THE JAMAICA SNIE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00302R001101670030-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 19
• Document Creation Date: December 21, 2016
• Document Release Date: February 9, 2009
• Sequence Number: 30
• Publication Date: September 14, 1983
• Content Type: MEMO

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THE DIRECTOR OF
CENTRAL INTELLIGENCE
FROM: John R. Horton
NI0/LA
NIC 6637-83
14 September 1983
enclose a copy of an article from the
September Atlantic on Jamaica. Except
for the last couple of sentences which
are trite or pious or both, it is a
good article.
oh~. Horton
p
Attachment:
as stated
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SEPrEMBERI9RY THE ATLANTIC MONTHLY
The Reagan Administration intends to nse Jamaica as
a develognient model that will demonstrate to the Third World the superiority
otcapitalism to socialism
THE.JAMAICA EXPERIMENT
A LOT IS RIDING ON THE FUTURE OF JAMAICA. IT IS
playing a critical economic and political role not
only in the Caribbean but in Latin America and,
indeed, the Third World. The Reagan Administration has
made Jamaica a fulcrum of its national-security plans for
the Caribbean Basin. Even more significant, it has select-
ed Jamaica as the site for a high-stakes experiment intend-
ed to demonstrate the superiority of capitalism to social-
ism, the free market to state control. The result of that
experiment will have important implications for the future
of U.S. foreign policy, as well as for other Third World
countries that, like Jamaica, are seeking to solve the mys-
tery of development.
Jamaica entered center stage with the election of Ed-
ward Seaga as prime minister on October 30, 1980-five
clays before Ronald Reagan's own victory. Seaga, a conser-
vative white in a country that is 80 percent black, replaced
Michael Manley, a "brown," or mulatto, who had sought,
over the previous eight and a half tumultuous years, to
build socialism at home and a new world economic order
abroad. Manley drew close to Cuba and frequently de-
nounced U.S. imperialism, severely straining relations be-
tween Washington and Kingston.
Jamaica's move leftward under Manley; and uncertainty
about its political future, contributed to Reagan's growing
concern about developments in the Caribbean Basin. War
in El Salvador, insurgency in Guatemala, Marxism in Nica-
ragua and Grenada, refugees from Haiti-instability was
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PAGE 38 THE ATLANTIC MONTHLY
increasing everywhere along America's "third frontier," as
the region was being called. Nearly half of U.S. imports
and exports pass through the area, as do two thirds of all
our imported oil and more than half of our imports of stra-
tegic minerals.
To Reagan, Edward Seaga seemed a godsend. Here was
a Third World, leader who spoke unabashedly of the private
sector as the engine of growth-who, in short, spoke the
language Ronald Reagan liked to hear. In January of 1981,
Seaga, born in Boston, raised in Jamaica, and educated at
Harvard, became the
first head of state invited
to the Reagan White
House. The two hit it off
at once, and at the end of
their meeting, Reagan
promised that Seaga
could "count on American
support for his objec-
tives, especially in his ef-
forts to expand his coun-
try's private sector."
Seaga proposed that
Reagan formulate a sort
of Marshall Plan for the
Caribbean, in order to
help rescue its faltering
economies. That idea be-
came the Caribbean Ba-
tax breaks and tariff concessions. In the first year of the
Reagan Administration, the U.S. Agency for Internation-
al Development (AID) expanded its office in Kingston,
with a mandate to increase its links with Jamaica's busi-
ness community. The Commerce Department established a
Caribbean Basin information center to promote Jamaica
and its neighbors as attractive places for investment. And
missions of businessmen were organized to visit the island.
Reagan asked his friend David Rockefeller to-pitch in,
and Rockefeller obliged by creating the U.S. Business
Committee on Jamaica,
in order to promote in-
vestment in the country
and advise Seaga's gov-
ernment on the policies
necessary to attract it.
The committee included
some of the biggest cor-
porations in the U.S.,
among them Gulf & West-
ern, General Foods, Hil-
ton International, East-
ern Airlines, Alcoa, and
Atlantic Richfield. -
Finally, the White
House saw to it that the
International Monetary
Fund and the World
Bank, the two giants of
sin Initiative. Introduced in early 1982, the CBI included
large-scale aid for El Salvador but pointedly excluded
Cuba, Nicaragua, and Grenada. It also articulated a whole
new approach to foreign policy, much favored by Reagan.
