THE WINDIES - SPOT REPORTS FROM THE EASTERN

UNCLAS SECTION 01 OF 04 BRIDGETOWN 000076 SIPDIS SENSITIVE SIPDIS DEPT FOR WHA/CAR SANTO DOMINGO FOR FCS SOUTHCOM ALSO FOR POLAD E.O. 12958: N/A TAGS: PGOV PREL CPAS EAID EFIN TW XL SUBJECT: THE WINDIES - SPOT REPORTS FROM THE EASTERN CARIBBEAN - DECEMBER 2005 REGIONAL - IMF Official Concerned About PetroCaribe Debt ANTIGUA AND BARBUDA - Internet Gambling Operations to Expand DOMINICA - New Opposition Leader - Taiwanese Bank Sues Dominica - Machine-Readable Passport Introduced GRENADA - Criticism of Grenadian/Canadian MP Continues - USAID Reconstruction Program Nears Completion ST. KITTS AND NEVIS - Budget Presented to Parliament ST. LUCIA - Voter Registration Commences After Delay - Campaign Funding Becomes an Issue -------------- REGIONAL -------------- - IMF Official Concerned About PetroCaribe Debt ¶1. (U) During a recent visit to the region, International Monetary Fund (IMF) Deputy Managing Director Agustin Carstens expressed concern that Caribbean nations would take on more debt through the concessionary financing scheme offered by Venezuela's PetroCaribe oil initiative. Carstens spoke highly of government and fiscal reform measures in Antigua and St. Kitts, praised Dominica's fiscal reform efforts that are being implemented as part of an IMF economic stabilization program, and complimented Grenada's post-hurricane recovery, although he said the country still has a long way to go. Without making any specific offer of assistance, Carstens said the IMF and the Eastern Caribbean Central Bank should work together more closely to help countries in the region to reduce their debt, increase competitiveness, attract foreign investment, and prepare to "fully embrace globalization." -------------- ANTIGUA AND BARBUDA -------------- - Internet Gambling Operations to Expand ¶2. (U) The Government of Antigua and Barbuda will provide licenses to ten new Internet gambling companies that will allow them to begin operations on the island-state in 2006. Finance Minister Errol Cort said that the new companies would provide up to 500 new jobs and generate approximately US$740,000 in revenues for the Government through licensing fees. This expansion of Antigua's online gaming industry follows an April 2005 WTO decision that found certain U.S. prohibitions on Internet gambling to be in violation of global trade rules. The WTO gave the U.S. until April 2006 to bring its laws into compliance with the ruling. According to the USTR, the U.S. needs only to implement minor changes to off-track-betting regulations to comply with the WTO ruling. ¶3. (SBU) Comment: The expansion of the Antiguan online gambling industry suggests that it has been a lucrative source of revenue despite the Government's claim that the U.S. prohibition on Internet gambling has hurt its economy. Considering that the majority of Antigua's Internet gambling customers are American, this development also indicates that it will be difficult for the U.S. to regulate or curb the use of offshore gaming by Americans. BRIDGETOWN 00000076 002 OF 004 -------------- DOMINICA -------------- - New Opposition Leader ¶4. (U) The opposition United Workers Party (UWP) selected Parliamentarian and attorney Earl Williams as its new Party Leader. A committee of leading UWP members chose Williams in an 11 to 10 vote over Julius Timothy, who has served continuously as Deputy Party Leader since the UWP was founded 17 years ago. Williams replaces former Prime Minister Edison James, who led the UWP to two consecutive election defeats in 2000 and 2005. Despite handing over the UWP leadership, James remains the official Leader of the Opposition in Parliament. ¶5. (SBU) Comment: The change in UWP leadership appears to have been a successful move by Edison James to maintain control of the party while giving the appearance that he has stepped aside after suffering defeat in elections last year. James may have made a deal with certain key UWP members to keep his deputy, Julius Timothy, from moving up to the leadership role even though the close vote demonstrated considerable support for Timothy, a businessman who has been bankrolling the UWP. Timothy is said to have been deeply wounded by this treachery and it is unclear what role he will continue to play in the UWP. - Taiwanese Bank Sues Dominica ¶6. (U) A Taiwanese bank has filed suit to recover US$12 million in loans it claims the Government of Dominica has defaulted on. According to articles in Dominica and Trinidad newspapers, the Exim Bank of Taiwan filed the suit in a federal court in New York. Dominica Prime Minister Roosevelt Skerrit criticized the suit as a "politically motivated" action intended to punish the country for switching diplomatic relations from Taiwan to China in 2004. The PM denied that Dominica had defaulted on its payments to the bank. The Government of Dominica reported recently that it had reached agreement to reschedule its debt payments with creditors that hold 70 percent of the country's debt and was making progress on discussions with other creditors, including Taiwan. - Machine-Readable Passport Introduced ¶7. (U) Dominica introduced a new machine-readable passport bearing the CARICOM seal in December. The new passport is reported to contain security measures that should make it more difficult to alter than the existing non-machine- readable passports, which will be phased out as they expire. The Minister overseeing the introduction of the new passport told the press that the Government would avoid mistakes made