The EU Debt Crisis: Implications for Non-Independent Territories

(NITs) in the Caribbean

Michele Reis, Ph.D.

Institute of International Relations

The University of the West Indies

St. Augustine

Trinidad and Tobago

UCCI/UWI/ICCI Conference : 50-50 Surveying the Past, Mapping the

Future, Grand Cayman Islands

21-23 March, 2012

Michele.Reis@sta.uwi.edu

Tel: 1 (868) 662-2002 (Ext) 83237

Fax: 1 (868) 663-9685

2

ABSTRACT

This paper examines the impact of the debt crisis in Europe on the overseas

territories of a few EU member states in the Caribbean. Thus far, the

discussion of the debt crisis has focussed primarily on how local

economies within the mainland EU countries will be impacted and how

austerity measures and reform will affect jobs in Europe in the short to

long-term future. On the contrary, there has been little discourse on the

consequence of the state of the EU economy on its overseas territories, still

heavily dependent on its former colonial masters in both economic and

political terms. This is of great significance, given the high standard of

living these countries currently enjoy and the future implications for the

maintenance of the social benefits and the level of infrastructure in the

NITs.

In the first part of the paper the author will present an overview of the

diversity of the Caribbean and then define the countries in the Caribbean

that are non-independent territories, placing emphasis on the political

structure and special dispensations/arrangements that exist. The paper will

then examine the sustainability of same in the future, in light of the

precarious economic situation facing the EU by its debt problem and

conjure future implications for overseas territories vis-à-vis its dependent

neighbours in the Caribbean and continued relations with the EU. The

discussion around the ramifications of the debt crisis is not examined from

a purely economic basis. The author’s work is premised on the notion of

the economy as a socially defined construct and inherently a product of

social relationships (Lee: 2006).

DIVERSITY OF THE CARIBBEAN REGION

The Caribbean is characterised by great diversity, rendering it an extremely

complex region. Caribbean states have varying levels of economic

development, largely determined by the presence or lack of mineral

resources and a heavy reliance on just one or two commodities for export.

Tourism is the mainstay of several economies in the Caribbean and to a

much lesser extent agriculture. Only Trinidad and Tobago possesses oil

and natural gas deposits and has an important manufacturing sector, while

Jamaica mines bauxite ore for aluminum production.

3

Linguistically diverse, approximately 60 per cent of the Caribbean speaks

Spanish, 22 per cent French, 16 per cent English and 2 per cent Dutch.

Various dialects abound. Papamiento is spoken in Curaçao and créole is

prevalent in the French Caribbean although it varies from Haiti to French

Guiana, to Martinique and Guadeloupe. A French-based patois is still

present in remote parts of Trinidad, known as créole in Dominica and St.

Lucia.

In terms of ethnicity, in many of the small islands, particularly the Eastern

Caribbean, the majority of the population is overwhelmingly of African

descent, while East Indians are more numerous in Guyana and Trinidad

and Tobago. On the other hand, the Hispanic Caribbean has significantly

more white and mulatto populations and social stratification along ethnic

and class lines is extremely rigid.

The Caribbean is thus a unique region due to the confluences of three

major processes: slavery, indentureship and colonisation, where conquest,

European settlement and rule, capitalism and exploitation made the zone a

veritable experiment in globalisation, long before the term came into

vogue. As a result of European colonisation, the plantation system, the

sugar economy, slavery and emancipation, “each set of Caribbean colonies

was moulded politically, economically, socially, legally and linguistically

by the exploitative imperatives and institutions and culture of Spain,

France, Britain and the Netherlands” (Clarke: 1990).

The carving up of the Caribbean set the stage for myriad influences which

have not only diversified the ethnic, cultural, political and socio-economic

complexion of the region, but also divided the various territories due to

linguistic barriers, varying political and legal systems which affect avenues

for cooperation and hinder integration schemes. In other words, the

territorial fragmentation of the Caribbean, served to erect social and

political boundaries, a process referred to as “political Balkanisation” by

Lewis (2004).

There are varying political systems in the Caribbean with some states

independent while others are still dependencies. Puerto Rico has

Commonwealth status with the U.S., which differs from the three islands

that comprise the U.S. Virgin Islands: St. Thomas, St. Croix and St. John.

The Départements Français d’Amérique (DFA) achieved political

integration with metropolitan France since 1946. Constitutional

4

arrangements differ too, between the British overseas territories with their

locally elected administrations and a British Governor and the Dutch

islands, evidenced by the greater degree of autonomy enjoyed by the

former Netherlands Antilles (Girvan: 1997).

