THE GROWING VULNERABILITY OF SMALL STATES: THE CARIBBEAN REVISITED

Sanders, Ronald M.

Round Table Jul97 Issue 343, p361, 14p

Abstract: Examines the vulnerability of Caribbean small states to political, social and economic problems. Decline in the Caribbean's geo-strategic importance; Detrimental effects of the North American Free Trade Agreement (NAFTA) on the competitiveness of Caribbean products into the American market; Weakening of key international institutions and the role they play in global affairs.

Small states are in a worse position today than they were in 1985 when the Commonwealth produced a study of their vulnerability. International terms trade have badly affected their economies and guaranteed markets and preferential prices for their principal exports are being eroded. Caribbean small states are being pressured by the United States to enter into treaty arrangements undermining their sovereignty. Appeals to international organizations are futile since these organizations themselves have been severely weakened. New developments such as drug trafficking, money laundering and an increase in the frequency and intensity of natural disasters' make Caribbean small states more vulnerable than in the past. Consequently, the capacity of small states to adequately serve the needs of their communities has been weakened. There is an urgent need for small states to form an alliance in every international forum. The world's richer nations also need to take action on trade, debt relief and the provision of resources to small states. If not many small states may become 'failed states' and redeeming them will be at great cost to the international community.

Twelve years ago when the Commonwealth Secretariat produced the study, Vulnerability: Small States in Global Society, it did so against a background in which Commonwealth Heads of Government, in the words of the then Secretary-General, 'were deeply concerned about the precarious state of the international situation'.[1] The Secretary-General observed at the time that 'small states continue to be buffeted politically, economically and socially from both internal and external forces with the world taking little heed of their special needs'.[2]

However, looking back on it, Commonwealth Caribbean small states might seem to have been in a relatively privileged position at the time.[3] On the economic front, they enjoyed special trading relationships with the countries of North America and the European Community. These relationships were embodied in the Lome Conventions which governed trade and investment between the European Community and the countries of the African, Caribbean and Pacific Group (ACP) and in special arrangements with Canada and the USA. Under these arrangements, Caribbean small states were able to sell certain of their products at a preferential price on a quota basis and they enjoyed a guaranteed market in the European Community particularly for bananas, sugar and rum. In the case of the USA and Canada, they exported certain products on a duty free basis with no requirement to reciprocate similar treatment.

In the heady days of the Cold War, the Caribbean enjoyed a pivotal geo-strategic significance for the USA and what was then Western Europe because much of the oil requirements of the USA had to transit Caribbean waters, and the Caribbean was an important passageway for US military supplies to Western Europe. In the context of the USA only, the Caribbean was its so-called 'backyard', and US preoccupation with countering the 'communist menace' in that backyard rendered the Caribbean very important to Washington decision-makers. It should be recalled that it was after the US invasion of the Caribbean island of Grenada in 1983--to counter what the US administration perceived as the island falling into the grip of communism--that Commonwealth Heads of Government, at their meeting in New Delhi, mandated the Secretariat to undertake a study of the vulnerability of small states.

Apart from trade advantages, Caribbean small states also benefited from a relatively high level of aid flows from the European Community and North America whose Governments were intent on countering communist influence in the area. These same governments actively encouraged investment of private capital into the Caribbean.

Comparing today's reality with 12 years ago, the 1980s, for all the 'buffering', represents a decade of opportunity for the Caribbean. The really tough times were yet to come.

Today, with the Cold War at an end and Europe configured very differently, with administrations in the USA and Russia both resisting communism, the geo-strategic importance of the Caribbean has diminished. Aid and investment flows into the region declined rapidly and the Caribbean's preferential markets access in both the European Community and North America have eroded. In the case of US aid to the Caribbean, this dropped nearly 90 per cent from $225 million to $26 million over the decade 1986-96.[4]

On the economic side, as the Prime Minister of Barbados, Owen Arthur, recently put it:

The precepts which now inform the reform of the world's trading system --the new emphasis on reciprocity, non-discriminatory practices, liberal-isation and the like, strike at the very basis of the preferential arrangements which have hitherto been the pivot around which the Caribbean Basin economies relationship with its traditional and main trading partners has turned.[5]

