Letter to the Editor – Symptoms of a FAILED STATE

<<< By Forrester Carroll

Dear Editor,

Haiti, like Somalia; Zimbabwe; Iraq; Afghanistan and many others, is a failed state; and what are some of the core symptoms of a State that has failed? Its inability to function under any system of governance; the loss of physical control of its territory; the loss of the monopoly on legitimate use of physical force within its borders; erosion of legitimate authority to make collective decisions; a sustained, serious lack of resources to provide reasonable public services and the inability to interact, as a full member, with the international community. In other words-in a nutshell-a failed state or nation is characterized by complete social, political and economic failure; sounds familiar?

Immediate indicators of a State that is in the process of failing include-among other things-a weak and ineffective central government; a central government that has little or no control, physically, over its territory; widespread corruption; out of control criminality and sharp economic decline. Look around you; do you see, or don’t you, an ineffective central government? Out of control criminal activity? Widespread, government-sponsored, corruption? An economy that has been in a “decline mode” since 2007? A country that is on the brink of declaring bankruptcy?

Haiti’s attempts at democracy, these last several years, have all failed and for good reason. For without the semblance of order, control and ability-in terms of adherence to the standards outlined above-they would never be successful in their efforts at stabilization. For all intents and purposes, the country has survived for decades, barely, on the handouts (aid) from the international community, sympathetic to its dilemma. The question is, Can the “failed-state” status, akin to Haiti and all the other nations in the world suffering the same fates, ever happen to us, here, in the Bahamas? I used to think not but now, given the recklessness I’ve seen in governance, within the past three years under this FNM Administration? I am not so sure of my position, anymore. It should be noted that any nation which hangs its very survival on tourism and or financial services alone, has an endemic vulnerability for failing. Especially so, in our case, if those who run things, are as reckless as the Hubert A Ingraham, Administration.

Bahamas Press ran a very disturbing account, on its website last week of a report, coming out of the belly of the Public Treasury, to the effect that the country’s Treasury is broke-b.r.o.k.e. Now there was a time when most of us would have immediately discounted such a suggestion as rubbish; a time when most of us would never agree that the public treasury could ever lack funding. There was a time when scores of us felt that any amount of money the government needed, it could either print or extract it from the citizenry in additional taxes. There was a time when most of us would never agree that a government of the Bahamas could be confronted with “shortfalls” in its revenue; but that was then and this is now. The events occurring, under this FNM government, within these past three years, however, have certainly awaken me to the reality, and convinced me, that a country, like the Bahamas, can indeed, exhaust its available assets. I’ve come to realize that a country, like ours, can indeed squander its ability to access much needed additional capital, through taxation and or borrowings, to the degree that it could find its self in the unenviable position, where we are today-up the creek without a paddle. A very precarious position, indeed. Analyze our state-of-affairs, with an open mind, free from all the political baggage, and one can only conclude that the Bahamas is on a very slippery path to becoming an international casualty-a “failed state,” if you will.

An ideal Budget would be one that actually produces a surplus, as opposed to a deficit; or one that, at the very least, produces a break-even situation. In the Bahamas we have not had a budget, reflecting any of the above two category positions in years. We have actually, for many years now, been spending more money than we have been taking in, which has necessitated-whenever that situation occurred-us borrowing money to pay for the shortfalls. This is never a desirable situation for any country, to find itself in, especially in times of serious economic declines, as are being experienced. It is important, then, that cool heads prevail, when faced with the kind of serious conditions, with which we are presently confronted.  The degree to which our revenue has and continues to decline, and erode, is something which, the government should not be taking so likely, as it appears they are. The government’s own report, which I certainly accept with a couple grains of salt, shows that the country’s income for the first months of this fiscal period has drastically declined by some 18%, while simultaneously its expenditure has increased by some 50% more. And then, it should not be forgotten, that when S&P downgraded us from an “A-“ rating to a BBB+ in 2009, this greatly hampered our ability to access foreign currency loans. If we are able to borrow, it would be at astronomical, unaffordable, re-payment interest rates; this is not good.

Under the FNM government, within the last three years, the country has undergone a complete metamorphosis. We’ve gone from a virtual position of full employment and a bee hive of economic activity, under the PLP government and Perry Christie, to full un-employment; virtually no economic activity; drastic revenue declines; a dismantling of the middle class; the highest criminal activity ever experienced in our history; a total loss of assets by thousands of Bahamians; thousands of households being denied the use of basic essential services, because they cannot afford them; the misery index at its highest in history; thousands of public sector workers displaced; thousands of civil servants forced into early retirement without being paid their pensions and other disengagement packages, to date;  overtime taken away from customs and immigration officers for no good and valid reason; the shut down of the Bahamas Development Bank; the discontinuation of the student loan program; the closure of the training camp in Andros; another nine(9) police officers retired, in early December; teachers employed in August 2009, but not paid a dime of their salary to January 2010; need I go on?

