Courtesy of Emiliana Duarte, I give you the Venezuelan ambassador to the Republic of Trinidad and Tobago:
She is very good at all parts of her job. Trini-Venezuelan relations are better than they have been for years.
Courtesy of Emiliana Duarte, I give you the Venezuelan ambassador to the Republic of Trinidad and Tobago:
She is very good at all parts of her job. Trini-Venezuelan relations are better than they have been for years.
The British Privy Council just handed the opposition in St. Kitts and Nevis (SKN) a huge victory. Basically, the Labour government altered electoral boundaries on January 16, one month before the next general election. The fragmented opposition cried foul. (There is something quite amazing about the idea of a “fragmented opposition” in a country of only 55,000 people.) So they sued.
A judge immediately granted an injunction. The problem was that she granted it too late. Governor-General Edmund Lawrence signed the redistricting law at 6:20pm, whereas the judge issued her order at 7:38pm. Since you aren’t supposed to be able to injunct an action that’s already been taken, the injunction was discharged on January 27th.
But that was not the end of that! SKN, you see, is a part of the Organization of Eastern Caribbean States. The OECS has a common judicial system, so the SKN opposition took the case to the Eastern Caribbean Supreme Court in St. Lucia. The opposition argued that Section 119, Article 1 of the Constitution of the Federation of SKN defined “proclamation” as “a proclamation published in the Gazette.” Since the law had not been published in the Gazette, they argued, the injunction was valid.
The Eastern Caribbean Supreme Court found for the government. “The Constituency Boundaries Commission reviewed the boundaries of the constituencies in the Federation and recommended alterations to the constituency boundaries; a draft proclamation giving effect to the recommendations of the Commission was thereafter approved by the National Assembly; the Governor General then signed a proclamation which (according to the evidence of the Attorney General) was published in the Official Gazette. All of this happened on Friday, 16th January 2015, and though one may say that the process was hurried through by the relevant authorities to gain an unfair political advantage, that is an issue of political morality and not constitutional validity, which is not suitable for judicial enquiry.”
But that was still not the end of that! SKN, like most of the Commonwealth Realms of the Caribbean (save Barbabos but including Trinidad), still uses the British Privy Council as its highest court of appeal. And so, the case went to London. Where the opposition won!
I can’t wait to read the final decision.
Anyway, this is not a huge piece of news. After all, SKN is just a small group of islands with only 55,000 people. But it is a striking example of how the microstates of the Caribbean survive by contracting out so many state functions to other polities and organizations, be it the OECS, the CSME, or the United Kingdom.
Full text here. Minus stylistically-awful preamble below:
Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That
SECTION 1. SHORT TITLE. This joint resolution may be cited as the “Authorization for Use of Military Force against the Islamic State of Iraq and the Levant.”
SECTION 2. AUTHORIZATION FOR USE OF UNITED STATES ARMED FORCES.
(a) AUTHORIZATION.—The President is authorized, subject to the limitations in subsection (c), to use the Armed Forces of the United States as the President determines to be necessary and appropriate against ISIL or associated persons or forces as defined in section 5.
(b) WAR POWERS RESOLUTION REQUIREMENTS.—
(1) SPECIFIC STATUTORY AUTHORIZATION.—Consistent with section 8(a)(1) of the War Powers Resolution, Congress declares that this section is intended to constitute specific statutory authorization within the meaning of section 5(b) of the War Powers Resolution.
(2) APPLICABILITY OF OTHER REQUIREMENTS.—Nothing in this resolution supersedes any requirement of the War Powers Resolution.
(c) LIMITATIONS.— The authority granted in subsection (a) does not authorize the use of the United States Armed Forces in enduring offensive ground combat operations.
SECTION 3. DURATION OF THIS AUTHORIZATION. This authorization for the use of military force shall terminate three years after the date of the enactment of this joint resolution, unless reauthorized.
SECTION 4. REPORTS. The President shall report to Congress at least once every six months on specific actions taken pursuant to this authorization.
SECTION 5. ASSOCIATED PERSONS OR FORCES DEFINED. In this joint resolution, the term ‘‘associated persons or forces’’ means individuals and organizations fighting for, on behalf of, or alongside ISIL or any closely-related successor entity in hostilities against the United States or its coalition partners.
SECTION 6. REPEAL OF AUTHORIZATION FOR USE OF MILITARY FORCE AGAINST IRAQ. The Authorization for Use of Military Force Against Iraq Resolution of 2002 is hereby repealed.
Regarding that preamble, when did the endless list-of-whereas style become the norm? They’re really horrible to read. The AUMF for the Spanish American War limited itself to one:
Whereas, the abhorrent conditions which have existed for more than three years in the Island of Cuba, so near our own borders, have shocked the moral sense of the people of the United States, have been a disgrace to Christian civilization, culminating, as they have, in the destruction of a United States battleship, with 266 of its officers and crew, while on a friendly visit in the harbor of Havana, and can not longer be endured, as has been set forth by the President of the United States in his message to Congress of April 11th, 1898, upon which the action of Congress was invited:
Therefore, Resolved, by the Senate and House of Representatives of the United States of America in Congress assembled,
First. That the people of the Island of Cuba are, and of right ought to be, free and independent.
Second. That it is the duty of the United States to demand, and the Government of the United States does hereby demand, that the Government of Spain at once relinquish its authority and government in the Island of Cuba, and withdraw its land and naval forces from Cuba and Cuban waters.
Third. That the President of the United States be, and he hereby is, directed and empowered to use the entire land and naval forces of the United States, and to call into the actual service of the United States, the militia of the several States, to such extent as may be necessary to carry these resolutions into effect.
Fourth. That the United States hereby disclaims any disposition or intention to exercise sovereignty, jurisdiction, or control over said Islands except for the pacification thereof, and asserts its determination, when that is accomplished, to leave the government and control of the Island to its people.
Approved, April 20, 1898.
Returning to the current proposal, what is “enduring offensive ground combat operations” is supposed to mean? Sounds to me like Congress is authorizing anything including invasion, as long as we do not stay there forever. Not that the current administration has any desire to invade, of course. But why spell out the list of grievances in agonizing length only to leave vague the limits on the action? Go ahead, Congress! Take a whole page to spell out exactly what’s okay and what’s not!
I also have to wonder why there are no geographic limits on the current resolution. For example, “Within the territory of the Syrian Arab Republic or, with the permission of their internationally-recognized governments, the territory of any States bordering on the Syrian Arab Republic.” Instead we got, well, nothing. (FWIW, the 1898 resolution was also pretty vague. We did, however, follow it up with an actual declaration of war two days after Spain declared war on us.)
Is this just kabuki?
It is a good thing to repeal the 2002 AUMF. And it is a good thing for Congress to weigh in. But this strikes me as an open-ended check.
The real new thing here is the three-year limit ... which I think is not kabuki. But I am open to arguments.
There has been a lot of worry that the increasingly penurious Venezuelan government may cancel the Petrocaribe program that helps Caribbean nations (and El Salvador) buy Venezuelan oil. The fear is that fragile Caribbean economies will collapse if Caracas withdraws its support.
I think these worries are misplaced.
Petrocaribe finances Caribbean oil purchases on a sliding scale. When the price is between $30 and $40 per barrel, it will finance 25% of the purchase price. When the price is $90 per barrel (as it was back in July), Petrocaribe finances 40% of the purchase price. The terms are laid out in Article IV the Petrocaribe Cooperation Agreement.
Upshot: the price of Venezuelan oil is currently $39 per barrel with no subsidy. Six months ago, Caribbean countries had to shell out $59 in cash for a barrel of oil valued a hair below $99. It is true that if Petrocaribe holds the Caribbean countries will have to stump only $29 in cash ... but at the end of the day, $39 < $59.
Meaning that even if Venezuela abandons its Bolivarian ideals and dumps its Caribbean allies, the Caribbean countries will still be better off than they were last year.
If PDVSA defaults on its debts, then yes. It would be a standard commercial dispute. Once a court made its final ruling, U.S. officials would seize Citgo shares, sell them, and give the proceeds to the creditors after deducting expenses and taxes.
But if the Bolivarian Republic defaults, not PDVSA, then it gets harder. Let’s say I own shares in a company and I default on my debts. Creditors can go after my shares in the company, but they cannot go after the company’s assets. This is true even if I am the only shareholder in the company. (Limited liability goes both ways.)
This principle applies to companies owned by foreign states. An official House of Representatives report (see footnote 185 on page 196) bluntly stated: “Section 1610(b) [of the Foreign Sovereign Immunities Act of 1976] will not permit execution against the property of one agency or instrumentality to satisfy a judgment against another, unrelated agency or instrumentality. There are compelling reasons for this. If U.S. law did not respect the separate juridical identities of different agencies or instrumentalities, it might encourage foreign jurisdictions to disregard the juridical divisions between different U.S. corporations or between a U.S. corporation and its independent subsidiary.”
So far, so clear. Citgo is safe from creditors of the Venezuelan government.
But here’s the thing: I can’t hide from creditors by creating a separate me-controlled firm and transferring my assets to it. In the words of the Supreme Court, “where a corporate entity is so extensively controlled by its owner that a relationship of principal and agent is created, we have held that one may be held liable for the actions of the other.” Morever, there is a “broader equitable principle that the doctrine of corporate entity, recognized generally and for most purposes, will not be regarded when to do so would work fraud or injustice.”
In 1983, the Supreme Court specifically extended that principle to foreign state-owned entities in First National City Bank v. Banco para el Comercio Exterior de Cuba (Bancec).
Here’s the backstory. In 1960, Bancec arranged to sell some Cuban sugar to a Canadian company. Citibank issued a letter of credit to Bancec for the sugar. Bancec handed it to the Cuban central bank (the Banco Nacional) for collection. On September 15, 1960, the Banco Nacional presented the letter to Citibank. The next day, the Cuban government nationalized all Citibank branches. (This was remarkably poor timing.) Citibank, not surprisingly, did not pay Bancec. Bancec sued in the Southern District of New York. The Cubans let the claim sit around until 1975. When they picked it again, they argued that Bancec was an independent state-owned company; why should it be liable the Cuban government’s actions?
The case went all the way up to the Supreme Court. The Supreme Court upheld the lower court ruling: “Bancec is not a mere private corporation, the stock of which is owned by the Cuban government, but an agency of the Cuban government in the conduct of the sort of matters which even in a country characterized by private capitalism, tend to be supervised and managed by government. Where the equities are so strong in favor of the counter-claiming defendants, as they are in this case, the Court should recognize the practicalities of the transactions. . . . The Court concludes that Bancec is an alter ego of the Cuban government.”
Alright, then. Easy! It might be impossible to seize Citgo assets because Citgo is clearly not an agent of Caracas, but it might be possible to take Citgo shares away from PDVSA. After all, it would not be hard to argue that PDVSA has not been an independent commercial entity since 2002.
So I ran this past a lawyer friend of mine who works on this stuff.
And ... oh boy ... PDVSA does not own Citgo directly. It owns it through PDV America Inc which is in turn a subsidiary of PDV Holding Inc, both incorporated in Delaware. And those two companies are not legally beholden to PDVSA.
So now you have to show that PDVSA has no independence and that PDV Holding Inc and PDV America Inc have no independence. That ain’t so easy. In short, Lex is too sanguine about the prospects for seizing Citgo. It could happen, and my lawyer friends think it will happen ... but only after a long delay.
But there’s another problem! Venezuela has ICSID judgments against it. Unless Venezuela pays them, then ExxonMobil and ConocoPhillips will be sniffing around those assets. Their claims rank higher than claims by bondholders, since uncompensated expropriation, unlike default, involves a clear denial of justice.
In short, you have a mess. Sure, the fact that Citgo is there will make the Bolivarian Republic think six times about defaulting. But the economic mismanagement in that country is of such a scale (sorry, Shah8
☺) that Caracas no longer really has any other options.
Now, creditors have another recourse.
The creditors could go after Venezuelan oil exports directly. There is a recent history of this. In 2007, Texas courts ordered American companies to turn over not only royalties but also physical oil due the Congolese Republic. (See here and here; the decision itself is here.) Now the legal approach used in Texas did not have legs. But to be fair, the suits were quite different than the suits that might happen regarding Venezuela.
The Venezuelans could sell their oil at the point of embarkation and try to hide it, but that opens up foreign refineries to lawsuits. With the world awash in oil, many will be behooved to avoid going anywhere near the Venezuelan stuff.
So here is the upshot: a default will cause much pain in Venezuela but it will not make creditors whole. Having Citgo as a target does not cancel out all the problems with legal enforcement of sovereign debt because even if the creditors win it will take forever and a day to collect. But because of the legal challenges to oil sales, default be a big enough disaster for Venezuela that the country will likely make an offer that 75% of its creditors will accept. They will then abandon any attempts to go after Citgo.
Given what Venezuelan bonds are yielding, I’m tempted to buy them. How bad could the restructuring be?
Remember that dumb USAID plan to create democracy in Cuba by bringing it “Twitter-like” social media? Well, it turns out that USAID managed to be even dumber: it decided to use an HIV-prevention workshop as a front to recruit young Cubans for anti-government activities.
Yeah, you read that right. USAID, in another attempt to imitate the CIA at its silliest, decided to use an anti-HIV campaign to work against the Castro government. It is like something out of one of Vladimir Putin’s fever dreams.
And it was carried out with typical competence. From the A.P.:
In the HIV workshop effort, the AP’s investigation found the Latin American travelers’ efforts were fraught with incompetence and risk. The young workers nearly blew their mission to “identify potential social-change actors.” One said he got a paltry, 30-minute seminar on how to evade Cuban intelligence, and there appeared to be no safety net for the inexperienced workers if they were caught. In all, nearly a dozen Latin Americans served in the program in Cuba, for pay as low as $5.41 an hour ...
Drawing on documents and interviews worldwide, the AP found the travelers program went to extensive lengths to hide the workers’ activities. They were to communicate in code: “I have a headache” meant they suspected they were being monitored by Cuban authorities; “Your sister is ill” was an order to cut their trip short.
To evade Cuban authorities, travelers installed innocent-looking content on their laptops to mask sensitive information. They used encrypted memory sticks to hide their files and sent obviously encrypted emails using a system that might have drawn suspicion.
“These programs are in desperate need of adult supervision,” said Sen. Jeff Flake, an Arizona Republican.
Yes, quite. I will add that there seems to have been the same sort of contractor-capture as in the weird social-media-for-revolution case: Creative Associates International kept sending underpaid agents to Cuba even when the U.S. told them to stop after the Cubans arrested Alan Gross.
So what have we accomplished? We have given Castro and Putin talking points, put innocent people at risk of arrest, recruited zero Cuban rebels, and discredited USAID health operations. The next time Pakistani militants go on a rampage against vaccinations, it is going to be that much harder to convince people that they are making things up.
