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DIGITAL REAL ESTATE: how Caribbean islands can cash in on their country codes
“When it comes to monetising Caribbean country codes, Anguilla is the region’s unrivalled success story.” Every Caribbean country has its own unique footprint on the internet, thanks to its domain name. Saint Lucian sites are instantly recognisable from their ‘.lc’, Jamaica is identified by ‘.jm’, and Grenada by ‘.gd’. Known as country code Top-Level Domains (ccTLDs), there are more to these handles than just a convenient means of finding your way around the web.
BY CATHERINE MORRIS, STAR BUSINESSWEEK CORRESPONDENT Continued on page 4
IN THIS EDITION OF
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Residency by Investment Around the Region Last year Anguilla became the latest Caribbean jurisdiction to offer Residency by Investment. RBI schemes are often seen as a more palatable middle ground to their CBI counterparts – inviting overseas investment without having to hand out passports in return. Page 3
The Cayman Islands has one of the longest running RBIs in the region (Photo courtesy Hans Schwarzkopf/Pixabay)
Digging Into Sand Mining For the Caribbean, effective conservation and utilisation of sand supplies cannot simply be a vague aspiration of the eco to-do list; it’s critical to the future viability of regional tourism, and also the physical territory of nations increasingly battling against an endless ocean that seeks to reclaim land. Page 5
Albert Daniels, Senior Manager for ICANN Stakeholder Engagement for the Caribbean (Photo courtesy ICANN) If reckless sand mining continues, it threatens to sink Caribbean islands
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INTERNATIONAL RELATIONS
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GOVERNMENT OF SAINT LUCIA Ministry of Tourism, Information and Broadcasting,Culture and Creative Industries 3rd Floor, Sir Stanislaus James Bldg. The Waterfront, Castries Saint Lucia, West Indies Tel. No. (758) 468-4629/4603 Fax: (758) 451-7414
LATAM’S MOST INFLUENTIAL REGIONAL ORGANISATIONS BY ED KENNEDY, STAR BUSINESSWEEK CORRESPONDENT
March 18, 2020
DEAR INDUSTRY PARTNER, Our industry at this present time confronts a most trying period, perhaps the most devastating in its recent history. Together with the rest of the world, the Government of Saint Lucia continues to navigate the dynamics presented by COVID-19 and is committed to sharing in the global efforts to combat this virus. With rapid changes taking place globally, the impact on the travel industry is devastating. Around the world and in Saint Lucia, necessary precautions are being taken, to protect the health and safety of all citizens, visitors and residents. In proactively outlining response actions for the challenging period ahead, the Ministry of Tourism and the Saint Lucia Tourism Authority (SLTA), convened with the Board of Directors of the Saint Lucia Hospitality and Tourism Association (SLHTA) on Friday March 13, 2020 to gather first hand information on the overall status of the tourism industry over the next ninety days. We have also had similar dialogue with travel trade partners, airlines and media. As we endure this difficult time, lets us find inspiration from the multiple examples in history, which demonstrates to us, every time tourism has been resilient. Our collective will and shared resolve will overcome this. Please note that we remain focused at this time to ensure that Saint Lucia is positioned to regain its market share when the travel landscape rebounds. In an effort to contain the disease, the following measures have been taken: • • • •
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Activation of the National Health security Committee to develop the national response plan. Assessment of the capacities at the ports and health facilities and other relevant facilities to determine the capacity to respond and identify resource gaps. Training and procurement of resources. Imposed travel restrictions for Mainland China, Hong Kong, the Republic of Korea, Italy, Singapore, Spain, Iran, UK, Germany, and Mainland France and by Extension Martinique, whether in- transit or originating. Suspension of all yachting and pleasure craft calls into Saint Lucia until further notice. The Ministry of Health through the Bureau of Health Education commenced a public awareness and education campaign.
