Grenada: The Revo in Reverse

September 25, 2007

other services ground to a halt during the second
week of December, when Grenada's 7,000 public employees
walked off the job. The issue at hand was $9.25
million in back wages which, according to the late Prime
Minister Herbert Blaize, could not be paid because
"foreign sources" had failed to deliver on promised
funds. There was little doubt in the minds of strike leaders
that he was referring to the United States.
Blaize, the man the United States helped put in power
after "rescuing" the island in 1983, was forced to recall
parliament, which he had suspended in August to avert a
vote of no confidence. His inability to govern had already
led to reduced U.S. support; his reputed corruption, banning
of books and calypso lyrics, and blatant manipulation
of parliamentary process were an increasing embarrassment
to his former patrons. The strike ended December
11. Blaize died suddenly a week later. But it now
seems clear that Blaize was to be dumped much in the
same way the United States abandoned Jamaica's Edward
Seaga. Like Michael Manley, Blaize's successor will
inherit a decaying economy, unpayable debt, and strong
foreign pressure to submit to further "structural adjustment."
After 6,000 U.S. troops brought Grenada's four-anda-
half-year experiment with a pro-socialist government
and a mixed economy to an end on October 25, 1983, the
island was flooded with more than $102 million in development
assistance from the U.S. Agency for International
Development. Millions more came from other foreign
donors and lenders, along with help from the Commerce
and State Departments, the White House and committees
of powerful U.S. business executives. Under AID tutelage,
Grenada's economy was re-shaped according to
principles of privatization, free trade, and market-driven
development. U.S. personnel, including army construction
brigades, peace corps volunteers, and retired IRS
officials, were visible in nearly every village and government
Even with its tremendous influence and vast resources,
the United States was unable to produce genuine economic
progress in a country only twice the area of the
District of Columbia with a population of only 110,000.
Today, after six years of U.S. stewardship, Grenada is
deeper in debt than at any time in the nation's past. AIDsponsored
efforts to balance the government's budget
failed pitifully. The country's tax system, after being
thoroughly re-designed by AID consultants, has largely
collapsed. Unemployment, estimated by AID at 30%, is at
an all-time high. Agricultural productivity continues its
long-term decline, and Grenada's manufacturing sector
remains small and stagnant.
Official U.S. sources still stubbornly claim success in
their "rescue" of Grenada. The country's gross domestic
product has registered overall growth yearly since 1985.
However, this resulted primarily from what one economist
described as "force-feeding" with foreign aid funds,
and a fortuitous and probably temporary jump in the
prices of two major exports, nutmeg and bananas. But the
benefits of these windfalls accrued mainly to U.S. contractors,
foreign-owned shipping companies, and Grenada's
tiny elite.'
"It's like the whole country's in a coma," observed
one young man, who recounted the three-year search
which finally won him a steady job. Hard drug use,
household burglary, and violent street crime, all of which
were rare a few years ago, are becoming widespread. A
part-time construction worker expressed with a bitter
laugh an opinion widely shared among Grenada's poor,
"The same ones who've been exploiting we [poor people]
are back in power now. They get you in the lumber yard,
they get you in the supermarket, at the bank, in your
insurance, and now they can get you in your taxes, too.',
Many Grenadian business people the "private sector"
that U.S. officials say is the key to the country's
future are just as disenchanted. Said Grenada Chamber
of Commerce president, George de Bourge, "We're told
that the leftist regime was intending to stifle the private
sector and that the present one is trying to support it. This
has not been our experience. Under the PRG [the People's
Revolutionary Government, led by Maurice Bishop] the
government was much more aggressive in support of
economic programs, but Grenada was squeezed out of
access to foreign capital. The Bishop government had its
act in gear; they were much more motivated. Since then,
AID has not created a very palatable situation for the
private sector.' '2
AID officials in Washington spoke of the government
of Grenada and its ailing 71-year-old prime minister with
thinly-veiled contempt. In June 1988 a harried AID official,
charged with overseeing the Agency's structural adjustment
funding in the Eastern Caribbean, received a
telephone call from Blaize, inquiring whether and when
Grenada would receive several million dollars that Blaize
said had been promised by Reagan's AID chief Alan
Woods.3 When the official asked his superior what to say
to the prime minister, he was told, "If he [Blaize] doesn't
get the message that we don't take him seriously anymore,
tell him to turn up his hearing aid."4
At that time, the U.S. government was already in the
process of abandoning its protégé nation. AID funding in
Grenada had been slashed to about a fifth of the amount
spent in the year following the invasion; further cuts were
planned. AID personnel in Grenada, busy packing their
files and computers, also blamed the Grenada government
for the country's sad condition. The last remaining
official in charge of the special AID mission remarked,
"This government has no political backbone. They've
been raising people's expectations when they should have
been telling them to prepare for hard times ahead." But
"hard times" were the opposite of what the United States
had promised.
