Eastern Caribbean States Plan Political Union

by Leroy Baker, Tax-news.com, New York

31 August 2001

Discussions at last month's meeting of the Organisation of Eastern Caribbean States (OECS) between the Prime Ministers of the English-speaking states in the Eastern Caribbean - Antigua, Dominica, Grenada, St Kitts-Nevis, St Lucia and St Vincent - have increased the chances of a political union between the five similar statelets, whose economies are based on agriculture, tourism and offshore financial services.

The islands already have a common currency, administered by the region's central bank, common aviation and telecommunications authorities, and a shared appeals court. The group is creating a regional stock exchange that is expected to increase the level and pace of economic activity. Officials are analysing the implications of the abolition of requirements for passports or travel documents for their nationals to enter or leave any of the states. They are also contemplating removing the demand for work permits for citizens of the states to live and work in any of the countries.

Ralph Gonsalves, Prime Minister of St Vincent, sees a basis for creating a confederation similar to the European Union model, with a rotating presidency. The region's prime ministers would constitute the executive of the union, he suggested. "There will be an advisory parliament of the union, with members coming from the existing national parliaments in proportion to government proposition," he said, quoted in the Financial Times. "We will remain independent states, as it is a confederal structure that will allow us to do the things at the centre where the states' capacity to do them individually is patently absent," Mr Gonsalves said.

Co-operation among the leaders of the five countries is already at a high level. This week, Mr Gonsalves is visiting Libya with colleagues Keith Mitchell, Prime Minister of Grenada and Pierre Charles, Prime Minister of Dominica. The aims of the leaders are to seek technical and monetary aid to help modernise their agricultural sectors. In Grenada's case, it would also like Tripoli to write off the $5m loan it obtained in 1982 to build an airport. Very unlike Grenada's current right-wing administration, the Grenadian regime of the time consorted with Fidel Castro and incurred the wrath of Ronald Reagan, leading to the US invasion of 1983.

Prime Ministers Denzil Douglas of St Kitts and Nevis and Lester Bird of Antigua pulled out of this week's trip to Libya, with Douglas citing pressing commitments at home and Bird saying Antigua had no diplomatic relations with Tripoli. Instead, they sent lower-level delegates. All five territories however cite reduced US and European aid for their cash-strapped economies, along with the 'fiscal colonialism' of the OECD's unfair tax competition initiative, as giving sufficient reason for the approach to Libya.

US assistance to the Caribbean has fallen from $225 million 10 years ago to $120 million today. With nearly 60% of this earmarked for Haiti alone, 13 other independent states share the remainder. In addition, the banana industry, the traditional economic linchpin of the OECS, is now in deep trouble following the success of the US attack on European Union preference for Caribbean imports over so-called 'dollar' bananas from US-owned Latin American plantations.

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