By Lennox Weston
When countries in the Caribbean introduced the Citizen by Investment Program or CIP, there were heavy political discussions in the various parliaments and in the body politics of OECS countries
The Caribbean governments, having mismanaged their finances, found themselves in IMF fiscal reform programs or in a debt squeeze that required immediate cash injection to avert social dislocation and political unrest.
The dire need for finances was used to support a call for the introduction of CIP against strong emotive calls to respect the historic struggle and sacrifice of past generations who, through Blood Sweat, and Tears, overcame slavery and colonialism to gain political Independence and for Nationals to receive citizenship.
Converting citizenship to a commodity cheaply sold to individuals of a different culture and race didn’t seem respectful of the historical struggle for Independence and the value of citizenship.
All the government in the OECS, except for Saint Vincent, implemented their own CIP programs.
In Antigua and Barbuda, the need to repay the IMF loan frittered away by the Upp government with no observable investment that could generate the repayment of the IMF loan, coupled with large trade debts some of which threatened the continued supply of electricity, water and continued access to Chinese financing and Caribbean Development Bank requires substantial financing.
Additional challenges included an insolvent social security system, the collapse of the billion-dollar ABI Bank the largest indigenous Bank, the crumbling Seaport both cargo and cruise, and an incomplete Airport.
There was the need to equip the hospital with critical equipment and rebuild the road network in the country and repair and maintain several government buildings, as well as to ensure the University of the West Indies could become a reality. The need for immediate financing became critical.
In Antigua, the new labor party government which took over in 2014 and which was initially against the sale of passports, changed its policy position when it came to power and had to face up to a nation-state on the brink of collapse and on the brink of becoming a failed state with disastrous consequences for all citizens.
The government decided to implement a well-ran and managed CIP program with the objective of generating significant investment capital that would form the basis of a sovereign wealth fund that could be used for productive investment purposes and to correct the fundamental challenges listed above. It was always understood that the CIP program would last at best 10 to 15 years and the selling of citizenship while obnoxious to many could be justified if the resources were used to preserve the independence, survival, development, and sustainability of our independent nation-state.
Therefore, the objective of the CIP program was to maximize the generation of Revenue to be utilized in a sovereign wealth fund that would provide a revolving investment financing to augment private capital investment and to provide capacity in disaster mitigation and resilient financing as well as to shore up financing gaps in the recurrent National budget.
Some countries were more successful than others with annual CIP National revenues ranging from 80 million dollars to 300 million EC dollars per year, based on figures reported in the media and tabled through a variety of national statements both inside and outside of Parliament by leaders of the various countries.
Antigua and Barbuda was at the lower end of the scale while some countries, notably Saint Kitts and Dominica were reported to be at the upper end of the revenue scale.
Several OECS countries established sovereign wealth funds with significant balances.
In Antigua, large current financing gaps, paying back IMF, large debt arrears, and rescue of the Social Security fund and financing the bailout of the banking sector used up most of the CIP financing making the establishment of a sovereign wealth fund difficult.
Several good Investments which continue to yield benefits were made in part supported by the resources of CIP.
University of the West Indies, the equipment of Sir Lester Bird Medical Centre with diagnostic equipment, the dredging of the harbor for cruise and the completion of the airport, as well as paying on time Social Security contributions and the paying down of the IMF loans and servicing the loans from the Caribbean Development Bank, the Chinese loans and the Japanese loans all of which finance important projects in energy, in port infrastructure and in Road and educational Construction
In essence, the CIP resources were mainly used for highly productive and beneficial investment purposes which continue to yield economic, employment, and tax-generating benefits to the state. It is true to say that money from CIP program, along with careful Investments of the normal General budget resources generated sustained growth and employment in Antigua and Barbuda.
What is required now is the removal of a policy that de-links the collection of government revenues from economic activities and growth through a series of tax exemptions that dates back to a time when foreign investments were the drivers of growth in our local economy and the need for earning super profits to attract foreign investors was quintessential to sustain growth in the local economy. This is clearly no longer the case.
The UPP party gleefully listed over 24 investment projects which failed to materialize mistakenly assuming that it was a function of poor governance and corruption rather than the drying up of foreign Capital Investments to small micro Island States where the threat of global warming, the obvious risk of a pandemic, the shutting down overnight of Tourism would have led to a conservatism by foreign investors in risking their money in micro Island States prone to be the most disaster risk countries in the world
It is the linking of tax collection to the growth of the economy by removal of exemption policies that would ensure that sufficient revenues are collected to refinance a sovereign wealth fund that is vital to the survival, sustainability, and independence of the local economy and independence of our nation-state.
