Mr. Master of Ceremonies,
Distinguished representatives from OECS countries including our colleagues from the French Caribbean,
Secretary General of the Caribbean Tourism Organization, Mr. Hugh Riley,
Mr. Roderick Soomer and other representatives from the OECS Commission,
Ladies and gentlemen,
It is indeed an honor and pleasure for me to be able to welcome you here today to this very important meeting to discuss the issue of regional air transport within the eastern Caribbean.
Today’s meeting tackles one of the most difficult issues facing Caribbean tourism i.e. the problem of inter-regional travel and specifically inter regional air transport.
It is no secret that we face a tremendous battle in this regard. While international tourism continues to climb in most of our destinations, inter regional air travel – that is, travel within the Caribbean by Caribbean nationals and visitors – continues to show a precipitous decline.
In the case of Antigua and Barbuda, arrivals from the OECS have slipped from 18,740 in 2008 to 10,022 in 2014 – an almost 50% decline! While not all OECS countries may have witnessed such a dramatic collapse, I am confident in saying that we all share the concern of the continuing decline in passenger arrivals from within our region and a common desire to reverse this trend.
The reasons for wanting to reverse the trend are not difficult to identify. From the tourism perspective regional visitors provide at least two significant positive economic attributes. Firstly they are likely to travel outside of the peak season therefore providing stimulus to the tourism sector during the industry’s slow period. Secondly the regional market is particularly important for the small hotel sector comprising locally owned properties including apartments and guest houses. In all cases the regional traveler is an important contributor to the overall national and regional tourism picture with their expenditures on food and drink, accommodation, local transportation, entertainment and other goods and services.
An assessment of the factors driving this decline in inter-regional is likely to reveal, as the consultants have indicated in their report, a number of complex push and pull factors affecting the demand for inter-regional travel within the OECS.
Needless to say, for most Caribbean persons the key factor which they are likely to identify for the decline is the dramatic increase in the cost of air travel since 2008/2009. In fact the reduction in inter regional travel coincides with the escalation in ticket prices from those years.
However a number of other factors will also have contributed to the decline in inter-regional travel. Many of these stem from the development process itself, so that goods and services previously not available for example in Antigua but available in Dominica, are now available in Antigua possibly even in a virtual format over the internet. Each country now has its own international cricket facilities and its own music festival, so that the push and pull factors are constantly evolving and influencing the nature of the demand.
Notwithstanding these challenges, our administration is determined to restore growth in OECS and Caribbean arrivals into Antigua and Barbuda. This process has already begun with a major effort, for example, to restore international cricket through an enhanced relationship between government and the WICBC aimed at promoting the recent England tour as a major tourism promotional event. This has borne positive fruits with an encouraging number of regional and diaspora visitors coming for the match. We intend to continue to intensify such events which have potentially strong regional appeal.
We are also working to further develop the flow of ferry visitors from Guadeloupe coming on one day shopping excursions. This has emerged as a lucrative market for our downtown retailers, but itself reflects the challenges facing the regional travel industry as it is strongly impacted by
the comparative strength of the Euro vis a vis the US dollar to which our EC currency is pegged. We are also working to refresh our annual carnival product to make it more attractive among the now extremely competitive tourism carnival offerings available within the region.
Most of these efforts will require air transportation that is able to meet the demands of the consumer for cost and convenience. Today’s conference is therefore particularly timely as it brings together airline, tourism and aviation representatives from public and private sectors to review the consultants findings and to advance practical measures that governments and other stakeholders must take to revitalize our internal OECS travel market.
In fact, the emphasis here must be on a comprehensive plan to tackle this issue: a plan that involves partnerships with hotels, governments, airlines, shopping outlets, and other potential beneficiaries of an enhanced inter OECS tourism market. This combined approach will be necessary if we are to be attractive to other regional and international destinations with which we compete for visitors.
In addition to challenges such as airline costs and schedules, visitors within our region are also subjected to the hassle of multiple security checks on single journeys, as well as to often repetitive and burdensome Visa and other immigration restrictions. It is particularly incumbent on this gathering to advance bold actions for ending, at the earliest opportunity, the extreme inconveniences associated with multiple security checks. If only that is achieved then today’s meeting would have scored a major triumph.
In terms of Visa restrictions, I urge that OECS countries give consideration to a harmonized Visa policy which would allow for a Visa issued by one OECS country to be valid throughout the sub-region. Such an approach already exists in the EU so that guidance already exists in that regard.
It is also time for a harmonized OECS approach to the adoption of US, Canadian, UK, or EU Visas as qualifying the visitor for visa-free entry into the OECS. I think we all recognize our own limitations in conducting the type of due diligence which those countries undertake in their immigration review processes and the difficulties which many visitors, or potential visitors, from certain potential markets face in trying to obtain Visas to travel to OECS countries. It is time for us to modernize these procedures using technological solutions while at the same time integrating our national systems in such a manner as to establish the OECS as a single tourism and travel space.
These measures will go a considerable way to establish our region as friendly to visitors while maintaining the security and other requirements of our domestic laws and international obligations. It is important to note that arrangements for facilitating inter-regional travel were adopted on a short term basis during Cricket World Cup eight years ago, so that what we are proposing here is by no means new or revolutionary.
Before closing let me say how pleased I am that we have with us here today representatives from the French Caribbean. It is my view that the solutions for regional tourism, including inter-island air transport, will require the participation of all of the islands and territories that comprise the eastern Caribbean. In terms of the wider French market we are also encouraged by recent changes to LIATs schedule which I am told should enhance the possibility for connecting passengers from Paris through Guadeloupe.