Traditionally, U.S. assistance to the developing world has
consisted of grants to governments; the CBI provided only
$350 million in direct assistance for the entire region. It
sought, for the first time, however, to use public policies,
such as tax and trade incentives, as a way of enlisting the
private sector to help achieve U.S. objectives abroad.
American companies were to receive tax credits on their
investments in the region, while Caribbean businessmen
would prosper through duty-free treatment of their ex-
ports to the U.S. The CB], said Reagan, would enable Ca-
ribbean and Central American countries to "make use of
the magic of the marketplace" in order to "earn their own
way toward self-sustaining growth."
Jamaica was at the heart of the new approach. Even be-
fore Reagan introduced the CBI, the Seaga administration
had received about $100 million from Washington; this
year, Jamaica, a country of 2.2 million people, is the fifth-
largest per capita recipient of U.S. assistance. Although
the trade and tax sections of the CBI were held up in Con-
gress, Jamaica has been favored with a number of special
Al irked ifa.vsiuq, J'ortineely the e.reeutire editor of Ill e Columbia Jour-
nalism Review, is a writer who lives in New York City.
international finance, would share the President's interest
in Jamaica's well-being. Both institutions became involved
in the economy of Jamaica to an extent unprecedented
there.
All in all, it was an unusually ambitious effort-matched
by an equally ambitious goal. As Alexander Haig, then the
secretary of state, summed it up at the time of Seaga's
visit to the White House: "We feel strongly that the future
of Jamaica is not only of vital importance in its own right
but also as an example for the entire Caribbean Basin, a
region where so many newly formed nations and peoples
are facing the alternatives of authoritarian solutions and
economic determinism, or a market economy and demo-
cratic process. We are all vitally concerned that Jamaica
succeed."
More than secure borders and shipping lanes, then, was
Reagan has designated Jamaica a front-line state in the
global struggle between East and West-but in this case;
the conflict is not military, as in El Salvador, but material
and even moral. After nearly a decade of political turmoil
and economic decline under Manleyite socialism, Edward
Seaga is receiving the means necessary to show that un-
leashing the private sector can promote growth in a demo-
cratic framework. In short, the Reagan Administration
hopes to make Jamaica a model for other Third World
nations.
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SEPTEMBER 19&9 THE ATLANTIC MONTHLY
I DECIDED TO GO TO JAMAICA RECENTLY FOR A LOOK AT
how the model is faring. Prime Minister Seaga's pub-
lic-relations firm in New York had laden me with glow-
ing accounts of the turnaround of the Jamaican economy. I
had met with members of the Rockefeller committee and,
in Washington, with officials at the Departments of State
and Commerce; all said they were pleased with the prog-
ress Seaga was making.
When I arrived in Kingston, the capital, I quickly found
much that seemed to bear out their optimism. The streets
were crowded with shiny new Mercedes-Benz, Toyotas,
and Hondas. Building cranes hovered over new office com-
plexes rising in Kingston's modern business sector. The
Doily Gleaner, the powerful national paper, was filled with
stories about investment projects and a healthy tourist
season. At the Pegasus Hotel, I saw a tour bus pull up to
the front entrance and disgorge a score of Japanese busi-
nessmen, arriving to expand their holdings in Blue Moun-
tain coffee, a popular item in Japan.
The real seat of power in Jamaica these days, in fact, is
not Jamaica House, the prime minister's office, nor Parlia-
ment, nor the central bank. Rather, it is the Pegasus, a
modern, deluxe structure that rises eighteen stories in the
center of Kingston. Here gather economists from the
World Bank and the International Monetary Fund; officials
from the U.S. government; investors from Kansas, Israel,
and Hong Kong; bankers,
diplomats, journalists,
and consultants with ex-
pertise on everything
from exchange rates to
water pumps.
At a reception held for
a group of visiting Ameri-
can businessmen at the
residence of William
Hewitt, the U.S. ambas-
sador, the mood was up-
beat. In attendance were
top staff members from
the embassy, AID execu-
tives from Washington,
the executive director of
the Rockefeller commit-
tee, representatives from
bristling out. Now, at least, government people wear blaz-
ers and ties." The comment captured the tone of the eve-
ning: things were back to normal, discipline had been re-
stored, profits waited to be made.