OVERSEAS TERRITORIES OF THE EU IN THE CARIBBEAN

The European Union1 comprises some 27 member states with

approximately 500 million inhabitants, speaking 23 languages. Of the 27

EU states, 17 of them use the euro as their common currency, the globe’s

second most important currency after the U.S. dollar.2 France has overseas

departments and territories in the Caribbean as well as the Atlantic, Pacific

and Indian Oceans. Three EU member countries still have overseas

territories located in the Caribbean. These are Britain, France and the

Netherlands. The context within which these territories came into being

reside in the vastly different approaches taken by these three former

colonial powers’ process of decolonisation. In the post-World War II

period, Europe divested somewhat of their former colonies in various

ways: “Britain opted to decolonise via independence; France chose

incorporation or assimilation; and the Netherlands offered autonomy plus

integration in the Tripartite Kingdom” (Clarke: 1990).

Together, these non-independent territories (NITs) comprise 15 countries.

Britain has 6 overseas territories in the Caribbean. These include Bermuda,

Montserrat, Anguilla, the British Virgin Islands, the Cayman Islands and

the Turks and Caicos.3 These micro-states are simultaneously British

Overseas Territories and by extension, Overseas Territories of the EU.

They have full British citizenship4 and are governed by U.K. law. Britain is

therefore responsible for their military defence, diplomatic representation

and humanitarian assistance in the event of disaster. In the case of

Anguilla, it is an internally self-governing overseas territory of the U.K.

1 The following countries comprise the European Union: Austria, Belgium, Bulgaria, Cyprus, Czech

Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia,

Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain,

Sweden and the United Kingdom. 2 The non-Eurozone countries are Czech Republic, Bulgaria, Denmark, Hungary, Latvia, Lithuania,

Poland, Romania, Sweden and the U.K. 3 In the Turks and Caicos, allegations of gross mismanagement of the economy and corruption resulted in

a revision of the constitution in 2006 and the re-imposition of direct rule by the U.K. government. 4 Since 2002, residents of the Turks and Caicos have full British citizenship status.

5

These six territories are mainly small, archipelagic states which have little

natural resources, depend heavily on tourism and offshore financial

services and banking and are particularly vulnerable to hurricanes. They

represent a combined surface area of 1,063.7 sq. km. and a total population

of no more than 210,000 (See Table 1).

France has three overseas departments or Départements d’Outre-Mer

(DOM) since 1946 (See Table 2). Two of these islands are situated in the

Eastern Caribbean: Martinique and Guadeloupe and the third, French

Guiana is located in South America. Residents of the DOM are full French

citizens, hold French passports, use the Euro and are subject to French

laws and regulations, including the French civil and penal code,

administrative law, social laws, tax laws, etc. Heavily dependent on

mainland France, the largest employer is the French state, which entitles

French Antillean civil servants to an additional cost of living allowance

that amounts to 40%, in addition to health services, social benefits and an

education system that has rendered their standard of living comparable

with most of Western Europe.

Six countries comprise the Dutch Caribbean: Aruba, Bonaire and Curacao,

(otherwise known as the ABCs) and Saba, St. Eustatius and St. Maarten,

situated 500 miles away from the rest of the islands (See Table 3).

Formerly known collectively as the Netherlands Antilles, Aruba was

granted Status Aparte by the Netherlands in 1986, thereby converting the

island into an autonomous component within the Dutch Kingdom,

separated from the Federation of the Netherlands Antilles (Lampe: 2001).

Later, from October 2010, the Netherlands Antilles ceased to exist as a

separate country and the entity comprising the remaining five islands was

dissolved. In a rather complex arrangement, the extended statehood of the

Kingdom of the Netherlands was restructured to encompass three

countries, namely, the Netherlands, the Netherlands Antilles and Aruba.

Curaçao and St. Maarten were next to acquire country status within the

Kingdom of the Netherlands (like Aruba in 1986), but with less autonomy.

Dutch Antilleans, referred to as allochtoon have Dutch passports,

nationality and are entitled to the same domestic and welfare subsidies as

their counterparts in mainland Netherlands, the so-called autochthon or

‘True Dutch’ (De Jong: 2001). Unlike the DOM where great effort was

placed on bringing the infrastructure and social services on par with those

6

in mainland France, disparities exist between the infrastructure and

delivery of services in the Dutch islands.