I urge you to observe all the necessary precautions outlined by the Health Authorities to stay protected from the COVID-19 epidemic and to work in tandem with the Ministry of Health, Ministry of Tourism and the Saint Lucia Tourism Authority, as we all remain strong and committed to the task. I know that this must be a most difficult time for you, your management team and your line employees. Therefore, I would like you to know that myself along with the Permanent Secretary in the Ministry of Tourism and the Chief Executive Officer of the SLTA stand ready to act as a bridge of communication between yourselves and the Health Authorities during this difficult period. Sincerely,
Honourable Dominic Fedee Minister of Tourism Information and Broadcasting, Culture and Creative Industries
A tangled web of international alliances. The alliance data shown in the map (compiled by Douglas M. Gibler in ’International Military Alliances 1648-2008’) comes from three sources: The Correlates of War Project; The Alliance Treaty Obligations and Provisions Project (ATOP); Michael Beckley, ‘The Myth of Entangling Alliances’.
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n 2020 the postwar liberal consensus is being tested. Not since before World War II has the international community known a time when world leaders flirt with protectionism and isolationism so heavily. Multilateral, regional organisations cannot provide a ‘cure all’ to these challenges – indeed, among any organisation’s members can be those countries who are leading such a charge – but they do offer a strong community for nations committed to collective ideals and international co-operation. This is especially so in an era when longstanding and firmly established norms around free trade and Western security alliances are now being heavily scrutinised. The Caribbean and wider Latin America has an abundance of regional organisations that promise the benefits of partnerships to those nations that join. But they are not all made equal, and many regional challenges inform their ability to be truly effective vehicles of regional engagement and exchange. Here are six of Latin America’s (LATAM’s) most powerful regional organisations, and the factors that underwrite their strength.
1. THE ORGANIZATION OF AMERICAN STATES (OAS) Active since 1948, the Organization seeks to advance four central goals among its member nations: democracy, human rights, security and development. It once had all 35 independent states
of the Americas within its membership but recent years have seen Cuba and Venezuela experience ‘in and out’ statuses as members. This notwithstanding, the OAS remains, by total GDP of its collective membership, the largest organisation of its kind in the region, albeit by a small margin.
2. FORUM FOR EAST ASIA AND LATIN AMERICAN COOPERATION (FEALAC) For LATAM nations FEALAC is a key bridge to the global economy’s ‘engine room’ of Asia. Established in 1999, and today with 36 member countries from LATAM and Asia, this forum has rapidly grown in importance, commensurate with the Asian region’s scorching economic growth throughout the 2000s. With an emphasis on meetings at the level of foreign minister, senior officials and working-level officials, up to 2007 the group had notably implemented 411 national and regional projects among member countries. 3. THE COMMUNITY OF LATIN AMERICAN AND CARIBBEAN STATES (CELAC) With 33 member states all hailing exclusively from LATAM, CELAC is a regional organisation with a particularly distinctive local identity. Its aim is for members to work in greater political, social and cultural integration, and this year has seen a new momentum following Continued on page 6
RESIDENCY BY INVESTMENT
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RESIDENCY BY INVESTMENT AROUND THE REGION BY CATHERINE MORRIS, STAR BUSINESSWEEK CORRESPONDENT
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ast year Anguilla became the latest Caribbean jurisdiction to offer Residency by Investment. RBI schemes are often seen as a more palatable middle ground to their CBI counterparts – inviting overseas investment without having to hand out passports in return. Unsurprisingly, the islands that benefit most from these programmes are those with a high-demand residential market, an established luxury property niche, favourable tax systems and an easy to navigate legislative framework. STAR Businessweek takes a look at RBIs around the region.