Can we fire Rajiv Shah now?
Venezuela has a special relationship with Cuba. The number of Cuban officials who can be found throughout the Bolivarian government is quite astounding, as is the volume of financial aid that Venezuela grants its Cuban partner. Moisés Naím has a good piece on it at the Financial Times, although it relies too much on a qualitative picture for my taste.
There are two things to note about “Venecuba,” as Hugo Chávez once called the alliance.
The first is that the two countries reached the current level of integration fairly early, around 2008. Evidence? One estimate for 2008 is that transfers to Cuba came to $5.6 billion in payments for Cuban officials working inVenezuela and $2.5 billion in subsidies for oil sold at $27 per barrel. (See page 109.) For 2010, the same source estimated the value of the same two transfers at $5.4 billion for personnel and $2.8 billion for oil. (See also here.) That is not a big change.
Ernesto Hernández-Catás (using a different methodology) gets the same result: not a whole lot of change in net Venezuelan transfers (in billions of current US$) after 2008:
The more qualitative reports of Cuban officials operating inside the Venezuelan state are harder to measure. But it should be noted that the U.S. was worried about Cuban influence in the foreign ministry and the Cuban presence in Venezuelan ports in 2008. Juan José Rabilero, the coordinator of Cuba’s Committees for the Defense of the Revolution, boasted, “We have over 30,000 members of Cuba’s Committees for the Defence of the Revolution in Venezuela” ... in 2007.
In short, the Cuban-Venezuelan relationship reached its peak around 2007-08. That is not to say that the relationship isn’t an astoundingly tight one. It is. It is to say that it hasn’t gotten much tighter since ‘08.
The second thing to note about Venecuba is that there was a lot of talk of deeper union in 2007. The State Department noted this in an internal cable. The political benefits of greater institutionalization were obvious. It would secure Cuba’s access to Venezuelan resources and make it easier for President Chávez to call on Cuban support to help him cement his control over Venezuela. Randy McDonald discussed the idea here.
So what happened? One possibility is that plans to institutionalize the Venecuban links were just hot air. That was true of a lot of Hugo Chávez’s initiatives.
But that isn’t what happened. What happened was that Chávez put the possibility of a federation before the Venezuelan people in 2007 and got beat at the ballot box. Here’s the story. Chávez proposed a series of constitutional amendments to the National Assembly in 2007. In the Assembly, his party added a series of additional amendments. (This almost certainly occured under the supervision of the executive branch.) Among them were reforms to Articles 152 and 153.
The original text of both articles read as follows:
Article 152: The international relations of the Republic serve the ends of the State as a function of the exercise of sovereignty and the interests of the people; they are governed by the principles of independence, equality between States, free self-determination and non-intervention in their internal affairs, the peaceful resolution of international conflicts, cooperation, respect of human rights and solidarity among peoples in the struggle for their liberation and the welfare of humanity. The Republic shall maintain the finest and most resolute defense of these principles and democratic practices in all international organs and institutions.
Article 153: The Republic shall promote and encourage Latin American and Caribbean integration, in the interest of advancing the creation of a community of nations, defending the region’s economic, social, cultural, political and environmental interests. The Republic shall have the power to sign international treaties that implement and coordinate efforts to promote the common development of our nations, and to ensure the welfare of their peoples and the collective security of their inhabitants. To these ends, the Republic may transfer to supranational organizations, through treaties, the exercise of the necessary authorities to carry out these integration processes. In its policies of integration and union with Latin America and the Caribbean, the Republic shall give privileged status to relations with Iberoamerican countries, striving to make this a common policy throughout our Latin America. Provisions adopted within the framework of integration agreements shall be regarded as an integral part of the legal order in force, and shall be applicable directly and with priority over internal legislation.
The new versions would have read:
Article 152: The international relations of the Republic are based on the full exercise of the sovereignty of the Venezuelan state and are governed by the principles of: political independence, equality of States, self-determination and non-intervention in internal affairs, the peaceful resolution of international conflicts, defense and respect of human rights and solidarity among peoples in the fight for their emancipation and the welfare of humanity. The Republic shall develop the finest and most resolute defense of these principles in international organs and institutions, fostering their permanent democratization for the construction of a just and balanced order. The foreign policy of the Republic shall be actively oriented towards the construction of a multipolar world, free from the hegemony of any imperialist, colonialist, or neocolonialist power center. In order to guarantee that this article be carried out, the Foreign Service is declared a strategic activity of the State. Its organization and functioning will be established by law.
Article 153: The Republic shall promote the integration, Confederation, and Union of Latin America and the Caribbean with the aim of configuring a great regional political, economic, and social power bloc. In order to obtain this objective, the State will favor the construction of new models of integration and union across our continent, to permit the creation of a geopolitical space within which the peoples and governments of our America shall construct a single supranational project, which Simón Bolívar called “A Nation of Republics.” The Republic may sign treaties and international conventions based on the broadest political, social, economic and cultural cooperation, supranational productive complementarity, solidarity, and fair trade.
In practical terms I cannot make heads-or-tails of either article ... but as a statement of principle the reform is clear. The original version committed the Bolivarian Republic to defending motherhood in article 152 and enabled the construction of something like the European Union in Article 153. The new version changed that. Article 152 now committed the country to an effectively anti-American foreign policy. Article 153 declared the aim of uniting as much of Latin America as possible into an anti-American confederation.
At the time the reform of Articles 152 and 153 was seen as part of the Venecuba trial balloon.
Anyway, the Venezuelan electorate narrowly defeated the reform at the polls. These reforms were not the main reason for the loss, of course, but President Chávez decided that he had pushed de jure union with Cuba as far as it could go. He had also pushed the de facto alliance as far as possible. And that was the end of that.
But not of Cuban involvement in Venezuela, for better or for worse. To be perfectly frank, I believe that the Cuban presence is both very large and largely inconsequential.
For those who missed it, it appears as though USAID recently and clandestinely tried to establish a twitter-like service inside Cuba. Contractor documents reveal a CIA-like plan to start the program up with innocuous postings but later introduce political content in order to organize “smart mobs” and “renegotiate the balance of power between the state and society.”
On the pro side, an admirable goal. The United States has long used USAID to help people self-organize against odious regimes. This happened during the Cold War, of course, and most notably the organization played a significant role in bringing down Slobodan Milosevic in Serbia. But it also helped tip over Vladimir Voronin in Moldova, a role that was not at all secret even at the time.
I can’t blame USAID for wanting to give it a go in Cuba. The agency appears to have crossed the line from discreet into covert distinction, but the line is fuzzy. It is hard to operate openly in closed societies. A close personal friend has seen the torture scars on an Otpor member who was caught organized protests against Milosevic. The Castro brothers are no less oppressive. So even though the secrecy was ultimately counterproductive, I would cut the agency some slack in that respect.
This plan was moronic.
You can sum it up as follows. (1) USAID money, (2) Twitter in Cuba, (3) ????, (4) Democracy!
The goal was unclear beyond “get young Cubans on social media.” There was no way to scale up. There was no exit strategy. USAID employed a sketchy contractor using an even sketchier subcontractor. There was little to no oversight within USAID or the State Department. (We appear to have trusted the contractors to stay quiet, but we did not trust our own internal watchdogs.) In the process, we managed to give away hundreds of thousands of dollars to Cuba’s state telecoms operator.
You might think that USAID would have a strong bench of people who have carried out this sort of operation. But none of them seem to have been involved. My discussions with people connected to American aid work chalk this up to a series of systemic problems with the agency. First, it has a short institutional memory: salaries are low, so the best people tend to leave for the private sector. Often they leave to become contractors with the agency ... but the contractors don’t talk to each other. Second, there is regional stovepiping: the Latin American experts don’t talk to the Eastern European ones, etcetera. Finally, there is a lot of contractor capture, and that clearly happened here: the contractor tail wagged the USAID dog.
One sad possibility is that USAID kept this ridiculous operation alive longer than it should have in order to suck up to Congressperson Ileana Ros-Lehtinen (R-Florida), who chaired House Foreign Affairs in the last Congress. I could sympathize with that if I thought it would actually buy the agency any credit with the Republican house majority. Sadly, I don’t. And not telling Senator Patrick Leahy (D-Vermont) about the operation? That was probably USAID head Rajiv Shah trying to be cunning. Only it was not cunning. It was stupid.
The overall impression is very Amateur Hour.
I am not impressed with Director Shah’s vision of turning USAID into a stepped-up version of the Gates Foundation, where government money leverages private financing for private ventures. Contrary to the New York Times headline, Shah’s vision is not a “switch.” Rather, it’s just more of the same outsourcing, with all the loss of oversight and knowledge transfer that outsourcing involves. I saw the result of that up-close-and-personal in Afghanistan and it was not pretty.
I have to agree with my colleagues in the aid world that Secretary Kerry should ask Obama to wait a decent interval, say six months, and then fire Director Shah. I’m sure that Shah will make a great Congressman. Maybe he’ll even make a great executive someday. But right now he should not be running this nation’s premier aid agency.
Randy McDonald brought this video to our attention:
We saw it with a number of Trinidadians and Trini-Americans. The reaction? First: “Who’s that talking? That’s somebody else talking.”
Second: see the title of this post. We are sending it to Jamaicans for review.
What I want to know is: where did he pick that up?
The Inter-American Dialogue just published a new report on Chinese investment in the Caribbean. And what did it find? Nothing!
Seriously, nothing. There is nothing to be seen here. The headline number for the stock of Chinese FDI in 2011 was $469 million. This is not a whole lot, even considering the small size of the Caribbean economy. Moreover, the geographic distribution shows there is even less to this than meets the eye.
Investment in the Bahamas and Barbados totalled $1.6m and $3.1m respectively; this is the equivalent of a couple very nice beach houses. (And significantly down in both places.) In Trinidad, perhaps the Caribbean’s most important economy, and certainly the one with the greatest growth prospects, China has invested a risible $900,000.
In Jamaica, China has more significant investment: $39 million and rising fast. The Jamaican government got out of the sugar business in 2011, selling three sugar factories and leasing 30,000 hectares of cane fields to Complant International. Complant then began a four-year investment program to put about $156 million into improvements in fields and factories, plus a new refinery to process 200,000 tons of raw sugar per annum.
How has that been working out? Not too well. First, it got hit with a drought. Then it got slammed by a fall in the Jamaican dollar. (Jamaica, unlike the rest of the West Indies, floats its currency. See the previous post.) Adding insult to injury, the company purchased $160 million in new plant and equipment ... of which an astounding $28 million was promptly stolen. Complant then fired 132 guards on July 31, 2013 ... only to face a sympathy strike by the rest of the workforce. The strike was resolved, but the Jamaican sugar industry is still in trouble, and the company is now in trouble over a decision to terminate the credit-support facility to its sugar-cane suppliers.
Another big rise has been in St. Vincent, from $6m to $36m between 2003 and 2010. I have not been able to find out what that was about, and I should note here that St. Vincent still recognizes Taipei as the official capital of all China.
Two-thirds of Chinese investment in the Caribbean is in Cuba and Guyana, with the bulk of the rest in Suriname. Cuba is, well, Cuba. The Guyanese investments are in bauxite, where the Bosai Minerals Group purchased 70 percent stake of Omai Bauxite Mining (the remainder staying in the hands of the Guyanese government). The Surinamese investments are in palm oil. Neither in Guyana nor in Surinam have Chinese investments lead to great leaps in output or productivity; Guyana is in a mining boom, but the lead is not Chinese.
There is more debt invesment (for example the giant Baha Mar complex in the Bahamas is on track, although the China Ex-Im Bank never seems to have taken an equity stake) but other than the Bahamian mega-resort none of it is economy-changing.
In other words, China has a presence in the Caribbean, but it is concentrated in a few countries, not particularly successful, and a harbinger of nothing other than the fact that Chinese banks and companies have dollars to burn.
It appears that the German government has just announced that it wants Greece to renounce its sovereignty in return for more credit. (Well, at least in return for the release of existing credit lines.) The idea isnt new: in 2002, two prominent economists seriously proposed that Argentina give up its sovereignty for five years. Of course, Argentina has done quite well for nine years by breaking all the rules, but it is far from clear that Greece could copy that, or that Argentina will continue to do well.
There is a historic parallel: the U.S. and the Dominican Republic in 1905. (Actually the U.S. and lots of Latin American countries, ranging as far afield as Peru and Bolivia, plus Liberia ... but let’s wait on that.) Short takeaway: Washington was way more generous back in those benighted days, with very little at stake, than Berlin is being today, despite massive repercussions for Germany if things go wrong.
The backstory was about what you might expect. The D.R. had defaulted; its government was facing multiple armed revolts; and the Germans were nosing around. This latter made Washington nervous that a rebel force (or one of the rapidly-changing governments of the day) might transfer a naval base to Germany in return for aid. In fact, after U.S. intelligence captured a letter from General Demetrio Rodríguez openly requesting aid for President Carlos Morales, Captain James Miller “invited” Rodríguez on board his ship, where he explained: “Neither he [Morales] nor anyone must think for a moment that Germany or any other foreign power could be situated in any portion of the Dominican territory.”
President Morales saw an opportunity. If he could convince the United States to take over his country’s customhouses, using the German threat as motivation, then he could kill three birds with one stone. First, having U.S. troops in the ports would remove them as strategic targets for rebel forces. Second, U.S. officials could manage the customhouses far better than corrupt Dominicans, thereby increasing revenue. Third, if the Americans could be convinced to skim a bit off the top and use that to guarantee debt repayments, then the D.R.’s borrowing costs would go down, and Morales could borrow more on top of the increased revenue. Win win win! Who needs sovereignty? (Two out of the three points, one might think, would apply to Greece today.)
Uncharacteristically, President Theodore Roosevelt (in his own words) chose to “put off the action until the necessity became so clear that even the blindest can see it.” He was a bit worried that American public opinion might not be thrilled with the idea of involvement in somebody else’s civil war, not while the Philippine War had only just ended two year previously, and not with U.S. troops still fighting in Mindanao. So Roosevelt waited, and the Dominican situation got worse, and the Europeans kept nosing around, and American investors kept screaming, and finally in May 1904 the President proclaimed his famous corollary to the Monroe Doctrine. It read:
Any country whose people conduct themselves well can count upon our hearty friendship. If a nation shows that it knows how to act with reasonable efficiency and decency in social and political matters, if it keeps order and pays its obligations, it need fear no interference from the United States. Chronic wrongdoing, or an impotence which results in a general loosening of the ties of civilized society, may in America, as elsewhere, ultimately require intervention by some civilized nation, and in the Western Hemisphere the adherence of the United States to the Monroe Doctrine may force the United States, however reluctantly, in flagrant cases of such wrongdoing or impotence, to the exercise of an international police power.
