Identifier
Created
Classification
Origin
06BRIDGETOWN1057
2006-06-16 20:45:00
CONFIDENTIAL
Embassy Bridgetown
Cable title:  

MOTTLEYNOMICS - THE RETURN OF THE STATE?

Tags:  ECON EIND PGOV EFIN PINR BB XL 
pdf how-to read a cable
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C O N F I D E N T I A L BRIDGETOWN 001057 

SIPDIS

SIPDIS

SOUTHCOM ALSO FOR POLAD

E.O. 12958: DECL: 06/16/2016
TAGS: ECON EIND PGOV EFIN PINR BB XL
SUBJECT: MOTTLEYNOMICS - THE RETURN OF THE STATE?

Classified By: DCM Mary Ellen T. Gilroy for reasons 1.4 (b) and (d).

C O N F I D E N T I A L BRIDGETOWN 001057

SIPDIS

SIPDIS

SOUTHCOM ALSO FOR POLAD

E.O. 12958: DECL: 06/16/2016
TAGS: ECON EIND PGOV EFIN PINR BB XL
SUBJECT: MOTTLEYNOMICS - THE RETURN OF THE STATE?

Classified By: DCM Mary Ellen T. Gilroy for reasons 1.4 (b) and (d).


1. (C) Summary: Barbados Deputy Prime Minister Mia Mottley
recently announced a plan for massive government investment
in the ailing furniture and garment industries. She touted
the idea as a way to reduce Barbados' persistent trade
deficit and slow the outflow of foreign exchange. Her
proposal, made at a conference on industrial development,
attracted universal criticism from other conference
participants and represented a radical departure from Prime
Minister Owen Arthur's policies of encouraging private
investment and divesting state enterprises. This apparent
divergence on economic policy may create a divide between
Arthur and Mottley, his heir apparent as the ruling Barbados
Labour Party (BLP) leader. In the unlikely event that
Mottley's policies were to prevail, Barbados could be stuck
with inefficient and uncompetitive state manufacturing
enterprises that would increase the already high national
debt and become a drain on government resources. End Summary.


2. (SBU) Barbados Deputy Prime Minister and Minister of
Economic Development Mia Amor Mottley delivered the feature
address at a May 31 conference celebrating the fiftieth
anniversary of the Barbados Investment and Development
Corporation (BIDC). In a clever and eloquent address, she
highlighted the history of the furniture and garment
industries in Barbados, tying them to slavery and colonialism
and exalting the creativity of local designers. Uttering
phrases evoking nationalism and emotional attachment to the
past, she presented an unlikely vision of world-class
furniture and garments coming out of Barbados. Criticizing
the unwillingness of private capital to invest in these two
industries, she said the Government of Barbados (GOB) must
take an "entrepreneurial role" in Barbados' industrial
development, meaning the GOB should invest heavily in the

furniture and garment industries and run the industries in a
public/private partnership. (Note: Private capital has
probably stayed away because there is little hope of making a
profit from manufacturing furniture and garments in Barbados.
The country has some of the highest wages in CARICOM and
would have to import the necessary raw materials for these
industries (lumber and fabric). End Note.)

--------------
Bio Note on Mottley
--------------


3. (C) Mottley easily dominates any gathering with her
commanding physical presence, razor-sharp mind, and eloquent
speech delivered in a distinctive contralto voice. She
demonstrated her leadership skills when she quickly organized
the police and military to restore order after inmates rioted
and burned down the country's only prison in March 2005.
Mottley was the youngest ever lawyer in Barbados to attain
the rank of Queen's Counsel, and has been in the leadership
of the ruling Barbados Labour Party for over a decade. Her
competence has given way to arrogance at times, and she has
been known to walk out of negotiations and assume knowledge
of subjects in which she has little expertise, such as
business and economic policy. Many observers viewed PM
Arthur's decision to move her from Attorney General to
Minister of Economic Development in the February cabinet
shuffle as a way to round out her skills in preparation for a
run for Prime Minister.

--------------
A Real Problem - A Bad Solution
--------------


4. (C) As a small, import-dependent island with a fixed
currency and minimal exports, Barbados has a structural trade
deficit and a foreign exchange problem. Rising standards of
living coupled with easier access to credit have increased
demand for imports, thus making the country a victim of its
own economic success. Except for a financial crisis in the
early 1990's, Barbados has managed to earn enough foreign
exchange from tourism, other service exports, and investment
to maintain its reserves at a sustainable level. GOB efforts
to right this trade imbalance had previously focused on
encouraging exports through private investment. This new
"Mottleynomics" of state investment in manufacturing could
drive up the country's already-high debt while creating two
more inefficient state-run albatrosses similar to the sugar
industry.

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Instant Criticism
--------------

5. (SBU) As Ministers tend to do when attending conferences
in Barbados, Mottley entered the conference room, gave her
speech, and left immediately. Subsequent presenters
indirectly rebutted her assertions by focusing on the need
for private investment and for the country to produce what it
has a competitive advantage in producing. Michael Howard, a
professor at the University of the West Indies, made the most
direct criticism of Mottleynomics. Arguing that furniture
and garments are the "way of the past," he stated that
Barbados could not compete with Trinidad in manufacturing.
Howard's remark drew titters of knowing laughter from the
assembled audience of business leaders.

--------------
Comment
--------------


6. (C) Mottley was a relatively competent if disorganized
Attorney General, but she seems truly out of place as
Minister of Economic Development. Lacking experience and
training in business and economics, Mottley has refused to
consult with business leaders in Barbados and has apparently
embraced discredited statist import substitution policies.
The obvious divergence in approach between the Deputy Prime
Minister/Minister of Economic Development and her mentor, PM
Arthur, may signal a divide in the BLP over economic policy.
Because it seems highly improbable that Mottley can persuade
the PM, a forward-leaning economist, to support GOB
investment in the furniture and garment industries, her
backward-looking proposal is likely to be short-lived.
KRAMER