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 profound impact on the politics and economics of the region. "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 experts and the public at large." -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.
