CARICOM and Latin America

CARICOM and Latin America
N ASSAU, BAHAMAS, WAS THE SCENE OF THE fifth Meeting of CARICOM heads of state from July
4-7, 1984.* The meeting was a notable attempt to resolve
the conflicts undermining regional trade and to patch up
the political disputes ignited by the Grenada crisis of Oc-
tober 1983.
The Caribbean integration movement faces its most
critical test in 1984, as international recession, low com-
modity prices, declining tourism and tough borrowing
conditions on international capital markets erode the ca-
pacity of the regional economies to earn foreign exchange.
CARICOM governments have been forced to adopt tough
domestic policies in order to deal with their balance of
payments problems. In the process, they have sacrificed
regional ideals for short-term domestic interests, a conflict
that challenges CARICOM’s integrity.
The balance of payments crisis has obliterated the po-
tential of Guyana and Jamaica as regional markets, while
Trinidad and Tobago (whose oil makes it the region’s only
viable industrialized economy) has imposed import re-
strictions in an attempt to stem the outflow of foreign re-
serves. These restrictions have targeted cheap goods im-
ported from East Asia and then simply repackaged in the
Eastern Caribbean with a “CARICOM” label.
These measures also reflect declining export revenues.
Trinidadian exports to CARICOM plunged by TT$121
million (approximately US$30.25 million) in 1983.
Through its new Export Development Corporation,
Trinidad is exploring new non-regional export markets. A
further indication of the crisis of traditional trade patterns
is the growing prevalence of barter: Guyana has bartered
timber and building blocks for Trinidad’s oil, and bauxite
for Japanese cars; Jamaica has exchanged bauxite and
aluminum for U.S. cars, and factory machinery for
Guyanese rice.
As these practices take hold, and as individual
CARICOM states look for markets outside the region,
faith in CARICOM by both government and private sector
has declined. Intra-CARICOM trade continues to experi-
ence negative real growth; a Multilateral Clearing Facility
collapsed because accumulated debts could not be hon-
ored; balance of payments problems have severely af-
fected regional production and employment.
Y ET CARICOM’S STAYING POWER CONTIN-
ues to surprise integrationists. Though a common
Caribbean identity remains elusive, the region has begun a
search for closer ties with Latin America. CARICOM’s
viability in the next decade depends in large part on its
members’ commitment to Latin American cooperation.
Stronger trade, economic, financial and technical ties are
widely seen as the key to a unified regional response by
ANTHONY T. BRYAN is a professor at the Institute of Interna-
tional Relations of the University of the West Indies, St. Augus-
tine, Trinidad.
Latin American and Caribbean nations to the present
economic crisis.
The trend toward broadly-based cooperation agree-
ments has been encouraged by the January 1984 Quito De-
claration, in which the Andean Pact–Colombia,
Ecuador, Peru and Bolivia–gave high priority to closer
ties with the Caribbean. The July 1984 CARICOM meet-
ing in Nassau reciprocated the sentiment. Discussions are
already underway on the feasibility of broad cooperation
agreements with the Andean Pact and with Brazil, and on
expanding existing Mexico/ CARICOM accords. Indeed,
a number of bodies are conducting technical studies on a
wide range of Caribbean/Latin American relations. They
include CARICOM itself, the U.N. Economic Commis-
sion for Latin America (ECLA), and the Latin American
Economic System (SELA). This new openness is a far cry
from the mistrust of the past. As recently as 1975, Prime
Minister Eric Williams of Trinidad and Tobago was de-
nouncing Venezuela’s “neo-colonialist” threat and warn-
ing against importing Latin American tensions into the
English-speaking islands.
