BY AMBASSADOR ODEEN ISHMAEL AT HOWARD UNIVERSITY:
THE IMPACT OF THE SEPTEMBER 11, 2001 TERRORIST ATTACK AGAINST THE UNITED STATES ON THE CARIBBEAN POLITICAL ECONOMY - 30 January 2003
Posted February 1st.. 2003
I am deeply honored to make this presentation to you the participants in the Caribbean Studies Program of Howard University. A few weeks ago when Dr. Gooding along with Dr. Joseph Edmunds, former Ambassador of St. Lucia and I had a discussion about this program, I right away expressed the view that such a program would be of immense benefit to the students of this institution, which has a very close historical link to the Caribbean. It is important to note that some of our Caribbean leaders received their education at Howard University. Dr. Cheddi Jagan, who was President of Guyana, and who himself was a legendary figure in the fight against British colonialism, attended Howard University for two years in the late 1930s before he moved on to Northwestern University in Chicago to study dentistry. Dr. Eric Williams who served as Prime Minister of Trinidad and Tobago studied History here in the 1940s and his doctorial dissertation, Capitalism and Slavery, became one of history's most read reference textbooks. The current Prime Minister of Grenada Keith Mitchell was a mathematics professor here in 1977-83.
And as you would know more than I do, many of the professors at Howard University and physicians at Howard University Hospital are of Caribbean origin or heritage.
Our world entered a new era on September 11, 2001 with the terrorist attacks on the United States of America. Now one a half years later, we are still faced with the challenge to determine whether we can find any logic behind those gruesome attacks. Reason surely will be tested to the highest degree in such an exercise.
The Caribbean region suffered directly from the attacks on the World Trade Center and the Pentagon. Over 100 of its nationals died in the attacks. Many Caribbean communities here in the United States, and people in the Caribbean countries themselves suffered great distress over these deaths, and over the nearly three thousand other lives lost in these devastating attacks.
I want to utilize my time this evening to discuss the economic, social and political impact these attacks are now having on the Caribbean region, particularly the countries which form the Caribbean Community (CARICOM). In this presentation, I will also examine the actions taken by the CARICOM Governments to deal with the critical situations that have developed. In addition, I will express some views on the impacts of the those events on debt burden, security and international financial aid on the region.
THE ECONOMIC FALLOUT
Let us look first at the economic fallout. It is easily understandable why the Caribbean is affected by the events of September 11, 2001. The countries of the region, in particular the northern Caribbean consisting of Belize, Jamaica and The Bahamas, are physically close to the US, and in a large way they, as well as the rest of the Caribbean, are integrated to the US through people contact, trade and investment flows.
The countries across the region, especially those that rely largely on tourism and financial services, have already been feeling the impact in a very immediate way and with grave consequences mainly on their economies.
The tourism sector in the affected countries immediately after the attacks began to operate below normal levels. The situation worsened because of low occupancy rate of some hotels, which, even before the crisis, had fallen to 20 percent. Every day there were cancellations because people are not bothering to travel. As a result, many persons employed in the entertainment and hotel industries in the countries relying heavily on tourism were been laid off. And with less money circulating as a result of the sliding tourism sector and possibly tighter controls on the offshore banks, many persons in The Bahamas, for example, who had made banking their profession, joined the ranks of the unemployed.
For Caribbean tourism, the period of about a year after the attacks was disastrous, as American tourists stayed at home after September 11. The situation is only now beginning to show some improvement. Barbados, which is less dependent than its neighbors on the American market, actually received about 30 percent fewer tourists by the end of 2001. The small island states of the Caribbean - the Organization of Eastern Caribbean States - were even more seriously affected, and they are still suffering from the tourism fallout.
Caribbean countries receive their highest influx of tourist in winter. That did not happen in the winter of 2001. Hotel bookings are scanty, even at heavily reduced room rates. This winter has shown some improvements, but the level has not gone back to that of pre-September 2001. The hope now is that with a critical situation brewing in the Middle east, cruise operators will transfer ships from the Mediterranean and thus adding some substantial increases in visitors from Florida.
But even this may not be too helpful since cruise ships compete sharply with island hotels, often charging drastically reduced rates. Further, tourists on cruise ships do not spend much money when they go ashore. And now the cruise operators are demanding that Governments pay for divers to inspect hulls for bombs while, at the same time, insisting on lower port charges.
Currently, the situation remains uncertain. But we hope the situation will improve over time. In a best case scenario the region would actually benefit from a permanent redirection of yachts and cruise vessels to the safer waters of the Caribbean. Looking ahead, the tourist trade may slowly recover, but at the expense of resorts in the eastern Mediterranean and Indian Ocean which are now regarded as "danger regions" for tourists.
