TRANSCENDING CRITICAL CONSTRAINTS
DR. THE HON. KENNY D. ANTHONY
THE 38TH AUTHORITY MEETING OF THE ORGANISATION OF EASTERN CARIBBEAN STATES
CASTRIES, ST. LUCIA
Mr. Chairman, Colleagues, Director General, Distinguished Ladies and
This 38th Meeting of the OECS Authority is taking place against the sad
background of the loss of a dear friend and colleague, the late Prime Minister
of Dominica, the Honourable Pierre Charles. His passing, in the middle of a
historic and courageous fight to restore fiscal viability, growth and economic
development to his country, brings a certain poignancy to the struggle we all
have in these times to bring our countries individually and collectively to new
levels of economic and social development.
We shed tears for Pierre Charles. Now we must wipe the tears away, and welcome
his successor, our colleague, Hon. Roosevelt Skerrit, the youngest Prime
Minister in the CARICOM Family. Prime Minister Skerrit has displaced Prime
Minister Douglas and of course the Prime Minister of Saint Lucia. I also extend
a warm welcome to Dr. Smith, the Chief Minister of the British Virgin islands,
who is attending a meeting of the Authority for the first time.
A PERIOD OF UNCERTAINTY
The OECS countries now have to face some of the most challenging times and
circumstances in our recent political and economic history. The current
international environment can be summed up in one word, uncertainty. The
21st century at its very beginning was transfixed by the possibility that the
very computer technology which had engendered such spectacular technological
progress could lead to world wide chaos as the world turned, so to speak. We can
all recall, of course, the Y2K problem. In the year 2001, on September 11, the
unthinkable happened and the United States was attacked on its own soil leading
to some of the most fundamental changes both within that country and the rest of
Those attacks and the subsequent wars in Afghanistan and Iraq have in a sense
overtly replaced the norms in international relations which are now having
significant repercussions on the international body politic. These circumstances
have vividly illustrated and highlighted the extremely difficult circumstances
in which very small states like ours exist and have to exercise, and if possible
maintain, our sovereignty.
The fight against terrorism now raises major issues for the international
community and states like our own, as the international community now seeks to
establish a meaningful balance between allocating resources to defeat terrorism
or to eradicate poverty and disease.
To compound the problem, major issues in the arenas of trade and finance have
also illustrated our vulnerability to external circumstances. The change in
trade regimes has had a negative impact on our major agricultural export
commodities, bananas, sugar, and the FSF, FATF and OECD have placed significant
obstacles to the development of our off shore financial services sectors. Our
tourism sectors have been affected by the events of 9/11 through the increased
costs and inconvenience of travel, not to mention the higher costs we have had
to incur for increased security at our airports and seaports. The war against
Iraq and instability in the Middle East always have the potential of raising the
price of our most critical import commodity, oil.
The countries of the OECS have always had to operate in the most challenging of
circumstances. As we moved towards the attainment of our independence in the
1970s this was undertaken against the background of two major oil crises, world
recession and the debt crisis of the 1980s. Our fledgling countries were exposed
to the harsh realities of the international system having not yet quite
recovered from the political disappointments of the 1960s when all efforts of
regional political union had failed.
BUILDING ON THE PLATFORM
It would be difficult to contemplate the fate of these countries if the
institutional arrangements first established through the West Indies Associated
States and then consolidated in the Treaty of Basseterre in 1981 had not been in
place to support these countries in such difficult circumstances. The preamble
to the Treaty of Basseterre has two very significant and far reaching assertions
The governments of the contracting states -
“Affirming their determination to achieve economic and social development for
their peoples as enunciated in the Agreement of the 11th day of June 1968
establishing the East Caribbean Common Market.”
“Inspired by a common determination to strengthen the links between themselves
by uniting their efforts and resources and establishing and strengthening common
institutions which could serve to increase their bargaining power as regards
third world countries or groupings of countries.”
The fact that the OECS arrangement has lasted for almost twenty-three years and
has been strongly supported by all OECS Governments of all political
persuasions, clearly signifies that the two premises as laid out above still
hold and in fact may be even more relevant in the current circumstances.
The OECS countries under their current leadership must now assess the need for
significant changes in the arrangements, building on the substantial platform
that has been created by the original treaty arrangements.
