Plunder in Paradise: An Economic Overview
Barry, Tom
CLUB MED ADVERTISES ITS CARIBBEAN resorts as "an antidote for civilization." But, tourists trying to escape from the industrial world are discovering that many of the evils of...
...The echoes of the economic and social structures of a colonial past are inescapable...
...However, corporations in agriculture, finance, mining and petroleum-while not as numerous--exercise far greater control...
...Even so, in the early 1980s it has once again become the economic development fad for the Caribbean...
...An estimated 150 U.S...
...Our first oil was drilled back in the 1860s...
...Its sugar industry is beset by labor conflicts, a $200 million deficit and an inefficient bureaucracy...
...United Nations Economic Commission on Latin America (ECLA), Economic Activity 1982 in Caribbean Countries...
...8. Wall Street Journal, November 17, 1982...
...While there has been an increase in this export-oriented manufacturing sector, no other island has matched even the modest successes of the Bootstrap strategy in Puerto Rico-which counted on an early start and a special relationship with the United States...
...2 0 The bauxite industry brings very few indirect ben- efits...
...The islands that arch down from the Bahamas off the Florida coast to meet the Guyanas and Suriname on the South American continent offer a wide variety of political structures...
...Yet another U.S...
...The new industries in the region are marked by their mobility...
...Its industrialization program-Operation Bootstrapcreated only half as many jobs in manufacturing as it lost in agriculture.'" A lush, fertile island which might feed the bulk of its population, Puerto Rico imports more than 80% of its food from the main- land...
...CORPORATIONS IN THE CARIBBEAN (SIX OR MORE SUBSIDIARIES: EXCLUDING PUERTO RICO) Subsidiaries 8 7 7 6 II 18 13 7 6 21 16 26 13 14 13 8 11 7 9 15 8 9 Main Business Mining Food Home Products Agriculture Banking Banking Bottling Home Products Communications Manufacturing Oil Manufacturing/Agro Travel Communications Agriculture Mining Oil Travel Agriculture Chemicals Pharmaceuticals Bottling Source: The Resource Center, Compilation of Corporations, 1984...
...Only Barbados and Trinidad and Tobago are crude oil and natural gas producers...
...With the exception of consumer banking (the domain of the major British, Canadian and U.S...
...The Caribbean economies are in fact kept afloat more by bilateral and multilateral aid than by real growth...
...and 40 other for- eign corporations have subcontracting arrangements in Haiti, and Haitian subcontractors produce over 75% of the country's manufactured exports to the *For further discussion of international subcontracting, see the feature article by John Cavanagh and Joy Hackel in the May/June 1984 issue of Report on the Americas...
...And do you know what the industry will do when it finds a cheaper source of labor somewhere else...
...Caribbean offshore locations allow money center banks in New York or London to deal in billions of Eurocurrency free of taxes and regulations, and to move capital between the major industrialized nations...
...All 56 of the original corporate contributors to CCAA have identifiable interests in the Caribbean...
...U.S.-based TNCs are in the majority, except in the French departments and a few small English-speaking islands...
...The vestiges of colonialism are more prevalent here than in any other part of the Third World...
...Grenada's controversial Point Salines airport is perhaps the best illustration: the NJM regime and Eric Gairy...
...Though one out of every three Caribbean tourists now arrives aboard a cruise vessel, the business only contributes 5% of the total foreign exchange generated by the region's tourist trade...
...mountainsides scarred by open-pit mining and hardscrabble agricultural plots...
...Leading the drive for U.S...
...Companies may pull out on a whim if they decide their profits can be maximized elsewhere...
...While the banks register international loans in these offshore centers, the money usually remains in the New York and London vaults...
...For some, they are an escape from the drudgery of the cane fields and other arduous ag- ricultural work...
...finance-related investment outside U.S...
...This has made the country into a regional power, but it has also given rise to an array of environmental problems and a militant workforce that presents a constant challenge to investors and government alike...
...The Caribbean Group of Experts, The Caribbean Community in the 1980s, (Georgetown, Guyana: CARICOM, 1981), p. 2 9 . 31...
...the large majority have interests in Central America...
...Caribbean Contact, July 1983...
...9 The newspaper of Jamaican sugar employees, The Workers Times, charges that field and factory workers have no say in the operations of the industry...
...Tourism is a leading source of foreign exchange for Jamaica, Antigua, Barbados, St...
...The colonial plantation may indeed be dead, but its neo-colonial successor lives on...
...One of the most successful operators, Royal Caribbean Cruise Line, declares that, "One of the greatest compliments passengers can pay us is when we come into port and they don't leave the ship...
...From 1975-81, the dollar value of international subcontracting in the Caribbean increased fourfold...
...26 T HE FINAL KEY SECTOR OF FOREIGN investment in the Caribbean economy is the least visible...
...Industrialization is a "misnomer" says Felipe Vicini, a member of the Dominican Republic's business elite...
...OLEP Bananas, another United Brands subsidiary, has reached an agreement with the government of the Dominican Republic to grow bananas on that country's north coast...
