ST. VINCENT RULE OF LAW SLUMPING, ECONOMY GRINDING

C O N F I D E N T I A L BRIDGETOWN 000229

SIPDIS

SIPDIS

STATE FOR WHA/CAR - JONATHAN MITCHELL
SOUTHCOM ALSO FOR POLAD
DS FOR DS/ITA

E.O. 12958: DECL: 04/01/2017
TAGS: PGOV ECON SNAR PREL PHUM ASEC XL VC
SUBJECT: ST. VINCENT RULE OF LAW SLUMPING, ECONOMY GRINDING
TO A HALT

REF: A. BRIDGETOWN 220

B. BRIDGETOWN 134

Classified By: PolOff Arend Zwartjes for reasons 1.4 (b) and (d).


1. (C) Summary: On the heels of the much-publicized rape case
against the Prime Minister which was discontinued by the
prosecution (Ref A),rule of law in St. Vincent and the
Grenadines has been given a public black eye. With the
murder rate among the highest in the world, meanwhile, crime
is perceived by the general population to be spiraling out of
control. A broad spectrum of Embassy contacts is gloomier
than ever regarding the nation's economic outlook, which is
riding on government-sponsored capital improvements and
remittances. St. Vincent and the Grenadines has become
polarized as every societal issue has become politicized, and
most intellectuals have been ostracized or alienated by an
increasingly demagogic PM Gonsalves. The only "success"
story? The robust drug trade, which thrives under a
government whose leadership was previously legal counsel to
drug barons - a coincidence not overlooked by many
Vincentians. End summary.

Political Chasm
--------------


2. (U) On a recent visit to St. Vincent, PolOffs encountered
constant chatter regarding the recent and ongoing rape
charges filed against SVG Prime Minister Ralph Gonsalves. As
detailed in reftel A, many Vincentians loyal to the ruling
ULP view it as a political ploy. Despite the observation by
the senior reporter for the pro-government newspaper The
Searchlight, Kirby Jackson, that it is "an accusation that is
winding its way through court system," most observers
outside of government view the government's handling of the
case as a serious affront to rule of law in the country.


3. (C) Unsurprisingly, the opposition New Democratic Party
(NDP) leaders are among the most vocal critics of the PM's
tendency to politicize all issues, noting that everything in
SVG is "based on party loyalty." Dr. Godwin Friday, the NDP
member of parliament for the Northern Grenadines, told
PolOffs that a pastor recently approached him, claiming that
the government told him that to receive the permits he needed
to build a new church, he would first need to acquire a
United Labour Party (ULP) membership card. Such political
accusations aside, more disconcerting is the number of
Embassy contacts who admit to have previously worked quite
closely with Gonsalves, but for one reason or another have
been shunned or alienated by the PM. From the leader of the
Green Party to Gonsalves's first cousin, the refrain "I used
to be close to Ralph, but..." is heard time and time again.
Unfortunately, this group represents most of the
intelligencia, technocratic elite, and leaders of the
business community.

Lawyer vs. Lawyer
--------------


4. (SBU) This fallout between Gonsalves and his former
associates mirrors the broader political divide, which pits
intellectuals and businessmen (with the opposition) against
less-educated and poorer populations. Kirby Jackson
emphasized to PolOffs the popularity of the ruling ULP with
"poorer people" due to its socialist policies, pointing out
that "policy-wise, the poor person's children are doing
well." Among SVG's intellectuals, the country's lawyers
appear especially divided among party lines: while the PM is
infamous for his role as a defense attorney for drug dealers
prior to entering public office, three of the most senior
leaders of the opposition NDP are lawyers, as are the very
vocal leaders of the St. Vincent and the Grenadines Human
Rights Association.


