dollars. The EC dollar (ISO currency code: XCD) is a stable currency that has been pegged to the US dollar since 1976. As the official national currency of all five Caribbean CBI jurisdictions, there should be no legislative change required to accept payment in EC dollars.

There is a Central Clearing House for all cheques in EC dollars, meaning that Continued on page 6

LATIN AMERICA

THE STAR BUSINESSWEEK

AUGUST 3, 2019

WWW.STLUCIASTAR.COM

THE CALL TO THE CARIBBEAN FOR BRAZIL AND MEXICO’S NEW PRESIDENTS

BY ED KENNEDY, STAR BUSINESSWEEK CORRESPONDENT

A

s Latin America’s two biggest economies, the performance of Brazil and Mexico will always have a tremendous impact on the economic health of the region as a whole. In this current chapter of global politics — with the US-China trade dispute and the ongoing debacle of Brexit which threatens economic harm for both the UK and EU — nations across Latin America are once more looking closer to home to bolster economic growth, given the instability further afield.

For Brazil and Mexico, the past calendar year has seen two new presidents emerge on the scene: the rightist Jair Bolsonaro in Brazil, who is a clear contrast to the leftist Andrés Manuel López Obrador, aka AMLO, in Mexico. Each has different visions for their nation and the region around them. But to what extent could they find a common purpose? And how may the Caribbean stand to benefit?

BOLSONARO AT HOME AND ABROAD Bolsonaro won the presidency amidst a cloud of scandal that saw the past three presidents, Luiz Inácio Lula da Silva, Dilma Rousseff and Michel Temer, each accused of corruption, offset by accusations of political witch hunts in response. Views vary on the scandal but all agree that it has been hugely damaging to Brazil.

As a longtime politician who had never ascended into the political elite before, Bolsonaro was able to campaign as an outsider, promising swift and bold change accordingly. So far these promises have been largely unfulfilled. Bolsonaro’s presidential term is young but, even where headway has been made, such as his key promise to deliver pension reform, it has quickly become embattled; strikes, congressional antics, and a reduced rate in expected public savings — generating US$ 200bn when Bolsonaro’s goal was closer to US$ 327bn — have led some to declare the reform programme dead before it has even been introduced.

In foreign policy, Bolsonaro’s ambition to drive change has found more momentum, notably strengthening ties with the US and Israel, with an announcement in March 2019 that he would open a diplomatic office in Jerusalem following on from Trump’s shifting of the US Embassy there from Tel Aviv. With his domestic policy being

Andrés Manuel López Obrador (left) and Jair Messias Bolsonaro (right), the new presidents of Mexico and Brazil respectively, share the feature of being seen as solutions.

Though they are at opposite poles, they were both chosen as antitheses of previous governments at a time when discontent pervaded Latin American politics.

frustrated at home, Bolsonaro will be on the lookout in the second half of this year for more foreign policy moves that he can declare successes, hoping to bolster his historically low approval rating.

AMLO’S ONGOING CAMPAIGN Like US President Donald Trump north of the Mexican border, critics of AMLO have cited the ongoing blur between his role as president and presidential candidate. Even after half a year in office, AMLO is still racking up regular public appearances in front of thousands of people, filled with promises of new jobs and infrastructure projects.

Some may say this is just reflective of a modern presidency; others would say it’s time to wind back the public speaking and up the pace on policy implementation. AMLO has maintained a greater popularity among his nation than the Brazilian president has at home, but on key metrics, such as the high murder rate and high gas prices — campaign promises that AMLO said he would address and bring down — there has been little progress.

Any observer from afar may well say that these presidents just need more time, but this is offset by the fact that most new leaders of government have their greatest political capital when they first take office. Should they be unable to stamp their authority and effect change early on, the prospects of them being able to do so down the line will decrease. So both leaders are eager to proclaim new success, abroad if not at home.

A CARIBBEAN CONNECTION Where Bolsonaro and AMLO share a common perspective is their readiness to up-end prior political norms and conventions. While on paper the two sit at opposite ends of the political ideology, they each contend that their nations need a new path in years ahead if they are going to grow and thrive. It is here that Caribbean countries have a unique appeal, offering these two economic powers a collection of nations with stable democracies, steadily growing economies, and an ambition to build greater international trade links.

Mexico and Brazil are both pursuing immense financial reforms. In this field, the Caribbean already has a strong industry and leading global professionals. There is also emerging recognition of local expertise within the sectors of digital technology, renewable energy and emerging public instruments, like citizenship by investment programmes and cryptocurrency (although these latter aspects remain controversial in the minds of many).