In general, we see tremendous opportunities for joint benefits from greater economic linkages in tourism and trade between the French territories and the OECS and we welcome the participation of Martinique and Guadeloupe in these important regional discussions.
Finally let me wish you fruitful and frank discussions. It is important that you provide OECS governments with a clear set of policies and measures for tackling the serious crisis affecting inter-regional travel within our region. I look forward to receiving your recommendations and report.
I also hope that you will have the opportunity to enjoy some of the sights and sound of Antigua and Barbuda during your short stay, starting with the beautiful and tranquil waters of Jolly Beach and the wonderful hospitality for which our people have become world famous.
Hon Porsha Stubbs, Minister of Tourism Turks & Caicos,
Dr. Kingsly Been, Chairman of Turks & Caicos Tourism Board
Mrs. Lavern Skippings-Reynolds, Airport Manager, Providenciales International Airport
Ralph Higgs, Director of Tourism, Turks & Caicos Airport
Mr. Rohan Hector, Chairman of the Antigua and Barbuda Tourism Authority
Mr. Colin James CEO Antigua and Barbuda Tourism Authority
Ms. Paula Frederick-Hunte Permanent Secretary in the Ministry of Tourism
Ms. Shirlene Nibbs: Tourism Consultant in the Ministry of Tourism
Other Distinguished guests and members of the media
Ladies and Gentlemen.
First of all, I would like to warmly welcome everyone to V. C. Bird International Airport today, and to thank you for being here to celebrate and share this exciting occasion in tourism, for not only Antigua and Barbuda, but even more so for our close friends from The Turks and Caicos, Islands as well as British Airways.
Today marks a very important step in the gaining importance of the Caribbean for the UK and European tourism industry. We ,a Part of Caribbean Community (CARICOM) are welcoming the inaugural flight of a British Airways service that will transit Antigua and where the aircraft will continue onwards to the Turks & Caicos Islands.
I believe I can speak for everyone here today by saying that Antigua and Barbuda have long had a mutually beneficial and respected relationship with the tourism industry from the UK – and beyond – a relationship that we have done much to foster to ensure all visitors know they will be embraced with open arms when they arrive.
Figures for the UK tourism market to the Caribbean as a whole have been showing positive growth, and I believe we can officially say that the Brits love us, and of course, that we love the Brits! In fact we look forward with much expectation to welcome thousands of English cricket fans for the upcoming Test Series with the West Indies which will be held in Antigua from April 13th -17th.
This rise in popularity of both Antigua and Barbuda and The Turks & Caicos Islands as top destinations is shown by British Airways agreeing to add a direct link between our two destinations. Additionally, with British Airways being one of the world’s largest carriers, it means that not only will UK residents, but so will many others from across Europe connecting via Gatwick, be able to visit our dual destinations even more easily.
This new airservice also means that for the first time in the history of our two countries there will be direct flights between the Eastern Caribbean and the Turks and Caicos Islands.
This new flight means new opportunities and choices available to us for increased business activities and closer collaboration. The end result will be greater economic growth while, simultaneously building the spirit of regional integration between our two countries.
We are confident more choice will equal more visitors for everyone here, and everyone in the Turks and Caicos Islands.
I do truly stress the ‘us’ as this new flight will offer an increase in options not only for those wanting to visit Antigua and then visit the Turks and Caicos, but also vice versa for those visiting Turks & Caicos now being able to easily visit Antigua. We know when passengers are flying 8 hours and longer from Europe that they truly want to explore the Caribbean and this direct flight allows them to easily, comfortably, and quickly travel between these two, I would say, unique and perfect destinations in the Caribbean.
This new air service comes with unique advantages. It actually means visitors from the UK and Europe as well as the Eastern Caribbean wanting to visit our friends in the Turks & Caicos Islands will be able to do so without travelling via a US port. This is a major benefit as transferring at an airport in the US means obtaining a regular visitor’s VISA or ESTA pre-clearance visas for all non-US citizens. Not only is there a costinvolved for obtaining a visa, but untold amounts of time is spent standing in immigration and custom lines while transiting most US airports. We can promise all travelers transferring directly to Turks and Caicos a smoother, quicker and more enjoyable experience – plus an even more wonderful experience if they choose to stop-over!
As part of our investment to prove to visitors how important they are to us, and to ensure that all visitors receive the best travel experience possible on our island, we will be opening a new airport terminal very shortly. This will feature not only the latest technology for our passengers to avail of, but also first class duty free shopping. Additionally the overall passenger experience will be greatly enhanced by expedited processing procedures with multiple VIP andPremium Passenger First Class lounges.
Finally I would like to take this opportunity to extend an invitation to my colleague Minister, of Tourism from the Turks and Caicos Islands the Honourable Porsha Stubbs to be present with us in June to help us celebrate the opening of our new airport which will mark the commencement of a new phase ofgrowth in tourism for our beloved country.
May the start of this inaugural direct service between Antigua and Barbuda and the Turks and Caicos Islands mark the beginning of a new the phase of friendship, cooperation and growth in this vital industry between our countries.
Colleague Heads of Government
Ministers of Government
Members of the Diplomatic Corps
Distinguished Ladies and Gentlemen
I thank Prime Minister Perry Christie and the people and government of The Bahamas for the warm welcome given to all the participants in this meeting.
