Guyana is in court battles in Canada and the United States, following lawsuits filed by a Canadian company owned by a Guyanese-born man, but now operated by his two sons over the trademark ‘Demerara Gold’.
The sons of Lionel Bedessee, owners of Bedessee Imports Inc, filed the legal action  after the Guyanese government, through Minister of Agriculture Robert Persaud,  accused the company of deceit in using the name “Demerara” and a map of Guyana on sugar products that were not made from Guyanese sugar..
Bedessee Imports Ltd was founded by Lionel Bedessee, who went to Canada from Guyana in 1971. In 1977, he started a retail store selling Caribbean food on Queen Street West in Toronto and from that store, the business has grown and prospered to the extent that at present it  operates from a 46,000 square foot warehouse and manufacturing facility in Scarborough. Bedessee Imports Inc. was incorporated on September 23, 1985 to carry on the same business in the United States.  It has a warehouse in Brooklyn, New York and a wholesale outlet in Florida, both of which are now managed by the founder’s sons.
The products marketed by Bedessee include raw cane sugar from Mauritius, which it sells under the trademark ‘Demerara Gold’. The label contains a map of Guyana. Bedessee also markets a brown sugar product described as ‘Guyanese Pride,’ which also has a map of Guyana on the label. Neither product contains Guyanese Demerara sugar.
The right to use the name ‘Demerara’ in relation to sugar products is not a recent controversy. In a matter before the English Kings Bench Division in 1913 case (Anderson vs Britcher), the respondent was charged with unlawfully selling as ‘Demerara sugar’ a sugar that was “cane sugar crystals coloured with an organic dye foreign to genuine Demerara sugar, so that the sugar was not of the quality, substance, or nature of the article demanded by the purchaser.”
It was found that the sugar was a crystallized cane sugar grown in Mauritius and coloured with dye. The magistrate had dismissed the charge, finding that the term ‘Demerara sugar’ was a “… generic term applicable to any sugar of the substance, kind, and colour of the sugar in question wherever produced, and that therefore the said sugar was of the nature, substance, and quality of the article demanded by the appellant, the purchaser, and that accordingly the sale was not to his prejudice, and that no offence had been committed by the respondent.”
The matter was appealed but dismissed.   
 
Bedessee has been using the name ‘Demerara Gold’ as a trademark for sugar and other products in Canada and the United States since 1984. Until 2003, GuySuCo sold its sugar “nameless” in unlabeled 50 kg. bags to buyers, primarily in the Caribbean. In April 2003, GuySuCo launched its first branded sugar for the retail trade, which it called ‘Demerara Gold’, the same name used by Bedessee.
In October 2003 GuySuCo wrote to Rayman Bedessee, and invited him to submit an application for distributorship of GuySuCo’s ‘Demerara Gold’ product in Canada. Bedessee replied that although he would be happy to buy bulk sugar from GuySuCo, the brand ['Demerara Gold'] was owned and used in Canada by his company, Bedessee Imports Ltd: “It is a trademark. We would be unable to use your mark, and you will be unable to sell your brand to anyone in Canada and USA,” said Bedessee.
Shortly after the launch of its brand,  GuySuCo applied to the Canadian Intellectual Property Office to register the mark. This prompted an opposition by Bedessee, which later applied to register the same mark. GuySuCo in turn filed an opposition to Bedessee’s application.
GuySuCo subsequently abandoned its Canadian application for registration of “Demerara Gold” as its trade mark.
In its lawsuit, Bedessee Imports Ltd has charged GuySuCo and the Government of Guyana with”distributing, promoting and selling the infringingly marked Demerara Gold goods in the United States commerce with knowledge of Bedessee’s superior and established rights to the distinctive Demerara Gold mark and name for the purposes of trading upon Bedessee’s goodwill and reputation, creating in consumers’ minds an association with Bedessee and giving GuySuCo’s goods a salability they otherwise would not have.”
(Compiled with material from the Stabrokek News)

By Gregory McGuire

“Elections done,  now back to work!”
These profound words,  uttered by a wit who had clearly been celebrating with a few drinks too many outside a bar in Couva last Monday night, brilliantly sums up the sentiments of the vast majority of the population. Having won an overwhelming political mandate at both the national and local level, the People’s Partnership must now buckle down to the serious task of running the country.  While issues of crime, health care and infrastructure remain important, it is the state of the economy that takes centre stage. In this context, the first budget of the PP’ Government is  eagerly anticipated.
Finance Minister Dookeran and Planning Minister Mary King have sent early warning signals that all is not well in the economy. Their views are supported by the data and analysis of the Central Bank and IDB. Some of the key indicators are:
Prices of major export commodities- oil, gas, petrochemicals- are running much higher than budgeted and likely to remain strong.
Output in the energy sector remains flat as oil production continues to decline and no new investments are taking place or are on the horizon in the Petrochemical sector.
Economic activities in the non-energy sector remain depressed with the sharpest declines being experienced in construction, distribution, and manufacturing.
Non-energy exports continue to slump as a result of the weak Caricom markets, still suffering the after-effects of the global financial meltdown.
 Notwithstanding higher than budgeted oil and gas prices, Government is likely to run a fiscal deficit for the third straight year with recurrent expenditure continuing to outstrip income.  The Budget deficit is being financed from the Infrastructure Development Fund.
 The banking system continues to be characterised by excess liquidity as both private and consumer credit demand remains weak.
Although official foreign exchange reserves remain high at the equivalent of 11 months imports, the exchange rate has creeping up in recent months .
Unemployment is rising as a direct result of the slowdown in aforementioned sectors.
Inflation is rising again as a result of higher food prices.
 Overall, GDP growth in 2010 is forecast to be negative or less than 1% at best.

 There is no doubt that the PP Government is aware of the massive challenge it faces, particularly in the context of  a commitment to keep its many campaign promises. It seems generally accepted by the PP government that economic transformation is an imperative. For Planning Minster Mary King, the short term hope is that energy prices rebound. The longer term solution is economic transformation.  Finance Minister Dookeran seems to agree, and proposes the establishment of an Economic Development Board, with the main focus on how to generate revenue for the country. In addition, the EDB is to ensure the alignment and  incorporation of existing strategic and long term plans into a new T&T development framework. .
Beyond the rhetoric of transformation, however, early indications are that the Government is unclear about how to proceed.  An economic development philosophy is yet to be articulated.  However, public expectations are high and patience could run thin if nothing seems to be happening. Having campaigned against many PNM plans and programmes, the parties that are now Government seem  in danger of  accepting  the status quo and of pursuing the strategy of presenting old wine in new bottles. 
This would be tragic not only for the PP Government but for the future of the economy as a whole.
Economic transformation is a long term process that is underpinned by a development philosophy and supported by cogent analysis.   The aim must be to reduce dependence on oil and gas and break the cycle of boom and bust. Hopefully this is the work to be undertaken by the EDB. 
The efficacy of proposed solutions will be heavily influenced by the framework used in  planning and  the quality of the diagnostics   The  policy makers may wish to  give consideration to two important  elements  that help shape the planning framework.  The first is the age-old maxim that who forgets the past are doom to repeat its mistakes into the future. The late  Professor Dennis Pantin,  to whom  we pay tribute to in this issue of the TTR, would have argued that this is the third occasion in the last sixty years that this country has been through the boom-bust cycle.  The first was from the mid 1950s to independence.  It was triggered by the discovery and launch of commercial production of  the Soldado marine oilfields off the South Western coast.
 The second period, 1974-1983  was triggered by increases in both oil prices and output.  Those old enough will not forget the harsh economic realities of the decade  that followed.  The last ten years of gas-based expansion marked the third period of offshore resource-inspired boom for this nation.  Each period has featured the positive and negative aspects of a booming resource-based economy including rising incomes, large Government surpluses,  exploding public and private expenditure, high inflation,  surging imports etc. There is evidence of some improvement in macro -economic management during the upswing. At the very least savings were legislated in the form of the Heritage and Stabilization Fund.  But the old habits of increasing recurrent expenditure in line with windfall incomes persisted. The PP Government now has the challenge of managing a downturn.
The situation today is reminiscent of the 1981-83 period- the first years of the George Chambers administration. Chambers had inherited an economy that appeared reasonably strong with prices were still relatively high  and with the  transition to gas underway.  Chambers’ economic advisory team at the time warned that behind the facade of  a trade surplus and high levels of foreign exchange reserves, the underlying fabric of the economy was being undermined by the reality of  recurrent expenditure  rising faster than revenue.  The Government entreated the population to exercise restraint and embarked on a strategy to bring the economy to a “soft landing” at a lower level of equilibrium.  However,   by that time, what Dennis Pantin always referred to as the  “rentier mentality” was embedded . Expenditure on public account proved sticky to reduce. Government drew down  its reserves and special funds in order to meet recurrent expenditure. Foreign exchange reserves were rapidly depleted in spite of exchange controls.   By the time oil prices crashed in 1985, the treasury was truly empty.
 There are perhaps two important lessons to be learnt from that experience. First, soft landings do not work in a small open economy, particularly with a liberal trade and foreign exchange regime. Secondly, when an economy such as ours is showing signs of weakness decisive action is required.  Failure to act extends periods of uncertainty and postponement of investment decisions which contributes to accelerating the onset of the  decline that the indecision was  trying to avoid.