There were signs, however, that not all, was well. At my
hotel (not the Pegasus), the power went out almost every
day, and the water stopped running every night. The baux-
ite industry, the country's largest, was in its worst slump
ever. And the powerful trade-union movement, relatively
quiescent after Seaga's election, was issuing one strike
threat after another.
Most ominous, unemployment, at 27 percent, was ris-
ing, and the sense of expectancy that had welcomed Sea-
gd's victory seemed to be giving way to something darker.
Visiting a crafts market soon after I arrived, I was accost-
ed by one of the many drug dealers who prowl the area. I
turned down his offer, but we began to talk. "Seaga's no
good for the people," he said angrily. "He's brought all the
capitalists down here with their money. But. we don't see
any of it. No one has any money."
"At first, you get the impression that things are better
here," a Jamaican journalist told me. "But it's just a ve-
neer. Underneath, there's the same level of unemploy-
ment, the same disadvantage, the same seething. The
ghettos are still there. If you scratch the surface, you find
the same feeling of resentment."
Kingston is a tense, di-
vided, politicized place.
Its very topography pro-
vides a lesson in the coun-
try's social stratification.
The city slopes gently up-
ward from its stunning
blue harbor, the seventh-
largest natural harbor in
the world. Then, at its
midsection, the city be-
gins to rise sharply to
meet the foothills of the
Blue Mountains, which
form a dramatic, dark
backdrop to the city's life.
In the flat, low-lying
section are the mean,
smoldering black shanty-
corporations like United Brands and Control Data, and
the cream of the Jamaican political and economic
establishment.
"Under Manley, the city was dirty, and people didn't
want to work," I was told by a distinguished-looking Ja-
maicdn in a dark suit. I later learned that he was the head
of a major private-sector organization. "He succeeded in
destroying the country's social fabric, especially with his
rhetoric, which seemed intentionally aimed at alienating
people. Government representatives would come to busi-
ness functions with their shirts open to the waist and hair
towns of West Kingston, which bear names like Trench
Town, Lizard Town, and Concrete Jungle. It is a place of
"burnin' and lootin'" and "weepin' and wailin'," in the
words of Bob Marley, whose reggae anthems capture the
explosive nature of life in Trench Town, where he grew up.
Here families of six, eight, or twelve live in ramshackle
houses with corrugated zinc roofs and concrete walls. Chil-
dren run about shirtless and barefoot, alongside chickens
and goats that pick at the littered streets. Unemployment
in these ghettos can run as high as 80 percent, and survival
usually means hustling-peddling, stealing, playing the
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PACE 40 TnE ATLANTIC MONTHLY
black market, or dealing in "ganja," as marijuana is known.
As the city's altitude rises, so does its standard of living.
Jamaica's small non-black population-scions of British
plantation owners, Syrians, Chinese, and Jews, and up-
wardly mobile browns-lives in the hills. Here the neigh-
borhoods have names such as Beverly Hills, and the air of
country clubs. Elegant mansions are set far behind high
concrete walls topped with barbed wire; at night, guard
dogs bark ferociously at the slightest rustle. Many yards
boast satellite dishes, which pick up American TV programs.
These enclaves are visible throughout Kingston; the man-
sions of Beverly Hills can be seen from Trench Town.
The political divisions in Kingston run as deep as the
social ones. National debate breaks along the fault line
separating the two major parties: Seaga's Jamaica Labour
Party (JLP) and Manley's People's National Party (PNP).
The two clearly demarcate right and left, but allegiances
often seem to defy logic. West Kingston is a patchwork of
political turfs, in which party control changes with the
street or neighborhood. Loyalty is enforced by armed
gangs, each linked to one of the parties. In Parliament,
Edward Seaga represents Denham Town, a poor, tough
neighborhood that regularly gives the JLP 95 percent of
its vote. PNP supporters do riot show themselves here;
instead, they stick to their own area, in the next neighbor-
hood over. Every election year, West Kingston's slums
erupt into violence, as
g ngs'raid the strongholds
of their rivals, eager for
the favors a victory for
their party would bring
them.
