www.jamaica-gleaner.com published: Saturday | February 22, 2003

FEARFUL OF what a war in Iraq would mean for Jamaica's oil bill, the country is pressing aggressively ahead with plans to convert to liquefied natural gas (LNG) as a main energy source.

The move has become even more imperative in light of the continued oil strike in Venezuela, Jamaica's main source of crude. Jamaica is yet to resume lifting oil from the turbulent South American country, creating uncertainty in the energy markets here over energy price stability.

Prime Minister P.J. Patterson says the introduction of LNG into Jamaica's energy mix, is a major step towards diversification and a move towards greater security and stability of energy supply and price.

He was speaking in the context of a looming war in Iraq, and Jamaica's heavy dependence on imported energy and the domination of petroleum in the supply mix.

Imported petroleum accounts for over 92 per cent of Jamaica's annual energy consumption of some 26 millions barrels of oil, mainly from Venezuela, Mexico and Trinidad & Tobago.

While recognising the limited impact of Iraq's erratic oil production on world petroleum supply, the Prime Minister said the threat of military action against Iraq had added a war premium to the price of petroleum. He noted that in the context of globalisation, Jamaica could not continue to remain reliant on the volatility of the price and supply of crude.

Yesterday oil prices were trading at US$32.21 per barrel as recorded by the international benchmark Brent crude. By comparison Jamaica was paying US$23/24 per barrel when the troubles with Venezuela first hit.

Pointing to the continued volatility in world oil prices due to war and anxiety premiums, the PM warned that in the event of an attack on Iraq, the price of oil might further escalate, putting pressure on the cost of energy in the oil-importing developing countries.

Recalling the recent strike in Venezuela, during which the collection of petroleum was suspended, Mr. Patterson informed journalists that in addition to meeting the supply shortage by importing from Mexico and Trinidad & Tobago, Jamaica also had to buy from Ecuador on the open market at high spot prices.

"We have not as yet resumed uplifts from Venezuela," the Prime Minister said, adding that once Venezuelan production recovered to the pre-strike level, Jamaica was unlikely to face a serious supply threat.

"In the case of war, members of the Organisation of Petroleum Exporting Countries (OPEC) are expected to lift the supply quotas, and it is expected that the spare capacity in some of the OPEC countries would kick in to meet the supply shortage, if any," he said.

The Prime Minister said that prices were likely to continue to rise in the short run, and that in order to meet Jamaica's energy needs, the country would be required to buy petroleum at world prices as anyone else.

Representing a strategic shift to a cheaper and more environmentally friendly source of fuel, for long-term economic benefits and preservation of the environment, the proposed move to the use of LNG is expected to reduce electricity cost by one third, said JIS News, quoting Donald V. Graf, a consultant with MPR Associates Inc., in Virginia, USA, who worked on the feasibility study here.

The project could save Jamaica US$30 million a year in its fuel import bill, representing a reduction by five million barrels of oil a year, said Mr. Graf, adding that similar savings could be achieved by the bauxite and alumina sector.

The fundamental objective of the shift to LNG is to bring a source of energy that would enable Jamaica to become a much larger player in the industrial world, so that reducing the price of electricity was important, not just for itself, but for the total industrial improvement and economic benefits to Jamaica.

According to the pre-feasibility study, the LNG is to be sourced mainly from Trinidad & Tobago, where it had spawned several industrial processes, such as polyethylene and steel plants, because it is a cheap energy source.

However, existing generating plants would have to undergo some amount of conversion, in order to be able to use LNG. The building of new LNG plants would also be an option. Once the electricity is produced, it would go through the existing lines.

In the long term, LNG could potentially be used to provide fuel for motor vehicles. LNG vehicles are believed to be much cleaner-burning than gasolene or diesel-fired engines.

There is also the potential use of LNG to produce cooking gas, which can be taken to homes, not in tanks, but through a network of pipes, as is the case in major cities such as London.

www.jamaicaobserver.com Observer Reporter

Friday, February 21, 2003CLARKE... war will significantly increase production costs in manufacturing sector

SOME of Jamaica's top business leaders registered concern Wednesday over the "devastating" impact a war in Iraq would have on Jamaica's fragile economy.