I shall never tire of reminding you that the FNM is only a “borrow and spend” administration. They know nothing about fiscal discipline and their history of governance is littered with all the relevant, evidence to prove my claim. Kindly take a little walk with me, if you don’t mind, down memory lane. They came to office in 1992, after a 25year stint of PLP rule. The national debt was at $970 million and the country was having some economic challenges due to the after affects of the Gulf War, which ended in February 1991. They quickly ran through more than $1 billion of borrowed money and by 2001, the national debt had climbed to a whopping $2.1 billion. Do the arithmetic and you will see that between 1992 and 2001-in only 9 short years, at helm-Ingraham borrowed and spent $1.13 billion. The FNM’s term in office, however, did not end until 2002-a year later-when the voters kicked them out, with the election of the PLP. While they were spending the last year of their second term, however, they began the process to gain parliament’s approval for the borrowing of another $125 million. What was their reason for borrowing this additional $125 million, you ask? To pay the hundreds of thousands of dollars, owed to local Bahamian vendors who were screaming, at the top of their heads, for their money.  The PLP, and its new incoming Administration, did not abort the process already in progress, initiated by the FNM, to borrow the $125 million, as Hubert Ingraham did when he cancelled projects started and approved by the PLP, in 2007, but we (PLP) concluded the parliamentary process and paid off most of the outstanding debts left by Ingraham and his fiscal indiscipline crew. When  you add the $125 million (which was really their borrowing) to the $1.13 billion, they borrowed in the previous 9 years the total, borrowed and spent, in the ten years they were in office-between 1992-2002- totaled to a huge $1.255 billion. This amount increased the national debt to the whopping $2.225 billion, which is where it stood when the PLP took office in 2002. The Ingraham Administration has already borrowed and spent, in the three years, since May 2007 so far in this their third parliamentary term, almost another $1 billion, and the country is in a worse off condition than it has ever been in its short history.

From where I sit, these five years will be another record “borrow and spend term” for the FNM, should they survive their full parliamentary period. With almost $1 billion already borrowed and spent, the revenue not performing and the country’s monthly expenses already increased by more than fifty per cent over 2008, due to the incredible increasing numbers of Bahamians applying for social services assistance on a daily basis, I believe all our records, to date,  will be shattered. The government will, in all probability, be obliged to continue their efforts to find sources for funding through borrowings, but the S&P downgrade, in 2009, has greatly hampered the country’s ability to access foreign currency, for borrowing. Lenders, because of the downgrade will see us as too bad a risk and will no doubt refuse us. If we are, in fact, able to find an institution, which would agree to take a chance on us, the interest rate on the re-payments would probably be charged at double the usual and that would be very foolish and terribly unwise, for us to pursue. But do you know both Ingraham and Laing are not known to worry very much about the adverse affects, on the country, resulting from asinine decisions they make. There is one thing that is for sure; the country’s recurring expenditure will not change in the short or medium term, so if the revenue continues, in decline, at the rapid rate at which it has been performing so far, in this fiscal period, trouble will abound in the land. I won’t be very surprised if I were to awaken one morning and heard the news broadcast that the government had collapsed; or that the country couldn’t pay its bills; or that public sector workers were being given IOUs in lieu of salary payments; or that the B$ had lost it’s parity to the US$ (devalued; in other words), I repeat; I would not be shocked. We are treading on thin ice, here, with this bungling crew of “Gilligan Island” misfits. I have heard, from somewhat credible sources, that the country’s deputy prime minister may have provided funding, to the government for last two months, in order to pay the salaries of some civil servants; incredible? I would say; but like I told you before, it will not surprise me to hear any shocking news, given our precarious financial position presently.

Mama and papa always warned us that blood could never come out of stone so don’t try. We need you voters, in the Elizabeth by-election, to send the FNM government a very strong, clear and precise message, by rejecting the suckers soundly, at the polls, on the 16th February 2010. Take all the gifts and jobs and money wrapped up in the T-Shirts, they give you, but go to the polls and vote, proudly, PLP for your children’s future. They will come to you now because they need your vote, but when the election is over; bush crack and man gone-We can’t find Jerry Roker in town.

What causes a State to fail? Bad governance; what caused Haiti to fail? Bad governance; what can cause the Bahamas to fail? Bad governance. The prophet Isaiah in his book, chapter 3 and verse 12, warned Judah saying; “O my people! Can’t you see what fools your rulers (leaders) are? Weak as women! Foolish as little children playing King. True leaders? No, misleaders! Leading you down the garden path to destruction.” Unquote!!Need I say more?

Forrester J Carroll J.P
Freeport, Grand Bahama
27th January 2010