By HAYDN I. FURLONGE

Energy Minister Caroyln Seepersad-Bachan with a former PNM energy minister Errol Mahabir.

Dispassionate perspectives and informed analysis are not the things of which political platforms are made, even when the topic is as mundane as the energy sector.  Now that election fever has subsided, and a new Cabinet and Parliament installed, the business of country development can resume with renewed vibrancy and hope.  It is worth distilling some of the key issues that have implications for the energy sector and the stability of the economy.  This article focuses on two main themes: 1) Leveraging energy for diversification and competiveness; 2)Value maximization.
The backdrop is one of a staggered climb out of global recession with demand for energy being dragged along by the most unlikely economies, such as Brazil, India and China, with which T&T has little trade of any kind.  Over recent months, crude oil prices have been buoyant once again (slightly above the average over the past five years of US$70/barrel), with ammonia and methanol prices struggling to maintain healthy levels (around or just below historical averages of US$330 and US$393 per tonne respectively).  International natural gas/LNG markets have been bearish, with prices expected to remain less than favorable to exporters until the end of the decade (well below the historical average of US$7.00 per million British thermal units).  An imminent 20% increase in LNG production capacity, and displacement of gas imports due to indigenous production from shale deposits contributes to this poor outlook.
Why is all of this important to T&T?  Figure 1 demonstrates the strong relationship between the prices of crude oil and natural gas and GDP since Independence in 1962.  A high degree of correlation also exists between GDP and total hydrocarbon production.  This economic construct is largely as a consequence of an industrialization-based model proposed by Sir Arthur Lewis in the 1950s, the Mostofi Commission of Enquiry in 1964 and others which sought to identify (e.g. geographical location, natural resources) and capitalize (via fiscal incentives, provision of cheap land and labour, etc.) on competitive advantages in order to attract industrialists for manufacturing and export.  This approach has been adopted and modified by successive Governments since the 1960s, and has given birth to an energy sector that has contributed between 48% and 62% of total Government revenues, between 36% and 48% of GDP, and between 86% and 91% of export receipts over the past five years. 
Our industry currently comprises a 5:1 ratio of natural gas to oil in terms of energy equivalent production levels. The relative overall contribution to the economy is slightly lower, making it safe to conclude that T&T is now a predominantly gas-based economy.  Juxtapose the market scenario for petrochemicals (30% of T&T gas portfolio) and LNG (60%) described earlier, and one realizes that notwithstanding high oil prices, economic outlook is less than what we have been growing accustomed to. 

DIVERSIFICATION AND COMPETITIVENESS

This high level of skewness of the economy and exaggerated volatility in macro-economic performance, accompanied by high inflation in times of above-average hydrocarbon prices, have been cause for concern.  These along with stifling of non-energy (tradeable) sectors due to currency appreciation (typical Dutch Disease effect), inadequate transparency and allegations of corruption in boom years are some of the signs of the phenomenon called “natural resource curse”.  Whilst this is a label not stamped on T&T, there are those who would say that its “silhouette” is approaching.  It is typical of economies based on the exploitation of God-given physical resources that fail to flourish sustainably due to inherent challenges of managing its endowment, unless windfall rent sterilization and other sound macroeconomic management strategies are exercised. 

There is one view that oil and gas should remain the major economic driver, whilst others call for expeditious steps to break this staple trap, and tackle diversification in a real and tangible way.   Granted, the latter is relatively difficult to achieve due to sheer inertia, with challenges as well as risks involved. 
New areas such as information and communication technologies (ICT), and financial services may be worth considering, but we must be absolutely clear on how competitive advantage is to be created.  At the heart of a decision on the role of energy either way, is the question of whether this age-old but somewhat proven industrialization model based on oil and gas is still sustainable for T&T in this post-modern era and globalised world.  One eagerly awaits the approach to be taken by the new administration.
Having just passed one hundred years of commercial hydrocarbon production, there is much to be proud about in terms of establishing a national identity in the global energy arena.  However, by its very nature, oil and gas resources will be depleted if not beyond the physical limits due to technological capability, then as a result of some impassable economic hurdle (e.g. market price and competition).  Yet it may be argued that turning down the burner, so to speak, for the sake of achieving sustainability is not prudent.  The industry needs to continue growing while diversification pathways are pursued. 
One strategy may be to use our strong energy base (not just its revenues) as a foothold for new business opportunities, developing new related skills and creating more sustainable jobs.  What new strategies can be adopted to help drive other sectors given the beleaguered local content policy?  Opportunities include the provision of goods, services, technology and capital/financing by nationals and local companies in the engineering, construction and procurement phase of energy sector projects, and in their ownership, operation and management.  The education thrust must be geared towards such economic activities and in creating entrepreneurs, rather than more of the same.  We now need to move beyond the superficial platform promises of free tertiary education and laptops for all (not that these ingredients aren’t important) if we are to move closer to the future knowledge-based economy we fondly speak about.  There have been many calls for a national innovation system and institutional framework for directing and governing R&D, its linkages with the economy, and to maximize the resources of all stakeholders, especially the multinational energy companies operating in T&T which may have much to offer in this regard. 
A sobering aspect of the industry is declining crude oil production, and the much-debated gas (proven) reserves to production ratio which currently lies around 12 years.  Poor results of past bid rounds, protracted negotiations in finalizing recent award of production-sharing contracts, and slow pace in cross-border unitization with Venezuela have shaped the current dimmed supply projection. 
Whilst some in the industry may tag this as a temporary dip rather than an indication of future potential, there is little doubt that substantial expansion in downstream activity is unlikely in the near term given the lag between exploration and reserves commercialization activities. 
This has implications for GDP growth rates in the coming years, and the multiplier effects that would normally ensue from new energy projects.  Additionally, the matter of a reserves policy for treating with long-term availability and pricing of gas for electricity generation for residential and commercial sectors may be more relevant today than previously.  One must bear in mind that competitiveness of our manufacturing sector relies in part on low cost electricity and natural gas.

Another critical consideration is the cost of finding new reserves.  Converting probable, possible and potential reserves to proven quantities would require exploration in deeper waters (above 1500 feet), which is more capital intensive.  This tilts the negotiating balance for fiscal terms in favour of producers.  Notwithstanding the recent launch of bid rounds, what is the strategy of the new Government to rekindle activity and elongate the backbone of the economy whilst ensuring fair economic rents to the State? 
Commercializing such relatively expensive reserves would face competition from the many new and cheaper suppliers such as Qatar and the African countries.   Furthermore, these countries are now competing for a share of the best markets in the Atlantic Basin region which is a serious threat to our netback earnings, just as PetroCaribe dealt a blow to our markets for petroleum products.  What is our energy and foreign policy response on this occasion (e.g. role of the Gas Exporting Countries Forum)? 