Members of the Jamaica Manufacturers Association (JMA) also expressed distaste over the scandal engulfing Finance Minister Omar Davies, saying his remarks on pre-election spending reflected a larger problem of economic mismanagement, and underscored the need for legislation to control fiscal policy.

JMA members broke into rare and unanimous applause during a regular board meeting when JMA President, Clarence Clarke, urged that the United States achieve "peace at all cost" in Iraq and not act unilaterally.

Calling on the US to "let good sense prevail", Clarke said a war would have a devastating impact on our economic wellbeing, hurting the tourism industry and provoking a significant increase in production costs in the manufacturing sector.

Clarke said some manufacturers already have complained that their electricity bills jumped 25-30 per cent, as a result of Venezuela's oil-worker strike, and that a war would exacerbate the situation.

In addition to hurting Jamaica's economy, Clarke said the US economy and global economy would suffer, and that the economies of small developing nations would be particularly hard-hit.

Clarke joins a growing list of high-profile Jamaicans, including leaders from the People's National Party and Jamaica Labour Party, who recently have spoken out against the increasing possibility of a US-led attack on Iraq.

US officials say military action may be the only way to disarm Saddam Hussein of weapons of mass destruction that he's alleged to have, and which, they say, pose a threat to US security following the Sept 11 terror attacks. However, some members of the United Nation's Security Council argue that more time should be given to UN weapons inspectors to find weapons that Hussein denies having.

Regarding the finance minister, Clarke said the Government faced a "credibility problem" and should consider legislation to better control election budgets, campaign financing, and deficit-to-GDP ratios.

Davies had said he gave the OK to some pre-election spending so as not to give the parliamentary Opposition the edge going into the election, and that it was time to correct the problem now that the administration has been returned to power.

Clarke said such remarks were unfortunate, considering that the fiscal deficit was programmed at 4.4 per cent of GDP but has now reached 8.4 per cent.

"If we implement such laws then governance will be much more transparent, and relevant sanctions can be brought against those not complying with the regulations," Clarke said.

"We cannot leave these issues to chance or discretion."

athena.tbwt.com By Peter  Richards IPS Article Dated 2/20/2003

PORT OF SPAIN - Keenly aware of the slow pace of their progress towards a single market and economy (CSME) and buffeted by the ill economic winds swirling around the globe, Caribbean Community (CARICOM) leaders have agreed to a work programme to implement the agreement by 2005.

''The present global economic liberalisation and the proliferation of regional economic and trading blocs demand that we implement the CSME as a matter of urgent priority,'' said Trinidad and Tobago Prime Minister Patrick Manning at the leaders' summit last weekend.

It is ''more than time'' for the CSME, first conceived in 1989, ''to see the light of day'', added his Jamaican counterpart, P.J. Patterson.

''We dare not concede to other countries rights of access for the procurement of goods and services which are not available to us,'' he warned.

The CSME, which will remove all existing restrictions on the free movement of goods, services, capital and labour flowing between the 15 member countries, was supposed to start operating this year but delays in adapting national laws coupled with bad economic news, like a drop in tourism following the Sep. 11, 2001 terrorist attacks on the United States and the impact of the recent hike in oil prices, retarded progress, said the leaders.

They agreed that countries in positions to become ''CSME-ready'' before 2005 should do so; Jamaica, Barbados and Trinidad and Tobago signalled their intention to do so next year.

While the countries continue to push economic union, they were lukewarm to a proposal advanced by Manning for political union, many hinting that they feared having to give up political sovereignty.

Barbados Prime Minister Owen Arthur, who has lead responsibility for the CSME within CARICOM said the agreement would require ''heightened and deepened'' cooperation between nations in key areas of the economy, as well as a massive undertaking to harmonise policies and laws.