CTIVE POLITICAL AND ECONOMIC RELA-
tions between the Commonwealth Caribbean and the
nations of Latin America are fairly recent. Part of the
problem lies in the very nature of the Caribbean region, its
diplomatic projection and its sense of itself. In contrast to
Latin America and the Spanish-speaking islands, long rec-
ognized as a diplomatic entity, the indigenous diplomatic
community of the English-speaking Caribbean has been
hazily defined. Historically, Commonwealth Caribbean
concern for the outside world has not been marked by any
serious interest in its Latin American neighbors–the re-
sult of the colonial policy of encouraging exclusive verti-
cal relations with the European powers. Only with inde-
pendence from Great Britain in the last quarter-century
have matters begun to change.
The first serious moves toward Latin America were
made by the government of Trinidad and Tobago, which
had long-standing political and cultural ties with neighbor-
ing Venezuela. First came a firm pledge from Trinidad in
1967 to join the Latin American states in their increased
drive for economic integration; then the pursuit of govern-
ment and private sector cooperation through Trinidadian/
Venezuelan Mixed Commissions in 1967 and 1968. These
initiatives were complemented by Trinidad’s admission to
the Organization of American States (OAS) in 1967. In
their search for new economic links to take the place of
their traditional colonial ties, other West Indian nations
*CARICOM members are Antigua and Barbuda, the
Bahamas, Barbados, Belize, Dominica, Grenada,
Guyana, Jamaica, Montserrat, St. Kitts-Nevis, St. Lucia,
St. Vincent and the Grenadines, and Trinidad and To-
bago.
42REPORT
ON THE AMERICAS
42 REPORT ON THE AMERICASsoon followed suit.
Membership in regional organizations has been basic to
the new era of cooperation. Barbados and Jamaica joined
the OAS in 1967 and 1969 respectively; Grenada followed
in 1975 and other newly independent states in the latter
part of the 1970s. (Guyana continues to be barred from
membership as a consequence of its diplomatic dispute
with Venezuela over the Essequibo territory.)
Clearly these countries regarded OAS membership as a
first step in forging a closer identification and cooperation
with Latin America. Their main motives were economic:
the availability of capital and technical assistance from
OAS agencies; participation in regional marketing and
trading associations; and diversified trade links. In short,
the new OAS members hoped the body would offer them
new scope for their development plans and a forum for in-
fluencing hemispheric politics.
While the OAS has been the main vehicle for promoting
the Caribbean at a political level, other bodies, such as the
Inter-American Development Bank (IDB) and ECLA
serve a more directly economic purpose. The effort to ac-
celerate autonomous regional economic development can
be seen in common market arrangements. CARICOM it-
self emerged in 1973 from its predecessor CARIFTA–the
Caribbean Free Trade Area; the Caribbean Development
Bank (CDB) complements CARICOM as a regional finan-
cial institution and acts as a subregional one for Latin
America, with Venezuela and Colombia participating as
non-borrowing members and donors of “soft” funds. The
effort by a number of Caribbean and Latin American
states to create a new regional economic system resulted
in the formal launching of the Latin American Economic
System (SELA) in August 1975, as well as a Multina-
tional Caribbean Maritime Transport Enterprise
(NAMUCAR) and a Latin American Energy Organization
(OLADE). Most Caribbean states have now joined these
multilateral attempts to confront problems common to the
entire hemisphere from Mexico southward.
How has Latin America reacted? Venezuela, Mexico,
Brazil and Cuba have evinced the greatest enthusiasm for
ties to the English-speaking Caribbean; the Dominican
Republic, Colombia and Haiti have also responded with
interest. The activities of Venezuela and Mexico in par-
ticular have helped improve the bargaining power of the
Caribbean states.*
Venezuelan concern for the English-speaking Carib-
bean began with the Christian Democratic administration
of Rafael Caldera in 1969 and increased under his Social
Democratic successor, Carlos Andr6s Per6z. With the in-
*For a full discussion of the Venezuelan role, see Robert
Matthews, “Oil on Troubled Waters: Venezuelan Policy
in the Caribbean,” Report on the Americas, (July-August
1984), pp. 21-51.
crease in oil revenues, the petrobolivar became a potent
instrument of foreign policy. Venezuela identified the
Caribbean as an area of market expansion and long-term
security interests, and when the 1973 increase in oil prices
hit the Caribbean, Venezuela was presented with a splen-
did opportunity to project a “Godfather” image to the re-
gion. By 1978, almost every Caribbean head of state had
made the pilgrimage to Caracas seeking economic assist-
ance.