The objective situation is that since the independence of the OECS countries,
some thirty years ago in the case of Grenada and twenty one years ago in the
case of St Kitts/Nevis, there has been a remarkable record of liberal democracy
with one temporary exception. There has been political and social stability,
free and fair elections, respect for the rule of law, impressive social
indicators under the Human Development Index as well as currency and financial
RECONFIGURING TREATY OF BASSETERRE
There were many who doubted decades ago whether these states could prosper much
less survive as they launched out on their independence in those turbulent
times. That the Treaty of Basseterre played a significant part in the progress
of these states there can be no doubt. That it must be reconfigured in some way
to meet the new challenges is certainly unquestionable.
Article 3 (1), outlines the purposes of the Treaty and while underlining the
need for unity and solidarity among the member states to defend their
“sovereignty, territorial integrity and independence”, clearly establishes the
need for cooperation with the rest of CARICOM and the international community.
Article 3 (2) sets out seventeen areas in which the member states pledged to
coordinate, harmonise and pursue joint policies. These seventeen areas can be
broken down into five basic subjects as follows:
1. Law and Order
2. Foreign Affairs
3. Public Administration
4. Management of Human and Natural Resources
5. Economic Cooperation and Management
These two sections place in a certain context the particular and peculiar
position of the OECS arrangements viewed both internally and externally.
Internally, the areas of cooperation if fully implemented will lead to a new
form of both government and governance which will require new political,
constitutional and economic arrangements.
Externally, the OECS will have to identify its particular and peculiar interests
which may not be at any particular junction consistent with those of the wider
CARICOM and the international community.
It is clear that the two are significantly correlated as without a much deeper
form of solidarity and integration the OECS countries’ interests either singly
or collectively could not prevail in CARICOM or the international community.
The current economic circumstances of the OECS underscore the need for a higher
and deeper form of integration as set out in the Treaty and as is being provided
by the Authority. The fiscal situation in most countries has deteriorated
significantly in the last few years following a series of external shocks and
natural disasters. Fiscal deficits have increased and correspondingly debts have
risen to new levels. A more fundamental issue, however, has been the long run
trend towards stagnation which requires significant adjustment measures for the
transformation of our economic structures.
The issues of production, productivity, and regional and international
competitiveness have now assumed major proportions for us as we transition from
highly protected and low productivity economic structures to a more open and
competitive environment. Economies, however, do not automatically transform
themselves and in today’s environment many of the avenues open to countries in
the past are not available to us now. For example, development behind protective
tariff walls is not now an option and the most we can hope for in today’s
climate is a holding operation. This illustrates quite clearly that while we
need time to effect our economic transition, external circumstances are inimical
to our requirements.
Our countries are therefore placed in the most difficult of situations trying to
balance the demands of the regional and international communities, through
trading arrangements and standards and codes, for particular kinds of actions on
one hand against the legitimate demands of the local populations for improved
economic and social welfare on the other. This poses enormous challenges for our
countries both individually and collectively, as the OECS. What kind of economic
activities, what kind of productive structures, what kinds of markets will allow
us to transcend these critical constraints? Logic would seem to suggest that the
aggregation of natural and human resources across countries would lower
transaction costs and raise output. However, this is not as simple as it seems
and must take into consideration the impediments, physical, cultural and
insular, not to mention the lack of information which people possess.
BALANCING SOVEREIGNTY AND EFFICIENCY
We have now come to the very delicate point where the attributes of both
sovereignty and efficiency must be carefully balanced. This will require not
only very careful thought but wide and constructive discussion at every level in
the OECS so that our people are made aware of the trade offs and the choices
which they have in looking to the future not only for themselves but for
generations to come. We must stop living in world of fiction.
It all comes down to a vision of the future for these countries and the
leadership which is required to engage in a societal dialogue with our people
both within each island and between the islands. In looking to this future
it is necessary to define in concrete terms the essence of the OECS arrangements
and what we desire them to provide us with.
The OECS can be described as a treaty arrangement which has a political and
geographic domain. The objective in the final instance as in all integration
arrangements is to create a single economic and financial space leading to
increased production and productivity which results in higher incomes and
The OECS Heads of Government at a special meeting held in Basseterre in November
2002 set out a number of objectives which they hoped to achieve by the year
2007. These were:
1. A growth rate of at least 6 per cent.
2. An unemployment level of a minimum of 6 per cent.
3. A poverty level of a minimum of 6 per cent.
4. Acceptable targets on the human development index.
5. A broad based, adaptable and internationally competitive economic structure
in each island and across the OECS.
These targets are daunting and will require considerable effort and significant
changes to our present modus operandi.
