Monthly Archives: May 2009

No Exit: Former Prime Minister Seaga gives us the very bad news

Former PM Edward Seaga was never accused of being a ray of sunshine when he was an active politician. “Action, not a bag a’ mouth” was more his style. Now retired, Mas’ Eddie is writing his autobiography and reflecting on days gone by.

In his column in the Sunday Gleaner today, he gives us the bad news. What is happening to the Jamaican economy now has happened before. He reminds us that in the 1980’s, the bauxite sector tanked, and then recovered, when worldwide demand for aluminium (cars, aircraft etc) picked up. The bauxite industry has nosedived again, but now, in the 00’s, Mr. Seaga predicts that there will likely be no revival, no coming back for the bauxite sector. The ownership of the industry has changed and the productivity of our bauxite processing plants has fallen drastically, mainly because they are not energy efficient.

Mr. Seaga’s analysis echoes that of the industry experts and that of our current Prime Minister Bruce Golding. No one is seeing much of a future for Jamaica’s bauxite industry, as there is no obvious reason why any of the current owners would want to invest the massive sums required to make our plants energy efficient. It is probably going to be cheaper for them to mine and process bauxite elsewhere.

What is interesting about Seaga’s analysis is that he points out this structural problem in Jamaica’s economy but eschews blaming the situation on anyone. The lack of blaming let’s us focus on the issues.

Bauxite has always been our number one or number two foreign exchange earner, and there is no obvious way to replace its’ US$850 million in annual foreign exchange earnings. Tourism can’t bring in that type of ADDITIONAL money, nor can remittances, while manufacturing for export he thinks is dead in the water. So he’s going with agriculture as the way to save ourselves.

I don’t know. It’s hard to imagine any JLP government following Mr. Seaga to another massive Spring Plain-like investment. (For you youngsters out there, Spring Plain was Mr. Seaga’s massive high-tech Israeli-led agricultural investment that was going to make us rich quickly by selling winter vegetables to New Yorkers, and make us rich slowly by growing tilapia, macadamia nuts, hearts of palm and other “non-traditional” crops for export. The Israeli manager of Spring Plain, Eli Tisona, is currently in prison in the U.S., serving the tenth year of his 19 year sentence for money laundering – it turns out that he was in the same “traditional” export agriculture business as many other Columbian and Jamaican farmers).

So what are we going to do to replace our new annual shortfall of US$ 850 million ? Your guess is as good as mine (or Mas’ Eddie’s). What is clear is that there’s no soft option. The first step will be going to the IMF for a bailout – strictly a short term remedy and strictly unpleasant.

In the 1980’s, PM Seaga cut government spending by making drastic cuts in public sector employment. He sent home thousands of government employees (who most Jamaicans suspected never did any work anyway….) Then he lost the 1989 election, and the next government gradually expanded public sector employment again.

So, Prime Minister Golding does have the option of saving money by firing lots of government employees. However, he cannot do it. We have only had one of the 4 citizenship by-elections, and at no time in the next 3 years will it be a good time to make job cuts. So where does that leave us ? And where does it leave the PM ?

No soft options. No easy answers. No exit.

“No Exit and Three Other Plays” (Jean-paul Sartre)