The road to China
Robert Buddan, Contributor
The road that has taken recent Jamaican delegations to China has paved the way for Chinese assistance to Jamaica for road building, among other things. Chinese assistance in roadways and other ways goes back to our negotiations with China from 2004-5. There are three very important lessons here for Jamaica in how we conduct business with others and what responsibilities we take at home to be accountable.
The first lesson is about the importance of foreign policy. Since Independence, Jamaica has alternated between two foreign policies, the 'we are with the west' policy of the Jamaica Labour Party (JLP) and the third world (North-South and South-South) policy of the People's National Party (PNP). The latter has emphasised ideological and military non-alignment and solidarity with countries pursuing development models more appropriate to former colonies and dependencies.
The Michael Manley government established diplomatic relations with communist China in 1972 at a time when relations with communist countries were very unpopular in the west. By 2005, the Patterson administration had raised the level of these relations to their highest. Jamaica opened an embassy in China in that year, the arrangement for which the JLP had unnecessarily criticised.
Penny wise, pound foolish
Jamaica-China trade reached US$500 million by 2006. This is why China now says it wants to continue what had been started in infrastructure, construction, mining, tourism, sports and culture. Our trade with China actually slipped by 30 per cent in 2009. In February 2008, the vice-premier of China visited Jamaica and the new JLP government had the benefit of a wide-ranging agreement that had been worked out since 2005. Still, Prime Minister Bruce Golding failed to visit China, deciding to stay at home, to save the cost of foreign travel, he said. I criticised that decision last year. Foreign travel cannot be equated with foreign affairs. This was a 'penny-wise, pound-foolish' policy.
The Chinese had invited the PNP to visit and the highest-level delegation of Portia Simpson Miller (Sports), Bobby Pickersgill (infrastructure and transport), Anthony Hylton (foreign affairs and foreign trade), Peter Bunting (national security), and Angela Brown-Burke (Vice-president) visited for five eye-opening days over November-December 2009.
The Jamaican delegation was very impressed by the futuristic development planning it saw in China. This should not be surprising. China is a planned and disciplined society. Jamaica is neither. The delegation received appreciation for the party's role in building Jamaica-China relations. Happily, the current government eventually followed the road to China because its back was against the wall.
It visited China in February when the imminent International Monetary Fund (IMF) agreement offered no budget support to Jamaica. Jamaica had gone into domestic debt default and the private market for loans was effectively closed. The GOJ apparently discovered it could take up and build on a previously agreed framework co-operation agreement on trade financing between the Ex-Im Bank of China and the Ex-Im Bank of Jamaica for a US$100 million line of credit.
DEMOCRACY BY PARLIAMENT
This takes us to another lesson we should learn. Parliament is a very important forum for our democracy in international relations, not just for domestic matters. This is worth emphasising because the Government has not been forthcoming about its spending and revenue plans and its talks with the IMF. It has not always taken the nation's business to Parliament when it should have. It now seems to take that attitude in its dealings with China as well.
Robert Pickersgill of the Opposition says government has signed a contract with a company called China Harbour. The Chinese Ex-Im Bank will lend the GOJ US$340 million to finance the contract and another US$40 million will come from the Road Maintenance Fund (RMF). The 2009 gas tax is supposed to go towards the RMF. Questions have already been asked in parliament of the minister of finance, if the promised amount from the gas tax is being paid into the RMF.
On top of this uncertainty, the RMF is already paying back a Venezuelan PetroCaribe loan. The Opposition is not of the view that the RMF can pay back the Venezuelans and the Chinese at the same time. Pickersgill is concerned that the RMF will not be able to meet its obligations to the Chinese.
The Opposition says it has been asking questions in Parliament about the RMF over the past year and it still has not been answered. Government, it believes, is paying road contractors out of the RMF an amount nearly that which it had paid into the RMF from the gas tax. So, if about all of the gas tax has gone to pay contractors and the RMF is already being used to repay the Venezuelans, then it wonders where the money is going to come from to repay the Chinese.
In fact, the RMF is already contracted to other prior road projects and those contractors have to be paid too. But because of the unaccountability to Parliament, we don't know who those contractors and their sub-contractors are, what parts of the island or constituencies are to be served by these contracts and how much the contracts cost. The minister of finance had promised that a board would have been appointed to oversee the contracts of the RMF, but Pickersgill said that commitment has not been kept.
A third lesson is about what is at stake here. There is the reputation of the Government. It is no secret that it is in pawn to the IMF and it needs a spending programme in case it has to seize an opportunity to call an election. It doesn't matter that Golding had argued stridently for fixed election dates. The government wants to keep all its options open.
But the country's reputation with the Chinese and any other potential lender or investor is also at stake. The IMF has limited our borrowing. The private market is closed. The multilaterals are at or close to their ceiling for Jamaica. We are happy for Chinese assistance. The Chinese might be very interested to hear the Government answer Pickersgill's questions in Parliament. After all, the IMF demands that we pass quarterly tests and will be monitoring our monthly data.
The IMF wants to make sure capitalist money is being spent for capitalism. China is not asking that we spend communist money for communism but whatever we spend it for we should spend it honestly. There is real concern that the Chinese loan might go towards political spending. There is concern that contracts might go to political hacks, who would be expected to give kickbacks to the party's election campaign. The framework cooperation agreement referred to above is for 'productive purposes'. Political spending would not be classified as that.
We have fallen low in our international credit worthiness, if not in our very credibility for financial management. China will be one of the two or three most important countries in the world for the rest of our lives and our children's lives. We need to be credible in our dealings with them. Our Parliament has a role to play in this. The Office of the Contractor General has a role. If we can't pay debts we are pretending we can, our children will have to pay them back. They will have to deal with China.
Robert Buddan lectures in the Department of Government, Mona, UWI. Email: