Jamaica Caught in The Debt Trap

Jamaica and the Politics of Debt Trap

by Jeb Sprague - TeleSur

Debt is a drain on Jamaica, and also functions to block any potential efforts to structurally transform the nation or to ramp up social investment.

With a population of just under three million, the nation of Jamaica remains ensnared in debt. The debt trap is most apparent when looked at from the state’s interest payments as a percentage of the government’s non-grant revenue, which currently amounts to 40%. Jamaica’s continual caving in to the IMF has meant severe austerity measures, freezing of wages, cutting of spending, and it has left the country with the highest debt interest burden worldwide.

A drain on the country, it also functions to block any potential efforts to structurally transform the nation or to ramp up social investment.

Politics & Cynicism

Speaking with Jamaicans from a wide variety of backgrounds during a recent bout of research in and around Kingston, it became clear that there is widespread cynicism about the country’s political system. Many are critical of the rapacious global financial structure that they find themselves in and the rising levels of inequality that surround—a heavily present tension. This is reflected in the class consciousness of local reggae and dancehall music with lyrics about poor urban youth, the sufferer’s, the haves and the have nots, and politicians taking advantage. New more progressive reggae groups are even replacing homophobic "battyman" disses with "capitalist" as the target of derision.

With 1.2 million people living below the poverty line, rising inequality, and officially 13.8 percent unemployment (with many more in precarious work or forced to hustle to make ends meet), the country also faces declining medical and educational systems in drastic need of assistance. So why aren’t popular mobilizations occurring to shift priorities and to default on the debt or at the very least disengage from the most onerous policies of the IMF (as the country's late Prime Minister Michael Manley once advocated)? Can Jamaica’s political establishment even consider such possibilities?

While Argentina's historic and successful defaulting on $100 billion of debt at the end of 2001 was followed by years of economic growth and a massive decrease in poverty, such defaults have had more mixed results in small Caribbean states, such as with the defaults of Belize and Grenada followed by state officials agreeing to stringent IMF austerity measures. More radical adjustments could be possible, especially as creditors would rather get something over nothing and as the IFIs (international financial institutions) own large parts of Jamaica's debt and could be pressured by global campaigners to go along with a default. Groups such as Jubilee USA are campaigning to rid economically fragile nations, such as those in the Caribbean, of crushing debt.

After the completion of Jamaica’s recent IMF (International Monetary Fund) agreement and debt exchange, only domestically held debt was reduced, while the principal was not reduced. This means that institutions, such as the World Bank, IDB (Inter American Development Bank), and IMF, that offer Jamaica new loans are the same institutions that Jamaica continues to owe huge sums to. With record low growth over the last twenty years, continued engagement with the IFIs is squeezing the government during a time of recession, committing it to slashing spending even more, such as on public sector workers.

Committed to debt payment and austerity, Jamaica’s two main political parties are largely concerned with remaking Jamaica into a more globally competitive platform for transnational capital. The two parties are heavily reliant on funding from the top tiers of Jamaican society. Most from the upper echelons of Jamaican society as well as the outward looking middle strata are opposed to empowering the poor. The state increasingly is becoming run like a business enterprise geared toward top local and foreign investors, with some unwanted domestic necessities (or baggage) it must nonetheless attend to.

Policy and ideological differences have diminished over the years between the two major parties – the JLP (Jamaican Labor Party) and the PNP (People’s National Party). While the PNP has been in office for the majority of time over the past two decades (maintaining support among some in lower income neighborhoods, its "garrison" constituencies, and among important groups such as with many school teachers), its policies over the past three decades have shifted from its redistributionist and social democracy policies of the 1970’s toward a neoliberal position. It’s rival, the JLP, with a more knee-jerk pro-business line, maintains a somewhat more sizable following among local elites and sectors of the middle class but also has backers within certain “garrison” neighborhoods where it has pumped out patronage over the years. The PNP has remained more popular among the popular classes, with Prime Minister Portia Simpson-Miller, also known as “Sista P” or “Mama P”, considered to have a deep connection with many poor Jamaicans.

People's political passions (and anger) are thus channeled through a two party system, a situation made all the more difficult to change as rampant out-migration and brain drain lead many to understandably see leaving as the alternative rather than challenging the status quo. Cynicism over political motives is high, intensified by corruption scandals within the government.

Internationally, the PNP maintains some of its sovereign streak: supporting deepening ties with Cuba, opposing the war in Iraq, sheltering Haiti’s democratically elected President following his illegal 2004 ouster by the U.S. Bush regime, taking part in CARICOM’s reparations commission, and joining Venezuela's PetroCaribe Alliance to Washington’s chagrin. Yet the Jamaican state's foreign policies rarely challenge major economic interests, especially as the country's state technocrats and political leaders orientate more and more toward the global economy.

Without the funds gained through PetroCaribe in recent years, Jamaica might have taken an even more painful plan from the IMF. So it is worrisome then that with a tightening global oil market, PetroCaribe looks less cost-effective, with the Venezuelan state recently offloading some of its PetroCaribe debt to Goldman Sachs so as to obtain more rapidly part of the value.

A collection of problems face Jamaica: from the large informal economy, to a low-level of tax collection, and massive annual debt payments. The state has sought to avoid the tough decisions that need to be made, such as patrolling local tax dodging companies and seeking out an alternative to the continued IMF deals. Instead informal and unregulated capital is rampant, and politicians don’t dare consider a break with the IFIs. Many I spoke with in Kingston seem to have shrinking expectations of government, part of a broader de-radicalization trend in parts of the Caribbean where the left has little infrastructure and less of an organized or mobilized base.