There is also the matter of size.

The Caribbean cannot lay claim to the same population as China or India; nor the economic diversity of so many different industries that can compete on a global scale, as in Beijing and New Delhi. However, there are a number of areas where Caribbean countries can make a strong contribution, and look to

reap the rewards. Just like these two nations of the Americas, many Caribbean economies aspire to greater diversification in the years ahead, with new trade at its core.

THE FUTURE The competitive aspect of Brazil and Mexico cannot be overlooked.

Currently their chief trading priorities are different, with Brazil primarily focused on building trade in South America whereas Mexico looks north to the US and Canada. In recent years the two nations have had notable economic skirmishes in the oil and automotive industries, and this won’t change anytime soon.

One should also consider the role of other nations, like Argentina — in 2018 the largest exporter of automobiles to Brazil with a value of US$ 1.8bn compared to Mexico’s US$ 1bn.

Ultimately, there remains a massive gulf in economic size between Brazil and Mexico and all other regional nations.

Brazil’s economy is roughly two and a half times that of Mexico, and Mexico’s is three times bigger than Argentina’s, the region’s third largest economy.

This means a greater presence in the Caribbean of these two economic powers could bring major benefits to their citizens and the region alike.

With two presidents keen to break from the norm, there’s never been a better time to drive new trade with Latin America’s two biggest economies.

3

4

THE STAR BUSINESSWEEK

AUGUST 3, 2019

WWW.STLUCIASTAR.COM

FOREIGN AFFAIRS / TAIWAN

TAIWAN’S CHARM OFFENSIVE Continued from page 1

I

n this charm offensive, it makes sense for the tiny Asian territory to focus on the Caribbean where it has been battling its long-time enemy China for investments and influence. If diplomacy is political warfare then the Caribbean is a significant front for both nations, and the islands are reaping the rewards of the skirmish with investments pouring into infrastructure, education, health and tourism.

NATIONS AT ODDS Animosity between Taiwan and China has been bubbling for centuries but came to a head during the Chinese Civil War when the Communist Party seized power. The defeated Republic of China government fled to Taiwan in 1949 and set up a ROC-led state in opposition to the People’s Republic of China. Taiwan boomed, entering a period of economic growth through the 1950s and 60s. Today the island state has around 23 million inhabitants and a multi-party democracy.

However, China still refuses to recognise it as a self-governing province and views the Taiwanese government as traitorous upstarts.

With powerful allies such as the United States following the ‘One China’ line, Taiwan has been politically isolated. It has formal relationships with just 17 countries, most of which are other small islands. Gaining international support is crucial to Taiwan’s survival, particularly as Beijing ups the pressure, sending warships to perform ‘military drills’ at the Taiwanese border and actively condemning it in the international community. In January Chinese President Xi Jinping gave a speech reiterating his goal of bringing Taiwan back into the fold, by force if necessary. More recently Taiwan stirred the waters further by weighing in on the Hong Kong protests, calling for legitimate elections to be held to deepen Hong Kong’s autonomy from China and sheltering of political asylum seekers.

President Tsai Ing-wen has always taken a confrontational line with China.

The Taiwanese leader, who is up for reelection in January, is now pushing hard to extend Taiwan’s meagre influence, relying on longstanding partners in the Latin America and Caribbean region to boost her global credentials. This latest mission follows a tour of allies in the Pacific, with stops in Palau, Nauru and the Marshall Islands.

REGIONAL FOOTHOLD The conflict between China and Taiwan has been particularly apparent in the Caribbean. China has been very active in snatching up potential allies, making investments, gifts and diplomatic overtures to most of the region’s states. It is particularly embedded in The Bahamas and Jamaica, funding energy projects, mega resorts and infrastructure initiatives.

Five Caribbean countries have signed

on to China’s Belt and Road initiative, borrowing money for infrastructure works, including Trinidad and Tobago, Grenada, and Antigua and Barbuda.

And last year China welcomed a new friend into the fold when the Dominican Republic received a US$ 600mn loan for its national grid.

By comparison, Taiwan has been concentrating on its small but loyal band of Caribbean supporters, which includes staunch ally Saint Lucia. Over the years Saint Lucia has received a myriad of investments from Taiwan and, in return, has proved a tenacious advocate for the small province, supporting its independence and recognising its legitimacy in a number of global forums including the World Health Assembly and the United Nations.

