The Caribbean After the Hurricanes: What Path for Recovery?

By Daniel P. Erikson*

A group of man clear debris

Residents and volunteers begin clearing debris from Hurricane Irma on St. Maarten. / NLRC / Flickr / Creative Commons

This fall’s historically fierce hurricane season reminds us once again that the Caribbean remains extraordinarily vulnerable to natural disasters – especially in the lucrative tourist sectors – and needs to move beyond tourism.  The services sector in the Caribbean may serve as an important source of economic growth, but only if the region begins to take advantage of opportunities in banking and financial services; call centers and information and communication technology; off-shore education and health services; and transportation.

  • While the impact of Harvey, Irma, Jose, Katia, and Maria in U.S. states like Texas and Florida has received wide attention, the small island nations of the Caribbean have also been left to contend with extensive damage to infrastructure and loss of life that has resulted in thousands of newly homeless and dozens of deaths. Irma struck the tiny nation of Antigua and Barbuda as a peak-strength Category 5 storm, and Prime Minister Gaston Browne estimated that 95 percent of the properties on the smaller island of Barbuda were destroyed.  Irma then raked across the U.K. territories of Anguilla, the British Virgin Islands, and the Turks and Caicos, the French territories of St. Bart’s, Guadeloupe and St. Martin (including the Dutch half of St. Maarten).  Cuba also suffered as the storm swept across its northern coast and ravaged the third-largest city, Camaguey.  Then, just as Hurricanes Jose and Katia rattled the islands only to retreat as minor threats, Hurricane Maria strengthened into a Category 4 storm that ravaged Dominica and the U.S. territory of Puerto Rico with winds exceeding 150 mph, devastating local infrastructure and knocking out the power grid, possibly for months to come.

Clearly, the focus of the near-term will be relief and recovery efforts, as these small islands seek to cope with the enormous damage.  But rebuilding a stronger and more diversified service sector may offer the best path towards a sustainable and much-deserved recovery for the people of the region.  Several years ago, the Centre for International Governance and Innovation in Waterloo, Canada, asked me to assess what steps the Caribbean islands could take to diversify their economies away from an over-reliance on tourism to create a more sustainable future.  The lessons of that study, Beyond Tourism: The Future of the Service Industry in the Caribbean, remain relevant today.  The bottom line:  Expanding the competitiveness of the Caribbean services sector beyond tourism is a way to draw on regional strengths and broaden the basis for economic growth.

The hurricanes have dealt a tragic and costly blow to the Caribbean, but the reconstruction efforts may also provide an opportunity to build back stronger and more resilient economies.  While the damage is still being assessed, it is already clear that the lives of tens of thousands of people who live on these islands will never be the same and that property damage will extend into the billions.  The recent damage to Puerto Rico from Hurricane Maria will likely jolt those figures substantially higher, while some of the smaller, remote islands hurt by earlier storms may be uninhabitable for weeks to come.  French President Emmanuel Macron and the King of the Netherlands traveled to the region to show solidarity with their afflicted citizens, while the United States deployed teams to assist in disaster relief and deployed over $1 million in aid to the smaller affected islands – and is beginning to launch a major relief effort in Puerto Rico as well.  Once the challenges of treating the injured and assisting with basic human needs are met, much of the early reconstruction effort is likely to focus on rebuilding tourist infrastructure.  This will be necessary, but not sufficient, to create a full recovery.  Caribbean leaders have increasingly recognized that developing globally competitive services industries offers one way to retain high-skilled workers and mitigate the risk of external shocks to the tourist sector. During the Obama administration, Vice President Biden made a major effort to deepen U.S. investments in the Caribbean’s energy sector, and new sources of financing through the Inter-American Development Bank, the Overseas Private Investment Corporation, and private U.S. companies could similarly lead to a major push to modernize services-related infrastructure throughout the islands.  Future storms cannot be prevented, but a more diversified services sector will help the islands to navigate the challenge of reconstruction more effectively.

September 28, 2017

* Daniel P. Erikson is managing director at Blue Star Strategies in Washington, DC, and previously served as a White House and State Department advisor on Latin America during the Obama Administration.

