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‘We have lost all that money can buy and replace,’ said Roosevelt Skerrit, the prime minister of Dominica, where 98 per cent of the buildings are damaged.
Dominica is already heavily indebted, and the IMF ranked the island as at high risk of a debt crisis even before the devastation caused by Hurricane Maria. Now a petition to the World Bank and IMF calls for all lenders to suspend debt payments from countries drastically impacted by hurricanes in recent weeks.
Past hurricanes are one of the reasons why Dominica and other Caribbean countries are already heavily indebted. Just two years ago, Dominica was hit by Hurricane Erika, which is estimated to have caused losses of 90 per cent of GDP, as well as killing 30 people and leaving over 500 homeless.
The prime minister of Antigua and Barbuda made an appeal for the country’s debt to be written off following Hurricane Irma. Speaking at the UN General Assembly, he said the cost of rebuilding from Hurricane Irma would be around $250 million – that’s 15 per cent of the country’s GDP or $2,500 per person.
But Caribbean countries are among many that have had their debt problems ignored for decades. Jamaica has effectively been in a debt crisis since the 1970s, with continued government cuts just leading to a stagnating economy. The current IMF mandated economic programme on the island includes austerity more than two times greater than that being pushed on Greece by the Eurozone.
In the Eastern Caribbean, many countries suffered an economic shock in the 1990s, when American companies used the World Trade Organisation to make the EU import bananas and sugar from Latin America on the same terms as from the Caribbean. The smaller Caribbean producers could not compete with the US companies in Latin America, and production was decimated. Debts were taken on in an attempt to cope.
In contrast to the financial debts of Caribbean countries, there are much bigger debts owed the other way round. One is the economic impact of colonial history. As a taxi driver told me when I visited Grenada in 2013: ‘England bled us dry for many years of our cocoa and nutmeg, being made rich whilst we were made poor. It’s time for them to give something back. We really need your help in getting the debt written off.’
Another is the impact of climate change. Warmer seas mean there is more energy to drive the devastating power of hurricanes, and higher sea levels to begin with before hurricanes dump water onto the land. The devastating impact of storms across the Caribbean can only be expected to get worse.
In the long term, rebuilding the islands requires finally delivering debt cancellation to get debts down to a sustainable level. Reconstruction aid should be given as grants, not loans, and better trade terms would help the economies to be self-sufficient. Grants could support adaptation to the inevitable impacts of climate change, and the rest of the world needs to take on board a radical reduction in carbon dioxide emissions to stop climate change being even worse.
Right now, Dominica, Antigua and other countries need as much immediate help as possible, and the suspension of debt payments is the least they should receive.
Tim Jones is policy and campaigns officer at Jubilee Debt Campaign
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