VALUE MAXIMIZATION

Value from the energy sector is generated largely in the form of rents (royalties and taxes) from extraction and primary hydrocarbon processing.  Further downstream conversion of ammonia, methanol and ethane/propane presents value-added opportunities.  The urea-ammonia-melamine and gas to propylene projects, for instance, would generate incremental revenues and jobs per unit of gas consumed.  It must be emphasized however, that the real value of such a policy is derived from linkages with the manufacturing sector which use the secondary products (melamine and polypropylene) for conversion to consumer items.  Strategies for pursuing this avenue need to be considered. 
With regard to local ownership, indigenous value is derived from dividends (hence reduced expatriation of wealth) and jobs/skills development. 
Whilst T&T is a major exporter of gas and its derivatives, Government shareholding and depth of involvement in the business is limited compared to that in countries such as Algeria and Malaysia.  Indeed, resource nationalism is a growing trend worldwide, whereby Government-owned oil and gas companies are holding greater shares in reserves and in marketing of products.  This goes well beyond the facilitator and rent-collector model adopted locally, notwithstanding certain strategic investments made onshore. 
Is there appetite for the risks associated with State (or private sector for that matter) investment in exploration and production, energy projects in other countries, offshore activities such as LNG shipping and trading, and in exporting energy skills and services?  Would a merged single national energy company be in a better position to undertake deeper and wider commercial roles in the hydrocarbon value chain?  Of course there are ongoing issues occupying the attention of our various State-owned energy companies including the need for efficiency improvements, cost cutting, rationalizing the debt situation, financing for new projects, and change out of ageing plant, equipment and infrastructure. 
The country’s energy agenda cannot be divorced from the global warming issue, since this is largely attributed to the burning of fossil fuels (T&T Review, April 5th, 2010).  Carbon reduction initiatives, a climate change mitigation program, and renewable energy (RE) implementation are strategic areas.  Clean development mechanism (e.g. energy efficiency and conservation) projects, carbon capture and storage, development of hybrid (fossil fuel/RE) energy systems, and an RE equipment sales and service sub-sector are some of the specific new opportunities to integrate mainstream energy with other business ventures.  Further, sugar to bio-ethanol, vegetable oil/algae to biodiesel and biomass to energy could create linkages between energy and agriculture.
Certainly, opportunities abound.  But it is worth remembering that this business involves technological, operational, market, price, labour, logistics, financing, and credit risks, inter alia.  Currently, the energy world is looking on in awe as stakeholders struggle to deal with the oil leak in the Gulf of Mexico following the well blowout whilst drilling in deep waters (5,000 feet).  Despite employing the latest drilling technology and codes for environment, health and safety, this may turn out to be one of the largest and most costly spills in the industry.  Is there a lesson for us?  Commercial failure of the Deep Ibis well (deepest well drilled in T&T), worker strikes which impacted the latest LNG and 56″ gas pipeline projects, operational and market challenges of innovative technology (e.g. hot briquetted iron plant) are notable negative risk outcomes.  Additionally, market convulsions are leading to more rigid specifications on liquid fuels beyond our oil refinery’s capability unless there is major upgrade.  Over-investments in LNG infrastructure worldwide (import terminals and ships) due to a once burgeoning LNG market outlook have created a situation of value erosion since the associated costs impact netback returns to T&T.  Admittedly, the industry has been resilient in mitigating/absorbing these, with all parties involved having played their part.  But, a touch of reality is needed when pegging the near and future hopes of an economy on this dynamic, risky business of hydrocarbons. 
A final matter for the new administration is the need to re-examine institutional arrangements.  Strengthening of the current government agencies and State companies are important in addressing the many challenges ahead.  It has also been suggested by others that a permanent technical secretariat to provide independent energy intelligence deserves consideration.  Whatever the means, facilitating a policy development approach based on a mix of stakeholder engagement and thorough ongoing rigorous analysis would be welcomed.  This is useful in creating a more structured education programme on major energy matters, and in resolving issues, for instance the incessant aluminum smelter debate, consensus on a land use policy, and the determination of an optimal revised fiscal regime for oil and gas.  Compliance with the Extractive Industries Transparency Initiative (currently in the preparation stage) is complementary to building a framework of strong governance and oversight of the energy sector in the interest of maximizing value to the people of T&T.

One Year After The CL Bailout

By AFRA RAYMOND

As we enter the wrong side of the boom, it is a little like travelling to the dark side of the moon. Familiar navigation points fade from view and we are forced to use bearings that are new.
The quality of our political rulers has now joined in unholy matrimony with the sheer recklessness of their anointed deal-makers to put our economy into an entirely new and perilous place.
At these moments of turmoil and impending crisis, it is always interesting to observe closely what key people are not saying. Their pauses and silences can be very instructive.
The seriousness of the evolving situation now requires that we discipline the national appetite for melodrama, bacchanal and comesse and face up to the challenges ahead.. 
The main case involves the CL Financial bailout, which was announced a little over a year ago when the first Memorandum of Understanding (MoU) was signed on 30th January 2009.  Given the subsequent revelations as to the withdrawals of funds by important people and the shareholdings of the Minister of Finance in CLF, it is impossible to say exactly when the actual bailout began.  All we can say for sure is that we, the public, were told of a bailout on 30th January 2009.
There has been a cascade of bewildering and disturbing events—those are set out at my blog, www.afraraymond.com—and we are now at a position of deep confusion.  The resignations of three top-level executives of the group and the subsequent bald press releases are most disturbing.  They speak of disputes and jostling taking place in terms of this huge group we are now committed to rescue. For the record, those resignations were: 

12th January – Steve Bideshi, CLF Group CEO, effective 31st January
19th January – Michael Carballo, CLF Group Finance Director, also effective 31st January
3rd February – Claude Musaib-Ali, CEO of CLICO, effective 14th February

The growing sound we are hearing is that the Bob Lindquist forensic report into the dealings of CLICO etc. was due for completion at the end of February. While many anxiously await its release (or leak) for evidence of  possible wrong-doing, the more responsible position would be for the citizenry to press for publication of the Audited Accounts of the CL Financial group as at 31st December 2008. Those accounts should be signed-off by the same professional firm which had done the 2007 audit, PriceWaterhouseCoopers. 
CL’s audited accounts constitute the most important single document, since it will fix an asset value at the end of 2008. That is—12 months after the last audited accounts, which showed a total asset value of $100.666Bn. (http://www.clico.com/pdf/AR07/CL%20Financial%20Annual%20Report%202009.pdf
55 days after Michael Carballo, the then-Group Finance Director, gave statements to the Business Guardian that the group had assets of $100Bn and could weather any storm. (http://legacy.guardian.co.tt/archives/2008-11-07/bussguardian1.html.)
13 days before Lawrence Duprey, the group’s Executive Chairman, wrote to the Governor of the Central Bank to request urgent financial assistance.  That letter was accompanied by a table setting out the group’s asset values – totaling $23.9Bn – and was read into the Hansard by the Minister of Finance on 4th February.
(http://www.ttparliament.org/hansards/hh20090204.pdf at page 628.)
16 days before a dividend of $3.00 per share was paid to the CL Financial shareholders.
30 days before the historic press conference to announce the bailout, at which it was repeatedly stated that the CL Financial group had $100Bn in assets.

Despite its obvious importance in the mystery of the missing money, there is complete silence regarding the progress of the 2008 audit.  It is almost a full year overdue and the only accounts being given to taxpayers are the forensic and confidential ones. The public must insist on this information as a non-negotiable condition of the bailout with taxpayer funds.
Let us mark this moment well, because if the 2008 audited accounts are allowed to fade into obscurity, please worse should be expected with the 2009 accounts.  
There are also other facts, now in the record, which cry out for early attention, without need for special reports or melodrama.
Was the payment of a dividend to CL Financial shareholders, after writing to seek urgent financial assistance, an illegal act by its Board of Directors?  If yes, then what actions are to be taken to both a) recover those sums of money and b) punish the Directors of CL Financial for such action?  If no, then we need to hear the argument to support that conclusion.   As incredible as it might seem, is it possible that the Board of CL Financial did not know that Duprey’s letter had been sent to the Central Bank?

The State is in control of the CL Financial group and ought to be able to present a picture as to who broke their deposits in the last 90 days.  That is guaranteed to be an interesting read and no need for any forensic report there, either.  Maybe more importantly: who borrowed from the floundering group in its last days and on what terms?  
The Governor of the Central Bank has, on several occasions, publicly and clearly stated his deep concern at the actions of the CL Financial chiefs. Two examples:
At a press conference on 22nd April—”If you ask me whether CL Financial did everything that was honourable and beyond reproach, the answer is no! The answer is no!” (http://guardian.co.tt/business/business/2009/04/24/cl-financial-bailout-cost-5-billion-over-two-years.)
Speaking on 10th November 2009, at a conference on The Global Financial Crisis - “I prefer, however, to focus on the governance issues because, without doubt, the failure of Clico was a failure of Governance … it was absence of controls from the Board of Directors.” ( http://www.centralbank.org.tt/news/speeches/2009/sp091110.pdf.)

The Central Bank issued updated regulations as to the qualities of person considered to be fit and proper to serve as Directors or Senior Officials of Financial companies – that is at http://www.central-bank.org.tt/news/releases/2005/mr050510.pdf. At 3.1, it states—
“In accordance with governing legislation a person is considered to be fit and proper if the person essentially is of good character, competent, honest, financially sound, reputable, reliable and discharges and is likely to discharge his/her responsibilities fairly.” The Governor of the Central bank has spoken, in unmistakable terms, about the conduct of CL Financial officials. Does the evidence in his possession rise to a level that contravenes “fit and proper” regulations? And if it does, what will the Governor do about it?
We do not need to wait for any forensic report to be leaked or any opinion from expensive foreign lawyers.  Sweet as the melodrama can be, it is a highly dangerous distraction for all of us.

—www.afraraymond.com  afra@tstt.net.tt

…. and 20 million Brazilians less in abject poverty
By OWEN THOMPSON

British Prime Minister Gordon Brown recalls a confession made to him by Brazilian president Luiz Inácio Lula da Silva during the meeting of international leaders at which the agreement for re-floating the world’s major banks was signed: “When you’re a labour leader, you blame the government and the opposition. When you’re in the opposition, you blame the government. When you become president you blame Britain, America and every blameable western capitalist democracy.”