We have no doubt that under Prime Minister Christie’s chairmanship, the outcomes of this meeting will be beneficial to the people of the Caribbean Community who have entrusted us with a mandate to manage their regional affairs.
As I formally hand-over the gavel of chairmanship of CARICOM, I would like to reflect briefly on the period of my own stewardship of the Community’s affairs.
I came to the Chairmanship within weeks of winning a general election and becoming a Head of Government for the first time.
I am thankful to my colleagues for the encouragement and support they gave me.
And, I was extremely pleased that I was able to superintend our Community affairs through some historic events.
Those events include the decision of the Governments of Cuba and the United States to establish diplomatic relations.
We in the Caribbean can rightly take credit for being on the right side of history in this matter dating back to 1972, when four independent member states of our Community ended the US-inspired hemispheric diplomatic embargo of Cuba.
At our Summit meeting with Cuba last December, I called on the US congress to end its senseless trade embargo against Cuba.
I do so again now.
I also had the privilege of chairing our grouping in a meeting with Japanese Prime Minister, Shinzo Abe in Trinidad. In addition, I was extended the privilege to speak on behalf of Caricom as a whole during a Celac meeting in Brazil, when the majority of our member states had a productive meeting with China’s President Xi, that has set the foundation for a beneficial economic relationship between us.
At the third Summit of the Community of Latin American and Caribbean States (CELAC), in Costa Rica, I was pleased to speak on behalf of CARICOM.
That Summit agreed on a plan of action to eliminate hunger by 2025 submitted by the Director-General of the Food and Agriculture Organisation, Dr. José Graziano da Silva, who is with us at this meeting and with whom we can follow-up specific measures of benefit to the people of the Caribbean.
You will note Chairman that I speak of “the people” of the Caribbean, and not “the peoples” of the Caribbean.
I do not regard the inhabitants of our Region as different “peoples”; we are one people with a shared history, common challenges, common opportunities and a common destiny.
Those challenges cannot be effectively overcome nor can the opportunities be successfully seized by each of our countries acting alone.
While each of our small nations from time to time may enjoy a moment of remarkable triumph, we all know that such moments are rare and are – in any event – temporary.
They are not enough to sustain our economic growth domestically, nor are they sufficient to protect us from the onslaught of powers much bigger and stronger than any of us.
Only our collective action in defence of our mutual interest will offer resistance to the tides of unfavourable challenges that rush from outside and imperil the livelihoods of our people.
Similarly, only united action will allow us to take advantage of opportunities that could better the lives of our people.
We need collaboration, cooperation and unity within our Region and in our Region’s affairs with the international community, if we are to surmount obstacles, overcome limitations and advance our people’s interests.
We need to engage the international community at all the levels open to us, and through our best people.
Wherever possible we must establish a Caribbean presence within international organisations to advance Caribbean interests.
And, we must do so through genuine Caribbean representatives who have fought in the trenches for us and for Caribbean development.
That is the only way we have a chance of success.
Mr Chairman, our Region now confronts one of the most demanding periods of its post-Colonial history.
Even though we are small and vulnerable, the international community treats us as if we enjoy the resources, the populations, the land mass and the wealth of the United States or the European Union.
The special and differential treatment to which our small size, high transactional costs, and openness of our markets should have entitled us, is denied us.
In this regard, I take this opportunity to thank the people and Government of Venezuela for the special arrangements rendered to many CARICOM countries under Petro Caribe.
I also thank the Governments of China and Taiwan for their support as well.
While others were neglectful of the adverse impact on our economies of the financial crisis that originated in the US and Europe, the governments of Venezuela, The People’s Republic of China and Taiwan extended a hand of help.
We will not forget.
Chairman, I call on this Conference to register our condemnation of the recent report of a plot to overthrow the constitutionally elected government of Venezuela.
In our region we believe in the democratic process as amply demonstrated by all our recent general elections that changed governments by ballots not bullets.
Let us send that message of firm commitment to the democratic process resoundingly around the world.
Mr Chairman, while my own country is not affected, we are deeply disturbed by the news that from the end of next year, European Union policy will deal a severe blow to Caribbean sugar producing nations, such as Barbados, Belize, the Dominican Republic, Guyana and Jamaica.
The EU will terminate a cap on European beet sugar production and so flood the EU market displacing sugar exports from Caribbean countries that will be unable to compete with heavy subsidies given to EU beet sugar producers.
The British Department for International Development is reported to have predicted that this “perfect storm” of the new EU beet sugar policy, and the consequent low, subsidised price, will force force 6.4 million people in African, Caribbean and Pacific countries into poverty over the next five years.
Caribbean sugar workers will be forced into subsistence agriculture and will face the danger of extreme poverty.
The EU does not appear to have any appreciation for the fact that we cannot create new markets in the space of a year, nor can we retrain and retool our farmers in other crops.
They have also repeatedly, broken their commitment to us on sugar – a commitment for which our representatives fought since 1973.
We are proud to have with us at this meeting our first spokesman on sugar when that commitment was negotiated – the Most Honourable PJ Patterson, a Caribbean patriot and statesman to the core.
I am sure that he would agree that this latest grave and mortal policy announcement by the EU is not one that we should allow to rest.
This Conference should and must resolve, that this issue will be taken up aggressively with the EU at the highest levels – and taken up by all our governments collectively.
Mr Chairman, the countries of our Community are not only marginalised in the international community with no voice or vote in International Financial Institutions of the world, we are also coerced into adopting policies that harm our own economies while serving the interests of others.