5. (SBU) The majority of the country's lawyers have expressed
concern for the state of rule of law in SVG, with NDP leaders
expressing "concern about police and courts" to PolOffs.
According to both Arnhim Eustace and Nicole Sylvester (of the
Human Rights Association),St. Vincent has a very high
conviction rate based on confessions (see also the Annual
Report on Human Rights for SVG). Eustace further pointed to

the various slander lawsuits that have been brought in the
past year by the government year against himself, radio
talk-show host E.J. Lynch (who was also convicted for
"causing alarm" in 2006),Senator Daniel Cummings of the NDP,
and the co-founder of the SVG Green Party.
Dr. Friday noted in relation to these suits that, "civil law
is used to squash freedom of speech". By contrast, the
managing editor of the "Vincentian" newspaper (a
self-proclaimed "close political ally" of the Prime Minister)
described such lawsuits as a check on "irresponsible speech".



6. (C) Echoing what PolOffs have heard from contacts in civil
society, Friday continued by citing the "heavy handed
approach of the police", and senior NDP leader Linton Lewis
claimed to have several clients who have been beaten by
police. Friday noted a general "suspicion of the police in
SVG" and emphasized the police force's lack of
professionalism, while Lewis claimed the force makes
promotions "based on political allegiance". Friday and the
other NDP leaders questioned the independence of the
judiciary, mentioning that the magistrate in the PM rape case
allegedly refused to hear the case out of fear of losing his
job (Sylvester told us separately the judge had admitted as
much to her personally). In closing, Friday stated, "a lot
of people in our society are giving up hope that you can have
justice in St. Vincent and the Grenadines".

Grim Economic Outlook
--------------


7. (U) Prime Minister Gonsalves has been quick to point out
that the IMF has projected real GDP growth for St. Vincent
and the Grenadines at 4.4% in 2007 and 6.2% in 2008. Despite
receiving such good marks from both the IMF and the Eastern
Caribbean Central Bank (ECCB),local businessmen and a wide
range of Embassy contacts outside government are gravely
concerned about the state of the economy. Leader of the
Opposition Arnhim Eustace noted that GDP growth is almost
entirely fueled by capital improvements, adding that there is
a lack of commodities production in SVG. According to World
Bank statistics, whereas in 2000 (just before Gonsalves was
first elected) exports comprised 53 percent of GDP in the
country, by 2006 they were only 44 percent.


8. (C) One of St. Vincent's chief exporters, the Eastern
Caribbean Group of Companies (ECGC),which runs a flour mill
and exports flour and animal feed, is struggling mightily,
largely due to government price controls on wheat products.
PM Gonsalves has indicated that he intends to sell off the
government's 20 percent stake in the company, which is the
country's second largest exporter behind the banana industry.
Marketing Manager (and former President of the SVG Chamber
of Commerce) Martin Laborde told PolOffs that there has only
been one price increase for flour in St. Vincent since 2004
(a 12 percent increase),and the price of flour in SVG is now
lower than the cost of wheat. Lamenting that "as I speak we
are losing money," Laborde criticized the short-sightedness
of the governments in the region in implementing price
controls in an attempt to ease the burden of the rising cost
of living. Noting that CARICOM heads of government recently
discussed adding even more price controls, Laborde did praise
countries such as St. Lucia and St. Kitts and Nevis, who
subsidize the flour and increase the controlled price "from
time to time."

The "College Kid" Financial Plan
--------------


9. (C) Remarkably, in many meetings with government contacts,
St. Vincent and the Grenadines' financial planning appears to
closely mirror the kind of plan you might expect from a kid
in college, with a heavy emphasis on remittances, debt
forgiveness, and scholarships. In a completely serious tone,
Kirby Jackson of the Searchlight newspaper praised the Prime
Minister for his ability to continually acquire more
scholarships for Vincentian students from foreign
governments, such as during the PM's recent trip to Turkey.
Jackson noted that largely due to scholarships secured by the
PM, the country has a surplus of about 60 trained nurses, all
of whom have moved to the United States. He also estimated

that between 200 and 300 Vincentians are studying abroad on
government scholarships, and noted that remittances are a
major percentage of GNP (estimates range from 22 to as high
as 30 percent). Minister of Tourism Glen Beache reinforced
the "college kid" planning mentality when he casually
mentioned that they "hope" to attract a high-end brand-name
resort to the island such as the Ritz-Carlton, but offered no
specifics as to what steps the government is taking to
attract investment. He also seemed to take no interest in
reaching out to yacht tourists (a primary tourism earner) who
have been put off by a recent spate of yacht robberies in St.
Vincent moorings, preferring to leave the job to unspecified
"PR people" in New York.