Brazilian President Luiz Inacio Lula da Silva

Interesting words from a man whose economic policies have been responsible for lifting 20 million Brazilians out of poverty in the eight years since he became president. And quite an achievement at a time when Europe and the United States have slid into gruelling economic recession.
Though economic thinkers and tinkers of different ideological persuasions on both sides of the Atlantic continue to trade blame for the present situation, most seem to agree that if the western world is now in the biggest crisis it has experienced in 80 years it is in large measure due to the greed and irresponsibility of bankers, speculators and securities dealers in the heart of the capitalist world.
Some countries have been more severely hit than others. A year after taking office, Obama’s popularity has dipped appreciably because of what too many see as his inability to arrest the crisis and improve the job possibilities of millions of Americans. In western Europe, Greece is on the brink of collapse, the new government having inherited a poisoned chalice from its predecessor, while Spain, a paragon of growth in the late 90s and early noughties, now has almost 20 percent unemployment and many influential liberal-conservative economic journals have not been afraid to more than speculate about the country’s economic and financial solvency.
Prime Minister José Luis Rodríguez Zapatero has boldly hit back, saying that it is simply now, in his second term of office after he came to power in 2004, that the economic downturn that was always inevitably going to set in after the construction boom bubble burst, has indeed set in. “It is somewhat paradoxical that the markets we had to step in to save, now want to subject us to stiff examinations,” declared Zapatero.
The Spanish right, riding the crest of the conservative wave that has swept over the EU since the turn of the century (only Gordon Brown, in Britain, Zapatero in Spain, Jens Stoltenberg, in Norway, José Socrates in Portugal, and George Papandreou in Greece, remain as Labour/socialist leaders in the 27 nation EU), has been noisily trumpeting against the ills of a left-leaning government whose, in its view, flawed policies have been unable to deal with the crisis.
Merkel and Sarkozy seem determined to seize the reigns of the EU, while on the other side of the Atlantic Obama is being lambasted by resurgent Tea Party forces that have cashed in on the recession to point an accusing finger at him. Once again, Right and Left are at each other’s throats and things are being painted in a most simple light. While patently worn, dated discourses show just how much they have simply run their course, Brazil points the way towards a mode of thinking that is badly needed.
The old debates and even older remedies, all derived from dated struggles and antagonisms, simply no longer hold. The liberal-conservative forces that have plunged the western world into the mire in which it now finds itself simply refuse to acknowledge responsibility, let alone blame. They have been in charge for too long and too much is riding on what they have built up: the very pillars on which the banking and financial systems of so many key countries rest. The banks had to be rescued. All the major world leaders, of all ideological and political persuasions, were mobilised to do so. Now, the desire is for business as usual, for things to continue as though nothing had ever happened. But something does have to happen for all to see that there must be a new way of thinking and doing. It is here that the figure of Lula surges forth. His words to Gordon Brown are very revealing. Brazil cannot continue to wallow in Third World victim-hood.
I remember, during my writing trip to Brazil in March 2007, the thoughts that would traverse my mind every morning as I had breakfast on the 10th floor terrace of my hotel overlooking Copacabana. Before me loomed the favelas in the foothills around Rio. In the street, ten floors below, was all the agitprop of pavement vendors, city workers, bankers, taxi drivers, street hustlers and a very long et cetera.

To my right, the seemingly endless line of luxurious hotels along Copacabana, throbbing with thrilled European and North American tourists determined to cash in on the Brazil they had come to find. In less than a second, with a simple 180-degree turn of my head, followed by a curt glance downwards, I would, every morning, encompass the three worlds of Brazil, so inextricably linked, yet so irremediably separated.
So many Brazilian presidents, simply playing along with the system, had been powerless to do anything about such a scenario for decades and decades. So many had simply followed formulaic remedies that are condemned from the outset, conceived as they are from within the heart of a system designed to ensure self-perpetration and a minimum of mobility, in spite of rising GDPs and the usual plethora of economic data and statistics conceived and elaborated from the entrails of international agencies and policy houses that are themselves trapped within a way of seeing, planning and effecting that is powerless to effect a shake-up of themselves.
It is the dilemma couched in Lula’s words to Brown. Here, finally, was someone who seemed to grasp that the entire system had to be revamped, using the system itself to effect such revamping. Eight years and 20 million less poverty-stricken Brazilians later, we might say that Lula seems to have at least found a way.
No set formula in one sense or another. He skilfully distanced himself from the strict leftist leanings of The Brazilian Workers’ Party from which he is issued without subserviently embracing blood-sucking western capitalist interests, to find a way to improve the nation’s economy, to the extent of making a positive difference to 20 million people in the short space of eight years. No tomfooling with meaningless isms. No formulaic following of set patterns spouted from powerful policy-making centres of one colour or another. Brazil is so much the better for it now, with real clout in the G20 and close to a seat on the UN Security Council. Not to mention 20 million people less in abject poverty.
There is no greater proof of the meaninglessness of trite isms than the Haitian tragedy. A country so historically valiant, so culturally rich, but economically sodomised and politically traumatised, has never been able to find a way in the world.
No one has ever really cared enough. It now behoves the world, beyond isms and tendencies, with all its funding agencies, and lending bodies, and development banks, and aid engines, and policy implementers, to honestly seek to make a difference to the lives of 8 million Haitians.
A clever Brazilian politician, full of vision, and working his way through and round the isms, has managed to begin to pilot Brazil out of a state of affairs that had previously seemed so endemically Brazilian, so tragically self-perpetrating, towards recovery and prosperity, while Europe, America and the opulent western world wallow in a crisis of hitherto unforeseen proportions, to which they have been driven by callous capitalist speculation.
Obama continues to have difficulty convincing America that though wealthy enough it certainly isn’t healthy enough. It still has to be bold enough to embrace universal health and incorporate the 45 million Americans who simply cannot afford healthcare. It is something which the nation as a whole doesn’t wish to entertain.
There are still too many millions of Americans who can afford such costs and cannot conceive of a system, publicly funded, that guarantees such care for all. Any president that tries to go against such a deeply engrained way of thinking is only committing political suicide, as Obama has discovered.
Zapatero and his four social-democrat/Labour colleagues within the EU still have to deal with being blamed for bringing their countries to economic ruin, above and beyond the bubble of fictitious wealth that had been allowed to grow through decades and decades of speculation prior to their tenures in office.
It is a facile liberal-conservative way of presenting things. It is easy armoury to deploy in the pursuit of the return to political office. It is easy to point an accusing finger at labour and social-democrat governments and say that it is on their beat that the worst economic crisis for 80 years has fallen upon the world. It is also an easy, demagogical way of playing with the economic insecurity of ordinary citizens.
 It is the kind of thinking that underpins the dated discourse that presides over Europe at present. It was most eloquently played out during the last European Cup. Italy and Germany served up the usual fare: dour, hard-tackling Italian robustness, and mechanical, unimaginative, Germanic endeavour.
They both simply relied on what they always have, confident in the belief that it would be enough to see them through. The British weren’t even there, cynically dismissing their absence. After all Europe isn’t that important. The Scandinavians, as always, were there and thereabouts, never standing out, but part of the continental enterprise, content to give a discreet, creditable account of themselves.
Russia threatened significantly, but slowly lost ground, though not before saying, “we haven’t quite made it this time, but watch out, we’ll be back next time, even more incisively”. The French once again fell victim to the very French ill of the prevalence of artifice over substance. One can only make out that one is far better than one really is for so long. Reality will eventually smack one in the face.
The French refuse to budge after countless smacks in the face. It is the eternal plight of the nation, something to which they simply refuse to wake up. In footballing terms, exit in the second round is very painful, though one gets the impression that they remain obstinate in their refusal to face up to what their real standard is.
The team, like the nation, continues to drift along in the murky waters of uncertainty, these days with a presidentially imposed debate about national identity and essence, designed not to put anything right but to weed out what they are superciliously convinced is wrong, so their near perfect nation is not further contaminated.
In the meantime, eight out of their starting eleven are black (of African or West Indian origin) less than half a decade after the play-making prowess of Algerian-engendered Zinedine Zidane made them World Champions on an evening when Brazil, thanks to Ronaldo’s epileptic fit, had an off day. When will the French learn? Portugal, initially brilliant, flattered to deceive, never quite believing that it belonged in the big leagues.
Portugal, initially brilliant, flattered to deceive, never quite believing that it belonged in the big league. The present Portuguese problem is the ill with which Spain had been afflicted for so long. Until this outing. At Euro 2008, it finally found the way to add voice and resolve to resources, and overcome the traditional European powerhouses.
In so doing, it reflected the pulse of a country bristling with newly found pride, optimism and self-belief, finally able to articulate a discourse that proved too imaginative, too good and too effective for the dated powers. It is the nature of the challenge it now faces on the economic and political front: finding the voice and resolve to break with the long established mould that had always relegated it to subordination. As Lula has done with his Brazil.
It is what Prime Minister Zapatero did when he told Bush no to his war in Iraq. It is what he now has to do to lead the way out of the liberal-conservative maze that is telling him that he is responsible for plunging the country into the severe recession in which it now finds itself. It is what Obama has to do to arrest the resurgent Tea Party forces. The recession is not simply economic, as the long established forces would have us believe. The economic recession is the perfect pretext for the continuation of a way of seeing, conceiving and effecting. It is so skilfully woven into the fabric of things that we have always been led to believe that a way out can only ever be conceived within certain clearly established parameters. Lula has shown that this is a gross misconception that has been cleverly perpetrated for centuries. Obama is having difficulty working his way through the maze. Zapatero is a meek voice in Europe trying to make a European electorate intimidated by economic insecurity see that the way out is by breaking with a long established mould. At the same time, the punters talk about China as an emerging power, which, they say, possesses the bulk of American debt. Worryingly so.
So, we are being bombarded with the usual splurge of economic data about dwindling GDPs, spiralling public debt, rising unemployment, unpaid mortgages, rampant deflation, saturated markets, etc. The bubble has burst, and those responsible for taking us there, are, after being rescued by public spending, telling us that they have to continue to guide us because the alternatives are too frightening. In the midst of all the alarmist rhetoric, it is comforting to see that Messieurs Zapatero, Lula and Obama seem to recognise that they need, now more than ever, to play their cards skilfully, against all the pressures.
In the meantime, while Sarkozy and Merkel continue to jostle for Franco-German control of the EU (as usual), I wouldn’t bet against a Brazil-Spain final in this summer’s World Cup.

