Sovereignty for sale – $27 million China loan for Dominica’s Presidential Palace

So why is a country which has 40% of its citizens living below its poverty line, has a growth of less than 3% with exports of around $94 million against imports of over $300 million and an external debt of more than $220 million, seeking to borrow $27 million from the Chinese government for the building of a Presidential Palace for the country?

Sounds fishy, or as they say in Dominica, is there ‘bobol’ about? Well fishy it seems to be and as for bobol, read on.

1) The Caribbean islands and Dominica, in particular, are in dire straits. They are quite frankly desperate for money as foreign aid has practically dried up. Former aid partners – USA, UK and the EU – are struggling to contain their own problems which have been brought about by the global financial crisis. The islands need investment from anyone willing to give it and the Chinese are well aware of that.

2) But why a loan for the building of a Presidential Palace?  Well, Dominica is one of Caribbean islands which has recognised China‘s ‘One China’ principle vis-a-vis Taiwan. As such, it has been rewarded with an aid package from the Chinese of more than $122 million. The public package is for the building of a new stadium, roads, schools and hospital, but the private package could be worth a lot more to the government it is rumoured.  The Dominica government argues that borrowing millions of dollars from China for construction of a new Presidental Palace will not indebt Dominica as if it can’t pay the debt back (which is more or less certain), the Chinese will write it off, which is their custom.

3) The Caribbean islands and Dominica, in particular, are no-hopers economically.  All of the islands have trade deficits that are getting bigger and bigger year by year and as such they can be easily persuaded by generous grants, some might say ‘bribes’,  to back China’s ‘One China’ principle with regard to Taiwan. The Chinese offer lending conditions which are perceived to be not too onerous as the Chinese are aware that their ‘loans’ are practically grants as they are very unlikely to be repaid and the agreements’ texts normally state no conditions.  Furthermore, there are various fringe benefits for Dominica government officials like fully paid official visits to China etc.

China’s ‘economic evasion’ and the rise of democratic unrest and corruption in Dominica

Prime Minister Skerritt of Dominica is a controversial figure. He is staunchly pro-China on the island and has angered locals by his failure to explain how he became a millionaire from his time in office when his state salary is around $5000 per month.  Also his ex-lawyer, Stephen Isidore is under investigation and a court case is pending for him to explain how $6 million disappeared from the accounts of his former partner’s firm, Mr.G.O.N. Emanuel. Furthermore, Mr.Emanuel, was subject to a hitherto unexplained murder attempt via firebombing of his house last December. So far no arrests have been made and there is concern on the island with regard to the deafening silence from Mr. Skerritt on the matter and the lack of action by the police, especially as Mr. Emanuel is a distinguished lawyer and former Chief Magistrate of Dominica.

Mr. Skerritt has also initiated prosecutions of members of the opposition and a former prime minister of Dominica for public order offences during peaceful protests voicing concern about the rule of law and democracy on the island. In addition, Mr. Skerritt is currently taking libel proceedings against a journalist who had asked him to explain his sudden rise to wealth. Sounds familiar?

As no strangers to autocratic rule, the Chinese are sure to be heartened and not frightened by such bold actions from Mr.Skerritt.  However, they should tread carefully as dictatorial rule historically does not sit well in the Caribbean and the wave of ‘people power’ taking place in other troubled economies could filter though to the Caribbean and upset the apple cart for a smooth ‘economic’ invasion.

So apart from a most likely increase in state corruption on this island, is there much more that Dominica needs to fear from trading its sovereignty for Chinese cash?  The African experience of China’s economic ‘invasion’ is instructive.

The Chinese reached Africa around 600 years ago with the most significant ‘invasion’ happening during the early 1900s when more than 60,000 Chinese miners worked in the South African gold industry. Fifty years later, thousands of Chinese were sent by their government to Africa to be engaged in  agricultural and construction work so as to improve ties with the former colonies.

In 1999, China-Africa trade rose from $6bn to over $90bn (£56bn) in 2009 and was split more, or less equally between  imports and exports with Africa’s natural resources – oil, iron, platinum, copper, and timber – moving east to fuel China’s factories and production back to Africa. In 2010, China’s trade with Africa was at a high of $100bn. Each year, China gives billions of pounds in grants and loans to African governments as inducements for raw material and/ or the financing of  infrastructure projects that could benefit Chinese companies.

So is Africa any worse off after the Chinese economic invasion? Perhaps Dominica should look at the African’s experience more carefully before wading into deeper waters. But at the moment, this kind of decision is not one for Dominican’s to make, it is up to their government and the Chinese know how to motivate governments to do the right thing as Mr. Skerritt and Dominicans are finding out.

Commenting is free in International Times of Dominica – let us have your views.

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