in the issuance of passports under Dominica's economic citizenship program. He explained that approximately 3,000 people who were not born in Dominica currently hold the old passport; issuance of the new passport would "serve as a filter," according to the Minister, to insure that only those people truly entitled to a Dominica passport will have one. ¶8. (SBU) Comment: As one of the few countries in the region to maintain an active economic citizenship program, it seems unlikely that Dominica would deny the new passport to those willing to pay for it, despite the Minister's remarks. One issue the Minister did not address is the delay in completing an OAS funded program to computerize the registration of Dominica's civil records, including birth certificates. The Government of Dominica has fallen months behind in completing the project; until then, the security of the documents currently used to issue the new machine- readable passports remains questionable. -------------- GRENADA -------------- - Criticism of Grenadian/Canadian MP Continues BRIDGETOWN 00000076 003 OF 004 ¶9. (U) The Government of Prime Minister Keith Mitchell has continued its attacks on Parliamentarian Peter David, a leader of the opposition National Democratic Congress (NDC), by asserting that his 2003 election should be nullified because David holds both Canadian and Grenadian citizenship. Though untested in court, the Grenada Constitution appears to bar Members of Parliament from holding dual citizenship. If the Government is successful in removing David from Parliament and replacing him with his opponent in the 2003 election, it would give the ruling New National Party (NNP) a 9-6 advantage in Parliament, versus the slim 8-7 majority it currently holds. The issue will ultimately be decided in the courts. In the short term David's popularity has risen. - USAID Hurricane Reconstruction Program Nears Completion ¶10. (U) By the end of December, USAID had concluded most of its US$45 million Hurricane Ivan reconstruction program, full completion of which was delayed by a regional shortage of cement. Among the highlights of the program were the repair or rebuilding of about 1000 houses, 24 schools (almost half of Grenada's primary schools),11 health clinics, and other important structures such as community centers and tourist sites. The program has helped many Grenadian businesses, farmers and fishermen to get back on their feet, has trained several thousand people in new skills, and assisted the Government to pay some of its utility and other bills. Further information on the program is available on Embassy Grenada's website at http://www.spiceisle.com/homepages/usemb_gd/. -------------- ST. KITTS AND NEVIS -------------- - Tax Reform Focus of New Government Budget ¶11. (U) St. Kitts and Nevis Prime Minister Denzil Douglas presented a US$259.4 million budget to parliament in mid- December, projecting a small fiscal surplus of US$9.8 million for fiscal year 2006. The PM's budget focuses on tax reform, including revamping the property, telecom, corporate income and sales taxes. The PM proposed raising some taxes, restructuring others, and doing away with "nuisance taxes." These moves are intended to help the Government be less dependent on tariff revenues, which will allow it more easily to implement WTO-mandated tariff cuts. The new revenues will also help the country transition out of sugar production (St. Kitts ended its state-run sugar industry in 2005 due to severe financial losses) and pay down its high debt (over 150 percent of GDP). -------------- ST. LUCIA -------------- - Voter Registration Commences After Delay ¶12. (U) Voter registration has commenced after a two-month delay caused by a legal challenge to the registration process by an independent Member of Parliament, Sarah Flood- Beaubrun of the Organization for National Empowerment (ONE), a small party built around her. A court denied the MP's motion for a judicial review of the registration process that allows only the country's two main parties, the ruling St. Lucia Labor Party (SLP) and opposition United Workers' Party (UWP),to appoint scrutineers to monitor the voter registration process. Elections are constitutionally due by December 2006, although it is widely believed that Prime Minister Kenny Anthony will call the election before then. - Campaign Funding Becomes an Issue ¶13. (U) Prime Minister Kenny Anthony and opposition leader John Compton have traded charges over campaign funding in the upcoming election, with the PM suggesting that the opposition might obtain funds from Taiwan. (Note: Although St. Lucia recognizes China, the opposition leader met with the Taiwanese President in St. Vincent last year. End note.) The PM has said that campaign finance reform legislation that would prohibit political parties from BRIDGETOWN 00000076 004 OF 004 accepting money from foreign governments may be in order. The opposition leader also called for campaign finance legislation in St. Lucia after commenting unfavorably on the large sums of money spent by the ruling party in St. Vincent to secure victory in that country's December 2005 election. ¶13. (SBU) Comment: It is unlikely that St. Lucia will enact campaign finance legislation in advance of an election this year. Like other countries in the region, St. Lucia does not have campaign disclosure laws or place legal limits on campaign spending, which allows both parties to obtain unlimited funds from members of the diaspora, wealthy expatriates, and maybe even foreign governments.