When the present Lome IV Convention expires in February 2000, it is most unlikely that the Caribbean will continue to enjoy the preferential prices and market share in the European Community that they did in the past particularly for bananas which is an important export for the Windward Islands of the Caribbean and to a lesser extent Jamaica and Belize.[6] World Trade Organization (WTO) rules, geared as they are to the trade liberalization policies of its more powerful member-states, will see to that. A WTO interim report in March 1997 upheld several elements in a complaint from the USA and four Latin American countries challenging the European Union's marketing regime for bananas. The role of the USA in this matter particularly worried Caribbean small states which pointed to the fact that the USA is not a banana exporter but that a US multinational corporation owns banana plantations in Latin America and is a big contributor to US Presidential and Congressional elections. One Caribbean Ambassador to the European Union summed up Caribbean feelings as follows:

Small countries like mine have no power ... All that is on offer to us is rough justice. The interests of ACP banana farmers were not being allowed to prevail against the ambitions of a multinational corporation which happens to be politically influential.[7]

In the event, the 'colonial conscience' which fuelled aid and market access from the European Community for Caribbean countries is fast disappearing with both the expansion of the membership of the European Community and the increasing view that the colonial obligations, if not met, are no longer relevant. The European Commissioner with responsibility for relations with ACP countries, Joao de Deus Pinheiro, has made it

clear that the ACP countries are not now a priority for the European Union. According to him:

. . . recent years have seen greater priority being given within the European Union, and a short time ago at the Essen Summit, to relations with countries in Central and Eastern Europe, paving the way for further expansion, and to relations with Mediterranean countries, in other words our closest neighbours.[8]

The creation of the North American Free Trade Association (NAFTA) between the USA, Canada and Mexico has already had a detrimental effect on the competitiveness of Caribbean products into the US market. Certain Caribbean-produced goods, are being driven out of the US market by similar Mexican products by virtue of that country's unrestricted access under NAFTA. The Caribbean Textile and Apparel Institute says that over the two-year period, 1995-96, more than 150 apparel plants closed in the Caribbean and 123 000 jobs were lost as a direct result of trade and investment diversion to Mexico." Promises of membership of NAFTA by Commonwealth Caribbean small states, posited by US President Bill Clinton at a Summit of the Americas in December 1994, has remained unfulfilled primarily because the US Congress has opposed fast-track authority for NAFTA expansion. In any event, the unrestricted tree trade and market liberalization envisaged by NAFTA would close fledgling Caribbean businesses making many small states mere markets for goods from the USA, Canada and Mexico. Two or three Caribbean small states may be able to survive, but the region as a whole would undoubtedly suffer.[10]

Responding to concerns by small states in Central America and the Caribbean, the Clinton Administration sought to have Congress accord them 'parity' status with Mexico in order to address the problem of diversion of trade and investment. This notion was rejected by Congress.

Although Canada continues to allow duty-free access for almost 90 per cent of Commonwealth Caribbean products, these products represent less than 10 per cent of the region's major exports. The area's beneficial exports are still restricted from duty-free entry to Canada. Further, Canada no longer appears to have a well-defined constructive policy toward the Commonwealth Caribbean, and its own global trade liberalization posture is inimical to the economic development prospects of many of the countries of the region. For the countries of the Commonwealth Caribbean, this is a regrettable development since, in the past, Canada was always regarded as a dependable ally and champion.

While Caribbean small states have experienced severe erosion of the markets for their goods and the prices they enjoyed, they have equally faced increased costs for the goods and services which they import. This has led to a widening balance of payments deficit and to burdensome debt as they seek to finance much needed social and economic development through borrowing.

The international financial institutions, such as the International Monetary Fund (IMF) and the World Bank, have been unhelpful to the worsening economic conditions in Caribbean countries. Except for Guyana and Jamaica, Commonwealth Caribbean countries have been graduated from eligibility for borrowing on soft terms on the basis of their per capita income. The Caribbean countries have long argued that the use of per capita income as the formula for determining such eligibility is flawed since it fails to take account of the fact that a small number of persons earn the bulk of the income while the greater number exist at a subsistence level. They have also contended that the international financial institutions should create a mechanism for debt forgiveness especially for those debts which, onerous interest excluded, have been repaid several times over. These countries have also pleaded for debt repayment to be linked to an acceptable percentage of export earnings to give them a chance to finance development without further borrowing. None of these arguments or pleas have elicited a sufficiently favourable response.

On the security side, apart from Cuba, the primary interest that the US administration retains in the Caribbean is in making sure that conditions in the region do not produce an adverse effect on the United States. The USA is concerned about the flow of increasing numbers of unskilled Caribbean people to their inner cities, the consequent increased demand on their welfare system, the intensifying of racial tension and mounting crime.

