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