574 COHA Report Dominica: The Caribbean’s Next “Terror Island”?

In 1983, while aboard a New York subway, I noticed someone reading that day’s issue of the New York Post. The front page headline screamed, “YANKS INVADE TERROR ISLAND.” It was early on in the Reagan administration and the U.S. had just militarily intervened in the Caribbean nation of Grenada, ending the island’s short-lived socialist experiment. The landing was based on the pretext that the Reagan administration had suspected that the new commercial airport—which Cuban laborers were aiding Grenada to construct on the island—actually would be used to transport Cuban troops to fight alongside African revolutionaries. Today, another Caribbean nation, Dominica, has been forging links with leftist Cuba and Venezuela. Authorities on that small Caribbean island had better watch out, or they may be presiding over this generation’s “Terror Island,” but this time the name of the island is Dominica.

A tiny nation of 133 square miles whose population could barely fill the Rose Bowl, Grenada had posed no strategic threat to the U.S. But Maurice Bishop of the leftist New Jewel Movement, which had ruled Grenada since 1979, had become positively irksome to Washington. Inspired at least as much by Bob Marley as by Karl Marx, Bishop, a young LSE graduate and an island intellectual and visionary, had embarked on an ambitious social and economic program aimed at diversifying agriculture, developing cooperatives, and creating an agro-industrial base that was leading to a reduction in food imports. Bishop also established a free health service and secondary education system, resulting in a markedly higher literacy rate on the island.

The Reagan administration sought to halt the New Jewel Movement in its tracks: economic assistance through the World Bank and the Caribbean Development Bank was mysteriously blocked, aid from the International Monetary Fund was restricted, and any participation in the Caribbean Basin Initiative was dismissed out of hand. Reagan even refused to meet with Bishop when the Grenadian Prime Minister visited Washington in June, 1983. According to the Washington Post, the CIA had been engaged all along in a campaign to destabilize Grenada both politically and economically.

Grenada: Bitter History
Grenada’s controversial domestic and foreign policies would soon give the White House the pretext to intervene. Bishop had sought to align Grenada with Cuba and had welcomed hundreds of skilled airport construction laborers, medical personnel, and military advisers from the Communist island to translate their skills to their Grenadian counterparts. After a hard core Marxist-Leninist island official named Bernard Coard led a military coup placing Bishop and other moderates under arrest, Bishop’s supporters were at first able to liberate their prime minister. However events deteriorated rapidly after army troops massacred dozens of protesters, as well as murdering Bishop along with two of his cabinet members.

Reagan immediately invented the scenario that the Cubans were behind the anti-Bishop coup and his assassination. In reality however, Fidel Castro was outraged by events on the island and quickly condemned Coard’s actions. Angry Cuban officials threatened Grenada with a cutoff of assistance and declared that its forces would only fire in self defense. On October 25, several thousand U.S. troops invaded the island, ousted the government, and took full control of Grenada within two hours.

In seeking to justify its actions, the Reagan administration had invented the claim that the Cubans were undertaking a military buildup on Grenada even though less than 100 of the 750 Cubans on the island were military personnel. Washington also claimed that its troop deployment was aimed at protecting American lives and to safeguard U.S. students at a local medical school. However, scores of Americans had left the island prior to the invasion without incident and their lives were never in danger. In addition, U.S. officials had instructed a cooperating Prime Minister Tom Adams of the nearby island of Barbados to close down its airport so U.S. students couldn’t flee Grenada. This gave U.S. authorities the cover to invade the island, insisting all the time that the U.S. students were in mortal danger.

The Return of Progressive Politics Through PetroCaribe
Though the Reagan administration was successful at extirpating Cuban influence from Grenada and defeating prospects for the further development of progressive political change there, the U.S. now faces a new ideological challenge in the Caribbean. Twenty five years after the fall of the New Jewel Movement, Venezuelan leader Hugo Chávez has been able to recruit critical political leverage throughout the region through the skillful use of diplomatic petropower.

Venezuela is today the biggest oil exporter in the Americas, and under the so-called PetroCaribe agreement, heavily-indebted countries throughout the Caribbean basin may trade agricultural goods for concessionary oil prices. Launched in 2005, PetroCaribe has been able to alleviate many Caribbean nations’ energy woes and lessen their dependence on U.S. financial aid.