...They show thick plumes of exhaust spilling from new oil refineries...
...even after this long, she could not assemble a whole pair of pants by herself...
...capital is located in Puerto Rico and another $2.9 billion in the U.S...
...Once regarded as the world's best sugar-producing country, Jamaica is now producing half the amount it did in the early 1970s...
...Puerto Rico, which has been losing factories to islands that offer even cheaper labor, is promoting the "twin-plant" concept...
...The result is that consumers around the world can now buy Caribbean-manufactured jeans, shoes, calculators, bras and baseballs...
...The Caribbean has been highly regarded as a refining center because of its political stability, its deep harbors, its lack of environmental regulations and its proximity to major shipping lanes and the Panama Canal...
...A LONG WITH LIGHT MANUFACTURING and mining, tourism has come to dominate the Caribbean economies since World War II...
...One survey reported that 270 of the 300 banks licensed in the Bahamas in 1979 had no physical presence...
...Time-hardened economic structures began to open up during the 1960s and early 1970s...
...Since 1982 bauxite production has ceased altogether in Haiti and halted temporarily in the Dominican Republic...
...Though bauxite makes up 70% of Jamaica's exports, the industry provides less than 2% of the country's employment...
...He didn't like to use the word 'Puerto Rico,' because it's been discredited, so he preferred to talk about the countries of the Far East...
...But this failed to create strong and diverse industrialization...
...Reynolds Reynolds Metals Texaco Trans World United Brands W.R...
...2 8 The leading offshore banking centers are the Bahamas and the Cayman Islands...
...firm has been contracted to mine bauxite...
...This NOVEMBER/DECEMBER 1984 1 39A Lovely Piece of Real Estate dependence," says Carlton Davis of the Jamaica Bauxite Institute, means that "the companies are still in the driver's seat...
...But microchip assembly is no more a guarantee of economic stability than canecutting...
...He says, "Puerto Rico, a classic example, was a major exporter of sugar before World War II and now imports sugar from the United States...
...S UGAR, COCOA, COFFEE AND BANANAS continue to define many of the economies of the Caribbean...
...By 1982, the figure had grown 16-fold to $29.1 billion.' An overwhelming amount of this direct investment-$25 billion-was in banking and finance...
...Instead, it resulted in inefficient industries protected by high tariff walls and "finishing touch" plants set up by TNCs in the Caribbean to assemble imported inputs for the island markets...
...It has failed to take up the slack in the declining agricultural sector, and it has created many fewer new jobs than its optimistic planners projected...
...Six corporations control each stage of the industry, from bauxite mining through alumina processing to aluminum manufacturing...
...Yet after a short period of rising commodity prices in the 1970s, their high ambitions for economic progress and an escape from their underdeveloped past began to crumble...
...Just before the banana boat comes to port, they may often work through the night sorting and stacking the fruit...
...Besides the large direct investments, scores of foreign contractors and suppliers operate in the petroleum industry...
...govern- ment relaxes banking and insurance regulations to compete with the attractions of Caribbean offshore finance...
...The other is the Caribbean's importance as a petroleum producer and an oil refining and transshipment center...
...Virgin Islands are host to the world's largest oil refinery, operated by Amerada Hess...
...Under pressure from the World Bank and the IMF, Guyana opened negotiations in 1982 with Alcan, Kaiser and U.S...
...The prime ministers who arrive in Washington in search of handouts can al- ways dangle the specter of another Castro or another Bishop if aid is not forthcoming...
...Trade revenues are falling...
...The organization publishes educational materials on Central America and the Caribbean...
...Clive Thomas, "Neo-Colonialism and Caribbean Integration," Contemporary International Relations of the Caribbean, (Institute of International Relations, University of the West Indies: Trinidad, 1974...
...3 Under the twin-plant program, factories will use Puerto Rico for the capital-intensive portions of manufacturing...
...Increasing numbers of firms have located in Caribbean industrial free-trade zones...
...T HE CARIBBEAN ECONOMIC MODEL IS today in crisis...
...Despite all the promotion, manufacturing growth rates have PLUNDER IN PARADISE 1. "Fighting Blight in Paradise," Time, April 4, 1983...
...Ramesh Ramsaran's 1974 study, "External Dependence and National Development: Case Study of Bahamas," cited by Staff Study of Crime and Secrecy...
...Government plans to use this income to build an industrial sector have been threatened by falling oil prices, declining production, company demands for lowered taxation and threats to pull out of Trinidad...
...are all mimics at heart" "I T NTERNATIONAL SUBCONTRACTING" has also become a popular variety of export promotion.* Rather than involve themselves directly in the Caribbean countries, many TNCs have chosen to subcontract production to other smaller transnationals or to locally owned businesses...
...oil imports pass through Caribbean shipping lanes...
...The refineries in the Netherlands Antilles are also among the world's largest and most modern, refining Venezuelan and Middle Eastern crude and shipping it mostly to North American markets...
...9. Courier (Jamaica), September-October 1982...