remarked then Sec. of State George Shultz in 1983,
after sighting Grenada's capital of St. George's with its
backdrop of mountains and picturesque harbor. In the
opinion of U.S. officials, too much of that real estate was
government-owned, even though nearly all the country's
industry and commerce, and 80% of its farmland remained
in private hands under the PRG. But before AID
could tack a "for sale" sign on the country's public
property, there were more urgent tasks at hand.
During the two years after the invasion, AID spent at
least $37 million on "emergency" construction and reconstruction.
The largest expenditure was $22.1 million
for completion of the Point Salines airport, a non-military
facility which was nearly finished under the PRG by
Cuban construction workers and engineers, working alongside
Grenadian craftsmen and trainees. The Reagan administration
called it a Cuban base, citing this as one
justification for the invasion. But AID officials quickly
realized, as had the PRG, that a modern airport was
essential to Grenada's tourist industry and commerce.5
The airport was opened by Ronald Reagan on the first
anniversary of the invasion, complete with a plaque
thanking the U.S. forces that liberated" Grenada.
In the meantime, AID took over the complex that had
housed Cuban airport workers. U.S. military crews filled
in the bullet holes in the walls of the dormitory where most
of the 24 Cubans killed in the invasion had died, painted
the facility blue and white, and erected a tall security gate
and a sign beckoning, Welcome to the l-lotel California."
From this new headquarters, AID supervised road
resurfacing, repair of port facilities, sprucing-up of the
waterfront tourist center, renovation of the main market
square and health clinics, and rehabilitation of some of the
buildings destroyed during the invasion.6
Many of these projects were needed, and U.S-financed
construction gave a temporary boost to Grenada's
economy. But as of 1988, according to Robert Evans, who
supervised the first phase of airport construction, "The
current government of Grenada has not initiated any
capital project of its own: The roads, the airport, the
harbor project, the health visiting stations, now have been
re-named, but they were all begun by the PRG." A taxi
driver expressed a widely-held view: "This government's
still running off of the steam generated by the revo."
AID and the U.S. military did make some efforts to win
hearts and minds with what the Agency calls "highly
visible activities." During 1984-1986, AID financed repairs
of more than 50 buildings, mainly schools, by the
U.S. Army 360th Civil Affairs Brigade. "What can you
expect from the Americans?" a rural schoolteacher asked.
'One week they bomb and mash up our buildings, and the
next week they're repainting schools and giving out
candy and helicopter rides to our children." AID also
made available $500,000 for "small, high-impact community
self-help projects." But after administrative costs
were deducted and the fund divided among 140 communities,
the impact was often not so high.
Total AID allocations for social services and basic
human needs, including education, health, agricultural
research and extension, and community self-help added
up to less than 7% of AID spending in Grenada. A rural
development worker said, "We hear over the radio all the
time that the United States is giving us so many thousands
of dollars for this project or that. But by the time the
experts and bureaucrats take their share, we don't see any
of it. That's why when people hear these announcements
they say, 'Here comes more of that radio money',because
that's all it is radio money."
Even in small business promotion, described by AID
as a top priority, local enterprise has gotten short shrift.
AID allocated $12 million for one project to aid small and
medium-sized enterprises in the Eastern Caribbean. Part
of the funds was supposed to be channeled to small and
"micro" enterprises through National Development Foundations
(NDFs), established under AID guidance. But according
to the director of Grenada's NDF, "AID puts so
many conditions on a project that they stifle it. It's as if the
people who work for AID don't feel we should get
anything, and that their job is to block aid. There is a lot
of money paid to Americans for consultant fees, but little
for local loans."7
sell all government-owned enterprises. Among those
slated for disposal were a carpentry shop, machine shop
and central garage, the printing office, the electricity and
telephone companies, a quarry, a housing construction
materials plant, and small factories for grinding spices
and coffee and for processing perishable produce.