The loss of revenue from the CIP program will have a major negative impact on the countries of the OECS with a 15 to 40% reduction in budgetary revenues that could be lost with little opportunity for short-term replacement. The OCES countries, including Antigua and Barbuda, will be challenged to come up with new and immediate solutions.
It was no surprise that the UK government led the assault on the CIP program; Caribbean and African history is replete with the extraction, exploitation of captured lands, and repatriation of those profits back to London leaving the colonies undeveloped, no infrastructure, no sustainable industry, no Health Care system, no educational system. From Columbus to Castro and beyond the UK lead the rape of the riches of these islands.
The press release from the UK Embassy stressing its friendship to Dominica and OECS generally pointing out its generosity of spirit by providing small grants to Dominica in the aftermath of the hurricane was a bit too much to hear and aggravating to the core of our historical soul.
Seeking to destroy an OECS annual billion-dollar industry and pointing to small ad hoc grants as symbols of friendship required a response in the local dialect developed by our ancestors to curse those who threaten the survival of our children.
It is no accident that this aggressive assault on the viability of the OECS is being led by the UK; the mother of all exploiters, it is also noticeable that when minority leaders emerge in predominantly white countries the aggression towards black countries intensifies as if these leaders of colour are aware they have to demonstrate to the white ruling class that they belong and in spite of their Colour they have no affinity to the countries of origin of their ancestors.
We lost Gaddafi and Libya was destroyed as President Obama tried desperately to prove himself worthy to the white military-industrial complex in America.
Leaders of colour in these countries seem always to bow under the pressure to demonstrate they have been converted to the Anglo-Saxon racist agenda of War, exploitation, rape, and colonization of Africa, Asia, and the Caribbean.
What must the response be to the clear signal of the intention to collapse the CIP program in the OECS we all know talk of inadequate oversight, poor due diligence, and risking the safety of European States are all simply an excuse.
In the UK alone and across Europe, large numbers of migrants leave those countries from the Arab, African, and Asian (including China) parts of the world and visit, settle and live in the UK and Europe.
The due diligence carried out by the CIP program is done in conjunction with those Visa-free countries own due diligence apparatus.
The evidence after over 10 years of operation of these programs does not support the reported risk to the state and well-being of the countries that normally provide Visa-free access.
The war being waged in Europe has nothing to do with the Caribbean CIP program or Caribbean migrants or Asian migrants or African migrants or Chinese migrants or Arab migrants no terrorist threats, no mass killings, no major financial fraud, or no Bank collapse.
Further, no economic collapse and no inflationary spiral have resulted because of the limitation of these CIP programs in the OCES.
It is just a normal reaction and inclination to kill any sense of Independence of earnings or competitive economic activity by imposing rules/restrictions, many of which are extraterritorial and designed to keep these countries dependent on the goodness of their handouts after our entire country is devastated by a natural storm or an economic storm not of our own making.
These are the “good citizens, and architects of our economic slavery” keeping their knees pressed to our necks crushing every attempt by the OECS to develop independent means of earning a living and taking care of our people, and maintaining our ability to survive as an independent state based on trade and earning our way.
We have heard talks of tinkering with the rules and modus operandi of the CIP programs with the hope of slowing down the date of termination or at least leaving a variant of the CIP program operational albeit with its earning capacity greatly reduced to an insignificant level.
Truth is, this approach will not allow the program to be a major generator of funds.
We have seen this movie before in the offshore sector, the banking sector, and the gaming sector where new conditions are imposed every day, eventually wiping out the sector and reducing it to an insignificant source of Revenue, growth, and employment creation.
Efforts are currently being made to look at several new areas such as cryptocurrency and blockchain technology and even Ganja. None of these have shown any real potential to be a significant player in generating the types of revenue that came from the CIP program.
Climate Finance is another area that is presently being explored in an attempt to get greater access to low-cost development financing through green climate financing architecture.
Barbados has also been leading efforts to gain support for new global development financing, trade, and creative industry architecture dubbed The Bridge Town Accord.
Antigua and Barbuda have been leading efforts to get acceptance of an MVI (Multi-dimensional Vulnerability Index) reenergizing a thirty-year-old project previously led by the Common Wealth Secretariat and the Caribbean Development Bank. The MVI seeks to access highly subsidized development financing by introducing the concept of risk, vulnerability, and small size in the qualification.