A Major Gig for Buena Vista

By Ana Serra* 

Photo Credit: OtherDrK / Flickr / Creative Commons

Photo Credit: OtherDrK / Flickr / Creative Commons

The Buena Vista Social Club Orchestra’s performance at the White House last week was a celebration of the ongoing normalization process between the United States and Cuba and of the musical collaboration – considered illegal at the time – that made this group possible.  Playing in commemoration of Hispanic Heritage month and the Educational Excellence of Hispanics, it was the first visit to the executive mansion by a Cuban band in more than 50 years, and part of its Adiós World Farewell Tour including a number of U.S. states before traveling to Puerto Rico and Latin America.  Buena Vista Social Club (BVSC) is a brand, starting as a 1940s club in Havana and revived by a 1997 album produced by Ry Cooder with Cuban and US musicians, a 1999 documentary film directed by Wim Wenders (chronicling concerts in Amsterdam and New York), and decades of fame-garnering recognition of Grammies and film awards.  At a time that the U.S. administration is taking steps to relax the terms of the embargo, the invitation auspiciously recognized Ry Cooder’s inaugural ice-breaker, which was investigated as a violation of the Trading with the Enemy Act.  While tied to the commercial success of the band, the concert inadvertently has progressive implications in a racial context.

The invitation to play at the White House amounts to a diplomatic gesture, and as such it was both cautious and optimistic.  The event resonated with many other people-to-people exchanges that have made thaw a reality, and highlighted the prominence of Americans of Cuban descent among Hispanics in the U.S.  The band is tried and true – if fully predictable – in its powerful evocations of a memorable past.  Its traditional musicians evoke the Havana music scene of the 1940s, a time of intense exchange and collaboration between Cuban and U.S. musicians.  In addition, it may cause for some a nostalgia for a supposedly harmonic relationship between the two countries, despite decades of strong U.S. intervention in political and economic affairs during the two administrations of Fulgencio Batista.  The album’s son, bolero, guajira, and danzón rhythms do not challenge expectations and the lyrics talk about love, beautiful women, and tropical landscapes.  Ry Cooder’s role in forming the original band – he apparently brought piano virtuoso Rubén González away from a shoe-shining job – represents the current dream of many art representatives hoping to go down to Cuba and “discover” or “bring to light” hidden talent.

Fans of Cuban music may be disappointed that far more interesting Cuban musicians – in terms of novel song styles or political messages – were not invited.  BVSC’s tunes have become so familiar as to make the minds of listeners numb: they have been played to exhaustion in tourist sites in Havana, and added to the ambiance of many a foreign venue aiming to evoke the irresistible rhythms of Latin American music.  A silver lining, however, are the progressive implications of what the band represents in a racial context.  The original Buena Vista Social Club was a so-called “club de negros” in the 1940s, in which the 1997 BVSC performer Compay Segundo had played.  These clubs were closed down after the 1959 revolution, since their emphasis on black identity was deemed divisive.  At the time of #blacklivesmatter in the United States, it is fitting that the first African-American president hosted this historic band in the White House.  Beyond the problematic background of a beautiful diplomatic gesture the event establishes a bridge between some of the common struggles in the U.S. and Cuba.

October 22, 2015

* Ana Serra is an Associate Professor of Spanish and Latin American Studies in the Department of World Languages and Cultures at American University.

Puerto Rico: Debt and Budget Crisis

By Fulton Armstrong

Photo Credit: Erica Feliciano / Flickr / Creative Commons

Photo Credit: Erica Feliciano / Flickr / Creative Commons

Puerto Rico’s debt and budget crises – worsened by the legislature’s rejection last week of the governor’s proposed fiscal reforms – threatens to plunge the island into a deeper, longer-term depression and is already causing tensions with Washington.  The government and state-run corporations are $73 billion in debt, with little prospect of paying it off.  The Puerto Rican Electric Power Authority (PREPA) alone owes investors, mostly based on Wall Street, about $9 billion.  Last year, the government restructured about $19 billion of PREPA, the water company, and the highway administration’s debt – giving itself barely a year’s breathing room.  The inability to make good has caused internal political tensions and thrust the government into the danger of defaulting, which would shut off access to much-needed credit for potentially years to come.  Hedge funds and others have been buying Puerto Rican paper at deeply discounted rates.