Mexico also turned its eyes to the anglophone Carib-
bean around 1970, though largely for domestic reasons.
Newly elected President Luis Echeverria sought to project
a radical foreign policy to deflect attention from the
domestic unrest that followed the 1968 Tlatelolco student
massacre. The “progressive” governments of Cuba,
Jamaica and Guyana became prime targets for Mexican
largesse. Both Echeverria and his successor, Jos6 Lop6z
Portillo, found a valuable ally in Venezuela. Together,
they found the Caribbean a promising arena for the joint
expression of their anti-imperialist postures and economic
initiatives. Most notable among these was the 1980 San
Jose Agreement, designed to offset Caribbean economic
difficulties by supplying oil at discount rates.
IVEN THEIR DISADVANTAGES OF SIZE AND
limited influence, the independent Commonwealth
Caribbean states have made some striking gains whenever
thay have acted in concert on issues of common political
concern. Examples of their success are the admission of
new states into the OAS; the removal of barriers to IDB
membership for non-OAS members in the region; and lob-
bying for the removal of OAS sanctions against Cuba.
Since the 1960s, their relationship to Hispanic-Caribbean
actors such as Venezuela, Colombia and Cuba has grown
on the basis of geopolitical factors, the need for economic
assistance and the mutual interest of both groups of coun-
tries in finding enhanced leverage in the North-South de-
bate through the machinery of collective negotiation.
The debt crisis and the end of the 1970s oil boom have
severely constrained the room for diplomatic maneuver by
Venezuela and Mexico. Even Cuba’s regional role-al-
ways one of demonstrated commitment to aid for progres-
sive countries-has been neutralized since the invasion of
Grenada. Both bilateral and multilateral efforts have be-
come less easy.
The response of the Caribbean nations has been to reas-
sert the difficult path of regionalism. The July 1984 Nas-
sau meeting breathed new life into CARICOM, with fresh
joint approaches to the IMF and World Bank, and an
agreement to revive CARICOM’s multilateral clearing fa-
cility to provide $100 million in short-term trade credits.
In a necessary preliminary step before being granted full
membership, the Dominican Republic and Haiti were-ac-
corded observer status on a number of CARICOM
ministerial committees.
NOVEBER/ECEMER 1S44 NOVEMBER/DECEMBER 1984 43A Lovely Piece of Real Estate
actually declined in many Caribbean countries over
the last two decades. In Haiti, the assembly sector
accounts for 12% of GDP and 35% of exports, but
employs only one in 20 workers. In Jamaica, the
numbers employed in industry grew only 2% from
1960-77, while agricultural employment fell from
40% to 15%.3o
The promise of factory jobs has proved illusory. Indeed, the islands’ industrial development bodies
have found themselves searching for companies to
take the place of those who are leaving, rather than
attracting additional manufacturing plants. Only un-
productive sectors-tourism, domestic work, trade and government services-have shown an increase
in employment opportunities. Mining, petroleum,
finance and tourism have all proved flimsy bases for
sustained economic advance. The lack of momentum in the region’s economies
is most evident in its failure to reduce its reliance on
extra-regional trade. Sugarcane, microchips and
blue jeans are shipped out; inputs and consumer staples are shipped in. In many countries, as much
as 90% of exports and imports are extra-regional.
The major nations of the English-speaking Carib-
bean (Jamaica, Guyana, Trinidad and Tobago) have
each experienced an especially severe drop in intra- regional trade since 1980.”‘
Y 1980, THE WEST INDIES HAD BECOME
an archipelago of debtor colonies. From 1970- 80, the external public debt of the region increased
by 700%, while over the same period the value of
exports and GDP did not even double.” The re-
gion’s combined debt–excluding Puerto Rico and
Cuba-now stands at a staggering $18 billion. The
experience of the Dominican Republic is far from atypical. In 1960 its external public debt was a mere
$6 million; in 1982 it stood at over $2 billion-a 340-fold increase.