The process of assimilation was not as strong a driving force for the

Netherlands as it was for the French, and so, Dutch Antilleans are tolerated

and accepted but not considered as equals in principle like in the French

overseas departments. Nonetheless, the varying standards in government

services and infrastructure have not emerged as a serious political issue in

the past because Dutch Antilleans have been granted relatively strong

Caribbean autonomy in local affairs. De Jong (2001) makes special

reference to the disparity in “education, social security, public safety as

well as social housing and environmental practices.” This contrasts sharply

with considerable expenditure by the French on infrastructure, social

security, healthcare and public employment in the DOM. These factors

notwithstanding, the overall level of development and infrastructure in the

NITs is much higher than in the independent territories of the Caribbean.

The common thread running through the varying levels of autonomy and

arrangements in each of these NIT groupings is the implicit high standard

of living residents in these territories enjoy on account of their political

status. Commensurate with the juridico-political status of the DOM, the

Status Aparte and other arrangements of the French and the British

Overseas Territories, is the high level of economic dependence on the

metropole in the NITs.

This economic dependence has been the subject of much discussion in

political and academic circles alike. The situation is cause for even greater

concern now, in the context of the EU debt crisis, the implications of

which are yet to be analysed in any meaningful way in relation to the ultra-

peripheral regions of the EU and how these micro-states will invariably be

affected. This also supposes that any future discussion of the impact of the

EU sovereign debt crisis is unlikely to take into account the special

circumstances of ultra-peripheral and peripheral regions of the EU.

FINANCIAL DEPENDENCE OF THE NON-INDEPENDENT

TERRITORIES ON THE EU

The current international financial crisis raises the question once again as

to the length of time Britain, France and the Netherlands can continue to

maintain their overseas territories in the Caribbean. Considerable

7

expenditure is required for the functioning of these territories, particularly

salaries, infrastructural development and maintenance and social benefits.

The genesis of this in part, harks back to the Treaty of Rome (1957) where

preferences were granted to the OCTs through the European Economic

Commission (EEC). This included France and the Netherlands and later

Denmark and the U.K.

National state resource allocations to these OCTs are quite sizeable. In July

1995, Britain absorbed most of Montserrat’s nearly 8,000 environmental

refugees with the eruption of the Soufrière volcano. Of the 13,000 people

living on the island then, a mere 5,140 remains. Britain is responsible for

rebuilding efforts on the island, including the construction of a new capital

in the north at Little Bay. Montserrat's operating budget is largely supplied

by the British government and administered through the Department for

International Development (DFID) to the tune of £25 million annually.

With respect to the Cayman Islands, the world’s fifth largest offshore and

international financial centre, banking drives the economy and employs

36% of the population, while generating 40% of all government revenue.

Tourism accounts for 70% of GDP and approximately 75% of foreign

currency earnings. The British Overseas Territory is a tax shelter and

because of its reputation in offshore and financial banking, its populace

enjoys a standard of living also comparable with much of Europe.

The Dutch Caribbean has been administered politically by the Netherlands

since the 1600s. In 1954, the Charter for the Kingdom of the Netherlands

conferred responsibility for the islands’ foreign affairs, defence, citizenship

with naturalisation and the Amendment of the Constitution on the Dutch

government. With three of the six islands having acquired country status,

Aruba in 1986 and Curacao and St. Maarten in 2010, various

conditionalities applied. For the two latter countries, these included the

setting up of a College of Financial Supervision with membership

appointments being controlled by the Kingdom of the Netherlands and

restrictions being imposed on public borrowing. The Dutch government

also forgave the huge debt of the Netherlands Antilles in the amount of

Euro 2.3bn, representing 13,000 Euro per capita (De Jong: 2001).

Since 1946, in the French-administered territories outside of Europe, their

status as DOM affords them many privileges that also apply to mainland

France. These include representation in the Parliament of France; the right

8

to vote in elections to the European Parliament; and representation in the

French National Assembly (Assemblée Nationale) and the French Senate

(Le Sénat). In EU terminology, Martinique, Guadeloupe and French

Guiana are part of the designated ‘ultra-peripheral regions,’ which refer to

the territories of member states that suffer from structural handicaps. As

such, the French Overseas Departments are included in this grouping on

account of their ultra-peripherality with the Azores, Madeira Islands and

Canary Islands (Daniel: 2001). The common features of this ultra-

peripherality are also shared by the Dutch and British OCTs. These

handicaps include their limited local economic activity and range of

commodities, remoteness from the continent and lack of competitiveness,

physical constraints due to typology, linked to accessibility and finally,

vulnerability to natural disasters. These very limitations have served to

justify the need for increased capital spending in the OCTs.