Extra-territorial laws and policies made in other countries and regions are imposed upon us without consultation – indeed without the slightest interest in such consultations.
We are made to implement the agenda of others, even to the point of spending our own scare resources to act as their tax collectors, or we suffer the consequences of not surrendering to their will.
Now our banking sector is facing a new and potentially devastating threat.
Our Region is being labelled as a high-risk area for financial services.
Consequently, correspondent banks in the United States and major banking centres in Europe are being made to evaluate risks versus rewards for doing business with our indigenous banks, and banks in our offshore sector.
Because in many cases indigenous banks cannot provide a high level of reward, correspondent banks are closing their relationships with them – all because an arbitrary an unsubstantiated claim is being made that the Caribbean is a high risk area for financial services.
Unless this situation is addressed with urgency, the indigenous banks in each of our countries will be forced to close their doors, not because of any inherent difficulties in the banks themselves, but because they are constrained from transacting business abroad.
I need hardly say that the impact of such a development on our economies would be calamitous.
Mr Chairman, I venture to suggest that our Community should waste no time in jointly addressing this problem.
I call on this Conference to agree to establish a Committee of Finance Ministers to work with the Caribbean Association of Banks to develop a plan to deal with this matter, including by making strong representations at the World Bank, the IMF, within the Commonwealth and La Francophonie and, if it necessary, at the United Nations.
It is time that we raise our voices and not meekly accept the continuing emasculation of our financial services, particularly after we have spent millions of dollars on making our jurisdictions compliant with every demand that has been made of us.
The situation is unfair and unjust.
Colleagues, the state of financial services, which once contributed significantly to the growth and development of our economies, is now a shadow of its former self.
Yet, despite all that we have lost through the dictates of powerful countries, our countries receive no concessionary funding from International or Hemispheric international institutions or from countries whose policies materially affect our economic and social development.
And, while that observation is valid for all our countries, in the specific case of Antigua and Barbuda, in two weeks’ time it will be eleven long years since the World Trade Organisation granted us an award which has not been honoured by the country that violated an international agreement and injured our economy.
My country is yet to receive the benefit of that award, the penalties for which, according to the WTO ruling, now stand in the equivalent sum of US$168 million.
It is not, Mr Chairman, that representatives of my country have not sought consultations with the other party to settle this matter.
We have been patient and we have been reasonable, but so far to no avail.
The casualness with which the ruling of the legitimate international body has been treated, and the neglect of a legally-binding obligation have implications for every country represented in this room.
I signal now that there are remedies legally available to my government that have been stipulated by the WTO.
We hope that we are not forced to resort to these remedies, but we have a duty of care to our people that we cannot disregard.
Mr Chairman, we in Antigua and Barbuda, are thankful to our brothers and sisters in the Caribbean Community for all their moral support and their many declarations of solidarity.
It is my fervent hope that you, as representatives of the Caribbean people, will at this meeting once again strongly indicate your support of Antigua and Barbuda.
Mr Chairman, I know well the daunting task that faces each of our governments to provide employment for our people, to attract investment, to fight crime, to eliminate guns from our streets, to keep our people safe while we improve health care and education; and build roads and ports.
I know it is right that we should formulate national policies to meet all of these challenges and that we should each do so creatively, but I warn that none of us should believe that we can succeed on our own.
Within the Region, our policies need to be mindful of the need to spread the face of integration so that all our people reap some benefit.
My own country has been a faithful member of regional organisations since we helped to found CARIFTA in 1965 and throughout the trials and tribulations of CARICOM.
For all these years, we have endured serious balance of trade deficits with virtually every CARICOM country.
We have been a ready market for the goods of our sister-states.
It is in that connection, that we believe that countries, such as Antigua and Barbuda, that have stayed the course without benefits in trade, should not also be disadvantaged in services like LIAT to which we have also been a major financial contributor over several decades for the benefit of many other countries.
We must ensure that regional integration serves the interest of all.
In this regard, I welcome the initiative of the Prime Minister of Trinidad and Tobago, Mrs Kamla Persad-Bissessar, for our region to consider the growing threat to our security posed by international terrorism.
Before us are recommendations from the Commissioners of Police and Heads of Intelligence of CARICOM arising from the Prime Minister’s initiative.
These recommendations encompass collective regional safeguards against terrorism, and they include measures to curb illegal guns and gangs – phenomena that plague all our countries, terrorising our people and damaging our economies.
Despite the fiscal constraints with which all our governments are faced, I hope that we can adopt the very pro-active recommendations of the Commissioners of Police and Heads of Intelligence.
The work they have done is a fine example of the region’s brains working together for the benefit of the region and for our people.
We should applaud their effort and their example.
Colleagues, I know doubts continue to exist about the effectiveness and usefulness of our regional integration movement. However, Antigua & Barbuda remains fully and firmly committed to Caricom Integration.
But, as I formally hand over the Chairmanship of CARICOM to the Prime Minister of the Bahamas, Perry Christie, I do so convinced that regional integration remains vital to the betterment of our countries individually and collectively.
The evidence is clear: we need more not less regionalism; we need more not less regional integration.
Thank you very much.
NASSAU, The Bahamas – 28th February 2015……….Prime Minister of Antigua and Barbuda, Hon. Gaston Browne has warned that the Caribbean’s banking sector “is facing a new and potentially devastating threat” because the Region is being labelled as “a high-risk area for financial services”.
The Prime Minister was speaking as the out-going Chair of CARICOM at its Inter-Sessional Conference in the Bahamas.