...Vincent, Grenada and Dominica-where the banana industry employs, directly or indirectly, half the working population...
...counterparts-who are paid up to 10 times more...
...Baltron Bethal, director of tourism for the Bahamas, estimates that 81% of every tourist dollar "finds its way back to the United States...
...Transnational Corporations in International Tourism, (New York: United Nations Center on Transnational Corporations, 1982), p.10...
...The problem is made worse by consumer preference for foreign-produced goods...
...The last 30 years have seen a trend toward disinvestment by the TNCs, particularly in banking, utilities, mining and agriculture...
...Inter-American Development Bank (IDB), Economic and Social Progress in Latin America, 1983 edition...
...In 1980, for example, Haiti and the Dominican Republic supplied the U.S...
...the World Bank and the IMF...
...Most export- promotion industries use only one local input: the labor of the Caribbean workforce...
...corporations also regard the region highly for electronic assembly...
...The islands also count on more than their fair share of the global runoff because of the geopolitical importance that Washington has assigned to the Caribbean Basin...
...For the island and mainland nations of the Caribbean are a study in contradictions, of acute socioeconomic imbalances, uneven modem development and a critically frayed social fabric...
...We can't produce designs for refineries...
...Caribbean/Central America Action, Caribbean Databook (Washington, D.C., 1983), p. 2 7 2 . 18...
...Steel over the possible resumption of some degree of private investment...
...external debt is skyrocketing...
...Computer and defense firms have electronic parts shipped in and then ship out the assembled products...
...That appeal is based on the promise of cheap labor and favorable taxation rates...
...But the government fears that a confrontation with the foreign petroleum giants will isolate the country and destabilize the economy...
...4 Petroleum, the second largest category of U.S...
...most offshore insurance business takes place in Bermuda...
...The local diet of most islands is determined not by what can be grown but by what is being imported in cans...
...Though the Caribbean has long been used to hide and launder money, the spectacular boom in offshore activity over the last 20 years reflects the growth of the Euromarket-the international money market supplied mainly by petrodollars...
...Whether in traditional agriculture or computer- age international finance, then, the Caribbean nations have largely opted for a marginal and subordinate economic role...
...Its two leading locations are Haiti and the Dominican Republic: Haiti is, in fact, second only to Mexico in the hemisphere in total subcontracting investments...
...Conflicting Trends: In several economic sectors-mining, local banking, agriculture and utilities-many TNCs have transferred their stock ownership to Caribbean governments, but have usually retained their interest through management contracts, technology transfer agreements and marketing...
...One strategy for industrial development was import substitution...
...for others, they are the only alterna- tive to a dead-end life of unemployment...
...Among the corporations favoring such twin-plant arrangements are GTE, Esmark's Playtex, Intel, Dwyer Instruments and Honeywell...
...Bauxite, an essential mineral for airplane and defense manufacture, comes from the hills of Jamaica and the bush coun- try of Suriname...
...direct investment in the region, accounts for $1.6 billion...
...The industry leaders in the Caribbean are still Geest Industries and United Brands, the successor to United Fruit...
...Vincent, the Dominican Republic and Haiti...
...The Caribbean islands must depend on foreign airlines for most of their tourist traffic, yet the choice of flight destinations and scheduling remain almost totally beyond their control...
...NOVEMBER/DECEMBER 1984 37A Lovely Piece of Real Estate United States...
...Washington, Britain and Havana were all agreed on the crucial economic importance of the project...
...All economic indicators suggest imminent disaster for the region...
...2. Imitation of Cuba's revolutionary break with the international capitalist system...
...Often these "institutions" are purely legal fictions...
...In the wake of nationalization, the Guyanese workforce and managers enthusiastically proved they could indeed run the industry...
...The United States has two territories, France three dependencies and the Netherlands two sets of island dependencies, while Great Britain leads the pack with six crown colonies...
...The diverse political systems range from state capitalism in Guyana to a president-for-life in Haiti, from parliamentary democracies of varying hues in the former British colonies to revolutionary socialism in Cuba...
...REPORT ON THE AMERICAS 36workforce ready for the assembly line...
...Each has its own come-on, its own slogan...
...4. Agency for International Development (AID), "Caribbean Agriculture Trading Company," Project Paper #538-0080, July 28, 1982...
...There is little interaction between the passengers and the islands they visit...
...Many of the sugar-producing nations have preferred to let corporations such as Tate & Lyle, Booker McConnell and Gulf + Western shoulder the burden of the floundering industry...
...This "industrialization by invitation" approach generally locates TNC investors in industrial zones constructed by the host country...
...some, like Trinidad, Barbados and Antigua, import over 80%.' Even when the countries host food-pro- cessing firms, these companies import about 80% of the food ingredients for their processed products.' The region's inability to feed itself adequately is the main reason for its acute nutritional deficiencies...
...Brazil, Guinea and Australia have eclipsed the region in the last decade...
...Forbes, February 1, 1982...
...In the West Indian islands, farms feed only onethird of the population...
...Figures from the U.S...
...The U.S...