Global Capitalism

Jamaica’s deepened integration with the global economy is clear: from the spread of transnational finance capital, to the growing array of global fast food chains, to mini-malls, and the expansion of gated middle class neighborhoods.

Along with the underdevelopment brought on through today’s global system and earlier historical eras of colonialism and slavery, we can recognize in the objective social and class conditions major shifts occurring through the economic restructuring of Jamaican society through globalization. Leading local groups of capital are profiting through the service sector, finance, tourism, and through the stores integrated into the global import system (with the country heavily reliant on foreign imports). The onetime international division of labor has given way to a global division of labor, where capitalist production has become flexibilized and segmented through chains of production that functionally integrate across borders. Specialists move more frequently to temporary jobs abroad, such as with the use of Chinese engineers in a major ongoing road construction project in the country.

Production in Jamaica has grown slowly, especially in comparison to nearby Puerto Rico or the Dominican Republic. The country’s half a dozen free trade zones (FTZs) are undergoing a transformation to special economic zones (SEZs), the difference being that the new SEZ’s eliminate the 15% cap on how much of the production within the zone can be sold within the country. I visited one such EPZ along Kingston’s wharf. The goal, state officials explain, is to stimulate more global investment in production, so that large companies can setup in Jamaica and cluster with local companies: a reverse enclave development model meant to foster development locally that is integrated with the global economy.

Meanwhile, transnational cruise ship companies and the global mining industry maintain major operations in the country but in recent times contribute little in taxes. Labor inputs into the mining sector have declined over recent decades, and in line with global trends the state gain's less and less from the industry. With regard to the highly profitable cruise ship industry; Caribbean states failed in earlier attempts to jointly negotiate higher levies on what states’ receive per visiting cruise passenger, a campaign that should be revitalized.

Bending over backwards to compete for foreign investment, one of the country’s most ecologically sensitive bays may soon be developed into a deep-water port hub for a China based transnational conglomerate. This comes at a time when scientific data on global warming suggests dangerous consequences for the region, in addition to other harmful factors, that have already resulted in a 50% decline of the region’s corral reefs since the 1970s.

From the Past, to the Future

The undermining of Jamaica’s popular movement’s has been a long and painful process, from the crushing of militant labor in the 1930s, to the destabilization of the PNP’s “third way” project (during the first administration of Manley) in the 1970’s, to the post-cold war collapse of the Marxist WPJ (Worker's Party of Jamaica). Prior to his passing, the leftwing Jamaican journalist John Maxwell observed how many of the country’s former radicals have since become “intellectual leaders of free market theology”. Calling to mind Margaret Thatcher’s infamous line: “There is no alternative”.

It’s difficult to guess where the left could resurge in Jamaica. A diverse array of community groups exist in the lower income neighborhoods, but the focus on NGO work has steadily marginalized radical alternatives. Activists I spoke to argued that popular education and organizing against police brutality were among the most pressing concerns.

Grassroots organizers for example working with families from Tivoli Gardens (one of the country’s lowest income neighborhoods and with an estimated 40-60% unemployment), have pushed the state into carrying out an enquiry into the heavy handed police and army raid under a previous administration (headed by then JLP Prime Minister Bruce Golding) that targeted a narco boss but cost the lives (officially) of 73 people (or possibly up to 200, as locals claim). At the time of the attack the U.S. embassy in Kingston was heavily pressuring Jamaica’s government to take action, with the U.S. Department of Homeland Security providing a surveillance aircraft for the operation.

The government of Jamaica has yet to provide a commitment to compensate the victims of the violent 2010 Tivoli Gardens “incursion” (what residents of the poor neighborhood describe as a massacre). Now is the time to make it crystal clear that the Jamaican and U.S. governments have a legal, moral, and political duty to deal with the suffering.

In fact it was first through the facilitation of JLP leaders and U.S. intelligence services in the 1970s and early 1980s that paramilitary groups formed in Kingston (meant at first to violently target popular neighborhoods supportive of the PNP). Overtime the paramilitary gunmen evolved into a narco-trafficking ring heavily active in extortion and well known in the crime world; echoes of the cold-war drug-war nexus.

Of course many other specific conditions exist within Jamaican society. It has for instance a large diaspora population living abroad producing a reverse flow of remittances that has grown massively over recent decades. Another unique dynamic is that Jamaica has more churches per capita than any other country. Amidst economic hard times, scapegoating sexual minorities has become more commonplace, such as with the evangelical protestant “anti-buggery” campaigners that have launched in Kingston some of the largest demonstrations and marches in recent memory. Meanwhile, an estimated 3-5% of the population identify as Rastafarians--a decentralized segment of the population with pan-Africanist politics, yet (similar to the large evangelical community) many hold deeply homophobic views.

Moving forward, it will be grassroots organizing, the youth, and lower income communities pressing for a unified and emancipatory (not sectarian or chauvinist) alternative that might best aim to shift the structural conditions toward empowering the poor majority. At the very least, movements from below can put pressure on the two party system currently in power. Vital for this struggle is to grow local organizing and create tighter transnational bonds with grassroots groups and popular movements abroad and work to strengthen new regional alternatives such as ALBA. For emancipatory politics to reemerge in Jamaica its core energy will need to emanate from the poor and grassroots, from the communities that are most dispossessed and marginalized by the rightward drift of the nation’s domestic politics and the country’s heightening integration with global capitalism. Faced with understandable cynicism and intensely negative structural conditions the future at times appears bleak and unmovable, but human society and its future is what we make of it--a reality we need not abandon.