With regard to air transport, in the last four months of 2001, US airlines were running at about 60 percent of volume before September 11. Caribbean airlines - Bahamas Air, Air Jamaica and BWIA - experienced significant loss, but unfortunately did not benefit from the bailout packages like the US carriers received from the US Government.
In the area of financial services, the Caribbean has offered fairly sophisticated financial services through many jurisdictions to the rest of the world. But financial services are also under scrutiny since September 11, 2001. An OECD Financial Action Task Force had earlier listed a number of Caribbean countries as not possessing proper financial practices, and pressure is being applied on these Caribbean countries to tighten these measures.
The uncertain political and economic climate since September 2001 are impacting all economies since virtually all major sectors of Caribbean economies, e.g. transport, tourism, agriculture, manufacturing, mining and finance, depend on ready access to the US. These setbacks come at a bad time. Sugar, rum and bananas, the Caribbean's agro-industrial mainstays, all face stiffer competition than in the past. These countries are already seeing some decline in foreign direct investment and difficulties in raising international finance. With a recession in North America and to a lesser extent in Europe, there is a reduced demand for the region's products, particularly its already high priced tourist product and commodities. At the same time, with a global recession, capital flows to the region are also certain to go into further decline.
Some economists made predictions, just after September 11, that oil prices would rise. But this did not happen. Actually, oil prices declined because of the decrease in demand owing to the fact that people are traveling less since September 11. Thus, Trinidad and Tobago, the largest Caribbean oil producer, was not able to gain a windfall, but actually earned relatively less from its oil resources in the last four months of 2001.
We are now experiencing some additional problems in the area of maritime transport. Insurance has increased, and the obvious result is now a higher freight cost for many of the goods imported from the US. This is also affected by increased security costs at international airports in the Caribbean.
Non traditional agriculture produce now have to undergo longer delays because of check in procedures. In some cases, this is causing some of the perishables that are transported from the Caribbean to North America to be affected. Guyana is one of the countries experiencing this particular problem.
The entire Caribbean region is also negatively affected by the drastic reduction of remittances from their nationals who live in the United States. Jamaica is particularly affected in this respect. With people beginning to lose their jobs because the US economy is going into crisis and recession, the Gross Domestic Product (GDP) of many developing countries will feel the impact heavily because of the reduction in these remittances.
Meanwhile the illegal drugs business remains as a booming enterprise in the Caribbean. Just after the September 11 events, there were record seizures in October of 1.2 tonnes of cocaine in Jamaica, and 1.5 tonnes in Belize. Some analysts believe the flow of drugs across the Caribbean has increased by 25 percent. One of the reasons is that since September 11, 2001, the United States has withdrawn some radar-carrying AWACS planes from airborne drug patrols, and pulled coastguard vessels northwards. More rigorous inspections of vehicles crossing Mexico's border with the United States, and searches of ships off the American mainland, mean that drug smugglers are likely to rely on island-hopping routes.
And it is felt that as America concentrates on fighting terrorism, emphasis is being relaxed on combating the demand factor in the United States. This gives encouragement to drug producers and dealers to send more narcotics to supply the still lucrative market in the United States.
RESPONSE OF THE CARICOM GOVERNMENTS
How has the Caribbean region responded to the terrorist attacks? On October 11-12, 2001, the leaders of CARICOM met in Nassau, Bahamas, and after intense discussions, issued a declaration against terrorism and a resolution on measures the region would jointly undertake to protect their economies from the economic fallout of September 11.
The declaration recognized that terrorism is a global problem requiring a concerted and resolute global response. The leaders re affirmed their commitment to work with the international community in the multifaceted fight against terrorism in accordance with international law and conventions. Accordingly, they pledged their support for the efforts to bring to justice the perpetrators, organizers, and sponsors of these terrorist attacks, and expressed full support for any concerted action by the international community to eliminate terrorism. They also agreed to ensure that their territories, institutions and their citizens, are not used in any manner to facilitate the activities of terrorists or to undermine national and regional security. To this end, they mandated a review of all relevant regional and international conventions in order to ensure the widest possible adherence to them by CARICOM governments. They agreed to give the highest priority to the enhancement of existing national legislation relating to security in all its dimensions and to the enactment of new laws, as required.
To improve the region's economy and to enhance security and combat terrorism, the leaders decided to do the following:
1. Provide through the Governments and private sector a US$18 million major tourism promotion and marketing development campaign centering primarily on the USA, UK and Canadian markets.
