Sat | Aug 24, 2019

Editorial | Will Gov’t buy out the Russians, too?

Published:Wednesday | January 23, 2019 | 12:21 AM

The Jamaican Government’s emboldened stance against the Nicolás Maduro regime opens the door to a more muscular foreign-policy ideology and strategy, particularly as they relate to important industries and treasured assets.

The Andrew Holness administration’s intention to forcibly repossess the 49 per cent stake in Petrojam owned by PDV Caribe, a subsidiary of Venezuelan oil company PDVSA, has been interpreted by critics as expropriation, or a hostile takeover.

However, the Government’s defence has mainly been grounded on the existential threat that faces Petrojam, Jamaica’s oil refinery, because its infrastructure is obsolete; there may be sanctions linked to international obligations; and more than half its revenue will be wiped out as the island’s power provider transitions from heavy fuel oil to liquefied natural gas.

Whether or not these premises enunciated by Foreign Minister Kamina Johnson Smith make a compelling case, the Government has committed itself down the wicket hell for leather. It will either launch into the stands or be clean bowled.

It is in the context of this more aggressive posture that the Holness administration should tell the Jamaica people if it will be similarly committed to a takeover of the Windalco bauxite company, which operates in Ewarton, St Catherine, and also holds the mothballed plant at Kirkvine, Manchester, and which is owned by Russian oligarch Oleg Deripaska through his company UC Rusal.

Hobbled by hurdles

Windalco has been hobbled by correspondent banking hurdles because it is caught in the midst of a duel between global powers the United States and Russia. Hundreds of jobs have been under threat because of punitive sanctions undertaken by the Trump administration.

Jamaica had sold its seven per cent stake in Windalco more than four years ago, but it may have to recover full ownership if it is to insulate itself from vulnerability to future economic and diplomatic sanctions by the United States.

Last April, Robert Montague, then mining minister, reportedly flirted with the idea of taking over Windalco in “the national interest” but as a “last resort”. Mr Montague might have to revisit that position.

With the US Treasury Department indicating that it would shortly lift sanctions against UC Rusal, there have been sighs of relief from, and cautious optimism among, both government officials and bauxite stakeholders.

But a New York Times exposé published yesterday shows not only how tenuous is the rapprochement between the Trump White House and Deripaska, but how fragile and intricate the diplomatic web is woven.

Though on the surface, Mr Deripaska, an ally of Russian President Vladimir Putin, will decrease his share spread in En+, holding parent company of UC Rusal, from 70 per cent to approximately 45 per cent, a confidential document titled ‘Terms of Removal’ indicates that family, friends and organisations associated with the oligarch, including a foundation founded by Mr Deripaska, will still have a substantial stake.

Diplomatic intrigue may suggest that the shadowy agreements with Mr Deripaska converge with the narrative of Donald Trump’s complicated, complicitous and gratuitous relationship with Mr Putin and the Kremlin.

Shadowy agreement

But more narrowly, it means that Mr Deripaska’s links with UC Rusal, and thus Jamaican bauxite plants, still expose this important national industry, and hundreds of direct and indirect jobs, to grave threat.

What may have been scripted as punitive action against Mr Deripaska could very well be clever public-relations manoeuvring by the White House, or it might have been the victim of more astute negotiators.

Nonetheless, Jamaica’s interests, based on the emerging diplomacy of Prime Minister Andrew Holness and Mrs Johnson Smith, remain in danger if they turn on the increasing volatility of Donald Trump.

And should the Democrats take the White House in 2021, Mr Deripaska, for whom they hold no sympathy, will face even more hostility, which will further compromise the fortunes of the En+ Group and its bauxite operations in Jamaica.

What’s your play, Mr Holness?