He informed the Conference that “correspondent banks in the United States and major banking centres in Europe are being made to evaluate risks versus rewards for doing business with Caribbean indigenous banks, and offshore banks established our regional financial centres.” He explained that “Because in many cases indigenous banks cannot provide a high level of reward, correspondent banks are closing their relationships with them – all because an arbitrary and unsubstantiated claim is being made that the Caribbean is a high risk area for financial services.”
Prime Minister Browne cautioned that unless this situation is addressed with urgency, the financial services in every Caribbean country will be forced to close their banking doors, not because of any inherent difficulties in the banks themselves, but because they are constrained from transacting business abroad.
“I need hardly say that the impact of such a development on our economies would be calamitous, I venture to suggest that our Community should waste no time in jointly addressing this problem,” Browne said.
He called on the Heads of Government to establish a Committee of Finance Ministers to work with the Caribbean Association of Banks to develop a plan to deal with this matter, including “by making strong representations at the World Bank, the IMF, within the Commonwealth and La Francophonie and, if it necessary, at the United Nations”.
Developing his argument further, the Antigua and Barbuda leader emphasised that Caribbean Community countries are not only marginalised in the international community with no voice or vote in International Financial Institutions of the world, but are also coerced into adopting policies that harm Caribbean economies while serving the interests of others.
He said “Extra-territorial laws and policies made in other countries and regions are imposed upon us without consultation – indeed without the slightest interest in such consultations”.
The Prime Minister drew his colleague Heads’ attention to the fact that Caribbean jurisdictions are being made to implement the agenda of others, even to the point of spending the region’s own scarce resources to act as their tax collectors, or suffer the consequences of not surrendering to their will.
He concluded “It is time that we raise our voices and not meekly accept the continuing emasculation of our financial services, particularly after we have spent millions of dollars on making our jurisdictions compliant with every demand that has been made of us.
At TRINIDAD AND TOBAGO ENERGY CONFERENCE 2015
Powering Development and Ensuring Stability
0n 26 January 2015
at the Hyatt Regency Hotel
Commodity prices have never been free of the influence of politics; and of none more so than oil.
But, the world has now entered a phase where politics play a quite different role in the price of oil than it has played previously.
This situation has led to volatility and unpredictability in the prices of oil and gas.
There are currently as many views on how long the present lower price of oil will last as there are experts who are asked to venture an opinion.
The only single certainty seems to be that, in the short-term, the price of oil will not return to figures of US$100 a barrel or more.
The world – and in the context of this Conference – the Caribbean now enjoys a respite from high costs of petroleum products.
It may not last long.
The United States Energy Information Administration) forecasts that West Texas Intermediate crude oil prices will average around US$ 55 per barrel in 2015 and US$ 71 per barrel in 2016.
So, there is a small window of opportunity.
Throughout the Caribbean, there is now significant interest in the adoption and use of clean energy, renewable energy, and energy efficiency technologies.
What is more, almost every Caribbean country has vast renewable energy resources with only 1% of the existing potential harnessed.i
Therein lies opportunities for better energy security for the region, but not before many challenges are overcome, principally access to capital on affordable terms.
Factors impacting price on the International Stage
On the international stage, it seems that two factors have impacted the current oil and gas scenario.
The first is economic and the other political.
On the economic point, in October last year, the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia and with the exception of Venezuela principally, decided not to increase the production of oil even in the face of declining revenues from falling prices.
This decision was confirmed at an OPEC meeting on November 27th.ii
Economic politics were at play.
The government of Saudi Arabia decided that, in its own interest, it wants to keep oil prices low so as to maintain its share of the global market.
Therefore, it led the argument in OPEC to hold production levels at 30 million barrels per day.
Simply stated the Saudi government feels threatened by the booming shale oil and gas sector being led by the US whose oil production has increased by 65% since 2008.
Authoritative studies say the US “shale production has reached 8.7 million barrels a day, about a million barrels a day more than just a year ago and the highest level in nearly a quarter century”.
This has caused a significant reduction in imports from OPEC since 2008, forcing many of their members to compete with one another for markets.
In deciding to keep prices low, the Saudi calculation appears to be that if returns from oil sales decline, the fracking companies in the US (that produce shale oil and gas) will be pushed into uneconomic situations forcing them either to cut back or suspend production.
Should this gambit work, conventional oil producers such as Saudi Arabia would continue to receive significant revenues over a longer period of time, and they would retain the reins of oil’s power.
How this will work out in the future is anybody’s guess.
But not all OPEC members are happy.
Particularly unhappy is Venezuela, which according to the IMF, needs oil prices at about US$115 a barrel to keep its economy afloat, pay back its considerable debt and maintain an expensive social welfare programme.
The Venezuelans put that figure much lower, claiming that “the current budget was estimated with the cost of a barrel of oil at US$60”.iii
But they admit that the revenue earned above US$60 a barrel “supports the activities outside of the budget framework”.iv
Last week Brent crude oil dropped to $48 a barrel, and US crude fell to $47 a barrel.
At US$40 a barrel and below, the Venezuelans know that meeting all their obligations, including servicing their debts, is extremely difficult and can only be addressed by massive cuts in spending.
In all this China is a wild card.
However, it is uncertain how much of a wild card China can afford to be since it is now owed US$50 billion by Venezuela and the recent announcement in Caracas that it has agreed to lend another US$20 billion has not yet been confirmed.v
I will return to Venezuela’s situation in the context of implications for the Caribbean later.
