The Washington Diplomat / April 2009
By Larry Luxner
When President Barack Obama and 33 other heads of state gather for this month's three-day Summit of the Americas in Port of Spain, the resulting PR boost for Trinidad and Tobago will be priceless — and a welcome break from the depressing stream of negative economic news coming out of this twin-island republic of late.
"It's been really hectic," said Glenda Morean-Phillip, Trinidad's ambassador in Washington. "I even had to put Carnival on the back burner because of preparations for this summit."
Morean-Phillip spoke to The Washington Diplomat on Feb. 24 — the day after Trinidad's all-important Carnival ended and one day before flying off to Mexico City to present her credentials to Mexican President Felipe Calderón to serve concurrently as her country's ambassador there. She is also Trinidad's permanent representative to the Organization of American States, whose members will be attending the fifth Summit of the Americas.
The ambassador said that between 5,000 to 6,000 visitors from 34 Western Hemisphere nations will head to Port of Spain for high-level talks on energy security, environmental sustainability, labor laws and of course, the global economic crisis affecting just about every country on Earth.
"The pace has accelerated since it was made public that President Obama and [Secretary of State] Hillary Clinton will be attending the summit," Morean-Phillip said. "We donít have enough hotel rooms for everyone, so right along the waterfront we'll have two cruise ships docked just a short walk from the Hyatt conference center where the summit will take place."
The April 17-19 event represents a sort of coming-out party for Obama, who's eager to meet his counterparts from across Latin America and the Caribbean. Observers will be closely watching how the new president interacts with such heavyweights as Argentina's Cristina Fernández de Kirchner, Brazil's Luiz Inácio Lula da Silva, Colombia's Alvaro Uribe and, notably, Venezuela's Hugo Chávez.
"The upcoming summit is going to be, in my view, a watershed moment in the history of the Americas," said Albert Ramdin, assistant secretary-general of the OAS. "We expect that the hemisphere's political leaders will be able to carve out a new agenda for the region, an agenda which will take into account the fundamental changes that have taken place over the last few years."
These changes, he said, include the establishment of democracy and the pursuit of forward-reaching foreign policies by the region's countries.
"Of course, the current global economic crisis will be the principle issue on the minds of leaders at the summit, but this crisis should not isolated from all the region's other environmental, energy and poverty problems," Ramdin told The Diplomat in a phone interview from Antigua and Barbuda, where he was monitoring that country's recent national elections.
"Throughout the hemisphere, there is an enormous desire to meet with the new U.S. president," said the OAS official, who hails from Suriname. "Keep in mind that the Caribbean is used to black presidents and prime ministers. So for them, it's nothing new. But it is a turning point in the history of the United States, and there's a lot of sympathy and emotion associated with that. Latin Americans will want to engage with President Obama simply because of the hope associated with his presidency."
These hemispheric get-togethers are held every three or four years. Previous summits have taken place in Miami (1994), Santiago, Chile (1998), Quebec City (2001) and Mar del Plata, Argentina (2005). The selection of Port of Spain was made several years ago.
"Countries pay a lot of money for advertising, and this summit in itself is a great advertisement for Trinidad," said Morean-Phillip. "You have 34 heads of state converging on this little island. That's a big thing for a large country, so it's even a bigger thing for a small country like ours," added the ambassador, a former Supreme Court judge who went on to become the first female president of the Law Association of Trinidad and Tobago. She also has the distinction of being the first Trinidad-born woman in her country to qualify as a solicitor, as well as the longest-serving attorney general in Trinidad's history (2001 to 2003).
In 2003, Morean-Phillip served as Trinidad's high commissioner in London (a position similar to ambassador) with accreditation to the United Kingdom and Northern Ireland, Denmark, Norway, Finland, Sweden and Germany. She took up her current post in Washington a little less than a year ago.
The theme for this year's OAS summit will be "securing our citizens' future by promoting human prosperity, energy security and environmental sustainability." The energy component is especially important for Trinidad and Tobago, half of whose entire economy depends on oil, natural gas and petrochemicals.
"We're trying to move away from heavy reliance on hydrocarbons," Morean-Phillip told The Diplomat."We're looking at expanding our downstream industries as well as conference tourism. And this summit is a big chance to advance that agenda of making Trinidad and Tobago the conference center of the Caribbean."
This shot in the arm won't come a moment too soon for Trinidad. The recent implosion of CL Financial Ltd., one of the country's largest conglomerates — coming on the heels of a dramatic fall in world energy prices — means a double blow to what until last year ranked was one of the Caribbean's most prosperous nations.
In fact, the oil boom, coupled with Trinidad's vast energy resources, allowed the small twin-island nation to slash its poverty rate by 50 percent from 1990 to 2006, offer free health care, and embark on ambitious projects such as building a national network of highways and providing universal education.
That aggressive development is likely to be tempered — if not stopped altogether. The International Monetary Fund is projecting 4.5 percent gross domestic product growth in 2009, down from 5 percent in 2008, but Neeraj Arora, an analyst at J.P. Morgan, says "in our view, that's too optimistic."
Instead, Arora is forecasting 2009 GDP growth in the 0 percent to 1 percent range, and 2.5 percent growth in 2010. Even that could be too rosy, if oil and gas prices continue their current downward slide and the global economic crisis is more protracted than expected.