ANGUILLA The newly-created Select Anguilla is the government agency charged with running the country’s two new RBI programmes and, according to CEO Philip Kisob, will “strongly embrace concepts of best practices; robust due diligence; training and certification of key personnel; use of technology; integrity; understanding the market and building a dynamic migration programme”. The programmes are designed and implemented by investment migration firms Arton Capital and Latitude Group. The first RBI programme offers residency to applicants purchasing or building a property worth a minimum of US$ 750,000, and who are committed to maintaining it for at least five years. RBI applicants can also qualify by making a single donation (worth US$ 150,000 or above) to the Anguilla Capital Development Fund, which is used to bankroll public projects. The second scheme, the High Value Resident Programme, comes with a laundry list of requirements. To successfully qualify, applicants must pay US$ 75,000 a year in annual worldwide income tax to Anguilla’s treasury, own and maintain a property valued at more than US$ 400,000, establish links in the country, spend a minimum 45 days there a year, make an annual written declaration to the effect that they spend less than 183 days elsewhere, demonstrate that they can meet their tax obligations under the RBI programme for the first five years, and pay the necessary RBI fees. BAHAMAS The investment threshold for residency in the Bahamas has been subject to heated debate over the years as successive governments have gone back and forth on the numbers. Prior
Anguilla introduced two RBI programmes last year, managed by Select Anguilla (Photo courtesy Ray Googin/Wiki)
to 2018, investors had to buy property worth US$ 500,000 or over to qualify but this threshold was recently raised to US$ 750,000 (the government has signalled, however, that this may be lowered for the more economically depressed Bahamian islands to encourage investment throughout the archipelago rather than just Nassau and other developed hubs). At present, foreigners can qualify for permanent residency in the Bahamas if they buy a property worth at least US$ 750,000, but those homeowners whose property is worth US$ 1.5mn or above can fast-track the process, receiving accelerated consideration of their application. There are also ongoing plans to codify the Bahamas’ tax residency initiative. To qualify for tax residency, applicants must reside in the country for a minimum of 90 days a year and not spend more than 183 days elsewhere. The financial services industry is currently urging government to enshrine the tax residency certificate into law, giving greater certainty to investors.
BARBADOS When it comes to residency investment, Barbados sets a high bar. The Barbados Special Entry and Reside Permit (SERP) was introduced in 2012, offering permanent residency to those investing US$ 2mn or more into the country (either through property or other vehicles). Barbados has also added an age component to its regime, specifying that High Net Worth Individuals aged 60 and over can gain an open-ended SERP, lasting indefinitely, whereas applicants younger than 60 are issued a permit for the number of years until they reach that age.
CAYMAN ISLANDS A veteran of RBI, the Cayman Islands has a clear framework for high net worth would-be residents. There are four options, covering wealthy retirees, property-hunters and business backers, and they don’t come cheap. Anyone investing a minimum of CI$ 2mn in property is eligible for the Certificate of Permanent Residency for Persons of Independent Means, which gives them the right to reside there indefinitely. A similar certificate is available for foreigners who want to live in the Caymans without the right to work and can demonstrate that they have invested in real estate and meet financial standing requirements. This residency permit lasts up to 25 years and comes with some strings attached
depending on where investors want to live. For Grand Cayman, applicants must have an annual income of at least CI$ 120,000 or open an account on the islands and maintain a balance of at least CI$ 400,000. They must also invest CI$ 1mn, of which at least half must be in real estate. The figures are lower for Cayman Brac and Little Cayman. A Certificate of Direct Investment eliminates the real estate requirement, asking for a CI$ 1mn investment in an employment-generating business. A Residency Certificate (Substantial Business Presence) is available to those who invest in, or are employed in a senior role, in an approved category of business in the islands. This permit requires no minimum investment and is valid for 25 years.
The programmes are designed and implemented by investment migration firms Arton Capital and Latitude Group. The first RBI programme offers residency to applicants purchasing or building a property worth a minimum of US$ 750,000, and who are committed to maintaining it for at least five years
MONTSERRAT Unsurprisingly, given its size and relative lack of demand, Montserrat’s Economic Residence Permit carries one of the lowest thresholds in the region. To qualify, applicants must maintain a balance of at least EC$ 400,000 in a local bank, or invest in property worth at least EC$ 400,000, or hold Montserrat goverment securities worth a minimum of EC$ 400,000. TURKS & CAICOS Invest Turks and Caicos, created in 2015, runs the country’s residency programmes and caps the total amount of permits issued each year at 200. Foreigners can gain permanent residency by investing in property or business with the threshold for both set at SBW a minimum of US$ 1mn.
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DIGITAL ECONOMY
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DIGITAL REAL ESTATE: how Caribbean islands can cash in on their country codes Continued from page 1
These pieces of digital real estate are increasingly becoming more valuable as the traditional ‘.com’ falls out of fashion, and can be leveraged into important revenue streams for Caribbean governments – as evidenced by the growing success of Anguilla’s ccTLD.
