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Grenada: Peaceful, Dynamic and Open for Business
The Wall Street Journal / December 4, 1997

By Larry Luxner

ST. GEORGE'S, Grenada -- Fourteen years after U.S. Marines invaded Grenada to overthrow a Marxist regime that had just executed its leader, tourists -- if they search hard enough -- can find scattered reminders of that bloody episode.

On the northern side of the Caribbean island, along an abandoned airstrip, sit the bombed-out hulks of Aeroflot and Cubana planes, goats and sheep tied to the rusting fuselages. And in the picturesque capital city of St. George's, motorists are greeted by graffiti that says "Thank You U.S.A. for Liberating Us -- KGB Behave!"

But for the most part, Grenada's 98,000 inhabitants have put the revolution behind them and want to get on with their lives. Likewise, the government of Prime Minister Keith Mitchell, aware that many foreigners still associate Grenada with political instability and revolution, wants potential investors -- particularly Americans -- to know that his nation is open for business.

"This country went through a tough time. We have to do a lot of things to correct our image," Mitchell said in a lengthy interview.

One of the smallest nations on Earth in terms of population, Grenada was discovered by Columbus in 1498 and settled by the French in 1650. After oscillating between French and British rule for 130 years, it was ceded to Great Britain in 1783, finally achieving independence in 1974.

Besides being the world's second-largest exporter of nutmegs (after Indonesia), Grenada's chief claim to fame is its 1979 Marxist coup that toppled Prime Minister Eric Gairy and brought Maurice Bishop to power, and Bishop's 1983 execution -- which led to President Reagan's invasion of Grenada, and Washington's eventual passage of the Caribbean Basin Initiative to stem Communist influence in the region.

Yet despite assistance from the United States, Cuba, Venezuela, Taiwan and other allies, Grenada is still essentially a poor Third World country with beautiful beaches, sparkling blue waters and spectacular mountain panoramas.

"Not a single genuine investor has come into Grenada since June 1995," charges ex-Prime Minister George Brizan, leader of the opposition National Democratic Congress. "There is no confidence and no macroeconomic climate to attract investors. The Mitchell government has no plans, no policies and they're not guided by anything except how to protect and preserve their political power."

Not true, retorts Mitchell, who projects Grenada's GDP to grow 5% this year. This growth, he said, is being fueled by Grenadians returning home from the U.S., Great Britain and Canada, as well as large infrastructure projects such as the National Stadium Complex -- a $23 million undertaking that'll include an international soccer and athletics stadium to accommodate 8,000 people, and a cricket ground that'll hold 15,000 spectators.

Anthony Boatswain, general manager of the Grenada Industrial Development Corp., says manufacturing now accounts for 8% of Grenada's total GDP. That compares to tourism, which contributes 10%, and agriculture, which accounts for 13%, down from 30% in the 1970s.

"With the declining agriculture sector over the past two decades, we have been looking at the service sector -- primarily tourism -- to take up the slack," says Boatswain. "I think we could compete with other tourist destinations, unlike manufacturing, where we are regarded as a high-priced producer due to economies of scale."

Nevertheless, Boatswain says the IDC's 198,000-square-foot Frequente Industrial Park -- down the road from Point Salines International Airport, which was begun by Cuban construction workers and finished by U.S. Marines -- is already 90% occupied. The 33,000-square-foot Seamoon Industrial Park on the island's northeastern side is less than 40% occupied at the moment.

"What we have done in Frequente is subdivide two buildings into industrial incubators. It's a controlled system whereby we provide the tenants with subsidized rates in addition to administrative assistance, and that is doing pretty well. We are making the units more manageable in terms of size."

Factory space at Frequente costs EC$8.25 (US$3.05) per square foot per year, and EC$7.00 (US$2.60) at Seamoon. Of the 33 companies operating at Frequente, two are U.S.-based: Datalogic, which employs 300 people in data processing for airlines, package-delivery services and other U.S. companies, and Abbott Laboratories, which employs 90 people in the manufacture of surgical instruments. Other foreign investors with local operations include Grenada Clayworks Ltd. (ceramics, dinnerware, pottery); Grenada Breweries Ltd. (a unit of Guinness International) and Grenada Rice Mills Ltd.

Rupert Agostini, an independent accountant and unofficial adviser to the Prime Minister's office, says Grenada's economy is shuffling along, but is impeded by high indirect taxes.

"Manufacturing investment has been very slow, almost insignificant," he said. "What has taken place is due wholly to the efforts of local, indigenous entrepreneurs."

Finton De Bourg, who founded Capital Bank International in 1988, says Grenada's banking system has traditionally not been very interested in mobilizing international capital for major projects such as tourist resorts and industrial parks.

"Since 1983, we've had millions if not hundreds of millions of dollars in projects that have been approved by government, but because we don't have a banking system in tune with that kind of thinking, most of those projects have died on the drawing board for lack of capital," said De Bourg, whose bank has assets of EC$15 million (US$5.6 million). "We are poised to fill that void by doing both domestic and international business."

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