Their achievement requires a strategic and disciplined approach to policy making
and implementation based on three critical processes, namely –
The Stablisation process is well under way with Dominica making significant
strides under their structural adjustment programme. All countries have
established programmes with performance guidelines.
At the Monetary Council of the ECCB we have set for ourselves fiscal and debt
benchmarks which the countries have agreed to have convergence on over finite
With respect to Stimulation we need to establish the appropriate public sector
investment programmes to initiate growth directly as well as to provide the
infrastructure for private sector investment and growth.
In the case of Transformation there are critical factors which need to be
assessed. For instance, incentive regimes and tax systems, the facilitation of
the export of goods and services, the investment climate, and the creation of a
cadre of dynamic domestic entrepreneurs.
The coordination of economic policies must be buttressed by suitable political
arrangements. Some of the required changes need constitutional amendments. Our
relations with CARICOM and the rest of the world also needs to be clearly
We need to balance the need for change against what the political traffic can
bear and the need to retain the distinctiveness of each of our countries which
should not be seen in negative terms but as a positive asset to the sub-region.
Integration is not about mindless uniformity.
The question of new or upgraded political arrangements must take into
consideration the tenor of our current constitutions and political culture.
The OECS arrangements have been characterized by the significant role of the
Authority. This institution operates very much in the spirit of a quasi cabinet.
Critical decisions and appointments are made by this body in an exercise of
Another political institution within the OECS, the Monetary Council, comprising
Ministers of Finance, exercises joint sovereignty in monetary policy and through
their efforts have maintained the stability of the currency, low inflation and
the safety and soundness of the domestic banking system.
The external threats and shocks to the economic system as well as the domestic
circumstances of increasing fiscal deficits and debt servicing obligations and
the need for growth and structural transformation require an enhanced form of
political collaboration to ensure continued progress.
STRATEGIC PLANNING AND CONSTRUCTIVE NEGOTIATIONS
With the continued trend towards liberalisation and globalisation, small states
need to identify and secure their interests through strategic planning and
constructive negotiations. These states have to be very clear and unapologetic
about their particular interests which can only be attained through consistent
and principled negotiations. The OECS countries are now engaged in a series of
negotiations with respect to the Caribbean Single Market and Economy (CSME), the
FTAA, the COTONOU Agreement and the WTO. There are particular interests which we
have which may not be well served by particular segments of these arrangements.
The OECS holds a special position within CARICOM which must be recognized by all
parties if either are to make significant progress. The OECS are the smallest
countries within CARICOM and within the international system. Recognising this,
they have, through treaty arrangements, sought to address the critical issues
associated with their very small size.
1. The acquisition of the economies of scale and scope in administration,
production and marketing.
2. The mitigation of risk by spreading assets and efforts over a larger
geographic and political space.
3. Increasing their negotiating capacity with third countries or groups of
Within CARICOM the special problems of the OECS were recognized by special
access to resources at the CDB and special arrangements through the Agricultural
Marketing Protocol and Article 56. The new arrangements under the new protocols
and the CSME do not speak eloquently enough to these circumstances which is
ironic since the wider region in their negotiations with other countries
consistently speak to the issue of special and differential treatment.
The further irony is that the OECS as currently constituted has attained a
higher level of integration than CARICOM. The OECS has a common judiciary, a
common currency and central bank, a common directorate of civil aviation, joint
diplomatic arrangements in Canada, common procurement of pharmaceuticals and
many other areas of close cooperation. These are the assets which the OECS takes
into any arrangements with CARICOM. The OECS must therefore set out a clear and
unequivocal position with respect to CARICOM as a whole and some of the
participating states of CARICOM like Trinidad and Tobago and Barbados with which
we have significant reciprocal interests. It is important for instance that we
have conversations with Trinidad and Tobago on matters concerning Oil, Air
Transportation, Trade in Manufacturers and Agricultural Products, Banking and
Finance, Education and Training. Similarly with Barbados we need to discuss
Trade in Manufacturing and Agricultural Products, Finance, Education and
Training, and Air Transportation. With both countries, matters of Security and
Immigration are of vital importance.
With respect to the FTAA, COTONOU and the WTO our special circumstances need to
be forcefully communicated through the Regional Negotiating Machinery (RNM).
To get to these positions requires deep thought and introspection by the
political leaders of the OECS and purposeful discussions with our people. We
will have to devise a structured and deliberate way of plotting our future which
is appropriately sequenced bearing in mind our own circumstances. Each island
has its own distinctive features which we should treat as significant assets
These distinctive features we must seek to bring to levels of excellence which
our own citizens can enjoy and which we can share with other members of the
OECS, the region and the world. For instance, if there are aspects of St Lucian
culture of which we are justly proud we should not be opposed to sharing them
with our fellow citizens of the OECS.
