Home African Caribbean US and the Caribbean: brief summits not enough
Dr Sir Ronald Sanders former Caribbean diplomat

Dr. Sir Ronald Sanders former Caribbean diplomat

Caribbean news. US President Barack Obama and Jamaica Prime Minister Portia Simpson-Miller have pronounced his visit to Jamaica and their bilateral discussions to be a success.   What is certain is that media coverage of Obama’s visit and his late night call at the Bob Marley museum where the President declared “I still have all his albums” will have enhanced the Jamaican ‘brand’ in the US.  Jamaica’s tourism and investment prospects would have benefited.

Obama’s town hall meeting with young people at the Assembly Hall of the Mona Campus of the University of the West Indies, televised live, was a resounding success.  He established rapport with a young audience delighted to be in his company.  His answers to their questions were fulsome and sincere.

But his meeting with leaders of the 14 Caribbean Community (CARICOM) nations is a different matter.   It is doubtful that much came of that, primarily because the entire encounter was scheduled to last only 90 minutes.  The effectiveness of a 90-minute dialogue by 15 leaders would have required extensive, comprehensive and detailed preparation by officials such that only ratification would be required.  But, there appears to have been no such preparation.

The value of the meeting, therefore, seems to have been no more than an opportunity for leaders to raise issues in the hope of addressing them fully at a later time.  The principal issues were: security, energy and competitiveness.

The US is concerned with security matters in the Caribbean insofar as they affect America.  It is also interested in neutralising links between Venezuela and those Caribbean countries that benefit from special arrangements for paying for petroleum and petroleum products under Caracas’ Petro Caribe.

Evidence of the US concern about the Venezuelan influence on Caribbean governments resulting from the Petro Caribe arrangements was provided by US Vice President Joe Biden at a so-called Caribbean Energy Summit in Washington on January 26.  In his remarks, Biden talked of “governments dependent on a single, increasingly unreliable, external supplier” and stated that “no country should be able to use natural resources as a tool of coercion against any other country”.  The remarks were clearly directed at Venezuela and its supply of petroleum and petroleum products to several Caribbean countries that have come to rely on it because of the very soft loan component of its price.

Prime Minister Simpson Miller and President Obama Photo courtesy wwwwashingtontimescom

Prime Minister Simpson-Miller and President Obama. Photo courtesy www.washingtontimes.com

For the Caribbean’s part while they too have great interest in security and energy issues, they don’t see them in the same way as the US.  Indeed, the greater concern of the Caribbean with the US centres on financial services.  The Caribbean region has been categorized as a “high risk area” for financial services and this is resulting in indigenous and offshore banks losing vital correspondent-bank relationships in the US.  Many of the US banks are unwilling to take risks with banks located in a “high risk” area, particularly when the earnings from relationship are small.  But, for Caribbean banks the relationship is vital to transacting international business.  If they lose their relations with correspondent-banks, they will be forced to close their doors with consequential effects on employment.  The only banks that would be left standing are subsidiaries of established foreign-owned banks that have a relationship with their headquarters institutions.  Caribbean governments would also be anxious about the total reliance on foreign-owned banks and the power they could exercise on local economies.

Of further disquiet to Caribbean countries is the reputational damage done to all of their financial services sectors by the US State Department’s annual International Narcotics Control Strategy Report (INCSR).  In the most recent report, the State Department identifies four CARICOM countries as jurisdictions of “major concern” for money laundering.   All the other ten countries are listed as “jurisdictions of concern”.  Several of the CARICOM governments have protested these categorizations pointing out that they have been judged by the Financial Action Task Force and the International Monetary Fund as satisfying international requirements and best practices.  The INCSR could heighten the fear of US banks over according correspondent relationships to Caribbean indigenous and offshore banks, and even create reluctance by investors to put money in the region.

Given the complexities of these issues it is doubtful that the Summit between CARICOM leaders and President Obama could do anything more than raise awareness of concerns by both sides.  Resolving the problem would require a joint Commission of the US and CARICOM governments to work through them steadily.

Obama at Marley Museum Photo courtesy wwwgazettenetcom

Obama at Marley Museum. Photo courtesy www.gazettenet.com


With regard to energy, Caribbean countries (except Trinidad and Tobago which is an oil and gas producer exporter) are very nervous about supply of their energy requirements and the cost.  However, the majority of them will not regard the Petro Caribe arrangement with Venezuela in the same way as the US.  The reality is that as oil and gas prices sky-rocketed and became especially damaging during the global financial crisis, only Venezuela came to their rescue through the part payment-part loan scheme of Petro Caribe.  Without that scheme the economies of many of them would have collapsed.  Further, the scheme is still beneficial to all its participants who still enjoy long and low interest terms for their part payments.

In these circumstances, for as long as Venezuela continues the Petro Caribe arrangements, no participating CARICOM country will turn away from it.

At the Energy meeting in Washington last January, the US – now a leading producer of natural gas – promoted “a natural gas strategy for the Caribbean” with support from the Inter-American Development Bank.   Clearly, the US thinking was two-fold: first, it could break dependence on Venezuela and reduce Venezuelan influence in the region, and second, US companies could benefit commercially from selling natural gas and the structures for its delivery in Caribbean countries.

To promote this idea, the US undertook to encourage the multilateral financial institutions to provide concessional financing to Caribbean countries for energy and climate projects.   This is a huge departure from the per capita income criteria used over the years by multilateral financial institutions to deny CARICOM countries cheaper financing because they are regarded as middle-income states.

Undoubtedly, CARICOM countries would welcome such an energy initiative by the US; it would allow them to diversify their energy sources and reduce dependence on any supplier.  But, until the initiative is realized, they are hardly likely to abandon the benefits of Petro Caribe while it continues.  Nonetheless, the US government should be taken at its word and every encouragement given to it to deliver on its undertaking.

The brief meetings between the US President and CARICOM leaders are neither satisfactory nor enough.   The Kingston encounter should at least serve to advise both sides that what is required is a structure for regular and meaningful discussion between high level officials to follow-up on their general policy guidance.

(The writer is a Senior Fellow at London University and a Consultant on International Affairs)

Responses and previous commentaries: www.sirronaldsanders.com



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