Particularly in the case of the French Caribbean, this financial dependence

has had deleterious effects on the economies of Guadeloupe, Martinique

and French Guiana. The psychological and more tangible consequences of

such great reliance on France by the DOM are more urgent and worrisome

in light of the EU debt crisis. Départementalisation may have raised the

standard of living in the DOM, but it has also resulted in the following

(Daniel: 2001):

1) An extreme and growing dependence on subsidies and large influx

of capital from France;

2) An illusory sense of wealth;

3) The weakening of economies while inhabitants enjoy a high

standard of living;

4) Greater political and economic dependency on the former colonial

power;

5) The transfer of French capital from the mainland to the DOM

represents the main source of growth aggravating a huge

unemployment problem;

6) Further polarisation of racial groupings; and

7) The stifling of local cultural identity.

Constant (2001) also highlights the costs of departmentalisation to the

DOM: “the eruption of a pseudo-industrial society built on public transfer

payments to the Antilles has led to a cruel paradox, by which as each of

these territories gets poorer and poorer, the more prosperous its inhabitants

become.” This illusory sense of wealth to which he alludes does not in any

9

way bode well for future responses to the decline in capital that the

Eurozone crisis is likely to bring to OCTs in the Caribbean.

EUROPE’S POLITICAL AND ECONOMIC MALAISE

The largest economic area in the world is in deep financial crisis. Since

rebounding from the recent financial crisis of 2008, there is renewed

uncertainty in the global financial system. Altman and Rijken (2011) refer

to the gravity of this most recent international crisis in relation to major

banks and sovereign governments’ ability to honour their obligations. In

Europe, this largely relates to concerns about extremely high public debt

levels in Portugal, Ireland, Italy, Greece and Spain, ignominiously referred

to as “PIIGs nations” or the “Big-Five” European high-risk countries. The

implications for the rest of the EU, both Eurozone and non-Eurozone

members alike are therefore colossal (Ackerman: 2011).

Europe is saddled with a wave of debt crises that is threatening some

member states with default and endangering the stability of the zone.5

Economists have been critical of the EU’s concentrated monetary policy in

the European Central Bank (ECB) without any harmonisation of fiscal

policy, left to the determination of individual member states themselves.

With the advent of debt crisis and looming default by various countries

hardest hit, the model seems untenable, “as it denies member states

monetary policy levers with which to help their recoveries” (Matthews:

2011). The reality is that the European debt crisis has affected various

countries in the continent differently. The common monetary policy of the

ECB will assist some members but worsen an already bad situation for

others. A prime example is in the tightening of monetary policy that has

arrested inflation in high-growth economies such as Germany’s, while

exacerbating the recession in places like Greece, Spain and other states

(Matthews: 2011).

European banks are the largest holders of Greek debt and France is the

most exposed of all the individual countries. Belke and Dreger (2011) in

their analysis of the Greek debt crisis’ impact on European countries,

signaled that “according to BIS data French banks could potentially be

more impacted from a collapse of Greek banks and from a sovereign

5 Altman and Rijken (2011) point to the example of Greece where financial problems there “and other

southern European countries not only affect their neighbors, but threaten the very existence of the

European Union.”

10

default than Germany, Italy and Spain.” French banks are therefore being

grossly impacted by the downgrading of France’s sovereign debt.6 The

Société Générale’s stock fell by more than 4% in mid-August this year, the

lowest of any decline in the past two and a half years. The Banque

Nationale de Paris (BNP Paribas) resorted to closing two of its hedge funds

and both the Crédit Agricole and the Société Générale were downgraded

by Moody’s in September 2011.7 The Société Générale is likely to absorb

potential losses incurred over time on its Greek government bonds. All

three of these major French banks operate in the DOM.

In the U.K., a non-Eurozone country, the Bank of England stated in June

2011 that the EU debt crisis posed the greatest risk to the stability of the

UK financial system (King: 2011). The Governor of the Bank of England,

Sir Mervyn King speculated that if all of the so-called PIIGS nations were

to go bankrupt and write off half of their sovereign debt, banking debt and

non-bank private sector debt, this could translate into wiping out half the

capital in the UK banking system.8 Britain may have lower exposure to

Greek debt, ($14bn or £9.1bn) vis-à-vis French or German banks, with

$2.3bn directly held by banks. However, “the UK has around $136.6bn in

total exposure to Irish debt-more than eight times its Greek exposure”

(Chibber: 2011). Its exposure to Spanish debt is also high-$100bn.

