By David Jessop
It is hard to imagine nations less like one another than the islands of the Caribbean and Iceland. Despite this the government in Reykjavik recently made clear that it shares many of the region’s concerns and wishes to develop a stronger relationship with the Caribbean.
Late last month Iceland’s Minister of Foreign Affairs, Mrs Ingibjörg Sólrún Gísladóttir, told participants at a conference in Barbados that her small sub-Arctic northern nation of 0.3 million people had much in common with the Caribbean.
Climate apart, she said, Iceland as a small island state shares many features with the Caribbean. These include small population, limited resources, remoteness, susceptibility to natural disasters, a disproportionate dependence on international trade and high communications and transport costs.
Smallness was, she said, often a state of mind. “The right combination of confidence, conviction and realism yields the best results.”
Coincidentally the visit occurred as Iceland was starting a battle internationally aimed at protecting its economy from financial predators threatening to undermine its economic integrity.
In March Iceland began an international investigation into a speculative attack by hedge funds on its currency, banking system and stock market. Newspaper reports suggest that a small group of hedge funds managers and a major US investment bank on a visit to Iceland in January decided, because of weaknesses in Iceland’s banking and currency system, that they would in effect bet against the collapse of the nation’s banks and its economy, allegedly using rumours spread in third countries aimed at causing a run on the nations’ financial system.
In response Iceland came out fighting and is now undertaking a global investigation aimed at trying to bring charges against those involved in the alleged conspiracy.
At the Barbados conference, Caribbean participants were told about Reykjavik’s Island Growth Initiative that was established earlier this year to manage development cooperation with small island developing states.
During the three days of meetings in Barbados much of the discussion focused on practical co-operation under this programme in areas of shared concern. By the time the Icelandic team from government, the public sector and business returned to the cold, three main areas of co-operation had been identified: mobilising technical and financial resources to address climate change; encouraging investment in renewable energy including the geothermal sector; and the sharing of experience on sustainable fisheries. The discussions also considered the possibility of agreements on double taxation, investment, transportation and social issues.This may all seem marginal in relation to the regular meetings and power summits that Caribbean governments attend in Washington or in Europe, but Iceland’s ability to take its case to the world despite its smallness warrants more than passing attention.
Its interest is indicative that in areas beyond security and trade there may be utility in the region developing relationships with nations that are small but successful and understand Caribbean constraints.
The fact that Iceland and other small but wealthy economies in the Middle and Far East and elsewhere have recently focused on the region suggests there would be value in considering closer relations with such nations if their smallness and economic interests coincide with shared global concerns.
For most of the post-independence period the Caribbean’s relationships have been either with the metropolitan powers through trade and security in its widest sense, or with the nations of Africa and the Pacific that have had a similar historic experience. However, these are now in flux.
In the case of a much less interested US and Europe it is likely that over time a part of their global and hemispheric role could be filled by nations like China, India and Brazil. But while these nations have much greater sympathy with the challenges of small island development the likelihood is that as they become more engaged in global power politics and multilateral decision making, the attention they will pay to smaller states will diminish.
And while the sense of solidarity and shared experience remains with the ACP, Europe’s unspoken policy of disaggregating this group through regional Economic Partnership Agreements, the absence of any viable trade or transport link between the ACP regions, and the unlikely prospect of significant cross investment between the ACP regions, all suggest that the utility of this special relationship will fade.
This points to a fact, still hard for many in a far from integrated region to accept: the old order has gone and they are largely on their own. This suggests that as economic globalisation proceeds and the last vestiges of preference disappear, the region has no option other than to rely on its own ability to build a new and genuinely single market and economy whether based on services or a new approach to agriculture and fisheries. It also implies that since it does not have the capital to achieve this on its own it will require significant flows of foreign investment and for a while yet the support of international institutions.
Some academics argue, correctly in my view, that the US and Europe have made this process more difficult through previously pursuing agricultural and development policies that have distorted the Caribbean economy and agriculture in particular, causing problems the region now has to overcome. However, such retrospection does not suggest a viable way forward. Nor does it address why in the last decade the region has not pursued more assiduously the regional integration process to resist the worst effects of economic globalisation or come up with an alternative and viable approach to growth.
All of this is of course much easier to write than achieve. Almost all smaller developing nations including those with alternative development models such as Cuba are struggling to address the challenge of economic globalisation in ways that spread its benefits. For example in its case and setting aside the obvious constraint of the US embargo, it is trying to create a socialist market economy that can be integrated with the region and the wider world in a manner that does not destroy its social objectives.
If the Caribbean is not to become, as some in the region fear, the poodle of Europe or US economic interests, time might be spent on better understanding how diverse countries such as Iceland, Ireland, Dubai, Mauritius and other small or once-poor nations have driven forward their economic development and global inter-relationships to their own benefit.
David Jessop is the Director of the Caribbean Council and can be contacted at david.jessop@caribbean-council.org
Previous columns can be found at www.caribbean-council.org
