Caribbean Currents #009: Prolonged Turbulence

US tries to salvage Barbados Agreement, Jamaica is (still) not doing Ok

Feb 15, 2024

January 13th, 2024 edition of Caribbean Currents 🌴🌊📊

Commentary on the headlines from across the region

📅 Constitution-less Republic Day Counter:
It has now been 806 days since Barbados “transitioned” to a republic without a new constitution.

Didn’t See That One Coming…

Barbados Agreement begins to crumble

The ink has barely dried on the parchment but Venezuela has resumed business/folly as usual, to the surprise of no one. The country’s Supreme Court upheld a 15-year ban on opposition leader María Corina Machado, barring her from running in the upcoming elections. US officials warned that Machado’s participation is non-negotiable and should she not be on the ballot, Washington will have no choice but to reimpose the tough Trump-era sanctions that were in place before the agreement.

That’s a lot easier said than done. While US officials may wish to present a tough facade, businesses that have jumped the gun on establishing relations with Venezuela will have a much harder time reversing course. The energy industry in particular was keen to get a foot through the proverbial door, lest we forget the sigh of relief from Trinidad and Tobago on being given the green light for their Dragon Gas Field exploits.

President Maduro faces a plummeting approval rating of 22%, down from the 27 he enjoyed in 2022. This is undoubtedly due to rampant inflation, corruption and an overall decline in the standard of living within the Bolivarian Republic which has in turn sparked the largest immigration crisis in the history of the modern Americas. The president would be likely to lose the election to Machado, who has built a platform on rectifying the aforementioned ailments and holding those responsible accountable to the full extent of the law.

That last part would spook any politician who finds the idea of time in a Latin American prison to be less than palatable. Maduro understands what is at stake should the elections be allowed to proceed in any semblance of a fair fashion. Banning the opposition was the next play should any attempt to shore up support before the polls fail. And fail it did… Kicking up a diplomatic storm with neighboring Guyana likely did not galvanize the electorate as was hoped. Venezuela has (mostly) backed away from any notions of taking the Essequibo, in light of not having the resources, logistics, or geographically feasible means to do so. The continent’s sleeping giant, Brazil, would sooner see the Amazon on fire before it allowed Caracas to reopen old territorial wounds. In the meantime, Venezuela seems content to continue saber rattling, despite last December’s agreement with Guyana.

Washington is keen to save face on this one. Global energy prices will continue to wreak havoc on the already strained supply chain without Venezuela’s input to alleviate some of the shocks. The US faces pressure to cool relations with Venezuela in light of the ongoing wars in the Middle East and Ukraine and the overall ineffectiveness of sanctions on the Maduro regime.

Unsafe Islands

The Power of the Travel Advisory

Caribbean countries once again find themselves at odds with the US State Department. Jamaica and the Bahamas have seen their alerts updated (not upgraded) while remaining at levels 3 and 2 respectively. The level 3 -” Reconsider travel” alert for Kingston points to elevated levels of crime and an ongoing lapse in the country’s medical care capacity. It should also be noted that several parishes have been hit with an all-out “Do not travel” advisory for all US diplomatic personnel.

Jamaica recorded 83 murders in January so far for 2024, a number which the Jamaica Police were eager to point out is a decrease from the 109 recorded in January last year. The country is no stranger to violent crime, often jostling with Trinidad and Tobago for the top spot of most crime-laden territory in the region (failed states like Haiti don’t count). Trinidad has remained under a level 3 alert since last July. The State Department pointed out a prevalence of robberies, sexual assault, and harassment, even at all-inclusive resorts that were previously considered safe. Jamaica’s tourism officials hit back, pointing to a low crime-against-tourists rate of just 0.001% and stringent efforts to reduce incidents across the board.

Evidently, this has done little to allay the State Department's concerns. Jamaica’s deeply broken social infrastructure (see: Jamaica is not doing okay) has created an almost comically lawless society that nonetheless, attracts over 3 million Americans to its shores annually. Perhaps the notion of returning to the Wild West is a far better tourist trap than Bob Marley, as visitors seem to take these advisories with a hefty serving of salt. Or perhaps, they’ve become desensitized to warnings on Jamaica, given that it was nothing more than a routine update to the existing level 3 advisory, which has been in place since 2022.

The Bahamas is also in the spotlight, having their level 2 advisory updated, but not for the reasons you’d think. Gang violence in Nassau prompted an upgrade to the current level 2 status in 2022. This year’s update was prompted by unsafe water sport practices, warning against the unregulated industry. Bahamian officials reiterated that the islands remain safe, and welcoming to all and share this level 2 designation with many other destinations worldwide.

Ongoing discussions and media attention to these advisories seem arbitrary and very much overblown. Neither advisory is an upgrade or notable change to the status quo but rather an addendum to the existing warnings. Neither Jamaica nor the Bahamas have recorded a significant impact on their arrival numbers due to these advisories. We appear to be witnessing a textbook example of media sensationalism over a rather mundane series of releases from the US State Department. Caribbean officials need not rile themselves up over the musings of journalists on a slow news day.

Historic 1.14 trillion GYD Budget

That’s roughly 5.4 billion in real money (USD)

It’s not often one sees a number in the trillions of dollars being thrown about in a national budget. The fact that it’s in Guyanese dollars takes a bit of wind out of those sails. Nonetheless, it is the highest on record for the country. From this point on we’re going to refer to its US dollar equivalent, because 1.114 trillion of anything outside of maybe US debt or stars in the observable universe, sounds ridiculous.