Britain’s concern too, should be the viability of the Eurozone and the

overall state of the economy, as the Euro country sphere represents 40% of

the UK’s export market. If Germany and France, the EU’s largest

economies take a direct hit from the impact of the debt crisis, then this

could spell disaster as the ripple effect of stunted growth, inflation and job

losses spread across the continent.

The Netherlands too, has been negatively impacted by the Eurozone crisis,

as the Dutch government provided support to both Greece and Ireland in

various ways. Earlier this year, the Dutch government had pledged “4.7bn

EUR ($6.6bn) to the 110bn EUR rescue package announced by the

International Monetary Fund and the European Union for Greece”

(Steinglass: 2011).

6 “Moody’s raised concerns about the exposure of BNP Paribas, Société Générale and Crédit Agricole to

the Greek mess” (Belke and Dreger: 2011). 7 “Crédit Agricole controls Emporiki Bank of Greece and Société Générale is the owner of a majority of

the Greek lender Geniki Bank” (Belke and Dreger: 2011). 8 Robert Peston, Business editor, June 24, 2011: http://www.bbc.co.uk/news /business-13906745

11

The Netherlands government however, is not in favour of euro bonds as a

mechanism to end the debt crisis. More stable economies in the zone, such

as the Netherlands could also run the risk of weakening their economies by

continually having to increase the volume of the bailout funds to the more

indebted nations.9 The Dutch Finance Minister is on record of having

stated his country’s vehement opposition to euro bonds as a solution to end

the crisis, as he believes that “euro bonds remove every incentive for ailing

countries to return to sensible fiscal and economic policies” (Reiermann:

2011).

The deep financial trouble for Southern European countries and the

likelihood of default is not to be taken frivolously. The prescription for

bailing out distressed sovereigns, particularly the stronger and more stable

economies of the EU, is to demand austerity measures of high-risk nations

(Altman and Rijken: 2011). However, the average taxpaying citizen will be

directly impacted by these austerity programmes. Altman and Rijken

(2011) identify what these measures usually entail: “substantial cuts in

cash benefits paid to public workers, increases in retirement age, and other

reduced infrastructure costs as well as increased taxes for companies and

individuals. The objective is to reduce deficits relative to GDP and enhance

the sovereigns’ ability to repay their foreign debt and balance their

budgets.” These prospects and the looming fear of loss of jobs, salary and

pension cuts, rising inflation and a decrease in government expenditure in

keys areas preoccupy the European community and understandably have

been the cause of protests and social unrest across the continent. Despite

the geographical remoteness of the continent, the potential impact on

already weak local economies in small states heavily reliant on large

capital from Britain, France, the Netherlands and the EU can be

devastating.

THE EFFECT OF THE EU CRISIS ON NITs IN THE CARIBBEAN

Substantial attention has been paid to the ongoing Eurozone crisis

evidenced by the heavy mediatisation of the EU’s attempt to contain the

crisis and bail out the “PIIGS nations.” On the other hand, there has been

little if any coverage of how this crisis on the continent is being

9 Altman and Rijken (2011) refer to situations prescribed for Greece: “sovereign economic conditions

appear to spiral out of control with almost predictable regularity and then require massive debt

restructurings and/or bailouts accompanied by painful austerity programs.”

12

experienced in the NITS, further reinforcing not only their ultra-

peripherality but their marginalisation in the world’s largest economic

zone. The possible solutions offered and the measures prescribed for

rescuing Greece and the other debt-laden countries have not been analysed

in terms of how they would affect the “Caribbean parts of Europe.” Yet

inhabitants of these 15 territories will be affected by the financial chaos

that will undoubtedly impact their beleaguered local economies and risk

altering their standard of living.

If Europeans on the mainland are concerned with possible austerity

measures that would affect their livelihoods, residents in the NITs have no

less reason for such fears. In fact, “the mother of all financial crises” as

Eichengreen (2010) has dubbed it, places an additional burden on overseas

territories in the Caribbean: their very survival. The foremost question is to

what extent the servicing of debt from Greece and other Southern

European countries could jeopardise their standard of living or result in

their further alienation in the event European countries divert their funding

away from their overseas territories in the Caribbean. In other words, as

local industries shrink, what happens to the OCTs when the largesse from

mainland governments and Brussels come to an end?