Politics in Jamaica
seems to touch everyone
in deep, personal ways, of-
ten splitting families and
rupturing friendships. For
instance, an interview
with Anthony Abrahams,
the minister of tourism,
began as a rather bland af-
fair, focusing on hotel oc-
cupancy rates, tourist ar-
rivals, and the like. Then,
in passing, Abrahams men-
and joined in. They were still going at it ten minutes later,
when I excused myself to make a telephone call.
Politics was not always such a divisive, business. For
years after World War II, the two parties agreed on the
path Jamaica should pursue: the island's economy, domi.
nated for centuries by sugar plantations, needed rapid in-
dustrialization. Inspired by Puerto Ricos Operation Boot.
strap, which seemed to have brought instant prosperity,
Jamaica's leadership in the 1950s courted foreign investors
with promises of liberal tax breaks, cheap land, and a disci-
plined work force.
by the beauty of the North Coast and the hospitality of the
government, built luxury hotels in Montego Bay and Ocho
in aluminum, was critical to the world's expanding auto.
mobile and aerospace industries, and Jamaican soil con-
tained rich deposits of it. Reynolds and Kaiser, among oth-
er aluminum companies, began digging huge pits in the
Jamaican countryside, and by the late 1950s, the island
In the decade after in-
dependence from Britain,
8 beginning in 1962, the
gross national product
grew by an average of 6
percent a year. But that
tioned that he had been Manley's director of tourism until 1974,
and I asked how he had made such a change in loyalty. Suddenly
growing impassioned, Abrahams began nervously pacing his of-
fice, and spent the remaining fifteen minutes denouncing Man-
lev with all the fervor of a disillusioned believer.
One day, while sitting on the veranda of my hotel, I fell
into conversation with one of the front-desk clerks and her
boyfriend. The talk immediately turned to politics, and
within minutes, the two of them were shouting at one an-
other about the 1980 election, she defending Manley, he
Seaga. Soon another clerk, hearing the uproar, came out
skewed. In the push for
industrialization, agricul-
ture was neglected. Sug-
ar began a relentless de-
cline. Peasant farmers
were forced to look for
work in Kingston and be-
yond-in New York, To.
ronto, and London. Ac-
cording to one study,
Jamaica in the mid-1960s
had the most unequal
distribution of income in the world. The sight of rich
Americans sipping rum punches under the patens height-
ened the deprivation felt by blacks, who were effec-
tively barred from hotels and beaches. This inequaljty
fueled the growth of black protest groups and of Rastafar.
ianism, a religion that preaches black superiority and radi-
cal social change. By 1972, social tensions had reached a
boil. , r
During the election campaign that year, the PNP, under
Michael Manley, called for a transformation of Jamaican
society Manley, a charismatic young labor leader and a son
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 of Norman Manley, the party's founder, campaigned on slo-
gans like "Better must come." He took 56 percent of the
vote-a clear mandate, he felt, for fundamental change.
Jamaica, Manley told the opening session of the new Par-
liament, was to become a "land of social justice."
As Manley recalls in his recently published assessment
of his term, Jamaica: Struggle in the Periphery, his gov-
ernment sought a "third path," a "non-capitalist path of de-
velopment to distinguish experiments like ours from the
neo-colonial capitalist model of the Puerto Rican type and
the Marxist-Leninist
model of the Cuban
type." Manley writes that
he wanted to create an
economy "more indepen-
dent of foreign control
and more responsive to
the needs of the majority
of the people at home,"
and to build an "egalitar-
ian society" in which
"people felt that they
were of equal worth and
value." This was to be ac-
complished by reducing
foreign ownership of in-
dustry and agriculture,
reining in the local oligar-
chy, increasing state con-
with his belief in economic nationalism, he sought to
strengthen local manufacturers, providing them with spe-
cial credit facilities, tax rebates, and accelerated depreci-
ation rates. The PNP adhered to a policy of "import substi-
tution" introduced in the 1960s, by reinforcing tariffs and
import quotas in order to protect factory owners against
foreign competitors. Manley also encouraged domestic
manufacturers by giving them incentives to export their
goods.
