The Sir Ronald Sanders Column – Dominica: Poverty and potential

May 18, 2008 Ronald Sanders

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By Sir Ronald Sanders

Right now it would be difficult to convince any banana farmer in the Caribbean island of Dominica that the Economic Partnership Agreement (EPA), initialled between the European Union (EU) countries and the several Caribbean countries, benefits him in any way.

Edison James, Prime Minister of this small island State from 1995 to 2000 and Leader of the Opposition in Parliament from 2000 to 2007, has been a banana farmer since 1980. Now, he is seriously considering abandoning banana cultivation entirely.

For more than 50 years, the banana industry was the lifeblood of Dominica, sustaining its population of some 72,000 people, 65% of whom are in their productive years.

Today, compliments of former US President, Bill Clinton, and the favours he owed to two US companies, Chiquita and Dole, for campaign financing, a special agreement with the EU which allowed former British colonies in the Caribbean a guaranteed share of the European market was wiped out.

In the late 1990s, the U.S. government joined with Latin American countries in which the US companies operated to challenge the EU’s special banana regime for the Caribbean. The result was that Caribbean countries, and particularly Dominica and the neighbouring islands of St Vincent and St Lucia, found that almost overnight their banana industry was seriously imperilled.

Under the EU regime, while Caribbean bananas entered the United Kingdom market (as part of the EU) duty-free, the produce of the U.S.-owned estates in Latin America were subject to a tariff. Once the tariff was removed, the Caribbean banana industry could not compete on prices, particularly as workers in the U.S. owned banana plantations in Latin America were paid as little as $2 a day.

In St Lucia, St Vincent, Jamaica and Belize, which are also banana suppliers to the EU market, the economies have other strands such as tourism and financial services. In Jamaica’s case, it also has bauxite and a thriving manufacturing sector. But Dominica was hardest hit; it had no other productive sectors on which to rely.

In the 1980s, Dominica did try to develop a Financial Services Sector and it attracted a number of offshore banks. However, the sector was poorly regulated, and the country fell foul of two organisations, established by the world’s richest countries.

The two organisations are: the Organisation for Economic Cooperation and Development (OECD) and the Financial Action Task Force (FATF). One introduced what it called a ‘harmful tax competition initiative’ and the other imposed a set of criteria for unilaterally judging whether countries were “cooperative jurisdictions” or not.

Dominica was blacklisted by both the OECD and the FATF, and lacking the capacity to quickly put in place the necessary legislation and regulatory and enforcement machinery, its financial services evaporated.
The sad aspect of all this is that, instead of the OECD and FATF working to help Dominica to establish the architecture it needed to retain its financial services sector and so help the country to survive, they did everything they could to do the exact opposite.

Dominica, always a poor country subject to the devastation of hurricanes, did not easily survive the blows to its banana industry and its financial services sector.

Today, unofficial figures place unemployment at between 25% and 30%; some argue that it is higher.
A poverty assessment study in 2002 found that poverty is huge – about 29% of households and 39% of the population. These figures are high by the standards of the 15-nation Caribbean Community and Common Market (CARICOM) group of which Dominica is a part.

The exception, of course, is Haiti, which remains the poorest country in the Caribbean. And, as if to exemplify this, despite its severe economic difficulties, Dominica is a refuge for a few hundred Haitian illegal immigrants to whom the government and people of Dominica have turned a blind eye, and who have become hard workers in the agricultural sector.

But, Dominicans are forced to leave their homeland to seek opportunities abroad. Conservative estimates suggest that some 160,000 adults – more than double the existing Dominican population – live in the United Kingdom, Canada and the United States.

Fortunately, they remit money home to their relatives and while there are no official records, it is estimated that their remittances account for over 12% of Dominica’s GDP.

The highest incidence of poverty exists among the Caribs – the original people of Dominica. And this portends a problem for the future. Already, there is a discernible militancy in the leadership of the Caribs amongst whom poverty is rated at 70% with almost half of the population listed as very poor.
In the banana industry, Dominica looked for salvation under the broad rubric of “fair trade”. This was a niche, which gave a diminishing banana farming community a chance to survive. From a couple of thousand banana farmers, the community is reduced to about 700. But a row between the managers of Windward Islands Banana Development and Exporting Company and the Dominica banana producers over the volume of bananas that Dominica can export under the “fair trade” label – and the price – threatens to harm the industry even more.

It is a real problem for any government, but particularly for the present government of Dominica to whom the population are looking for answers to their problems.

So far, it appears that the answers are being sought from grants from other countries.

The present Dominican administration, led by Prime Minister Roosevelt Skerrit, has secured help from the government of the Peoples Republic of China, after it broke diplomatic ties to Taiwan in the game of ‘dollar diplomacy’ that is being played by the smaller Caribbean islands.

Dominica is also the only Caribbean country – other than Cuba – to sign up to the Bolivarian Alternative for the Americas (ALBA), which was created by Venezuela’s President Hugo Chavez, supposedly as an alternative to the Free Trade Area of the Americas proposed by the United States.

And while ALBA is nothing more than a declaration of principles at the moment – and therefore presents no problem for any of Dominica’s existing treaty obligations – it does have a fund provided by the Hugo Chavez government from which Dominica has drawn some benefits, though how much and in what form is not generally known.

Limitation of space does not permit the conclusion of this commentary on Dominica. I will return to it next week.
(The writer is a business consultant and former Caribbean Diplomat)

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