The implementation process calls for at least 400 legal enactments in member countries, he added.

Comparing the process to the creation of the European Union (EU), Arthur said the Caribbean arrangement is more challenging since the region lacks a super-national institution that can issue directives and has to wait for each country to translate its obligations into its domestic laws.

The Barbados leader said special attention should be paid to those countries lagging behind because, ''in the final analysis, the creation of a single market and single economy will depend upon the readiness of the least-ready member''.

Antigua and Barbuda Prime Minister Lester Bird urged his colleagues to move as quickly as possible.

”Conditions in several of our countries are at the worst they have been for some time. Economic growth has slowed, private investment, both local and foreign, has dwindled, meaningful aid has virtually disappeared, preferential markets for commodities have gone, tourism has declined and unemployment has risen.''

''These conditions are, at one and the same time, the motivation for completing the CSME quickly, and the cause of the process slowing down,” added Bird.

The region's economic problems do not appear set to end any time soon.

Oil-rich Trinidad and Tobago recently turned down a request by CARICOM states to provide a cushion against substantial increases in the price of crude oil and petroleum products as a result of a strike in oil producer Venezuela, which supplies many Caribbean nations at preferential rates, and possible war in Iraq.

They wanted Port of Spain to guarantee a ''pre-Iraq war oil price'' but Manning said that was impossible because his country has ''been experiencing difficulties of our own''.

The leaders' statement issued at the end of the two-day summit noted that at least five Caribbean states had failed to achieve positive gross domestic product (GDP) growth in 2002 and were unexpected to do so this year.

Leaders did have some positive news: they gave the green light for the establishment of a stabilisation fund with initial capital of 60 million U.S. dollars, rising to 180 million dollars within five years.

It will serve as a buffer for countries experiencing financial difficulties, such as Dominica, which has approached the International Monetary Fund (IMF) for assistance.

The move to establish the CSME comes at a time when the region is also engaged in a series of external economic negotiations, including for the Free Trade Area of the Americas (FTAA), which leaders say places significant strain on their resources.

They called for ''a high level meeting in the hemisphere to take stock and to review the scope and pace of the negotiations'' towards the FTAA, which would establish the world's largest trading bloc, grouping the nations of North, South and Central America along with the Caribbean.

CARICOM countries are also involved in challenges at the World Trade Organization (WTO) against EU sugar subsidies that, if successful, could also end an agreement that they enjoy as members of the African, Caribbean and Pacific (ACP) group of nations.

The region is also moving to enhance trade arrangements with Costa Rica and Canada while exploring an offer of a partial trade agreement with the member countries of MERCOSUR - Argentina, Brazil, Paraguay, Uruguay.

Experts at the University of the West Indies (UWI) have recommended also that the Caribbean conclude a customs union agreement with the Central American Common Market (CACM) - Guatemala, Honduras, Nicaragua, El Salvador, and Costa Rica - as soon as possible and before the implementation of the FTAA.

''The time frame should be no more than one year to coincide with the CSME coming into force,'' said their report, noting that the goal should be free trade between CACM and CARICOM ''with a limited list of exemptions on both sides.'' For more discussion on this article and to see what others have to say click on the link below to go to discussion forums.

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www.jamaicaobserver.com Observer Reporter Thursday, February 20, 2003

JAMAICA has been named to two regional task forces that Caribbean Community (Caricom) leaders established last week to fast track the implementation of an economic union and develop an energy policy for the region, Prime Minister P J Patterson disclosed.

Patterson, who attended the 14th inter-sessional meeting of Caricom heads of government in Trinidad and Tobago last week, said Jamaica, Barbados and the host country had decided to move ahead of the 15-member grouping to get their economies ready one year earlier to participate in the imminent Caribbean Single Market and Economy (CSME).

"Jamaica has committed itself to be CSME ready by 2004," Patterson told reporters at Jamaica House on Monday.

The CSME, scheduled to come into force in 2005, is intended to be a single economic space comprised of most, if not all, Caricom member countries, which will allow the free flow of goods, services, financial and human resources across the region.