According to Taiwanese officials, the theme of last month’s tour was “Freedom, democracy and sustainable governance”. In Castries, discussions centred around foreign investment and tourism. The Taiwanese delegation visited various sites to see their investments in action, including the St Jude Hospital Redevelopment Project, the Gros Islet Human Resource Development Centre and the Inland Reception and Distribution Centre. A tourism delegation accompanied the party to discuss links with the tourism sector, going forward.

The Taiwanese group mingled with agricultural workers, schoolchildren, entertainers and parliamentarians. It was a busy few days with plenty of photo opportunities, banquets and project

launches. Addressing Saint Lucia’s Parliament, President Tsai recalled Prime Minister Chastanet’s state visit to Taiwan last year and referred to him and members of his government as “old friends”. She continued: “Saint Lucia has long been a staunch ally in the Caribbean. I want to thank all of you for your courageous support. I hope you will continue to stand by us. Taiwan has much more to contribute.”

WINNING VOTES Heading into an election year, President Tsai Ing-wen needed a big win on her Caribbean tour. While much was made of the delegation’s stops in America and whether that heralded a softening of relations between the US and Taiwan, the

Caribbean leg was equally successful and equally important.

The President’s main opponent in the 2020 election is an advocate of closer ties with Beijing. To secure a second term, Tsai must win over voters unsure of Taiwan’s resilience to the everpresent threat of Chinese unification and demonstrate that the island can step out from China’s shadow on the global stage.

By reconnecting with small but strategic allies like Saint Lucia, and pushing for more alliances across the Caribbean in the fields of energy, infrastructure, technology and tourism, Tsai is continuing her aggressive moves towards more economic and political freedom and framing herself as a leader with a firm grip on future progress.

Artwork commissioned by the Taiwanese Embassy in Saint Lucia ahead of President Tsai’s visit to the island last month.

CENTRAL BANKING

THE STAR BUSINESSWEEK

AUGUST 3, 2019

WWW.STLUCIASTAR.COM

5

ECCB HITS NEW HIGHS

BY CATHERINE MORRIS, STAR BUSINESSWEEK CORRESPONDENT

I

t’s been a good year for the Eastern Caribbean Central Bank (ECCB), which is celebrating its third consecutive year of growth.

Releasing its 2018-2019 annual report at the end of June, the bank posted profits of EC$ 32.7mn — more than triple the previous year’s figures.

In announcing the results, ECCB Governor Timothy Antoine acknowledged that external factors played a part in the bank’s success saying, “The fiscal environment [in 2018] was much more benign than the previous year when several ECCU countries were battered by unusually strong hurricanes. Despite relatively fair weather in the last year, the global economic environment was less pleasant. In 2018 the global economy began to show signs of losing steam. That notwithstanding, the Currency Union achieved a significant improvement in its growth performance as post-hurricane recovery and reconstruction efforts continued.”

Real growth in the Eastern Caribbean Currency Union (ECCU) reached 3.3 per cent in 2018, a substantial upswing from 1.4 per cent in 2017. Antigua and Barbuda, Grenada and St Kitts and Nevis were the leaders in driving this growth.

The ECCB’s long-term goal of 5 per cent growth across the Union remains out of reach, however. “While the performance is encouraging, we do recognise it still falls short,” said Antoine. Another target that is within sight, but not yet delivered, is the ECCU’s debt to GDP ratio. The bank wants to see this number drop to a maximum of 60 per cent and came close in the 2018-2019 fiscal year with 67.9 per cent, marking the first time it has dropped below 70 per cent since 2000.

Foreign reserves, the basis of monetary stability throughout the ECCU, also performed positively last year, with a backing ratio of 99.5 per cent. There are still concerns over credit growth, however, as non-performing loans (NPLs) continue to burden the financial system (accounting for 11.4 per cent of total loans in 2018) and resulted in a cautious approach from banks wary of extending credit. This reticence has stifled growth somewhat as citizens are denied access to much-needed credit — for businesses, investments and property purchases. To tackle this, the ECCB is mobilising the Eastern Caribbean Partial Credit Guarantee Corporation which will guarantee loans for SMEs. The bank is also launching the newly formed Eastern Caribbean Credit Bureau this year and progressing with plans to establish a comprehensive credit reporting regulatory framework and coordinate public awareness and education activities.

NEW YEAR, NEW GROWTH Last year marked 35 years since the ECCB was created. With over three

The ECCB headquarters in Basseterre, St Kitts and Nevis. The ECCB is the central bank for the Eastern Caribbean dollar and is the monetary authority for the members of the Organisation of Eastern Caribbean States.

