An Economic Crisis Spreads Offshore
(This is one of a series of fortnightly columns from Guyanese in the diaspora and others with an interest in issues related to Guy-ana and the Carib-bean)
By Tami Navarro
The ongoing collapse of the global economy brings to mind a number of images that are repeatedly circulated in the media: beggared Wall Street bankers; shuttered windows where formerly thriving businesses once stood; foreclosure signs that stretch along blocks of manicured lawns. What this does not immediately bring to mind for most participant-observers of the current economic downturn are visions of the sandy shores of the US Virgin Islands (USVI). In fact this US territory, and the island of St. Croix in particular, is an important node in this global financial moment, ever since the forming of the Economic Development Commission (EDC) – with a local government agency to oversee it – as a new entity in 2001. The EDC replaced the previous Industrial Development Commission that had been around since the 1970s and had focused on such industries as a large aluminum plant and many watch factories. The shift in development strategy represented by the EDC was in part designed to stimulate the economy of these US-owned islands by offering companies staggering tax cuts. Launched in the USVI after local politicians approached the US Federal Government, the EDC has enabled St. Croix to play host to a number of financial firms (in the vicinity of seventy) and their managers in the past few years.
While funds in the Caribbean have long been viewed with suspicion as tax shelters for laundering money, the EDC program represents an attempt by the local government of the US Virgin Islands at legitimate banking in the Caribbean. Arriving from the US mainland and sometimes employing the requisite number of Virgin Islands residents, the managers of many of these companies have, since the beginning of the program, occupied an ambiguous space on the island. Although the pay at EDC companies is generally much more than that offered in other sectors on St. Croix, these companies are also seen by local residents as unstable and suspicious—a reputation earned as a result of several federal investigations at various EDC companies and further solidified by the recent charges of investment fraud brought against the largest such company on the island, Stanford Financial. While much is rightly being made of Stanford’s ties to the island of Antigua—including his role in the Bank of Antigua, involvement with that island’s national sports franchise, and his ownership of untold numbers of businesses and properties there—the company began the process of relocating to St. Croix in 2006 to take advantage of the extremely attractive tax breaks offered by the EDC (while Stanford Financial passed through the process of review, including public and executive hearings for this program, it is St. Croix’s good fortune that the company was not yet able to begin receiving its benefits as a result of government red tape). Operating five growing offices across the island and quickly buying up large swaths of real estate, Allen Stanford was heralded by advocates of the program as the billionaire-savior of St. Croix’s struggling economy, but vilified by many Crucians priced out of the real estate market as a result of his seemingly-endless dollars. Sir Allen Stanford— he was knighted by Antigua—was the embodiment of the ambivalence surrounding the EDC program.
In light of the enormous impact of Stanford Financial on St. Croix, as well as the CEO’s avowed commitment to good corporate citizenship (at a 2007 economic forum on St. Croix he described the order of the day as “getting rid of the pirates in the Caribbean), I interned with Stanford Financial, as well as several other EDC entities as part of my own research on the EDC program. Having worked within this sector in St. Croix, I know the stunning blow these recent Securities and Exchange Commission charges against Stanford Financial will deal to the already-beleaguered economy of St. Croix. What is more, the checkered history of the program, combined with the continual unfolding of this particular story—including the recent arrest of the Chief Investment Officer of Stanford Financial—make it difficult for the Crucian former-employees of Stanford to envision employment with this company or any of its kind on the island. For many of these workers, having attended college in the United States, landing a job within the EDC sector and earning a salary comparable to that earned by financial workers on the US mainland represented a viable opportunity to spend at least part of their working lives back on St. Croix. This is not to defend any nefarious goings-on within this particular company or any of its ilk on St. Croix, but instead to point to the importance of adjusting and enlarging our perspective when thinking about this crisis.
Having just a year ago held a grand spectacle of a groundbreaking ceremony for its megacomplex-headquarters, replete with an Antiguan cricket team and the requisite dignitaries, the revelation of Stanford’s actual state of affairs marks a stunning reversal for the EDC program at large —and potentially for the island. While Stanford’s implosion lends itself to an easy recasting as Madoff Revisited (a reference to the December arrest in the United States of businessman Bernie Madoff, charged with what some say is the biggest investor fraud ever perpetrated by a single individual), it is important to note its context. Until now, employment at Stanford and the conferral of its coveted company logo Eagle lapel pin, was a defining status marker on the island. More deeply than that, however, working at this company—and to a lesser degree any EDC firm—represented the possibility of mobility and a new identity for Crucians long overlooked by that standard go-to of Caribbean islands, tourist dollars. The slow demise of the EDC program in general and the fiery crash of Stanford in particular show us that it is not just New York, or Chicago, or even Anytown, USA that are falling victim to the current economic crisis and those crafty few who have benefited from it and hastened its arrival. If the downturn is most seriously affecting the American middle class, the case of Stanford begs the question of what the fallout will be for US citizens off the mainland who were in dire financial straits to begin with. Without cruise ships, all-inclusives, or investment firms, what will become of the economy of St. Croix?
Tami Navarro is a Ph.D. Candidate in the Department of Cultural Anthropology at Duke University. She is also a Crucian whose research focuses on economic development in the Caribbean.
