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Editorial
May 25, 2013

Global community must help small states

SMALL states have generally achieved considerable economic progress, measured by a raft of social and economic indicators, although suffering the disadvantages of size, geographic isolation, frequent natural disasters, narrow range of exports (usually one), vulnerability to external economic shocks and migration of skilled persons.

These states have succeeded by finding specialised niches in the global economy, eg, as international financial centres (Cayman); tourism (The Bahamas), fishing (Iceland) and strategic location (Panama). Some have benefited from having oil or gas, eg, Trinidad.

Their success has weakened their case for assistance, eg, the per capita income of Barbados is far above the conventional thresholds for development aid.

Indeed, the international community has withdrawn some of the traditional supports, like preferential trade arrangements, at the behest of some developed countries and poorer developing nations. The dismantling of the EU banana regime demanded by the United States and Central America is one such example.

The difficulties of small states have been compounded by the onset of the global economic crisis in late 2008, with the small developing economies of the Caribbean among the hardest hit. Ironically, they are also the governments that have done the least to effectively respond to the global economic recession.

Small states have responded to the economic difficulties in several ways, mostly ineffective. First, a few have continued to grow by persevering with the old niche (Cayman) or innovative proactive adjustment (Mauritius). Second, hanging on to the status of being colonies (Martinique, British Virgin Islands). Third, new strategies, eg, climate change (Guyana).

The international community can afford to, and should assist countries in economic difficulty whether that predicament is due to adverse short-term events like hurricanes. Assistance, however, must be on condition that small states demonstrate self-help.

The assistance must not be based on per capita income but must recognise their structural vulnerability and volatility of economic growth. Both the donors and the small states must recognise that financial handouts are not the only form of aid, but there should be affirmative action such as trade concessions and technical assistance. The international community must accept and formally recognise the category of small developing states. After all, there is no need to aid Lichtenstein or Monaco.

An example of the type of initiative which should be carried out is the Commonwealth Secretariat’s recently announced establishment of a High Level Mission on Small States Debt. This will be a small group which will raise the international awareness of this problem by their advocacy about the challenges of debt and liquidity faced by small states and recommend practical approaches to overcome their challenges.

The group will be chaired by Prime Minister Dr Denzil Douglas of St Kitts with funding and technical support by the Commonwealth Secretariat. The Group will then report the outcomes of its work to the next Commonwealth Heads of Government Meeting in Colombo, Sri Lanka, in November 2013.

This is an important opportunity for small states to help themselves by addressing one of their most burdensome problems. Let us hope that they do not miss the chance by making it another exercise in mendicancy.

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