Grenada: The Revo in Reverse

September 25, 2007

SCHOOL, SANITATION, POSTAL AND MOST 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 office. 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. T'S A LOVELY PIECE OF REAL ESTATE," 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 A TOP AID PRIORITY WAS TO DISMANTLE OR 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" Grenada. 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 contracts. B ESIDES THE MONEY SPENT ON EMERGENCY 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 adjustment."9 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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