Caribbean: Leaders Watch Venezuela, Iraq For More Bad News

athena.tbwt.com IPS Article Dated 1/30/2003

GEORGETOWN, Guyana - Caribbean Community (CARICOM) leaders meeting in Trinidad next month will devote much of their time discussing how political turmoil in oil-producing Venezuela and a possible Gulf War II would affect this economically fragile region, still reeling from the Sep. 11, 2001 terrorist attacks on the United States.

The two-day biennial meeting that starts on Feb. 14 will be preceded by a day-long special encounter between heads of government and civil society that would examine whether or not political federation could work in the 15-nation Community of 15 million people.

But CARICOM officials say leaders will focus on the serious social and economic consequences of a U.S.-led war against oil-rich Iraq, which they say would affect almost every sector in the Caribbean, tourism in particular.

Since the opposition-led effort to oust controversial President Hugo Chavez in Venezuela started nearly two months ago, several CARICOM nations that depended on petroleum from that country - delivered under the concessional Caracas Energy Accord - have been forced to turn to alternative markets to keep their economies afloat.

Guyana now buys much more expensive gas and diesel and Bunker C fuel from Trinidad, while Jamaica has turned to Mexico and Ecuador because supplies from Venezuela have virtually dried up under the weight of crippling strikes.

Barbados and St Vincent have also indicated that they are watching the situation closely.

Higher fuel prices have resulted in near riots among private bus and taxi operators in Jamaica and triggered several brief strikes by owners in Guyana - where many commuters refused to pay the average 25 percent increase in bus fares - and a strike in Haiti.

Officials say that while alternative arrangements are working, a war in Iraq accompanied by sabotage of that country's oilfields would hike prices astronomically.

''We are still reeling from the effects of 9/11 and we know for sure that our high-energy sectors like the aviation industry would be seriously affected. We can see airfares and jet fuel (prices) going up and that would be tough on airlines and our tourism industry,'' said Maurice Odle, economic adviser at the Guyana-based CARICOM Secretariat.

Odle is scheduled to present a paper to finance ministers in the next 10 days that would paint a picture of the impact on the region if the Venezuela crisis persists and the United States attacks Iraq.

Sabotage of Iraqi oilfields would put severe pressure on the airlines and cruise ships that are expected to bring the bulk of the 18 million people scheduled to visit more than 30 Caribbean destinations this year.

That total is down significantly following the 9/11 attacks and more signs of the decline in tourism, which employs one in four Caribbean nationals, have emerged recently.

The finance-starved Trinidad and Tobago airline BWIA announced this week it is firing 617 of its 2,400 workers, many of them maintenance engineers, to help it reduce monthly losses of one million U.S. dollars.

The airline, the second largest in the English-speaking Caribbean after Air Jamaica, has been carrying heavy losses for several years, but they have grown in the last two years.

''We had no choice. We had to save the airline,'' said BWIA Chief Executive Officer Conrad Aleong.

Meanwhile, Air Jamaica, which brings about 70 percent of the nearly two million tourists who visit Jamaica each year, is carrying accumulated losses of 70 million dollars at a time when jet fuel prices are rising significantly. Executives say setting higher prices to cover climbing fuel costs would discourage North American and European tourists from flying.

The story is similar at LIAT, the island-hopping, Antigua-based commuter airline that serves the smaller islands in the east Caribbean and is a valuable feeder for the larger carriers. Several CARICOM governments came together late last year to bail out LIAT to the tune of about 12 million dollars.

Edwin Carrington, CARICOM's three-term secretary general, says that some member states are now hard pressed to pay their annual budget contributions to the Secretariat.

''One member state said that one of the factors limiting their capacity to contribute any increased resources to our budget is the rising price of oil, and so my Secretariat is feeling the squeeze of oil price increases,'' he said.

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