2. Convene the Tourism Summit on the 8 9 December, 2001 in The Bahamas;
3. Enhance aviation security involving both the airports and the airlines, and heighten security at airports, seaports, and borders.
4. Consider immediately for adoption and implementation a range of pertinent international conventions and protocols to address the issue of international terrorism;
5. Coordinate greater collaboration among regional security services, particularly in intelligence gathering, analysis and sharing, with a focus on combating crime, illicit drugs and terrorism;
6. Work out an agreed framework for operational cooperation among the security services, to meet the immediate and long term responses;
7. Present a request by the region through a CARICOM Head of Government to the European Union for emergency financing under the Convention between the African, Caribbean and Pacific countries and the European Union.
8. Send a high level regional delegation to approach the Inter American Development Bank with a concrete plan of action relating to the region's emergency financing needs in light of the devastating impact on the region's economies;
9. Convene urgently a meeting of the Caribbean Association of Regulators of International Business to discuss the implementation of UN Security Council Resolution No. 1373 of 28 September 2001, which, among other things, compels Member States to criminalize the funds of any of their nationals supporting terrorist activities, and to freeze the assets of persons or entities associated with such activities;
10. Support the creation of mechanisms, mainly for the aviation and hotel industries in the Region, in order to mitigate the burden of high insurance and re insurance costs, and so provide protection above the limits that commercial insurers are willing to offer; and
11. Convene a working group to develop proposals on incentives to insurance companies to facilitate the strengthening of their capital reserves.
I now move to look at some of the additional pressures which Caribbean countries, and indeed all poor developing countries, are now facing.
The Deportee issue
First of all, there is the issue of criminal deportees. As the Caribbean countries implement more stringent security measures to combat terrorism, their security forces are overloaded with additional pressures to monitor criminal deportees being sent back to these countries by the United States. As some of you would know, in October 2001, the United States placed visa sanctions on Guyana because it felt that my country was moving too slowly in issuing travel documents for 113 criminal deportees. I do not want to go into the issue of the morality, or immorality, of dumping these persons back into my country when they were initially accepted into the United States free of any criminal record. But in any case, we are obliged to receive them in Guyana because they are Guyanese citizens.
The visa sanctions were lifted in December 2001 after we issued travel documents for the 113 criminal deportees.
Meanwhile, our Police have to keep an eye on these deportees, while at the same time look out for persons trying to undermine national and international security.
I use Guyana as an example on this issue, but clearly other Caribbean countries' security forces are facing similar pressures in monitoring criminal deportees and trying to control increasing crime, some of which is accounted for by the entry of some of the very deportees into the business.
I must mention, too, that the Caribbean region forms an extensive third border of the United States. This border is monitored in different ways by the security forces of the Caribbean, and it is obvious that with the need for advanced surveillance, especially at our airports and seaports, Caribbean Governments are now forced to divert increasing amounts of their budgetary resources to providing this security at the expense of their social and economic programs.
On the other hand, some of our citizens, especially our students, now face a situation where they have to comply with new and changing rules, in order to obtain visas for entry into the United States. And we are still assessing the impact that the US Patriot Act is going to have on the movement of our citizens and our goods to the United States.
I should mention, too, that with growing economic pressures on Caribbean countries, we continue to see migration - legal and illegal - to the United States. This is also encouraged by government institutions in the United States. For with shortages of teachers and nurses in some states, for example, in New York, an aggressive recruitment campaign is being carried out to employ our teachers and nurses in this country. You have to understand that we spend a great deal of resources to train our nurses and teachers. Then these teachers are attracted to what are regarded as generous offers from the recruiters in the United States, and they leave. So, we lose our qualified personnel and also the resources we spent to train them. This situation perpetuates underdevelopment of our own societies.
I think the United States, as a beneficiary of our training programs, can help to arrest this situation of our losing our qualified people to this country, by recruiting American students and send them to study in our nursing and teacher training centers. By doing so the United States will be able to draw from their own pool of trained personnel. Or, as an alternative, the US state agencies can set up training centers in the Caribbean to do the necessary training. In both cases, there will be an injection of financial resources to the Caribbean region, and both the Caribbean region and the United States will be more or less equal beneficiaries.
The Debt Burden
I want to examine briefly the issue of the debt burden and how I think it may be affected by the September 11 events. I have a fear that with emphasis now being placed on combating terrorism and its economic fallout, the international financial institutions and the more developed countries may pay decreasing attention to addressing the issue of debt, which is a major problem for poor countries including Guyana. But we cannot afford to shift this emphasis, since the debt burden itself is a terrifying problem. In a sense, it is a form of economic terrorism which has for decades affected the lives of millions in Africa, Asia, Latin America and the Caribbean.
