Social and Economic Underpinnings - The Mandate for Change

• Author: Wendell Mottley
• Profession: New York-based Investment Banker having previously served as executive director of the company which eventually became the pivot of Trinidad and Tobago s natural gas-led industrialization and as Minister of Finance, credited with playing a decisive role in setting Trinidad and Tobago on a sustained path of growth from 1994 onwards
• Pages: 118-143

118

TRINIDAD AND TOBAGO INDUSTRIAL POLICY 1959–2008

SOCIAL AND ECONOMIC

UNDERPINNINGS –

THE MANDATE FOR CHANGE

Energy-dominant industrial policy has a proud and successful

history in Trinidad and Tobago, and has served the country well by

causing the location of heavy industry in the country and in

generating wealth. But, as Sophocles has cautioned, you have to

wait till evening to say how splendid the day has been. It is now

high noon in Trinidad and Tobago! As will be demonstrated, it is

time for a different approach to preserve and build on those early

gains. Trinidad and Tobago can now plan confidently over a twenty

year horizon based on gas contracts now in place for twenty years

(mainly LNG). The transition will require continuing macro-

economic stability, large investments in social transformation, in

making Trinidad and Tobago a learning society, in savings lodged

overseas, and in physical infrastructure, investment promotion and

judicious industrial subsidies over the medium to long term in a

broader base of industry and services.

I commented earlier on the strong element of dualism in the

Trinidad and Tobago economy. I noted limits to the transference of

energy-sector dynamism to the rest of the economy; and pointed

out the dangers of political and social discord inherent in such

marked dualism. Whereas it may be unwise to assign quantitative

values to the probability of civil conflict arising in Trinidad and

Tobago, we should nevertheless note that energy industrialization

has made the state itself a rich prize, for the government is the locus

through which very large hydrocarbon rents are collected and

recycled. 1 It does not augur well for stability that there is competition

for this prize in a political system characterized by deepening ethnic

divisions, and widening income inequality. Trinidad and Tobago

Chapter Seven

119

SOCIAL AND ECONOMIC UNDERPINNINGS

already experienced in 1990 an attempted coup d’état by radical

Islamists who continue to be active. The international drug trade is

deepening its penetration and corruption of the country’s institutions.

A broad swathe of the society and economy continues to be isolated

from the prosperity and modernity of the energy-sector. One of the

observable features about a resurgent natural resource economy is

the high visibility and the resulting pursuit of wealth that put pressure

on the already antiquated institutions of the state, magnifying their

inefficiencies and allowing characterizations of the government as

incompetent, out of touch, or uncaring.

In Trinidad and Tobago, a nexus exists between economic

dualization and rising crime, between 24-per cent levels of poverty

and the influence of drug lords and Islamic fundamentalists on youth;

and between the struggle of rival gangs to capture the proceeds of

poorly supervised government work/welfare programmes and the

high incidence of violent street crime. 2 There is also a nexus between

the growth of a criminal economy which feeds on drug proceeds

and recycled government rents, leading to cascading levels of

corruption at the base of state administration, thus creating pervasive

perceptions of personal and national insecurity.

The state seems not fully aware of the danger posed by these

interactions and, consequently, has resisted bold and urgent new

departures. The seduction of governments and elites in petro-states

by their energy-sectors explains this in part. The sector is modern,

wealthy, technologically sophisticated and First World in its business

practice. As we saw earlier, the removal of the financial constraint

causes the state to underestimate or ignore risks, and overestimate

its power. Everybody likes to be associated with success, not to least,

senior government officials who see themselves driving a successful

modern economy. Most of the top echelons of Trinidad and Tobago

society live in a privileged energy-fed cocoon, penetrated only by

the rising incidence of violent crime. Energy is power- addictive.

Every utterance from the head of OPEC is followed by the world

capital markets as though an oracle had spoken. In the same way,

the Prime Minister of Trinidad and Tobago gets to meet with the

President of the United States because LNG has now become

strategic to the U.S./Trinidad and Tobago relationship.