ALTERNATIVE ADDRESSES When it comes to monetising Caribbean country codes, Anguilla is the region’s unrivalled success story. By riding an emerging tech trend, Anguilla brought in millions in domain name revenue as its coveted ‘.ai’ caught the eye of Silicon Valley start-ups. In 2018 Anguilla received just over EC$ 7.8mn from registration of the ‘.ai’ domain – taking a cut each time the domain was registered or renewed. According to Nominet UK, there are over 40,000 ‘.ai’ domains currently registered (for comparison, Saint Lucia’s ‘.lc’ totalled 3,823 in 2018). Demand for Anguilla’s ccTLD more than doubled from 2017, when it brought in just under EC$2.7 million, to 2018. This sudden surge in the market can be explained by the emergence of Artificial Intelligence seed companies. Sites are being snapped up by AI start-ups themselves or by speculators hoping to jump on the trend and resell them for inflated prices as the market heats up. Since 2014 the number of start-ups choosing options other than ‘.com’ has more than doubled, with ‘.io’ and ‘.co’ growing in popularity. Anguilla’s highly desirable ‘.ai’ nudged out ‘.net’ as the third most popular alternative domain in 2018, according to US credit card firm Brex which surveyed over 3,000 start-ups. Brex found that funding was a factor in explaining this explosion in alternative domains as seed stage companies with a ‘.ai’ address attract 3.5 times the average funding of a company with a standard ‘.com’ domain. According to Brex, the Anguilla sign-off was most popular in California, the home of Silicon Valley. While Anguilla enjoys its newfound fame among the tech world, other Caribbean countries have the potential to follow suit. Data from Nominet show that, after Anguilla, the region’s top three country codes in 2018 belonged to Belize, whose ‘.bz’ attracts businesses and has racked up 31,508 domains; the Dominican Republic which operates ‘.do’ and has 28,850 sites
the most of this revenue. “You need to be able to scale,” says Daniels. “You need to have the technical and administrative capacity to deal with that kind of growth, and manage it when it comes.”
Geography of country top-level domains
with that tagline; and St Vincent and the Grenadines which has 22,487 domains with the ‘.vc’ handle – particularly appealing to venture capitalist firms. Other opportunities are out there for countries wanting to find their ccTLD niche. Saint Lucia could attract limited companies, Antigua and Barbuda’s ‘.ag’ has potential in the German market where ag is a known shorthand for certain corporations, Montserrat might target Microsoft entities with its ‘.ms’. There are also opportunities closer to home as Caribbean entrepreneurs use their own country codes as part of their online branding.
POLICY CONCERNS AND CONSIDERATIONS But before the Caribbean can fully exploit this market, it must first get its house in order. Thanks to the haphazard nature of the region’s digital development, there is little harmonisation across the region concerning ccTLDs and how they are managed. In the early days of the internet, Caribbean countries connected through an exchange point located in Puerto Rico. While the Puerto Rico Internet Exchange ceased operations in 2011, many Caribbean islands still have Puerto Rico stakeholders listed as their ccTLD managers today. For example, Saint
Lucia’s ccTLD manager is the University of Puerto Rico. Others are managed by government or private entities but the most progressive islands have adopted a new model – the Multi-stakeholder Advisory Group (MAG) – and have been supported and guided in these efforts by the Internet Corporation for Assigned Names and Numbers (ICANN). Senior Manager for ICANN Stakeholder Engagement for the Caribbean, and a former manager of Saint Lucia’s ccTLD, Albert Daniels says: “Most islands started with Puerto Rico; some have redesignated but Saint Lucia has not crossed that final step. Trinidad and Tobago are in the lead with this. Other countries in the Caribbean have different MAGs, some do not have a MAG at all. You have a broad spectrum of models in the Caribbean. “I encourage [other countries] to look at Trinidad and Tobago and see how well it is working. The multi-stakeholder grouping decides what the policies should be and how it is run. You do not have one person deciding everything. Countries need to organise themselves and get a MAG going so they have the representation of all stakeholders.” Without the right framework in place, countries risk being unable to handle expansion of their ccTLDs. A resilient structure is vital if islands are going to make