Chávez has benefited in turn by expanding his regional profile and broadening the appeal of his socialist agenda. In recent years, the greatest beneficiaries of PetroCaribe have been Cuba, the Dominican Republic, Jamaica, and Nicaragua. During a PetroCaribe summit in August 2007, Chávez remarked, “the Caribbean shouldn’t have problems this century and beyond.”

The most recent Caribbean country to have joined Chávez’s alliance is the small island nation of Dominica, which may well become “Terror Island” for the State Department. That institution could soon publicly vent its displeasure over the island’s growing ties with Caracas. Dominica has signed up for ALBA (or Bolivarian Alternative to the Americas), a scheme designed by Venezuela to promote reciprocal trade and solidarity amongst poor Latin American nations. Specifically, the initiative is designed to counteract Washington’s push for corporate free trade through bilateral mechanisms (Dominica is also a member of PetroCaribe and receives subsidized Venezuelan oil as part of the initiative).

“ALBA continues to grow as a new geopolitical, geoeconomic area and seeks the construction of a better world for those of us in the Caribbean and Latin America,” Chávez has remarked. Always the artful provocateur, Chávez warns of the looming economic crisis in the U.S. and has urged his closest Latin American and Caribbean allies to begin withdrawing billions of dollars in their international reserves from U.S. banks.

Dominica’s Grinding Poverty
Dominica, which is more than twice as large as Grenada, is characterized by mountains and tropical rainforest. It was the last of the Caribbean islands to be colonized by Europeans, largely due to fierce resistance by the native Caribs. France ceded possession of its former colony to Great Britain in 1763, which declared Dominica a British colony in 1805. Almost all Dominicans are descendants of African slaves brought in by colonial planters in the 18th century. Of particular interest, Dominica is the only island in the eastern Caribbean to retain some of its pre-Columbian population–the Carib Indians–about 3,000 of whom live today on the island’s east coast.

In 1978, the Commonwealth of Dominica was granted independence by the United Kingdom. However, self-rule did little to solve the many problems stemming from centuries of economic underdevelopment. Chronic economic malaise was compounded by the severe impact of the hurricanes in 1979 and 1980. With relatively few natural resources, Dominica’s 70,000 people have faced grinding poverty and many have left for some of the more prosperous nearby islands, the United Kingdom, the U.S., and Canada.

The Banana Island
By the end of the 1980s, Dominica’s economy had somewhat recovered, but weakened again in the 1990s, owing to a decrease in banana prices. Bananas and other tropical products still dominate Dominica’s economy, and almost one-third of the labor force depends on cultivating the fruit on family parcels. Unfortunately, this sector is highly vulnerable to weather conditions such as hurricanes and to external global economic movement affecting commodity prices.

The banana sector has been on the decline since 1990, falling from 25% of GDP in 1990 to 18% in 2005. As a result of adverse WTO rulings, the European Union phased out preferential prices for producers in its former colonies. Therefore, Dominica has tried to reduce its reliance on bananas, its traditional and main export earner. In an attempt to boost the economy, Dominica is increasingly looking to create niche markets in eco-agriculture and eco-tourism. The island is also diversifying its agricultural sector by introducing coffee, patchouli, aloe vera, cut flowers and exotic fruits such as mangoes, guavas, and papayas.

Dominica has a fledgling tourist industry but poor infrastructure and the absence of a commercial-sized airport has impeded the sector’s growth. The island is mostly volcanic and has few beaches. As a result, tourism has developed more slowly than on neighboring islands. In November 2004, Dominica suffered an earthquake which damaged structures throughout the island. Even worse, landslides were brought on by heavy rains. Dominica has several areas of volcanic activity, with an estimated 25% chance of a large eruption occurring in the next 25 years. This increases the uncertainty and risk factors for potential investors on the island.

The Rise of Roosevelt Skerrit
When Prime Minister Pierre Charles died in 2004, Roosevelt Skerrit took over the reins of government. A former education minister, Skerrit studied English and psychology in the U.S. before becoming a teacher and lecturer on Dominica. Skerrit was Dominica’s youngest Prime Minister—upon assuming office he was a mere 31 years old. The political neophyte was chosen by Skerrit’s Dominica Labour Party to succeed Charles.

Skerrit assumed the reins of power at a troubled time. Two years prior to his ascension, Dominica had requested a loan from the International Monetary Fund. Although the financial institution ostensibly agreed (extending $4.3 million in a standby accord), the island was obliged to implement an IMF-mandated adjustment program. Under IMF stipulations, Dominica had to reduce its fiscal deficit by nearly half to 5% of GDP. In order to comply with the agency’s prescription, the government was forced to undertake painful revenue measures through a new round of taxes while reducing expenditure.