The International Political imperatives
For now, I draw attention to the political aspects of the price for oil and gas.
The countries of the West and NATO – even though at least two of them, the United Kingdom and Canada, are suffering setbacks to their economies because their own oil and gas earnings have declined – are relieved by the effect on two adversaries: Russia and Iran.
To balance its budget, the Russian government should be selling oil at US$98 a barrel this year and US$105 next year.
Apart from the dent in the Russian budget and its effect on domestic programmes, the fall in revenue from lower oil prices will also force the country’s leader, Vladimir Putin, to make a choice between spending on domestic projects or involvement in theatres of conflict with the West such as Ukraine.
In the case of Iran, declining oil revenues will, the West believes, constrain its activities, including its efforts to develop a nuclear capacity for peaceful or any other purposes.
Undoubtedly, the weakening of the Russian and Iranian economies are unspoken imperatives of the foreign policy ambitions of many countries in the West, particularly the United States which now finds itself in a powerfully influential position in oil and gas production.
The world would be foolhardy not to expect the US to take full advantage of the enormous political, economic and strategic leverage of its current position to reassert its weight if not its dominance.
All of this has implications for the Caribbean region.
Opportunities for the Caribbean
For many Caribbean countries – the exception being the host-state of this Conference, Trinidad and Tobago – the lower price of oil is a god-send that should ease the strain on their populations for transportation and electricity – and in the case of Guyana and Suriname particularly, facilitate resource development.
Lower oil prices should also help to boost tourism and manufacturing by bringing down costs and making products and services more competitive globally, provided that owners are sensible enough to share the windfall with their customers and not try to gobble-up the benefits only to their bottom line.
Further, if the benefitting Caribbean countries – both governments and private sector – take advantage of this period of lower cost oil, they should be investing in green technology such as solar, wind, hydro and geothermal sources, to be better placed to cope if and when oil prices rise again.
The production of solar and geothermal energy appear both possible and capable of attracting financing and there is evidence of this in St Vincent, St Lucia and Dominica.
Another aspect of future planning for the region should be the feasibility of converting electricity generating systems from diesel to natural gas which, in time, may prove to be more beneficial to Caribbean economies.
I lay down the marker, however, that in the current situation of lower oil prices, encouraging investment in – and securing capital for – the conversion of systems for natural gas, particularly in the OECS countries, may not be attractive to governments in the region that are already highly-indebted and cash-strapped.
Ironically, in past discussions of the persistent and debilitating effect of the prices of oil, gas and energy in the Caribbean, Trinidad and Tobago – as an oil and gas producer – has been the exception.
It also remains the exception in the current situation since, for while the economies of other regional countries will benefit from lower oil prices, Trinidad and Tobago is suffering a loss of revenues and, perforce, has had to curtail a number of development projects.
Reportedly, the government faces a budget deficit of approximately US$1.7 billion.
Nonetheless, a statement last week from the Trinidad and Tobago government that it is talking with the Inter-American Development Bank about “a Caribbean solution in which Trinidad and Tobago is the lead player in terms of the energy challenge and crisis”vi is encouraging.
The opportunity now exists for Trinidad and Tobago to take the lead in developing a genuine pan-Caribbean owned project for the creation and implementation of energy, based on natural gas, in which all Caribbean countries – governments and the private sectors – are owners and beneficiaries.
I recognise, however, that such an initiative will only be achieved by resolute and mature regionalism on the part of all countries.
Narrow political and nationalistic ambitions would have to be overcome – never an easy task, and, so far, not one that has been decorated with success in the region.
As the former Prime Minister of Barbados, Owen Arthur, pointed out in this capital just one week ago:
“In a real sense, the region has come to this moment with the integration movement functioning virtually as the fifth wheel to a coach. It exists, but it is of very little practical value”.vii
The United States geo-political interest
Even as we meet now, the US government is holding a one-day Caribbean Energy Security Summit in Washington with Caribbean leaders and US Vice President Joe Biden.
This meeting is being held as President Barack Obama boasted in his State of the Union address on 20 January that: “Today, America is number one in oil and gas. America is number one in wind power. Every three weeks, we bring online as much solar power as we did in all of 2008”.viii
Additionally, two days later the US Energy Information Administration (EIA) reported that U.S. commercial crude inventories increased by a whopping 10.1 million barrels, maintaining a total commercial crude inventory of 397.9 million barrels.ix The Caribbean leaders invited to the meeting are from the 14 independent member-states of the Caribbean Community (CARICOM) and the Dominican Republic.
As far as I am aware, there has been little – if any – joint regional preparation for this meeting, particularly as a “Draft Joint Statement” was not given to many Caribbean governments until last Wednesday, January 21st.
If anything, leaders might have met in Washington on the eve of today’s meeting, but in the absence of knowing precisely what the US is asking them to commit to, and any expert study of the proposals, it is difficult to see what meaningful or cohesive response the Caribbean leaders will have.
I expect the Joint Statement, pre-drafted by US officials, will be issued at the end of the meeting later today.
Hopefully, Caribbean governments will take a strong hand in amending the US draft to reflect their own concerns and priorities.
We will all have to await its issuance and careful study before any understanding of what the US has in mind, and how inclusive a process with the Caribbean it intends.
For the US – with the Venezuelan economy reeling, and the future of its signature Caribbean project, Petro Caribe, apparently on shaky ground – this is a good psychological and strategic moment at which to proffer an energy initiative.
