Pushed to the brink

When on Mon-day night, US President George W Bush gave Saddam Hussein, 48 hours to leave Iraq or face war, many TT business people started praying for a short war. A long war, they said, could disrupt trading links and increase the cost of doing business.

Newly elected president of the Trinidad and Tobago Manufacturers Association (TTMA) Anthony Hosang, said there is no doubt that a war will affect TT. He said the terrorist attacks in the US caused a serious decline in tourist arrivals to this country, noting that war against Iraq could further depress the tourism industry. He noted that while there was an increase in the number of visits out of Europe, this time around, war will  not only affect the US but other  countries around the world. “We can only hope that this does not do further damage to our tourist industry,” he said. Hosang added that local manufacturers who import raw materials and other inputs for their products are also going to be affected. However, he said many of them have not implemented any contingency measures in the event that there is an outbreak of war. “It’s a wait and see situation,” he said.

In a televised address to the nation, Bush said  it was time for “decades of deceit and cruelty” to come to an end in Iraq. “Saddam Hussein and his sons must leave Iraq within 48 hours. Their refusal to do so will result in military conflict, commenced at a time of our choosing,” he warned. The warning has put many nations on alert. Businesses around the world are also bracing for the worse as trade around the world will no doubt be affected. Hosang  added that with war, the movement of goods and services will be impeded. “It is a matter of waiting and seeing what the fallout of war is going to be,” he said in an interview. “Clearly we need to look at it carefully and work with all stakeholders. We do not know what we have to deal with as yet, at this point it is all guess work.”

The biggest victims of war and terrorist attacks have been the airlines, which are particularly vulnerable to rises in energy costs. While national carrier BWIA West Indies Airways is still trying to come to terms with the losses it experienced after the terrorist attacks in the US, it refuses to be caught off guard this time. “This time BWIA has a plan in place,” said Clint Williams, corporate communication director, BWIA. He said the airline has implemented a number of contingencies in the event that war is prolonged. These plans, he said, include special security for its flights, flexibility for passengers who need to change bookings and security for its employees at various stations around the world. “We are quite confident that we have everything in hand,” he said, noting “we can start rebuilding since the airline is already in a precarious position from September 11. War at this time only exacerbates the weak financial position that many carriers find themselves in,” he said. Williams said he cannot say how much money BWIA stands to lose, noting it all depends on how long the war lasts. “We can survive a bad week. But a terrible month is going to have a bad effect on us.” 

Central Bank Governor, Ewart Williams has said that war by the US and its coalition forces against Iraq will seriously affect Cari-bbean economies, many of which are still recovering from the fallout of September 11 terrorist attacks in the US in 2001. He also said while energy-rich TT is in a position to collect increased revenues from the spike in oil prices, decline in tourism in Caribbean countries will hurt exporters in the twin-island state. “It is seriously going to affect the economies of the region. One cannot simply assume that because we are an oil producer, we will benefit, certainly there is going to be an increase in oil prices and it redounds to a healthy revenue position,” said Williams. Bush’s war drums has sent the price of oil crashing to its lowest level for three months.

The cost of benchmark Brent crude slid more than $2 a barrel in the first hour of trading in London on Tuesday. It fell ten percent to $26.40 before edging back up to about $27.30. Williams added that he is not sure that investors can continue making investment decisions in a condition in which there is war.  “I am not sure that trade relations would be the same if there is prolonged war,” he said. There is also continuing discussions among regional leaders about a Stabilisation Fund to help prop-up fragile economies. It is envisaged that such a fund will have an initial capital of US $50 million in the first year rising to US $180 million within five years. Williams suggested that countries that are facing major economic disruptions as a result of a war could approach the IMF;  the Inter-American Development Bank (IDB) and other multilateral organisations which have facilities for emergency assistance. He warned though that they may have danced to the tune being played by these institutions.

Peter Clarke, managing director, West Indies Stock Brokers Ltd (WISE) said investors will exercise some caution with their investments. “I do not think that the war will impact fundamentally on TT’s economic prospects of going forward. However, at a time like this, one needs to exercise some caution and watch and see how things develop in terms of the war itself and the impact it has on us.”  Courier services are already counting the costs of war. Dana Mackie, a customer service representative at Federal Express (Fedex), noted that according to the restrictions put in place by governments, there may be some problems where flights are concerned and this may ultimately have an impact on their service. “There may be some changes where ‘commitment days’ are concerned as well as to the flight plans, but that is all we can see happening for now,” she said.

Fedex currently has 211 offices worldwide including branches in the US, Spain and Portugal, three countries which are expected to be directly involved in the war. Mackie revealed though that the company does not provide services to either Iran or Iraq, although they do have some Middle Eastern clients. Joanne Abbas, manager of Trinidad operations for JSL Speedpak, whose main office is based in Miami, Florida, noted that one problem she could foresee would be a slowdown of orders from foreign clients. She maintained though that apart from this she could not see the war affecting the company to any great extent since they utilise cargo planes for transportation, rather than commercial planes.

Abbas noted that since the terrorist attacks of Septe-mber 11, US Customs had initiated strict security measures which required companies to be registered for courier services. Therefore, she maintained, business can continue as usual in the event of war. For Ramnarine Mohepat, chairman, Skyline Freight, war with Iraq could have “a terrible effect” on the company’s business. “Imports and exports will fall for sure,” he said. Those involved in the business of import and export will see a definite drop in business, he predicted.