Thing is, it still took a while to build support, and there was, you know, an election to win. President Roosevelt didn’t agree to Morales’s request until December 1904, a month after the U.S. presidential vote. The Senate, it turns out, had other ideas. Roosevelt decided that with the election past, that wasn’t a problem, and so the U.S. took over the customhours without a treaty on March 31, 1905.
Under the agreement, the U.S. directed 55% of customs revenue towards debt payments, but it did not do so mindlessly or automatically. Rather, it banked the money until February 1907, when it finally forced the D.R.’s creditors to accept a 50% haircut on their outstanding principal. (The average coupon was reduced to 5%.) In fact, if expropriation claims are excluded, creditors accepted a 57% haircut on their debt.
Moreover, the agreement worked: there was no austerity. Even after the U.S. took 55% off the top, government spending did not fall. Moreover, the D.R. managed to go to the capital markets as early as May 1907, when it refinanced its outstanding post-haircut debt of $15.8 million and borrowed an additional $3.9 million. ($3.9 million is, as a share of U.S. GDP, the equivalent of $1.7 billion in 2010.)
And therein lies the rub. Or rubs. First, the D.R. was not a democracy in 1904; Greece is one in 2012. Second, the D.R. asked for the receivership; the Greek government is not. Third, the U.S. used its good offices to obtain a very favorable debt restructuring; the E.U. (meaning the Germans, really) is letting Greece hash things out with its creditors on its own. Finally, in the case of the D.R. the U.S. really was able to improve custom collection; I’m not sure that anyone believes that a foreign administrator will be able to easily improve the Greek internal revenue service inside a culture of widespread evasion.
In other words, the U.S. was much more generous to its dirt-poor neighboring nondemocracy than the Germans are being towards their not-as-poor fellow democracy. Good luck with that. Unless, of course, failure is the plan.
The Kingdom of the Netherlands is a strange animal. It isn’t much of an empire. Nor is it a proper federation; it doesn’t even have a federal government per se. International treaties apply differently to the different parts. (See Articles 24-28 of the Charter of the Kingdom.) The Caribbean members have duty-free access to the European Union, but there is no true common market. In theory, Article 35 requires that they pay for their own defense. (In reality, it doesn’t matter: the insular Caribbean outside Cuba is a de facto military protectorate of the United States.) The Supreme Court of the Netherlands is the ultimate court of appeal, but most of the ex-British insular states (save Barbados and Guyana, but including Mauritius an ocean away) still use the Privy Council. It uses a different currency, with its own central bank. Finally, the Caribbean countries can all withdraw fairly easily, using provisions laid down in the Charter. Sint-Maarten could remove Dutch influence far more easily than the Bahamas could get rid of the United States.
So is the Kingdom meaningless? Are the constituent countries simply independent countries without a seat in the U.N.? Well, not quite. First, there is a common citizenship. Immigration and naturalization laws may vary (the latter by rather little), but once you’ve got that Kingdom passport you’re a full citizen. If Great Britain had been willing to extend that to the West Indies Associated States, I doubt that any of them would be sovereign countries today. (To be fair, the WIAS had other issues, not least of which that there was no equivalent of the Charter. British officials treated the association as nothing more than a British administrative inconvenience, which rankled on the islands.)
Second, law enforcement. The relationship is a bit of a mess. This Dutch document goes into it: since I am not a Dutch speaker, and translation software is overvalued, I can’t say that I understand the details. That said, while Dutch police have less authority in Sint-Maarten than, say, the FBI does in Puerto Rico, they do have authority, even if they generally need local approval to make arrests. That is a bit more authority than, say, OPBAT gives American officials in the Bahamas, or than DEA agents have in Colombia or Mexico.
Third ... well, here it gets interesting. The Netherlands provides financial support to the other countries in the Kingdom, but it is phasing it out. Development and fiscal aid is supposed to end by 2013. In fact, transfers have been generally miniscule. According to IMF data, in 2008 aid to Sint Maarten amounted to only 0.3% of GDP.
Recently, however, that has changed. Aid rose to 2.0% of GDP in 2009 and 6.2% in 2010, most of it to pay off Sint-Maarten’s debt arrears. More substantively, the Netherlands took over the debt from the former government of the Netherlands Antilles that otherwise would have gone to Sint-Maarten, a gift worth approximately 30% of the country’s GDP. In return, however, the island has had to accept Dutch financial supervision. The Financial Supervision Authority is supposed to stick around until 2013, by which point Sint-Maarten is supposed to have trained up enough people to take over the functions formally carried out by the government of the Netherlands Antilles. We’ll see.
In short, being part of the Kingdom of the Netherlands is a bit more substantive than simply lacking a U.N. seat. That said, technical sovereignty matters very little. The U.S. routinely took control of the finances of Latin American countries before WW2, and the IMF effectively does so today. (A country can refuse IMF money, of course ... but Sint-Maarten can, in theory, also refuse Dutch support.) Similarly, law enforcement officials from a powerful state can often find ways to exercise their authority inside a weaker one. Finally, lots of nominally sovereign countries share or outsource judicial authorities. What matters, rather, is citizenship and the moral authority to call on Dutch resources when necessary. It is a relatively weak relationship, but a real one nonetheless.
The French side of the island is completely different. If there’s interest, I’ll discuss it later.
Every Christmas, we go to a different Caribbean island to meet my wife’s family. This year, we went to Sint Maarten, Saint Martin, and St. Vincent. The first two, I should add, share the same island.
Sint Maarten, which makes up the southern half of a tiny Caribbean island in the north of the Lesser Antilles, is a new country in two ways. First, it really is a new country. The Kingdom of the Netherlands is not a small country on the northwestern coast of Europe. Rather, it is a federacy of several different countries, called, well, “countries.” In 1954, when the former empire was turned into a federacy via the Charter, the Kingdom consisted of the Netherlands, Suriname, and the Netherlands Antilles. (Dutch New Guinea was not part of the new structure.) In 1975, Surinam became independent in a disgusting little racist episode engineered by Prime Minister Joop den Uyl. Aruba split from the rest of the Netherlands Antilles in 1986, but remained part of the Kingdom. Finally, last year the Netherlands Antilles dissolved into two more countries, Curaçao and Sint Maarten, while the three remaining territories (Bonaire, Saba, and Saint Eustatius) became part of the Netherlands. Sint Maarten’s status as a country, then, is only a little over a year old.
Sint Maarten is a new country in another sense, however: more than three-quarters of the population consists of the descendents of immigrants who arrived after 1960. The sugar and cotton industries collapsed after the abolition of slavery in 1863. Maartenese laborers went to Cuba, Puerto Rico, and the Dominican Republic to work in the sugar industry. In 1918 a giant oil refinery opened on Curaçao, followed by one in Aruba in 1928, sucking out more labor from Sint Maarten. The result was stagnation: in 1960, the population was only 2,728. The island looked to be sinking into a backwater, an unpopulated remnant.
The jet age (and Fidel Castro) changed all that. The Cuban Revolution removed that island as a destination for North American tourists. Sniffing opportunity, in 1964, the Antillean government relocated and expanded Princess Juliana International Airport.
Tourists began to arrive en masse, the cruise ships followed. And the population grew. And grew. And grew. To only 40,000 people, admittedly, but the entire country covers only 13 square miles. By 1992, only 30% of the population had been born in St. Maarten, and a solid chunk of those were the children of post-1964 immigrants.
It is possible to be naturalized as a Dutch citizen, but it isn’t easy. (Strangely, it seems as though I may qualify for Dutch citizenship without the need to be naturalized, just as I qualified for Spanish citizenship until last Tuesday.) In 2001, citizens made up 51% of the population. 30% of the population was (still) native-born; an additional 10% came from elsewhere in the former Netherlands Antilles and 2% came from the Netherlands proper. The math, then, shows that only 9% of the population consists of naturalized citizens.
Who naturalizes? It isn’t easy to tell, but it is easy to see who doesn’t naturalize: in 2001, people born in the British West Indies made up 20% of the population, whereas citizens of those countries made up 21% — they do not naturalize; neither did a small number of their Sint-Maarten-born children. Even more dramatically, the Haitian-born made up 8% of the population, but Haitian citizens made up 12% — very few of their children naturalize. Finally, Dominican-born made up 12% of the population and while Dominican citizens made up 10%; of the three major groups, they are the most likely to naturalize. (Two-thirds of the foreign born outside those three groups and developed-world expats become Dutch citizens. Most of them are from Cuba, South America, and Lebanon.) The West Indians may be unlikely to receive Dutch citizenship, but they are also next-to-invisible on the Dutch side. The initial plantation owners on that side of the island were from Britain; they brought English. Everyone speaks it fluently, from birth, with a faint West Indian inflection.
The Dominicans, on the other hand, are pretty distinctive. Our first contact with them actually came on the French side of the island. We were walking along Orient Bay in the evening, and heard tropical music coming from one of the beach clubs, all the way at the southern end of the beach. It was a live band, and an awesome live band. Everyone in there except for us (including the waitress) was Dominican. (There are no border controls.) It was awesome ... and by day an utterly nondescript beach bar populated by tourists.
On the Dutch side, you can see money-sending places, Spanish service shops, and evangelical iglesias scattered around the poorer outskirts of Philipsburg. The Dominicans are visible. The migration is skewed towards women: 61%. According to the Sint Maarten government, most of the initial migration came in illegally from Romana and San Pedro de Macoris. The migrants provided fake work sponsors to Sint Maarten’s then-lackadaisical immigration officials. It’s also skewed towards the unskilled: Dominicans make up 29% of all unskilled workers, with Haitians filling an additional 30%.
The Haitian migration is almost the mirror image of the Dominican one in terms of gender: it’s 59% male. It’s also the mirror image in terms of visibility. The only easily-spotted presence is the fishermen near the airport, and the stalls where they sell their products.
Policy, as you can imagine, has been confused, although it is getting better. Before August 1, 1996, education was neither free nor compulsory for immigrant children. The legal school population doubled in 1990-95, and so educating immigrants was not particularly popular, especially since many of the Haitians were refugees fleeing the chaos of the early 1990s and living in tent cities. Nonetheless, the government came around to the idea that creating a large uneducated underclass was a bad idea, and so compulsory education was extended to all. State health insurance, however, is not available for undocumented immigrants, who often cross over the French border to receive emergency care.
The Bahamas are not rich by the standards of the United States and Canada. But they are not poor by the standards of the world. There is no desperate poverty, and there are few people cut out of the modern economy altogether. Rather, the country feels like a relatively poor part of the United States. The poor areas are poor, but they are no worse than what you can see all over Florida.
The country’s minimum wage is $4.00 an hour. That’s low by American standards, but high by regional ones: Trinidad’s average wage is only a little higher than the Bahamian legal minimum. “Kitchen helpers” in the hotel industry, one of the lowest-paid categories, average $6.16 per hour. Shop sales assistants make $7.37 an hour. Gas station attendants make $8.00; cashiers $8.40, and housekeepers $10.53. The average hourly wage for all production workers was $13.00, and the average work week was 38 hours. These wages are not low. In fact, average nominal wages in the Bahamas ($13.00) are on a par with Mississippi ($12.83), Puerto Rico ($12.92), and West Virginia ($13.19).
The Great Recession has badly wounded the Bahamian economy, but no worse than several parts of the United States. Bahamian unemployment remains high at 13.7%. That said, unemployment in Minnesota (14.1%), Nevada (13.7%) and Puerto Rico (16.3%) exceeds the Bahamian level, while the other low-wage jurisdictions in the United States don’t show low unemployment: Mississippi with 11.1% and West Virginia with 9.0%.
What is the Free National Movement (FNM) government doing about the economy? Monetary policy, of course, is mostly out of their hands. Capital controls mean that the government also has some room to use monetary policy — it recently slashed the discount rate from 5.25% to 4.50% — but the peg to the dollar limits its freedom of action. The government has some scope for a Keynesian boost — the budget deficit is only 3.0% of GDP, and they recently sold the Bahamian Telecommunications Company for $210 million — but it is unlikely to be effective. Why? Simply put, the Bahamas is too small and too open. Imports come to 35% of GDP. Much of any stimulus, therefore, is likely to “leak” away in increased imports.
What’s left, then, besides praying for the United States to get out of the doldrums? Well, Prime Minister Hubert Ingraham has decided to try attracting as much Chinese investment as possible. The Chinese government has taken a $2.75 billion equity stake in the giant Baha Mar resort development. It also provided loans to finance stadium and road construction.
The problem? Well, the economic problem is the same as with Keynesian spending: leakage. The Bahamas is a pretty small economy. It doesn’t produce a whole lot of construction material, and while unemployment is high, it doesn’t have that many skilled construction workers. The Baha Mar construction project will bring in 6,150 Chinese construction workers, while the $70 million new airport road has involved another 200. Not all the construction labor force will be Chinese, of course, but construction is estimated to employ only 4,000 Bahamians. The developers have pledged only $200 million in contracts to Bahamian firms although that might ultimately rise higher.
The China State Construction Engineering Corporation (CSCEC) will get $1.9 billion, or 53% of the total value of the project. Some of that may stay in the Bahamas, of course, but probably not a whole lot: Chinese workers are estimated to remit roughly $12,000 per year. They do, of course, eat and drink — but the Bahamas is a large agricultural importer, and so those expenditures will like benefit American agriculturalists. The government estimates about $80 million or so in tax payments from the CSCEC but that isn’t a lot. The highest estimate is that Bahamian contractors will receive no more than $400 million, or 11% of the total project value — and they will, of course, spend a large chunk of that revenue on imported inputs. In short, at least half the stimulus will leak away and possibly as much as 90%.
The Nassau Guardian summed it up: “"The Bahamas has fallen fully into the embrace of China. And the rising empire has been kind with its gifts … What Bahamians must understand is that when China lends, and it contracts its own workers to do the job, a significant amount of the money borrowed goes back to China with the workers who build the project. They pay their workers with money we borrow … The Chinese also keep their workers in self-contained on-site camps when they are sent abroad. We barely get them to visit our stores to spend the money we borrowed when they are working in our countries.”
This is not to say that the project is a bad deal! Once it’s done, it will provide a solid boost to the Bahamian economy. Even if the U.S. economy stays flat, it should be able to attract business away from other Caribbean resorts. It is to say that a tiny country like the Bahamas can’t really do a whole lot to use countercyclical fiscal policy to boost its economy, regardless of whether the stimulus comes from government borrowing or foreign investment.