...In both cases, the compensation offered was considered generous...
...Under this arrangement, the subcontractor usually supplies the factory, the management'and the employees to manufacture a product to certain specifications-be it pajamas, fancy underwear or leather handbags...
...only Taiwan outstrips them as a supplier of cotton and fiber shoe uppers...
...But the Caribbean sugar industry today is facing disarray...
...The economic diversification of recent years has led to no matching increase in stability...
...Though these service jobs are generally poorly paid and unskilled, they are much sought after...
...These "finishing touch" industries, often simply packaging plants for items like toothpaste, bring few benefits to the local economy...
...23 Guyana, too, is increasingly in thrall to the bauxite corporations, despite its nationalization a decade ago of the local Reynolds and Alcan operations...
...It employs about 20,000 workers and accounts for half Trinidad's GNP.' 7 Between 1970 and 1980, the country increased its petroleum earnings 30-fold, making Trinidad one of the richest nations in the hemisphere...
...Through their policy of prepayment for tour packages, they contribute to the Caribbean nations' foreign exchange crisis...
...borders is located in Caribbean offshore financial centers-Bermuda, the Bahamas and the Netherlands Antilles...
...counterparts, do have substantial interests in trade, tourism and utilities...
...Their advertising campaigns carry lines such as "It's better in the Bahamas" or "Puerto REPORT ON THE AMERICAS 32Rico is your profit paradise...
...The Caribbean garment business is concentrated in the Dominican Republic, Haiti and Barbados...
...The routine labor-intensive phases will be passed on to islands offering lower wages...
...IN MANY RESPECTS, THE CARIBBEAN looks much as it did in the eighteenth century...
...T HE WEST INDIES MAY NO LONGER BE the Rum Islands and calypso colonies of the past, but they are still far from healthy industrial economies...
...At the same time, in response to domestic pressures, Caribbean political leaders took some measures to ensure that more of the benefits of their economies stayed at home...
...But the visitors' shock at the reality behind the glossy tourist brochures and the extravagant ad copy is equally telling...
...One U.N...
...Most nations import more than half their food...
...There, they find the factory shells and infrastructure already in place...
...Politicians and businessmen may continue to pay lip serNOVEMBERJDECEMBER 198433 NOVEMBER/DECEMBER 1984 33A Lovely Piece of Real Estate vice to the ideals of regional cooperation and econo- mic integration...
...Many of the assembly plants, however, are owned not by large TNCs, but by small foreign investors...
...Caribbean Business, March 9, 1983...
...About 35% of all U.S...
...1 6 WHEN WASHINGTON SPEAKS OF THE strategic importance of the Caribbean, it usually cites two things...
...And throughout the Caribbean, the descendants of West African slaves cut cane, gather coffee beans and pick bananas for as little as three dollars a day...
...2 ' A country like Jamaica must also import all the industry's components-heavy earth-moving equipment, 40-ton trucks, petroleum and caustic soda...
...The area has 13 Holiday Inns, nine Hilton hotels and nine Sheratons...
...The other Caribbean islands thought that, like the Puerto Rico of the late 1940s and early 1950s, their cheap labor supply and investment incentives could attract the TNCs...
...Tortola, Montserrat and Antigua are destinations for the sun-seeking jet-set...
...The Caribbean nations faced rising interest rates, sinking prices for exports, shrinking markets and soaring costs for oil and other essential imports...
...But their hopes were groundless...
...They have seen nationalist economic strategies collapse in Jamaica and Guyana under the combined weight of international pressures and domestic upheaval, while effective regional integration among the small island "microstates" remains an elusive dream...
...Unfortunately, recession and falling terms of trade have brought a desperate stress on agricultural export production, at the expense of plans to build a local agricultural market...
...ACH ISLAND PORTRAYS ITSELF AS "A special place in the sun...
...Many critics have called for the partially nationalized industry to be taken totally out of the hands of the corporations who control its main refining capacity-Amoco, Texaco and Tesoro...
...For three and a half centuries, unrefined sugar has been the region's main export crop...
...Jos6 Madera, administrator of Puerto Rico's industrial development organization, noted, "Our position is that, if certain labor-intensive processes are not profitable in Puerto Rico, then it is in our interest that they be performed near Puerto Rico...
...Yet the seasonal nature of tourism, its high import content, the predominance of foreign control and its damaging psychological impact all substantially un- dercut the industry's benefits...
...In addition to the broadening of the Caribbean oil industry, the arrival of four new areas of economic activity-- bauxite mining, international finance, tourism and light manufacturing--have changed the fice of much of the Caribbean...
...business: companies like Maidenform ship the straps, hooks and cups to Caribbean assembly plants, where low-paid women workers stitch them together into bras for American women...
...Centuries of slave labor and colonial administration established the West Indies as plantation societies that exported all they produced and imported from the mother coun- try all they consumed...
...Jane Little, Euro-Dollars: the Money Market Gypsies, (New York: Harper and Row, 1975...
...Economically, however, the countries of the region share more common ground...
...3. New Internationalist, February 1982...
