Chinese take-away?

Problems have emerged in the Bahamas over the number of Chinese workers on a project funded in part by the Export-Import (Ex-Im) Bank of the People’s Republic of China.

The original number of Chinese workers appears extraordinarily high – 8,150 even though there is an undertaking from the owners of the project that the peak number of foreign workers, at any given time, will not exceed 5,000 non-Bahamians.{{more}}

Rightly, Bahamas’ Prime Minister, Hubert Ingraham, has raised concerns about the large number of Chinese workers. His concerns are particularly relevant against the background that, according to the International Monetary Fund “tourist arrivals declined by 10 per cent and foreign direct investment fell by over 30 per cent, leading to a sharp contraction in domestic activity and a large rise in unemployment” in the Bahamas in 2009.

Construction is a critical engine of growth in any economy, but especially so in small economies where payments to local workers and suppliers keep money in circulation over a wide area including supermarkets, transport providers, clothing and footwear stores, real estate rentals and banks.

If 8,150 Bahamians – or close to it as possible – could be employed in this project, it would definitely be a fillip to the Bahamian economy and help to expand domestic activity and create jobs directly and indirectly.

The issue troubled Ingraham enough for him to travel to China to raise the matter with the Chinese government and return to the Bahamas with the news that he had succeeded in securing $200 million dollars more for construction workers and for Bahamian sub-contractors, raising the total that would be allocated to them to $400 million.

How this translates into jobs for Bahamians and a reduction in the number of Chinese workers is unclear, but note should be taken that, not surprisingly, the opposition Progressive Labour Party (PLP) has characterised Ingraham’s journey to China as “a failure”. To be fair, it should also be pointed out that it was the PLP which introduced this project, known as Baha Mar, when it served as the government.

Baha Mar, projected to cost $2.5 billion, is a very large tourist project. On completion it is expected to rival the Bahamas’ biggest tourist plant, Atlantis, which was developed by Kerzner International. The operators behind Baha Mar include Sarkis Izmirlian, its Chief Executive Officer, whose published profile says “he currently manages most of the Izmirlian family businesses from offices in The Bahamas. These businesses include commodities trading and processing, manufacturing, real estate, and public market investments”. Izmirlian is said to have overseen the negotiations with the Government of The Bahamas and the acquisition of the Baha Mar project site.

Like every commercial business, Baha Mar puts its profitability first, and, clearly, in seeking financing from Ex-Im Bank of China, the company apparently accepted that the work force, in effect, would be 71% Chinese and 29% Bahamian – a bitter pill for Bahamians to swallow in the best of economic times and certainly indigestible in the present economic climate.

No one in the Bahamas or elsewhere doubts the contribution that Baha Mar will make to the Bahamas economy in the short and long term, but the conditions of the Chinese loan rankles on the requirement for such a large number of Chinese workers.

After all, this is not aid. It is not even emergency or disaster aid when a high component of Chinese material and people would be acceptable. It is purely and simply a commercial contract, lending money that will have to be repaid.

The only reason one can surmise for the insistence on such a large number of Chinese workers, vastly outnumbering Bahamian ones, is that the Chinese will work for less and trade union conditions, and rights, would not apply in their case thus reducing the cost of the project.

This commentary is less concerned about the local politics of the Bahamas that are involved in this issue; more qualified people can comment on them. It is more concerned with the present and future relations between Caribbean Community (CARICOM) countries and China.

The experience of African countries, notably Angola recently, in relation to China’s use of an overwhelming number of Chinese workers, shows a strain in their relations with China. In 2006, the former President of South Africa Thabo Mbeki famously remarked: Africa must guard against falling into a “colonial relationship” with China.

I have long argued that CARICOM countries should negotiate with China at least a long-term framework treaty that covers aid, trade and investment. It should be a treaty along the lines of the Lomé and Cotonou Agreements that existed with the European Union.

As in all their bargaining with third countries, the CARICOM states would secure better terms if they negotiated with China as a collective grouping than if each of them tried to bargain alone. And, if they succeeded in settling a treaty with China, issues such as the paramountcy of local labour in commercial projects and in loan-funded projects could be settled upfront, as would issues such as the supremacy of labour laws and respect for human rights in the countries where such projects are undertaken.

To negotiate such a Treaty with China, however, CARICOM countries have to do one of two things: those who now recognise Taiwan over China will have to drop that stance so that there is a united CARICOM recognition of China only; or those that recognise China should proceed to negotiate the Treaty with China leaving the others to join when they can.

There is a small window of opportunity left to negotiate a meaningful treaty with China. As China grows more powerful economically crowding out CARICOM’s traditional aid donors and investment partners, it will become very difficult for small Caribbean countries to bargain for the best terms even on commercial projects.

Beggar thy neighbour policies will get CARICOM countries nowhere in the long term and the time is right for all CARICOM countries to strengthen their relations with China on the basis of a structured and predictable treaty.

My friend and fellow writer Anthony Hall, wrote recently that Hubert Ingraham’s “challenge to China” on the issue of the 8,150 Chinese workers “is precedent-setting… and it behoves all leaders in our region to support, and be prepared to emulate the stand he’s taking: for together we stand, divided we fall”.

China has itself faced the challenges of division; it might – just might – respect Caribbean unity.

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