The U.S. government worried that China might be “using this investment solely to establish a relationship of patronage with a U.S. trading partner less than 190 miles from the United States.” I don’t see it. Sure, the Chinese government will have a big stake in a giant resort development. If there was some evidence that China had used its state power to unfairly obtain contracts from American firms, then there might be cause for concern, but there isn’t. Nor is there evidence that China bribed or otherwise influenced Bahamian officials.
As for Chinese “patronage,” well, patronage in exchange for what? The U.S. already controls large spheres of Bahamian public policy. The Chinese government isn’t about to force the Bahamas to suspend OPBAT, expel the Coast Guard, sever the link to the dollar, seize American property, restrict American imports, replace the Privy Council with a Chinese court, or station nuclear weapons off the coast of Florida. Given the overwhelming dominance of the United States, and its long-standing and multiple links with the Bahamas, I can’t for the life of me figure out what a “patronage relationship” with Beijing would even mean. In point of fact, “Senior GCOB officials privately expressed that China is not their preferred partner and acknowledge that negotiations are difficult.” Moreover, the Chinese government told the Americans that they were unhappy about the need to take the financial lead on the project: “Chinese embassy officials privately told [a U.S. official] the China Ex-Im bank would prefer another investor in the mix to diminish the financial risk.” E.g., Americans just weren’t interested. So much for the rising empire muscling out the declining one.
The only realistic worry I can see is that the Bahamas might serve a pathway for illegal Chinese immigration, a fear shared by the U.S. Embassy in Nassau: “The continuous arrival of thousands of low-wage Chinese workers in the Bahamas will likely lead to a significant increase in illegal migration of Chinese from the Bahamas to the United States. The GCOB (Government of the Commonwealth of the Bahamas) does not have the institutional capacity to effectively monitor the movements of the Chinese workers nor effectively detect inauthentic travel documents.” But still, that is minor ... and that worry involves the fact that China is still a poor country unable to retain its own people when given opportunities elsewhere.
In short: the Bahamas is rich, small countries have serious economic limitations, and China is still both poor and very far away. Okay, not the deepest conclusions ever, but hey. I am on vacation. And really, any opportunity to reduce the latent China-hysteria in the United States is probably worth taking.
Crime in the Caribbean has risen dramatically in the past decade. The Bahamas is no exception — but there are two major differences between the archipelago and the most of the rest of the West Indies: first, the Bahamas has been there before; and second, the Bahamas has well-functioning police institutions. In that sense, there is much room for optimism (assuming that the world economy holds up) to predict a significant fall in violence in the near future — if certain fairly simple reforms are undertaken.
We’ll start with the history. From the late 1960s through the mid-1980s, the murder rate (measured per 100,000 people) steadily spiraled upwards as the islands became a center for drug trafficking into South Florida. (The data come from U.N. crime surveys and the Royal Bahamian Police Force, abbreviated RBPF.) Unfortunately, uniform data is not available for 1987 through 1990 (the Bahamas did not take part in the U.N. survey for those years) but the time series agrees with the general impression of that era: once the United States took an active role in suppressing the drug traffic through the archipelago, violent crime fell rapidly. It did not, however, fall all the way back to pre-1970 levels: most accounts pin the continuing level of background violence on the establishment of youth gangs on the islands and the arrival of large numbers of Haitian immigrants.
In the last decade (after a brief spike in 1999-2000) homicide has climbed back up to near its historic high. The reason for the climb is not undocumented immigration from Haiti and Jamaica: between 2005 and 2009, only 12% of homicide victims were Haitian-origin, with another 1% from Jamaica. That is not far off historic norms, and certainly not enough to explain the rise.
Rather, like elsewhere, the cause is probably drug-related, albeit this time for control of local markets, rather than export to the United States. Between 2007 and 2009, the percentage of drug-related killings jumped from 8% to 16%. Put another way, the increase in drug killing accounted for all of the post-2007 increases in homicide. Unfortunately, drug-related crime accounts for precisely none of the 2004-07 jump. (Actually, drug-related killing fell from 9 per year to 6 over that period; their contribution was actually negative.)
The Bahamian police, however, use a very exacting definition of drug-related. There is, however, a looser classification for what are called “retaliation” homicides: “Killing in response or reaction to prior confrontations, altercations, crimes or other issues.” Between 2005 and 2007, retaliation killings rose from 2% to 18% of all homicides, and accounted for 65% of the rise in murders. They since stabilized, but as noted before, murders carried out at the site of drug transactions continued to increase. Since the majority (it isn’t clear how many) of retaliation killings are in fact related to previous narcotics-related crimes, it seems likely that increasing conflict for retail drug sales explains most of the Bahamas’ crime spike.
This pattern provides grounds for optimism. First and foremost, the Bahamas is not a particularly corrupt country. Oh, rumors and complaints abound, but there is little evidence of serious rot. The Wikileaks cables, for example, amply criticized Bahamian officials and they had a field day with the scandals surrounding Anna Nicole Smith, which included a torrid affair with the immigration minister who expedited her residence permit ... but the State Department made no mention of serious corruption impacting American business or security interests. And the scandals that have been mentioned, whether by State Department or the Bahamian press, are pretty small potatoes by American standards ... let alone compared to standard operating procedure in, say, the Mexican prison system.
More systematically, the classifications used by the IMF rank the Bahamas fairly high in terms of control of corruption. The Bahamas’ rating of 1.4 on a scale from −2.5 to +2.5 ranks it with places like Belgium and Chile and far above Jamaica and Trinidad, both of which have negative scores. In short, Bahamian institutions work, and that is a necessary but not sufficient condition for controlling violent crime.
Reports by the Bahamian police make it fairly clear that the criminal justice system suffers from three shortcomings. First, the RBPF is undermanned — a situation made worse by its reluctance to adopt the common American tactic of flooding “hotspots” with police officers when violent crime spikes. Here is a quote from a high-ranking Bahamian police officer: “For policing purposes, the identification of an ellipse defining a hot spot is, alone, useless. The question then becomes: what does a police officer do after finding him or herself in the middle of a designated hotspot. Experts stress that as long as nobody knows what is heating the hotspot, responses may be futile.”
This reluctance to simply flood “hotspots” with officers sounds commonsensical, but it flies in the face of the evidence from American cities that stamping out violence in one area in does not displace it to others: if the opportunity is lost, most killings simply don’t happen. Such tactics would be particularly effective in the Bahamas, where 23% of homicides occur between pedestrians out on the street, and an additional 21% take place inside commercial establishments. Of course, the RBPF might need more officers (it currently numbers about 3,000, which is not small for a country of 330,000) — but the Bahamas is not poor, and it is ridiculously undertaxed.
The second issue is twofold. First, the RBPF is great (on paper) at solving murders, but extremely lousy at managing to convict those it accuses. Its clear-up rate is 73%, which is higher than the 62% rate in the United States, albeit lower than the 78% rate in Barbados, the 82% rate in the U.K. and the 86% rate in Australia. It certainly beats the hell out of the 32% clear-up rate in Jamaica and the 18% rate in Trinidad.
The problem is that murder arrests in the U.S., U.K., Barbados, and Oz overwhelmingly result in conviction, whereas in the Bahamas they do not. Of the 231 homicide charges filed in 2005-09, only 63 had gone to trial by the end of 2009. Worse yet, of those 63, only 18 resulted in conviction. The former is a sign that the court system is overwhelmed, and needs more judges and bailiffs and jails and money. The latter is a sign that the Bahamian police are pretty bad at following through on the second part of a good Law & Order episode, and casts doubt on the veracity of that much-touted clear-up rate.
Still, the Bahamas doesn’t need to massively increase the rate at which it arrests and convict murderers to reduce its incidence, although that would help. They simply need to disrupt open criminal activity (which is highly clustered) and detain people for other crimes. The Bahamas is not at all like Trinidad or Mexico; it’s much more like a high-crime area of the United States. If its voters don’t like the level of criminal activity on the islands, then the solution is pretty straightforward — all it will take is money.
Is the Commonwealth of the Bahamas a sovereign nation? It has a seat in the United Nations, so it a technical legal sense the answer is clearly yes. And it has a very cool flag.
But in any other sense of the world, the Bahamas isn’t sovereign. Like many (perhaps most) microstates, the Bahamas has only managed to survive by a combination of outsourcing some state functions to bigger more powerful countries and giving control to powerful neighbors when their interests are at stake.
Let’s start with the obvious: the Bahamas is fully dollarized. Technically there is a separate Bahamian dollar, maintained at parity with U.S. money — in reality the U.S. dollar circulates to the point where you have to go out of your way to receive Bahamian banknotes. Unlike Argentina during the days of the currency board, nobody bothers to hoard dead presidents. Still, the Bahamas hasn’t completely outsourced monetary policy to the United States: under the Exchange Control Act of 1956, the Central Bank retains the right to restrict foreign exchange dealings. In practice, this has worked as a tax on capital outflows, although there are also some restrictions on current transactions. Still, it’s telling that the act enabling the controls predates official sovereignty by 17 years — and yes, it applied to Great Britain as well.
Moreover, monetary policy is a poor test of sovereignty, even ignoring Bahamian capital controls. After all, many sovereign states outsource monetary policy. Zimbabwe is about as sovereign a country as you are likely to find, and even it adopted the U.S. dollar in the wake of a ruinous hyperinflation. So let’s turn to something more fundamental: law enforcement. Sovereign countries do not allow foreign courts to make decisions or foreign law enforcement agencies to make arrests. The United States, for example, is perfectly willing to help out the RCMP, and the links between the RCMP and the FBI are so profound that the agencies can be indistinguishable — but the Mounties don’t fly helicopters over Montana, and FBI agents don’t make arrests in Ontario. And while American and Canadian courts respect each other’s decisions, you can’t appeal an adverse outcome in Newfoundland to a court in Washington, D.C.
This is not true in the Bahamas, although, confusingly, the foreign power with judicial power and the foreign power with police power happen to be different. The Bahamas’ supreme court is the Judicial Committee of the Privy Council in London. In 2006, 2007, and 2009 the Privy Council held its sessions in the Bahamas — the only country to have that privilege outside the U.K. itself — but at the end of the day, it’s still a British court. It creates some controversy, particularly over death penalty cases. Nonehteless, the Bahamas shows no sign of wanting to cut its links to it.
Meanwhile, with some caveats, U.S. law enforcement operates in the Bahamas almost as freely as it does in Florida. In the late Seventies and early Eighties, drug traffic through the islands into Greater Miami steadily escalated, and the Reagan Administration put more and more pressure on the Bahamas to do something about it. In November 1983, the Pindling government gave into the pressure and convened a commission of inquiry “To inquire into the illegal use of the Bahamas for the transshipment of dangerous drugs intended for the United States of America.” The commission was made up two Bahamians, an Australian, and a Canadian, and after 146 days it uncovered what everyone knew: the Colombians moved narcotics with impunity through the islands.
And I mean impunity. Aircraft from Colombia would land in Bimini or drop cargo to waiting boatmen, who would put them in speedboats for the 50-mile into Broward and Palm Beach counties. The chief local distributor on Bimini received $90,000 for each run, with local schoolchildren received $500 for a night’s work. A December 1979 raid by the Royal Bahamian Police ended with rocks being thrown at the cops “by children, adults and elderly.” It also uncovered corruption, which had not yet escalated to the upper channels of Bahamian law enforcement … but was clearly getting there.
The result was OPBAT: Operation Bahamas and Turks and Caicos. It started in 1984, but in 1987 the Bahamian government granted the U.S. Coast Guard the right to stop any and all ships and aircraft entering or leaving Bahamian territory. The USCG couldn’t officially make arrests without a Bahamian sign-off, but that was a distinction without a difference. In 2004, the Comprehensive Maritime Agreement between the U.S. and the GCOB (Government of the Commonwealth of the Bahamas) replaced the grab-bag of unofficial conventions and understanding, but had the effect of strengthening the U.S. position in the islands: now the Royal Bahamian Defence Force would regularly station “ship-riders” on U.S. vessels and helicopters, giving the full rights of arrest in Bahamian waters. This authority has proven useful not only in combatting the drug traffic, but also in preventing Haitian migration to either the Bahamas or the U.S. Of course, stopping emigration is not good for Haiti — and OPBAT’s success in curbing the Caribbean drug trade has been awful for Mexico. (I’m heading to Monterrey on Wednesday.) But it has prevented any chance that the Bahamas might become a narco-state.
(You can read Wikileaks’ rather anticlimactic revelations about Bahamian thoughts regarding Haiti and the CMA here. In 2007, the U.S. Army pulled out of OPBAT, and its helicopters were replaced by DEA aircraft, a distinction without a difference. All that happened were that Army UH-60s were replaced at Georgetown by three DEA Bell 212s and a fixed wing aircraft.)
To recap: Bahamian monetary policy is set by the Fed, the supreme court is in Britain, and American law enforcement freely operates in its national territory. Does that make for a sovereign country? I report, you decide ... but if you pushed me, I would have to say not.
Trinidad almost became an American territory in 1931. It didn’t because the British government was perfectly willing to default on its debts to the U.S. government. The Hoover Administration, sensibly, didn’t push the issue.
The Bahamas, it turns out, almost became a Canadian province in 1911. The colonial assembly in Nassau, backed by prominent Canadian investors in the islands, pushed hard to join. The population of the islands was only 56,000, but there was plenty of money to be made investing in infrastructure: the first telephones were only installed in 1906, and electricity arrived in the archipelago in 1909. The Royal Bank of Canada set up shop in 1908.
Canada’s share of Bahamian imports, however, remained small: $28,392 in 1911, compared to $1.3 million in American imports to the archipelago. Moreover, the fiscal cost of taking over the islands would have been minimal: the federal government spent only 6.1% of GDP in 1911, and transfers to provincial governments amounted to only 0.4% of GDP. (Federal infrastructure spending in the Bahamas would have contributed to economic growth in the islands and likely been a wash for the treasury. It also would have been negligible on the scale of the Confederation.)
So why didn’t it happen? Simply put, Canadian racism ... triggered by a wave of American political refugees. Prime Minister Wilfred Laurier (a Liberal) seemed open to the idea of letting the Bahamas join until, in 1911, a strange wave of racial fear arose from Manitoba. A group of about 1,000 wealthy black Americans from Oklahoma — fleeing the 1907 passage of Jim Crow laws after statehood — arrived at the Emerson border crossing. The result was panic on the prairies.
I’ll turn the floor over to William Thoburn, a Conservative MP from Ontario: “As long as we give the free homesteads in Canada’s northwest, they will come by the tens of thousands. I would like to ask the government if they think it is in the interests of Canada that we should have Negro colonization in the Canadian northwest. Would it not be preferable to preserve for Canada the land they propose to give to Negroes?”