While the debt crisis may be a new problem on a more grandiose scale than

previous financial crises, the fear that OCTs are too onerous and

financially burdensome for Europe are not new arguments. More than

twenty years ago, Clarke (1990) wrote an article in which he claimed that

the French DOM were potential time bombs and that the territories of the

Netherlands had already exploded, evoking questions even then about their

viability. France’s current president, Nicholas Sarkozy, while he was

Minister of the Interior spoke of national budgetary constraints and the

looming prospect of reducing the amount of capital to the overseas

departments. He further suggested that the DOM should become more

autonomous and reinvent themselves as Zones Franches Globales or tax-

free investment zones (Bishop: 2009).

Furthermore, the fear of contagion leading to negative spillovers to other

bond markets in Euro area countries could place greater pressure on

governments in many states to contract their fiscal policies, risking a

double dip recession (Belke and Dreger: 2011). Given the gravity of the

situation, economists and policy-makers are rife with speculation about the

future of the Eurozone. This raises a number of pertinent questions relevant

13

to the ultimate survival of the eurozone and a recovery of the economies of

the continent, including “who will pay the bill of such a debt increase: the

original creditors or the governments of the euro area (and thus ultimately

their taxpayers?” (CPB Policy Brief: 2011).

What then are the implications for the NITs if indeed there is an unraveling

of the entire monetary union? Eichengreen (2010) emphasises the

implausibility of the breaking up of the Eurozone due to the sheer

economic and political costs involved, including the devaluation of the

newly-introduced national currency in the selected countries which exit the

zone. The political and social upheaval as a result of the debt crisis has led

to the National Front party (Le Front National) already contemplating

replacing the euro and reverting to the franc in the event of their success at

the next presidential elections. This would also have huge consequences

for the DOM where significant adjustments had to be made when the euro

was being introduced.

According to Valiante (2011) the implosion of the Eurozone would result

in social conflict and economic disparities. Thus far, the social response to

the proposed austerity measures has understandably been met with protests

and even violence in Greece, Hungary and France (Altman: 2011).10

The

French in particular have a reputation for protesting and resisting change,

which Lynn (2001) describes in the following words: “no other country in

the developed world is quite so resistant to economic reform: any

modifications to working hours or pensions or welfare plans bring out

rioters and is usually swiftly abandoned.”

In addition, if as economist Eichengreen speculates, “the mother of all

financial crises” results in a huge bank run, what would be the attendant

effects on these tiny entities? While residents in the NITs share the

concerns of EU citizens in the mainland, they are ill-equipped to respond

to external economic challenges emanating from outside their geographical

domain. The additional burden of competing for diminishing resource

allocations is a very real threat. How will the austerity measures of

distressed sovereigns in the EU directly and indirectly impact non-

independent territories in the Caribbean? What would be the cost to

citizens in non-independent territories of the Caribbean? How would it

10

Belke and Dreger (2001) cite the actions of EU citizens: “protests against privatization, spending cuts

and tax increases have been widespread and turned even violent in several regions.”

14

impact people’s investments, savings and pensions? Will there be less

expenditure on infrastructure? Will social welfare and benefits be cut and

how will the NITs adapt to these proposed changes in light of the current

standard of living to which they have grown accustomed?

CONCLUSION

The global economy is characterised by considerable volatility. Nowhere is

that precariousness more evident than in the latest financial crisis in

Europe, more extensive and potentially more threatening to the rest of the

zone. The risk of escalation and expansion of the Eurozone crisis is in

many ways unprecedented. Yet despite the enormity of the situation, the

overseas territories of the EU, 15 in all, are largely excluded from all

debate and analyses, their remoteness and vulnerability from the mainland

governments rendering them more susceptible.

The EU debt crisis is likely to have different significance for the

population of the NITs. In addition to the concerns of EU citizens that

austerity measures will affect the quality of their lives, residents of the

NITs run the risk of increased marginalisation, as governments in the

metropolitan centres may divert the considerable funding on which these

territories are historically dependent. Hudson (2006) had highlighted the

fact that globalisation and the widening and deepening of the EU put the

OCTs at additional risk, emphasising inequalities between the European

mainland and small entities in the Caribbean.

In theorising about the future of ultra-peripheral parts of the EU, Hudson

(2006) presents a pessimistic view that “prospects for the ultra-peripheral

regions remain gloomy” in relation to development. However, this is

equally true of their ability to respond to the challenges posed by the EU

debt crisis as they are not active subjects in controlling and determining

economic outcomes in their states. If according to Hudson (2006) the

economic prognosis for ultra-peripheral regions was unpromising in

relation to development prospects, the Eurozone crisis presents even more

urgent constraints that reinforce their marginality.