Owen Thompson is a Trinidadian journalist based in Madrid, Spain.

… As we Head Into The Second Decade
It’s hard to believe that we have already come to the end of the first decade of the 21st century. It was only yesterday, it seems, that widespread fear had gripped our world about possible computer system failures and pending catastrophe at the dawn of Y2K. Ten eventful years of this millennium have now passed and if the first decade is anything to go by, the world could be in for increasingly turbulent times.
 For Trinidad and Tobago it has been a decade of relative political stability, industrial peace and, most significantly, economic prosperity. How many societies could have survived the outlandishness of a President breaking an electoral tie, not through the democratic route of returning to the polls, but by choosing the victor on some subjective basis of morality?
We did—even if we are still counting the cost in the collective loss of trust in institutions now collapsing under the weight of growing illegitimacy.   
Nonetheless, the  national report card would be in the black were it not for the ugly realities of increasing murders and serious crime, deterioration in social service delivery and human development, increasing perceptions of corruption, falling education standards and a growing sense of exasperation at being short-changed on quality of life.
Once the dust settles on the UNC election and Carnival is out of the way, Trinidad and Tobago could expect to head into a long season of unrelieved tension until the next general election. If Basdeo Panday were to be returned by the UNC membership on January 24, the issue could be settled sooner rather than later. Patrick Manning would be saved a lot of trouble if he could feel confident enough to call an election now instead of having to weather the building storm of mass restlessness as contending forces vie for the one wave to  be caught all the way into Whitehall.
The Prime Minister might have expected to have harnessed this wave by now. By his calculation, he and his party should have been surfing comfortably into 2010 on a cresting wave of popularity after two international summits—unprecedented in this part of the world—  and the grand commissioning of several major projects including the new waterfront development and the performing arts centre.

But life keeps getting in the way and, to paraphrase the poet Robert Burns, the best laid schemes of mice and men can go very much awry.
Far from coasting into the homestretch, Mr Manning’s fortunes have fallen victim to a rash of unexpected occurrences and unforced errors. The global economic collapse sucked the Clico empire into its vortex of destruction with implications that remain still dangerous to the rest of T&T’s financial system while inside the government and party, Mr Manning must be wondering whether his 2007 election compromise with Keith Rowley wasn’t  a miscalculation after all.
Better to have risked PNM wrath then and scotch’d the snake at the polls than have this permanent distraction of a running war.
Meanwhile, across the land, the masses are in pain. Too many dying; too many broken; too many ill; too many angry; too many frustrated. So much injustice; so much despair; so much alienation, all combining to unleash violence on the spirit of the people.
The post-independence march to a brighter future has been halted by a deepening cloud of  unrelieved cynicism among a people too afraid to believe in anything more elevated than self. Private gain at the expense of public good is rampant, from captain to cook with the worst offenders being among the most self-righteous. It didn’t—and doesn’t—have to be like this. Every prime minister from Williams to Manning has had his chance to turn the tide. Sadly, none has had the courage to resist the temptation of the quick-fix even if all have had the instinct to find some common basis for national endeavour. As the most recent expression of such, Vision Twenty20 should have delivered the broad outlines of a republican Project for Society shared by all, given the grand scale of public participation and personal investment by so many. Instead, it has been left to dry on the vine, surviving only as a ghostly echo in the corridors of officialdom and as a rubber-stamped rationale for decision-making. 
In this climate of psychic dread, who can believe that an election—any election—will make any difference? If nothing else, the last 30 years should have taught us is that winning elections is the easy part, especially when the incumbent falls victim to self-inflicted wounds. 

All it takes is some good spin doctors and a large crowd entertained on rum, roti, wine and jam to unleash an avalanche of electoral hysteria designed to carry one all the way to the polls.  What is truly hard is winning the electorate’s commitment to a shared view of the future and keeping them as full partners in that project.
Perhaps in this Chinese Year of the Tiger, we  will find the courage to dare to dream again and to believe that the creation of an enlightened, progressive, humane, efficient republic is within our scope and that within each of us lies the ability and the power to insist that it be so.

By REAY GREAVES

TRINIDAD & TOBAGO

$2 million in the wind. —Photo: JERMAINE CRUICKSHANK

• Climate change was the dominant theme of the 54th meeting of the Commonwealth Heads of Government in Port of Spain  after French President Nicolas Sarkozy dropped in for some last-minute talks ahead of this month’s summit in Copenhagen. Also, Rwanda was voted in as  the 54th member of the Commonwealth.

• One Caribbean Media Ltd posted a profit before tax of $58.7 million for the nine-month period ended September 30, 2009. This was 28 per cent lower than the $82.1 million recorded for the same period for 2008.

•The Unit Trust Corporation announced the appointment of Eutrice Carrington  to the position of CEO, Financial Services. Ms Carrington previously held the position of UTC vice-president, Asset Management.

•Carib Cement posted a loss of $431 million during the three months ended September 30, 2009.

• Minister of Energy & Energy Industries, Conrad Enill granted consent to state-owned Petrotrin to enter into a ten-year sub-licence agreement with contractors.  Fram Exploration was one of five contractors to benefit from the agreement.

•Minister of Sport Gary Hunt and chairman of Sport Company of Trinidad and Tobago (Sport) Kenneth Charles confirmed that the total price of the 60 feet by 36 feet national flag fluttering at the Hasely Crawford Stadium cost $2 million.

•RBTT Financial group announced that Canadian banking executive Jim Westlake, would take over as new chairman.

•ANSA Merchant Bank became the first local institution to manage a euro-denominated mutual fund to be offered in Trinidad and Tobago.

•Losses from discontinued operations pulled down Guardian Holdings Ltd’s overall performance to a net loss of $655 for the year ended September 30, 2009.

•Scotiabank posted income after taxes of $455.1 million for its year ended October 31,
2009. This was an increase of 5.4 per cent over the comparative period last year.

•Republic Bank chairman Ronald Harford announced the appointment of William H
Pierpont Scott to the bank’s board of directors.
•The Central Bank issued a special $100 note to commemorate the Commonwealth Heads of Government Meeting (CHOGM).

•William H Scott, Arthur Lok Jack and Kenneth Gordon joined eight other local
pioneers in the Chamber of Industry and Commerce Business Hall of Fame.

•Rating agency CariCRIS lowered its rating on the US$3 million issue of the Barbados government to CariAA (Foreign Currency Rating) and Cari AA+ (Local Currency Rating) on its regional scale from CariAA+ (Foreign Currency Rating) and CarAAA (Local Currency Rating).

•First Citizens Bank (FCB) won the “Best Bank” award for a second time.

JAMAICA

•Jamaica welcomed back British Airways to Montego Bay. The airline had stopped flying to Montego Bay seven years ago.

•Jamaica’s central bank governor, Derick Latibeaudiere -who was leading negotiations with the IMF for a $1.2 billion stand-by loan, resigned. His successor was named as Byron Wynter, a former deputy governor.

•Standard & Poor’s downgraded Jamaica one notch, to “CCC” and kept the negative outlook on the island’s credit following the resignation of central bank governor, Derick Latibeaudiere.

•Ratings agency Moody’s Investors downgraded Jamaica’s local and foreign currency bonds from B2 to Caa1 with a negative outlook. Later in the month, Fitch Ratings became the third agency to downgrade Jamaica’s credit ratings for the month of November.

•For the fourth consecutive year, Jamaica was named the World’s Leading Cruise Destination in the World Travel Awards.

•Jamaica’s National Water Commission (NWC) floated a seven-year bond on the domestic market, successfully raising J$900 million one-week private placement.

•Jamaica Money Market Brokers (JMMB) acquired an 80 per cent stake in Corporacion de Credito America S.A. (CCA), a Dominican Republic-based savings and loans institution.

•The Statistical Institute of Jamaica (STATIN) reported 9.1 percent fall in inflation for the period January - October 2009 when compared to the same period last year.
CUBA

•For the sixth year in a row, visitor arrivals in Cuba crossed the two million threshold, this time two weeks before the date it was reached in 2008.

•Canada’s WestJet airline started operations to Cuba.

•Russian state oil company Zarubezhneft signed contracts with Cuba to search for oil along Cuba’s northern coast.

HAITI

•Prime Minister Michele Pierre-Louis was removed by the Senate.

