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De Ole Dawg – Part 26: 2017 -DfID, MNI and moving to economic breakthrough

De Ole Dawg – Part 26: 2017 -DfID, MNI and moving to economic breakthrough

How can we solve the “golden elephants next” problem?

BRADES, Montserrat– We continue to express thanks to the people and government of the UK for support since 1995 – 98. However, given the persistent plight of Montserrat, we clearly need to focus on removing key barriers to economic breakthrough.

Now, due to the legally binding force of the UN Charter Article 73 (and with our longstanding Britishness as another factor) the UK has a policy that the “reasonable” assistance (or sometimes, “development”) needs of Overseas Territories have “a first call” on the UK aid budget. It is as a result of this that when in 2012 DfID reported on its work with Montserrat and other OT’s,[1] it stated:

“The British Government remains firmly committed to meeting the reasonable assistance needs of the aided Territories as a first call on the aid budget. At the same time, consistent with the vision of flourishing communities, DFID is striving to support interventions that will deliver greater financial independence, where options exist to achieve this [p. 2.] . . . .  [W]here conditions are right, we will make strategic investments  in the aided Territories to enable private sector-driven economic growth. These investments will be made where we can see the real prospect of self-sufficiency being achieved in due course and savings for the British Government through the reduction or elimination of dependency on UK aid. We expect the Territories, for their part, to help develop their financial management capacity so that they can meet their budgetary obligations and reduce their reliance on subsidies from the UK taxpayer.  [p. 5.]”

Of course, such words have to be read quite carefully, to see what they really mean; not just what they may appear to mean at first glance.  For instance, reasonable investments in “catalytic” economic initiatives or in health, education and welfare cannot fairly be dismissed as “making a noise and a row” in order to get “golden elephants next.”  That ghost from twenty years ago needs to be properly and permanently exorcised.

As well, DfID’s words need to be compared with the underlying legal requirements of the UN Charter Article 73. For, strictly, the UK is bound to “ensure” economic, political, social and educational advancement, and it must “promote” constructive measures of development. Such a comparison instantly reveals a gap: the UN’s priority is ensuring development, but DfID’s language suggests a gap between “assistance” on one hand and support for strategic development initiatives towards self-sufficiency or advancement on the other.  Also, there is no certainty that the reasonable cost of “catalytic” aid projects that promote development will always be cheaper than the net present value of slow-drip support budgetary assistance “forever.” But, needlessly reducing a people to endlessly having to beg for hand-outs from year to year – when there is a reasonable alternative that does not cost hugely more – just does not seem right.  That is, Mr Rhys-Burris’ words may be all too apt: “unimaginative, grudging and tardy.”

Especially, when the sweat equity of two hundred years of unpaid plantation slave labour under the lash should also be put into the reckoning. Unpaid labour that (as historian and Trinidad Prime Minister Eric Williams long since pointed out) was a significant source of the funds that energised the UK’s industrial revolution. Plus, there are nearly two hundred more years of interest on the value as at August 1st 1834.  (But, there is no need to go into a futile and polarising debate over reparations and the like.  We just need to reckon that this is not simply a cold, clean financial calculation where the only relevant interest is what brings “reasonable” benefits to Montserrat AND saves money for UK taxpayers. Let’s just say: history written in tears and blood carries sobering weight on this matter.)

Now, too, of the three OT’s on year-to-year budgetary support, Pitcairn – home of the descendants of the mutiny on the Bounty – is one of the most isolated places in the world.  Perhaps fifty or sixty people live there on any given day and it has no hopes for moving towards self-sufficiency.  But, there is still an Article 73 obligation of support towards their political, social, educational and economic progress. 

Likewise, in 2012 DfID held up the £200+ million St Helena Airport as a shining example of how a major investment could be transforming, and so Montserrat by implication should go and do likewise. Especially in terms of fixing governance, financial management and technical capacity so that economy-transforming projects could go ahead. Since then, the once shining example has been tarnished by a media scandal over a gusty runway that seemed to be a failure; however, it turns out that the Brazilian firm Embraer makes suitable aircraft and regular commercial flights have now begun.  Also, St Helena has just signed a MoU with the South Atlantic Exchange cable people, funded through the European Union. By 2020 it is to have Fibre Optic access to an intercontinental cable connecting South Africa, Brazil and the USA.