Hence, US activity in the region in recent time was focused on Haiti more because of the constant flow of Haitian refugees to US shores than because of a strong desire to address the inherent economic and political problems in Haiti which sparked the flow of refugees in the first place. It is well known, for instance, that before the Cold War ended, successive US administrations tolerated repressive regimes in Haiti, including the notorious ones led by Francois 'Papa Doc' and Jean-Claude 'Baby Doc' Duvalier, who declared themselves allies of the USA in the anticommunist battle. As one commentator put it, 'One United States Administration after another held its nose against the stench but tolerated the Duvaliers as the alternative to possible communist penetration'.[11] Further, evidence of US determination to stem the flow of Caribbean immigrants is the new Illegal Immigration Reform and Immigrant Responsibility Act of 1996. Under this Act immigration officials are empowered to remove an arriving alien without any further review and aggressively pursue and deport criminal aliens even if they are landed immigrants. The Act also requires sponsors of alien relatives for immigration to have higher incomes than was previously necessary.[12]

US deportation of Caribbean-born criminals to their native countries has bothered Caribbean governments considerably. They have argued that these criminals were created in the peculiar conditions of the USA and it is unfair to ship them back to the Caribbean which is ill-equipped to deal with sophisticated and violent criminals and which is not responsible for their development as criminals in the first place.

All this profound global change that has affected the Caribbean is worsened by the fact that there is a weakening of key international institutions and the role they play in global affairs, particularly as guardians of the interests of small states. The UN General Assembly, for instance, was once an effective forum for developing countries including small states. Today, it has slipped to a low place in global diplomacy. The doctrine of sovereignty and the inviolability of the nation state have also been eroded with the case for intervention over a wide range of issues being arbitrarily interpreted by the world's only remaining military super power--the USA.

Apart from the United Nations itself, other international organizations--long the champions of causes dear to the developing world, and, therefore, to small states--have fallen by the wayside. The Non-aligned Movement no longer enjoys the authority it did in the decades of the 1960s and 1970s. Other UN bodies, such as UNESCO (United Nations Educational, Scientific and Cultural Organization) and UNCTAD (United Nations Conference on Trade and Development), which sought to challenge the pervasive influence of individual states such as the USA, have been whipped into submission either by the withdrawal of the more powerful countries or by the creation of other organizations such as the WTO whose organizational ideology and rules suit the larger states better. The result of this is that small states are marginalized in international fora along with the issues which most concern them.

Even in organizations where small states are in the majority, such as the Commonwealth, they no longer enjoy the heightened concern for their viability and survival that prompted Commonwealth Heads of Government to commission the 1985 study. Not until March 1997 did the Commonwealth Secretariat announce--after considerable urging--that it was appointing an Expert Group to update the 1985 report in time for the Edinburgh

Commonwealth summit in October. However, there was little or no consultation with small states on the membership of the Expert Group or its terms of reference. Indeed, representatives of small states had to press hard at a Senior Officials Meeting in October 1996 to focus the attention of the Secretariat and some Commonwealth Governments on the clear and present problems of small states.

Since the 1985 Commonwealth study on the vulnerability of small states, several other developments have taken place making the Caribbean even more vulnerable than before. These include:

* the use of the region as a transit point for illicit narcotics from Colombia, Peru and Bolivia destined for the lucrative markets in North America and Europe;

* an increase in the number of countries offering offshore banking services and the potential for money laundering perceived by the USA in particular;

* the diversion of investment to Cuba by Canada and European nations especially the United Kingdom;

* an increase in the frequency and intensity of natural disasters; and

* the weakening of states in terms of their capacity to adequately serve the needs of their communities.

Each of these developments is discussed below. Paradoxically, the first two developments have caused both Europe and North America to resume greater interest in the Caribbean, albeit for selfish reasons. Drug trafficking has become important because, increasingly, the Caribbean is being used as a transit point for the shipment of drugs from South America to the lucrative consumer markets in North America and Europe. Money

laundering has become a major consideration because, in an effort to diversify their economies away from a reliance on clearly threatened preferential trading relationships with Europe and North America, many small Caribbean countries have established Financial Services Sectors including offshore banks and trust companies. Governments in North America and Europe have linked these Financial Services Sectors to drug trafficking.

While there is evidence to support the view that some banks have been used for laundering drug related money--as have many banks world-wide--it has not been established that this is true for all banks and all countries.

There are some officials who believe that the assault on the Caribbean Financial Services Sector, particularly by the USA, is concerned more with the flow of funds out of the USA than it is with money laundering.