VENEZUELA

•Venezuela’s PDVSA restarted its 180,000-barrel-per-day Petropiar crude upgrader, a
joint venture with Chevron.

•Venezuela’s state-owned oil giant PDVSA agreed to buy nearly half of the government-owned Dominican Oil Refinery for US$131.5 million.

•Venezuela permanently closed four banks-the Canarias and ProVivienda banks, saying the authorities had detected major financial problems.

BAHAMAS

•WestJet Airlines announced direct service to the Bahamas from Toronto, Canada.
BARBADOS
•Grantley Adams International Airport Inc. released figures showing that 2.1 million passengers had passed through the airport up to June 30, 2009. This represented a 1.7 per cent fall off in the numbers when compared to the same period last year.

•The 2009 Corruption Perceptions Index (CPI), done by Transparency International, put Barbados as the least corrupt country in the Caribbean.

OTHER REGIONAL

•The International Monetary Fund approved a $1.7 billion loan program for the Dominican Republic to shore up confidence in the government’s economic policies and win additional financing from other lenders.

The following paper titled “The Macro Economic Framework: Valid Theory and Policy Choice”
was presented at the Conference on the Economy, 2009 which was hosted by the
Department of Economics, University of the West Indies, St Augustine, on September 30, 2009.

By Eric St Cyr

I wish to make one point.  If economic theory is to be of assistance in guiding policy it must be both valid and relevant to the context.  We know from elementary logic that valid argument will never lead from true premises to false conclusions.  We know further that relevant theory must be scientific; its premises must be empirically tested.  Only then can its predictions of the unknown be trusted.  With these methodological building blocks in place I give two examples illustrative of the consequences of the use of invalid theory and proceed to make the case for our continuing search for a usable theory of Caribbean Economy.
Example One: A classic example of economic theory leading to social disruption because it did not apply was the cut in wages in Britain in 1926.  It led to the General Strike.  Neo-classical macro-economics held that the forces of supply and demand in the labour market determined both the real wage and level of employment.  Through the operation of an aggregate production function this level of employment determined the level of aggregate output.  Assuming with Say’s Law that ‘supply creates its own demand’ the goods market would also clear at full employment since the output that was not used in current consumption would be invested, interest rates adjusting to bring savings and investment into equality.  Money was assumed to be neutral; variation in its supply simply determined the nominal price level, that is, its purchasing power.
When, following on World War I and its many disruptions to economic life, there began to emerge open unemployment in Britain, the economic wisdom of the day diagnosed the cause as the downward inflexibility of the real wage and the solution as the reduction of the money wage.  This led to widespread social disruption and to re-evaluation of the theory.  Out of this came the Keynesian revolution, inter alia shifting focus to the determinants of aggregate demand and to financial markets.
Enough has been said here to make the following points: economic theory is valid in its context; societies evolve and contexts change; social institutions are key elements in historical contexts.
Example Two: The very distinguished West Indian Nobel Laureate in Economics, Sir Arthur Lewis, proposed in his 1950 paper “The Industrialisation of the British West Indies”, a strategy which has been dubbed ‘industrialisation by invitation’.  As implemented, this strategy has not produced the anticipated results because the analysis on which it was based did not explicitly distinguish between an offshore sector of Caribbean economy, where foreign enterprise and capital have always had sway, and an onshore sector where the residentiary population operates.  Lewis’ theory needed to be more precisely located in Caribbean empirical reality.
The problem Lewis addressed was the low level of income which the Caribbean economy of 1950 afforded its members.  To Lewis, low incomes resulted from low productivity in its principal industry, namely agriculture.  In order to raise factor productivity, agriculture needed to be mechanized to raise the land/man ratio since output per acre already compared favourably internationally but output per man was low.  There was however a severe constraint on land space in these small island territories of mountainous terrain. Labour, therefore, had to be removed from the land to make room for mechanization.  In the European experience, with which he was familiar, this was achieved by shifting labour from agriculture to manufacturing, from the land to the factory. 
The Lewis strategy thus required that manufacturing industry be established as necessary to raising productivity in agriculture.  There were, however, the problems of capitalizing manufacturing and finding markets for its output.  This is the context in which foreign investors were to be invited to establish and capitalize their enterprises and produce for overseas markets initially.  The record shows that Caribbean governments gave generous incentives to foreign capital through the various Pioneer Industries Ordinances, and that there was much foreign capital invested throughout the Caribbean.  The vast bulk of the investments, however, went into resource-based industries in the offshore sector -  petroleum in Trinidad, bauxite in Guyana and Jamaica, tourism in Barbados, Bahamas and the OECS, sugar in Trinidad, Guyana and Belize, citrus in Belize and bananas in the OECS.  Few investments were made onshore complementing the surplus labour in that sector.  It needs to be said that Lewis was not unaware of the existence of what he called a ‘West Indian peasantry’ onshore; nor of the downside of foreign investment. He, in fact, stated that foreign capital would be less dangerous in manufacturing than in resource-based industries.

The point of this example is that Lewis’ strategy which proved to be successful in South-east Asia rather missed the mark in the Caribbean by the theory on which it was based not having taken account of historical and institutional factors unique to the Caribbean.
The 19th century English economist John Stuart Mill denied the existence of a Caribbean economy, regarding these parts as the place where Britain produced her tropical staples.  Sir Arthur Lewis was clear that received economic theory did not apply wholesale everywhere; which led him to articulate in his “Economic Development with Unlimited Supplies of Labour” (Manchester School, 1954), a model tailor-made for Egypt, India or Jamaica.  However, it was the English economist/statistician Dudley Seers who made the methodological point most clearly in his “The Limitations of the Special Case” (Bulletin of the Oxford Institute of Economics and Statistics, 1962).  This writer has surveyed the literature in “The Theory of Caribbean Economy: Its Origins and Current Status”, (Institute of International Relations Occasional Papers #4, 1983) and gone on to state some basics in his “Some Fundamental Propositions in the Theory of Caribbean Economy” (Social and Economic Studies, Vol 40 No 2, 1991).  However it is to the pioneering work of Lloyd Best - “Outlines of a Model of Pure Plantation Economy” (Social and Economic Studies, Vol 17, 1968), the summary statement of George Beckford’s (ed.) Caribbean Economy (ISER,1975) and to the recently published book by Lloyd Best and Kari Levitt, Plantation Economy, that the perspective given here owes lineage.
Caribbean-type economy, of which Trinidad and Tobago is today the classic case, is externally propelled.  It is neither export led, like resource scarce Japan or resource rich New Zealand, nor is it internally propelled by technical innovation and investment like the USA or the European Common Market.  It is only over the last 500 years of modern world history that the Caribbean as we know it has come into existence, its institutions and culture shaped by the main actors of this era.  With less than 50 years of independence, opportunity for self knowledge and self determination remains rudimentary.
There seems to be compelling grounds for treating the economy, not as a monolithic whole, but as comprising two quite distinct parts, namely an onshore and an offshore sector.  This dichotomy, it seems to us, makes for more meaningful analysis than such other classifications as Lewis’ “modern versus traditional” or Ricardo’s “agricultural versus industrial”.  Moreover, because of the way that our populations have arisen and our nations have come to independence a central role must be ascribed to the state, both as an axis of economic power and in the determination of policy direction.  We thus have, as the structure of the economy, an offshore and an onshore sector mediated by a state sector.
The legacy of history has been that domestic resources have been harnessed for use by overseas enterprise and capital for the production of staples for export markets, the driving force being the maximization of returns to foreign capital realizable in foreign exchange.  At some time the very population and labour force comprised chattel capital to be optimally utilized towards the objective of the enterprise.  In other words, resource use was not aimed at maximizing the welfare of the human resource in these hinterlands of exploitation.  The consequence of this historical legacy is that the society is still, not only externally propelled, but highly externally oriented, dependent as it still is on overseas supplies for provisioning, with the implication that the earning of foreign exchange remains critical to survival and welfare.
The bare bones of the operation of the economy might now be modeled.  International enterprises operating through their agents, the trans-national corporations (TNCs), identify a natural resource of interest; a concession is obtained from the authorities and investment made to exploit the resource; in the process some local factors (mainly labour) are employed and paid, and royalties and taxes are paid to the state based on production and prices; in turn the state monetizes its receipts from offshore revenues and from taxes on local factor incomes and corporations and injects resources onshore in the process of providing governmental services; purchases from all these incomes are made from businesses onshore from which further incomes and taxes accrue; and so on.  Thus the economy is driven externally, its fortunes ebbing and flowing with activity worldwide, and in the offshore sector which constitutes the virtual engine.  This pattern has resulted historically in wide swings in the availability of foreign exchange, incomes, employment and tax revenue, and taking good years with bad low long-run average welfare.
The stated goal of economic policy, vociferously and aggressively pursued here in Trinidad and Tobago since independence, has been to raise the trajectory of long-run average income and reduce its volatility.  At the collective level this entails building up the stock of social capital and increasing the supply and distribution of public goods, while at the individual level maintenance of full employment at a living wage with stable prices.  It is not difficult to agree on these goals.  What’s debatable is how best to achieve them.

