What about the Brexit possibility?
BRADES, Montserrat, June 14, 2016 – “Brexit” is in the news. For, on June 23rd next, the people of Britain will vote on whether the UK is to leave or stay in the European Union. Some recent polls indicate a surge towards “leave,” which has grabbed headlines. Though, it should be noted that not only did polls “miss” the 2015 election in the UK but many others around the world so that the polling industry is doing some soul-searching.
Is Brexit just a “local” UK issue, or will it affect overseas territories?
To understand that, we need to look at issues and concerns of the UK public, how that will affect policy makers and how that in turn would affect us in Montserrat and other OT’s.
The first concern seems to be the impact of exit on the UK economy, with suggestions of a recession of up to 6% of the UK economy within two years of leaving. Heightened uncertainty is always bad for an economy and already the Pound is under pressure: on June 14th the pound was worth €1.28 in Euros, down from €1.36 in Euros in January. Those favouring “remain” in the EU point out that stability is important and say that the risk of recession is not worth whatever may be gained.
On the other side, emphasis falls on impacts of immigration within the EU (“all those Poles coming here . . .”), fear of the impact of the ongoing wave of migrants and refugees from Syria, Africa or Asia and risks of further immigration if Turkey eventually joins the EU. Linked to this are concerns over security, the UK’s sovereignty (“rule by Brussels bureaucrats”) and the like.
Over the past year or so “remain” has mostly been in the lead. However, “leave” has surged, with polls currently running at 7 – 10% in favour of “Brexit.” If the polls are believable, it will be hard to make up a gap of that size in little over a week. Especially, as the people inclined towards voting for “Brexit” are more intense in their feelings.
Most likely, exit will hit the UK economy over the next five or six years, tightening up budgets. If the Scots follow up on their threat to re-open the independence issue should the UK leave the EU, that would stretch the period of heightened uncertainty. If Scotland then leaves the UK, that would have significant and negative impacts on not only the UK’s economy but its standing in the world. However, Scotland recently voted to remain in the UK.
Economic instability, uncertainty or recession is of course bad news for Montserrat and other Overseas Territories.
In our case, perhaps 55 – 60 percent of our recurrent budget is UK funded through year to year grants, and something like 90 percent of our capital/development budget. Much of that budget support comes through DFID, and we must recall that from 2005 – 2014, DFID’s budget moved from £5 billion to over £10 billion, as the UK sought to commit 0.7% of its gross national income to development aid; a major commitment. (The Millennium Development Goals people have argued that if the leading nations were to put 0.7% of their GDP into development aid on a sustained basis, it would be enough to transform the economies of the under-developed countries around the world.)
This already underscores a painful lesson. Regarding, the Montserrat Development Corporation, MDC. The GoM-owned corporation that was set up in 2007 to spearhead our catalytic development projects meant to launch our economy into a new growth path. For, when DFID reviewed MDC in 2012 and had to call it a “failure” that was a sign that the opportunity created by DFID’s growing budget was being missed. It is easier to get increased aid from a growing aid budget (and yes DFID’s budget grew right through the 2008 – 9 recession), than in a time of uncertainty or possible recession ahead.
So, let us pause and see what DFID said about MDC in the 2012 MDC Business Case:
“ . . . the MDC has not performed to date as had been expected. The diagnosis of this failure is clear – too broad a remit given the staffing constraints, over ambitious targets and expectations, lack of clarity on how much independence and authority MDC was to be given, poor governance arrangements, a micro-managing Board of Directors and inadequate performance from the original implementing consultants.”
Going forward, we have to fix governance, improve GoM’s financial management capability and make much more substantial business cases, if we are to be taken seriously. That includes adequate, world-class project cycle management for catalytic development projects.
Worse, there are UK press reports that the £285 million St Helena airport “yardstick” development project faces serious wind shear challenges. Let us hope that HE Lisa Philips, St Helena’s Governor, proves right:
“[T]here are wind shear challenges on one runway (20, the northern approach) which means larger planes (eg. 737-800) cannot currently land safely. We are collecting wind data which will allow larger planes to land on this runway, but this will take some time.
Wind shear is a factor at several airports around the world, including London City Airport, where safe landings happen every day.
In the meantime, we are working hard to identify an interim flight solution that can land on our second runway (02, from the south) . . .”
(It seems that, despite comparative wind studies by the UK Met Office over a 12 month period at an inland site and from an automated weather station set up at the airport that indicated that “the wind shear risk was . . . relatively low,” test flights told a different story. Hence the “wasted aid money” stories in the UK and elsewhere; which puts pressure on DFID to be even more stringent with aid. But in fact on June 3rd runway 02 was used for an emergency medical evacuation.)
So, regardless of whether “Brexit” occurs, HMG’s core commitment to Montserrat is a matter of international law: the UN Charter, Article 73 commitment that makes the reasonable assistance needs of OTs the first call on the UK development budget. But, to move on to UK investment in major, economy transforming catalytic projects in the face of uncertainty and possible recession, we are going to have to undertake serious reforms, build up our capacity and make a much better case than we have been doing to date.
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http://www.themontserratreporter.com/de-ole-dawg-part-3-contribution/
http://www.sainthelena.gov.sh/st-helena-airport-2/
http://www.metoffice.gov.uk/media/pdf/s/j/15_0246_st_helena_airport_assessing_climatology_and_wind_shear.pdf
http://www.sthelenalocal.com/st-helena-airport-proves-vital-first-aeromed-evacuation/