Whatever the whole truth, both these developments create problems for the region domestically and internationally. Domestically, a drug problem has been created in the region and is having a debilitating effect on Caribbean youth. Drug trafficking is a prime contributor to increased crime in Caribbean societies and has led to corruption at many levels of the societies including police, customs officials and even political parties and

Governments.[13] Internationally, money laundering and transhipment of drugs in the Caribbean encourages the intervention of large countries in the region giving them the opportunity of being seen to be doing something about the drug problem when the real remedy lies in curbing demand at home. In the case of the USA, under the Foreign Assistance Act, the President 'certifies' to Congress that countries are cooperating fully with the USA in combating drug trafficking and money laundering. If he determines that a country is not doing so, that country is 'decertified'--a process by which US assistance is officially denied to that country. Caribbean countries--Belize, Antigua and Barbuda and Jamaica--have been threatened with such 'decertification'.[14]

Unofficially, US agencies also mount unsubstantiated media and other campaigns designed to coerce unwilling Governments to cooperate in the manner required by the USA. In November 1996, the Prime Minister of Antigua and Barbuda, Lester Bird, accused the US State Department of 'encouraging if not orchestrating' a negative press campaign against his country in an effort to pressure the Government to sign a Mutual Legal Assistance Treaty giving US agencies jurisdiction in certain instances in Antigua and Barbuda.[15] Eventually, the Government yielded and the Agreement was signed on 31 October 1996. Another instance was a media campaign, attributed to an official of the US State Department, against the Jamaican Government because it was unwilling to sign a 'Shipriders Agreement' according the US coast guard the right to patrol and effect arrests in Jamaican territorial waters. Barbados, which had also declined to sign the Shipriders Agreement, had its international airport--undoubtedly the best in the Caribbean--downgraded by the US Federal Aviation Authority to a Category B airport. In each case, US representatives denied any intention to coerce Caribbean governments, and representatives of two Governments--Trinidad and Tobago and Grenada--openly defended signing the Shipriders Agreement saying that rather than undermining the sovereignty of their countries, the agreement 'saves sovereignty'.[16] However, the majority of Caribbean governments remain convinced that the US authorities have little regard for their sovereignty. The Prime Minister of St Vincent and The Grenadines is on public record declaring, 'We've surrendered our sovereignty. We've given the US all the cooperation in the world.

What else do they want?'[17] In the case of Belize which was accused by a US Assistant Secretary of State of 'falling short of the standards' for counter narcotics performance, the Government issued a public statement saying that 'the true reason for decertification is ... Belize's refusal to sign a new Extradition and Mutual Legal Assistance Treaty in the form dictated by the US'.[18]

On the face of it, the treaties which the US Government sought to conclude with Caribbean Governments appear reasonable. For, if countries are committed to fighting drug trafficking and combating money laundering, they should all be ready to cooperate with each other to combat such activity especially if they lack the financial and human resources to do it alone effectively. The problem for Caribbean countries is that the USA did not seek to negotiate these treaties; they sought simply to impose them. In the case of the six smaller Commonwealth Caribbean states, their Heads of Government were urged to sign the treaties without review or change by their Attorneys-General. Thus, the issue is not about cooperating to stop drug trafficking and money laundering; it is about the nature of the relationship between the USA and Caribbean countries and the respect to which Caribbean countries feel entitled as sovereign states. Caribbean Heads of Government said as much at a Special Conference held in Barbados on 16 December 1996 specifically to discuss what appeared to be undue US pressure upon Caribbean Governments to sign treaties with the USA. In their communique, the Heads of Government said:

Heads of Government recognised the fundamental coincidence of interest of CARICOM member states and the US in a peaceful, stable and prosperous Caribbean. To that end, they reaffirmed the importance of a healthy relationship with the US based on respect for sovereignty and territorial integrity, dialogue, consultation and mutually beneficial cooperation.[19]

They went on to state that:

Heads of Government recognised the right of sovereign countries to enter into mutually acceptable agreements. They also rejected any suggestion or threat of coercive measures as a means of extracting compliance with predetermined policies. They warned that unfounded allegations, innuendoes and the threat of punitive measures, aimed at the economic welfare of Caribbean States, would only weaken the collective effort against drug trafficking and undermine the foundations of the good relations which the Region has enjoyed and seeks to maintain with the US.[20]

On the matter of Cuba, Caribbean countries all acknowledge that it poses no threat to their security. US commentators also acknowledge that Cuba poses no real threat and that 'the continuation of the punishing American economic embargo, a form of intervention, reflects domestic politics in the United States rather than foreign policy'.[21]