Guyana’s 2024 budget, themed “Staying The Course: Building Prosperity For All”, passed in the National House of Assembly last Friday, and underscores President Ali’s goals for quality of life improvements for CARICOM’s biggest member state. A large portion of the budget will be facilitated by Guyana’s REDD (Reducing Emissions from Deforestation and Forest Degradation in Developing Countries) fund. In layman’s terms, this is a big pile of money that developed countries like the USA and Norway have pooled to bribe underdeveloped forested states into preserving their greenery.

This “revenue” source, alongside actual revenue from the NRF (National Resource Fund), will be used in the areas of public infrastructure, education, and medical care primarily. 1.13 billion USD is allocated to improving the country’s physical infrastructure and power grid. 640 million is earmarked for education and another 600 million for the healthcare system. It is hoped that these much-needed injections will translate to tangible strides in Guyana’s development goals especially on the heels of the Essequibo oil discovery which has quickly propelled Guyana into the spotlight as one of the fastest-growing economies on the Earth.

Threats to these goals include a globally declining appetite for fossil fuels which provided 1.9 billion in savings via the NRF, Guyana’s class and racial divides which have resulted in social institutional debt and wide inequality across the population, and of course, its unstable Bolivarian neighbor to the west. Guyana risks becoming a retinue state should these ambitions fail to sync up with reality.

Sun, sand, and crude

Oil spill endangers Tobago’s marine ecosystem

A capsized vessel is leaking oil into the sea surrounding Tobago. The boat, found abandoned, has sparked an environmental crisis in an already vulnerable maritime region. As of writing, the origins of the vessel remain unknown. A team of 1000 volunteers is currently working feverishly to contain the spill which has already covered 15km of Tobago’s coastline.

The vessel itself is overturned, which has so far impeded efforts to discern the schematics or build of the ship. Prime Minister Rowley has declared a national emergency but has indicated that the situation is not yet out of the country’s control. The vessel is believed to have met its fate around 7th October and has continued to leak its payload ever since.

The clock is ticking. Tobago, unlike its larger main island neighbor, is home to a relatively pristine marine biome. The Buccoo Reef system, the largest in Trinidad and Tobago, forms a unique ecosystem that surrounds the island and protects 90% of its coastline from the Caribbean Sea. Damage to this system not only endangers the fish supply and a natural barrier to erosion but also jeopardizes a major tourism attraction for Tobago.

This massive oil spill could foreshadow bigger worries for the region that is poised to see more industrial activity in the petrochemical space. Guyana to the south will be seeking to exploit the maritime fields of the Essequibo soon. Environmental disasters such as this, do not remain localized for very long. Successive incidents can be felt throughout the Southern Caribbean. It was increased fertilizer usage on the South American mainland that caused the Sargasso bloom which continues to choke many beaches in the Lesser Antilles to this day. All eyes will be on Port-of-Spain to quickly contain this spill and mitigate as much damage and concern as possible for the maritime oil industry.

Visualize: Potemkin Currencies

A region of disjointed tokens

This chart shows the exchange rate for the various tokens used across the Caribbean. It tends to absurdity so we’ve also included a few standout extra-regional currencies for humor. Even within CARICOM itself, no two members outside of the Eastern Caribbean Currency board, use the same money.

The highest-valued is the Caymanian dollar (KYD). An offshoot of the Jamaican dollar, but without the iconic levels of devaluation, the KYD is based on the pound sterling. The Bahamas uses its own dollar and the US dollar in tandem and Panama has been officially dollarised for over 100 years. Puerto Rico and the USVI are fairly obvious as US territories, but even the British Virgin Islands also use the greenback.

The values fall like a rock from there as the next countries in line try to keep their Monopoly money pegged to the US dollar via means of FX reserves. The first offender is Barbados, at a proud 50 US cents to its dollar. The Barbados, Trinidad, Jamaican, and Guyanese dollar all exist under the guise of “independence”. All they’ve managed to induce is ridiculous amounts of inflation from being printed without the FX inflow to back them up.

In a nutshell, the idea that maintaining your own currency is a form of independence against colonialism was one of the greatest pieces of propaganda sold to Caribbean citizens. The sentimental value and historical context we apply to these currencies are misplaced. They are nothing more than instruments built solely to allow their respective governments to act without accountability. Were these countries to dollarize, they would have to implement prudent monetary and fiscal policies that promote responsible government spending and investment vehicles. After all, they can’t print the US dollar to their heart’s content.

Today what we have is a disjointed array of monies with varying levels of usefulness. That’s a lie. They’re all useless outside of their respective countries. You can’t spend Jamaican dollars in Trinidad. At the international level, no one wants either country’s notes. CARICOM trade is conducted entirely in US dollars. So if your own government doesn’t want the fake money that is your local currency, then why should you?

CPSI Podcast of the Week

Talent will make or break a band, a company, and even a country. Dr Collin Constantine joins us to explore the requirements for successful growth, primarily in the context of Guyana, the region's potential rising star economy. Does Georgetown possess the necessary talent to bolster its social and political institutions or will they languish beneath a wave of uneven wealth distribution, similar to the likes of West African oil states?

Guyana's political history and economy are in a complicated state of disrepair. Racial and class tensions have resulted in unsteady leadership as various interests jostle for control at every level of government. Collin argues that an influx of fortunes from the recently discovered oil reserves could widen the divide.