TRIP REPORT FOR FREEPORT, THE BAHAMAS DECEMBER 10-11, 2008

UNCLAS NASSAU 000897

SIPDIS

PASS WHA/CAR FOR ACADIEUX

E.O. 12958: N/A
TAGS: PGOV EFIN EAIR ECON BF
SUBJECT: TRIP REPORT FOR FREEPORT, THE BAHAMAS DECEMBER 10-11, 2008


1. (U) SUMMARY: Pol/Econ/PD Chief traveled to Freeport, The Bahamas
December 10-11 to attend the Chemical Weapons Convention (CWC)
Stakeholders Consultation and meet with local Island Administrators,
representatives of the Grand Bahama Chamber of Commerce, the CEO of
Hutchinson Container Port, and U.S. Embassy personnel from DEA and
CBP. Freeport has been severely affected by recent economic
downturn -- tourist arrivals are down from the same period last
year, hotels are posting a 3-30 percent occupancy rate, several
companies have closed their operations in Freeport, and many
development projects are sitting idle. USG and local government
officials predict that the resultant loss of jobs could lead to
increased crime, particularly in the illegal smuggling trade (drugs
and humans). Summary of the CWC Stakeholders meeting is reported in
Septel. End Summary.

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Island Administrators Claim Freeport
more Favorable to Foreign Investment
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2. (U) During meetings with PolChief, two of four of Grand Bahama
Island Administrators noted the recent downturn in the U.S. economy
had caused a negative impact on tourist arrivals and hotels room
nights in Freeport, but noted that the numbers had been declining
for the past couple of years. Alexander Williams, Administrator of
Freeport, and Bradley Armbrister, Administrator of East Grand
Bahama, said that some hotels had closed off portions of their
properties and in one case closed the entire hotel (Sheraton at
Lucayan) and transferred guests to an adjoining property (Westin at
Lucayan) at the same rate, in an effort to reduce staff and
operating expenses. According to them, hotel occupancy rates
island-wide were averaging between 3 to 30 percent. These numbers
are consistent with U.S. Customs and Border Protection (CBP)
Pre-clearance figures which confirm that departures to the U.S. have
been decreasing steadily for the last few years. The resultant
increase in unemployment worries local officials due to the
expectant rise in crime, including illegal smuggling.


3. (U) Several foreign owned companies had ceased operations in
Freeport, most notably Pepsi Cola which closed its bottling plant in
October 2008. The Island Administrators noted that Pepsi's closing
would have little effect on Freeport since Pepsi employed less than
15 employees. These closures though, were symptomatic of the loss
of foreign investment that was hampering development projects,
including proposed gambling resorts and residential properties. The
Administrators claimed that the local Grand Bahama government is
"more efficient and favorable to foreign investment" than Nassau.
As such, zoning and environmental impact approvals for projects are
much quicker. Further, they stated that Grand Bahama was the most
"well-kept" of the Bahamian islands.


4. (U) Grand Bahama received another blow to its tourism industry
on December 17 when Imperial Majesty announced that they would
discontinue cruise ship stops into Freeport.

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Keep Pre-clearance Open - Support
Staffing a Consular Agent
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4. (U) The Island Administrators noted the importance of the CBP
Pre-clearance facility and requested that it be expanded to include
general aviation (GA). They believed that Freeport could easily
handle the increased volume of GA traffic but told PolChief that
Nassau was "dragging its feet" because the increased GA volume at
Lynden Pindling International Airport would compete with commercial
flights. The administrators requested the U.S. Embassy provide a
consular agent on a rotating basis to Freeport to handle the high
volume of Bahamian citizens needing visas to travel to the U.S.
Repeating a previous request, they noted that it was expensive for a
family to fly to Nassau to get their visas. PolChief explained that
given the requirement to collect biometrics it would be difficult to
conduct interviews offsite. The Chamber of Commerce also made
similar requests for maintaining the pre-clearance facility and
periodically sending a consular agent to Freeport.