However, Cuba does pose a threat of an economic kind to Commonwealth Caribbean small states. There has undoubtedly been a significant diversion of investment by Canada and certain European countries, most recently Britain, from the Commonwealth Caribbean to Cuba. The Cubans themselves report that joint ventures and other foreign investment projects rose from 212 to 260 in 1996. In February 1997, Foreign Investment

Minister, Ibrahim Ferradaz, said that 150 additional projects were being negotiated.[22] In turning their attention to Cuba, investors from Canada and some European countries are taking advantage of the low wage levels and other costs that flow from the system in operation in Cuba. Unlike the Commonwealth Caribbean, Cuba has no trade unions and, therefore, no concerted demands for increases in wages and improvements in the conditions of work. What is more, unlike Caribbean Governments, the Cuban government does not have to face general elections where the electorate chooses between contending political parties on the basis of promises for improved conditions. Cuba, therefore, can continue to keep its costs of labour and production at a much lower level than its competitors in the Caribbean. This includes tourism which passed the million mark for the first time in 1996, a 35 per cent increase over 1995.[23] The result is that Commonwealth Caribbean countries and Cuba are not competing on a level economic playing field for investment or for tourists. Cuba's low costs make it more attractive to investors and for tourists seeking a relatively low-cost holiday. Furthermore, the Governments of countries investing there pay only lip service to the Castro regime's continuing disregard for democracy.

Caribbean small states have been very helpful to Cuba. As far back as 1972, Barbados, Guyana, Jamaica, and Trinidad and Tobago established diplomatic relations with Cuba despite clear messages from the USA that it would look askance at such a move. This step by four Caribbean states in the height of the Cold War did much to improve Cuba's acceptability in the Caribbean and Latin America. The Caribbean also stood firm when the USA signalled its unhappiness over Cuba's admission as a founder member of the Association of Caribbean States (ACS) in 1994. Previously in 1993, Caribbean small states voted in favour of a resolution asking the United States to modify its policies toward Cuba including repealing or invalidating laws or measures 'aimed at strengthening and extending the economic, commercial and financial embargo against Cuba'.

Therefore, having helped to bring Cuba in from the cold, Commonwealth Caribbean countries now find themselves a casualty of investor attention which has been diverted to Havana and a victim of their own adherence to the Western democratic system.

Despite all this, Cuba also presents an opportunity for Commonwealth Caribbean countries if they encourage their business people to invest in the Cuban economy now. Commonwealth Caribbean countries have some expertise in gearing industries for markets in Europe and North America. This expertise could be utilized in combining Cuban raw material and labour with Caribbean capital and know-how in joint ventures which could benefit Cuba and the region as a whole. Investment by Commonwealth Caribbean hoteliers in the Cuban tourism industry would also be beneficial in eventually promoting Cuba and other Caribbean destinations as multi-stop destinations.[24] However, opportunities for the Caribbean are ebbing away. Despite a Commission made up of representatives of Cuba and Commonwealth Caribbean countries and several private sector missions to Cuba, there has yet been no major Caribbean investment in Cuba. Apart from other constraints, the Helms-Burton legislation authorizing US sanctions against any firm and individual doing business with Cuba--legislation universally condemned--will operate with impunity against Caribbean small states.

In 1992 and 1993 Caribbean small states voted overwhelmingly at the UN in favour of condemning human rights violations in Cuba. Thus, if they decide to encourage their business people to invest in Cuba, Caribbean small states will also have to push the Cuban Government to address issues of human rights and the need for a democratic system of government. This is important not only for the Cuban people, but also for Caribbean economies which, otherwise, will continue to compete with Cuba on a playing field that benefits only the Cuban regime.

Natural disasters, particularly hurricanes, in the Caribbean region have increased in frequency and intensity in recent years. Each disaster causes hundreds of millions of dollars in damage and reverses development of these countries by several years. For instance, in 1995, Hurricane Luis packing winds of 210 miles per hour wrecked Antigua and Barbuda causing over US$500 million in damage and closing every hotel. The population of the country is 65 000 and more than 90 per cent of its gross domestic product is derived from tourism. Apart from the civil service, much of the workforce on Antigua and Barbuda was unemployed for nearly six months.