With the oil boom of 1973-82, the state in Trinidad and Tobago embarked on what we have termed the Point Lisas Strategy, namely using surplus revenues from the boom to secure the inflow of foreign exchange from direct state-owned investments in offshore production.  With the gas boom (1999-2008) this strategy has been resumed.  The success of this strategy would enable the state to maintain injections into the onshore economy thereby maintaining high levels of employment and money income.
While success with this strategy would reduce the dependence of the economy on foreign enterprise, it does not resolve the problem of its being prone to volatility or vulnerable to external shocks.  The question is whether the alternative of transforming the onshore sector of the economy from being a net foreign exchange user into a foreign exchange earner is not a more desirable long run strategy.  Such a strategy of Onshore Transformation would require surpluses now being earned offshore to be invested onshore to raise the productivity of the labour force and call forth productive enterprises onshore which are internationally competitive.  Might not this be what “developed nation status” really means and what a 20/20 Vision should entail?

A Monthly Round-Up of Business Headlines Across the Region

By REAY GREAVES

JAMAICA

Caribbean Airlines Ltd announced the appointment of Captain Ian Brunton as its new Chief Executive Officer. Brunton takes over from Philip Saunders, and has a long career as a pilot with the airline.

•National carrier Air Jamaica began laying off 300 workers on Monday in a move to further reduce its staff complement by 15 per cent.
•Digicel Group announced that its subscriber base hit 10 million customers in the 32 markets in which it does business globally.
•Telecommunications solutions company, Jamaica Newtork Access Point (JNAP) Ltd, has been acquired by the United States-based Digital Utilities Ventures Inc (DUTV), an outfit which specialises in the development of Internet protocol video transport systems.
•Cabinet cleared the way for Jamaica’s insurance companies to issue policies denominated in foreign currency, with oversight from regulator, the Financial Services Commission (FSC).
•RBTT Bank Jamaica Ltd announced a further reduction in its prime lending rate, which will cut the cost of borrowing by an additional 50 basis points. This brings to 150 basis points the net reduction in its lending rate over the two-month period, September to November.
•Scotiabank Jamaica announced that effective November 1st, it will cut its base lending rate by 62 basis points to 19.88 per cent, the second rate reduction announced by the bank in the past three months.
•NCB created a $1-billion fund priced at 9.0 per cent, a larger pool than the half-abillion loan window opened by Scotiabank Jamaica, which is selling its funds at 9.95 per cent.
•LIME filed a $100-million lawsuit against Digicel claiming that the Irish owned telecom unfairly priced its landline-to-mobile rates by as much as $2.48 per minute below the rate it charges LIME to terminate its landline calls.
TRINIDAD & TOBAGO

•In September, inflation continued its downward trend and fell to 4.3 percent, from 5.9 per cent in the previous month and from 11.6 per cent at the start of the year.
•RBTT announced that yet another woman had been chosen to assume the position as president and country head of the bank. Arvinder Bharath replaced Catherine Kumar, former head of the Bankers’ Association of Trinidad and Tobago.
•In an effort to boost trade between T&T and China, the Asian community in Trinidad and Tobago established The Chinese Chamber of Industry and Commerce of Trinidad and Tobago.
•The National Gas Company (NGC) was forced to reduce its supplies to large industrial customers in the country after gas giant bpTT had to restrict its supplies of offshore gas because of a malfunction at its Galeota facilities.
•In an interview in Buenos Aires, Argentina, Energy Minister Conrad Enill said the Government of Trinidad & Tobago is in talks with a Brazilian company to build an aluminum smelter on the island. The company seeks to build a smelter capable of producing 125,000 metric tons a year of the metal. 
•The Central Statistical Office (CSO) reported a 0.1 increase in the unemployment rate in the second quarter of this year, from 5.0 percent to 5.1 five percent in the first quarter. The rate was 4.6 for the second quarter of last year.
•The T&T Review of the Economy 2009 reported a decline in LNG exports to the United States, its major market, during the first seven months of the last fiscal year, while there was an increase in shipments to higher priced markets in Europe and Asia. Between October 2008 and April 2009, the United States received 129 billion cubic feet, or 33.2 percent, of the country’s total liquefied natural gas exports.
•Caribbean Airlines Ltd announced the appointment of Captain Ian Brunton as its new Chief Executive Officer. Brunton takes over from Philip Saunders, and has a long career as a pilot with the airline.
•Trinidad and Tobago was voted “Island of the Year” by Caribbean Travel and Living Magazine as part of its Caribbean Travel Awards. The Caribbean Travel Awards have been around for 15 years and are regarded by many in the industry as the “Oscars” of the Caribbean.
•The National Insurance Board (NIB) increased its shareholding in both Republic Bank Ltd (RBL) and Trinidad Cement Ltd (TCL). NIB now holds 27,960,429 shares or 17.41 per cent of the issued capital of RBL. The board increased its shares in TCL to 25,367,032 shares or 10.16 per cent of TCL’s issued share capital.
•The Industrial Court granted Hilton workers a wage increase of 11.5 per cent.
•The Trinidad and Tobago Unit Trust Corporation’s (UTC) announced that its TT Dollar Income Fund has crossed $10 billion. The milestone was achieved on October 9 and UTC said the fund was its fastest growing product with over 400,000 customers.
•NIS General Manager (ag) Doreen Nelson said NIS expenditure on benefits was rising faster than income from contributions. Total contributions to the NIS rose 117% between 1999 and 2009 while the increase in the payment of benefits for the same period was 224%.
•Methanol Holdings (Trinidad) Limited commissioned its new US$1.7b ammonia AUM plant.
•Nutrimix Feeds Ltd announced a drop in live broilers to $3.99 per pound in what the company termed a “pre Christmas sale”.

BARBADOS

•Consumers started paying less for gasoline as the retail price decreased by eight cents from $2.38 per litre to $2.30 per litre. The price of diesel fell by seven cents from $2.04 to $1.97 per litre, while the retail price of kerosene went to $1.19 per litre – a saving of seven cents.
•According to the company’s financial report for the nine-month period ending June 30, 2009, Barbados National Bank’s (BNB) consolidated net profit after taxation was Bds$35.8 million, representing a decline of 20.5 per cent when compared to the $45 million earned for the same period in 2008.
•Following several years of deterioration in credit metrics, Moody’s Investors Service downgraded Barbados’ government bond ratings to Baa3 foreign currency government bond rating and Baa2 local currency government bond rating from Baa2 and A3 respectively.

HAITI

•Foreign investors gathered in Haiti for a special conference with UN Special Envoy Bill Clinton. The two-day conference was organized by The Inter-American Development Bank at the request of the Haitian government. Organisers hoped it will attract the much needed capital to the country and improve its image in the eyes of the international business community.
VENEZUELA

•Hoping to exploit the reserves in the area of the Deltana Platform, Venezuela’s state oil company—Petroleos de Venezuela SA (PDVSA) purchased ConocoPhillips’ 40 per cent stake in a joint natural gas venture with Chevron Corp.
•Petroleos de Venezuela SA pulled out as a joint-venture partner to help Vietnam’s state oil company build a third refinery.
•A decision was reached to implement a single currency for transactions among the member states of the Venezuela led trade and economic bloc- the Bolivarian Alliance for the Americas (ALBA). The decison was reached at The Seventh Summit of the ALBA.
•Guyana and Venezuela entered into a US$18.8 million (GY$3.7 billion) export deal that will see Guyana exporting over 50,000 tonnes of rice to Venezuela.
•Petroleos de Venezuela SA boosted a bond sale to $3.26 billion from $3 billion to meet local investor demand for dollar-based assets.

OTHER REGIONAL

•Figures from the Caribbean Tourism Organisation (CTO) show a 90 per cent downturn in tourist arrivals for the region from January to July 2009. Countries such as Antigua and Barbuda, The Bahamas, Barbados, Bermuda, Cancun, Mexico, Cayman Islands and Grenada, have so far experienced staggering double-digit decline over the period compared to 2008. Cuba and Jamaica are the only countries that have scraped with minimal increases of 3.1 per cent and 3.4 per cent in growth, respectively.
•A United States think tank issued a dire warning about the latest impact of the International Monetary Fund (IMF) on developing countries. The Centre for Economic and Policy Research (CEPR) released a discussion paper in which it argues that 31 of 41 of countries with current IMF agreements have been subjected to harmful monetary and fiscal policies.
•St Kitts/Nevis established diplomatic relations with Finland and Estonia. The necessary diplomatic instruments was signed at a ceremony at the Permanent Mission of Finland to the United Nations
•Statements from the Bahamas International Securities Exchange’s (BISX) showed that for the nine month period ended June 30, 2009, All Share Index declined by 12 percent, with market capitalisation plummeting by $407 million.
•The governments of Barbados and Canada and the Caribbean Regional Negotiating Machinery (CRNM) signed a Canadian $2.5m agreement. The agreement hopes to enable the region to develop its capacities to engage in international trade negotiation arenas.
•Regional air carrier LIAT marked 53 years of continuous service to the Eastern Caribbean.
Bernuda concluded a bilateral agreement with Aruba that provides for a full exchange of information on criminal and civil tax matters between Bermuda and Aruba.
•A High Court ordered the liquidation of the Grenada Today newspaper after the owners failed to reach an agreement with former Prime Minister Keith Mitchell over the settlement of an EC$191,000 (US$71,135) award.