Programs that would introduce cuts in public service led to a week-long strike in February 2003. After concluding its mid-term review in March 2003, the IMF announced that Dominica, as of yet, had not been able to reduce its fiscal deficit and emphasized the need for the government to undertake substantial new measures to cool down the economy. In 2003, the government agreed to cut public service salaries by 5%. The next year, the authorities agreed to comply with yet more painful measures such as reducing the size of public expenditures, reducing wages and increasing the retirement age from 55 to 60.

Not surprisingly, the IMF and its user unfriendly role on the island rapidly proved to be politically controversial. In 2005, Skerrit’s party won the general elections; the campaign focused on the tough International Monetary Fund austerity program which had boosted growth but at the cost of increased taxes along with job cuts.

Skerrit Forges Alliances
Facing a sluggish economy, Skerrit, looking for a way out, has forged a close relationship with regional leftist leaders such as Fidel Castro and Hugo Chávez. Responding to a shortage of health professionals, Cuba has sent dozens of medical personnel to train nurses on Dominica. In addition, Cuba has agreed to establish an intensive care unit at Dominica’s major hospital. In 2006, Skerrit remarked, “I wish to thank the people of Cuba. It is through their hard work for humanity that they are able to assist persons all over the world.”

Furthermore, as Chávez flexes his diplomatic skills in the Caribbean in opposition to the U.S.’ traditional regional goals and aspirations, there are signs that some small nations are expectantly entering into Venezuela’s geopolitical orbit. Indeed, there’s been a flurry of diplomatic exchanges between Skerrit and Chávez. Recently, the Venezuelan leader donated several millions of dollars to Skerrit to help him build housing on the island and upgrade the agricultural sector. Additionally, Chávez has offered to increase the number of university scholarships available to Dominican students from 50 to 100. Jumping to the aid of a friend, in 2007 Venezuela provided crucial aid to the small island to help pave its roads.

Generously, Chávez was the first leader to offer assistance to Dominica after Hurricane Dean, which slammed into the island in August of 2007, causing particularly widespread damage to the agricultural sector and infrastructure. The destruction caused by Dean was estimated at 20 percent of Dominica’s Gross Domestic Product ($162 million), and destroyed much of what was left of the island’s banana industry. Economic growth slowed to 1 percent in 2007, largely as a result of the hurricane.

One of Chávez’s more interesting initiatives on the island is a program to help Dominica’s Carib Indians. Caracas is offering $4.5 million to construct housing and a school on Indian lands. The Venezuelan leader also has agreed to set up a special credit bureau which shall extend $3.2 million in loans to local members. According to Dominican officials, 70% of the Indians live in poverty. It’s not surprising that Chávez has singled out the Caribs for help: for years, the Venezuelan leader has sought to assist his own country’s indigenous peoples by providing land grants and economic assistance programs.

More Petro Diplomacy
Even more importantly perhaps, for some time Chávez has nursed plans to build an oil refinery on the island as part of PetroCaribe. Chávez has said that Dominica’s refinery would be a jumping-off point for distributing Venezuelan oil to other eastern Caribbean islands. Venezuela is seeking to build a string of refineries capable of handling its oil shipments to the area so that they will be less dependent on fuel stock coming from third countries or using U.S. facilities.

Valued at some $76 million, the Dominican refinery was scheduled to produce close to 10,000 barrels of oil per day. Venezuela was poised to finish the operational studies for the refinery when Skerrit called for a halt to the plan. The Dominican Prime Minister said that his country needs more time to analyze the project, which has been locally criticized as being incompatible with plans to promote eco-tourism.

Peanuts in Economic Aid
Regardless of whether the refinery plans eventually go through, however, it is undeniable that a number of small countries such as Dominica have embraced Chávez’s initiatives, and that poses thorny geopolitical questions for Washington. How might the U.S. view growing economic and energy integration involving Venezuela and some needy Caribbean nations? Could one envisage a return of the Big Stick policies of the Reagan era?

For the moment, such a prospect may seem far off, but the possibility of Dominica emerging as a “Terror Island” for a radicalized U.S. regional policy is very real. For one thing, an estimated 4,500 Americans reside on Dominica and the White House would not wish to endanger their status by some provocative move. The Peace Corps also provides technical assistance to the island, and has posted its volunteers on the island to work on education, youth development, and health projects. Dominica remains a beneficiary of the Caribbean Basin Initiative, a Reagan era trade vehicle that grants duty-free entry into the U.S. for many locally produced goods.