The hysteria soon spread to Alberta. A group of prominent Albertans wrote to the federal interior minister, Frank Oliver, with a series of complaints straight out of an American inner suburb, circa 1970. First, they worried that “Negro immigration” would create white flight and drive down property values. (The idea of rural white flight on the Albertan prairies boggles the mind.) They then went on to worry about their women. “We do not wish that the fair fame of Western Canada should be sullied with the shadow of Lynch Law but we have no guarantee that our women will be safer in their scattered homesteads than other white women in other countries with a Negro population.” To his credit, Premier Arthur Sifton refused to block black immigration.
The panic was especially crazy because Canadian law required immigrants to have on them at least $50 per man, woman, and child. In 2010 dollars, that’s $1,185 — but that figure doesn’t take into account the fact that people were poorer a century ago. When adjusted for increases in average wages, each immigrant was required to have the 2010 equivalent of $7,425. In other words, these were not the huddled masses; these were well-heeled political refugees fleeing the sudden imposition of racial tyranny in their home state.
From the Toronto Mail and Empire of April 27, 1911: “If Negroes and white people cannot live in accord in the South, they cannot live in accord in the north. Our western population is being largely settled by white people from the United States. If we freely admit black people from that country, we should have race troubles that are a blot on the civilization of our neighbours ... The Negro question is of the United States’ own making and Canada cannot allow any part of her territory to be used as a relief colony on that account.”
The Canadian government ordered their agent in Kansas City “to refuse certificates or any encouragement to migration of this class” and “take immediate measures to check this class of immigrants.” It then limited black immigrants to Emerson and North Portal, where it subjected them to degrading medical examinations. It went so far as to hire a black doctor from Chicago to travel to Oklahoma and give lectures about how terrible the Canadian climate was for black people. Finally, in August 1911, with a federal election coming up fast, came this order-in-Council, pursuant to the Immigration Act of 1910, which allowed the government to ban “immigrants belonging to any race deemed unsuited to the climate or requirements of Canada”:
In this atmosphere — with the Liberals under fire for their support of the Reciprocity Treaty with the United States — it should come as no surprise that Prime Minister Wilfred Laurier (a Liberal) would decide against expanding Confederation to the Bahamas on grounds of, in his own words, incompatible “ethnical origin.” Laurier was willing to take West Indian islands as purely colonial concerns, with no representation in Ottawa and no right of immigration, but that wasn’t acceptable to West Indian elites which already enjoyed a modicum of self-government. The Bahamas, for example, possessed a parliament elected by a property-restricted suffrage. (The restrictions meant that white people held 26 out of the 29 parliamentary seats, even though they made up only a quarter of the population.)
When Laurier lost the September 1911 election to Robert Borden, the Bahamians tried once again. The big issue in the election was a proposed tariff-reducing Reciprocity Treaty with the United States. The Conservative Party opposed the agreement, and it used imperial rhetoric as part of its appeal. With pro-Empire Borden as Prime Minister, the (unelected) Governor of the Bahamas, William Grey-Wilson, travelled to Toronto. Among other things, he gave a speech before the Empire Club. In it, Grey-Wilson extolled the wonders of trade and tourism — which were, in fact, the biggest gain from Confederation. The Bahamas would win a secure market for its tropical products, and Canadian companies would gain control of that trade. (They would also cement their domination of Bahamian finance and services.) Grey-Wilson, of course, felt the need to assure Canadians that the absorption of the Bahamas would not lead to black members of parliament sitting in Ottawa:
Now, the constitution of the Bahamas, like the other three B’s of that portion of the Empire, is on a suffrage that is almost equivalent to yours in Canada. I have examined them. Separately and I think they are very much the same. That is to say, any member of a community who is in possession of a house of the value of $10 a year is entitled to vote. That, of course, is practically manhood suffrage. That vote is common to the blacks and to the whites. The inhabitants of the Bahamas are one quarter white and three quarters black.
The result of our elections has been for many years past — and I would remind you that the Bahamas have a constitution almost as old as Newfoundland — that the black man almost invariably elects a white man to represent him. And why is that, gentlemen? You here are conversant with the horrors of the situation in the Southern States of America. In the Bahamas we have no such position. (Applause.) I say that a white woman in the Bahamas, in the most isolated position, is as secure today as if she were in this room now. (Applause.) I defy anyone to say that about the Southern States of America.
Now, gentlemen, why is that? It is not because we have treated the black man as the equal of the white; no. He admits himself — the most intelligent of them with whom I have spoken — he admits himself that he is the white man’s inferior. He admits that he is of a child race, undeveloped; but it is because, being a child race, we have extended to him, as we have to all the other races of the Empire, that universal unswerving British justice.
Unfortunately, Governor Grey’s arguments failed to assuage Prime Minister Borden. In a meeting between Grey and Borden on October 18th, 1911, the Prime Minister rejected the possibility of taking the Bahamas into the Canadian confederation. His reasoning was that the events of the past year had proved that Canadian public opinion would not countenance the admission of a majority-black province, no matter how small or how far away. (The refusal of Toronto hotels to give rooms to black Bahamian visitors only reinforced his point.) The Colonial Office concurred. Worried by the hysteria engendered by the emigrants from Oklahoma, the C.O. reported the following about the possibility of a Bahamian province: “No doubt for the moment the Dominion government would safeguard their interests, but there are signs of the rise of a colour question in Canada and in any case it cannot be long before U.S. opinion gives the tone to Canada in regard the Negro.”
Ultimately, all that came out of the talks was a reciprocity treaty with several West Indian jurisdictions. Reciprocity entailed a 20% tariff cut; it was far from the free trade entailed in political union. It barely dented American domination of Bahamian commerce. And so, much as racism derailed an 1867 attempt by the United States to annex the Dominican Republic, racism derailed what should have been a simple, easy, and mutually-beneficial extension of the Canadian confederation into the Caribbean. Canada eventually absorbed poorer, less strategic, and more troubled Newfoundland, but those islanders had pale skins.
As for the Bahamas, it became part of the United States ... okay, not officially, but watch this space.
I am reading The Icarus Syndrome, by Peter Beinart. It’s a good book. Unfortunately, it gives a misleading impression of the strategic situation during the Cuban missile crisis. Moreover, the misleading impression is unnecessary for Beinart’s overall argument.
The Icarus Syndrome is about hubris and American foreign policy. Beinart argues that hubris (from different sources at different times) caused foreign policy overreach, first in World War 1, then in Vietnam, and then in Iraq. In the case of the Cuban missile crisis, he wants to fit it into a seamless narrative connecting Cold War “toughness” with the debacle in Indochina. Therefore, Beinart wants to imply that the Cuban confrontation of October 1961 was about toughness and signalling, rather than actual concrete strategic threats.
On page 155, Beinart writes:
At first Kennedy was not sure why the Cuban missiles posed such a grave threat. (“What difference does it make?” he mused. “They’ve got enough to blow us up now anyway.”) But when he met with his advisers, a consensus quickly formed that the missile were intolerable. Whether or not the actually threatened America, Kennedy later explained, they “would have appeared to, and appearances contribute to reality.”
This description gives a misleading view of President Kennedy’s actual thinking. The first quote comes from page 72 of James Hershberg’s piece on the Cuban missile crisis in the Cambridge History of the Cold War. The quote is from a months before the U.S. detected Soviet missiles in Cuba, and appears to have been an offhand comment taken from a tape recording. As I will explain in a moment, Soviet missiles in Cuba did in fact give the USSR an offensive capability that it otherwise lacked, something that JFK knew quite well.
The second quote comes from pp. 174-75 of Melvyn Leffler’s For the Soul of Mankind: the United States, the Soviet Union, and the Cold War, and Leffler’s paragraph is worth quoting in full:
Kennedy acknowledged that Khrushchev did not want to use the missiles in Cuba to attack the United States. But their presence in the Caribbean “would have politically changed the [world] balance of power. It would have appeared to, and appearances contribute to reality.” The Soviet leader had demonstrated again that he could not be trusted. Through guile and through daring, the Soviets ceaselessy sought to create “a monolithic communist world.”
In context (and Leffler is a very good historian) is clear that Kennedy’s comment referred to Soviet intentions, whereas Beinart makes it seem that it applied to Soviet capabilities. To analogize, Leffler recounts the fact that Kennedy stated that Khrushchev had loaded a gun and pointed it at the U.S., although he knew full that Khrushchev had no intention of pulling the trigger. Beinart, however, gives the impression that Kennedy was saying that the gun wasn’t loaded. (More accurately, he gives the impression that the Soviet leader was merely pointing a handgun at the U.S., when he already carried an assault rifle.)
In 1962, the Soviet Union possessed very little ability to threaten the continental United States with nuclear weapons. Let me repeat that. This is not something that was publicly known at the time, but it was something that was known by the President of the United States. In 1961, President Kennedy received a report indicating that the USSR possessed only four ICBMs, all at a test site in Plesetsk. In November 1961, the President received a dissenting CIA report that included the following table:
In other words, even the dissenters believed that the Russians likely had only 10 (or 25 on the outside) missiles, all of which were vulnerable to U.S. attack. We now know from Soviet sources that the low estimate was spot-on: the Strategic Rocket Forces had only 10 operational intercontinental ballistic missiles at the beginning of 1962, whose reliability the commanders did not trust. Soviet missiles at the time relied on radio guidance, which in turn depended on installations that were not likely to survive a war, given the American ability to quickly detect Soviet launches.
As for bombers, here is Anthony Cordesman: “Soviet long range bomber forces consisted only of 100 Tu-Bears and 35 May Bison, whose range and flight characteristics forced them to fly at medium and high altitudes, and which made them extremely vulnerable to U.S. fighters and surface-to-air missiles.” What Cordesman doesn’t mention is that U.S. surface-to-air missiles at the time were armed with nuclear warheads, which made them extremely effective at destroying incoming aircraft.
In short, placing Soviet nuclear missiles in Cuba substantially changed the strategic balance. Moreover, in hanging tough, President Kennedy took less of a risk with American lives than is commonly perceived. The missiles in Cuba held the possibility of devastating wide swathes of the southeastern United States (and Western Europe would have been destroyed) but the sort of civilization-destroying attack that was very real by 1973 was not on the table in 1962. Of course, the logic also applies in the converse: by refusing calls to attack the missile sites in Cuba, the President was showing much greater restraint than he is commonly credited.
It is true, of course, that the Soviet buildup was so quick that within a decade any missiles in Cuba truly would have been superfluous. Moreover, as indicated, Kennedy did not believe that Moscow intended a first strike. (The fact that Moscow could not have pulled one off explains the President’s certainty, of course.) Restraint was of course an option. The point, however, is that there were solid strategic reasons to resist the placement of nuclear missiles in Cuba. It was not just about signalling and toughness and (by implication) pointless machismo.
None of this alters Beinart’s overall point. He makes an excellent argument about hubris, the cult of toughness, and the descent into Vietnam. The problem is that he wanted to make the Cuban confrontation a seamless part of that narrative, but it just doesn’t easily fit.
Once again, we here at TPTM are ahead of the curve. No sooner does Suresh take us into the mess that is the Haitian refugee camps than the Boston Globe publishes its own report, which corroborates what you heard here. Two latrines for thousands of people. Water shortages. Only 4% of all debris cleared.
I just came back from a tent camp in Petionville. 5000 people, maybe 10 latrines and 8 showers. Talk about a stateless zone! But still nobody with guns. In fact the only people I’ve seen with guns are the in front of posh restaurants, behind gates of posh houses, or our posh hotel. Bowles and Jayadev to the extreme.
Here’s what my brief conversations went like:
So do the NGOs ever come by here?
Who provides security?
After the earthquake, it was the police, but now nobody. We organize our own nighttime patrols.
Who provides sanitation?
MSF and PAM arrange for the latrines to be cleaned more or less once a day, but sometimes it doesn’t happen for weeks and the worms get so bad that they are unusable.
The interviewees also told me that PAM collects garbage sporadically from a big dumpster at the corner of the tent city. (Below is a picture of an empty water cistern.)
The strange thing is that PAM is the French acronym for the U.N. World Food Programme. I’m totally baffled as to why the World Food Programme would be taking out the trash, so I likely misunderstood something.
Who provides health care?
MSF stands for Medicins Sans Frontiers, aka “Doctors Without Borders.” They have an excellent reputation, but it doesn’t quite seem to be the best use of resources for them to be sporadically cleaning latrines but not, you know, providing health care. It’s also puzzling as to why latrine-cleaning is handled by an NGO, instead of being organized by the camp directors. I didn’t get to meet the president of the camp, but I’m told that the main source of income is remittances from abroad. Some entrepreneurs convert the remittances to inventory and run small retail stores in the camp.
Next is the thing that touched my primal sense of outrage: Red Cross and U.N. trucks parked right outside the tent city, but facing ... wait for it ... the trendy upscale restaurant across the street, where their personnel are all having lunch.
It’s a good question. According to the World Bank’s Operational Directive 14.70, “NGOs include a wide variety of groups and institutions that are entirely or largely independent of government, and characterized primarily by humanitarian or cooperative, rather than commercial, objectives” in poor countries.
But that’s still a pretty broad tent. And it begs the question of why they exist. Not why the totally private NGOs exist — that’s fairly obvious. No, the non-obvious question is why governments channel so much of their aid to poor countries through NGOs. Two billion dollars in government aid goes through these organizations. Werker and Ahmed provide a pretty good overview of what NGOs do, but (at their own admission) not a lot of evidence about how well they do it, and there is a little too much implicit market triumphalism in their account. There is much to be said for the NGOs’ ability to combine public and private assistance, but they do so at the expense of accountability.
In Haiti, there are millions of dollars floating around Port-au-Prince, collected by NGOs in the name of the Haitian people. My tour guide at one of the tent-camps is the founder (and sole force behind) Haiti Aid Watchdog. My host, if he can get the money to do it, wants to basically audit the NGOs. (Yes, there is an irony in having an NGO audit the NGOs.)
The problems he faces get my blood up. First, NGOs neither open their books nor make available online reports on their expenditures. They were all supposed to prepare such reports 60 days after the earthquake; none did. Second, the NGO headquarters totally ignore him, because he is just a Haitian citizen without political clout. He shows up at an NGO headquarters in Port-au-Prince and they ask “where is your mandate?”. He’s a Haitian citizen. THAT’S HIS MANDATE. But because of the imbalance in power, respect, and resources, he can’t get any of the big NGOs (e.g. World Vision) to release information. Finally, he can’t get any funding, despite the tremendous amounts of cash swishing around the country.
It’s a problem with the non-governmental “governance” that supplements (or even replaces) the state in so much of the world. Any ideas?