If the US is sincerely interested in the region’s development, it should set aside a committed and declared amount of money for the implementation in the region of projects that would install renewable energy plants and help to convert electricity generating and distribution systems to natural gas on highly concessionary terms.
It should be noted, at this juncture, that with oil prices as relatively low as they are, investment in natural gas on a national basis will make little financial sense for the small countries of the Caribbean, namely the member states of the Organisation of Eastern Caribbean States (OECS) – the magnitude of their individual consumption would not be sufficient to amortise the capital investment, unless the technology for doing so improves and becomes less expensive.
Concessionary financing and grants would, therefore, be essential for them.
If these are not the elements of the initiative the US intend from today’s Washington Energy Summit, the Caribbean will be very disappointed, and little will change.
6.Venezuela and Petro Caribe
This brings me then to Venezuela and Petro Caribe.
Suggestions that Petro Caribe might collapse find strength in reports, that Venezuela is selling debt owed to it by the Dominican Republic to Goldman Sachs for 41 percent of its value in exchange for a lump-sum payment, and is pursuing plans to do the same with oil debt owed by Jamaica.
But, even in the current terms of Petro Caribe where countries pay 60% of the world price of petroleum products to PDVSA and retain 40% as a long term loan (23 years) at 1% interest, the scheme remains attractive.
Petro Caribe was a crucial life-line for the participating Caribbean countries, and it remains so today.
It should be recalled that supplies of petroleum products under Petro Caribe amount to about 5% of Venezuela’s total production which it is not giving away. PDVSA is receiving part payment in cash, and repayments of the loan component.
As for the Caribbean recipient countries, while, with prices of petroleum products below US$80, the equation has changed requiring them to make a 60% a cash payment whereas before it was 40% (when the price was between US$80 and US$100), the fact that the prices have declined also means that the sum of the cash they pay is also reduced.
Moreover, the Venezuelan President and his Ministers of Energy and Foreign Affairs have indicated quite clearly that they have no intention of reneging on Petro Caribe, and the authorities have done nothing to indicate its demise.
But if prices reach the US$40 mark or below, I suspect Petro Caribe will be suspended however much the Nicolas Maduro government might like to maintain it in its own geo-political interest.
The Caribbean is therefore at an interesting juncture in energy terms.
Acting together the countries of the region can take advantage of low cost oil to diversify their energy sources, improve their energy security, reduce costs and make their economies more competitive in tourism and manufacturing.
But, to do so will require governments acting in concert and cohesion – not with beggar-thy-neighbour policies.
A number of countries are now looking at the Caribbean as a market and for financing including Abu Dhabi and Germany. These efforts should be co-ordinated in the region’s interest.
While there is interest in energy in the Caribbean displayed by the World Bank, the Caribbean’s experience in the administration and disbursement of funds is not encouraging.
But, the region – both governments and the private sector – have the advantage of the Caribbean Development Bank’s commitment to Energy Security in its Strategic Plan 2015-19 and its capacity to act as
a catalyst for concessional resources – money, therefore, could become available to reduce considerably the Caribbean’s dependence on external energy suppliers.
The fullest participation of energy companies such as the ones represented here will be required.
Indeed, it may require you not to wait for government action but to put forward a regional plan to the governments in whose countries you operate.
It is an exceptional time, requiring exceptional planning and action.
You should seize the moment.
i Caribbean Development Bank, 264th Meeting of the Board of Directors in Barbados, December 11th 2014, Paper BD 98/14, “Draft Energy Sector Policy and Strategy”, (Typescript)
ii OPEC 166th Meeting concludes, Statement by OPEC on November 27, 2014, http://www.opec.org/opec_web/en/press_room/2938.htm (accessed on 21 January 2015)
iii Personal interviews with Venezuela officials on 19 January 2015
v Shannon Tiezzi,The Diplomat, “Will China save Venezuela”, January 7, 2015 http://thediplomat.com/2015/01/will-china-save-venezuela/ (accessed on 21 January 2015)
vi Barbados Advocate, “Tewarie on falling oil prices: Gov’t wants T&T to lead regional response”, p.11, Wednesday, January 21, 2015.
vii Owen Arthur, Guest Lecture at the Institute of International Relations, St Augustine Campus of the University of the West Indies, Caribbean Regionalism in the Context of Economic Challenges”, January 19, 2015 (typescript)
viii US President Barack Obama, State of the Union Address, 20 January 2015, transcript in The Washington Post, http://www.washingtonpost.com/politics/transcript-state-of-the-union-address-2015-remarks-as-prepared-for-delivery/2015/01/20/fd803c4c-a0ef-11e4-b146-577832eafcb4_story.html?wpisrc=nl_politics&wpmm=1 (accessed 21 January 2015)
ix Paul Ausick, Crude Oil Inventory Soars by 10 Million Barrels, http://247wallst.com/energy-economy/2015/01/22/crude-oil-inventory-soars-by-10-million-barrels/ (accessed 22 January 2015)
Sir Ronald Sanders is an International Consultant, Senior Fellow at the Institute of Commonwealth Studies at London University and former Antigua and Barbuda High Commissioner to London, Ambassador to the World Trade Organisation and Ambassador to the European Union. He is the author of several publications on small sates in the International Community and on the Commonwealth. His weekly syndicated column on Caribbean and international affairs is published in major Caribbean newspapers and on several Internet News portals and is read by a worldwide audience,
WASHINGTON, District of Columbia,USA 26th January, 2015..Prime Minister of Antigua and Barbuda the Hon. Gaston Browne has made a case for countries in the region to receive grant and concessionary funding to catalyze investments in renewable energy sources and to mitigate the risks involved with the development of some of the technologies, such as geothermal.
