Region’s unregulated financial institutions root of most woes - Owen Arthur

Region’s unregulated financial institutions root of most woes – Owen Arthur

Mar 01, 2009 News

Unregulated or inappropriately regulated financial institutions and systems have proven to be the biggest source of instability in modern economies, and Caricom is not immune from the effect of such types of disorder.

Former Prime Minister of Barbados, Owen Arthur

This is according to former Barbadian Prime Minister Owen Arthur who, during his address to the 104th anniversary of the Rotary Club at Pegasus on Friday evening, said that crisis is no stranger to the Caribbean.

The small societies in the region, he told the gathering, have always had a difficult and hazardous existence.

With the Caribbean’s crisis-ridden history, it has had to endure the trauma of slavery and indentured servitude, colonial domination and exploitation, private pillage and, for long periods, the effects and the consequences of war.

Except in the rarest instance, the economies of the region, Arthur added, have been conditioned to accept and accommodate scarcity and instability as normal features.

In the process, a special kind of resilience has evolved in the Caribbean that has enabled the region to ‘bear up in the face the most severe vicissitudes’ without becoming failed societies.

The Caribbean, he added, has managed to cope largely on its own with the financial crisis.

In large measure, he said, this has been because, no matter how severe they may appear to citizens, the problems of the region are too small to pose any real threat to global economic stability.

“We never appear on the global radar as ‘emergencies’ even when our problems are akin to those that exist elsewhere. In such a context, our call for special or empathetic treatment from the international community generally goes largely unheeded.”

The Caribbean’s challenge to prosper and survive in today’s stormy arena has been compounded by the fact that the region has seldom been left more on its own in having to cope with what comes its way, Arthur said.

There is no doubt, the former prime Minister said, that the Caribbean can and should benefit from having access to concessional development finance to enable it to deal with long-standing effects of underdevelopment and contemporary requirements to adjust.

A Caribbean solution to an economic problem, which is global in source and scope, clearly will depend in large measure upon the strength and soundness of the response by the international community.

Arthur explained that, if the response is not sound to the extent that it is not rooted in analysis of crisis that is realistic and meaningful, and if it is not strong and all-encompassing in the scope of its proposed solutions, then countries such as the Caribbean will be left dangerously adrift.

“The evidence this far is that the response of those most capable of determining global policy has not been analytically sound as regards their explanation of the sources of the contemporary global disorder.

“It is even more distressing that the proposed solutions that are focused on corporate bail-outs and conventional macro-economic stimulus programmes are hardly likely to get the job done.

“By every account, the world is going through the worst economic crisis in more

than 50 years.”

The Caribbean cannot expect to escape unscathed, he said.

“Aspects of the response at the national and domestic levels must draw upon new regional forms of cooperation to pool what we have to support each other in times of danger.”

Amazingly, Arthur noted, the Caribbean Heads of Government, who have met in the past for less serious purposes, have yet to meet to consider how the region should respond to the unfolding global crisis.

“In the face of this economic crisis, it appears as if our regional movement is at large.

“This inertia has most profoundly taken the form of the virtual suspension of the programme to create the Caricom Single Economy.

“The consequences for the region are and will be adverse, as can be illustrated by reference to a situation that has evolved in the region’s financial sector.”

He pointed to the fact that the more enlightened and practical perspectives on economic integration in the Caribbean have always recognised that meaningful integration cannot be only a market phenomenon, merely entailing the removal of barriers of trade.

The scope of intra-regional trade in the Caribbean arising from trade-creation or trade-diversion is limited.

It has settled at around 10 percent of the region’s overall trade.