TIMELY TRENDS With the right infrastructure in place, ccTLDs can be a profitable niche for certain jurisdictions, but those yet to stake their claim in the market will have to move fast – the window is closing as technology moves on. While URLs were once the standard in navigating the internet, users are increasingly relying on search engines and apps as they surf, rather than remembering and retyping addresses into their browser. In the fast-paced tech world, trends come and go, and oddball domain names are no exception. Demand for ‘.ai’ surged by 219 per cent from 2017-2018 as Artificial Intelligence hit its niche, but its continued popularity can’t be taken for granted. ‘.cc’ from the Cocos Islands was in high demand among creative companies but dropped 44 per cent in 2018. Similarly, Indonesia’s ‘.id’ attracted security and identity-related firms but shrunk by 80 per cent in 2018, according to Nominet. And ccTLDs face stiff competition from generic TLDs, the list of which has expanded in recent years to incorporate new names such as ‘.hotel’ and ‘.bank’. “There is much more choice today,” says Daniels. “The bottom line is that there is broad competition right now so you really have to find a working niche and jump on it. That is the nature of the market. It is very diverse.” So how can governments promote their country codes in such a crowded industry? “The same way any organisation would market any service,” says Daniels. “You look at what you are trying to sell and the market you are trying to reach. There is no hidden secret or special sauce.” As the Caribbean moves to modernise its digital infrastructure, Daniels encourages countries to engage more with ICANN and related entities such as the Latin American and Caribbean Country Code Top-Level Domains Organization and Country Code Names Supporting Organisation to take advantage of the support and expertise offered by these bodies.
CONSERVATION
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DIGGING INTO SAND MINING BY ED KENNEDY, STAR BUSINESSWEEK CORRESPONDENT
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or the Caribbean, effective conservation and utilisation of sand supplies cannot simply be a vague aspiration of the eco to-do list; it’s critical to the future viability of regional tourism, and also the physical territory of nations increasingly battling against an endless ocean that seeks to reclaim land. Despite this, states in this region have long wrestled with how best to define a proper sand management policy, especially when it has entailed hard choices between urgent economic need today and environmental protection for tomorrow.
GETTING A LAY OF THE LAND Readers of STAR Businessweek who are not familiar with the ins and outs of sand mining may appreciate a brief overview. Sand mining has long been practised in the region, and around the world. Typically, the sand that is dredged is used in construction projects. Sand is critical, especially in lowlying islands, for the maintenance and use of coastline. Sand is also (seemingly) abundant and the use of it has been expensive to regulate. This means it’s a common target for theft, given its ubiquitous presence, the (comparatively) low surveillance surrounding it, and the simple fact that few members of the public are likely to take notice of workmen filling a truck on the beach in the same way they would several masked bandits running out of a bank with bags of cash in-hand. The scale of theft need not be small. In 2008 thieves in Jamaica effectively stole a whole beach – some 500 truck loads of sand from Coral Spring beach in Trelawny. It has since been theorised that the stolen goods were used by some resorts, but obviously it can be hard to determine where the proceeds of the theft went, given that sand would blend in with other sand. GOING AGAINST THE GRAIN Excess mining of sand has been a problem across the world, with episodes in South Africa, across the MENA region and here in the Caribbean affirming that this is very much a global challenge, but one that can have harmful local consequences. This is especially vivid in Asia right now. Between 2000 and 2017 Shanghai saw 7 million new residents skyrocket its population to 23 million. It’s no
Much credit for Shanghai’s imposing city skyline must go to sand from the surrounding region (Source: Pixabay)
surprise that such a population surge led to a huge new construction drive. Over decades the immense bustle of ship activity on Poyang Lake and the Yangtze River helped convert Shanghai from a one-time small fishing village into a city of skyscrapers, but it’s not been without consequence. Reportedly by the late 1990s the environmental effects of China’s demand for sand were already visible, with the structural integrity of bridges and riverbanks surrounding Shanghai diminished, and shipping routes entangled. Elsewhere, the amount of sand used in India for construction has more than tripled since 2000. What’s more, Singapore’s quest to reclaim land via the use of regional sand has been so voracious that Indonesia and Malaysia have previously banned sand exports to the city state. These events show that there is not going to be a cessation in demand for sand any time soon. But the failure to find a way to meet demand in an environmentally friendly manner gives rise to serious dangers. In 2001 a bridge collapse in Portugal was as a result of sand mining; as was the collapse of a bridge in Taiwan the previous year. Beyond these incidents, there is the less visible but overall more profound damage done by coastal erosion that ruins animal habitats and threatens daily life of anyone who works or resides by the shore.
