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by Ralph Jemmott
The debate on the Companies Economic Substance Amendment Bill was very instructive. It revealed the vulnerabilities of Barbadian and other small Caribbean economies in what prominent French economist Thomas Piketty calls “global patrimonial capitalism”.
The debate in the Barbados House of Assembly indicated how economically dependent the region is on the global market and the powers that control that market.
This is not new, the Caribbean has always been a highly dependent region. Writing in the New World Quarterly, Alister McIntyre noted that “political independence has not been accompanied by parallel advances in the economic field.” He concluded that the West Indies territories are still regarded as outstanding examples of dependent economies.
McIntyre observed that in the 1960’s uncharitable commentators sometimes described the Caribbean states as “mendicant economies”. A London newspaper labelled a West Indian delegation seeking economic assistance in Britain as little more than “a Beggars’ Opera”.
The debate in the Barbados parliament really makes one wonder whether for small vulnerable open economies there can ever be such a thing as “economic sovereignty”. This might call into question the viability of our ‘political sovereignty’ – republic or no republic.
When Barbados joined the World Trade Organisation (WTO) in January 1995, a prominent public servant came to lecture on Globalisation to the Harrison College General Studies sixth form class. After his speech, one student asked bluntly, “So is globalisation a good thing or a bad thing?”
The speaker replied that the debate was still out and he couldn’t say for sure. Today the debate is still out. One claim of the defenders of globalisation was that “it would lift all boats.” Its critics retorted that it has lifted the yachts of the rich while threatening to sink the dinghies of the poor.
One of the grosser examples of the inequities of global patrimonial capitalism is the on-going efforts of the European Union and the Organisation for Economic Cooperation and Development to disadvantage small states.
These relate to the operations of regional International Business Sectors that have become vital drivers
of economic growth.Along with tourism, the off-shore financial sector has become the main success story in Barbados’ efforts to diversify the local economy and reduce dependence on the traditional agricultural export sector based primarily on sugar.
In the late 1960’s the threatened withdrawal of the guaranteed preferential treatment accorded primary agricultural Caribbean products such as sugar and bananas and citrus, left a gaping hole in regional economies.
In Barbados, Tourism and foreign manufacturing investment in electronics and data processing were valuable alternatives. However as wage costs increased, many of these investing companies relocated to areas where human resources were cheaper. The Intel Corporation being the most obvious example.
It was the Tom Adams’ regime that reinforced the fledgling off-shore business sector started under the Errol Barrow-led DLP government between 1961 and 1976. A corpus of legislation engineered by Trade and Industry Minister Harold ‘Bree’ St. John created a full-fledged International Business sector and by the year 2000, Barbados had emerged as viable centre for the transaction of international business.
In spite of recent reversals, the sector still remains a central pillar of our economic stability, even more so given the current shock to the hospitality industry caused by the Covid-19 pandemic. In fact recent reports suggest that in the current crisis the off-shore sector remains the most promising prospect of Barbados’ economic growth.
In the debate in the House of Assembly Minister Ronald Toppin revealed that in the past year, Barbados had earned some US$600 million from International Business, a sum not to be scoffed at in our present predicament. A significant decline in the sector would not only mean a loss of corporate revenue but a fall-off in jobs, high-end property rentals and adjunct tourism enterprises.
As senators Rudolph Greenidge and Althea Wiggins noted the recent demands of the EU, promise to do significant financial injury to Barbados and the other struggling small states in the Caribbean. Senator Lindell Nurse correctly noted that the EU Regulations could dampen international enthusiasm for Barbados as an off-shore domicile of choice.
Nurse, an independent senator, discoursed on the frightening prospect of Barbados’ inability to attract financial business in the future.
If the present trends persist, in terms of widening the scope of the blacklisting criteria or in soccer terminology, ‘shifting the goal-posts,’ the financial sector could disappear altogether as developed countries insist on stopping corporations from avoiding and evading national tax payments at home.
Two recourses have been suggested. One was an appeal to the International Court of Justice to rule that EU regulations constituted ‘unlawful and unfair’ practice, prejudicial to the well-being of small states. Good luck with that, but it is important to at least state one’s position.
Another recourse was for CARICOM states together with the ACP countries to speak with one voice in making a collective case in the fora that matter, including the United Nations. This is an imperative, but one should not underestimate the obduracy of the North Atlantic powers in protecting their own economic and geo-political interests. As Nurse concluded small states have very little capacity to retaliate against the might of the powerful North Atlantic coalition.
Global financial capitalism is clearly not working in the best interests of small developing states. It will be interesting to see if the vulnerable ACP group can avoid what Thomas Piketty calls “an endless inegalitarian spiral and the worrisome dynamics of global capital concentration.”
Lord Haskins then Chair of Northern Foods plc once stated that in the deregulated global marketplace corporate ethical behaviour is minimal. It may be unrealistic to expect that global capital will feel any sense of responsibility to small island developing states and the vulnerable populations that inhabit them. The struggle continues.
Ralph Jemmott is a respected retired educator.