BARBADOS PARLIAMENTARY ELECTION CAMPAIGN:

C O N F I D E N T I A L BRIDGETOWN 001902 SIPDIS SIPDIS STATE FOR WHA/CAR SOUTHCOM ALSO FOR POLAD E.O. 12958: DECL: 10/26/2016 TAGS: PGOV PREL PINR ECON BB XL SUBJECT: BARBADOS PARLIAMENTARY ELECTION CAMPAIGN: UNSURPRISINGLY, IT'S THE ECONOMY... REF: BRIDGETOWN 1879 Classified By: DCM MARY ELLEN T. GILROY FOR REASONS 1.4 (b) AND (d). ¶1. (C) Summary: Barbados' next parliamentary elections will likely be decided by pocketbook issues and the voters' judgment of which party is best prepared to address their concerns over the cost of living, economy, and unemployment. Even though a recent poll gave his government poor marks on its handling of these same issues, Prime Minister Owen Arthur remains the political leader most trusted to be able to grapple with Barbados' economic challenges and therefore the man to beat in the next election. End Summary. ¶2. (C) As Barbados' two major parties, the ruling Barbados Labour Party (BLP) and the Democratic Labour Party (DLP), prepare themselves for the next parliamentary elections, they are increasingly focusing on economic issues as the key planks in their policy platforms. This focus is unsurprising, given the relative ideological agreement between the two major parties on all key issues, whether they be foreign or domestic policy- related. On foreign policy, Barbados, like most countries in the Caribbean, toes the CARICOM consensus line, and the public's focus rarely extends beyond the island and the region. The continuing process of regional integration under the CARICOM Single Market Economy (CSME) has become somewhat controversial, but the controversy is rooted in Barbadian fears over migration, both legal and illegal, and its impact on jobs and wages, rather than their opposition to the government's overall policy in support of greater regional integration. Thus, the opposition DLP has not attacked CSME and its goals, but instead has made only a few, vague promises for better protection of Barbadian workers. ¶3. (U) Similarly, domestic issues, like crime, have not generated major disagreements between the two parties. In a September poll, only 12 percent of respondents cited crime as a major issue of concern. In August, Prime Minister Arthur flirted for a short while with a family values-type message, but this was done in the context of attacking rampant and ostentatious consumerism, an element of what Prime Minister Arthur termed the country's "bashment mentality," which he blamed as one of the chief causes of the rising consumer debt. ¶4. (C) Although Barbados ranks among the region's most prosperous economies, with a per capita GDP above USD 17,000, Barbadians remain uncertain about their economic prospects. When asked to name the major issue of concern in a recent poll, respondents identified the cost of living (33.9 percent),economy (13.5 percent),and unemployment (12 percent). With inflation hovering around 7 percent and spiraling energy prices, the concerns over the high cost of living are not unfounded. In the same September poll, respondents rated the BLP-led government's performance on cost of living issues essentially as a failure: this despite the government's remarkable run over the past 12 years in steering the economy out of the financial crisis of the early 1990's and toward a decade of steady growth, which was interrupted only briefly in 2001 and 2002 by a post-9/11 economic slowdown. ¶5. (C) The BLP recognized that this high level of dissatisfaction with its economic leadership presents an opening for the opposition. The government has responded with a bit of smoke and mirrors to spruce up its image. For example, the government announced the formation of a task force to monitor prices, especially food prices. In a less than subtle act of blame-shifting, Prime Minister Arthur also recently called on the private sector to come up with solutions to the rising prices. Among the more concrete measures, the government announced that it will not renew the 6 percent import tariff surcharge when it expires next year. The government also vehemently rejected the IMF's recent call on Barbados to increase its VAT rates and prices charged by major public enterprises in order to shore up the government's fiscal position. ¶6. (C) The DLP, in the meantime, has taken advantage of every opportunity to highlight the country's economic problems. Housing, prices, unemployment have all featured prominently on the DLP's agenda. In addition, the DLP's shadow finance minister, Dr. David Estwick, has been hammering away at the government's management of the public debt in a series of newspaper columns. According to the IMF and the Central Bank of Barbados, government-guaranteed debt is now above 80 percent, therefore well above the recommended IMF guideline of 60 to 70 percent. According to DLP charges, even the 80 percent estimate may not present a complete picture, given the current government's propensity for extrabudgetary expenditures. In a recent conversation with PolOff, a prominent political commentator and businessman expressed surprise that debt has attracted so much attention because it is not an issue that usually arouses much interest among Barbados' voters. However, if a recent PricewaterhouseCoopers report on the region's banking industry is correct in suggesting that Barbadians may be borrowing to maintain their living standards, then the issue of debt may have a very personal dimension for some voters. ¶7. (C) Comment: Overall, Barbados' economy is still in good shape, and the upcoming Cricket World Cup activities may further boost the country's economic performance in 2007. However, inflationary pressures, rising external current account deficit, and higher government debt present challenges that Prime Minister Arthur's government has not been entirely successful in addressing. Although somewhat unhappy and feeling squeezed, the consumers/voters have not yet turned their backs on Prime Minister Arthur, who remains the country's most popular politician. He is therefore well placed to win the next parliamentary election, which may be called sooner than originally expected (reftel). However, in the long-term interests of his government and party, Prime Minister Arthur will have to tackle the economic challenges facing Barbados to ensure that his government's and party's popularity rests on a solid record of achievement and is not just one-person deep. End Comment. KRAMER