GUYANA-BORN international economist Dr. Bishnodat ‘Vishnu’ Persaud, who was recently honoured by the Barbados Government for his outstanding contribution to the public service regionally and internationally, says CARICOM countries need to implement far-reaching structural policy changes, which should be supported by regional expertise and consensus that would help overcome political resistance to changes which hurt in the short-run but are necessary to put economies on a better longer-run footing.“Out of the Caribbean crisis, there could be a very beneficial long-term gain in the structural change which has had to be undertaken, and the need for which has to be recognised. This could help us not to repeat mistakes and thus prevent future crises of the depth which have hit us,” the former Director and Head of the Economic Affairs Division at the London-based Commonwealth Secretariat advised.

Persaud was awarded Barbados’ second highest honour – the Companion of Honour of Barbados. In a recent conversation to congratulate him on his award, I sought his views on a number of key issues confronting the region.
Need for Structural Change in CARICOM Economies
He highlighted the need for CARICOM countries to downsize bloated bureaucracies, cut other non-essential public expenditure, encourage investment and competitiveness and redirect some public expenditure towards high-return infrastructure. A key focus, he emphasised, has to be increase of exports of diversified services and goods and reduction of imports in areas like food.
Persaud pointed to credit downgrades in the region, financing becoming difficult and even borrowing locally becoming problematic as foreign banks operating in the region are constrained by headquarters to extend credit, even to governments, due to credit downgrades and repayment difficulties. On the positive side, he said, the recovery in major developed countries is gradually improving prospects for tourism and other export sectors. As well, international financial institutions continue to be supportive, especially where there is willingness to undertake austerity and adjustment.
A former member of the United Nations Secretary-General’s High-Level Committee on Development Policy (CDP), he observed that debt ratios are in most cases below 80% of GDP, ratios much lower than in countries in Europe, which have had to seek substantial bail-outs. “Growth is becoming positive again in many countries, and those that are not facing a fiscal or debt crisis and that are commodity-dependent such as Guyana, Belize and Suriname are growing at reasonably good rates. Trinidad and Tobago as an energy exporter is growing mildly and both this country and Guyana could do even better, but for internal constraints rather than weakness in the world economy.”
Persaud, who served at the Commonwealth Secretariat for close to 20 years, shares the concerns of St. Lucia’s Prime Minister Dr. Kenny Anthony about the major unprecedented economic crisis facing the region, but unlike Anthony and other influential regional commentators, he doesn’t believe that the immediate requirement is regional solutions or more regional economic integration. He asserts that economic restructuring at the national level is absolutely critical as opposed to emphasis on a regional approach, which is more of a longer-term imperative.

Another CARICOM Commission is necessary
He lamented the fact that the report of the West Indian Commission ‘Time for Action’, which was headed by former Commonwealth Secretary General Sir Shridath Ramphal, was in the main, not implemented. “The seriousness of our current problems deserves another similar Commission. I must emphasise, however, that the focus must be on Caribbean economic problems, and not wholly on regionalism as it bears on pressing problems of member countries of CARICOM. Financing is a vital issue so the Caribbean Development Bank (CDB) and its ability to raise funds and invest wisely are crucial. CDB should be managed in a way that it should never have allowed itself to lose credit rating,” said Persaud, who served as chief economic adviser to the Commonwealth Secretary-General and on a number of high-level international commissions.
Persaud is convinced that the financial capacity does not exist to support the “ambitious plans” of CARICOM experts who have identified agriculture, transportation and renewable energy as CARICOM priorities for major regional investment plans, supported by the CDB. He contends that transportation is a regional issue requiring urgent regional solutions. However, on agriculture and renewable energy, he argues that the major thrust should be on national and bilateral programmes with support from CDB and other financial institutions and donors.
“What we need is national re-energising plans supported by regional efforts, where required, as in extending scope for freer trade on a wider regional basis and internationally. Another regional priority is freer movement of skilled people and controversially perhaps making residential status more easily available, not only to movement within the region, but also to people from outside with scarce skills, capital and vibrant entrepreneurship.”

Danger of Eroding Existing Preferential Trade Agreements
Professor Persaud, who has served as Chief Technical Coordinator of the Caribbean
Regional Negotiating Machinery (CRNM- now OTN), urged CARICOM countries to “get on with implementing” the Economic Partnership Agreement (EPA) with the European Union. He also stressed the importance of moving ahead with negotiating freer trade and investment arrangements with Canada, US and the wider Caribbean, including Central America. “In not moving ahead ourselves, we are isolating ourselves and will cause increasing erosion of our existing preferential trade agreements. A key regional policy initiative has to be to support national efforts to expand extra-regional exports.”
The region, according to the former UWI Professor of Sustainable Development, cannot develop on the basis of the small regional market and since the private sector are the exporters; they must be very involved with governments in devising a major export push in services and goods. A revived Caribbean Association of Industry and Commerce (CAIC) and an expanding role for regional export development facilitation and promotion were identified as being crucial.

IMPACT OF CRIME AND ANTI-MONEY LAUNDERING LEGISLATION
Persaud also feels crime and related drug trafficking and corruption are serious problems. “The US Drugs Enforcement Administration estimates that 14% of cocaine smuggled into the US now enters through the Caribbean – twice the rate of just two years ago. These problems are surmountable with determined action and increased foreign assistance of the kind provided through the US supported Caribbean Basin Security Initiative. Barbados, recognising the sensitivity of tourism to crime, has shown that such dedicated action can produce substantial results.”

“In Jamaica, the association of crime with politics in the past has made the crime situation difficult and in Guyana and Trinidad and Tobago race and politics have complicated policing problems and solutions. In all this, there is insufficient awareness of the urgency of the crime problem and of the dire consequences of playing politics with crime and policing.”
On the implications of Guyana’s failure to approve Anti Money-Laundering legislation, Persaud said the consequences are financially pervasive. “It is not only going to affect business people and investment inflows, but anyone with an interest in foreign exchange. A large section of the population benefits from remittances. Playing politics with people’s direct interests can backfire for those who are seen as obstructing legislation.”
ROLE OF THE COMMONWEALTH SECRETARIAT
Asked about the current role of the Commonwealth Secretariat in Caribbean economic development, Persaud, who co-chaired a UN Expert Group on the Vulnerability of Small States.

said it is sad to see the Caribbean losing its central role in the Secretariat’s work on small states. “In our time we initiated work which led to the international debt reduction programme for Highly Indebted Poor Countries (HIPC). It would have been good, if the Secretariat was more involved in helping the region in its debt management and relief needs.”
He recalled that some of the region’s leading lights were brought in to assist the Secretariat including former CARICOM Secretaries General and economists William Demas and Alister McIntyre, noted economists Jamaican G. Arthur Brown and Trinidadian Frank Rampersad, and former Barbados Attorney-General and Minister of External Affairs Sir Henry Forde.

(Sandra Ann Baptiste is a Business Consultant, Writer and Specialist in Caribbean Affairs)