St Lucia walking a tightrope

St Lucia walking a tightrope

Recent reports pertaining to trade and investment, and long standing drug trafficking and money laundering issues, have implications for Saint Lucia, amid a stagnant economy (rising corporate debt, capital outflows increasing the national debt of EC$2.9 billion, 15 percent VAT, 24 percent unemployment, 45 percent youth unemployment) and a newly elected Allen Chastanet-led administration with no clue as to how to achieve improvements and near-term growth.

First, a forecast over the so-called Brexit comes from policy experts’ analysis in two new research papers published by the Commonwealth Secretariat, namely, that “Brexit is a journey into unknown trading arrangements, both for the UK dealing with the EU, and the UK’s trading relationship with a large number of developing countries.” 

“The analysis is part of the Secretariat’s peer reviewed ‘Trade Hot Topics’ series. The latest papers suggest that the uncertainties caused by Brexit may weaken the chances of world economic recovery. This in turn will have severe implications for many developing and so called least developed countries or LDCs.” 

“Key industries in some Commonwealth nations could take massive hits if appropriate steps aren’t taken following the UK’s departure from the EU” while “at least 20 Commonwealth developing countries rely on the UK for ten percent or more in trade”. 

According to Dr Mohammad Razzaque: “The UK is one of the few high-income countries which fulfils the UN target of providing 0.7% of gross national income as overseas development assistance. The EU provides special trade deals to support these vulnerable countries, using often complex mechanisms”; however, Razzaque warns that if equivalent provisions are not provided while the UK leaves the EU, it could mean additional annual export duties of more than £600 million for these countries.

“More than 80 percent of St Lucia’s exports, mainly bananas, to the EU is bound for the UK. Remember that the country’s banana industry has witnessed tremendous competitive pressure. Unless it secures the same level of market access provision as in the EU, post-Brexit trading could deal a further blow to the sector. A weak pound, following the Brexit referendum, will have resulted in a significant loss in export value for these countries. It’s not just trade Brexit will affect, the impact of a weaker pound will affect overseas aid from the UK.” ~ Dr Razzaque. 


During a visit to the Caribbean last year, former British Prime Minister David Cameron announced a £360 million (US$550 million) economic development package for the Caribbean: “Britain can help Caribbean countries on their path of development – lifting people out of poverty, increasing economic growth, trade and security, and creating opportunities for young generations.”

However, in the event of the UK invoking Article 50 of the Lisbon Treaty in order to leave the European Union, there will be many unanswered question for Saint Lucia, including:

  • What are the implications for the UK development assistance to Saint Lucia under the National and Regional Indicative Programmes financed by the European Development Fund (EDF)?

    • What will become of the multiple initiatives to rural development, the support for the revitalisation of the agricultural sector, access for agricultural products – the banana sector – EC$10.4 million industry? 

    • Will the impending departure of the UK from the EU pose a direct threat to the Banana Adjustment Measures (BAM) from which ACP banana producers are benefiting?

    • At what cost will Saint Lucia have future direct access to UK markets?

    • What are the preparations to adapt once again to “globalisation” or is this treated as false equivalency, similar to 1993, when the EU began restricting privileged access and harmonizing tariffs and quotas, which placed new demands and reduced market share on Saint Lucia’s exports?

    • What is the future for livestock production of the abattoir at Beausejour, Vieux- Fort?

    • Will Saint Lucia become a Brexit bargain or will denial prevail in severe economic straits and lagged awakening?

This moment provides another opportunity to reflect on the politics behind Brexit; the necessity to negotiate new trade with the UK and the future of banana exports to Martinique/France to underpin campaign financiers’ returns

The newly elected Chastanet-led administration promised farmers an unlikely return to the banana industry of the 1970s and 1980s, through Martinique and Europe, oblivious to the fact that Saint Lucia’s banana production has passed its peak and is cost prohibitive – let alone the irreparable damage caused by irresponsible land use and health concerns. 

Thus, export penetration is likely to be insignificant and retooling for this purpose will divert resource allocation and cloud the outlook for new and diverse crop production.

The second report concerns the discovery by British law enforcement of approximately 6.8 kilograms of cocaine concealed inside nine hollowed out breadfruits, after a search of a 93-box consignment of produce shipped to Britain from Saint Lucia. 

This recent seizure is not uncommon, in keeping with foreign and local narcotics traffickers’ active use of the island as a transshipment site for cocaine from South America and a point to stockpile cocaine and marijuana for onward shipment the Europe, US and Canada.

Recently, “statistics released from the Saint Lucia Tourist Board revealed double digit growth (28.8%) in yachting arrivals for the period January to June 2016, in comparison to the same period in 2015.”  

Allegations have been made that traffickers are increasingly using yachts, boats, fishing trawlers for drug transit and major festivals, reported for public perception as a “successful event”, are being used for currency smuggling.

Complacency, weak law enforcement and institutional capacity, and an ineffective judicial system thus point to vital components that are often overlooked: the existence of trade-based money laundering and the absence of laws that specifically address narcotics-related corruption.

It stands to reason that an environment of declining macroeconomic growth has led to under-resourced law enforcement capacity, inadequate infrastructure, limited shared information and intelligence and a reliance on the US, UK and France for financial assistance and training. 

What is needed, instead of raising taxes by “creative means” to make up the shortfall between the promised reduction in VAT and increasing demand for government services and revenues, is credit easing, especially to small and medium sized enterprises, and the restoration of the middle-class.

However, the Chastanet-led administration’s futile fiscal prescriptions of “Five to stay alive” and “Five to thrive” will not slow down the mountain of debt government has accumulated but will instead contribute to Saint Lucia’s deficit, to the detriment of medium to longer-term trade, investment and economic planning.

If the anchorless and aimless part of this political theatre is to please “the base”, it will only serve to compound social problems in coping with unemployment, crime, drug trafficking, money laundering and a declining economy. 

For a moment, consider what shaky government policies could mean for real reform, trade, investment, and the relationship with the UK niche market that Saint Lucia needs for economic upturn. 

If more of us started paying attention there shouldn’t be any surprise that an improvement in the level of trade and investment relationship between the UK and Saint Lucia will be difficult to achieve without first removing the impediments to building instructional capacity, and the reorientation of monetary, fiscal and macroeconomic policy aimed at productive infrastructure investment (residential, civic and urban) to attract new industry and boost long-term potential.

At the same time, diplomacy, trade and investment negotiations are imperative and must begin in earnest, having identified specific sectors relative to national goals, policy formulation and crucial economic development priorities to pull Saint Lucia from the brink.

However, will a blinkered and lacklustre administration ever admit to decades of error and face the truth, or persist with the constant

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