Port-au-Prince isn’t a war zone, the way it is often represented. There’s a lot of rubble and houses sheltered by USAID/U.N./Canadian tarps, but the image of armed gangs running amuck is overstated. I have seen zero guns so far ... which is infinitely less than Noel spotted in rich northern Mexico last month. The image of Haiti as chaotic and violent (which I’ll admit to having bought into before I knew anything) is remarkably akin to how people perceive Africa. “Tch. Those chaotic disordered black people.” (Or maybe used to perceive Africa? Calling Chris Blattman.)
The only aid-funded construction project I’ve seen so far is a detention center for minors. Sigh.
Caveat: I haven’t been here very long (hitting my 24th hour) and people say that last year’s retreat was held with the sound of gunfire in the background. Still, that particular sound can be heard in wide swathes of major American cities. I could occasionally hear gunshots outside my apartment in the Mission in San Francisco, yet only eight blocks over the streets were filled with yuppies eating peacefully at gourmet restaurants.
There’s a potential research project on applying methods developed to measure statistical discrimination in the labor market to measure investment and travel decisions across countries. Much of the research on labor market discrimination uses panel data to see whether the penalty of being black goes away as employers learn about true worker productivity. The hypothesis is that if employers are using broad stereotypes as a proxy for ability, then the effect of those stereotypes on individuals should wane as they reveal information about their actual ability.
Could you do a similar exercise with firm-level investment in countries? What is the economic impact of country-level racial perceptions? Does being a “black” country penalize you in the market for global capital and tourism dollars? If so, how much of the penalty is driven by perceptions of disorder? It might be that countries (like, say, Mexico) which already have well-formed reputations are less hit by increases in disorder.
An interesting follow-up story: INURED’s institute is in Delmas, a historically high crime area ... thus the stories of weapon discharges. But due to its community work, INURED has enough local contacts to guarantee their safety. That allowed it to rent a building that they could afford. The earthquake, however, appears to have caused the local crime rate to crash, so the newly arrived NGOs and aid agencies would pay an arm and a leg for the place, but INURED gets to keep it at a fraction of the market rent. For once, a first-mover advantage that helps the good guys.
Which leaves us with the question: why did crime crash in this neighborhood after the quake, and is that something generalizable across the city and country? There is some evidence that it is not, and crime may have risen elsewhere, but we don’t yet know. More as I find it out.
I’m in Haiti for INURED’s retreat.
INURED stands for L’Institut Interuniversitaire de Recherche et de Développement. As the name suggests, the organization started in 1997 as an effort to connect Haitian institutions with international scholars working on Haiti. Some of its activities consist of straightforward stuff along exactly those lines, like managing scholarships from the Brazilian government for talented students from Cité Soleil to study at the Universidade Federal do Rio de Janeiro (Go, Partido dos Trabalhadores!), or running summer schools in Haiti taught by visiting faculty.
But INURED also has a great local network that it’s built up over years of working on ground in Cité Soleil, Port-au-Prince’s largest slum. They’ve been able to parlay this into a really marvelous rapid data collection infrastructure. This has allowed them to produce some cutting edge research, such as the first post-earthquake survey, which turned into this report. Anyone interested in randomized trials should partner up with INURED to run field experiments and collect data. The organization’s community-driven social science is pushing out the research frontier. Moreover, it’s one of the few organization that’s really trying to test what’s working and what isn’t in Haiti, systematically using local tacit knowledge to guide its research into things like mapping the (mis)allocation of aid funds. We’re here to brainstorm new research projects and new ways to connect Haiti to the outside academic world.
But also they have NO MONEY. All of us here at the retreat had to pay our own way. So everyone reading this should donate liberally to them. [Editor’s note: how??]
My whopping 24 hours of experience on the ground allows me, of course, to generalize and conjecture with impunity. Port-au-Prince’s economy exhibits many characteristics of a classic Lewis labor-abundance story. (Simplied version: imagine an overpopulated traditional sector, in which a big chunk of labor has no marginal productivity … but you should all read the original essay.) As in many countries, you see a lot of people here working at activities that could at best be called low productivity: men at the airport all grabbing your luggage and opening the door for you in anticipation of a tip, the ridiculously number of small-scale informal peddlers all selling the same thing, and the insanely excessive staff in every formal sector institution ... many of whom seem to be doing precisely nothing. The fact that you see these phenomena across poor countries brings a perverse joy to my heart; giving me hope in the possibility of social science.
I think that Tyler Cowen makes a surprising mistake here when he compares the lawlessness in Chile and Haiti. Cowen: “Haiti, on the other hand, remains fairly orderly and there have been reports that police corruption has gone down significantly ... Haiti is so orderly because a) looters would be killed on the spot, and b) the entire fate of the nation is at stake and thus every small event is taken very seriously.” He links to a CNN story and a tweet from somebody in Santiago reporting secondhand about Concepción. (God, I hate Twitter.)
I dispute the stylized fact. I am peripherally involved with (well, hearing about) a U.N. survey design in Port-au-Prince: the lawlessness is out of control. Kidnappings, assaults, and rapes are endemic. Concepción, on the other hand, has a looted shopping center. These are not the same thing!
Haiti seems orderly because expectations were much worse. Chile seems chaotic because expectations ... well, actually, Chile doesn’t seem that chaotic, given the scale of the disaster. More chaotic than it needed to be, but the state functions and there has been no organized violence. Minute-to-minute reports here.
The post perturbs me a bit, since I know many people who rely on Marginal Revolution for information, and I am afraid that the false comparison is going to mislead some of them. It is also a bit ironic, since the main point of the post was “context-dependence, context-dependence, context-dependence.”
Yes. Context-dependence. By any absolute standard, Haitians reacted far more violently than Chileans to the earthquake, because the destruction was far greater and the state basically collapsed, even if it is now getting back on its feet. Apples and oranges, context-dependence.
Look, I’ll cop to supporting the invasion of Grenada. It is true that the New Jewel Movement consisted of a bunch of authoritarian thugs. It is true that they became even more authoritarian when they ousted Maurice Bishop. It is true that they signed secret military agreements with the Soviet Union and Cuba and received $24 million in military equipment from Moscow, including 10,000 assault rifles, 4,500 submachine guns, 11.5 million rounds of ammunition, 294 portable rocket launchers, 16,000 rockets for said launchers, 84 mortars with 8,400 shells, twelve 75mm cannon with 600 shells, 60 crew-served AA weapons with 600,000 rounds of ammunition, 15,000 hand grenades, 7,000 land mines, thirty 76mm field guns with 10,000 rounds, fifty howitzers with 1,800 projectiles, sixty APCs, four coastal patrol boats, and 20,000 uniforms.
Moreover, the Barbadian prime minister, Grantley Adams, tried to persuade the U.S. to intervene on October 19, six days before the invasion. Military casualties ran to only 24 Cubans, 21 Grenadians, and 18 Americans, and the invasion killed only 24 civilians (21 of which in a tragic attack on what turned out to be a mental hospital). The intervention was and remains popular among Grenadians. Plus, it really honestly did restore democracy. Heck, considering the nature of the Gairy regime, it wouldn’t be unfair to say that it introduced democracy.
Would standing aside and letting Grenada collapse into civil war (or be intervened by Soviet-backed Cubans) have cost less in lives and resources? Probably not. Veterans of Operation Urgent Fury should hold their heads up high; you would have to go back to World War 2 to find a case of a more just war.
That said, the CIA went on to distribute comic books across the island that would have turned me into a gibbering opponent of the intervention:
This post has been substantially expanded. It was about nothing; now it’s about the slow withering of the British Empire, Margaret Thatcher notwithstanding.
Trinidad and Tobago was the first member of the Commonwealth Caribbean to become a republic, in 1976. After the Black Power disturbances of 1970, the government set up the Wooding Commission to review the clauses of the 1962 constitution. All sides of the political spectrum supported constitutional revision: some thought that its conservatism contributed to the instability; others worried in the aftermath of the Williams government’s powerful response to the riots that the pure Westminster system didn’t provide enough checks on the Prime Minister’s power. One solution to that problem was to strengthen the position of Governor-General ... but that caused a problem, since the Governor-General served officially as the Queen’s representative, and “among young people in particular the British Sovereign has no symbolic meaning.” The report did state some advantages of the monarchy — namely, a head of state “above the clash of race and class and ideology which makes up politics” — but they rejected them as inappropriate in the context of a head-of-state with actual executive authority, no matter how weak.* Williams did not accept all the recommendations of the Wooding Commission, but Trinidad got a new constitution ... and an elected President replaced the Queen as head-of-state.
Dominica followed Trinidad into republican status in 1978. One would have expected Grenada to follow.
In 1979, the New Jewel Movement shot its way into office. That came a surprise to nobody: the man who had ruled Grenada for the previous 12 years, Eric Gairy, was little more than a slightly more colorful version of Fulgencio Batista. His opposition knew this; they went so far as to unsuccessfully try to annex the island to Trinidad in order to prevent him from coming to power. (Unfortunately, Indo-Trinidadians were not particularly keen on bringing more African voters into the polity, so the idea failed.) After 12 years of increasingly corrupt Gairyismo (including a bizarre attempt to steal a Miss World competition) nobody was surprised when a small group of Marxist revolutionaries overthrew what was left of his government while Gairy was out of the country.
The rebels proceeded to issue a number of “people’s orders.” They mostly read like something out of an old Monty Python skit. People’s Order Number 1 declared, “The People’s Revolutionary Government now formerly enacts the Constitution of Grenada as hereby, has been suspended.” People’s Order Number 2 said that the People’s Revolutionary Government “shall be vested of executive and legislative power and the People’s Revolutionary Government shall appoint a Prime Minister.” People’s Order Number 4 went on to end all appeals to West Indian or British courts, People’s Order Number 7 established the People’s Revolutionary Army, People’s Order Number 8 created “preventative detention,” and People’s Order Number 10 reiterated the fact that the PRG was, in fact, issuing people’s orders: “For the time being, all People’s Laws shall become effective upon oral declaration and/or on publication of Radio Free Grenada by the Prime Minister or in the official Gazette under the hand of the Prime Minister.”
The weird thing was People’s Order Number 3. “The Head of State shall remain Her Majesty The Queen, and her representative in this country shall continue to be the Governor General who shall perform such functions as the People’s Revolutionary Government may from time to time advise.”
This became a problem when the U.S. was groping around for a legal rationale to intervene. They found a Governor-General, Paul Scoon, ready and waiting to provide them with one. In one of the stranger episodes in the long slow replacement of Britain’s empire with America’s not-empire, the British high commissioner to Grenada carried messages to the Governor-General on behalf of the United States and OECS, without London’s knowledge.
David Montgomery met Scoon on the Sunday before the invasion and asked him, “Would you welcome intervention?” Scoon replied that he saw it as the only thing that could prevent a civil war. He then agreed to issue an oral request for intervention, followed by a written order as soon as it was safe. A written letter to the Prime Minister of Barbados followed on Monday, October 24, 1983.
You are aware that there is a vacuum of authority in Grenada following the killing of the Prime Minister ... I am requesting your help to assist me in stabilizing this grave and dangerous situation. It is my desire that a peacekeeping force should be established in Grenada to facilitate a rapid return to peace and tranquility and also a return to democratic rule. In this connexion I am also seeking assistance from the United States, from Jamaica, and from the OECS through its current chairman the honorable Eugenia Charles (Prime Minister of Dominica) in the spirit of the treaty establishing that organization to which my country is a signatory.**
The Marines’ helicopter assault began at 5:00am on Tuesday.
The story gets stranger when you take into account Margaret Thatcher’s uncharacteristic reaction:
If you are pronouncing a new law that wherever Communism reigns against the will of the people, even though it's happened internally, there the United States shall enter, then we are going to have some really terrible wars in the world.
Why would a self-proclaimed socialist government, willing to ally itself with the Soviet Bloc, keep the Queen as its head of state? Especially when two nearby Commonwealth states had shown themselves completely willing to chuck her out? My guess would be that attachment to the monarchy must run very deep in the smaller islands. But that deep? Or perhaps they only played out two steps along the game tree. They knew that Britain almost certainly would not intervene under any circumstances, but it never occurred to them that the United States could as easily take advantage of the fact that the personal representative of Grenada’s head-of-state was not an appointee of the People’s Revolutionary Government.
Maybe so. I honestly do not know. The evidence is confusing. What is the role of the monarchy in the Commonwealth Caribbean? What should be its role? Does it persist out of popular sentiment, or simple inertia?
So Doug is in Tanzania, working on something mysterious designed to make the world a better place. On a previous excursion to Congo, Doug discussed the general malfeasance of the Congolese government. He also thought hard about the administrative competence of the Belgian bureaucrats who ran the colonial government. They ran that government to little purpose, but they ran it efficiently.
One way to stylize Congo’s dilemma is that the government can’t control its own agents. To which there may be a solution: get foreigners to do it.
Kris Mitchener and I have just written a brief piece for Paul Romer’s Charter Cities blog that summarizes our work on customs receiverships and Crown Agents. The piece draws from the early 20th-century experience of circum-Caribbean countries with customs receiverships, where countries relinquished management of their customs services to a small group of American managers, and the early 21st-century southern African experience of doing the same thing with a small group of British managers. There was a failure — the fellow who was able to run customs in Haiti found the more sophisticated Panamanians running rings around him when he became the fiscal agent there — but in general corruption went down and collections went up. Crown Agents, the organization that took over in the 21st century, had an earlier cameo on this blog.
Politically feasible? Well, Angola and Mozambique did it. So did several eastern European countries (in a slightly disguised form) when customs corruption looked set to hold up their ability to join the E.U. Long-term benefits or spillovers to other parts of the government? Well, at best the jury is out. But sometimes peoples need their governments to do certain things well right now.
Read the piece and tell us what you think.
Coincidently, that number is how much the IMF believes the Caribbean’s economy to expanded in 2009. Hopefully 2010 will be better. The Eastern Caribbean countries have just taken a proactive step forward, strengthening the OECS with the new Treaty of Bassaterre. The treaty basically does three things. First, it gives the OECS the authority to legislate on the creation of a full common market. Right now, the OECS is a customs and currency union, but there are barriers to internal factor mobility between the islands. Second, it gives the OECS the authority to enforce the legislation ... basically via national courts and, ultimately, the Eastern Caribbean Supreme Court. Third, it creates a quasi-executive E.U.-style Commission headed by a Director-General to run the organization. I say “quasi,” because the Director-General won’t have the ability to directly issue orders to the executive agencies of the various OECS governments, let alone act directly upon the citizenry, but he or she will have the ability to use the courts to take governments to task. So as long as the OECS governments are in fact under the rule of law, the head of the OECS will indeed have quite a bit of de jure authority.
(Some time ago, Doug Muir and I had a debate about the E.U. that ran along these lines. I think I convinced him, but it can be very hard to know.)