"If there is positive growth at all, it'll be much less than in previous years," said Morean-Phillip.
On Jan. 30, Trinidadian Prime Minister Patrick Manning announced his government would assume control of several key subsidiaries of CL Financial, which has vast holdings in rum, insurance, banking, real-estate and petrochemicals. Chief among those units is CL's flagship bank, Clico Investment Bank (CIB), whose assets and liabilities will be transferred to state-owned First Citizens Bank.
The bailout could end up costing Trinidadian taxpayers anywhere from $1.4 billion to $2 billion. Morean-Phillip said her government "acted swiftly" to prevent the contagion from spreading.
"Part of the problem is that CL was expanding, but drawing on funds from other units in the organization with the hope that money would come in to take care of that," the ambassador explained. "But that caused problems ó especially with insurance and banking. Word got out that they were having problems, so people went to collect their funds. There was a run on the banks."
To avoid falling further in the hole, the Manning government has vowed to implement further cuts in the national budget, which now assumes prices of $45 per barrel for oil. It had originally based this yearís budget on $70-a-barrel oil — which itself was quite conservative, considering that in July 2008, petroleum peaked at $147 per barrel.
"We have been saving for quite some time for an eventuality such as this — the rainy day," Manning said in a speech to Parliament. He added that running a temporary deficit and raising money on the domestic market was "far more acceptable" than raiding the Trinidad and Tobago Heritage and Stabilization Fund, currently worth $2.4 billion.
Samuel A. Martin, chairman of the fund's board of governors, conceded that Trinidad will run a deficit for the first time in recent memory. The main purpose of the T&T Heritage and Stabilization Fund is to provide a mechanism for future savings. Martin explained that if, for example, the government budgeted for $50 per oil barrel and the price of crude rises to $70, then at least 60 percent of the windfall must go into the fund.
On the other hand, if the budget assumed a price of $70 per barrel and it dropped to $50, then the government may withdraw money from the fund using the same formula.
"But the government has not attempted to withdraw any money and has indicated it does not intend to," said Martin, "because it wants to leave the fund for future savings, and has the capacity to borrow without seriously impairing its operations."
Yet the problems at CL Financial could overwhelm the country, warn observers. "People are quite concerned. This is the first significant business failure in years, and it's a big one," said Darryl White, head of RBTT Merchant Bank Ltd. in Port of Spain, whose own bank is in the process of being acquired by Royal Bank of Canada. "There is some discomfort in the banking sector. The most important thing for Trinidad now is to ensure that the government intervention takes place quickly and transparently."
CL Financial, whose total assets exceed 60 percent of Trinidad's GDP, owns — through its many subsidiaries — everything from a Kentucky bourbon distillery to luxury condos in Fort Lauderdale to a methane refinery in the Sultanate of Oman.
Last year, CL bought one of Jamaica's largest conglomerates, even while its problems were becoming evident. "They were using cash resources for expansion as opposed to consolidation," said one observer, "so it was not entirely surprising that they now find themselves in a difficult situation."
One might imagine that amidst all the gloom and doom, 34 heads of state might want to relax and enjoy this tropical paradise for at least part of their three-day sojourn in Trinidad. That's a definite possibility, with the government quietly making arrangements for Obama and his counterparts to see something of the country outside Port of Spain.
Incidentally, one world leader Obama won't be meeting at this get-together is Cuban President Raúl Castro.
Cuba was suspended from the OAS in 1962 at the behest of the United States. As a result, it hasn't been invited to any of the four hemispheric summits held so far.
While nobody expects Castro to crash the party, Ramdin said he's confident that Cuba will gradually be accepted back into the OAS family of nations — and it may very well happen sooner rather than later. Either during the summit or right before it, Obama is widely expected to announce a rollback of punishing U.S. restrictions against Cuban-Americans hoping to visit their families in Cuba.
The deeply unpopular rules — which limit exiles to visiting Cuba once every three years and spending no more than two weeks at a time on the island, among other things — were imposed by the Bush administration as a means of depriving the Castro regime of dollars. But Obama campaigned in Florida on a promise to end those restrictions, and few expect him to break that promise.
"There is a strong likelihood that Obama will announce policy changes prior to the summit," said Daniel Erikson, director of Caribbean programs at Inter-American Dialogue, a Washington think tank. "Loosening travel restrictions would be the easy thing to do and defuse tensions at the summit."
Some countries — most notably Venezuela, Ecuador and Bolivia — are already insisting that Cuba be re-admitted into the OAS as a full member. But that's very unlikely to happen as long as Raúl Castro is running Cuba.
"I'm sure some political leaders will want to raise that issue," said Ramdin. "We should not expect overnight solutions. At the same time, whatever approach we take should be principled. We still have issues [with Cuba] in terms of multiparty democracy and human rights. A lot needs to be done."
Ramdin, walking a fine line between calling for radical change and not wanting to offend the United States — which bankrolls 60 percent of the OAS budget — said delicately that "what we need at this point is a dialogue" with the Castro government.
"That's why I'm suggesting that the OAS needs a mandate to be able to start this process of dialogue," Ramdin told The Diplomat."The OAS has only been able to assist countries when we were able to communicate. At this point, we don't have that opportunity to communicate with Cuba because we don't have a mandate. And I think the OAS should be involved in that process."