Nor is there any evidence that the debt spiral is
tapering off. International terms of trade are only
growing worse, and most Caribbean governments
have proved reluctant to pay their bills or balance
their budgets by halting the import of non-essential goods or increasing taxation. Instead, they have
opted for ruthless cuts in social service programs.
This has usually been a response to the strong pres-
sures of the IMF and the World Bank, as well as pri-
vate and government lenders, who are in a strong
position to force structural and policy changes on the
Caribbean economies. The power of the lending agencies to impose austerity programs has already
brought violent consequences, notably the bloody
clashes between troops and demonstrators in the
Dominican Republic earlier this year.
THE OTHER SIDE of PARADISE
FOREIGN CONTROL IN THE CARIBBEAN
Tom Barry, Beth Wood, and Deb Preusch
The first thorough investigation
into the activity of the top international
corporations in the Caribbean and its
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“While passionate in its approach, this book also
provides a veritable gold mine of facts and sources
on the area, as well as finely drawn political and economic sketches of the islands.”
-Saul Landau, Senior Fellow,
Institute for Policy Studies
“Well organized, readable, and highly informative.
An indispensable handbook for anyone interested
in U.S. policy in the Caribbean.”
-Joseph Collins, co-author, Food First
“The 1983 invasion of Grenada dramatically
brought to light how little we know of the Carib-
bean. Here is a book to correct that. The authors
transform a tremendous body of information into
an enjoyable and lucid text which can serve both
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-Steven S. Volk, Research Director, NACLA
Available in November/ Softcover $9.95. 416pp. Index. ISBN: 0-394-62056-9
Order from your bookstore, or directly from:
Grove Press, Inc., 196 West Houston St., New York, N.Y. 10014p RESIDENT REAGAN’S CARIBBEAN
BA-
sin initiative (CBI) marks an attempt to halt the
economic decline by shoring up the labor-intensive export
industry. Though the CBI is touted as a “re-
gional” approach, its effect is to fracture regional
integration. The key element in the CBI and similar AID-sponsored
programs is bilateralism. By allocat-
ing aid to individual countries rather than to a re-
gional multilateral program, the United States has undermined
the already fragile unity of the Carib-
bean states. Separate trade and investment treaties
with each island serve the interests of the corpora-
tions who benefit from inter-island competition.
Most of the aid given to the Caribbean islands has
aimed to foster more foreign investment and has
bolstered the influence of the leading elements of the
region’s private sector. As Jamaican Prime Minister
Edward Seaga recognized, “Aid is not charity, it is
business.”” But
the CBI has so far proved more bombast than
substance. The CBI has not even managed to place
any appreciable sum of foreign investment in the
Caribbean. In 1983 the Government Accounting Of-
fice examined a $58 million project to attract U.S.
investment in the Eastern Caribbean. Local AID of-
ficials could name just one company that had made
so much as a tentative commitment to invest as a re-
sult. The GAO noted that even if the project were to
produce optimum results, it would mean a U.S. gov-
ernment expenditure of $5,800 for each new job
created-or almost three times the annual average
per capita income of the Eastern Caribbean.34
Thirty years ago, Caribbean economist W. Arthur
Lewis believed that Caribbean development would
entail “a period of wooing and fawning.” He pre-
dicted that this era of subservience to foreign capital
would give way to a new age in which Caribbean na-
tions would become equal associates of the de-
veloped nations and their corporations. But the CBI
condemns the islands to a further period of “wooing
and fawning” and holds out little hope that they will
eventually alter their subordinate status.