...We are just getting packaging work...
...One woman who had worked at a jeans assembly plant in the Dominican Republic for 12 years was doing the same menial job for which she had been initially hired...
...Barbados is insignificant (it does not even produce enough petro- leum to be self-sufficient) but Trinidad is a key oil and gas producing nation, with estimated reserves of 38REPORT ON ThE AMERICAS REPORT ON THE AMERICAS 38520 million barrels of petroleum at the end of 1976...
...corporations and a further 560 companies affiliated to other foreign firms.' The highest number of subsidiaries is located in Jamaica and the Dominican Republic...
...An even higher cost in international isolation and political tension has led the region to discard the socialist path of development...
...7. Testimony by Robert A. Pastor, University of Maryland, before the Subcommittee on Inter-American Affairs, July 20, 1982...
...More than 75% of bauxite sales and 87% of aluminum sales are made by affiliates of the same corporations...
...But foreign corporations have begun a comeback...
...Caribbean governments, however, have tended to adopt only those aspects of regional- ism that foreign investors and local elites find com- patible with their own narrow agenda...
...United Brands, meanwhile, through its British subsidiary Fyffes, buys bananas from Belize, Jamaica and Suriname...
...In 1970 U.S...
...Despite their acceptance of the need for economic diversification, the Caribbean nations still rely on a handful of agricultural crops...
...In Puerto Rico, after the most massive foreign-investment program in the world over the last 30 years, it has produced 25 to 30 % unemployment, with 50% of the people on food stamps and a massive migration to the United States...
...The workforce derives no lasting benefit from this arrangement...
...Ex-premier Michael Manley commented nega- tively on this trend in Jamaica: Seaga, during the campaign, committed himself to a resurrected Puerto Rican model...
...suppliers of leather shoe uppers...
...T RANSNATIONALS DOMINATE TOURIST development and have reaped the bulk of the industry's profits...
...Payments for services actually delivered in the Caribbean never even pass through local agency offices, but go directly to the New York headquarters of Hertz or Sheraton...
...Show us how capitalism works, she pleads...
...The United States is the direct beneficiary of this import dependency: Caribbean nations (not counting Puerto Rico and the U.S...
...survey found that the Caribbean houses 27% of all banks located in world financial centers...
...5. Judy Whitehead, "Select Technological Issues in Agro-Industry (2)," Social and Economic Studies, Vol.28 no.1, (March 1979), p. 1 6 1 . 6. U.S...
...Guyana also employs a U.S...
...of electronic parts to assemble or money to launder...
...And despite the billions that flow through these centers, they are of little consequence to the local loan markets...
...And United Brands' Paris-based La Compagnie des Bananes coordinates banana production in Martinique and Guadeloupe...
...banks and 47 of the 500 largest non-U.S...
...Yet we don't have any indigenous oil technology...
...Only the retailing of consumer goods, small farming and some professional services such as the law escape transnational domination...
...They have divested in certain sectors to reduce risks and shed unprofitable enterprises...
...The value added to crude bauxite by processing is a higher proportion than that of any other of the world's 16 most important exports...
...The model does what all models of a colonial nature do-increases dependence...
...This initially aimed to promote labor-intensive assembly plants in Puerto Rico, before it degenerated into more capital- and technology- intensive industry which only aggravated the island's unemployment problem...
...TNCs even own or manage most Caribbean utilities, defying the standard pattern of government control elsewhere in Latin America...
...TNC control was graphically illustrated earlier this year, when Reynolds Metals announced it was pulling out of Jamaica-without even consulting.the Jamaican government, its partner in the joint venture...
...Despite political independence and a degree of economic diversification, the Caribbean nations found themselves still teetering on the edge of the world market...
...In other areas-services, manufacturing and offshore finance-there has been a marked increase in the number of TNCs doing business in the Caribbean...
...corporations or individuals had $1.8 billion in direct investment in the Caribbean (outside U.S...
...Plans for industrializa- tion stalled, and the problems of unemployment, debt and poverty worsened...
...Whatever trickles down from the United States, Canada or the European Economic Community is what sustains their economies...
...CCAA's chairman is David Rockefeller...
...Lucia, the men and women who go out to the fields in bare feet and ragged shirts to pick the bunches of bananas earn barely enough for subsis- tence...
...Yet though much of the past endures, the Carib- bean countries are no island hideaways insulated from the main currents of today's transnational economy...
...fragile local infrastructure...
...IDB, Annual Report 1982...
...The cruise ships feature golfing greens, casinos, exercise clinics and classes in art, financial planning and home computers...
...The model for the second type of Caribbean industrialization was Operation Bootstrap...
...In the English-speaking islands, the service sector of tourism is unanimously agreed to be the most effective earner of foreign exchange, a healthy provider of jobs and the cornerstone of future economic takeoff...
...It has overtaken Guyana and Suriname, which between them supplied two-thirds of the West's bauxite needs by the end of World War II...
...About 40% of Carib- bean exports are in a completely raw form...
