Paradise lost? - Austerity drives Caribbean countries to rethink closer union

By Robin Wigglesworth

Intense bickering more than half a century ago led to the collapse of an ambitious political union of British colonies and protectorates in the Caribbean.

Yet an unprecedented economic crisis may force the former members of the West Indies Federation to band together once more.

The scale of the problems varies. Trinidad and Tobago, for example, is prosperous thanks to natural gas exports. But many of the anglophone Caribbean countries have foundered in recent years, dragged down by a tourism decline, withering banana and sugar industries and debt incurred by government overspending.

Many economists, international officials and even local politicians concede that part of the solution lies in closer union and that this will inevitably involve some loss of sovereignty, a touchy subject in states that were not so long ago under the colonial yoke.

"This is going to be the dominant conversation that the international community is going to place on the region in the next five to 10 years, largely because of what appear to be fiscally unsustainable scenarios," says Mia Mottley, leader of the opposition Labour party in Barbados. "The Caribbean will have to make some choices."

There have been some moves towards closer integration over the years since the West Indies Federation debacle. A handful of the former federation members - Barbados, Jamaica, Trinidad and coastal Guyana - formed the Caribbean Community, or Caricom, in 1973 to deepen the Caribbean Free Trade Association that grew from the ashes of the federation.

Caricom has since grown to include most of the anglophone islands: Belize, Dutch-speaking Suriname and francophone Haiti. In 2001, the members announced plans to work towards a single market and economy for the bloc. Local politicians meet regularly to pay homage to regional cooperation.

But progress has been disappointing to non-existent. While there have been some successes, such as a pan-Caricom schools examinations board and a Caribbean Court of Justice, which has begun to gain traction, wider efforts have foundered through a lack of political will. "There's instinctive protectionism in the Caribbean," says one western diplomat in the region.

In some respects this is understandable. The Caricom countries gained independence only relatively recently after cutting ties with the UK in the decades after the second world war. Relinquishing even some sovereignty is still politically difficult.

Moreover, the kind of populist concerns that have stalked the EU's development are mirrored in the Caribbean. Bigger countries, like Jamaica, or richer ones, such as Trinidad and Tobago, fret that they would be forced to shoulder too much of the costs of integration, or that they could be outvoted by tiny neighbours. Smaller states worry they would be swamped by cheaper labour and goods from more populous countries, or simply not have a significant say in contentious matters.

But the benefits could be significant. For the micro states of east Caribbean the cost of the trappings necessary for nationhood are particularly onerous: even a modest network of overseas embassies is a burden.

A true common market for goods, capital and labour could help foster bigger companies and reduce the severe economic efficiencies that bedevil the region, especially in areas such as transport and logistics. "It costs more for me to send a crate to Trinidad than to Liverpool [in the UK]," one Jamaican businessman points out.

Ms Mottley says: "We're either going to have to decide that we are going to make the political jump, or if you want to maintain the community of sovereign states, then you have to deepen at a far greater pace the functional cooperation, such that you can remove the duplication of expenditure on a range of things."

The reporting from the Caribbean was supported by a grant from the Pulitzer Center on Crisis Reporting, a non-profit organisation that supports independent international journalism

Copyright The Financial Times Limited 2014

(c) 2014 The Financial Times Limited