ST. LUCIA: BAD COUNTRY TO INVEST?

The handling of the Grynberg matter has proven beyond any doubt that St. Lucia is a bad country to invest under King's government! It cannot attract any "foreign direct investment" and it is at the same time chasing away critical investors like Grynberg.

According to the World Bank, St. Lucia has moved down in the world rankings on the ease of doing business (EODB) index from 27 (in 2006) to 53 (in 2010) - a dramatic decline of 26 places in 4 years.

Side by side with the drop, the US States Department has leveled serious allegations of  corruption and human rights abuse against us.

Are the two phenomena related? Are investors afraid of doing business with us because they are sensitive to the “Washington advisories” on our level of corruption? Or are the investors themselves aware of that corruption and may have alerted or advised Washington on the magnitude of the corruption? Or is it both?

I have a fear that, my beloved country St. Lucia may have become both the gateway and showcase of corruption in the Caribbean, with the main catalysts being the Taiwanese connection [cf. St. Lucia Patriot] and our Foreign Minister [whose “corruption dossier” was well articulated by Dr Anthony during the Lorne launching in Choiseul].

But let us return to our dramatic decline in World Bank’s EODB rankings and let us raise some questions/issues on the factors that may be specifically related to or even have contributed to St. Lucia’s status quo.

1.   Could our disgusting treatment of an ethical entrepreneur like Jack Grynberg whose company has already invested EC$163 million in oil exploration at Dauphin be a factor?

2.   Did the purchase of the derelict Daher Building as a part of a "national development strategy" have anything to do with it?

3.   Could the failure of La Paradis hotel project and government’s handling of that failure have played a part?

4.   Did the failure of the Rick Carlton Hotel project at Black Bay and our loss of 500 acres of land have anything to do with it, directly or indirectly?

5.   Did the outsourcing of the Airport Redevelopment to a dubious company facing litigation in the US for potential fraud have anything to do with it?

6.   Do investors see us as a nation who have “outsourced” our sovereignty and territorial integrity to Taiwan and do they fear the implications for stability and national security?

7.   Does our EODB drop have anything to do with having a criminal as our foreign minister who allegedly charges consultancy fees to potential investors;

8.   Could the dramatic upsurge in the uncontrollable levels of crime and government’s seeming helplessness have influenced investors to turn away?

9.   Did it have to do with the notion by the AG that we have a “bad boy” government comprising drug barons as gov’t ministers who have been arrested for custom fraud, government MPs/ministers without credibility who have lied under oath in a court of law?

Although all of the above may be significant “push” factors, we can’t from a scientific viewpoint tell with any degree of confidence that they are "the variables" that explain our "investment failure" equation. We can only formulate working hypotheses and test them! Nonetheless, there are issues of concern  which worry me [and perhaps potential investors].

While St. Lucia is degenerating politically, economically and socially, we have a condescending “lame duck” attorney general who [instead of advising the police to arrest and charge those criminals in government] chooses to team up with them in the pursuit of a “Grynberg mirage” with potentially enough “nuclear energy” to inflict untold damage to our already moribund economy.

My greatest fear is the resultant economic plague that may be brought to bear on us if and when these criminals in government decide to detonate that Grynberg nuclear bomb. And because they are criminals, they are likely to do it without regard to the financial and economic consequences which will result in damages of the order of hundreds of millions of dollars on the taxpayers' backs. 

Oil exploration - especially under the sea bed - is not just expensive; it is cost-prohibitive. It is primarily a scientific/engineering exercise which is “economically risky” in the sense that the prospector can end up losing millions or even billions of dollars in seismic research and equipment costs without reward.

The Voice Newspaper of August 16, 2011, reported the following:

 “Prime Minister King and other government ministers have criticized the Grynberg agreement stating it to be detrimental to the country - one that would see Saint Lucia spending millions of dollars to get out of it.”  

But couldn’t the same be said about the investor Grynberg, who has spent millions of dollars on the Dauphin Oil Exploration Project? Is this how we treat an investor?

According to Mr Huntley:

“He [Grynberg] has already spent over US $60 million on preliminary seismic work necessary for exploratory drilling”.

US$60 million turns out to EC$163 million. Which investor will invest so much money into an activity and allow a gov’t to kick him around in midstream as if he were a football?

If Government were to prematurely kick out Grynberg without consideration of the force majeure provisions, then both Richard Frederick’s and Rick Wayne’s judgments about the magnitude of the impending catastrophe as well as the costs involved are right.

I have a feeling though that those costs will be much, much greater than the minister’s myopic estimations, and may well bring about an economic catastrophe of untold magnitude on us, should Grynberg take the matter to arbitration and win.

Let us look at a hypothetical scenario: Just imagine the costs as the amount that Grynberg has invested [EC$163 m] plus interest [say 10%] plus cost [arbitration, opportunity and other compensation events] plus all the monies which government is spending on preliminaries. If the scenario obeys that "costs formula", then I am looking conservatively at a projected cost in the vicinity of perhaps EC$200-300 million.

That will comprise the single largest cost that government would have ever incurred.

Meanwhile St. Lucia’s vulnerability index continues to climb as a result of the the world economic crisis, the passage of hurricane Tomas and the collapse of CLICO and British American and this has left thousands of St. Lucians stranded because of the loss of endowment, life, education, property insurance coverage. Think of the “life”, “endowment savings” and “education” plans that were invested on behalf of our family/children. In short, we have lost hundreds of millions of dollars in insurance coverage and the government has not made this a priority.

Also consider the damage by Tomas which former Chief Engineer Peters so eruditely explained on the Red Zone on RCI last night [August 16, 2011].

According to Hon Phillip J. Pierre, our Government is more interested in the flashing mirror of Grynberg which can bring huge financial and economic costs to a nation already in a deep crisis? Couldn't the resources channeled into Grynberg be better used?

I totally agree with the view of the Former economic planning Minister [Ausbert d’Auvergne] that the Government made a fatal error when they played the Grynberg card.

In our present circumstances, St. Lucia now has to be the worst Caribbean country to invest.