What is worse, is that the effect of these disasters on the economies of small states cause skilled and qualified manpower to seek jobs abroad. Often, they do not return and the countries have to re-invest scarce capital in training a new cadre of skilled personnel. Moreover, governments, already strapped for cash, are forced to spend on rehabilitating vital infrastructure such as roads, power and water supplies, and buildings thus postponing expenditure on social essentials like health and education. Consequently, the capacity of the country to produce healthy, well-trained people to spur economic activity is eroded and development is retarded even more. It is a cruel irony that, according to the Intergovernmental Panel on Climate Change, these increased natural disaster hazards are attributable in no small measure to global warming--itself the consequence of CO² emissions by the industrial countries of North America and Europe.

Increasingly, the economic and security conditions described in this paper are weakening the capacity of Caribbean small states to serve the needs of their people in the way that responsible sovereign sates should. It is clearly true for all Caribbean small states that they lack the capacity to protect themselves from the incursions of drug traffickers and, then, from coercion by larger countries which impose their requirements on Caribbean

governments. There is little point in looking to the international organizations, such as the United Nations, for such protection. As was said earlier in this paper, these organizations have been severely weakened. A Regional Security System (RSS) exists between Barbados and the six independent countries of the Leeward and Windward Islands, but it would be incapable of mounting any real defence of the countries concerned.[25]

As it is, they are not fully able to patrol their own waters against drug traffickers which, in part, is why the USA sought to impose the Shipriders Agreement. In any event, coercion of Governments of small states by larger and more powerful countries is now more economic than military.

The cost of full participation in the international community is greater than many Caribbean small states can afford. At the United Nations, for instance, five Commonwealth Caribbean small states and other Pacific island-nations share premises partly funded by Australia, Britain, Canada and New Zealand through the Commonwealth Secretariat. Without the financial assistance of these countries, it is unlikely that these small states could sustain a meaningful presence in New York. Beyond this, there are many international organizations in which Caribbean small states are not represented even though matters vital to their survival are discussed every day: the WTO is a case in point. For the most part, the active participation of Caribbean small states in the international community is limited to the UN, the Organization of American States and the work of the ACP Group with the European Community in Brussels.

In the domestic context, governments are finding it very difficult to provide the basic services required by their people. Police forces lack the manpower and equipment to fight crime effectively. Judicial and prison services are also inadequately staffed and equipped. Hospitals also lack the equipment, drugs and trained medical personnel to properly cope with serious illnesses and grave accidents. Schools are also under-equipped and under-staffed with trained teachers. In many Caribbean small states, computers are still to be introduced as part of the normal equipment in schools. There are, of course, exceptions. Some small states do better than others in certain areas, but as a general observation the conditions described here hold good.

A further dimension of the domestic situation is the relationship between Governments and opposition political parties. The Westminster system of adversarial politics adopts an unwholesome confrontational character in small states and the Caribbean is no exception. The intense political rivalry between parties causes the opposition in many of these small states to oppose Government policies often whether they have merit or not.

Similarly, Governments tend not to consult, or involve, opposition parties in decision making for fear of strengthening them. This reluctance to set aside political differences for the national good further weakens the state which, in turn, frightens potential foreign investors, injures the investment climate even for local entrepreneurs and dilutes the country's capacity to resist external forces. On the latter point, had governing and opposition parties been able to set aside domestic political differences to arrive at a consensus, each country might have been able to resist the types of treaties imposed on them as well as the conditions dictated by the IMF and World Bank for structural adjustment programmes.

As economic growth and prosperity continue to elude Caribbean countries, the capacity of the State to provide services is further eroded. Although there is no imminent danger of Caribbean small states becoming 'failed states', should their economic difficulties go unattended by the international community, that spectre might well arise early in the 21st century at a greater financial burden to the world's richer nations than the cost of remedying the current problems.

What then are the prospects for Caribbean small states and in what international forum can their situation be addressed? CHOGM in Edinburgh in October 1997 is an obvious place. The theme of CHOGM is 'Trade, Investment and Development'. Strikingly, it was originally mooted as 'Trade and Investment'. It was representatives of Caribbean small states at a meeting of Senior Officials in London in October 1996 who urged that

'development' be added. Unlike New Delhi in 1983, the plight and prospects of small states is not part of the main agenda of the Heads; instead it will be discussed by a Committee of Ministers whose report will be submitted to Heads for consideration. Leaders of small states, therefore, will not be given the opportunity to personally sensitize their colleagues' Heads of Government from larger states of their situation. Regrettably, since the period for this Heads of Government Meeting is to be shortened with an abbreviated 'retreat' by the Heads, the possibility of discussing such matters is most unlikely. Within the UN system, there are already numerous recommendations on small states, many of them unimplemented. Indeed, one of the recommendations from the 1985 Commonwealth study was the appointment of a UN Assistant Secretary-General for small states--a recommendation already ignored for 12 years. There is, therefore, no ready international forum for addressing the particular problems and prospects of small states.

