A frontal assault

From regional integration and the Caribbean Single Market and Economy (CSME) to Liat and predatory pricing, Prime Minister of St Vincent and the Grenadines, Dr Ralph Gonsalves, tried knocking some sense into those attending a recent seminar hosted by the TT Chamber of Industry and Commerce. On the issue of globalisation, he puts things in perspective. “It is trite for us to speak about globalisation and more particularly about what it is in our own area — modern globalisation.” Modern globalisation has certain distinct characteristics, he went on to note. These include the rapid movement of large sums of finance capital across national boundaries as well as the spread of information technology and the easy availability of information. This is closely linked to the fact that the modern society is increasingly a knowledge-based society. He drew reference to the move towards trade liberalisation as a universal phenomenon. “What is to be our overall strategic response to the phenomenon of globalisation?” he asked the packed auditorium. The Caribbean Single Market and Economy (CSME) can be considered as a  strategic response to globalisation at the regional level, Gonsalves said. However, he lamented that the political apparatus of Caricom was in a “ramshackle condition” and therefore unable to meet the new, deepening economic space being created by the CSME.

Gonsalves severely criticised the private sector for the role it has played in what he termed the “slow move towards the CSME” and what was critical of the way trade negotiations were being handled. He said, “The simple fact is that by and large, the private sector in the Caribbean is unprepared for the CSME and the Free Trade Area of the Americas (FTAA).” “There is no real and thorough understanding as to what is required,” he went on, adding that companies and the private sector, not governments, are at a stage where they are negotiating the textual language of the FTAA. “You are the ones who know about which commodities you need, the particular kinds of leverage and protection for any transitional period, as well as the meaning which should be given to the practical terms for special and differential treatment, not only for countries, but for commodities.” This, he said, is not something which the regional governments know a great deal about and they need to have the private sector input.

On  a single regional carrier that could be an integral part of the Caribbean’s future, Gonsalves referred to an April 14 meeting of the Caricom Quasi-Cabinet for Regional Transport which was held in Barbados. “This is not to actually bring about a single airline but rather to give us a plan which we can then assess,” he maintained. “You can’t have a community unless you have communication. So it is of strategic importance if you are having a CSME to have communication.” And one of the principle forms of communication is air transport, he went on, adding, “once you see the issue in large terms, the small quarrels we are having about Liat and BWIA fall into place.” Liat, it was revealed, has incurred a debt of approximately EC $200 million. A significant portion of this money is owed in landing fees. In this light, Gonsalves took the view that it was cheaper to keep Liat in the air rather than to close it. He further went on to say that Liat required financing for the period April to June to the tune of EC$25 million. The government of St Vincent and the Grenadines, which possesses a 10.1 percent market share in the airline, put in EC$2.5 million, because of its interest in increasing its share holding. It has asked that this contribution be put towards its share holding.

Likewise, the government of Grenada, which has a market share of 1.4 percent, has donated $300,000. The TT government, Gonsalves said, has provided a line of credit of $12.5 million at zero percent interest with a moratorium of five years. “In the context of a single airline, whatever form it comes in, the government of St Vincent is prepared to be a shareholder in that entity,” he pledged. Responding to why he refuses to allow Liat to fall on its own weight and have the competitors take up the slack, Gonsalves replied, “I don’t know of any civilisation anywhere in the world, where the people allow others to exclusively control air transport.” He criticised what he called persons who came into the region with “deep pockets” and who engaged themselves in predatory pricing to run particular airlines into the ground. If there is predatory pricing to push business out of the market place, and in the case of Liat, out of the sky, it can be guaranteed that when a monopoly exists the prices will rise again sharply to regroup for the period when predatory pricing was the tactic being used. “Others can go for that model,” he asserted, “but St Vincent and the Grenadines, while we are happy to see other competitors in the sky, will be supportive of Liat. “We want to see a regime put in place which does not allow predatory pricing and ensures fair competition.” “This is the only way that as a civilised people we can move forward and be assured that we can be carried from one island to another. You never miss the water till the well runs dry,” he said.