David Vs. Goliath

I was presented with a variety of topics on which to comment this week.

For some time now I have wanted to return to the arena of international relations and in particular the increasingly tight bind in which the George Bush regime has put the United States.

The increasingly loud calls coming from traditional US allies in Europe for the closing of the Guantanamo detention prison, the growing recognition by Americans themselves about the abysmal mess that has been created by the illegal invasion of Iraq, the ridiculous position of denying economic assistance to the duly elected Hamas government in Palestine are but some of the issues which cry out for comment.

Then there was the Soca Warriors final first round match against Paraguay further lessons to us as a nation as our team returned to Trinidad and Tobago.

Also on the local scene was the June 19 Rally in Fyzabad and the seminal contribution to that Rally and to other forums by our friend and comrade Roger Toussaint, leader of the Transport Workers’ Union Local 100 of New York City.

Much needs to be said about June 19 as FITUN seeks to build, slowly but surely, a movement that will be capable of heading off the neo-liberal agenda that is being so aggressively implemented by the government.

I was debating which issue to go with when I read the headline stories in yesterday’s press about the Prime Minister’s statement that we should not worry about the direction of the country’s development, that there is no fear of our running out of natural gas, and that the country is in capable hands.

While the Prime Minister may have sought to communicate positive vibes about the country and its economic future he in fact raised more concerns in the minds of the population.

The Governor of the Central Bank is a supposedly neutral technocrat who is responsible for aspects of the country’s economic management and especially the management of our monetary policy and foreign reserves and by extension the exchange rate and interest rates.

These are vital measures of the health of the economy and many economists maintain that the exchange rate is our most important macro-economic marker.

This is because a devaluation triggers a range of problems such as inflation as the price in TT dollars of goods that are imported or are manufactured from imported goods will increase sharply. And as inflation takes off the effective earning power of working people is eroded.

Indeed, those on fixed incomes like pensioners and persons whose wages are low as for example minimum wage earners are hurt the most as they have little if any extra income to offset the increase in the cost of living. So our Governor holds a key position. Now I say that he is supposedly neutral since the position is not under the direct supervision of a Minister.

There is a Board of Governors of the Central Bank, but there is clearly a need for the Minister of Finance to work closely with the Governor in terms of policy.

This requirement for collaboration has meant that although Governors are appointed for a five-year term, we have seen a succession of persons in that position over the years.

This is due to the regular changes in government that have occurred since the NAR defeated the PNM in 1986.

Since that time we have had William Demas, Ainsworth Harewood, Winston Dookeran and now Ewart Williams reflecting the NAR, PNM, UNC, PNM governments during the past 20 years.

So one expects that although the Governor should be “neutral” in terms of his responsibility to manage key aspects of the economy he would to varying degrees be partial to the policies of the incumbent government.The extent to which the Governor places his national responsibilities above any sense of loyalty to those who appointed him is a good estimate of whether a government can proceed without any regard to good sense.

Now the Governor has been making statements over the last six or more months about dangers that are lurking on the horizon. These statements have been warning us that the Government, contrary to what the Prime Minister said on Friday last, is making some grave errors in its policy.

Hear the Central Bank Governor as he addressed the TTMA Annual Meeting at the end of March: “Foreign exchange is a national resource coming largely from our national patrimony (the energy sector). For most developing countries, foreign exchange is a major developmental constraint.

For Trinidad and Tobago, this constraint has been temporarily eased but it is there and it behoves us to use foreign exchange in a way that best benefits the economy and facilitates sustainable development.”

According to the Governor there are serious pressures on the foreign exchange rate, the “main factors behind these pressures being: the rapid increase in private incomes leading to buoyant import demand; increases in government expenditure on capital projects, some of which have a high import content; and a significant increase in capital outflows for asset acquisition, purchase of securities issued by regional sovereigns and a rise in portfolio outflows, including foreign currency denominated mutual funds.”

Now this is a serious statement. It may not be as strong as some may think is necessary, but it is nevertheless an important warning. But the Government is clearly going to ignore it since Mr Manning, who is both Prime Minister and Minister of Finance, insists that “we know what we are doing.”

Those of us who lived through the oil boom of the 1970s and the crash of the 1980s and early ’90s cannot be so confident.

The Government is spending on a range of projects that will yield no new wealth and no foreign exchange. On the other hand everything that the PNM seems to be banking on is in one sector — the oil and gas sector. It is like the foolish one who puts all his eggs in one basket.

We are neglecting agriculture, allowing manufacturing to die as we pursue so-called free trade policies and living in hope that our oil and gas will keep going forever. It didn’t happen in the past and it won’t happen in the future.

We need to raise our voices in unison and put a brake on how the government is managing the economy.

The present wealth provides us with a tremendous opportunity to finally create a sustainable economy and a proper quality of life for all our citizens.

Instead we are literally squandering this chance as we implement policies that result in growing inequality, the absence of social justice and investment in activities that will not result in sustainable development.

Rather be confident about the future, the present managers are giving us cause for serious alarm.