...Nowhere is this trend more pronounced than in Jamaica, where, after a brief flirtation with sugar cooperatives, the Seaga Administration is considering handing over the industry lock, stock and barrel to the transna34REPORT ON THE AMERICAS 34 REPORT ON THE AMERICASSugar: Continuing economic woes tional corporations (TNCs...
...Vincent, but has said that it will consider returning if the island government halts union organizing...
...GDP growth is static or negative...
...They were "brass-plate companies" represented by nothing more than a plaque on the wall outside an attorney's office.27 Others may be just a walk-in closet, a desk, a file cabinet and a telephone...
...It is the murky world of finance...
...Fyffes purchases Suriname's entire banana crop of 34,000 tons...
...An article in Time magazine observed, "Sadly, in recent years less enticing images have begun to intrude...
...The petroleum business is the backbone of the Trinidadian economy...
...These would then produce manufactured goods, not for the Caribbean market but for the world market-particularly the nearby United States...
...Kitts, Guadeloupe and Guyana...
...The Caribbean bra industry is an extension of U.S...
...David Abdulah, education officer for the militant Oilfield Workers Trade Union, complained about the technology gap in his country: We are one of the oldest oil industries in the world...
...2 4 The European or North American tourist in the Caribbean quickly feels at home...
...Most of the islands now have one or more industrial zones, an industrial development agency, a detailed investment code and a large NOVEMBER/DECEMBER 198435 NOVEMBER/DECEMBER 1984 35A Lovely Piece of Real Estate Strangers in Paradise The Caribbean is perhaps more thoroughly dominated by transnational capital than any other region of the Third World...
...Pressured by international development agencies and financial institutions, Caribbean governments are welcoming foreign agribusiness concerns-both familiar names from the plantation era, like Booker McConnell and Tate & Lyle, and new groupings such as the Latin American Agribusiness Development Corporation (LAAD...
...New Internationalist, December 1980, p. 1 5 . 24...
...Despite the dubi- ous benefits, leaders like Prime Minister Eugenia Charles of Dominica are enthusiastic about attracting U.S.-owned assembly plants...
...3. Further opening of the local economies to foreign trade and investment in the hope that the benefits from foreign-owned operations would trickle down into the local economy...
...Martin Marietta enjoys attractive tax incentives for its alumina plant in the U.S...
...Workers Times, newspaper of the Jamaican sugar workers union, January 1982...
...One is the region's bauxite reserves, long prized by the United States as the mineral base of aluminum production...
...A British traveler can lodge in any of eight Trust House Forte hotels, or in one of five owned by the Grand Metropolitan group...
...Large foreign firms invariably play the leading role in each of the four principal aspects of tourism: airlines, hotels, services and tour operators...
...The Jamaica Bauxite Institute announced it would reduce the levy in 1984...
...In part, the description reflects the evils imported by tourism itself and the heavy strain it imposes on TOM BARRY is co-director of The Resource Center, based in Albuquerque, N.M...
...Each day, American Airlines has its ticketing and billing information processed by lines of computer operators in Barbados...
...Their continued presence hardly suggests that the flow of foreign capital into a Third World nation encourages the development of local skills or is conducive to the transfer of technology...
...Foreign experts from Gulf+ Western, Tate & Lyle and Bacardi are the ones who are consulted and courted endlessly...
...Bananas, too, have passed largely into transnational control...
...The Club M6diterran6e of Paris offers seven resort hotels for those who want a French flavor to their vacation...
...Caribbean Tourism, (newsletter of the Caribbean Tourism Research Center), June 1983...
...the Netherlands Antilles have become a favored loca- tion for corporations seeking a tax-haven for inhouse financing...
...The offshore banking business contributes only 10% of the region's GNP and less than 3% of its employment...
...Virgin Islands) buy over $800 million worth of food from the United States every year...
...In most cases, the assembly plants import all the assembled products duty-free...
...A study by the Carib- bean Food and Nutritional Institute found that reliance on imported foodstuffs for daily energy intake had increased from 65% in 1977 to a staggering 92% in 1980...
...After a month or less of training, Caribbean workers can reach the efficiency levels of their U.S...
...The small independent nations and colonial states compete with one another to attract more investors, more tourists, and more foreign aid...
...This was down from a peak of 45 cents a pound in 1980.8 Hardest hit is Cuba, whose record-breaking 1982 sugar harvest of 8.2 million tons was only partially protected by Soviet price subsidies...
...Some of the largest apparel corporations in the world, like Playtex (Esmark) and L'Eggs (Consolidated Foods) have assembly plants in the region...
...The skills learned are normally specialized, and few advanced programs exist to up- grade them...
...What if the U.S...
...2 Where the Money Is: The manufacturing and service sectors have the greatest concentration of TNCs...
...Virgin Islands.' Other foreign economic interests in the Caribbean are also largely in banking, insurance, petroleum and mining...
...In these Dutch colonies, petroleum refining by Shell and Exxon accounts for nearly 20% of GNP and about 5% of employment...