One of the task forces, Patterson said, was to determine the resources required by less prepared Caricom member states to bring them to a state of full readiness for implementing the CSME. In this regard, a report is to be presented to the heads of government during their conference to be held in July in Jamaica.

The formation of the CSME is being done in the shadow of the emergence of a larger hemispheric grouping -- the Free Trade Area of the Americas (FTAA) -- which will involve countries of North, Central and South America and the Caribbean and is to come into force in December 2005.

According to Patterson, who has responsibility for external negotiations among Caricom heads, last week's meeting in Trinidad and Tobago agreed that the region should negotiate the FTAA agreement as a "united force".

Patterson said regional heads set up the second task force to make recommendations regarding "a regional energy policy and strategy to deal with the issues of (oil) supplies and prices" within the framework of the CSME. The issue of energy and oil supply was discussed at last week's inter-sessional meeting in light of the rise in oil prices consequent on the threat of military attack on Iraq, one of the largest producers of oil.

Furthermore, Patterson noted, the recent general strike in Venezuela had badly affected supplies to Jamaica and other regional countries. He added that Jamaica would continue bilateral talks with Port of Spain on arrangements to supply Kingston with Liquid Natural Gas as part of "our national energy diversification strategy".

The energy task force is to also report to the Heads in July.

www.sun-sentinel.com by Doreen Hemlock Business Writer Posted February 17 2003 These are trying times for tourism executives in the Caribbean. Just ask Edison Briesen, tourism minister for Aruba, the Dutch island off Venezuela's coast that depends on overseas visitors for its livelihood. Briesen has been working overtime to counter a triple whammy: A global economic slump that has pummeled world tourism since early 2001. A drop in U.S. tourism abroad after the Sept. 11, 2001, terrorist attacks. And recent political turmoil in Venezuela that has slashed travel from that neighboring nation, long Aruba's No. 2 source of tourists. Yet even after Aruba managed to spend more on tourism marketing and arranged flights from new cities, the island suffered a 7 percent drop in overnight stays last year. That's about half of the average 14 percent drop in overnight arrivals to the Caribbean as a whole, but still represents a serious hit for the island economy, he said. "And now the threat of war in Iraq hangs over us as a Damocles sword," said Briesen, concerned that war may further throttle the world economy and overseas travel. No other world region feels the tourism pain as sharply as the Caribbean, because none depends so heavily on tourism. The travel industry accounts for roughly 30 percent of the Caribbean's economic activity and one in four jobs in the region of more than 30 million residents. Briesen said Aruba has tried to confront the challenges by boosting its marketing budget by several million dollars a year, even tapping the reserves of the government-owned telecom company to scrape together funding. It's spread the marketing dollars out to nontraditional markets including the U.S. Midwest, Scandinavia and Brazil. Plus, it's working more closely with airlines to lure flights from more cities, with Continental Airlines to start service from Houston in June. "It's tough," Briesen said. "Sometimes you don't have the financial means to do what you want." Still, Aruba has a somewhat easier task than other Caribbean destinations. The small, relatively affluent island of 100,000 people depends mainly on an upscale clientele, less affected by recession. The average room rate for its roughly 7,300 hotel rooms now tops $150 a night, without meals, and promotions target travelers with household incomes of at least $100,000 yearly, Briesen said. Destinations with far more hotel rooms and greater reliance on mass travel, such as Dominican Republic, have been harder hit by recession and forced to discount more. Even so, Aruba recognizes its role within the wider Caribbean, taking part in an ongoing ad campaign on U.S. TV touting the region as a single travel destination. Ideally, Briesen said he'd like to see even more aggressive regionwide marketing and more multi-destination packages, much as Europe offers. Yet short term, there's little relief in sight to the multiple challenges. Tourism analysts forecast it will take at least until next year -- or possibly 2005 -- until the Caribbean as a whole can recoup the levels of overnight stays posted in 2000. That means trying times for Briesen and his colleagues for many more months to come.