Barbados readjusting

The January 2008 general elections having come and gone, the people of Barbados found themselves with a new government, having experienced a fifteen-year stretch under then Prime Minister Owen Arthur. Arthur had developed the reputation of having pulled the country out of the deep economic difficulties of the early 1990s. In the last months before the 1994 elections, David Thompson assumed the position of Minister of Finance, but had no time to show his colours as the Democratic Labour Party went down to defeat.

With Arthur’s defeat, Thompson having taken up the Finance portfolio, soon found himself having to grapple with the current economic recession induced by the malfunctioning of some of the major Western powers’ economies. Then, the promise of a recovery was clearly more dependent on external circumstances than had been the case when Owen Arthur first assumed office. Over the period of his administration since January 2008, Thompson had not as yet given the country a clear direction as to the path his government would take to economic recovery. So the present Budget statement, presented under a new Prime Minister, Freundel Stuart, and a new Minister of Finance, Chris Sinckler, is really the first to present the people of Barbados with what its government sees as the appropriate policies for the present time.

The Budget has been viewed by analysts as a quite severe one, with new taxation including a 17.5% Value Added Tax on most commodities, though the tourism sector has been exempted for the time being. Sinckler, in defending the severity of his proposals, pronounced the Barbadian economy as “structurally challenged and in need of major reform,” suggesting that the policies of the past could no longer suffice in the face of a global economy, including those economies with which Barbados  has most interaction, which is changing in dramatic ways. On the other hand the opposition has put its emphasis on what it sees as harsh measures affecting both the working class – for example in the case of increase in public transportation fares – and the middle class in the case of the removal of certain allowances.

It is unlikely that the Barbadian people are particularly pleased about the new Budget. But it is probably the case that they will be willing to give what is virtually a new administration as far as economic policy is concerned, some time to prove itself, without grumbling too much so early. The country has, in recent times gone through some trying experiences – the recession itself, Thompson’s long illness and death, the positioning of a new prime minister, and most recently a severe enough touch of Hurricane Tomas. In a sense many citizens will be feeling a little punch-drunk, and willing to wait for a while to see how things are turning out.

In addition, the population also suddenly found itself with a new Leader of the Opposition, a classic political coup having taken place. They will have thought that they were on the way to a transition to new political leadership in both parties, with Owen Arthur having apparently easily ceded his leadership position to Mia Mottley. But instead they have found the tables turned, and are now left to ponder whether the extensive political experience and admitted economic policy competence of Arthur should, in the present difficult economic circumstances, be given another chance of national leadership.  Mr Arthur’s contribution to the Budget debate, as lead opposition speaker, suggests that he is ready to play all his shots in preparation for the next general election. And As of now, little is known of the leadership skills of the new Prime Minister, though he has previously served as President of the Democratic Labour Party.

Caricom governments and citizens will be pondering what the stance of the new leadership will be. Prime Minister Stuart, a lawyer, will be familiar both in his professional capacity and as Attorney General and Minister of Home Affairs in the last few years, with some element of the Caricom integration fraternity. Finance Minister Sinckler too, was for a brief period Minister of Foreign Affairs in Thompson’s cabinet before being transferred to the portfolio of Social Affairs nearly a year after the start of the new administration. But he, as a former Executive Coordinator  of the Caribbean Policy Development Centre (CPDC) will be relatively well known to the civil society and NGO activists of the region, one of whose preoccupations has been with the changing character of the global economy, and particularly the Caribbean’s relationship with the United Kingdom under the Economic Partnership Agreement.

It cannot be said that David Thompson, with his early emphasis on controlling the extent of immigration of other Caricom citizens, got off to a good regional start. But the furore over that issue has quietened down, some regional governments, including Guyana, having clearly indicated their discomfort with the particularly public approach the Barbados government took to the matter. It is unlikely that the issue will raise its head in a similar way in the future.

This, as any other, Barbados administration will want to ensure that there is more movement on the implementation of the CSME, a particular enthusiasm of Owen Arthur. It is likely to pursue with deliberateness the issue of air transportation, including the circumstances of LIAT, now financially supported by only three governments in the region (Barbados, St Vincent and Antigua), but still deemed a regional necessity. During David Thompson’s tenure close cooperation on certain aspects of financial policy developed between the OECS states and Barbados, particularly in regard to their approach to the collapse of CLICO and its interests, and the British American Insurance company – the Barbados CLICO operations being responsible for the operations in the Eastern Caribbean. This experience, led by the directorate of the Eastern Caribbean Currency Bank, will have proved valuable in the integration sphere.

But it is probably unlikely that the new government will, at least as yet, be a loud advocate of quick movement on the regional front, particularly as there does not seem to be much enthusiasm in other quarters of the region. The Budget debate seems to indicate the new government’s concern with how Barbados, in the new international economic scenario, can make the adjustments necessary to maintain the relative success that it has had over the years, and the prosperity of its increasingly large middle class. The present combination of its needed adjustments is probably sufficiently challenging.