Caricom faces a future minus aid from the rich

Thursday, December 27, 2012

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ONE of the realities Caricom nations must face, as we look to a new year, is the fact that soon we will not be provided with development aid by the developed countries of Europe and North America.

Many in the region believe that we have an entitlement to get aid indefinitely because nature was unkind in making us physically small and we were exploited during colonialism. Truth is, Caricom countries have devoted more energy to mendicancy than to strategies of economic development suitable for the reality in which we exist. This worked for a long time in the form of retaining preferential trade arrangements and financial aid, but there is an increasing level of donor fatigue in Europe and the United States.

Rich countries no longer feel guilt about colonialism. Indeed, many in Europe never had colonies. And there are enough examples of small countries that have achieved high and sustained rates of economic growth to show the possibility for small developing countries.

In any case, Caricom countries have demonstrated that they are special in sports and entertainment, so why not in economic development. Indeed, many are now classified as middle-income. Ingenuity must focus on innovative strategies of economic development instead of concocting new platforms for mendicancy, the latest being climate change. Milking Taiwan, China and Venezuela for aid will soon run its course, especially in post-Chavez Caracas.

Dwindling aid from the US and Western Europe started with the dismantling of the EU's preferential trade arrangements for sugar and bananas under pressure from the new, needy EU member states and from within the World Trade Organisation at the instigation of our "brothers" in Central America and Brazil.

Aid has declined because the US and EU view the region as middle-income countries that refuse to be weaned from aid, thereby depriving the genuinely poor countries of resources from a steadily dwindling aid basket. This reduction in aid will continue as these countries struggle over the medium term to recover from the global economic crisis.

The view that the middle-income countries are privileged and too complacent to bestir themselves to be responsible for their own development is shared by the World Bank's International Bank for Reconstruction and Development (IRDB) which has basically withdrawn from a substantial engagement with Caricom, doing just enough to avoid criticism. The burden of helping the Caricom countries has been on the smaller Inter-American Development Bank.

Developed countries are rumoured to want to disbar Antigua, The Bahamas and Trinidad and Tobago. The current debate in Britain is whether aid should be confined to the least developed countries. By 2016 Britain will stop providing aid to 16 countries including Burundi and Niger, two of the world's poorest countries.

Meanwhile, the US has announced that St Kitts-Nevis has been upgraded to "a high income" country by the World Bank, and as of January, 2014, that island will, like Barbados before it, cease to be a beneficiary developing country under the Generalised System of Preferences (GSP).

Caricom must prepare to maintain and improve its middle-income status and economic development without the traditional assistance. Let us not squander time, money and energy on finding new donors.

The people of Caricom are capable of economic development without aid, even if some of our political leaders, state bureaucrats, business sector players, and academics do not believe this.




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