5. (U) U.S. CBP Port Director noted that passenger averages to the
U.S. were currently less than 300 daily. CBP passenger statistics
confirmed that departures to the U.S. fell steadily for the last few
years: weekly totals for the same period (December 4-10) decreased
from 3,300 passengers in 2006, to 2,800 in 2007, to 2,400 in 2008


6. (U) The administrators said that illegal immigrants, especially
Haitians, continue to be a problem for Grand Bahama. Due to the
already high number (estimates as high as 3,000 - 5,000 Haitians out
of a total population of 47,000) of Haitians on the island it is
easy for new illegal arrivals to assimilate into the population so
exact figures are unknown. They said that organized crime to
include violent crime is common among the Haitian population.
Comment: This is a common accusation that is not supported by the
incarceration statistics, though the anecdotal evidence cannot be
denied. End Comment.
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Chamber Of Commerce - "Freeport
Needs Better Branding"
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7. (U) Chamber of Commerce Executive Director, Mercynth Ferguson and
Vice President, Greg Langstaff echoed the administrators' assessment
of the economic situation in Grand Bahama. They noted that
previously it had been easy to entice U.S. tourists to Freeport due
to the inexpensive cost of airfare and hotel accommodations.
Increased taxes and tariffs on the flights caused airfare to
Freeport to be higher than longer distance destinations in Latin
America and Mexico. They further noted that most tourists now
associate The Bahamas with Paradise Island and book Nassau not
knowing what Freeport has to offer. Langstaff explained that
Freeport is less congested, cleaner and has many or more of the same
attractions as Nassau but at a cheaper price. He said that Freeport
needs to do a better job of branding itself. Both Chamber of
Commerce and Island Administrators voiced their satisfaction with
the new Ministry of Tourism plan for increasing tourism.


8. (U) The Chamber said that there were several development projects
in the works including a few new casinos; however most of these
projects were on hold while they sorted out financing. Ferguson
said that future projects would be planned to place several casinos
close together on the beach to give tourists options. She noted
that one of the main reasons that the Royal Oasis never reopened
after being damaged by Hurricanes Francis and Jeanne, was that the
property was located in an unfavorable location -- isolated away
from the beach and other resorts.


9. (U) High electricity costs prompted several companies to explore
alternative energy sources, including solar and wind. Langstaff
said that due to the government's monopoly of the power plant,
legislation has been unfavorable to these ventures. He said that
the zoning commission did not permit solar panels on rooftops due to
"aesthetic considerations." In another example, he cited that
Siemens had proposed a plan whereby homeowners would purchase solar
panels, Siemens would pay to install the panels and provide the
switches necessary to connect the excess power to the city grid in
return for the monthly power company rebate checks sent to the
homeowners. The homeowners would receive free electricity for the
life of the panels and the power company would receive low cost
(lower per kilowatt than its diesel generators) power. According to
Langstaff, the utility company refused to allow the panels to be
connected to the grid. Langstaff said there had recently been a
privately funded proposal for a wind farm which died because the
investor could not gain permission to connect to the grid as well.

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Freeport Container Port Seeks Pre-
Clearance for U.S.-bound Containers
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10. (U) PolChief accompanied by Freeport's DEA supervisor met with
Hutchinson Container CEO Christopher Gray at the Freeport Container
Facility. DEA thanked Hutchinson for their support and assistance
in preventing and detecting illegal smuggling through the port
facility. Representatives from Hutchinson had participated in the
CWC Stakeholders meeting and were encouraged by the participation
from Bahamian authorities. Gray noted that he had previously been
concerned about security and incident response at the port because
it was hard to get the Bahamian authorities to believe that there
was a threat. Gray was most concerned about the response to a
radiological event detected by Megaports and would welcome a
tabletop response exercise between all stakeholders including the
USG.


11. (U) Gray requested that the USG re-explore the possibility of
establishing a CBP pre-clearance facility for containers at the
port. A pre-clearance facility would permit US-bound containers to
be pre-cleared in Freeport expediting their processing at U.S.
ports. Gray said he had previously passed the request to the
Embassy and was informed at that time that CBP had no plans to
pursue a pre-clearance facility at the port Bahamas.

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DEA - Freeport the Hub for Illegal
Smuggling
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12. (U) Freeport DEA Chief briefed PolChief on trends noting the
recent upturn in seizures, citing better enforcement techniques and
increased trafficking volume. The container port facility, number
of unsupervised docks and landings, and proximity to the U.S. make
Freeport an attractive staging and transit point for illegal drugs
and immigrants. Cooperation with local law enforcement personnel
has increased with the appointment of a new Royal Bahamas Police
Force Drug Enforcement Unit (DEU) Chief. Several DEA staffers
expressed the need for high surveillance assets along traditional
shipping routes.

SIEGEL