 Where, too, wouldn’t it be more reasonable to compare the £4.94 million Montserrat Fibre Optic Cable project to the ongoing billion-pound effort to roll out superfast broadband to remote UK communities? Rather than, coldly calculating what some private entity or another donor agency may or may not be willing to put up?

Similarly, we need to factor in signaling. For, at global level, available financial capital looking for opportunities greatly exceeds what any given project or organisation can absorb. So, if capital is not knocking on your door, that is itself a strong sign that there are barriers there that would deter potential investors.  So, let us ask: if Montserrat lacks key catalytic infrastructure (in the main, due to impacts of the volcano disaster) and across twenty-plus years our chief development partner has consistently declined to make a strong vote of confidence in our future, what message does that send to the potential investor? What additional burdens would that place on a potential project?

The too often overlooked DfID 2012 MDC Business Case may therefore have something we need to heed:

“The principal development challenges facing Montserrat since the eruptions are: a persistent budget deficit, the high costs of access, severe human capital deficits, a demand-deficient local economy and high energy costs . . . . The base of local business comprises only 150-200 firms, mostly micro-enterprises servicing the small local market. Foreign direct investment has dried up completely and there are only a handful of local firms capable of trading in export markets. [p. 3] . . . . The principal barrier to economic growth and development on the island is poor physical access. This is particularly the case for sea access [p. 4] . . . . Why UK finance is required Montserrat’s OT status precludes access to other international donor support. GoM cannot secure funding from any other source. [p. 6 ]”

This brings us full circle to the February 2011 visit by the then Secretary of State for International Development. The way forward, is credibly the same almost six years later: “the UK would provide catalytic investments and technical support and in return GoM would implement a programme of reforms that would create the appropriate enabling environment for private sector led growth and reduce Montserrat’s financial dependence on the UK.”  However, since then – for various reasons –  these catalytic investments in key infrastructure have not gone through. Indeed, the one that seemed to have finally broken through (fibre optic cable) has now been rolled back. 

Perhaps, one of our key challenges is an unwelcome truth: some ghosts from twenty years…! ago! need to be faced together and permanently exorcised.

[1]           See https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/67426/DFID-work-overseas-territories.pdf

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The Montserrat Reporter - August 18, 2017

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How can we solve the “golden elephants next” problem?

BRADES, Montserrat– We continue to express thanks to the people and government of the UK for support since 1995 – 98. However, given the persistent plight of Montserrat, we clearly need to focus on removing key barriers to economic breakthrough.

Now, due to the legally binding force of the UN Charter Article 73 (and with our longstanding Britishness as another factor) the UK has a policy that the “reasonable” assistance (or sometimes, “development”) needs of Overseas Territories have “a first call” on the UK aid budget. It is as a result of this that when in 2012 DfID reported on its work with Montserrat and other OT’s,[1] it stated:

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“The British Government remains firmly committed to meeting the reasonable assistance needs of the aided Territories as a first call on the aid budget. At the same time, consistent with the vision of flourishing communities, DFID is striving to support interventions that will deliver greater financial independence, where options exist to achieve this [p. 2.] . . . .  [W]here conditions are right, we will make strategic investments  in the aided Territories to enable private sector-driven economic growth. These investments will be made where we can see the real prospect of self-sufficiency being achieved in due course and savings for the British Government through the reduction or elimination of dependency on UK aid. We expect the Territories, for their part, to help develop their financial management capacity so that they can meet their budgetary obligations and reduce their reliance on subsidies from the UK taxpayer.  [p. 5.]”

Of course, such words have to be read quite carefully, to see what they really mean; not just what they may appear to mean at first glance.  For instance, reasonable investments in “catalytic” economic initiatives or in health, education and welfare cannot fairly be dismissed as “making a noise and a row” in order to get “golden elephants next.”  That ghost from twenty years ago needs to be properly and permanently exorcised.