No solution seems possible to make good on such monstrous debt.  Governor García Padilla last year took steps to rein in spending and dramatically reduce the deficit – from $2.2 billion to $200 million a year.  Government personnel have declined by 16,000 positions without disruptive layoffs.  But such measures have barely made a dent in the $73 billion in outstanding liability.  García Padilla has been reluctant to fight PREPA over its inefficient management structure, force it to shift away from expensive hydrocarbons (which account for 98 of electricity production), and adopt renewable energy sources.  The legislature last week killed the centerpiece of his budget reform – a 16 percent value-added tax – and further complicated efforts to persuade lenders that the debt will be paid.  A broader economic slowdown over the past decade, with even tourism registering declines, has been a key factor.  The Governor’s biggest hope at this time seems to be legislation in Washington, introduced by Puerto Rico’s non-voting member in the U.S. House of Representatives, that would allow the corporations to declare Chapter 9 bankruptcy – which Puerto Rico (unlike the 50 states) is forbidden to do under current federal law.

The economic crisis is triggering a political crisis on the island and potentially in relations with Washington.  As Argentina’s failure to make good on its debts has demonstrated, U.S. hedge funds have extraordinary clout and will use it to block anything that lets Puerto Rico off the hook, reducing the chances that Representative Pedro Pierluisi’s bill will pass to practically nil.  The United States may press the island harder to reform its inefficient corporations, but it will ultimately have no option but to watch the crisis deepen.  The situation will give greater urgency to another referendum on Puerto Rico’s status, which the Governor said will take place in 2016, with two contradictory trends at play.  While many Puerto Ricans undoubtedly resent aspects of Washington’s attitudes toward the island, polls show no change in single-digit support for independence.  Most Boricuas, if nothing else, value their U.S. citizenship and the ability to move stateside if conditions on the island get much worse.  Even if the debt crisis frays relations with Washington, inertia argues for no redefinition of the relationship.  There is little indication that Washington will clarify the island’s status unless Puerto Ricans become a factor in Florida during the 2016 presidential campaign.

May 7, 2015

CELAC: Losing Relevance?

By Michael M. McCarthy

Presidencia de la República del Ecuador / Flickr / Creative Commons

Presidencia de la República del Ecuador / Flickr / Creative Commons

The announcement by Presidents Obama and Castro of their intention to normalize diplomatic relations could leave a big hole in the agenda of the Community of Latin American and Caribbean States (CELAC), which met January 28-29 for its third heads of state Summit in San José, Costa Rica.  Raúl Castro kicked off last year’s summit, in Havana, with a speech decrying the United States NSA spying scandal.  In San José, he moderated his tone, noting that “our America has entered a new era” since CELAC was founded (2010) while also calling on the U.S. to end the trade embargo – a point other member states echoed – and to return the naval station at Guantanamo Bay.  In concrete terms, the results of last week’s CELAC summit were modest.  The technocratic goals of quantifying progress on poverty and technology development announced by Ecuador, the group’s 2015-2016 President Pro-Tempore, suggest no major changes are imminent.

Since President Chávez’s death March 5, 2013, the former leader’s Bolivarian vision of Latin American and Caribbean integration and unity has shown signs of weakening.  CELAC now faces even tougher challenges defining and defending its identity and mission beyond the creation of a common political space for regional decision making insulated from the U.S. and Canada.  With Chávez’s successor, President Nicolás Maduro, losing support amid economic crisis, the Alianza Bolivariana para los Pueblos de Nuestra América (ALBA) can no longer throw its weight around on the international scene.  Cuba’s inclusion in the Summit of the Americas – increasing the likelihood of its participation in the OAS – is a major achievement but represents the loss of a major rallying point. 

Going forward, three issues will determine the groups trajectory.  The Cuba issue wont go away suddenly, but rapid change in U.S.-Cuba ties could reset hemispheric relations and leave CELACs mission muddled and potentially irrelevant.  Disagreement among CELAC members over issues such as Puerto Ricos status may create tensions, as they did when Nicaraguan President Daniel Ortega gave the island a high profile during the presidential plenary underlining the risks inherent in the unity within diversity principle embraced by CELAC.  (Ecuadoran President Correa, another ALBA supporter, chided Ortega.)  But perhaps the biggest determinant of the groups future relevance lies in its emerging relationship with ChinaA CELAC-China foreign ministers forum met in Beijing last month, formalizing the Asian nations relationship with CELAC.  The forum announced the 2015-2019 China-CELAC cooperation plan calling for the doubling of two-way trade and the increasing of Chinese investment in the region to $250 billion.  Exclusion of the U.S. and Canada may remain a tenet of CELACs platform, but the groups leaders may judge that its long-term relevance can be rescued by reaching out to China instead.