Nevertheless, the economy entered a decline. The 1978-
1974 oil crisis and ensuing
world recession crippled
the island, which re-
mained heavily depen-
dent on trade and thus
especially sensitive to de-
velopments abroad. Ja-
maica's oil bill tripled
overnight, and the price
of bauxite fell. This exac-
erbated the problems
caused by Manley's do-
mestic programs. The
sugar cooperatives fared
poorly, as a result of inad-
equate support and poor
management. A rise in
crime, reported in the
U.S. press in such detail
trod of the economy, and fostering grass-roots participation
in national decision-making. The PNP prepared to make a
radical shift in the country's balance of power.
The new government passed laws establishing materni-
ty leave, severance pay, and a minimum wage. It expanded
access of the poor to education, initiated a literacy cam-
paign, and opened rural health clinics. A new national
housing agency began building thousands of low-cost
units. The government established an ambitious jobs pro-
g;ram to combat unemployment, and, when that proved in-
adequate, expanded public enterprises in order to accom-
modate more employees.
Using revenues from new taxes and levies, the state
took over important sectors of the economy, purchasing
the country's largest utilities, its only cement plant, sever-
al banks, and nearly half the large hotels. It bought all
foreign-owned sugar estates and the mills situated on
:hem. And, in the biggest test of all, the government in
D74 decreed a new levy on the bauxite companies, which,
in one stroke, multiplied Jamaica's bauxite revenues six
times. The government also nationalized 51 percent of Kai-
ser's and Reynolds's local mining operations.
Manley instituted a number of measures intended both
to stimulate balanced growth and to promote equal distri-
oation. He passed a law forcing idle farmland into produc-
.ion and leased much of it to small farmers. He set up sug-
.ir cooperatives on the newly acquired plantations. In line
that Manley suspected malice, kept many tourists away.
Most important, the government became engaged in a
costly war with the private sector. Its redistributive poli-
cies, which included passage of new taxes on wealth and
property, unsettled many members of the middle and up-
per classes. 'T'heir insecurity was heightened by the gov-
ernment's rhetoric, especially after 1974, when it declared
its commitment to "democratic socialism." The PNP issued
frequent denunciations of capitalist exploitation, and do-
mestic investment dried up. At one point, Manley remind-
ed disgruntled members of the elite that five planes a day
left for Miami; thousands took his hint, flying away with
their money and their appreciable skills.
By the middle of Manley's term, banking windows in the
West had closed to the PNP Foreign reserves fell so low
that. the government imposed a variety of austerity mea-
sures, including strict controls on imports and higher taxes
on luxury goods, but nothing seemed to help. In 1977, the
government went hat in hand to the IMF, setting in motion
a confrontation between one of the Third Worlds leading
anti-imperialists and the premier financial institution of
the capitalist world. The IMF placed increasingly strin-
gent conditions on loans; the Jamaican economy kept de-
teriorating. Finally, in 1980, the PNP resolved to go it
alone. It broke with the Fund and called a general election
as a referendum on its decision.
Jamaica has still not recovered from the viciousness of
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 I PAGE 42
the 1980 campaign. Manley accused the JLP of conniving
with the CIA to destabilize his government; the JLP, un-
der Edward Seaga, denounced the PNP as a cabal of com-
munists. As the campaign lengthened, goods became in-
creasingly scarce, and by the end of it, people literally
fought over what little food was left on supermarket
shelves. Throughout the campaign, Kingston's rival gangs
did nightly battle, their M-16 rifles creating a staccato ac-
companiment to the bitter charges exchanged by the two
candidates. By election day, 750 people had been killed.
It is a tribute to the durability of Jamaica's democratic
tradition that the vote took place as scheduled, on October
30. A full 87 percent of the electorate voted-58 percent of
them for Edward Seaga. He took office the next day, prom-
ising to undo the strife and decline of the previous eight
years. ,
The economy was in dismal shape. Inflation was running
at 27 percent. So was unemployment. The country's GNP
had dropped a cumulative 20 percent over the course of
Manley's term. It was estimated that 18,000 Jamaican
professionals and managers had left the island, most of
them for good. The country's three chief foreign-exchange
earners were in crisis: bauxite was hit by world recession;
sugar was continuing its steady decline; and tourism had
been depressed by election-year violence. A badly shaken
public looked to Seaga to make the country whole again.