SINK OR SWIM IN BARBUDA AND BARBADOS Barbudan Arthur Nibbs was an anti-sand mining advocate until his mind changed.
In 2013 he made headlines when he famously said, “Would you prefer to appear to be protecting the environment and then have your people going hungry with no food on their table and people can’t pay their bills?” For a nation that had been sand mining since 1976, doing away with an industry rapidly was never going to be easy. Just as Mr Nibbs spoke of the desperation of the issue, so too did Dr Lorna Inniss of Barbados’ Coastal Zone Management Unit in 2014, albeit in a different way. Dr Inniss indicated that the survival of SIDS depended upon their capacity to stop sand mining. Reflecting on the experience of Barbados, she advised that it was also necessary to see work begin on an inventory in order to calculate the precise amount of sand required over subsequent years for sand dune construction. This is a critical consideration for nations already struggling to deal with the consequences of sand mining. In the year ahead, a huge spike in sand demand is expected, especially as many coastal replenishment programmes need to be redone over the years as sand depletes. This means that Caribbean states already short of sand could soon find territory being reclaimed by the sea. In the meantime, there are more immediate concerns to contend with, including here in Saint Lucia.
HOLDING THE LINE IN VIEUX FORT The situation in Vieux Fort illustrates the broader environmental consequences of sand mining. The coast around the town has posed problems before, with the Saint
Lucia National Trust undertaking works in 2018 to restore diminished sand dunes. Sand mining was carried out as part of the Desert Star Holdings horse racing track project. Local residents allege that as a consequence of sand excavation near the mouth of the river, the rock barrier which had been placed there to prevent sea water flooding the local houses was exposed, making it impossible to pass between the sea and the river to get to the highway; also, that as a result of this work, heavy rainfall could lead to substantial damage to residents’ properties.
CAN ‘SAND RIGHTS’ CONSERVE WHAT IS LEFT? Such an experience adds credence to the notion that greater recognition of ‘sand rights’ should occur. It’s a concept that seeks to allocate to those who remove sand the responsibility for preventing any resultant damage, or rectifying that which has occurred. Although penalties can already be applied for trespass and environmental damage, supporting such a concept should become more critical in the minds of lawmakers who must acknowledge that the growing challenge of climate change will increase the need for stronger protection of coastlines and management of sand holdings. There must also be laws to tackle businesses and individuals who may be tempted to replenish their diminishing coastline without going through the proper processes, and without SBW care for the consequences.
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INTERNATIONAL RELATIONS
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LATAM’S MOST INFLUENTIAL REGIONAL ORGANISATIONS Continued from page 2
Mexico’s ascent to the pro tempore presidency of the organisation, and its bold Work Plan for increasing closeness between member states. Moving forward, resistance to impacts of climate change and natural disasters is earmarked as a key priority.