Governor of the ECCB Mr. Timothy Antoine (left) and CEO of Bitt Inc. Mr. Rawdon Adams after signing the contract to launch the ECCB CBDC pilot project on March 6, 2019

decades behind it, the bank aims to build on its history of sustaining financial stability while evolving with the times. In March the ECCB launched its EC Digital Currency Pilot Project which will create a new online version of the EC dollar (DXCD). Barbados-based fin tech group Bitt Inc is partnering with the bank to roll out the new blockchain-backed currency which will be distributed and used by licensed financial institutions and nonbank financial institutions throughout the ECCU. The DXCD will be the world’s first digital legal tender issued by a central bank on blockchain and is set to be trialled in select pilot countries when it reaches the end of the development and testing phase next year.

As technology revolutionises banking

around the world, the ECCB is keen to promote not just efficiency, but also security online. In May 2018, it reinstated the EC Payments Council, first established in 2006, which is responsible for maintaining the stability of the payments system across the Currency Union. The Council will monitor the safety of cashless payments and how they are being used.

Physical currency also got an overhaul this year with the EC dollar upgraded to polymer notes. The new family of bank notes was rolled out in June with the polymer EC$50 bill. New EC$100, EC$20 and EC$10 bills will make their debut by the end of this year and the bank expects to complete the initiative in September 2020 with the polymer EC$5.

Reflecting on last year’s activities, Governor Antoine urged the bank not to rest on its accomplishments but to make the most of its momentum, saying: “The new financial year will see us forging ahead with ongoing and new initiatives under the Strategic Plan, with a focus on continuing our modernisation thrust.

Though the task of socio-economic transformation may, at times, seem daunting and our agenda never-ending, the bank is energised and will press forward.”

The 2017-2021 ECCB Strategic Plan was launched in October 2017. Governor Antoine said that since then the bank has been “fully immersed in the hard and daily work of execution”. The Plan has five goals: to ensure monetary stability, promote financial stability, encourage fiscal and debt sustainability, maximise growth, competitiveness and employment, and increase organisational effectiveness.

The ECCB is predicting growth of 3.5 per cent in the coming year but acknowledges that “downside risk is high given the slowdown in global economic growth and growing geopolitical tensions”.

With Britain’s exit from the European Union on the horizon, and an upcoming election in the United States, 20192020 will be a year of change on the global stage, shaped by shifting alliances within and from the economic powerhouses of Europe, the US and Asia. The Caribbean, and particularly the small eastern states, have always been vulnerable to external forces.

To guard against financial uncertainty going forward, the ECCB is focusing on resilience. Building this kind of fortitude will mean an emphasis on improving the business climate (by climbing the Ease of Doing Business rankings), promoting better physical connectivity between the islands, fostering and supporting creative entrepreneurship and improving organisational effectiveness within the bank itself.

6

THE STAR BUSINESSWEEK

AUGUST 3, 2019

WWW.STLUCIASTAR.COM

CITIZENSHIP BY INVESTMENT

3 WAYS TO FIX THE CARIBBEAN BANKING PROBLEM OF CBI Continued from page 2

cheques drawn on one of the territories can be cleared almost instantly in one of the other territories, including high-value cheques.

At its simplest, this means that if the governments could find just one bank in the region willing to serve the CBI market, it can easily help transfer funds into other regional banks. It would also allow, for example, a new governmentowned bank to join the system and transact in EC dollars, without fear of US correspondents because it would only do business in the local currency. Another variation would be to bring other market participants, such as existing credit unions, into the payment clearing system, or to pass legislation to encourage new “challenger banks” along the lines of the Electronic Money Institutions that have become so successful in Europe.

2. SET UP YOUR OWN BANK AND BYPASS THE US SWIFT SYSTEM Derisking is not just a Caribbean problem. Even in the European Union now they are plenty of banks that have given up transacting in US dollars

because they cannot get correspondent accounts.

The British Overseas Territory of Gibraltar suffered from derisking a few years ago, with even the British high street banks withdrawing from the market. Gibraltar responded in 2015 by setting up a government-owned full-service retail bank, Gibraltar International Bank (GIB). GIB today serves as a model and has been sharing its know-how with other remote places such as the Falkland Islands, which are not attractive to mainstream banks.