A year later, it seemed that he had. Inflation went down
sharply, to only 5 percent. Construction grew by 4 percent,
reversing a 30 percent decline of a year earlier. Tourists
began coming back. The country was swamped with for-
eign-investment proposals. Unemployment, though still
high, showed signs of going down. In 1981, the economy
overall grew by 1.8 percent-an impressive figure, com-
pared with the 5.4 percent drop in 1980. Washington's in-
vestment seemed to be paying off.
HOW HAD SEAGA PULLED OFF SUCH A DRAMATIC
change? His first priority upon taking office was to
restore a sense of calm. He pledged a crackdown
on crime and violence. He called for a return to discipline
and, as an example, reinstated the jacket and tie as official
attire, in place of the informal bush-jacket look Manley had
popularized. Seaga unceremoniously ordered the Cuban
ambassador off the island; Cuban doctors and technicians
soon followed him.
They were quickly replaced by advisers from the capital-
ist world, as part of Reagan's plan to make Jamaica a show-
case of free.market growth in the Third World. AID ex-
panded its office in Kingston to sixty-eight members.
Scores of consultants arrived to conduct time-and-motion
studies in Jamaica's factories, to formulate organizational
reforms for its bureaucracy, and to assess the condition of
its sugar mills. The government hired a British manager to
run the national power company and a Canadian to head
the railway system.
Soon, money-lots of it-began flowing into tl
try. At a March, 1981, meeting of the Caribbean C'
Cooperation in Economic Development, composed
resentatives of major Western donor nations, Jam
ceived pledges of $350 million in grants and loan,:
coming ,year. The World Bank put up an addition.,
million, and the IMF $698 million over three year
maximum amount Jamaica could receive under this
quota system.
The World Bank loan was, in many ways, the in,
portant. In return for it, Jamaica agreed to imple:
new Bank program called "structural adjustment.
program called fora transformation of the Jamaican
my over a five-year period. The role of the state was
cut back, the economy deregulated, foreign investme
licited, and exports promoted. Jamaica was to un
what Seaga described as "perhaps the most fundame,
ambitious redirection of the economy ever undertaker
Government of Jamaica."
A divestment committee was appointed to sell co
nies that had been state-controlled under Manley.
thirty to forty enterprises were to be offered for
ranging from a small dairy processing plant to the Ia
co Daily News, a newspaper founded by the PNP go(
ment. Top priority was given to eight luxury hotels,
the PNP had bought when their owners threatens
close them (luring a tourism slump brought on by the
recession. Their condition had deteriorated under
ownership, and Seaga now welcomed bids from the prn
sector.
As part of Jamaica's agreements with the IMF and
World Bank, Seaga sharply cut public spending and be;
phasing out many of the price controls that Manley I
imposed on necessities, especially food products. Conte
were lifted from butter, biscuits, cheese, sugar, inf
foods, evaporated milk, and packaged rice. The gove.
ment eliminated rent-control ceilings, which the Man)
government had strictly enforced in order to help prott
tenants; to Seaga, such a measure represented inter-ft
ence in the marketplace. The JLP set a low priority
public housing construction, preferring that the privy
sector fake the lead. Building applications came pourir
in, and deluxe apartment complexes began to rise in nit
neighborhoods.
Seaga sought to deregulate the country's import-licerc
ing system, which Manley had introduced as a means r
conserving scarce foreign exchange. For Jamaica, fo ekr
exchange is a precious commodity. Manufacturers need i
to pay for the raw materials and machinery they import fo
their production processes. As investment dried up am
loans failed to materialize in the mid-1970s, Manley began
rationing foreign exchange in an effort to make sure that i~
was used for productive purposes only. Commercial banks
were prohibited from dealing in foreign exchange. To bring
goods into the country, an entrepreneur had to obtain to
license from the government, which allocated him the hard
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currency to pay for them. Many luxury items were banned
altogether. Though well-intentioned, the licensing process
was time-consuming, cumbersome, and, in the end, rid-
dled with corruption.