Both efforts are laudable and will generate lots of international meetings and high-profile speaking engagements for the leaders and their diplomats. It is very unlikely though, that these two efforts will significantly change the region’s access to large-scale development capital financing.
This is simply because developed Nations have constantly promised much but failed to deliver any increased development financing and secondly the level of abject poverty that has been defined by the $1 per day rule will always be the first priority for development capital aid by both the bilateral and multilateral funding agencies.
New Development Agenda
Loss of CIP financing will demand an immediate rethinking and reconstruction of our development agenda: “Black man you can only depend on yourself, you can depend on no one else.”
This has to be the new mantra for the countries in the OECS and in CARICOM, in Africa and Asia so efforts should continue at the international level seeking access to greater development financing, seeking private sector Investments and trade. There is a national agenda and focus which need to be urgently designed and implemented and we can do it.
In Antigua and Barbuda, we need to understand that no man is an island and we can only depend on ourselves and our people and the ingenuity of national solutions. The challenge is not so much winning the war of talk radio, but more so astute vision, planning, and execution of a new and challenging development agenda post the loss of CIP financing.
The first and immediate adjustment for Antigua and Barbuda is the linking of the tax collection regime to economic activity by removing the widespread exemptions given to foreign investments and local Investments in property tax, the sale of assets, the transfer of ownership, tax on profits and tax on consumables.
The old policy regime of providing massive tax exemptions to foreign and local investment as a means of generating growth and employment and providing tax revenue financing to develop the infrastructure and to finance the operation of the government is no longer appropriate.
This fiscal imbalance has to be corrected immediately. The new fiscal policy should be accompanied by a focus on productive and commercially viable Investments in three main sectors 1)in education and skill training 2)in agriculture and 3) in the immediate Construction of additional two thousand hotel rooms.
Job creation is the most fundamental objective of any nation-state and the government’s budget could benefit from the creation of productive employment.
As part of the immediate investment in Education and skill Training project, the government should implement three components A) the University of the West Indies, the Antigua State college, the hotel trading Institution, the Airport Authority, ADOMS (Antigua Department of Marine Services) they should all get together with the American University to produce and train skilled individuals required at home and abroad because of labour shortages in the World Market.
The focus should be on the training of over 2,000 nurses and medical equipment maintenance professionals additionally another 2,000 professionals should be trained to take up jobs in the local hotel and cruise ship mega yacht sectors; not only trained in service side but also on the boat operational, maintenance and management area and another 2,000 individuals should be trained in aviation skills through the establishment of an aircraft pilot school simulation centre and aviation engineering training.
Then Special schools focusing on the training of soldiers and police officers in security and crime-fighting measures and target the supply to the UN’s peacekeeping and disaster management services. Lastly, an expansion of a teacher training facility with a focus on teaching primary school children and also a specialization of the teaching of mathematics, foreign languages and IT. This will augment the present focus on upgrading construction technicians that is currently underway.
In Agriculture what is needed is the purchase of several RO plants for crop irrigation and transforming all the rough shrub lands into fruits and vegetable export farms fully mechanized and the establishment of mini-feed lots for sheep, goats, pigs, chicken and cattle production.
Antigua and Barbuda has been stuck at 2,500 hotel rooms for the last 15 years due to the closure of several large properties and the maintenance of others. There is urgent need for the immediate construction of another 2,500 hotel rooms taking the number up to 5000 hotel rooms. This is designed to support the development of the aviation sector and to generate the scale of economic activities required for the main sector tourism. The old dependance on foreign investors has shown itself as not sufficient to expand the sector to the level required for improving the sustainability of the economy.
The construction of hotel rooms should be seen as fundamental infrastructure such as ports, harbours, roads, airports since they provide the main source of economic earnings to support the requirements of the nation state. Owning hotel rooms does not mean managing hotel rooms and the private sector should be called on to manage, publicly owned but managed on the basis of private commercial principles.
The government already has the capacity to do so since it owns its own block plant, concrete plant, quarry and the employment of thousands of construction workers and grass cutters some of whom have construction labouring skills.
The loss of the CIP should not be a cry of desperation but a signal to action, to put aside the pettiness of political governance and get to work utilizing the best skills and talents to get the job done. Failure to make the necessary adjustments could create a season of great economic hardship and political turmoil capable of ruining the legacy of the party in power and its leaders