Occasional Essays
March 30, 2007
SVG and Regional Integration

About a month ago the Heads of Government held their 18th inter sessional meeting here. The event led me to reflect on how regional integration has impacted on SVG since its inauguration. I used to represent St. Vincent at the civil service level at the inception of the process. Many of those early meetings were chaired by the late William Demas. He described my attitude to integration as committed yet skeptical. There was justification for my approach. The Federation had broken up because Jamaica thought that the small states like SVG would become a burden on their Treasury. It would therefore have been stupid to assume that any new approach to Caribbean unity would automatically imply any special dispensation for us.{{more}}

In fact, the start was not very propitious for St. Vincent. With strong backing from Trinidad and Guyana, it was anticipated that the Caribbean Development Bank (CDB) would be located here. Jamaica, led by Edward Seaga, opposed it. One of the arguments against SVG was the absence of a jet airport. This should have been an argument in our favour. Bank or no bank, Barbados would have developed as it has done. The location of the CDB in SVG would however have stimulated development, not least by accentuating the need for the airport to make the Bank more accessible to donors, lenders as well as borrowers. In fact we have had to wait another 40 years for two Caribbean countries, Cuba and Venezuela, neither of whom are involved in the integration exercise, to help us to get a jet airport.

Despite this setback the integration movement did in fact help to promote SVG’s development. It did so through the Agricultural Marketing Protocol and the CDB.

Under the Protocol the value of exports of sweet potatoes to Trinidad and of carrots to Guyana increased markedly. We not only sent these items to these countries but actually got paid for them. The trade was conducted through Government agencies and they realized that unless we got paid the integration movement would mean very little to SVG. When the trade has been left solely to the private sector, as it was before the Protocol and is now, our farmers have had difficulty collecting payment for their produce.

Currency movements contributed significantly to the decline in our agricultural exports to Caricom countries. Firstly, appreciation of the pound against the US dollar in the early eighties made banana production very lucrative in SVG. On the contrary, the devaluation of the Trinidad dollar in 1985 meant that our fruits and vegetables were no longer competitive in the Trinidad market. So that whereas bananas accounted for only 60% of our total exports in the early seventies it rapidly increased to 80% by the nineties.

In the early days the CDB did make a significant effort to develop the productive sectors with the sugar factory, the milk plant, a hotel and the Campden Park industrial estate. Such failures as there were among these projects cannot be blamed on the Bank. A major explanation is our persistent tendency to political infighting. Almost every new Government, instead of trying to make projects cannot be blamed on the Bank. A major explanation is our persistent tendency to political infighting. Almost every new Government, instead of trying to make projects started by the preceding government work, sets out to bankrupt the projects; a palpable waste of resources in a tiny place where the options for development are extremely limited.

In recent years the CDB has been somewhat marginalized. Most of the directly productive investment has been in tourism. And this has been undertaken by investors from outside the region who bring not only finance but the requisite marketing skills. The Bank tends to concentrate on infrastructure. Even here however, the Government is not entirely dependent on CDB since alternative sources of finance are available.

Today SVG is focusing heavily on education, construction, tourism, energy and to a lesser extent agriculture for its development. Dovetailing these efforts with the regional integration exercises requires some thought.

Energy development relies very heavily on natural gas, petroleum and diesel from Venezuela. Wind energy would probably be developed by direct investment from outside the region. However it cannot be gainsaid that Trinidad’s energy sector has impacted our economy in myriad ways.

The declining agricultural sector has little alternative but to look to regional markets particularly, Barbados, Trinidad and Antigua. The crops that would feature in this exercise would have to be carefully selected given our labour shortage and our high costs of production.

Primary and secondary education are more local than regional matters though this is not to deny the importance of the Caribbean Examinations Council. At the tertiary level the UWI continues to be a tower of strength though it has to be noted that an increasing number of students are going to Cuba, Venezuela, Mexico, Taiwan and Malaysia.

The bulk of the tourism investment and revenue will continue to come from extra regional sources. There have always been some tourists from Trinidad particularly at Carnival time and one detects some retiree tourism also beginning to develop from that island. Many of our graduates and skilled people also migrated to Trinidad.

Bearing the foregoing in mind, closer union with Trinidad perhaps ought to take precedence over Caricom’s initiatives. It should be noted however that one of these initiatives, the proposal to get a ferry that would take both cargo and people to Trinidad in less than half a day may very well sweep us along this path anyway.