Where does the solution to the problems of small states lie? Initially, it lies with them. As far as Caribbean small states are concerned, they already have an institutional arrangement in the form of the Caribbean Community and Common Market (CARICOM) on which they could build. They are in the process of establishing a single market and they have taken some actions to bring a greater level of coherence to their decision making particularly in external economic negotiations. At a meeting in Antigua in February 1997, the CARICOM Heads of Government decided to appoint the former Commonwealth Secretary-General Sir Shridath Ramphal, as their chief negotiator on external negotiations such as those with the European Community on the successor arrangements to Lome IV or with the USA and others on NAFTA and the proposed Free Trade Area of the Americas.

This decision to act together rather than as individual units points the way for a process by which Caribbean small states might jointly address all their external relations. For instance, had Commonwealth Caribbean countries adopted a uniform and institutional approach to the treaties which the USA sought to impose upon them, more acceptable terms might have been jointly negotiated. The CARICOM treaty itself already provides for the 'coordination and harmonization' of foreign policies. It now only requires the will of Heads of Government to act in concert in all external matters which affect their sovereignty and territorial integrity.

A beneficial development would be a strategic coalition of small states throughout the international system. If these small states act in unison on the issues that most concern them, they could achieve much more for themselves. An early opportunity presents itself in the negotiations for the successor arrangements to Lome IV. In the past, the African, Caribbean and Pacific countries have negotiated together. European countries have been suggesting to the Africans that they should separate from the traditional grouping and negotiate by themselves to get a better deal. Small states from the Caribbean and Pacific must resist this notion and do all in their power to persuade their African colleagues that there is danger in division--danger as much for Africa as for the Caribbean and Pacific--as their bargaining strength is diluted.

Essentially, small states throughout the world must meet and establish a common agenda supported by collaborative diplomacy in every international forum. Such an initiative has now become urgent. In the early 1990s an Association of Small Island States (AOSIS) was launched at the UN by delegations in New York. Essentially, AOSIS was a pressure group of small states which collaborated in advancing environmental issues at the

UN. AOSIS is a useful example of how small states might work in every international organization to secure better conditions. Of course, there will always be matters where agreement among small states might not be possible, but if they could agree a common agenda on a cluster of important issues their bargaining strength would be considerably enhanced as would be their prospects for improving their situations.

Beyond what the Caribbean small states must do for themselves, there are measures which the international community could take now that would strengthen small states and spare richer nations the greater costs of redeeming these tiny economies in the future.

Both the members of NAFTA and the European Union should recognize that trade liberalization will not benefit all small states; some will suffer. Therefore, neither the European Union nor the NAFTA countries should expect all small states to allow reciprocity in trade. Further, both NAFTA and the European Union should continue trade preferences to those some small countries with limited resources and restricted export potential, recognizing that without such preferences their economies will wither with all the social and political consequences of such a development including an exodus of people by legal or illegal means. The USA and the European Union could continue to strengthen their already stringent immigration legislation, but it is impossible to legislate borders against refugees.

International financial institutions should establish natural disaster funds to help small states rebuild when they are struck by hurricanes, earthquakes and flooding. The countries that control the IMF and World Bank should also allow these international financial institutions to give debt relief to small states. The richer countries should themselves consider relieving small states of bilateral debt particularly where onerous rates of interest have been applied. Furthermore, the international community should adopt a standard by which small states would repay debt at a reduced rate of interest and from a fixed percentage of their export earnings to allow them the opportunity to invest in their economic and social infrastructure. It should be recalled, as British Economist Mike Faber points out, that 'in 1946 the terms of a large US loan to war-torn Britain stipulated that interest payments would be waived--not reduced, but forgiven entirely--should that interest exceed 2 per cent of British export revenues in any given year'.[26]

Finally, where richer and more powerful nations require the collaboration and cooperation of small states to help combat problems which affect such rich and powerful nations, they should recognize that there is no need to threaten them or to deny them economic assistance. Many, if not all, small states will readily cooperate with larger countries in combating any pernicious activity; small states, therefore, do not need to be controlled. But, they do need help. Treaties and other arrangements designed to combat problems such as drug trafficking and money laundering should be accompanied by the resources necessary to do the job effectively.

Without such cooperation and assistance from richer nations, small states will not be integrated into the world economy and the stormy seas on which they toss at present will soon capsize them. The operation to salvage them will be a considerable cost to those nations and institutions who neglect them now.