February 2, 2015

*Michael McCarthy is a Research Fellow with the Center for Latin American and Latino Studies.

Caribbean Integration: Necessary but Elusive

By Victor Bulmer-Thomas*

Embed from Getty Images

The dream of Caribbean solidarity has never been in greater peril.  Norman Girvan, who died on April 9, was committed to the cause of Caribbean integration all his adult life, including during his time as Secretary-General of the Association of Caribbean States.  Born and raised in Jamaica, he saw no contradiction between Jamaican nationalism and Caribbean solidarity.  After steady progress from CARIFTA (a free trade area formed in the 1960s by a number of former British colonies) to CARICOM (a customs union formed in 1973 by all British ex-colonies and many colonies) to a commitment starting in 2006 to build a Caribbean Single Market and Economy (CSME), regional integration has gone backwards.  The CSME was never completed; a ‘pause’ in its implementation has been introduced by the Heads of Government and the famous Regional Negotiating Machinery (RNM) – itself formed to promote Caribbean unity in international agreements but then largely dismantled.  Suriname (in 1995) and Haiti (in 2002) have joined CARICOM, but the Dominican Republic is still outside after 25 years of discussions.  Cuban membership is still a distant dream, and the only non-independent state that participates today is the British colony of Montserrat, with a population of 5,000.  CARICOM may in theory represent much of the Caribbean population, but Haiti – its largest member by far – is not in the CSME.

Countries outside the Caribbean have reacted in very different ways to the region since the end of the Cold War.  The European Union (EU), three of whose member states – France, Holland and the United Kingdom – still have territorial ties to the Caribbean, has negotiated an Economic Partnership Agreement (EPA) with CARIFORUM (CARICOM plus the DR) that will in due course give the EU unrestricted access for almost all goods and services.  The agreement has generated very little enthusiasm in the CARIFORUM states despite the improved access for some of their goods and services in the European market.  Venezuela has persuaded most oil-importing countries to join Petrocaribe, but only a handful (Antigua & Barbuda, Cuba, Dominica, St. Lucia and St. Vincent & the Grenadines) have been attracted by the more ambitious ALBA.  The United States, a colonial power itself in the region thanks to Puerto Rico and the Virgin Islands, still offers asymmetrical trade privileges through the Caribbean Basin Initiative (CBI) and its related acts, but some of these provisions will end in 2020, and it is far from clear what will replace them.  Canada, which established CARIBCAN (similar to the CBI) in 1986, is negotiating its own version of the EPA with a broadly similar set of countries, but the negotiations have stalled recently.  Only China appears to have made huge advances in the region through increased exports and major foreign investments despite several of the countries that still recognize Taiwan.

All integration schemes, as Norman Girvan would have been the first to recognize, involve a balance between widening and deepening.  Through its premature commitment to a CSME, the member states of CARICOM took deepening too far.  At the same time, widening – necessary to negotiate with outside powers – has not gone nearly far enough.  It is a scandal that the Dominican Republic remains outside and that so little has been done to embrace Cuba despite the good political relations all states have with the island.  And the non-independent territories, as numerous as the independent states, should not be overlooked.  France and the UK have dropped their objections to closer ties between their territories and CARICOM, and the Dutch territories are largely autonomous already.  Even the U.S. territories would welcome closer links.  And when relations between Cuba and the United States are normalized, as could happen quite soon, it would be in the Caribbean’s interests to have fully embraced Cuba first.  That is an outcome that Norman Girvan would have strongly welcomed.

*Dr. Bulmer-Thomas is a professor at the University College London Institute of the Americas, fellow (and former director) at Chatham House, and author of numerous books, including The Economic History of the Caribbean Since the Napoleonic Wars (2012).