GIB, with the support of the government, has become active in fields that many banks are not willing to take on, for example, banking well-regulated crypto and gambling businesses. This has directly resulted in the creation of hundreds of jobs for local people, even to such an extent that there are not enough local people to fill all the positions. Thousands of workers cross the border daily to work in the gaming and the nascent crypto sectors in Gibraltar. It is widely regarded as a success story.

Generally CIPs draw individuals from countries whose passports offer limited abilities to travel, such as China, Russia and Middle Eastern countries

If the Eastern Caribbean states could get together and set up a new bank along the lines of the GIB model, it could solve not just the CBI payments problem but inject a breath of fresh air and new opportunity into all sectors of the economy of the entire region, encouraging intraregional and international trade. If the governments don’t want to do it, there is nothing to stop a private entrepreneur doing so either. It is a huge opportunity just waiting to be tapped. Maybe a new CBI-funded project itself?

Obviously, though, setting up a new bank does not happen overnight. So let’s get back to fast solutions to the current problem. Aside from the Clearing House, SWIFT transfers are also possible in EC dollars. Numerous currency exchange houses in Europe are willing to receive US dollars, Euros, Pounds sterling, or any other major currency and send EC dollars to the Caribbean, bypassing the US correspondent banks. I could easily find a dozen currency trading businesses tomorrow that would compete to take on this business.

Besides the EC dollar solution, the second obvious solution is for the governments to open accounts abroad to receive CBI funds: whether in banking centres like London or Miami, or in countries where payments might be coming from, places like China, the UAE or Russia. Funds could be received in local or foreign currencies and converted.

Granted, the vast majority of banks will decline such business, but I am 100 per cent sure there are innovative banks in these places that will jump on a multibillion dollar niche business opportunity where everything is actually very clear and transparent, with the source of wealth already verified by top international due diligence agencies.

Why have the governments not already done this? I can only imagine it has a lot to do with political pressure from the banks on the islands who don’t

want to lose business. However, if they refuse to modernise themselves and hire compliance officers with the requisite international experience, language skills and so on to assess CBI risks properly, they only have themselves to blame.

3. RECEIVE FUNDS IN CRYPTOCURRENCIES, RATHER THAN IN TRADITIONAL MONEY The third major option is the oft-mooted cryptocurrency solution. This has been frequently discussed, and even supposedly implemented by Antigua, but, in reality, not much has happened. Again, it is a simple, straightforward option for Caribbean governments to implement.

With this option, they can basically outsource all the banking costs and compliance work to an existing crypto exchange. All the national treasuries need is a way to receive transfers from a crypto exchanger, which again could potentially be executed in EC dollars, or into Euro accounts of Caribbean banks if US dollars are the problem. They could even use the crypto-assets directly to pay for imports of food, fuel, building materials or anything else needed.

There might also be hybrid solutions involving more than one of these options.

Governments can also transfer some of this work to other partners such as International Marketing Agents or Escrow companies, but then they should at least provide some active support on the payment processing issue because banks do listen to what governments say.

The sad fact is that by not springing into action and going out into the world to find real practical solutions, Caribbean politicians risk killing the goose that keeps laying golden eggs. It will certainly be interesting to see what happens and to carry on this discussion on social media.

Originally published in Investment Migration Insider, a CBI trade publication.

LATIN AMERICA

THE STAR BUSINESSWEEK

AUGUST 3, 2019

CAN A NEW PRESIDENT HELP GUATEMALA TURN THE PAGE?

BY ED KENNEDY, STAR BUSINESSWEEK CORRESPONDENT

O

n August 11 Guatemalans will take part in the final stage of the nation’s presidential election. Sandra Torres of the centreleft National Unity of Hope Party (UNE) and Alejandro Giammattei of the conservative Let’s Go (VAMOS) will face off, having progressed past the first round of voting on June 16, in which no candidate in the field of 19 was able to command a majority.

While Guatemalans look to the future and hope a new president will see the nation turn the page, this will be an election deeply informed by the past. Recent years have seen a corruption scandal engulfing the political elite so there is some doubt that current presidential candidates can offer a true path forward.

So what would a Torres or Giammattei presidency mean for Guatemala? And can it really be any different this time round for an electorate seeking a presidency that’s a circuit breaker?

GUATEMALA AT HOME AND ABROAD The future of Guatemala is important not only for its citizens but for those of Latin America. The nation is something of a bellwether to regional trends. As the most populous country in Central America, and with a GDP that is around the average for Latin America (including the Caribbean), the highs and lows that Guatemala experiences from one year and decade to the next can be indicative of broader triumphs and challenges in the region. Unfortunately, in 2019 Guatemala is facing a time of trial.