As well, DfID’s words need to be compared with the underlying legal requirements of the UN Charter Article 73. For, strictly, the UK is bound to “ensure” economic, political, social and educational advancement, and it must “promote” constructive measures of development. Such a comparison instantly reveals a gap: the UN’s priority is ensuring development, but DfID’s language suggests a gap between “assistance” on one hand and support for strategic development initiatives towards self-sufficiency or advancement on the other.  Also, there is no certainty that the reasonable cost of “catalytic” aid projects that promote development will always be cheaper than the net present value of slow-drip support budgetary assistance “forever.” But, needlessly reducing a people to endlessly having to beg for hand-outs from year to year – when there is a reasonable alternative that does not cost hugely more – just does not seem right.  That is, Mr Rhys-Burris’ words may be all too apt: “unimaginative, grudging and tardy.”

Especially, when the sweat equity of two hundred years of unpaid plantation slave labour under the lash should also be put into the reckoning. Unpaid labour that (as historian and Trinidad Prime Minister Eric Williams long since pointed out) was a significant source of the funds that energised the UK’s industrial revolution. Plus, there are nearly two hundred more years of interest on the value as at August 1st 1834.  (But, there is no need to go into a futile and polarising debate over reparations and the like.  We just need to reckon that this is not simply a cold, clean financial calculation where the only relevant interest is what brings “reasonable” benefits to Montserrat AND saves money for UK taxpayers. Let’s just say: history written in tears and blood carries sobering weight on this matter.)

Now, too, of the three OT’s on year-to-year budgetary support, Pitcairn – home of the descendants of the mutiny on the Bounty – is one of the most isolated places in the world.  Perhaps fifty or sixty people live there on any given day and it has no hopes for moving towards self-sufficiency.  But, there is still an Article 73 obligation of support towards their political, social, educational and economic progress. 

Likewise, in 2012 DfID held up the £200+ million St Helena Airport as a shining example of how a major investment could be transforming, and so Montserrat by implication should go and do likewise. Especially in terms of fixing governance, financial management and technical capacity so that economy-transforming projects could go ahead. Since then, the once shining example has been tarnished by a media scandal over a gusty runway that seemed to be a failure; however, it turns out that the Brazilian firm Embraer makes suitable aircraft and regular commercial flights have now begun.  Also, St Helena has just signed a MoU with the South Atlantic Exchange cable people, funded through the European Union. By 2020 it is to have Fibre Optic access to an intercontinental cable connecting South Africa, Brazil and the USA.

 Where, too, wouldn’t it be more reasonable to compare the £4.94 million Montserrat Fibre Optic Cable project to the ongoing billion-pound effort to roll out superfast broadband to remote UK communities? Rather than, coldly calculating what some private entity or another donor agency may or may not be willing to put up?

Similarly, we need to factor in signaling. For, at global level, available financial capital looking for opportunities greatly exceeds what any given project or organisation can absorb. So, if capital is not knocking on your door, that is itself a strong sign that there are barriers there that would deter potential investors.  So, let us ask: if Montserrat lacks key catalytic infrastructure (in the main, due to impacts of the volcano disaster) and across twenty-plus years our chief development partner has consistently declined to make a strong vote of confidence in our future, what message does that send to the potential investor? What additional burdens would that place on a potential project?

The too often overlooked DfID 2012 MDC Business Case may therefore have something we need to heed:

“The principal development challenges facing Montserrat since the eruptions are: a persistent budget deficit, the high costs of access, severe human capital deficits, a demand-deficient local economy and high energy costs . . . . The base of local business comprises only 150-200 firms, mostly micro-enterprises servicing the small local market. Foreign direct investment has dried up completely and there are only a handful of local firms capable of trading in export markets. [p. 3] . . . . The principal barrier to economic growth and development on the island is poor physical access. This is particularly the case for sea access [p. 4] . . . . Why UK finance is required Montserrat’s OT status precludes access to other international donor support. GoM cannot secure funding from any other source. [p. 6 ]”

This brings us full circle to the February 2011 visit by the then Secretary of State for International Development. The way forward, is credibly the same almost six years later: “the UK would provide catalytic investments and technical support and in return GoM would implement a programme of reforms that would create the appropriate enabling environment for private sector led growth and reduce Montserrat’s financial dependence on the UK.”  However, since then – for various reasons –  these catalytic investments in key infrastructure have not gone through. Indeed, the one that seemed to have finally broken through (fibre optic cable) has now been rolled back. 

Perhaps, one of our key challenges is an unwelcome truth: some ghosts from twenty years…! ago! need to be faced together and permanently exorcised.

[1]           See https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/67426/DFID-work-overseas-territories.pdf