Speaking at the Caribbean Energy Security Summit in Washington, D.C. on Monday, hosted by US Vice-President Joseph Biden,Prime Minister Browne pointed out that taking renewable energy to another level will ensure energy security for the region.
Developing our renewable energy potential so that we are much better insulated from the vagaries of the hydrocarbon markets is the ultimate form of energy security our region needs. This collaboration should also address the issue of support for Research and Development: both access to R&D from the US and support for R&D conducted by our own regional institutions, PM Browne stated.
The Antiguan and Barbuda leader also made a case for wind energy and solar power.
For countries like Antigua and Barbuda and Barbados that do not have access to a renewable form of base load power like hydro or geothermal, the emphasis has to be on developing potential in wind and solar photovoltaic.
However, these sources are intermittent and cannot form the basis of a 100 percent transition away from fossil fuels, he noted.
What would bring these renewable sources into play as full diesel replacements is storage, which would allow the utility company to dispatch the power when it is needed,PM Browne concluded.
We are pleased to present below the full text of the Prime Ministers intervention at the Energy Summit in Washington:
Statement by Hon Gaston Brown
Prime Minister of Antigua and Barbuda
on Monday 26th January 2015
We welcome this Conference and we thank Vice President Biden for organising it.
The peoples of the United States and the Caribbean have always enjoyed close relations.
Indeed, the links of families between the US and the Caribbean are closely intertwined.
Over the decades, the governments of the US and the Caribbean have sought to underpin the close historic relations of our people by meeting regularly at high levels of government.
Regrettably, in recent times, our governments have not been meeting with regularity, despite the enthusiasm for such meeting by Caribbean governments
Nor have we met at the level of Heads of Government despite President Obama undertaking in 2009 to do so.
But at a time when better understanding and swift responses are needed over a range of issues that pose threats to our collective well-being, such meetings remain vital.
Without them, we will not achieve the level of appreciation of the difficulties that our countries face, nor will be able to give the level of co-operation that is necessary to address them in our joint interest.
However, this Meeting provides an opportunity for a new beginning one which we hope will allow us to address a number of issues that weaken our relationship including areas of finance, trade and honouring decisions of the Dispute Settlement Body of the World Trade Organisation.
Mr Chairman, the issue of energy security is critical to Caribbean Member States.
It is quintessential to the growing of our economies, and reducing reliance on expensive and volatile petroleum products.
The majority of CARICOM countries have been unable to transition to renewable energy, not because of a lack of commitment but because of a lack of capital, especially access to concessional funding.
In this connection, while the proposed declaration from this Meeting summit outlines an architecture of cooperation to address energy challenges facing the region, it does not go far enough.
Indeed it does not go to the core of the issue which is finance.
The draft statement focuses on promoting regulatory reform in the draft declaration.
However, most, if not all of our governments have already embarked on regulatory reform.
There is also an emphasis on promoting natural gas as a better, cleaner fuel.
While natural gas does have these characteristics and we would appreciate the US liberalizing the export of natural gas to Caricom, it is not the long term solution for all of the countries of our region.
Our countries need funding, both grant and concessionary, to catalyze investments in renewable energy sources and to mitigate the risks involved with the development of some of the technologies, such as geothermal.
Developing our renewable energy potential so that we are much better insulated from the vagaries of the hydrocarbon markets is the ultimate form of energy security our region needs.
This collaboration should also address the issue of support for Research and Development: both access to R&D from the US and support for R&D conducted by our own regional institutions.
For countries like Antigua and Barbuda and Barbados that do not have access to a renewable form of base load power like hydro or geothermal, the emphasis has to be on developing potential in wind and solar photovoltaic.
However, these sources are intermittent and cannot form the basis of a 100 percent transition away from fossil fuels.
What would bring these renewable sources into play as full diesel replacements is storage, which would allow the utility company to dispatch the power when it is needed.
Mr. Chairman, we appreciate the assistance of the US in engaging OPIC, other US private sector entities and other institutions to participate in the creation of a funding mechanism for renewable energy projects in the Caricom Community.
However, what is also required is a commitment from the US government to provide Caricom countries with concessional funding for alternate energy.
Such concessional funding and the sharing of research and development findings with the region are what would truly make a difference.
Caricom would therefore welcome a commitment for funding by the US government to be enshrined in the joint statement of this Meeting.
The stability and security of our hemisphere requires each of our nations to extend a helping hand where it is needed in a spirit of genuine cooperation.
ST. JOHN’S, Antigua and Barbuda – 25th August, 2014…… “The Antiguan Government of Antigua and Barbuda has created the bold target of building no less than 500 new homes in 500 days. It is projects like these that need the support of those who have enjoyed the islands hospitality,” according to long-term local resident Calvin Ayre who has again pledged to help the country he now calls home. Ayre will add US $2,000,000 to help make this brilliant project a reality.
Canadian-born Ayre commented: “I love Antigua as so many that visit year in, year out do as well and, therefore, think its only right to continue to give something back by way of saying ‘thank you’ to the wonderful people of this beautiful island.”
The project is designed to increase home ownership and will be aimed at public sector organizations in an attempt to help satisfy the housing shortage among their members.
The new ABLP administration wants to empower local builders with specific incentives to make it easier for them to develop housing projects.