The civil war in Guatemala ended in 1996. Today the country has a population (allowing for a variance due to emigration) of around 17.5 million. Since the late 1990s there has been the potential for the country to draw foreign investment but this hasn’t been successful in bridging the gap between rich and poor. As this recent electoral cycle has shown,

Guatemala will soon have a new occupant in the presidential palace.

But can the nation’s new leader overcome a trio of current crises? (Image: Pixabay)

the most pressing financial issues are the problem of money at home and the massive corruption scandal.

THREE WOES FOR THE NEXT PRESIDENT The next president of Guatemala will need to contend with three priority issues: gang violence, mass emigration and alleged corruption at the highest levels.

Individually, each could pose a major threat to the stability of a nation but, collectively, they represent a political nightmare.

Gang violence and the lack of economic opportunity have seen many Guatemalans flee the country. Their representation in the illegal immigrant debate in the United States has proven to be a particularly fractious foreign policy issue beyond Guatemalan shores.

While diversity is a good thing in democracy, too much of it can mean a potential fracture in a major party, or within the political system generally. A global example of this is seen in the US, with the Democrats’ 2020 presidential candidates. At present there are around 20 (the exact number is fluid as some candidates at the back of the pack can drop out at a moment’s notice), and feasibly five to ten of them with a real shot at the 2020 nomination. For Democrats this is an ‘embarrassment of riches’, given that there is obviously much talent in the party, but it also

signifies an absence of party consensus.

In Guatemala an absence of consensus has been seen in the elections on the subject of migration.

Among the 19 candidates for president, there was a huge variety of proposals to address the problem, meaning that whatever proposal either Torres or Giammattei puts forward, there will be resistance waiting in the wings.

Then there is the ongoing scandal surrounding the political elite, including current president Jimmy Morales, that arose as a result of findings from the UN International Commission against Impunity in Guatemala (aka the CICIG).

It reached crisis point in Morales’ term in September 2018; the president had previously been a supporter of the CICIG’s work but when they began investigating him, he indicated he would not renew the group’s mandate which is set to expire in September of this year.

CONTINUITY OR CHANGE? Jimmy Morales himself has been facing backlash for the corruption scandal but his successor will have to take office mindful that the corruption challenge isn’t confined to individuals; it is seen as a system and nationwide issue. The next president will have to decide how to proceed with the CICIG. Presently, both Torres and Giammattei oppose the

WWW.STLUCIASTAR.COM

CICIG’s ongoing presence in their nation.

While there is no suggestion from this writer that Torres or Giammattei is corrupt, as the New York Times detailed last month, both have been accused of corruption. For voters seeking a new beginning, both candidates’ position on the CICIG, combined with the cloud hanging over them, is sure to stifle political momentum. Regardless of who wins, the new president will arrive in office having to reclaim that momentum.

REAL LEADERSHIP THAT’S REALLY NEEDED This has been a turbulent year for Guatemala. The elections have raised questions of national identity and existential crises far beyond the political norm, such as gang violence, mass emigration and alleged corruption at the highest levels, all matters that threaten the future foundations of the state. It has meant — rare in a presidential election — that the broader policies each candidate holds for the future of the country and its economy have often taken a backseat.

These crises are substantial, so it’s understandable.

Any individual who runs for president must be ready to risk history’s turn on whether they will leave office with acclaim or condemnation. The next president of Guatemala is likely to become hugely consequential in the nation’s SBW history, for better or worse.

An article titled “The New Era In The China And Dominica Relationship”, published in last weekend’s edition of STAR Businessweek, incorrectly stated the date that Dominica established diplomatic relations with the People’s Republic of China. The two countries established diplomatic relations at the ambassadorial level on March 23, 2004. The article also stated that the People’s Republic of China opened an embassy in Dominica in September 2018.

That was incorrect. China opened an embassy in the Dominican Republic, not Dominica, in 2018.

7

8

THE STAR BUSINESSWEEK

AUGUST 3, 2019

WWW.STLUCIASTAR.COM

PRINTED & PUBLISHED BY THE STAR PUBLISHING CO, (1987) LTD. RODNEY BAY INDUSTRIAL ESTATE, MASSADE , P.O. BOX 1146, CASTRIES, ST LUCIA, TEL (758) 450 7827 . WEBSITE WWW.STLUCIASTAR.COM ALL RIGHTS RESERVED