Foreign exchange continued to be in short supply under
Seaga, because of drops in earnings from bauxite and sug-
ar. While still barring banks from buying or selling foreign
exchange, Seaga issued licenses to importers without pro-
viding them with currency; in effect, he sanctioned the use
of black-market American dollars to pay for goods abroad.
He also removed many items from the prohibited list. Fur-
ther, customs agents were advised to relax their vigilance,
making it easier to bring in goods illegally. Before long, the
country was flooded with imports of everything from
cheap food and cigarettes to videotape players, color TVs,
and expensive cars. One result was a sharp drop in the cost
of living.
Nothing received more of the government's attention
than the drive for exports. This represented a sharp turn
away from the "import-substitution" policy of the Manley
years. That strategy had succeeded in building up a diver-
sified industrial plant, but by the late 1970s, its limitations
had become obvious. Jamaica offered too small a market to
sustain consistent industrial growth, and besides, protec-
tion against foreign competition allowed local companies to
become sluggish and inefficient, forcing consumers, in ef-
fect, to subsidize them
through higher prices.
There was an alterna-
tive, as demonstrated by
the striking success of
the so-called newly indus-
trialized countries of
East Asia. During the
late 1960s and the 1970s,
Singapore, Taiwan,
South Korea, and Hong
Kong achieved phenom-
enal growth by mounting
an aggressive strategy
called export-oriented in-
dustrialization. Low
wages enabled these
countries to manufacture
light goods far more effi-
ciently than could the industrialized West. As a means of
spurring local companies to look to foreign markets, im-
port barriers were lowered and liberal export incentives
established. To obtain the capital needed for expansion,
the governments lured foreign investment with generous
tax holidays and the promise of cheap labor.
The high growth rates that resulted turned the heads of
many Third World politicians, not least members of the Ja-
maica Labour Party. Anthony Johnson, a high-ranking of-
ficial in the Ministry of Industry and Commerce, explains
that during the 1970s, his party "had the opportunity to
look at the countries of the world to determine which
succeeding and which failing." He said, "We saw that
countries with open economies and an export orient
did the best. The closed models, on the other hand, ex
enced a falling standard of living, high unemployr
high inflation."
So the Seaga government set about converting Jan
into a Caribbean Singapore-a country that frequE
comes up in conversations with JLP officials. Seaga b,
preaching exports at every opportunity, and he put do:
tic manufacturers on notice that the easy life was ov'
their protective covering was to be dismantled. The
declared that import quotas would be phased out be
ning in early 1982; within a mere five years, 364 restri
items were to be decontrolled. The government hope,,
the competition from abroad for local markets would f
Jamaican companies to become more efficient in prod:;
goods for export. In setting export priorities, the gov
ment concentrated on the same labor-intensive sect,.,
shoes, garments, electronics-that had proved so succ
ful for the Far East.
As Singapore and its neighbors demonstrated, exo
oriented industrialization requires considerable infus
of foreign capital, and Kingston's pursuit of it was dog,
It hoped to attract assembly factories along the Mexr
U.S. border leaving because of concern over Mexico's
nomic future; light-ma
factoring plants le;-:
Singapore and South
rea, which are moving i
the production of steel
semiconductors; and
garment and electrum
companies seeking lov
labor costs.
The government c
patched trade missior:
California and Asia,
ducted investment se:
nars abroad, and bout
special advertising .,
tions in prestigious Ame
can publications. Se:t
himself was evervwh,
traveling to meet cor;
rate executives in New York, Atlanta, the Silicon Valle}:
order to field queries and assist investors, he establishe%
new agency, called Jamaica National Investment Promo) ii
Ltd., a one-stop investment center modeled after the ageu
in Puerto Rico that had spearheaded Operation Bootstra
Chase Manhattan sent a banker to help JNIP get off d
ground, and AID drew up an elaborate organizational pl:
for the next five years.
All in all, it was a year of intense activity, and it braviu
performance by Edward Seaga. He could be excused ti
sounding boastful when he described his government
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achievements. "The economy has reversed its course
from the degeneration of the middle period in the 1970's
and is definitely underway in the restoration of a path
of consistent growth leading to the expansion of new
development opportunities for employment," he stated in
an April, 1982, report titled "Jamaica's Economic Turn-
around." He added that "standards of living will once again
rise in the 1980's." Growth for 1982 was projected at 4
percent.
