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. -------------- Island Administrators Claim Freeport more Favorable to Foreign Investment -------------- ¶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. -------------- Keep Pre-clearance Open - Support Staffing a Consular Agent -------------- ¶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. -------------- Chamber Of Commerce - "Freeport Needs Better Branding" -------------- ¶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. -------------- Freeport Container Port Seeks Pre- Clearance for U.S.-bound Containers -------------- ¶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. -------------- DEA - Freeport the Hub for Illegal Smuggling -------------- ¶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