Industrial Strategy At The Crossroads

By Gregory McGuire

If nothing else, the impact of the global recession on the Trinidad and Tobago economy shouldserve as a potent reminder of theimperative of economic transformation—meaning reduced reliance on offshore energy-based rents. This is not by any means a new challenge.  However, after more than half a century of self-government and despite the efforts of successive administrations, economic transformation remains an elusive goal. Given the vulnerability exposed by the global slowdown, is it not time to revisit our approach to the challenge of economic transformation to sustainability? Having now seen its vulnerability can we continue to rely on the Point Lisas strategy to bring deliverance?
There is no doubt that the Point Lisas strategy of resource-based industrialization, hasyielded significant growth in the economy over the last thirty years.  This has been the dominant industrialization strategy pursued in two phases beginning with the   post 1974 oil boom.
In Phase 1, 1974 to 1983, the state played a central role in a deliberate strategy to monetize natural gas resources. The state injected US$ 3.3 billion in the development of a whole new industrial platform at the lead has been taken by foreign and local private capital in a massive expansion of the gas industry over the last 18 years.
Throughout it all, the state has continued to be an active facilitator in the process by providing infrastructure, competitive fiscal terms and where necessary, holding equity deemed.This period has witnessed capacity growth in ammonia, methanol gas processing, steel and LNG. However, the biggest contributor to growth of the industry and economy was the LNG business which commenced in 1999, and tripled capacity in the first half of this decade.  By 2005, thirty years after embarking on the path of resource-based industrialization, Trinidad and Tobago could boast of being the world’s largest exporter of ammonia and methanol, the fifth largest producer of LNG, and the leading exporter of LNG to the USA.  Whether we have been able to leverage these rankings is a debatable question.  Unfortunately, it may be argued that what the Point Lisas strategy achieved was not transformation of the economy. It fuelled several years of positive economic growth while simultaneously achieving successful diversification within the energy sector, displacing oil with natural gas and natural gas-based industry.  Table 1 shows the striking similarity in our energy sectordependence between the first boom period and today. Oil contributed 41% of GDP in 1974-78 compared with 45% of GDP thirty years later. Similarly, the share of energy (oil) exports of total exports was 93% in the years 1974-78 compared with 87.3% in the most recent five-year period.The energy sector share of Government revenue in the last five years was 57%, the same level as in the period 1979-1983.
As indicated in the last edition of the TTR, the prognosis is that growth in the energy sector is likely to be very slow over the next few years.  If the economy is to maintain output and employment levels and a stable exchange rate, it is imperative that new growth poles emerge. 
Governments always have been conscious of the situation. Unfortunately actions seldom match the chatter.   Our history shows that attempts at diversification have been given greatest focus when the lead energy sector appears to be on the wane.   This was the case during the ten years of recession 1984-83, when a package of fiscal incentives and a competitive exchange rate allowed the manufacturing sector to expand and prosper. It is not surprising therefore that, in today’s environment, talk of diversification has become the common mantra whenever the Government addresses the private sector. One hopes that this will not be a case of too little too late.
 As part of the Vision 2020 process, seven non-energy sectors were identified and targeted to lead the diversification thrust.  These are: yachting, merchant marine, food and beverage, printing and packaging, fish and fish processing, film and music and entertainment.   In addition,  Government has embarked on a major facility at the Tamana InTech Park which has been earmarked to house the ICT  and  other innovative industries.The basis and process of selection of these sectors are not clear.  However, strategic plans have been developed for each and, in some cases, special purpose industry facilitation and development companies have been formed   –e.g.   Trinidad and Tobago Entertainment Company, the Trinidad and Tobago Film Company and the Seafood Industry Development Company (SIDC).  

The general thrust of these companies is to provide trade, market and business development services to the targeted industry clusters.  The decision to remove the responsibility and impetus for planning and implementation from  the public service   to a special purpose vehicle provides each sector with a better chance of success.  Investigations reveal that despite financial constraints, progress is being made in some areas, particularly at the SIDC. While these initial steps are indeed encouraging, doubt lingers about the ability of these industries to meet the transformation challenge.
There are perhaps three key questions to be answered. The first is:Hve we targeted the right firms or sectors? Lloyd Best was always adamant that “effective development planning, whatever its horizon, must take as its point of departure some concrete interpretation of the way the economy is actually structured”. Best made the case for us to see the local economy as having two distinct components: the energy sector offshore and the rest of the economy- onshore. Government is the pipeline through which rents collected offshore are distributed onshore to stimulate economic growth. Economic transformation requires the   development of a vibrant and sustainable onshore sector- capable of earning foreign exchange and paying its way in the world. Within the onshore sector, Best distinguished between the satellite firm and the maroon firm. Satellite firms are those that are linked to energy sector activity and their fortunes rise and fall with the rhythm of foreign exchange generated offshore.  Maroon firms on the other hand are those firms that are autononous of the energy sector and which probably possess the capacity or potential for import replacement, export competition, foreign exchange self-sufficiency and long run viability. 
Research on “maroon firms” in the Caribbean has shown that they exhibit a comparatively high import productivity ratio- that is the rate at which it converts imports to foreign exchange earnings or savings.  In particular, these firms have the potential to survive and even prosper when the boom is done and the golden age is replaced by scarcity.   Best advocated the promotion of a cluster of maroon firms capable of being autonomous rather than looking offshore for one or other of scarce resources. Among the sectors targeted, the seafood industry, food and beverage industry and the entertainment industry are perhaps the ones with the highest population of maroon firms. Significantly, all three are characterized by a high proportion of local inputs, including raw material and know-how, strong domestic demand in a competitive market, and the potential for export.  It is apparent from the strategic plans, however, that more detailed micro level analysis needs to be done to find out more about these firms and their specific needs. In this regard, SIDC appears to be most advanced and getting the most traction.
Another problem with firms /sector definition arises from the philosophy underpinning the diversification strategy in general and the strategic plans in particular.   A common methodology in the Strategic Plans is the identification of what is called “international best practice” and determination of the gaps in the local industry. The recommended strategy is then targeted towards putting best practice in place in the local industry.  While this approach is not invalid, it does make the critical assumption that “best practice” is somehow universally applicable. In using this approach we run the risk of ruling out as deficient, defective or unimportant, any indigenous process or product that is not seen as part of the “best practice”.  Such thinking is perhaps a modern manifestation of the colonial mindset that continuously sees foreign as best.  One consequence of this can be seen in the manner in which the steelpan is addressed in the strategic plan for the entertainment industry. While this particular plan is loaded with important and useful information about the international industry, it treats scantily with the steelpan only from a manufacturing and export perspective. The potential of the panyard as a centre of learning   and the possibilities of the steel orchestra  as a maroon firm are notaddressed.
A second question to be considered is whether these sectors will receive the required level of Government support.  A common  error made by governments of resource-exporting countries isthat of being lured into a false sense of security by  the flood of foreign exchange coming from resource boom. When the boom is over very little remains after obligatory expenses are met.
Already there have been confirmed reports about smaller allocation in the current fiscal year.  This is really counter intuitive and driven by the short term needs to meet current expenses rather than the longer term transformation imperative.  Government has also been very tardy with respect to legislation.  At least five of the seven sectors targeted fordevelopment require amendments to outdated legislation in order to make meaningful progress. In some cases amendments have not even been drafted.   The case of Tobago is instructive.  Recognizing the vulnerability of the island to the vagaries of the international tourism industry and the limitations of the Tobago private sector, the THA  has led the way with new investments in the fishing industry including purchase of its own trawler and the establishment of a fish processing plant.  The THA plans to divest equity in these assets to Tobago stakeholders.  This is an excellent example of proactive Government, working with maroon firms to create a dynamic onshore sector.Government in Trinidad may wish to take example from the THA.  

T­he third question relates to the role of the private sector. Despite loud calls from the respective business Chambers for economic diversification, there are doubts about the willingness of the private sector to take up the challenge.  The likelihood of the dominant   local private investor attempting to expand into a new industry is arguably much greater during the periods of boom than in periods of contraction. During the latter period, the private sectorfirms, mainly offshore, and satellite firms are likelyto retain cash and wait until the business climate changes.  This behavior strengthens the case for focusing on the maroons firms, who, because they depend primarily on domestic inputs and markets, are well-placed to invest but may not even have been identified.
There is national consensus on the imperative of economic transformation. While several sectors have been targeted for intervention, their prospects for success may be dampened by the choice of firm/sector, fiscal and legislative constraintsand indifferent investors.   Given the imminent recovery in the global economy- and hence export commodity prices- a re-ordering of priorities in Trinidad cannot be ruled out. Diversification and transformation may again become second order priorities.  Hopefully Tobago will stay on course.