...On this and other labor conditions in the Domini- can Republic see the series of reports by Henry Frundt for the Interfaith Center for Corporate Responsibility...
...Corporation Alcoa Beatrice Foods Bristol-Myers Castle & Cooke Chase Manhattan Citicorp Coca-Cola Colgate-Palmolive Continental Telephone Esmark Exxon Gulf+ Western Holiday Inn ITT R.J...
...Gone for the most part are the colonial masters, but company agents, consultants and financiers remain...
...Just what they did in coming here: they take a wrench and undo four bolts, remove their equip- ment, crate it up and ship it off...
...We are all mimics at heart and imitative of the things we see and associate with...
...he asked...
...For the last three decades, Geest has dominated the agricultural sector of the Eastern Caribbean...
...corporation to study its industrial production problems, and has hired Kaiser Aluminum to overhaul the country's alumina plant...
...For many years, we were the largest oil producer in the British Empire...
...corporate interests is Caribbean/Central American Action (CCAA), which works closely with the Overseas Private Investment Corporation (OPIC) and the Agency for International Development (AID...
...2. Robert H. Girling, "The Caribbean Basin in the 1980s: Notes on the Current Economic Crisis," (unpub- lished ms...
...Geest Industries purchases the entire banana crop from the four nations collectively known as the Windward Islands-St...
...it is still the leading export of Barbados, Cuba, the Dominican Republic, St...
...It is host to the branches, subsidiaries or affiliates of more than 1,740 U.S...
...Many of the largest TNCs in the world operate in the Caribbean, including 77 of the top 100 U.S...
...The Caribbean nations are over-reliant on imports as well as exports...
...One recent case was the closure of Barbados Semiconductor, after Thompson CSF decided to consolidate all its operations in Pennsylvania...
...Will the defense industry need as much aluminum...
...Forbes, February 1982...
...In recent years, foreign direct investment in light manufacturing has risen steadily...
...M. Desmond Fitzgerald and Gerald Pollio, "Aluminum: The Next Twenty Years," Journal ofMetals, De- cember 1982, p. 3 7 . 20...
...Those Caribbean governments that have sought an ownership stake in the tourist industry often find that foreign exchange reserves are depleted by a steady outflow of fees to the corporations...
...U.S...
...Bauxite: A Buyer's Market," Multinational Monitor, February 1981, pp.1 8 -19...
...In the countryside, the black population still lives in wooden shacks, cutting cane and drying tobacco...
...From 1977-82, U.S...
...Tourism contributes about 250,000 jobs in the Caribbean, ranging from a scant 2% of the workforce in Jamaica to 70% in Ber- muda...
...non-financial investment jumped by 70% from $2.4 billion to $4.1 billion.' About $16.1 billion in U.S...
...it has also tried to overhaul the industry taxation system so that foreign producers can use the Jamaica levy to offset payments against their home country taxes...
...European and Canadian investors, who carry less weight in the manufacturing sector than their U.S...
...by 1978 the Caribbean accounted for only 31% of the total output of the International Bauxite Association.' 9 Jamaica is today the Caribbean's largest bauxite producer...
...This is after 130 years of oil activity.1' T RANSNATIONAL CONTROL-BY KAISER Aluminum, Alcoa, Reynolds Metals, Alcan and Royal Dutch Shell-poses similar problems to Caribbean bauxite producers, traditionally the main suppliers of the U.S...
...corporations...
...The integrated and highly concentrated nature of the industry makes it difficult for the Caribbean nations to confront the power of the aluminum giants...
...Barbados is the favorite location, followed by Jamaica, St...
...Industrialization has flopped on two counts...
...bubbling, dark cesspools of untreated wastes only a hop away from beaches jammed with tourists...
...But only a small proportion of the tourist dollars stay on the islands for the benefit of local economic development...
...It may take the form of vacationers or development loans...
...Virgin Islands, and Alcan has a bauxite transshipment terminal in Trinidad...
...Even in a short stay that revolves around beach and hotel pool, they can hardly fail to recognize the other side of paradise...
...Multinational Monitor, February 1981...
...The Caribbean is indeed a fragmented region...
...The same syndrome applies to the growing number of tourists who experience the Caribbean from the deck of an ocean liner...
...T HERE IS LITTLE EVIDENCE THAT THE strategy of "industrialization by invitation" has made any lasting economic contribution over the past 20 years...
...Foreign tour operators, who design complete package vacations that include air fare, ground transportation, accommodations, meals and enter- tainments, play a decisive-and negative-role in the development of the region...
...The exogenous economies of these feeble states revolve around their ability to attract transnational investors...
...Affiliates of U.S...
...This mirrors their overall preference for securing raw materials and maintaining outlets for their goods, rather than using the Caribbean as a platform to export assembled products...
...Combined unemployment and underemployment runs between 25% and 40% in most islands...
...For the Caribbean islands, offshore banking activity is generally regarded as a necessary evil, one of the few available alternatives for resource-poor microstates to earn foreign currency...
...And several governments, notably Jamaica, Trinidad and Guyana, have found out the hard way that state ownership does not necessarily mean control...