Shakespeare told the story of the Merchant of Venice who made a bond to pay back his debt with a pound of flesh. But the creditor was forced by the law not to take this repayment because the debtor would also lose his blood, which was not part of the original bargain. Today, the debt-ridden countries are paying back their pound of flesh, but unfortunately their life blood is also being taken away from them in the form of hundreds of thousands of little children, particularly in Africa, who die year after year of hunger, disease and malnutrition. This is because poor countries use their money to service the debt, when it could have been used to provide food and medicine to save these innocent lives and also to foster economic and social development.
We must remember that the debt that the current governments have to pay pack was not created by them, but by previous regimes, many of which were never democratically elected by the people. In those periods, some of them were dictatorships which were heavily funded by the multilateral financial institutions (MFIs) and the developed world. These repressive regimes used those funds to tighten security measures to repress their citizens and thus stifling democracy. However, by constant struggle, the repressed people were able to win democracy and replace those regimes by democratically elected governments.
The irony is that the democratic governments are being forced to pay back the debts they never created. And because they have to do so, they generally do not have enough resources to meet the economic and social developmental needs of their citizens. Thus the cycle of poverty continues. And some anti-democratic and unscrupulous groups take advantage of this situation and try to destabilize the society in a variety of ways, including the use of terrorism to achieve their ends in removing a democratically elected government.
The slow pace of debt relief by the MFIs, and the developed world (which attach a great deal of conditionalities on the debt-ridden countries) is not helping at all to promote and defend democracy. The MFIs made some bad loans to bad regimes, but they are demanding that current successor democratic governments service these debts despite the detriment they cause to their economies.
The terrorist attacks and their aftermath have certainly disrupted the world, and particularly for us in the Caribbean region. But the problems that we face did not begin after September 11. September 11 just escalated them, but I want to believe that our economic problems are now receiving greater attention from the MFIs and the donor countries. But will the multilateral financial institutions and the developed donor countries provide much needed developmental aid to the Caribbean? I cannot really be sure if they will be able to deliver developmental funds to meet our immediate needs. They may feel it is more important to give priority to divert funds to assist other countries the US feels are more strategic to its security interests. Since donor funding is not infinite, it is fair to say that funding will be diverted to that region at the expense of countries of the Caribbean which are seen as peaceful and not militarily strategic to the ongoing war against terrorism.
The suffering nation of Haiti has fallen victim of the stinginess of the IFIs. Despite an OAS resolution which delinked the political situation with the granting of aid, the IDB, World Bank and the IMF have not yet decided to unfreeze the more than $250 million in development aid for Haiti. By not having this funding, the Government cannot deliver on social services for its people, and Government projects on infrastructure cannot get going. The economy stagnates, and the Haitian Government is told to pay off its arrears to the IFIs before it can obtain any aid. Logic is thrown out of the window. Haiti is in the position of a man whose arms and legs are tightly bound together and who is then thrown into a deep river and told to swim across it.
As a footnote, I must mention that the countries of the Caribbean have passed laws to combat terrorism. This is requirement imposed on them by the current world situation, and also by resolutions passed by the United Nations and the Organization of American States. They also have to enact these laws if they are to obtain developmental aid from the IFIs. However, when they enact these laws - which obviously stipulate harsh penalties for those convicted - they are attacked by human rights organizations which also have friends in the IFIs, and who may work to block aid that the affected countries are trying to receive. Recently, Guyana enacted a number of anti-terrorism laws which bear similarities with those of the United States and India. However, the Guyana Government is now under attack from Amnesty International.
Our entire world changed drastically and dramatically on September 11, 2001. The effects of the attacks on the World Trade Center and the Pentagon are felt throughout the world, and especially in the Caribbean. All of us have to take stock of our new situation and become entities to combat terrorism in whatever way we can do it. For us in the Caribbean, we have to work much closer together to revitalize our economies. We have to do so or we will all go down together. We are all involved.
This realization brings to mind the words of Guyana's national poet, Martin Carter, who nearly five decades ago wrote the following poem, "You Are Involved":
This I have learnt:
today a speck
tomorrow a hero
hero or monster
you are all consumed!
shakes the loom;
like a web
is spun the pattern
all are involved!
All are consumed.
[Dr. Odeen Ishmael is Ambassador of Guyana to the United States of America]