4. MERCOSUR The Mercosur group is one of immense potential looking forward, but recent years have been a disappointment as a number of LATAM nations (most notably Brazil and Argentina) have endured huge systemic shocks that have rocked their economies and savaged optimism about their near-term growth. But these crises cannot last forever and, provided the group can maintain cohesion amidst its current turbulence, its economic future remains promising. 5. THE BOLIVARIAN ALLIANCE FOR THE PEOPLES OF OUR AMERICA (ALBA) Founded by Cuba and Venezuela in 2004, ALBA has admitted to its ranks a number of Caribbean nations including Antigua and Barbuda, Grenada, St Kitts and Nevis and Saint Lucia. This group lacks the economic oomph of others (regional giants like the United States and Brazil are not party to ALBA), and the meltdown of Venezuela has hugely diminished the voice of one of its biggest members. Nevertheless, this group is novel as it represents a resistance to US influence in the region, as well as having a concentration of states within the Caribbean and Central American area of LATAM. Although by many measures the group now lies somewhat dormant, it remains one to watch down the line, especially if Venezuela identifies a path to economic recovery. 6. THE CARIBBEAN COMMUNITY (CARICOM) The daily work of CARICOM surrounds growing regional integration, with the ultimate dream of a single market economy. Its members are all classified as developing nations. They share a common history of seeking to diversify their
A session of CELAC hosted in Mexico City in January (Source: Twitter)
economies from reliance on mining and agriculture to service-driven economies, the strongest growth often occurring in the tourism and finance sectors. CARICOM operates independently but
Founded by Cuba and Venezuela in 2004, ALBA has admitted to its ranks a number of Caribbean nations including Antigua and Barbuda, Grenada, St Kitts and Nevis and Saint Lucia. This group lacks the economic oomph of others (regional giants like the United States and Brazil are not party to ALBA), and the meltdown of Venezuela has hugely diminished the voice of one of its biggest members
has much overlap with the Organisation of Eastern Caribbean States and the Association of Caribbean States (the latter holding 25 states in comparison to CARICOM’s 15).
A SHARED SEARCH FOR REAL PROGRESS This collection of regional organisations shows the frameworks of institutions that maintain and help advance collective aims around diplomatic relations, trade and wider regional concerns. That so many of these institutions exist and continue to function effectively is an acheivement in its own right, as within the Caribbean alone there are over two dozen states, each with its own needs and aspirations within the international arena. These groups provide a strong foundation for building regional collaboration but the ambition to build stronger ties among Caribbean states that could one day see the region function similar to the European Union, remains distant. This is not to undermine the work done so far. Rather, it affirms for those who hold to such a goal that this decade is not a time to rest on their laurels, but instead to drive greater liberalisation of trade and labour mobility that could turbocharge regional economies.
The Saint Lucia Registry of Companies & Intellectual Property
Company Incorporations
Name: L and L Quality Cleaning Services Inc. Description: Cleaning services Directors: Lance Lionel, Valin Lionel Date Incorporated: 4/3/20 Chamber: Self-incorporated Name: Ageless Zen Biotech Naturals Ltd. Description: Research and manufacturing skin care and health supplement products Directors: Mei Yung Lee Date Incorporated: 11/3/20 Chamber: Du Boulay, Anthony & Co., Name: Premium Yacht Services Limited Description: Provision of yacht services Directors: Thomas Francis, Marie Francis, Edward Francis, Charity Francis , Mathurin Louison Date Incorporated: 12/3/20 Chamber: Beverley Downes Chambers
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CORONAVIRUS
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FALLING OIL PRICES, COVID-19 WILL DAMAGE CARIBBEAN GROWTH
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he Saudi-induced oil price collapse, the impact of COVID-19 on tourism, and a world rapidly moving towards a recession means that the Caribbean is about to experience an economic shock that will require a significant economic adjustment. In normal times a sudden drop in the price of oil would elicit a collective sigh of relief among Caribbean governments and Central Bankers. However, these are not normal times. The ill-judged decision by Crown Prince Mohammed bin Salman, the de facto ruler of Saudi Arabia, to pump more oil at just the moment the global economy is reeling from the impact of the coronavirus, COVID-19, has created a global shock that will touch the Caribbean in ways that may suppress growth for years to come. In essence, what the Saudi Prince decided to do, just as international markets were going into free fall and global demand for oil was in decline as a result of the coronavirus, was to flood an oversupplied world energy market with 12.5m barrels a day of crude. His aim was to try to take market share away from OPEC rivals, particularly Russia which has little spare capacity to compete. His decision at such a critical juncture for the world economy stemmed from fear that a virus-led recession would damage his