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Story Publication logo January 23, 2014

Austerity Offers Impetus to Band Caribbean Islands Together

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A swath of the Caribbean faces a bleak future as a deepening economic crisis leads to rising...

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Image by Robin Wigglesworth. Jamaica, 2013.

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The West Indies Federation, an ambitious political union of British colonies and protectorates in the Caribbean, collapsed more than half a century ago amid intense bickering. Yet an economic crisis of unprecedented proportions may force the former members to band together once more.

The scale of the problems varies. Trinidad and Tobago, for example, is prosperous, thanks to natural gas exports. But many of the anglophone Caribbean countries have foundered in recent years, dragged down by a tourism decline, withering banana and sugar industries and debt incurred by government overspending.

Many economists, international officials and even local politicians concede that part of the solution lies in closer union, and that this will inevitably involve some loss of sovereignty, a touchy subject in states that were not so long ago under the colonial yoke.

"This is going to be the dominant conversation that the international community is going to place on the region in the next five to 10 years, largely because of what appear to be fiscally unsustainable scenarios," says Mia Mottley, leader of the opposition Labour party in Barbados. "The Caribbean will have to make some choices."

There have been some moves towards closer integration over the years since the West Indies Federation debacle. A handful of the former federation members – Barbados, Jamaica, Trinidad and coastal Guyana – formed the Caribbean Community, or Caricom, in 1973 to deepen the Caribbean Free Trade Association that grew from the ashes of the federation.

Caricom has since grown to include most of the anglophone islands: Belize, Dutch-speaking Suriname and francophone Haiti. In 2001 the members announced plans to work towards a single market and economy for the bloc. Local politicians meet regularly to pay homage to regional cooperation.

But progress has on the whole been disappointing to nonexistent. Although there have been some successes, such as a pan-Caricom schools examinations board and a Caribbean Court of Justice, which has recently begun to gain traction, wider efforts have foundered due to a lack of political will. "There's instinctive protectionism in the Caribbean," says one western diplomat based in the region.

In some respects this is understandable. The Caricom countries gained independence only relatively recently after cutting ties with the UK in the decades after the second world war, and relinquishing even some sovereignty is still politically difficult.

Moreover, the kind of populist concerns that have stalked the EU's development are mirrored in the Caribbean. Bigger countries, like Jamaica, or richer ones, such as Trinidad and Tobago, fret that they would be forced to shoulder too much of the costs of integration, or that they could be outvoted by tiny neighbors. Smaller states worry they would be swamped by cheaper labor and goods from more populous countries, or simply not have a significant say in contentious matters.

However, the benefits could be significant. For the micro states of the eastern Caribbean, the cost of the trappings necessary for nationhood are particularly onerous: Even a modest network of overseas embassies is a burden.

The entire Eastern Caribbean currency union – which comprises Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines – has a population of 600,000. It would make sense to merge and rationalise some functions.

A true common market for goods, capital and labour could help foster bigger companies and reduce the severe economic efficiencies that bedevil the region, especially in areas such as transport and logistics. "It costs more for me to send a crate to Trinidad than to Liverpool [in the UK]," one Jamaican businessman points out.

There are plenty of areas where cooperation could be fruitfully deepened even if countries insisted on maintaining full political independence, Mottley says.

"We're either going to have to decide that we are going to make the political jump, or if you want to maintain the community of sovereign states, then you have to deepen at a far greater pace the functional co-operation, such that you can remove the duplication of expenditure on a whole range of things," she says.

There are limits to how much closer integration will achieve. It would help many countries trim their government wage bill, but the problems run much deeper than a few expensive overseas embassies.

The economies of the Caribbean countries are also perhaps too similar to benefit greatly from a single market. The dominant industry is tourism, which depends more on overseas economic conditions than the cost of shipping goods between islands.

Nonetheless, in time the chastening experience of international bailouts and austerity could perhaps play the same role in gluing the Caribbean states more closely together as the memory of two devastating wars did in Europe.

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