By
Sir Ronald Sanders
BRIDGETOWN,
Barbados, Thursday September 13, 2012 - The importance of the Caribbean
Community (CARICOM) countries acting jointly to address their development needs
has become acute.
With
high levels of debt to GDP ratios, widening budget deficits, deteriorating
terms of trade, dwindling aid flows, and shocks to their economies by a decline
in tourism earnings and a grave contraction of the financial services sector,
the majority of CARICOM countries are reeling.
Guyana and Suriname are the notable exceptions having recorded steady
economic growth in recent years, largely due to export earnings from their
mineral resources especially gold.
In
my last commentary I drew attention to the real possibility that the European
Union (EU) – one of the biggest aid donors to the Caribbean region – could
reduce their level of aid to all Caribbean states, except Haiti, because they
are Middle Income Countries. While the
European Commission has stressed that no firm decision has been made on aid
reduction to African, Caribbean and Pacific (ACP) states, under the EU’s
Multiannual Financial Framework for the period 2014-2020, a “differentiated
approach” to aid is being adopted.
Already, under this approach, the EU has eliminated traditional aid to
17 countries that are Upper Middle Income countries, and 2 large Middle Income
countries.
The
EU has made it clear that its differentiated approach “represents a budget for
investment and growth to ease the pressure on (EU) Member States' finances,
focussing on Europe 2020 priorities, impacts and results”. And while the European Development Fund
(EDF), under which aid is made available to the ACP states, is being kept
separate from the EU Budget, it seems inevitable that the EU – now consisting
of many countries that never had colonies in ACP countries – will insist on
applying the “differentiated approach” to giving aid to them. In the Caribbean, this means that in
calculating allocations for the 11th EDF (2014-2020) Haiti will continue to be
a beneficiary and all others could see aid reduced except “on the basis of
country needs, capacities, commitments, performance and potential EU impact”.
In
other words, “needs” alone will not be a sufficient basis for aid to Middle
Income Countries; their “commitment” and “performance” will also be key
determinants.
That
is why my last commentary stressed two points: first, the issue “should command
the urgent attention of all Caribbean governments, the CARICOM Secretariat and
the Caribbean Development Bank”, and second, “if ACP Middle-Income countries
are to justify why aid should not be reduced now, they must be prepared to show
how it will be used effectively to transition to diversifying their economies,
enhancing their productive sector, and standing on their own feet. A begging bowl is not enough”.
There
have been many responses to that commentary, but one of them from a Trade
Specialist, David Lewis of Manchester Trade based in Washington, was
particularly forthright. Lewis’ life’s work has been Caribbean oriented. But, he harbours grave doubts that Caribbean
governments, the CARICOM Secretariat and the Caribbean Development Bank are
prepared to act in a meaningful way. He said that they “are so out of touch
with reality in politics and economics in the Caribbean and more so elsewhere
that they will be playing 'catch-up' to no avail on this one”. He was also dubious about Caribbean
organisations actually “showing how the region will transition to diversifying
their economies, enhancing their productive sector, and standing on their own
feet”.
Lewis
is not alone in his misgivings. EU Representatives in the Caribbean have
bemoaned the fact that governments have not actively pursued funding for
regional projects that would benefit their countries individually as well as
the region collectively. They have also
expressed deep concern about the private sector in almost all CARICOM countries
failing to produce projects that could attract EU funding and gain access to EU
markets. Other regional commentators
have also lamented the reality that, in a beggar-thy-neighbour and
non-productive approach, many CARICOM governments have sought solutions to
their economic problems in national efforts only, shunning the real benefits
that could derive from regional action as well.
National
efforts for alleviating the budgetary strains on Governments and for a few
infrastructural projects have focused recently on getting help from China and
Venezuela. But, regardless of how
generous and unquestioning these two governments may be now, their
contributions, while welcome, are stop-gaps; they are not addressing
fundamental weaknesses that persist.
The EU’s frustration with Caribbean governments and their
institutions is not exceptional; other countries and agencies have also
expressed their disappointment and dissatisfaction. Among these agencies is the Canadian
International Development Agency which has identified the Caribbean as a
priority for its aid.
It
is significant that it is since May that the European Commission first advised
Caribbean representatives in Brussels of the decision to use a “differentiated
approach” to aid. While in ACP
representatives have been engaged in lobbying and presenting the counter
arguments in Brussels, there is urgent need for high-level representation to EU
governments, particularly the newer ones that have little knowledge of the
Caribbean beyond statistical information.
If
with the help of the Commonwealth Secretariat and the World Bank, CARICOM
countries and the Dominican Republic could secure an International Conference
on the Caribbean to address their fundamental difficulties of debt; a change in
the criteria for concessional financing; differential treatment for trade based
on their small size and limited capacity; deepening regional integration to
allow for the creation of pan-Caribbean undertakings that are competitive; and,
crucially, building machinery for transportation and storage of agricultural
products within the region, many of their problems could be addressed through a
co-ordinated approach by donor countries and agencies.
But,
first the Caribbean would have to assemble a single dynamic team to prepare a
convincing plan with measurable outcomes, performance criteria, and a viable
implementation mechanism. Otherwise they
won’t be believed.
It
is a dark time for the region; emerging into the light requires regional
ingenuity, regional commitment and regional action
SOURCE:
http://www.caribbean360.com/index.php/opinion/615714.html#ixzz26RO2pTof
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