10. (C) While one government contact praised the Prime
Minister for recently securing debt forgiveness from the
Italian government for over $56 million USD (relating to
funding of the Ottley Hall ship-repair facility),Eustace
pointed out that the government is projected to borrow $45
million USD in 2008, thus negating the potential benefits of
the write-off. He further mentioned that the government is
beginning to borrow most of its money from private banks
instead of from the international community - at much higher
rates. Greens leader Ivan O'Neal told PolOffs that in seven
years in office, Gonsalves has borrowed over $260 million
USD. O'Neal, a trained economist, opined that the country's
growth rate is largely "based on imports and government
expenditures". In addition, several contacts pointed out
that in an effort to raise money to pay for the government's
ever-growing capital expenditures (especially for an
ill-advised airport project),the government has begun to
promote the sale of previously sacrosanct crown lands,
especially in the Grenadines.

Drug Trade Thrives
--------------


11. (C) According to contacts in both of the opposition
political parties, the local drug trade is the only industry
not slowing down in SVG. Linton Lewis of the NDP
dramatically compared the situation to the 1980s in Colombia,
where the Medellins controlled much of society. Lewis cited
a recent case in which an accused drug dealer was able to

flee the country by lawfully obtaining a copy of his birth
certificate and a passport. In Lewis's opinion, the "United
States government should give more attention to
narco-trafficking" in SVG, and suggested that the USG could
pursue a crop-substitution program such as the one used in
Bolivia. Eustace and Lewis estimated that the drug trade
could account for as much as $100 million dollars, (around 10
percent of GDP),and that around 5,000 young people are
believed to be working in the marijuana fields of St. Vincent
- somewhat offsetting the 30 percent unemployment in the
country.


12. (C) The SVG Green Party's President Ivan O'Neal posited
that a new cross-country road, currently under construction
with Taiwanese funds, could further open up the ganja trade
in St. Vincent, allowing quick and easy access to both coasts
from the northern interior, where most ganja is cultivated
(Note: St. Vincent is widely recognized as the primary and
highest-quality source of marijuana consumed in the eastern
Caribbean. End note.) O'Neal blamed much of the downturn in
St. Vincent's agricultural economy on the shift to marijuana
cultivation, estimating that marijuana could account for as
much as 40% of the island's agriculture. He noted that
agricultural production in SVG has plummeted from 37 million
USD to 3.3 million USD a year; however, instead of blaming
this downturn on the loss of preferences and the perceived
wrongdoings of the USG towards the region in the "banana
wars" of the 1990s, O'Neal instead blames bad management and
the shift to the drug trade.

COMMENT
--------------


13. (C) More than one contact noted during this trip that
there may be a "need for regional security intervention" in
St. Vincent soon. A British-born restaurateur said he was in
the region during the 1983 US-led "intervention" in Grenada
and that he saw many parallels between that situation and the

current one in SVG. Whereas on previous reporting trips
Embassy contacts have refrained from speculating about any
potential for violence or civil unrest in St. Vincent,
several contacts told PolOffs for the first time that
political violence could become a possibility if the economic
situation on the ground continues to deteriorate and the
political situation continues to ossify. While some of the
talk is clearly hyperbole born of frustration, it is becoming
increasingly clear that Gonsalves is dividing the country,
alienating the private and civil sectors, turning a blind eye
to drug production, and running his economy into the ground
with outmoded Socialist/Populist demagoguery. Scholarships
and price-controlled bread might carry him to the next
election (if a growing list of rape charges doesn't force him
out sooner),but the long-term prospects for political and
economic development for St. Vincent look pretty bleak right
now. Some irony, for a country that simultaneously boasts
the most exclusive high-end resort on the planet - Mustique,
at around $10,000 a night. End Comment.
SMOLIK