...Department of Commerce, November 1982...
...The last several decades have brought major economic changes to the region...
...What has changed is that the banana companies have become conglomerates, with their own shipping fleets and worldwide investments...
...The U.S.-owned Pico also closed operations in St...
...Confronting the Multinationals: Trinidad Workers on the Lines," Multinational Monitor, January 1981...
...2 9 While offshore financing does account for some jobs and income, it is hardly an integral part of the future economic development of the Caribbean...
...But, tourists trying to escape from the industrial world are discovering that many of the evils of modem "civilization" are encroaching upon their Caribbean hideaways...
...The country clubs and beach estates are generally the domain of the light-skinned creoles or vacationers from Europe and the United States...
...T 0A GREAT DEGREE, THE COURSE OF Caribbean history has followed the vagaries of the sugarcane industry...
...policies have failed to promote self-sufficiency in the Caribbean...
...General Accounting Office (GAO), AID Assist- ance to the Eastern Caribbean: Program Changes and Possible Consequences...
...and Canadian aluminum industries...
...Foreign Agricultural Trade Statistical Support, 1982...
...banks) most foreign-controlled finahcing is known as "offshore" activity...
...But rather than leave the region completely, the corporations have tried to maintain and increase their flow of profits through management and technology agreements...
...The Caribbean may have broken out of the stifling reliance on bananas and sugar, but like the older agro-export system, the new industries are subject to influences almost entirely beyond local control...
...One-sixth of the oil consumed in the United States is refined in the Caribbean, and one-half of U.S...
...Those who place the blame on overpopulation ignore the figures on land use in the Caribbean, which show that more than half the arable land supports crops and cattle for export...
...Wall Street Journal, January 7, 1983...
...6 Robert A. Pastor of the University of Maryland cites Puerto Rico to illustrate how U.S...
...Latin America Regional Report: Caribbean, September 25, 1981...
...But essentially the model is the same...
...Caribbean nations supply the United States with 20% of its playsuits, 23% of its hosiery, 15% of its dresses and 19% of its cotton nightwear.' 2 This apparel assembly is done less by direct TNC operations than by small local subcontractors...
...The actual business of growing, harvesting and shipping the crop has changed little since it began in the Caribbean a hundred years ago...
...Will tourists prefer Mexican beaches this year...
...Lucia, St...
...market with about 3 million brassieres...
...The overpowering presence of the TNCs in the Caribbean is a relatively recent phenomenon...
...territories...
...Trinidad and Tobago both produces and refines petroleum...
...Lucia and many other islands...
...Most have chosen--or at least resigned themselves to-the model of dependent capitalism...
...Thousands of banks, insurance companies and other finance corporations have set up Caribbean subsidiaries to avoid taxes and legal regulations...
...IN THEIR SEARCH FOR A POST-INDEPENdence identity, the Caribbean nations have faced a choice between three broad economic develop- ment strategies: 1. A commitment to autonomous and self-inter- ested policies that would promote regional economic integration and more local ownership of resources and industries...
...In 1982 world sugar prices dropped to eight cents a pound...
...Lucia, St...
...Host governments generally coop- erate with the companies to keep these assembly areas union-free...
...Are labor costs cheaper in Costa Rica...
...We cannot design our own oil structures and drilling platforms...
...The Atlantic Monthly, September 1983...
...In St...
...Inefficient and corrupt managers," it claims-not the cooperative workforce-make industry deci- sions...
...2 2 From 1979 on, Jamaica has gradually backed away from the Manley government's plans for extended control and increased levies on the bauxite producers...
...After South Korea, the Dominican Republic and Haiti are the top U.S...
...corporations employ 100,000 Caribbean workers...
...industrial corporations, the three largest U.S...
...Barry is co-author of two books: The Other Side of Paradise: Foreign Control in the Caribbean and Dollars and Dictators, both published by Grove Press...
...The ore from nickel and bauxite mines is hauled out of the ground and on board the ships with little local processing--just as gold was in earlier centuries...
...Transnational Banks, (New York: United Nations Center on Transnational Corporations, 1981...
...Hundreds of billions of dollars move in and out of such improbable spots as Grand Cayman, Nassau and Willenstad...
...2 Even Cuba, that exception to most generalizations about the region, depends on sugarcane for over 60% of its total export earnings.3 While the steady decline of world commodity prices is a principal reason for mounting regional instability, it is only part of the story...
...Sixty percent of TNC-owned hotels have set up their oper- ations in the region since 1970.25 More common these days than direct equity ownership are contract management agreements, licensing, franchises and Many tourists don't leave the ship REPORT ON THE AMERICAS E 0technical service arrangements...
...Grace Warner Lambert Wometco SELECTED U.S...
...Besides the two refineries, there are three TNC-owned transshipment terminals in the Netherlands Antilles...
...They share a harsh colonial past that shapes their present economic condition and still inhibits their future possibilities of development...
...Most Caribbean governments have steered away from the first option...
Vol. 18 • November 1984 • No. 6