Notes and references

1 Foreword by the Commonwealth Secretary-General, Sir Shridath S. Ramphal, to Vulnerability: Small States in the Global Society: Report of a Commonwealth Consultative Group, London, Commonwealth Secretariat, 1985, p v.

2 Ibid.

3 Commonwealth Caribbean small states are: Antigua and Barbuda, The Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, St Kitts-Nevis, St Lucia, St Vincent and The Grenadines, and Trinidad and

Tobago.

4 Larry Rohter, 'Caribbean Nations Find Little Profit in Aiding US Drug War', The New York Times, 24 October 1996, p A13.

5 Owen Arthur, Prime Minister of Barbados, 'The Economic Realities of the Caribbean Basin', to the Wilton Park Conference on the Caribbean Basin: New Relationships Within and Beyond the Caribbean, 21 September

1996 (typescript).

6 The three Windward Islands are St Lucia, St Vincent and Dominica. 1987 figures show that the percentage of the population working in the banana industry was 46 per cent for St Lucia, 54 per cent for St Vincent and 50 per cent for Dominica. In 1988, the contribution of banana production to gross domestic product was 36.5 per cent for St Lucia, 24.9 per cent for St Vincent and 32. I per cent for Dominica.

7 St Lucia's Ambassador to the European Union, Edwin Laurent, cited in 'Banana Trade Under Fire from WTO Panel', Caribbean Insight, Vol 20, No 4, April 1997.

8 Cited by Michael B. Joseph, in European Centre for Development Policy Management Working Paper No 18, 'Post Lome IV Arrangements must mirror the Principles and Instruments of Lome: A Perspective from the Banana Sectors of the Windward Islands', The Netherlands, April 1997.

9 Larry Rohter, 'Caribbean Reels in NAFTA's Wake', International Herald Tribune, 31 January 1997.

10 Trinidad and Tobago and Jamaica with larger populations and better developed manufacturing and agriculture are probably the only exceptions.

11 Gaddis Smith, 'Haiti: From Intervention to Intervasion', Current History: A Journal of Contemporary World Affairs, Vol 94, No 589, February 1995.

12 See, The Illegal Immigration Reform and Immigrant Responsibility Act of 1996, Pub L. 104-208 enacted on 30 September 1996.

13 See, Ron Sanders, 'The Drug Problem: Policy Options for Caribbean Countries', in Democracy in the Caribbean: Political, Economic and Social Perspectives, Dominguez et al (eds), Johns Hopkins University Press, 1993.

14 See, Statement on Belize made by US Assistant Secretary of State for International Narcotics and Law Enforcement Affairs, Richard S. Gelbard, on 28 February 1997.

15 See, Don Bohning, 'Antigua Condemns US for Bad Press About Drug Efforts', Miami Herald, 21 November 1996.

16 See, CANA report by Linda Hutchinson, 21 March 1997 from Port-of-Spain.

17 Cited by Larry Rohter, op cit, Note 4.

18 Press release from the Belize Information Service dated 4 March 1997.

19 Communique at the conclusion of the Fifth Special Meeting of the Conference of Heads of Government of the Caribbean Community held in Bridgetown, Barbados on 16 December 1996 and issued by the CARICOM Secretariat, Georgetown. Guyana, 17 December 1996.

20 Ibid.

21 Op cit, Note 11.

22 See, 'Cuba Aims at External Deficit Reduction', in Caribbean Insight, Vol 20, No 2, February 1997.

23 Ibid.

24 For a fuller discussion of this see, Ron Sanders, 'Cuba: Ripe for Caribbean Community Joint Ventures', CANA Business: The Financial Magazine of the Caribbean Community, September 1993.

25 The six are: Antigua and Barbuda, Dominica, Grenada, St Kitts-Nevis, St Lucia and St Vincent and The Grenadines.

26 Cited in Susan George, A Fate Worse Than Debt, London, Penguin Books, 1990, p 245.

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H.E. Ronald M. Sanders CMG is the High Commissioner for Antigua and Barbuda in London. He is serving his second term, having been High Commissioner between 1984 and 1987. He has published widely on Caribbean small states in the international system. This article reflects his own perspectives which are not necessarily shared by the Government of Antigua and Barbuda.

Copyright of Round Table is the property of Carfax Publishing Company and its content may not be copied or e-mailed to multiple sites or posted to a listserv without the copyright holder`s express written permission. However, users may print, download, or e-mail articles for individual use. Source: Round Table, Jul97 Issue 343, p361, 14p.

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