TRANSLATING SENTIMENTS INTO CONSTITUTIONAL CONSTRUCTS
There is the urgent need to translate these sentiments into constitutional and
political constructs which will strengthen them and make them more meaningful
and valuable to us as a people. To extend this thought further, unless there is
law and order, peace and justice and economic progress it is unlikely that a
broad range of our citizens in each island will be able to enjoy the patrimony
of the land. The administration of justice and the preservation of law and order
are critical matters for this to be so. There are proposals before us for the
consolidation of the justice system by incorporating the magistracy and for
strengthening law and order by re-configuring the Police and Prison Services.
Sober and constructive thought needs to be given to these proposals to consider
whether they are that important to our existence to utilize our political
capital to seek constitutional amendments for their implementation.
Another area of significance is the freedom of movement of capital and labour
which are fundamental to the deepening of the integration process.
The movement of labour has been a contentious area in a region where
unemployment has been high and resources scarce. The labour market, however,
needs to be more flexible to allow for increased production and productivity.
Our experience has been in the region that people only move when there are
economic prospects in the destination they are headed to. Immigrants, if the
truth is told, work very hard and contribute in great measure to the local
economy. There needs to be some regulation of the labour markets but this can be
done only if the labour market information systems are accurate and timely.
We have already made considerable progress in this area through reciprocal
arrangements in Social Security Schemes, and a first phase involving relaxed
immigration procedures. Further progress needs to be made through the
identification of specific skill requirements in each country and training
schemes throughout the OECS, to facilitate the manpower requirements for our
In the area of capital movements we have made significant strides and are not
subject to some of the constraints faced by the rest of CARICOM. We now have a
Common Currency, an Inter-bank Market for liquid funds, a Regional Government
Securities Market, a Securities Market and a Secondary Mortgage Market.
These are vital platforms on which the free flow of capital can be built and so
we need to remove the other impediments such as Alien Landholding Restrictions
among OECS States.
The freedom of movement of capital will facilitate the increased mobilization of
savings and their more efficient allocation. It will give the citizens of the
OECS greater choices with respect to savings instruments and a more appropriate
means of financing for their investments. The possibility of the establishment
of OECS wide firms will increase substantially under such a regime. Already
there is significant cross border investments in government securities and
The Monetary Council has proposed that the Eastern Caribbean Securities Exchange
is the logical precursor of a wider regional stock exchange. It is in fact a
regional exchange having the technology to support cross border exchanges. We
are now in the process of preparing the necessary legislation to expand its
The OECS countries form part of an archipelago of islands and for integration to
be successful a realistic Air Transportation policy needs to be conceived to
address this most critical and complex of issues.
The OECS countries need to address the need for a coherent Social Policy which
takes into consideration both country and OECS circumstances. We have achieved
fairly decent social indicators but their maintenance and improvement are quite
a challenge given the current fiscal and debt profiles in some of our countries.
Education, Health, Social Protection and Pensions are areas which are vital but
costly. The scourge of HIV/AIDS by and of itself can place our entire social and
economic structures at extreme risk.
COURAGE TO TREAT CHALLENGES
In the final analysis we will have to think deeply about the costs and benefits
of how we are to proceed in an environment which is not only uncertain but
fraught with dangers. We have to balance our country and individual sovereignty
as well as our distinctive differences against the need to present a collective
political and economic posture to treat with third parties both in the region
and beyond. The people of the region in general and the people of the OECS, in
particular, have been very creative in their responses to difficult
circumstances over a long history of slavery, colonialism and a host of natural
disasters and external economic shocks. The very creation of the OECS was in
response to constitutional, political and economic challenges. We are now once
again faced with tremendous challenges which require a substantial effort and
creative responses from our politicians, our civil servants, our private sector,
our trade unions, our youths, civil society and the public at large.
There is an urgency to our current discussions which must not be lost on
us or our people. The pace of change and the fundamental and structural nature
of our problems do not provide much breathing space or degrees of freedom for
continued procrastination. The issues before us must all be squarely faced and
we must devise the necessary societal consensus within our individual countries
and across the OECS to be able to address our domestic issues successfully, and
having done that to treat with third parties to our advantage.
We must have the courage to treat with our challenges definitively. To quote
“Don’t be afraid to take big steps
You can’t cross a chasm in two small jumps.”
January 22, 2004