The potential social, economic and political ramifications of the outcomes

of the EU sovereign debt crisis are likely to usher in room for new

dispensations in the international relations of the region as further

marginalisation of the NITs can serve to provide vital avenues for a

15

rapprochement between the independent countries of the Caribbean and

the still dependent entities of the Antilles. As the financial crisis evolves,

future relations with the EU will also be altered, though it is unlikely that

NITs will take a proactive stance towards shaping the course of these

relations. The characteristic limits to action on the part of these NITs is

likely to be perpetuated and similar to Hudson (2006), the author is of the

view that “this does not bode well for their future prospects, even more so

given the current marginalised position of the ultra-peripheral regions.”

16

TABLE 1 BRITISH OVERSEAS TERRITORIES

Country Surface Area (sq. km.)

Population

BVI

Tortola 55.7 23,908

Virgin Gorda 21

Anegada 38 200

Jost Van Dyke 8 200

TOTAL 122.7 24,308

Bermuda 54 68,679 (July 2011)

Montserrat 102 5,140

Anguilla 91 15,094 (July 2011)

TCI 430 44,819 (July 2011)

Cayman Islands 264 51,384 (July 2011)

TOTAL 1,063.7 209,424

Data compiled from CIA-The World Factbook

17

TABLE 2 FRENCH DOM

Country Surface Area Population

Martinique 1,128 sq. km. 436,000

Guadeloupe 1,628 sq. km. 400,000

French Guiana 85,534 sq. km. 200,000

TOTAL 88,290 sq. km. 1,036,000

Data compiled from CIA-The World Factbook

TABLE 3 THE DUTCH CARIBBEAN

Country Population Surface Area

Aruba 103,065 (2009) 180 sq. km.

Bonaire 15,800 (2010) 294 sq. km.

Curacao 142,180 (2010) 444 sq. km.

Saba 2,000 (2010) 13 sq. km.

St. Eustatius 3,100 (2006) 21 sq. km.

St. Maarten 74,852 (2007) 87 sq. km.

TOTAL 340,997 1,039

Data compiled from CIA-The World Factbook

18

BIBLIOGRAPHY

Josef Ackerman. “The Global Financial System and the Challenges Ahead,” The

Fletcher Forum of World Affairs, vol. 35:1, Winter 2011, pp. 127-135.

Edward I. Altman and Herbert Rijken. “Toward A Bottom-Up Approach to

Assessing Sovereign Default Risk: An Update,” available at

http://69.175.2.130/~finman/Publications/JAF/2011/Altman.pdf, accessed

Tuesday October 18, 2011.

Ansgar Belke and Christian Dreger. “Ramifications of Debt Restructuring on the

Euro Area-The Example of Large European Economies’ Exposure to Greece,”

available at http://papers.ssrn.com/sol3papers.cfm/abstract_id=1906631,

accessed Wednesday October 19, 2011.

Matthew Bishop. “Lost in Translation: EU Development Policy in the

Anglophone and Francophone Eastern Caribbean,” European Journal of

Development Research, (2011), vol. 23, 3, pp. 337-353.

……………“The French Caribbean and the Challenge of Neoliberal

Globalisation: The Silent Death of Tricolore Development, in P. Clegg and E.

Pantojas-Garcia (eds.) Governance in the Non-Independent Caribbean:

Challenges and Opportunities into the 21st Century Kingston, Jamaica: Ian

Randle Publishers, (2009), pp. 119-145.

Olwyn Blouet. “Caribbean Contrasts,” in Brian W. Blouet and Olwyn M. Blouet

(ed.) Latin America and the Caribbean: A Systematic and Regional Survey U.S.:

John Wiley & Sons, Inc., (2010): Ch. 8, pp. 201-240.

Central Intelligence Agency (CIA) The World Factbook,

https://www.cia.gov/library/publications/the-world-factbook/

Colin Clarke. "Europe in the Caribbean: From Colonial Hegemony to

Geopolitical Marginality" in Anthony T. Bryan, J. Edward Greene and Timothy

M. Shaw (eds.) Peace, Development and Security in the Caribbean: Perspectives

to the Year 2000 London: Macmillan, (1990).

Fred Constant. "The French Antilles in the 1990s: Between European

Unification and Political Territorialization," in Aaron Gamaliel Ramos and

19

Angel Israel Rivera, Islands at the Crossroads: Politics in the Non-Independent

Caribbean. Kingston, Jamaica: Ian Randle Publishers, (2001), pp. 80-94.

