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[FONT='Verdana','sans-serif']Nov 12th 2009 | KINGSTON
From The Economist print edition[/FONT]
[FONT='Verdana','sans-serif']http://www.economist.com/world/americas/displaystory.cfm?story_id=14845329
The burden of debt and crime
JUST over two years ago when Bruce Golding’s Labour Party came to power in Jamaica, ending 18 years in opposition, there were modest hopes that it might make progress in tackling the island’s endemic problems of economic stagnation and gang violence. Quite how hard that is has become clear in the past fortnight with the departure first of the central-bank governor and then the police chief.
Mr Golding’s people inherited a huge national debt, much of it borrowed in the markets at interest rates that have sometimes topped 20%. Just servicing this eats up about 60% of government revenues. Then came the world recession, which has hit tourism, bauxite and remittances from Jamaicans abroad, the island’s three big foreign-exchange earners. UC Rusal, the country’s biggest bauxite operator, has shut most of its Jamaican mines because of low world prices. With tax revenue down and privatisation plans stalled, the fiscal deficit has soared.
The Bank of Jamaica’s governor, Derick Latibeaudiere, was leading negotiations for a $1.2 billion loan from the IMF. But midway through the talks, he lost his job. Mr Golding has complained about Mr Latibeaudiere’s generous salary and housing allowance, granted by the previous government. There was talk in Kingston, the capital, of policy disagreement with the finance minister. Either way, the timing of Mr Latibeaudiere’s departure was unfortunate. Standard & Poor’s, a rating agency, immediately downgraded Jamaica’s debt. Talks with the IMF will continue. Mr Golding has promised a fresh effort to cut the fiscal deficit.
The prime minister also edged out the police commissioner, Hardley Lewin, formerly a senior naval officer. Mr Lewin was blunt in his diagnosis of the crime problem. Last month he spoke of the need to “break the linkages between organised criminal networks, our politics, businesses, communities, and I dare say my own service, the police.”
The murder rate has stopped rising, but it remains high. Cocaine shipments have fallen, but gangs continue to thrive on extortion, marijuana and fraud. Yet Mr Lewin was seen by many in the police as an outsider, pushing unwanted reforms. On November 3rd Mr Golding said that he had “lost confidence in the ability of the commissioner to deliver the results.”
That smacked of shooting the messenger. Mark Shields, a British detective who was Jamaica’s deputy police-commissioner until August, recently said that he no longer believes the force can be reformed. He revealed that half the officers in a key unit failed a polygraph test last year. In his view it would be better to start again with a fully vetted staff and a new ethos. “The patient is terminally ill and should be put down,” he told a forum on crime organised by the opposition People’s National Party. “The cost will be great, but the cost will be even greater from not doing it. If you don’t fix crime, you can’t fix the economy.”
Some Jamaicans are prospering. Gordon “Butch” Stewart, who started his Sandals hotel chain in 1981 amid political warfare and economic chaos, is planning a new hotel in Kingston despite the recession. Patrick Casserly started a tele-services business with 35 staff in 2000; this year, he sold it with 4,200 employees to an American buyer for $85m. Thanks to its grassroots sports clubs, Jamaica also dominates the sprint events in world athletics. But these success stories are all too rare.
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[FONT='Verdana','sans-serif']Nov 12th 2009 | KINGSTON
From The Economist print edition[/FONT]
[FONT='Verdana','sans-serif']http://www.economist.com/world/americas/displaystory.cfm?story_id=14845329
The burden of debt and crime
JUST over two years ago when Bruce Golding’s Labour Party came to power in Jamaica, ending 18 years in opposition, there were modest hopes that it might make progress in tackling the island’s endemic problems of economic stagnation and gang violence. Quite how hard that is has become clear in the past fortnight with the departure first of the central-bank governor and then the police chief.
Mr Golding’s people inherited a huge national debt, much of it borrowed in the markets at interest rates that have sometimes topped 20%. Just servicing this eats up about 60% of government revenues. Then came the world recession, which has hit tourism, bauxite and remittances from Jamaicans abroad, the island’s three big foreign-exchange earners. UC Rusal, the country’s biggest bauxite operator, has shut most of its Jamaican mines because of low world prices. With tax revenue down and privatisation plans stalled, the fiscal deficit has soared.
The Bank of Jamaica’s governor, Derick Latibeaudiere, was leading negotiations for a $1.2 billion loan from the IMF. But midway through the talks, he lost his job. Mr Golding has complained about Mr Latibeaudiere’s generous salary and housing allowance, granted by the previous government. There was talk in Kingston, the capital, of policy disagreement with the finance minister. Either way, the timing of Mr Latibeaudiere’s departure was unfortunate. Standard & Poor’s, a rating agency, immediately downgraded Jamaica’s debt. Talks with the IMF will continue. Mr Golding has promised a fresh effort to cut the fiscal deficit.
The prime minister also edged out the police commissioner, Hardley Lewin, formerly a senior naval officer. Mr Lewin was blunt in his diagnosis of the crime problem. Last month he spoke of the need to “break the linkages between organised criminal networks, our politics, businesses, communities, and I dare say my own service, the police.”
The murder rate has stopped rising, but it remains high. Cocaine shipments have fallen, but gangs continue to thrive on extortion, marijuana and fraud. Yet Mr Lewin was seen by many in the police as an outsider, pushing unwanted reforms. On November 3rd Mr Golding said that he had “lost confidence in the ability of the commissioner to deliver the results.”
That smacked of shooting the messenger. Mark Shields, a British detective who was Jamaica’s deputy police-commissioner until August, recently said that he no longer believes the force can be reformed. He revealed that half the officers in a key unit failed a polygraph test last year. In his view it would be better to start again with a fully vetted staff and a new ethos. “The patient is terminally ill and should be put down,” he told a forum on crime organised by the opposition People’s National Party. “The cost will be great, but the cost will be even greater from not doing it. If you don’t fix crime, you can’t fix the economy.”
Some Jamaicans are prospering. Gordon “Butch” Stewart, who started his Sandals hotel chain in 1981 amid political warfare and economic chaos, is planning a new hotel in Kingston despite the recession. Patrick Casserly started a tele-services business with 35 staff in 2000; this year, he sold it with 4,200 employees to an American buyer for $85m. Thanks to its grassroots sports clubs, Jamaica also dominates the sprint events in world athletics. But these success stories are all too rare.
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