St Vincent Premier Enters Safeway Battle Over Banana Issue

by Jason Gorringe, Tax-News.com, London

04 February 2003

The battle for control of Britain's Safeway supermarket chain has seen an unexpected intervention, with Ralph Gonsalves, Prime Minister of St Vincent and the Grenadines, writing to Tony Blair and the Office of Fair Trading to warn against the consequences for his country's banana producers if US giant Wal-Mart is allowed to gobble up Safeway. Britons are world-champion banana-eaters, chomping their way through 140 million of the fruit each week.

Mr Gonsalves says that Wal-Mart's existing British subsidiary Astra has already seriously damaged Caribbean banana producers by agreeing an exclusive banana supply contract with del Monte, which sources most of its fruit in the Cameroons. Competition in the banana market has become fierce due partly to the dismantling of the EU's banana import regime which once offered a degree of protection to Caribbean producers, and partly to concentration in the distribution chain.

Mr Gonsalves told a British newspaper: 'What they (Wal-Mart) are seeking to do is to drive everyone out of the market and then to raise the price. The people who supply Wal-Mart are paying people starvation wages in Central America and Latin America, in conditions which no civilised country would accept.'

The problem for St Vincent and a number of other Eastern Caribbean economies is that their attempts to develop financial services to replace shrinking exports of traditional crops such as bananas and sugar have been hobbled by international pressure to clean up suspect banking practices, under the banner of anti-money laundering. The Caribbean islands say that they have been unfairly targeted by the developed world.

The World Bank is to produce a study focusing on the economic needs of developing Eastern Caribbean states, to be presented in June 2003. This was agreed last November following talks with representatives from Barbados, St Kitts and Nevis, St Lucia, St Vincent and the Grenadines, Antigua and Barbuda, Grenada, and Dominica. World Bank President, James Wolfensohn agreed to commission the report on the challenges facing the small island states in the face of increased globalisation, according to St Kitts Prime Minister, Denzil Douglas, who hosted the meeting.

Speaking to reporters, Mr Douglas explained that the study would be examining in detail ways in which the bank can assist the region in ensuring that impediments to its development are removed, allowing the states to compete more effectively in the international arena.

The St Kitts leader stressed that the Eastern Caribbean nations cannot become truly competitive until the underlying infrastructure necessary for international success is put in place.

'We need more grants rather than loans, we need to look at the relationship of the available capital between IDE (development) funds and the (world) Bank funds and moving it away from a 50/50 percent to a 70/30 percent,' he observed.

Although St Vincent remains on the FATF 'blacklist', it hope it has done enough to be removed soon. Last year saw the replacement of the Confidential Relationships Preservation (International Finance) Act, 1996, once lauded as the strictest confidentiality act in the world, by the Exchange of Information Act 2002, which facilitates the sharing of information from regulator to regulator, both locally and internationally. St Vincent has also installed a Financial Intelligence Unit which is said to be highly active in suppressing money-laundering activity.

Mr Gonsalves says in his pleas to the UK authorities that many Caribbean farmers are switching to planting marijuana in desperation, and that any further erosion of the banana market will exacerbate this problem. "Consumers just see prices," he said, "Other social consequences are low down on the totem pole."

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