One of the first to go was the Spice Isle canning plant,
where local produce had been processed into jams.juices
and sauces for local consumption and export. The canning
plant employed local people, provided a market for small
farmers, and made use of local crops that would otherwise
have gone to waste. It embodied the type of economic
activity that the PRG hoped would enable the country to
increase its earnings and reduce its dependency on expensive
food imports. It linked agriculture the main source
of wealth and livelihood forcenturies to industry, one of
the keys to the country's development.
According to Lyden Rhamdhanny, one of a considerable
number of local landowners and entrepreneurs who
supported the Bishop government, the closing of the agroprocessing
operation was a foolish loss. "The United
States called the plant a failure because it was not yet
making a profit. But in less than three years its sales were
growing fast, to about $2 million (Eastern Caribbean
dollars, about $769,000] yearly in European and regional
markets. Many private factories get tax concessions and
are still operating at a loss after five years, but the same
people don't consider them failures."
The government discontinued support of several other
small enterprises associated with the PRO. But when it
came time to sell these factories, hotels and other facilities,
few buyers were interested. "AID tried to put most
of the country up for sale, but there were no takers,"
Robert Evans observed.
"Although much of our funding goes to the public
sector," says Peter Orr, who took over as AID mission
chief in 1988, "that is to help the public sector to create
a climate that will be attractive to both foreign and local
investors." The Agency spent approximately $44 million
on public projects to attract and benefit the foreign private
investors who, AID says, should be the "prime mover" in
any economy.8 In one such project, U.S. contractors were
paid nearly $1.8 million to build the Frequente Industrial
Park by converting warehouses into factory buildings to
be rented by private manufacturing companies. At the end
of 1988, many of the new factories remained empty shells.
Nevertheless, AID was proceeding with plans for another
industrial park farther from the capital. This plan was
more likely to succeed, the AID mission director said,
because investors would be able to persuade people there
to work for lower wages. "Country people are more
willing to sit all day by a machine," Orr explained.
AID spent another $1.5 million to install a new sewage
system for the luxury tourist strip along Grand Anse
Beach. Private entrepreneurs were then expected to expand
the high-priced hotels and revitalize the industry.
"We've saved one of the world's great natural attractions
from pollution!" Orr declared proudly. He did not mention
that some homes in the nearby Grand Anse Valley
still had to get along with no plumbing facilities at all.
If AID was unable to script a foreign investment
success story in Grenada, it was not for want. of trying.
They advertised the opportunities for profit-making, and
wined and dined prospective investors. The U.S. business
consortium Caribbean/Central America Action helped
out, as did the U.S. Commerce Department, the White
House Office of Private Sector Initiatives and the U.S.
government-sponsored business, finance and insurance
companies, OPIC and Eximbank. But even when offered
sizeable subsidies in addition to being "allowed to operate
freely" few were inclined to come in and "develop"
Five years after the invasion, several investors had
come and gone, and at least two were under threat of
prosecution for taking advantage of the pro-business
climate and AID credit with fraudulent get-rich-quick
schemes. Asked in 1988 to list U.S. companies currently
operating in the country, AID and Embassy officials
could name only four. The 200-300 jobs these provided
were far outweighed by the jobs lost as a result of public
sector lay-offs and discontinued social programs and
public enterprises.
Investors realized even if AID did not that chances
of making a profit are slim in a small country where the
costs of importing and exporting are high, and where most
people remain too poor to be good customers for products
sold locally. The interest of U.S. companies in Grenada's
investment opportunities stretched only as far as funds
available through AID for construction and consultation
construction and on attracting investors, AID transferred
$22.2 million in cash directly to the government in
the five years following the invasion. In connection with
these transfers, AID negotiated five separate grant agreements,
each made conditional upon economic policy
changes designed "to promote private sector-led growth"
and provide "a more secure basis for undertaking structural
No exact accounting exists of how the first $10 million
was spent, at least not in AID's documentation system. A
substantial portion was used to repay loans from the IMF,
local commercial banks, and other lenders to finance the
airport and other construction. The government claims
some was used to replace PRG health and social welfare
projects. Critics say much of the money was absorbed by
graft and payments to U.S. consultants.'

Tags: Grenada, USAID, US involvement, development

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