For the time being, relations between the U.S. and Dominica are friendly, and the island receives economic assistance channeled through the World Bank and the Caribbean Development Bank, as well as via the U.S. Agency for International Development (USAID). In 2005, Skerrit signed an agreement with USAID under which it agreed to provide $2 million to the public and private sector. During the signing ceremony, the Prime Minister remarked that he hoped the agreement would represent “a deepening, a strengthening of relations between Dominica and the United States.”

Two million dollars is hardly the kind of cash that can reverse grinding poverty on the island. Two years later, a frustrated Skerrit had concluded that the U.S. should be more engaged in the Caribbean region. He told the U.S. Ambassador that the United States should help to finance small community-based projects to complement the work of Peace Corps volunteers on the island.

Skerrit is nowhere near to implementing the kind of socialist agenda that Maurice Bishop had in mind when he moved into Grenada’s Government House. But as Dominica pursues an independent foreign policy, what might be the limit of U.S. tolerance now that the island has joined ALBA, an organization which is very close to Chavez’s heart?

Back To the “Terror Island?”
In the event that John McCain is elected president, the stage could be set for confrontation with the Dominica leadership. The Arizona Senator has chaired the International Republican Institute (IRI) since 1993. Ostensibly a non-partisan, democracy-building outfit, in reality the IRI serves as an instrument to advance and promote a far right Republican foreign policy agenda. More a cloak-and-dagger operation than a conventional democratic-promoting research group, IRI has aligned itself with some of the most antidemocratic movements in the Third World.

In Haiti, IRI aggressively funded anti-Aristide groups and in Venezuela, IRI generously financed anti-Chávez civil society operations. When Venezuelan opposition politicians, union and community leaders went to Washington on a private mission to meet with U.S. officials just a month before the April 2002 coup, IRI picked up the bill. The IRI also helped to fund the corrupt Confederation of Venezuelan Workers (which played a major role in the anti-Chávez destabilization campaign leading up to the coup) and Súmate, whose director was at the Presidential palace with the other supporters of the coup, which later failed.

McCain at the Helm
For more than a decade, IRI chairman McCain has taken a personal interest in IRI’s Cuba work and vigorously praised the IRI-funded anti-Castro opposition. The Arizona Senator has called Cuba “a national security threat,” adding that “as president, I will not passively await the long overdue demise of the Castro dictatorship . . . The Cuban people have waited long enough.” Meanwhile, McCain’s most influential advisers on Latin American affairs are Cuban Americans from Florida, including far right Congressional figures such as House legislators Lincoln Diaz-Balart and Ileana Ros Lehtinen.

McCain seeks to confront countries such as Venezuela and Cuba by encouraging U.S. partnership with rightist regimes that support American-style free trade and despise Havana, such as the Czech Republic, Slovakia and Poland. Concerned about growing ties between Cuba and Venezuela, McCain said “He [Chávez] aspires to be this generation’s [Fidel] Castro. I think the people of Venezuela ought to look at the standard of living in Cuba before they would embrace such a thing.”

To make matters worse, the Chair of IRI has sought to promote neo-conservative figures from the Bush regime such as John Bolton, who has staked out an exceedingly hard line position on U.S.-Latin America relations. During the latter’s confirmation hearings in the Senate, McCain urged his Democratic colleagues to approve the diplomat’s nomination as UN ambassador quickly. Bolton has been a super hawk not only on Iran but also Venezuela. At the time, McCain, who has referred to Chávez as a “wacko,” said it was important to confirm Bolton, and with him there, the U.S. would be able to talk back to “two-bit dictators” like the Venezuelan leader.

With his long history of taking a combative stance against the Latin American left, McCain might seek to isolate or put pressure on the Skerrit government to sever its ties to Venezuela. Just as Reagan sought to make an example of Grenada, demonstrating that the U.S. would not brook an independent foreign and economic policy operating so close to its shores, McCain might seek to take the offensive against such Chávez initiatives as ALBA and PetroCaribe. The prospect of a tough operator like McCain taking command in Washington must genuinely worry those committed to a new emphasis on regional self-determination. With the grim fate of Grenada and Chile under Salvador Allende in mind, tiny Dominica has good reason to be apprehensive over its approaching destiny, whatever that might prove to be.

This analysis was prepared by Senior Research Fellow Nikolas Kozloff
February 26th, 2008