The CDB - a larger role in integration
Editorial
Stabroek News
March 17, 2004
Less well-known than the others in the triad of institutions to which the founding fathers entrusted the integration of their states, the Caribbean Development Bank (CDB) is also the one which has attracted the least controversy. No one has ever called seriously or in jest for its relocation although there had been sharp competition between Jamaica and Barbados for the location of the bank.
It has never been decided that some part of it should be hived off into another location - as has happened to the Caricom Secretariat. While the UWI has expanded from Mona in Jamaica into the campuses at St Augustine, Trinidad and Tobago and at Cave Hill in Barbados, and several teaching centres the CDB has from its headquarters at St Michaels in Barbados radiated financial support throughout the region not only to governments but to public and private sector entities.
At a time when the regional movement is in a situation of crisis and there is a profound questioning as to the relevance of its organs it could be useful to revisit the role and potential of two overarching institutions which seem to, perhaps not deliberately, have been shunted aside off the main tracks on which integration has run. The two institutions are the University of the West Indies (UWI) and the Caribbean Development Bank (CDB), the latter being the subject of this leader. Both the UWI and the CDB have associate status in Caricom.
The origins of the CDB thirty-five years ago lay in the ideas then current about development and about the benefits of integration. Sir Neville Nicholls writing in Caricom Perspective in 1998 recalls "that the last years of the 1960s and the early years of the 1970s were a time when it was thought that the economic fortunes of a people were largely, if not totally, determined by their inheritance of raw materials." The CDB was therefore conceived as a mechanism for helping with the development of those countries, mainly in the Eastern Caribbean, which were poor in resources.
Moreover integration theory as it was then understood pointed to the need for an instrument of equalisation which would ensure that the gains of the integration process did not accrue, as was observed to be the case elsewhere, only to the more developed member- states. The CDB was therefore conceived as a mechanism for levelling off the benefits through loans and grants to the less developed member-states.
The Group of Caribbean Experts, the so-called Wise Men, who were asked to chart a course for Caricom at the beginning of the 1980s observed that while the CDB was established under a separate legal instrument from that establishing Caricom, the CDB Charter "requires it to carry out two essential tasks of regional integration
a) To "have special and urgent regard to the needs of the less developed members of the region", and
b) to "assist regional members in the co-ordination of their development programmes with a view to achieving better utilisation of their resources, making their economies more complementary and promoting the orderly expansion of their international trade, in particular intra-regional trade."
The Wise Men remarked that it is generally considered that so far the CDB had discharged its first mandate very well. Indeed this is reflected in the distribution of funds. In the 32 years of the CDB's existence of the 2.2 billion US dollars approved, 1.2 billion or 57% has gone to the LDCs.
It is no failure of the CDB that it has played little part in the co-ordination of development programmes as this is an aspect of integration which has never been favoured by Caricom governments - no doubt dating back to the days when differing internal strategies were pursued in the name of ideological orientation. It is also the case that the promotion of intra-regional trade through the Single Market and Economy (CSME) and the expansion of international trade in particular through the mechanism of the Caribbean Regional Negotiating Machinery (CRNM) has remained the closely guarded kingdom of Caricom and its Secretariat.
In keeping with the doctrines of development referred to earlier the Chaguaramas Treaty divided the member- states into More Developed Countries (MDCs) and Less Developed Countries (LDCs). But the categorisation was always difficult to maintain; Barbados although not significantly endowed with raw material resources was correctly classified as an MDC with all the rest being regarded (the OECS and Belize) as LDCs which should attract special treatment. However, economic crisis is a great leveller. The economic crisis which overtook two MDCs, Jamaica and Guyana, in the 1970s and 80s reduced those states to zero or negative growth while several of the OECS states thrived and grew on tourism. All of which made the division between MDCs and LDCs less than relevant.
The CDB responded creatively to the crisis. In response to the rapidly worsening conditions in member- states due to severe balance of payments problems the CDB reconceptualised its lending approach to provide the Basic Needs Trust Fund (BNTF). It was an emergency programme strongly supported by USAID and was mainly intended for the financing of projects in the LDCs but Guyana, in recognition of the effects of the economic crisis, quickly became the major beneficiary. It was recently announced that Guyana is the top-funded country under the BNTF and has earned high marks for timely project completion. In the current phase of the BNTF Guyana has received funding for 152 projects located in every part of the country including the far hinterland and responsive to the needs of every group in the community.
In addition to funding small scale projects and the provision of large scale assistance for capital projects at the country level the CDB has directly supported the integration process by funding research projects and more importantly in institution building. Very much to the point is the CDB's assistance in mobilising the loan financing (100 million US) which enables the establishment of the Caribbean Court of Justice and ensures its financial independence as a separate entity.
Yet it is certain that the CDB should be entrusted with a deeper central role in the integration process. At present Dominica is engulfed in crisis. Once the general election in Antigua and Barbuda is over next week, it is likely that the true dimensions of its economic crisis will be revealed. Nor is the crisis situation only confined to the small territories. Although there have been no official pronouncements, Jamaica is already in negotiations with the IMF. Other member-states are likewise teetering on the edge of crisis.
Caricom's approach to the onset of this crisis has been faltering. At the Special Summit in Castries on the regional economy in 2002 a three-part framework was agreed upon. The first part was to provide special and immediate assistance to Dominica and on this there have been several commitments. The second part and in the longer term envisaged the establishment of a Regional Stabilisation Fund which was designated to supplement stabilisation and structural transformation assistance from traditional sources. It is understood that a blueprint for such a fund was completed more than a year ago by the Caricom Secretariat.
However it is the third part which must be implemented if Caricom member-states are to have a viable future. The third part involves no less than a regional plan for the economic restructuring and transformation of the regional economy. Surely this latter is a task for the CDB, especially as its current President, the distinguished Guyanese academic and economist Professor Compton Bourne had earlier produced such a plan, namely, "Caribbean Development to the year 2000."
The CDB is uniquely placed to assume responsibility for such fundamental aspects of integration. Unlike the Caricom Secretariat which has been hamstrung by budgetary constraints and uncertainties and inadequate accomodation, the CDB is well endowed, it has among its resources a skilled secretariat supported by the latest technology and management techniques. Moreover its membership and financial structure which includes in addition to Caricom members, contributing regional members Colombia, Mexico and Venezuela, and contributing non-regional members, Canada, China, Germany, Italy and the United Kingdom, puts it in an advantageous position in dealing with threats to the sub-regional economies and the integration process which impact from outside.
Caricom in its origins was the product of ideas which were generated by academics, public servants, political leaders, professionals and businessmen. At this time of its rethinking which began at the Montego Bay summit last year, there is need once again to cast the net wide to draw in the full intellectual resources of the region including in particular the regional universities and the CDB.