So it isn’t quite a federation. And the new OECS Authority (basically, an assembly of heads of government) will make legislative decisions only by unanimity. But it takes the Organization about as close as you can get without crossing that line. (Their security forces also bump up against the same limit, sharing training and commands.) But it is a step forward for a group of islands that were already rather strongly united.
Thoughts on integration?
Governor Carter refused to limit emigration because the remittances sent back to Barbados from the Panama workers had markedly improved the economy, especially for poorer tenant farmers. In a country that had recently been on the brink of collapse, he was not going to tinker with that.
The direct impact of the remittances was not that large. In 1906, when Carter declared their importance, they came to 73¢ (U.S.) per inhabitant per year; call it three days wages. That is not nothing, but it is also not an economic revolution. Over time remittances grew, peaking at $2.39 per person in 1913 — a bit more than a week’s labor for a male worker at 1910 wage rates. Not nothing, but not the millenium, either.
But the indirect impact was huge. First, it bolstered the growth of smallholders. In 1897, an estimated 8,500 small proprietors held a bit less than 10,000 acres. By 1912, 13,152 smallholders owned plots. Assuming that the average size of holding remained constant, this represented an increase in smallholder ownership of 5500 acres, or over 22 square kilometers, five percent of the land area of Barbados. By 1929, the number of smallholding households had further increased to 17,731. Land ownership on the island remained astoundingly concentrated, but the percentage of Barbadians who owned property rose from 18% in 1897 to 40% by 1929.*
Second, it supercharged the Barbadian banking system. Barbadians opened 16,094 new accounts in government savings banks between 1906 and 1913, and deposits increased 88%. In 1920, deposits per person surpassed $11. That was a level of financial penetration about half of contemporary Spain and two-thirds of Italy; very high for a country as poor as Barbados. It prefigured the island’s emergence as a regional banking center a half-century later.
Third, it prompted the emergence of a Barbadian social insurance state. The “friendly society” served as a form of insurance pool. For a weekly fee of 10 to 12 pence, the societies provided their members with sickness insurance, unemployment insurance, death benefits, free scholarships to household members, and an annual “bonus.” In 1901, there were 101 societies; between 1907 and 1910 a further 110 were founded, peaking at 260 in 1920. Their membership grew from 13,933 in 1904 to 46,207 in 1920. The 1921 census found that 156,312 people lived in households belonging to a friendly society. That was 94 percent of the population. Alongside the friendlies were the “landships,” which provided similar services along with ceremonial drills and uniforms modeled on the Royal Navy. Infant mortality continued to lag the rest of the Caribbean until the 1950s, but the societies aided a huge increase in literacy, to 93 percent by 1946.
The Panama Canal Agency took charge of picking the workers and getting them to from Barbados to the Canal Zone. Recruiting took place in Trafalgar Square, in Bridgetown, conveniently near the main police station. Today the place is called National Heroes Square (although a lot of people use the old name) right outside the Parliament building.
Agents went out into the crowd to interview and select potential workers. A doctor then checked the potential workers, selecting those who would receive a contract. In 1907, Arthur Bullard described the scene as follows:
Several policemen kept the crowd in order and sent them up into the recruiting station in batches of 100 at a time. As the men came up, they were formed in a line around the wall. First, all those who looked too old, or too young, or too weakly, were picked out and sent away. Then they were told that no man who had previously worked on the canal would be taken again. Then the doctor told them all to roll up their left sleeves and began a mysterious examination of their forearms. He saw that a few men had been vaccinated by him already, and these were sent away. One protested that a dog had bitten him there. Then, he went over the whole line gain for trachoma, rolling back their eyelids and looking for inflammation. Seven or eight fell at this test. Then he made them strip, and went over them round after round for tuberculosis, heart trouble, and rupture. About 20 of 100 were left at the end.
The selected migrants reported back to the docks a few days later. After a second medical examination and a check to insure that every emigrant had a number that matched the one on their contract, they boarded the steamers, where they had to find deck space and food for themselves during the 12 day voyage to Colón. According to a report presented to the Barbados Legislative Council, the atmosphere on the docks was fairly hostile towards the ruling class. The crowds would “abuse whites and aggressively denounce them” before boarding.
The anger was understandable, given the situation the emigrants were leaving. Ironically, the departure of so many angry young men gave plenty of leverage to those who stayed behind. One prospective emigrant was heard telling his co-workers, “Why you don’t hit the manager in the head and come along with we?” His co-workers refrained from assaulting the manager, but there was a wave of plantation labor disputes, and the following song became fairly common:
We want more wages, we want it now
And if we don’t get it, we’re going to Panama
Yankees say they want we down there
We want more wages, we want it now
And what do you know? Wages went up. By 1910, the American consul in Bridgetown reported that agricultural workers received 30¢ per day, a 25% rise in nominal wages over the 1900 level. More importantly, unpaid labor — remember the located labor laws? — basically disappeared. Planters reacted to the new environment. First, they started to employ tenant women in the fields. Second, they modernized production. In 1910 there were no modern sugar centrals on the island — intead, windmill-powered presses wasted upwards of 30% of the raw material. By 1921, in contrast, 19 modern sugar centrals had entered operation. Third, they mobilized politically to halt emigration.
Barbados had seen the emigration movie in the 1870s, when Guyanese and Trinidadian labor brokers began recruiting on the island. That time around, it ended with the Emigration Act of 1873, which effectively prevented labor recruiters from operating in Barbados. (My wife’s grandfather is from Barbados, but he left for Trinidad in the early 20th century.) Emigration fell from 2,676 in 1873 to only 613 by 1876.
This time the movie ended differently. In 1906, the Barbadian parliament passed a bill giving Governor Gilbert Carter the power to halt emigration. Two angry public demonstrations convinced the Governor to take the then-extraordinary measure of publicly proclaiming that he had no intention of using his new powers. The parliament then demanded that he appoint a commission of inquiry into emigration; he refused. Five years later, in 1911, Carter retired and returned to Britain. The new Governor, Leslie Probyn, appeared to bow to planter pressure by declaring a ban on labor recruiting for Panama ... but he took no action to enforce it. Barbadians continued to leave for Panama.
Emigration, then, had palpable economic effects on Barbados. It raised wages (albeit to still-low levels) and prompted the renewal of the sugar industry. That is not nothing. But there was another effect. In fact, that other effect was why Governor Carter refused to appoint a commission of inquiry ...
I don’t have a whole lot of emotional attachment to the madre patria, not where it counts. After all, the parliament has passed a law giving the descendents of Civil War refugees the option to apply for a passport. Yet I have zero desire to do it. No, I have a negative reaction to doing it. In other words, at the level where it counts, my people are the people of the United States of America.
But sometimes I can’t resist borrowing a phrase from my good friend (and great American) Carlos Yu: “Oh, my peoples.” The story of the labor troubles on the Panama Canal is one of those times.
In 1904, the United States began construction of the Panama Canal in earnest. Problem was, it needed laborers. Lots of laborers. Preferably cheap laborers, which ruled out hiring Panamanians. (The Canal labor force would peak at more than a quarter of Panama’s economically active population. Wage rates would have skyrocketed, even had that many people been interested in killing themselves to dig a big ditch ... which they were not.) So the U.S. turned to the same place from which the earlier French canal effort had got its workers: Jamaica. Problem was, the Jamaican government remembered the disaster that was the repatriation of Jamaican workers after the French canal effort collapsed in 1889. The Crown Colony government insisted that the Americans guarantee repatriation costs for any and all workers. That ended the idea of using Jamaican labor; ultimately, only 47 worked on the Canal.
At this point the Barbadians, and later the Spanish, enter the story ... the rest of which is below the fold.
Barbados is a very nice place. The water is wonderful, of course: the limestone makes it a turquoise color that simply doesn’t look real. But it isn’t just the water that makes it so nice: Quintana Roo and Yucatán also have very nice limestone-saturated water. No, what makes Barbados especially nice is the society inhabiting the island. Crime is low, human development is high, institutions seem to work. It terms of ex-colonies, it is the anti-Congo. The question is why the place is so nice.
One answer, which I find unsatisfactory, is good macroeconomic policy. In that view, Barbadian governments managed the economy particularly well after independence, and thus the island grew (relatively) rich. The problem with that view is that many of Barbados’ unique qualities emerged well before 1966. In 1960, for example, real primary school teacher salaries in Barbados were 31% higher than in Jamaica, educational spending as a % of GDP was 52% higher and real per student primary school spending was 2.3 times higher. In 1950, its GDP per capita was the third-highest in the British Caribbean, after an off-the-charts already-developed Bahamas and oil-rich Trinidad. It was a full 60% higher than Jamaica’s. Barbados and Trinidad were the only two countries in which less than 40 percent of the labor force worked in agriculture. (32% in both countries; the Jamaican number was 57%.) Lifespans at birth were five years higher than elsewhere in the Caribbean (except Trinidad) if still only 56 years. Other statistics are hard to come by, but the general impression is that for all the poverty — and it was widespread — Barbados had already diverged from the rest of the West Indies.
Except here’s the thing: if you jump backwards from 1950 to 1900, Barbados doesn’t look so special. In fact, the place was a disaster, close to becoming what we’d today call a failed state. In 1902, facing riots, assassinations and economic collapse, the U.K. would take the unprecedented step of approving the 2008 equivalent of a £164 million relief grant (measured as a percent of Britain’s GDP) ... or in purchasing-power terms the modern equivalent £125 per man, woman, and child in Barbados.
What had gone wrong? A brief history of the Barbadian collapse below the fold.
The world really needs a good game-theoretic model of informal empire. I suppose Bruce Bueno de Mesquita already has one, but I’d like to see something more specific.
What’s informal empire? Well, if “empire” happens whenever one sovereign state exerts its authority over an area previously under a different sovereignty (or none at all) then that empire is “formal” when the imperial state exerts its authority through a bureaucratic chain-of-command that runs from the imperial executive through the local government and down to the person in the street in the new territory. (Similarly, an empire has formal characteristics if judicial decisions can be appealed upwards to courts in the center, or if the imperial legislature can pass laws for the subordinate territory.)
Since 1898, the United States has generally eschewed formal empire. The exceptions are Haiti in 1915-34, the Dominican in 1916-24, Japan in 1945-52, Germany in 1945-55, Okinawa in 1945-72, and Iraq in 2003-04. (The European Union exercises formal authority over parts of the governments of Bosnia and Kosovo.) The U.S. has relied on a combination of treaty arrangements, sanction mechanisms, and moral suasion to get its satraps to do what the government of day wants them to do. The famous SOFAs kinda sorta sometimes formalize quasi-imperial arrangements by giving U.S. troops special privileges inside host countries, including sometimes the right to shoot people, but that is not the same thing as giving the American government the right to give local bureaucrats direct orders under the threat of unemployment or imprisonment.
Sometime informality works and sometimes it doesn’t. Right now, informal empire has hit its limits in Afghanistan and Honduras. The U.S. can’t make President Karzai crack down on corruption, form a coalition with Abdullah, or negotiate with the Taliban. Considering both the number of troops we’ve got running around the country and the number of dollars we pour into its government budget, the lack of influence (let along control) is pretty depressing. What kind of an empire is that?
In Honduras, the recent agreement between Micheletti and Zelaya appears to have collapsed. The Honduran legislature has not voted to reinstate Zelaya, and Micheletti is continuing his modus operandi of “what the hell?” by picking a fight over who will lead the interim cabinet until Congress votes. Washington may be able to pick something up out of this mess, but U.S. leverage is limited. Aid is suspended and visas were as well until recently; stronger sanctions, meanwhile, will just sock it to a lot of very poor people. We could give up and run out the clock, which would be the best option if the rest of the hemisphere agreed. They don’t, so something had to be done, and a few days ago it looked as though the Secretary of State had done it, by brokering a solution.
Only now Micheletti keeps going off the reservation, and there seems to be no quiet easy way to keep him on it. There is still something a little ridiculous about the lack of American leverage. What kind of an empire is this?
Not much of one, actually. To be honest, I suspect that the U.S. will be able to knock some sense into Micheletti. If pushed, I’d bet on the agreement coming back to life. But still, the limits of informality are clear. Even in Afghanistan, let alone Honduras, local political actors are autonomous, and the threats that the U.S. could use to sanction them are not credible.
Running an informal empire is complicated, and running a formal one is often impossible. The implications are left as an exercise for the reader.
There is an interesting (if rarely updated) blog called “Demography Matters.” It's hit a few interesting topics lately. Randy McDonald is the driving force behind it. For those of you who don't know him, he wrote the defining takedown of the whole “Eurabia” nonsense, aka the idea that immigration and differential birthrates will eventually give Europe a Muslim majority. But the blog is a lot more than that.
Here is a discussion of Greenland. Short version: considering the country's dependence on Danish expats for skilled labor, even a non-independence independence of the sort negotiated by other microstates could lead to disaster. The population is shrinking despite high birthrates. Maybe they'll get lucky and find oil. More likely they will remain a dependency of Denmark forever, most likely de jure but definitely de facto.
The blog also recently discussed Iran. Short version: looks like Europe! Crashing birthrates could fuel an economic boom if only the place could get the policies right. In comments there is an interesting discussion of the fact that American birthrates have stayed above replacement ... and that much of that difference is because urban birthrates in the U.S. aren't appreciably different from their suburban or rural equivalents. The really weird fact? Canadian birthrates are crazy lower than U.S. ones, even in such similar places as Washington and British Columbia.
Finally, it presents a scary version of Cuba's future, in which the country enters a demographic death spiral. All it lacks is a projection of the worst case scenario: what would Cuba's population and age pyramid look like in 2050 if it goes the way of Ukraine and stays there?
Below the fold is a music video. It is for Randy, for reasons he understands. Essentially, while not my cup of tea, it shows what can be accomplished in his preferred genre in both aural and visual terms when attempted by two rather accomplished artists. Enjoy.
This weekend, my wife and I made our way up to Fort Lauderdale Executive Airport to grab a helicopter ride above ground zero for the real estate collapse. It isn't just in marginal neighborhoods, as some observers have suggested. Spot the foreclosure in this photograph.
In fact, if you look closely, you can spot a second distressed property in the picture.
Nor is it only individual single-family houses. South Florida is dotted with what Mexicans used to call “obras negras”: stopped construction projects left to rot. And in the South Florida humidity, they will rot: unsealed foundations will flood and unprotected fixtures will erode. They are calling them “ghost towers” down here.
It was a Sunday, but note the lack of construction machinery around the site.
In fact, readers of this blog have already had contact with what became a pair of ghost towers. Last year, we spotted my brother working on a high-rise located on the border of the Everglades, far out on the urban edge, near nothing but a ginormous shopping mall. Now it is an infamously distressed complex in which, as far as the local papers can figure, no one lives.
