Late yesterday evening, I posed someone a question: Who’s really relevant to Jamaica, its politicians, foreign governments, foreign private investors, IFIs, domestic investors? If you answer that question, certain things become clearer. My basic point in my own head was that Jamaican politicians have made themselves less relevant to Jamaicans since Independence, except through the ‘favour system’ of passing through other people’s money, and that this is largely the result of rank mismanagement of the country. I went to bed tired after posing that question.
I can’t marshal all the data to answer the question precisely, but I think I have a good impression of how it shakes down.
Politicians have been given the local mandate to rule the country, and they have taken that and played with it in many ways that people could say are unpatriotic, favouring their group and friends over the nation in many instances. Stop me at any point, if you think this is garbage. They have not come forward with solutions to problems that can be seen as universally neutral in their impact, preferring often to side with those of the same political stripe. To my feeble economist mind, that must always have given the country at most second-best solutions.
Anecdotally, people will look around the country and lament the decline of local companies, taking this as a sign that foreign investors have taken more control of the economy. Local company names do not mean local ownership and control, and we know that many famous national companies are now in the hands of foreigners. I say that with no pejorative slant to the observation. Others may look at this as a very bad thing, and some will even be openly xenophobic about this. So, Trinidad is on the radar for some vile remarks, as their nationals own and operate many once-Jamaican companies. We know that other nations are in the business of controlling business in Jamaica. Right now, we are seeing a makeover of gas stations: Shell (Dutch-owned) is no more, after some nine decades of dominating local gas tanks; their stations are now to be covered in the colours and logo of Rubis (a French company).
People will look around at the swathe of major infrastructure investment projects and see the presence of Chinese investment, notably in the shape of the Chinese Harbour Engineering Company (CHEC),who are in charge of the Jamaica Development Infrastructure Programme (JDIP), ‘intended to be the catalyst behind the revitalisation of the country’s roadworks and bridges’. I have no grouse with that company, and have recently been in their company several times a week, as they are doing pipe and road construction work near a golf course where I play. I see lots of Chinese workers carrying equipment and talking to Jamaicans, smiling and loving the fact that they are spending each working day in the Caribbean sunshine. I don’t know which of them may be forced labour–that’s China’s policy figure out. But, it was notable at the weekend, how some people saw this presence. “We soon see lots of Chinese-black babies,” a lady said to me on Sunday, as we played a tournament and lots of bronzed Chinese men crossed our paths. She was just making a straight-forward point; no sense of fear in her comments. But, for some, that is a threat. In The Bahamas, where Chinese money and staff are building a massive new hotel resort complex, Baha-Mar, people have expressed fear of being ‘swamped’ by the Chinese. Admittedly, the Bahamian population is very small, and New Providence does not have a large indigenous group of Chinese living there. Jamaica, on the other hand, has had Chinese people as part of its population for the best part of 200 years, and Chinese talent and investment have done enormous things to build the Jamaica we know and love. Think food industry, say, and Jamaican Chinese influences are all over it. But, CHEC is different. We may be in for much more of their influence as they are the preferred developer of a transshipment and logistics hub. Chinese investments are already in mining and are due to expand according to reports, yesterday.
We see the Spanish in tourism. We see the Americans, Canadians, and Russians in mining. British influences are still there, though less. We have the French in the form of Total and their gas operations. Most of us know that Jamaica is not owned by Jamaicans.
How much do foreign companies call the tune? I am not going to try to answer that, but pose the question. The fact is that elected politicians cannot go around randomly endangering foreign companies and the investments that they have in place. Jamaica is not a country that has gone in for forced nationalisation or putting foreign investments under threat.
What about international financial institutions? Well, many would say they have Jamaica by the proverbial ‘short and curlies’. We have debt owed to these agencies and make up a large part of Jamaica’s 140 percent to GDP debt overcoat. Most of Jamaica’s debt is now domestic, about 60 percent. Foreigners are owed the rest, and about half of that is to bilateral or multilateral agencies. While that may seem small, it comes with enormous leverage because much of it comes with tough conditions for disbursement and the almost unavoidable need to repay. The multilateral ‘musicians’ make Jamaicans dance a jig and jump high and bend low. Many Jamaican say they don’t like this. Most disliked of all is the IMF, who tend to have a lot more leverage because other agencies need to see that the IMF is happy with a country’s economic policy before they will lend, and if the IMF says things are going off-track, then these other agencies will turn off the money spigot till things get back on the rails. The bliateral agencies can more or less suit themselves, though they are often prudent and want to see that they do not support what others have deemed not yet ready to be supported because of some economic mismanagement. Protecting tax payers’ funds is not to be taken lightly, and the bilaterals may even have conditions that are very tight and subject to rigorous oversight at home. It’s been very interesting in recent days to watch how Jamaica was skipping along and then slipped on a banana peel thrown their way by the Inter American Development Bank, which did a sort of ‘No way José!’ over financing a power generation project. “Que?” said the minister in charge; asking if the stringent procurement policy rules that the institution followed were really binding. “Si, señor!” The rest is recent history. So, the IFIs would be something that Jamaicans can understand–the debt to them is little but it tallawah. Anyway, let’s smile that for the moment, Jamaica seems to be making the most important one, the IMF, happy. The World Bank has just put a big smile on with a new lending program. I’m sure that, with the large range of things that they finance, the IDB will soon be grabbing Jamaica’s hand again to do a salsa. Nevertheless, the power of this group is enormous and has grown because Jamaican politicians have not been able to tie their shoelaces properly and keep tripping themselves up when trying to keep the economy on a good path. That’s the price for economic failure that the world has imposed. If you don’t like it, jump off at the next stop.
What then of domestic investors? They are not the same as local voters–they really matter a lot. Whether they are buying government bonds or putting their cash into physical structures, the local investors are not insignificant. They are not all the same, and I will gloss over the differences at the moment. What was also interesting this weekend, was how this group also had a big say in the shaking out of things in the energy sector. They are important partners in developing the country and found that they have big muscles to flex. They walked away from the Energy Monitoring Committee and said they wanted government to shape up. In a nutshell, government suggested that it will shape up. We can look back at the preceding week’s debacle–that a lot of debacling in a short time–over a proposed bank tax as another power play by domestic investors and their agents, because they were going to be hurt on several fronts if tax payments for withdrawals became effective. So, let’s say that these matter a lot.
So, for all that voters (in their roles apart from investors) give the political mandate, they are not the ones who matter the most. Yes, they can complain about the mess of water supplies, or the cost of electricity, or the problem of getting a bus to work, or the constant problems of praedial larceny, but how much do they move the SS Jamaica? I would say not that much.
So, if the politicians have had their leverage lessened by the claims on them from those non-voting entities, who do you think is more likely to help effect meaningful change in Jamaica?