Justin Daniel. "The Construction of Dependency: Economy and Politics in the

French Antilles," in Aaron Gamaliel Ramos and Angel Israel Rivera, Islands at

the Crossroads: Politics in the Non-Independent Caribbean Kingston, Jamaica:

Ian Randle Publishers, (2001) pp. 61-79.

Lammert De Jong. “The Implosion of the Netherlands Antilles,” in P. Clegg and

E. Pantojas-Garcia (eds.) Governance in the Non-Independent Caribbean:

Challenges and Opportunities Into the 21st Century Kingston, Jamaica: Ian

Randle Publishers, (2009), pp. 24-44.

Barry Eichengreen. “The Euro: Love It Or Leave It? Vox, May 4, 2010.

Matthew Lynn. “For Next Rating Downgrade, S&P May Look at France,”

Market Watch, August 10, 2011, available at

http://www.marketwatch.com/story/for-next-rating-downgrade-sp-may-look-at-

france-2011-08-10, accessed Wednesday October 19, 2011.

Rita Giacalone. "The Political Status of Curacao at the End of the Twentieth

Century," in Aaron Gamaliel Ramos and Angel Israel Rivera, Islands at the

Crossroads: Politics in the Non-Independent Caribbean Kingston, Jamaica: Ian

Randle Publishers, (2001), pp. 95-105.

Norman Girvan. “Creating and Recreating the Caribbean,” in Kenneth Hall and

Dennis Benn (ed.) Contending with Destiny: The Caribbean in the 21st Century

Jamaica: Ian Randle Publishers, (2000): Ch. 5, pp. 31-36.

Norman Girvan. Societies at Risk? The Caribbean and Global Change, MOST

Discussion Paper Series, No. 17, (1997) (www.unesco.int/most/girvan.htm).

Norman Girvan. The Caribbean in a Turbulent World

http://www.normangirvan.info/wp-content/uploads/2010/04/girvan-turbulent-

world-final11.pdf (2010).

Professor R. Hudson. “The EU’s Ultra-Peripheral Regions: Developmental

Considerations and Reflections,” Paper presented at the Conference-The

Macroeconomic Situation of the European Ultra-Periphery, Brussels, December

15, 2006.

20

Armando Lampe. "The Recolonization of Aruba," in Aaron Gamaliel Ramos

and Angel Israel Rivera, Islands at the Crossroads: Politics in the Non-

Independent Caribbean Kingston, Jamaica: Ian Randle Publishers, (2001),

pp.106-114.

Roger Lee. “The Ordinary Economy: Tangled Up in Values and Geography,”

Transactions of the Institute of British Geographers, Vol. 31, Issue 4, Dec. 2006,

pp. 413-432.

Gordon K. Lewis. “The Caribbean Background,” in Puerto Rico: Freedom and

Power in the Caribbean Jamaica: Ian Randle Publishers (2004), Ch. 2: pp. 29-48.

Dylan Matthews. “Everything You Need to Know About the European Debt

Crisis in One Post,” The Washington Post, available at

http://www.washingtonpost.com/blogs/ezra-klein/post/everything-you-need-to-

know-about-the-european-debt-crisis-in-one-

post/2011/08//05/gIQAg69QaI_blog.html, accessed Tuesday October 18, 2011.

Robert Peston. “Why UK Banks Are Not Immune to Eurozone Woes,” available

at http://www.bbc.co.uk/news /business-13906745, June 24, 2011, accessed

Tuesday October 18, 2011.

Christian Reiermann. “Dutch Finance Minster On the Debt Crisis: We Are All

Threatened by Contagion,” Spiegel Online International, available at

http://www.spiegel.de/international/spiegel/0,1518,781622,00.html, accessed

Tuesday October 18, 2011.

Matt Steinglass. “Majority of Dutch Politicians Back Greek Aid,” Financial

Times, May 24, 2011, available at http://www.ft.com/intl/cms/s/0/467cf632-

8642-11e0-9e2c-00144feabdc0.html#axzz1bEwbEuAA, accessed Wednesday

October 19, 2011.

“The Netherlands and the European Debt Crisis,” CPB Netherlands Bureau for

Economic Policy Analysis, http://www.cpb.nl/en/publication/netherlands-and-

european-debt-crisis, 2011.

Diego Valiante. “The Eurozone Debt Crisis: From Its Origins to a Way

Forward,” CEPS Policy Brief, no. 251, August 2011.