ambition to modernise the Kingdom and, in the longer term, to obtain greater strategic advantage in the Middle East and globally, in a world in which he believes he should be a major player. Unusually, and despite the uncritical support he continues to receive from President Trump and in particular his son-in-law, Jared Kushner, even the US Department of Energy was moved to issue a statement suggesting that the Saudi-created price war amounted to an attempt ‘by state actors to manipulate and shock oil markets’. The consequence was that the benchmark price of Brent Crude fell by as much as thirty per cent to US$ 30 per barrel before recovering slightly at the time of writing to US$ 32.55, but with the markets expecting the price to remain below US$ 40 for some time to come. Far from having the more normal effect of stimulating the global economy, analysts suggest the effect will be the opposite. They say that because the induced oversupply is occurring at just the moment that COVID-19 continues to spread globally, reducing demand, the two together will cause a recession of unpredictable dimensions and
The Carnival Corp. Panorama cruise ship sits docked in Long Beach, Calif., on March, 7, 2020 (Photo: Patrick T. Fallon/Bloomberg via Getty Images)
duration. They believe the consequence will be to further suppress energy consumption, delay investment and cause the retrenchment of workers in both the manufacturing and services sectors. For oil and gas producers the loss of revenue is likely to be substantial. In a clear indication of what it will mean if energy prices stay at their present level, Trinidad’s Finance Minister, Colm Imbert, believes that the collapse in oil prices and lower projected revenue from natural gas will lead to the Republic experiencing a further budget shortfall of US$ 560mn, increasing significantly the Republic’s existing budget deficit. If the Saudi decision is sustained and no accommodation can be reached with OPEC members, it is also likely that upstream growth in Guyana, Suriname and hoped-for investment in exploration elsewhere in the region may decelerate. A much lower oil price and demand will also see Guyana’s hoped-for revenues fall, even though, according to the CEO of the Hess corporation, John Hess, the current breakeven price for Guyana’s oil at US$ 35 per barrel is low by world standards. Another potentially dire consequence is the impact on Venezuela. Although it is reportedly selling oil at a heavily discounted price to overcome US sanctions and a fall-off in demand from its principal remaining markets, including China, a collapse in oil revenue coinciding with COVID-19 and a severely weakened health care
system could result in an even worse humanitarian crisis and refugee outflow should the virus take hold. While Caribbean nations that import energy are likely to benefit from lower prices, this is unlikely to offset the fall in visitor arrivals and taxes now widely anticipated as a result of the coronavirus. Caribbean governments have agreed a common response to COVID-19, but a growing reported incidence of imported cases of the virus in the Bahamas, the Dominican Republic, Cuba, French Guiana, Guyana, Jamaica, Martinique, Puerto Rico, St Barts, St Martin and St Vincent, suggest that the region may be unable to avoid the broader public health consequences. The US Government has already suggested that its citizens should avoid all cruises and overseas travel, and the airlines and the cruise companies have begun to dramatically reduce their services. In the last week the US President announced unilaterally that the “foreign virus” meant that air travel from the EU Schengen zone by “most foreign nationals” will be halted. It is a decision that will not only impact directly on the tens of thousands of European visitors who daily transit the US to Caribbean destinations — ignoring the evidence of how rapidly the virus is spreading in the US — but bodes ill for any other nations that he regards as posing a risk. In an indication of how serious COVID-19 could be for Caribbean
tourism, Saint Lucia’s Prime Minister, Allen Chastanet, recently said that his government is modelling various scenarios including a potential fall in arrivals of 50 to 80 per cent. In addition, Jamaica’s Prime Minister, Andrew Holness, has indicated that some thought has been given to halting flights from the UK in view of the rapidly rising incidence of cases in Britain: a politically complex decision if taken, due to the regular travel ‘home’ by the island’s large older diasporic community, and the country’s growing British tourist market. At the same time, Barbados’ Prime Minister, Mia Mottley, has warned that the economic consequences will be difficult to contain and may affect the positive progress the island has been making with its IMF programme. The Caribbean is in dialogue with the major international financial institutions including the World Bank and the IMF about possible responses and support, but it is hard to avoid the conclusion that between the Saudi-induced oil price collapse, the impact of COVID-19 on tourism, and the probability, in a world rapidly moving towards a recession and a loss of global confidence, the Caribbean is about to experience an economic shock that will require significant economic adjustments. David Jessop is a consultant to the Caribbean Council and can be contacted at david.jessop@caribbean-council.org
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