T HERE ARE NO READY-MADE SOLU- tions to the range of problems that plague the
Caribbean. The isolation of one island from another,
the lack of resources and the all-encompassing de-
pendency they suffer are more complex issues to re-
solve politically than the inequitable land distribu- tion or military repression that have given birth to
revolt in Central America. Today’s Caribbean may be the best visible example of the long-term damage
wrought by both colonialism and neo-colonialism.
Nonetheless, not all the problems of the Carib-
bean can be attributed to the Queen of England and
Uncle Sam. The Caribbean nations have failed to
commit themselves to regional integration. Instead,
they are characterized by micro-nationalism and is-
land rivalries. Complacent political elites have also
avoided the long overdue internal restructuring of
their social and economic order. Instead, they have
looked outward for solutions, hoping that yet
another fortuitous and temporary economic windfall
would stave off disaster.
Intra-regional trade wars, the attempts to ostracize
Maurice Bishop’s Grenada, and the willingness to
submit to bilateral alliances with the United States
are all examples of the Caribbean’s dog-eat-dog
mentality. “The politics of regional integration have
disappeared from the agenda of most Caribbean
leaders,” observed economist Clive Thomas of the
University of Guyana. “It is as if we have forgotten
that no single territory can have a future on its
own.”” CARICOM has failed to deal with the prob-
lem of Caribbean fragmentation or mount any effec-
tive regional challenge to transnational control. As
Thomas remarked on another occasion, “If at a na-
tional level the multinational corporations dominate,
at the regional level they cannot do otherwise.””3
The limited resource base of each nation, particu-
larly in the micro-states of the English-speaking Eastern Caribbean, makes a more meaningful level
of regional cooperation the essential foundation of
future development. One possible strategy for reg- ional integration is more local processing of exports. Instead of exporting raw materials, the nations of the
Caribbean might cooperate in refining the region’s sugar, manufacturing aluminum from its bauxite, process its cocoa into chocolate. Another important
step will be stricter regulation of TNC activity to
create space for more internal economic links and
the development of competitive local industries. The
third imperative will be to bring patterns of local
consumption more closely in line with the domestic productive and resource base.
If the political will to enact these changes is lack-
ing, the prospects for major advances in the Carib-
bean economy are slim. The political isolation of
Cuba and its continued reliance on sugar exports
stand in the way of any desire to emulate the single
socialist experiment. The two more recent attempts
at breaking the mold-Manley’s Jamaica and
Bishop’s Grenada-resulted only in steps backward.
For the moment, economic change in the Caribbean
looks set to continue on the same historic path that
has taken it, in the words of one local economist,
from “plantation” via “plantation modified” to
“plantation further modified.”
STRANGERS IN PARADISE
1. Figures are taken from Compilation of Corpora-
tions, (Albuquerque, N.M.: The Resource Center, 1984).
They do not include corporations located in Puerto Rico or the U.S. Virgin Islands.
2. Fortune, August 22, 1983.
3. Various issues of Survey of Current Business
(Washington, D.C.: U.S. Department of Commerce).
4. Marc Herold, “Worldwide Investment and Disin-
vestment by U.S. Multinationals: Implications for the
Caribbean and Central America,” (paper presented at
Second Regional Seminar on Central America and the
Caribbean, CRIES, Managua, Nicaragua, February 9-12,
1983).
5. These U.S. Department of Commerce figures fall
short of quantifying the full extent of U.S. investment in
the Caribbean for the following reasons: (a) the Depart- ment reports only the book value or historic costs of U.S.
investment, not the resale value of the business; (b) it only
identifies direct investment as 10% or more of voting sec-
urities; (c) the $500,000 minimum investment standard
does not include the many hundreds of small business ven-
tures such as tourist shops and restaurants owned by U.S.
citizens in the region; (d) it excludes the value of manage- ment, licensing and technology contracts; and (e) the fig-
ures include only direct investment, not the assets of for-
eign affiliates.
6. U.S. Department of the Treasury, The Operation of
the Possessions Corporation System of Taxation, 1983.