Of course, the recession is also visible at ground level:
Lots of Stars-and-Stripes on the Mall of course, a few Texan ones, two French tricolors, one Ghanaian Black Star, a Californian red-star-and-bear ... and multiple Trinidadian, Jamaican, Haitian, Grenadine, Grenadian, and Guyanese flags.
The Commonwealth Caribbean has an interesting emotional relationship with the United States, all the more so with this inauguration.
P.S. Why is Washington overrun with the Miami P.D.? Dude. Miami??
P.P.S. Did Governor Paterson just call Hillary Clinton the best senator that New York City has every had?
P.P.P.S. That's a lot of booing for the still-President. I suppose I shouldn't be surprised. I much prefer the singing, "Hey hey hey, good bye."
There is a debate inside the economics profession about the importance of institutions, broadly defined. One side of the battle holds that institutions are everything. Countries can institute all sorts of bad policies and still prosper over the long run if they have “good” institutions — France is a common example. A subset of this group likes to argue that a particular set of legal institutions is very important. You can sum their argument up as “Common law good, civil law bad.”
The “institutions as epiphenomena” side of the debate has mostly given up, with the valiant exception of Greg Clark. That said, strong opposition still exists in the form of two arguments: “institutions aren't everything” and its subset, “legal origin theory is total b@ll$#/t.”
One obvious experimental laboratory is the British West Indies. Not a whole lot of good came out of the collapse of the West Indian Federation, but one bit of lemonade coming out of that lemon was that it left us with a collection of independent and quasi-independent states with a similar institutional background. Now come two authors with a comparative paper on Barbados and Jamaica, arguing that it is macroeconomic policy, not the legacy of history, that explains the different paths of the two nations since independence.
Are their arguments convincing? More below the fold.
I worry about Venezuelan government spending. I just don't believe that oil prices are going to stay this high for long.
I could be wrong, but one of the things I learned in Venezuela was that Belize started producing oil in 2006. They quite literally found oil on some dude's farm. Production is now up to 3,000 barrels per day. That's about 15 trips per day for a typical tanker truck.
Even more strangely, Venezuela gives Belize money through Petrocaribe. Chávez, I would think, gets even less out of his spending there than in the rest of the Caribbean. He is, in essence, giving away money to up global oil production with only a very small claim on the corresponding returns.
So, nothing in the global scheme. But when prices are so high that Belize gets into the oil industry, you've got a tidal wave of other producers waiting in the wings. They'll be high-cost, of course, so given the increase in global demand the days of $20-per-barrel oil are over. In fact, I'd bet that the days of $40 oil are over. But I wouldn't bet on triple-digit prices being with us for much longer.
Strangely enough, I'd like to be wrong. For the planet.
Congestion pricing. The idea makes total sense. Why allocate road space the way the Soviet Union allocated everything? It makes total sense to charge for the privilege of taking up space on the road, and it makes even more sense to charge more when more people want to take up that precious space.
Which is why Florida is building the I-95 Express. I-95 in Miami-Dade and southern Broward is currently five lanes: four regular, and one HOV lane, which can only be occupied by cars with more than two people in them during peak hours. The Express plan expands the freeway to six lanes, for "local," just like now, and two "express." The express lanes are separated from the regular lanes by these little rubber tubes, with entrances and exits from the local lanes several miles apart. In a few months, the Express lanes will be electronically tolled, using the Sunpass system.
So this week they open this thing in Miami-Dade. No charging, yet, it's a "test period," to get drivers used to the new set-up. And why a "test period"? Because, well:
Miami drivers, you see, are a little, well, self-centered. And not very good.
My father and I (along with a slew of other friends and relatives) are in Trinidad at the moment for some very very very important business, after which I'll be travelling for a bit and posting only sporadically, if at all.
For those of you who don't know him --- and I plan to start posting a bit about his experiences when I return to the States --- here's a picture of the grand old man and myself:
See y'all later!
No, wait, that doesn't quite capture it. This captures it.
It's not just the city proper; the coast looks like a crumbling plate from the air. Can anyone explain what causes it? Is this an intermediate stage between seafront cliffs and a real beach, or something else?
If there's interest, I'll discuss what the project is about in a later post. Right now, I'll say that the Archivo was a great place to work. The staff is incredibly helpful, and the reading room is rather pleasant, although the air-conditioning system was one of the loudest I've ever run across. Thankfully, the Archivo has its own backup power system, and therefore was only hit with one brownout while I was working there.
There was one pleasant mustacchioed old fellow there, quite garrulous. I think he was a professor or former professor: he was always nattily-dressed in jacket-and-tie, and he was usually assisted by some rather younger women. At one point he turned to me and asked, "Are you from here?" I smiled and said no. He nodded, and asked if I were from Mexico or the U.S. I lied, of course, at which point he said to me, and this was as weird as it sounds, "In the time of Trujillo, things were orderly."
I later got the opportunity to glance at the 1940s-era newspapers that he was reviewing. I'm fairly certain that he wasn't looking at the ads, but I found this one too striking not to record for posterity.
Extranjero vecino, indeed.
The Dominican Republic, like much of the extranjero vecino, is economically-married to the United States. Far more so, in fact, that any of the Russian Federation’s near abroad. The U.S. absorbs 72% of the country’s exports and provides 48% of its imports. Americans and Dominicans resident in the United States make up 38% of all tourist arrivals. Finally, and most strikingly, the huge hole in the Dominican Republic’s trade balance left after export sales and tourism receipts is plugged by remittances from Dominican workers living in the United States — an amount equal to 7 percent of the country’s GDP last year.
The relationship goes beyond mere commercial convenience: under CAFTA, Washington effectively sets Santo Domingo’s investor protections, labor standards, and environmental regulations. Eat yer heart out, Vlad.
Still, there is one way in which the United States is conspicuously absent from Dominican life — the main currency is the “gold peso,” not the greenback. That also wasn’t always true: between 1905 and 1946, the Dominican Republic used the dollar as its currency, and if anything, the economic relationship is closer now than it was then. This brings up three obvious questions, of course. Why did the D.R. reintroduce its own currency? What effects did that have? And should it go back to the dollar?
I’ll try to take a stab at all three below the fold.
Financial collapses take some time, you see. And so, this 28-story condominium is still going up within spitting distance of the Sawgrass Mills mall, on the very edge of the Everglades. Turns out that the architect screwed up the specifications for the awnings, which needed to be bigger. And so, who you gonna call?
Right! My older brother, pictured above, in the sunglasses. (You can also see the back of my cousin Larry's head.) My brother runs a contract air-conditioning company based in Fort Lauderdale. Larry and his brother Jesse started the firm and still own it: South Florida in the 1970s was the right place at the right time to start installing AC systems; they soon moved into service followed by contract manufacturing. (How d'ya think I found out about the Trinidadian air conditioning industry?) When I was a teenager, I spent summers cutting fiberglass for them at $5.00 an hour; $9.37 in today's devalued money.
And so, when you need to airlift a 2000-pound slab of concrete 28 stories in to the air, Thermal Concepts is the place to go.
That helicopter was built for the Army during the Korean War. More below the fold.
Here’s a brief primer on Dominican politics. Leonel Fernández took over in 2004 in the wake of a severe economic collapse. (More about that below the fold, with pictures.) After cleaning up the mess Hipólito Mejía left behind, he’s presided over a fairly strong economic recovery. He built a lot of infrastructure — most prominently, that subway line — and created programs to attract a boatload of foreign investment, particularly into tourism. He also hiked taxes and privatized the phone company, pulling out a fiscal surplus in 2007. Finally, he created Vamo’ Arriba — which quite literally translates into “Movin’ on Up,” presumably to a departamento de lujo en el cielo — a Dominican version of Roosevelt’s WPA that pays roughly $87 a month for three months in exchange for community service, cleaning out canals and the like, after which the recipient qualifies for a small business loan from a program called “Promipyme.”
Fernández is currently tipped to win in the first round of the election on May 16th. His opponent, Manuel Vargas of the Dominican Revolutionary Party (PRD), is popularly thought to have links to organized crime. The PRD has struck back by accusing Fernández of using Vamo’ Arriba to buy votes and spending government money on his campaign. In addition, the government faces strikes from doctors, teachers, and transport workers. A demonstration on March 12th met water cannons, and teachers in the town of Bani have walked off the job claiming that they haven’t been paid in a year.
The graffito calls for a strike on April 9th. More below the fold.
Sadly, I’ve been mostly limited to the central area this trip. I’m here for work, not play. The same was true of Puerto Rico, of course, but there I had more time to work in a more-organized and less-interesting archive.
Central Santo Domingo — the Zona Colonial and Gazcué — have no areas of truly concentrated desperation that I could find tucked away within them. Nor do they appear to have any areas of concentrated nice, the kind of wealth amid poverty that makes you want to don a Ché Guevara T-shirt and start hollering, “¡Hasta la victoria siempre!”
Traffic is chaotic, and it’s not helped by the guaguas, private minibuses that ply most of the city’s routes despite an attempt to establish a municipal bus system. Nor is it helped by the paucity of signage — you need to navigate by vector in most parts of this town. I do not know whether that is the cause of the effect of the fact that Dominicans appear to pay even less attention to speed limits, posted signage (when it exists), or traffic lights than Mexicans.
I got into Santo Domingo at night, after a two-hour flight and a three-hour wait on the tarmac at Miami International. Tornado alert. No s**t — tornados. In South Florida. Not that they told us that — just anodyne “weather conditions” — but in this age of cellphones I could surreptiously call my brother and ask him what was up. He told me “tornado alert” in about the same tone of voice that he’d use to say “alien invasion” or “Argentine hip-hop.”
The air conditioning on the plane was iffy, and the flight was packed, but otherwise it wasn’t bad as waits go. One of the few advantages of being short is that coach seats on American Airlines aren’t as uncomfortable as they otherwise might be. There were lots of kids (not babies, not toddler, kids) on the flight, maybe a full quarter of the coach passengers, and I found the resulting roar to be strangely soothing. When they first announced the delay everyone stood up and started milling about, but once the slightly annoyed stewardess asked everyone to sit down I was surprised by the alacrity with which everyone took their seats and remained in them for the remaining two-a-half-hours of our wait.
The Aeropuerto Internacional de las Américas isn’t bad. As with so many Latin American airports — albeit not Mexico’s not anymore — foreigners speed through faster than the locals. There was a fellow at the front of the line guiding people to the immigration booths … but, strangely, he didn’t seem to speak any English. I wound up translating for the woman ahead of me; he wound up letting us all go through without getting our ten-dollar tourist cards. Here’s hoping I don’t regret that when I try to leave.
Customs, exit into a foyer filled with fast-food restaurants and ATM machines, and onto the taxi stands. The fellow who drove me into town was fairly taciturn, although he did ask me if I was from Mexico.
My accent options in Spanish are: (1) generic unidentified foreign type, usually pegged as French for reasons I don’t pretend to understand; (2) gringo — or on a good day Costa Rican, the only Spanish-speakers that I know of who pronounce the “r” in a mushy American-English way and sometimes elid the Spanish “e” to something more like the “i”; or (3) exaggeratedly stereotypically laughably Mexican. Which one I adopt depends upon neurological and biochemical factors beyond my control.
The highway downtown seemed rather nice, but it was night. We crossed over the Río Ozama and pulled off the cloverleaf onto the riverfront road, and we passed a sight that brought home that No Estamos en Puerto Rico …
My muse has left me for this trip. Literally. Amma had to take an exam on Tuesday, and then she needed to be in Philadelphia on Thursday. So I’m here in Santo Domingo by myself, trying to think of something to blog about when I should be getting some sleep.
The Dominican Republic and the United States have a very long and tight relationship. The relationship is so tight, in fact, that I’m not sure that the country really fits into the typical American conception of “foreign.” The Russians have a phrase for the former territories of the Soviet Union: the “near abroad.” Well, America has its own extranjero vecino, and this country is part of it. Which makes the United States, of course, the vecino extrajero of the Dominican Republic. (Or maybe just the vecino extraño.)
You see the relationship right at immigration, where a giant sign cajoles overseas Dominicans to register to vote. Dominican-Americans form a key electoral bloc in this country, which is why the major Dominican political parties have offices in San Juan, Miami, and New York.
The current president, Leonel Fernández, is running for re-election to his third (non-consecutive) term. Below is a 1996 interview with Fernández from the Charlie Rose show, right after he won the first time. He says interesting things, but the most interesting thing is the accent in which he says them.
I’m telling you, he could win election anywhere between New Haven and Trenton with that voice.
Amma and I were there for Thanksgiving. Most of my family on my father's side lives scattered between Coral Gables and Deerfield Beach; this particular holiday, a few even came over from California. And so, I was reminded, yet again, that I actually spent a significant part of my childhood (before age seven, I should make clear) in the (not so) wonderful (un)scenic town of North Miami Beach. A warning for Claudia: apparently I gave my mother a horrible case of separation anxiety when I charged off to kindergarden without so much as a look backwards. She'd been expecting fear and tears, not "Other kids! Much chido! Outta here."
No pictures of my mother or North Miami Beach. But here is my father outside the best cigar shop in South (Miami) Beach.
He moved back down in 2005, but he had previously lived in Miami in the late 1940s, some of which involved ... let's give that another post.
I end on a warning and a request. The warning is that should any of the Europeans on this blog choose to visit Miami, do not bother to go to Little Havana (including Calle Ocho) unless you rent a car. You will be very disappointed otherwise.
The request is for holiday family get-together horror stories. Any holiday, any get-together. Anyone?
OK, that’s not quite true. What happened was that at a summit at Camp Rapidan in October 1929, President Herbert Hoover told Prime Minister Ramsay MacDonald that the U.S. would cancel Britain’s war debt in exchange for Trinidad, Bermuda, and British Honduras. Hoover only wanted Belize in order to split it up between Guatemala and Mexico, and nobody expected London to part with Bermuda. (Strangely, MacDonald drew the opposite line at the summit, insisting on retaining Belize but showing no objection to giving up Bermuda.)
The real prize was, of course, Trinidad. Hoover had worked there, the place had oil, and its location was perfect. Between Trinidad and Puerto Rico U.S. planes could overfly the entire Lesser Antilles (and Venezuela), pretty much turning the Caribbean into an American lake.
How much did Hoover offer, you ask? Well, in nominal terms, a little less than £1.0 billion. In 2006 terms, £44 billion. And as a percentage of Britain’s GDP, the equivalent of £254 billion today. Not a bad deal for the U.K.
MacDonald, of course, eventually said no. Hoover later wrote that MacDonald knew that Hoover had previously suggested a moratorium on war debts, and therefore the perfidious British saw no reason to pay off what they owed.
But what if MacDonald had said yes?