Before long, however, the marketplace began to lose
I SPENT AN AFTER-
noon in Kingston
wandering around
Coronation Market, a
hot, dirty, soulless place
that sprawls through the
heart of the capital.
Women from the country-
side sat wearily behind
meager piles of yams,
mangos, cassavas, and
ackees (an exotic-looking
fruit that is the national
food). Young men pro-
uelled produce-laden
.rmtdcarts through , the
=rrrwmr - _~ s
her two children, aged seven and eight. "It was better un-
der Manley," she added. "You could at least afford to get
somewhere to live. Now, if you can't afford to pay $200 or
$300 a month [$110 to $165 in U.S. dollarsj, they put you
out."
As we talked, a crowd of twenty or thirty people gath-
ered around us-a white visitor is rare in Coronation Mar-
ket-and others came forward with their own hard-luck
stories. I learned that many had been forced to take up
residence in this dispiriting place. All complained of sky-
rocketing prices. "The
times is terrible," said a
gentle-looking older man
narrow, crowded streets. Mounds of refuse were everv-
where, attended to only by flies and stray dogs. And on 'a
side street, an itinerant preacher held an impromptu reviv-
alist meeting, the sound of tambourines and psalms mo-
mentarily injecting a note of hope into the torpid
.d'ternoon.
I visited the market at a time when the government's
price decontrols were starting to take effect. In the last
weeks of 1982, the price of sugar had risen by 30 percent;
the price of condensed milk, a Jamaican staple, soon fol-
lowed. With the phasing out of rent controls, landlords had
raised rates to two, three, even four times what they had
ucen when Seaga took office. Though the 1982 inflation
rate of 8.4 percent remained low by past standards, it was
hitting the poor with disproportionate force.
Walking clown one vendor-lined street, I passed a wom-
an who sat beside a small food stall, a vacant look on her
face. I asked her how things were going. "Do you really
want to know?" replied the woman, who appeared to be in
rer early thirties. "I'll show you." She gestured to her
hree-by-five-foot kiosk and said, "This is where I sleep." I
,.oked inside and saw neatly arranged cylinders of peas.
reans, pimentos, flour, and rice, some canned goods, and,
v one side, a small space. "I was living in a building," she
2: plained in a numbed tone, "but it was sold, and I was
,iver notice. I've been living here since August. I pack up
he place ever,.% night and go to sleep in it." She is joined by
who wore a sailor's cap.
"They never been like
this before. People can't
get jobs. Many have to
thieve to survive." He
concluded bitterly: "Poli-
tics-that's just a matter
of some able to eat and
others not. All I say is, if
there's a cake, let some of
the smallest morsels
reach us."
Another result of Sea-
ga's changes was on dis-
play at the nearby Nig-
glers' market, located in
a spacious, warehouse-like building on the city's main
square. Inside the ill-lit structure were row upon row of
small fenced-in cubicles, each bursting with shoes, skirts,
hats, sunglasses, pocketbooks, cosmetics, appliances-all
the items one might find in American stores. That, in fact,
is where most of them came from. Every week, hundreds
of Jamaican higglers board planes to Miami or Panama, fill
suitcases with consumer goods, and return to sell them in
Jamaica. Although the travel and the use of black-market
dollars jack tip the price, the items are snapped up quickly,
since most Jamaicans shun locally produced goods as
inferior.
The higglers began operating under Manley, when the
imposition of import controls made smuggling profitable.
But they came of age with Seaga and his relaxation of im-
port restrictions. Seaga admired their entrepreneurial in-
genuity, and he had promised the middle class that he
would make the scarcities of the Manley years a thing of
the past. So, even though many of the goods brought in,
like shoes and clothing, were still technically prohibited,
Seaga tacitly gave the higglers his blessing on taking of-
fice. The tide of cheap imports that resulted made the mid-
dle class happy
At the same time, however, it had a devastating effect
on local mnufacturers. Suddenly after years of protec-
tion, they found themselves up against efficient companies
abroad; many simply could not compete. To compound the
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PACE 46 TIE ATLANTIC MONTHLY
problem, the government's attempts to liberalize the li-
censing process had backfired. Factory owners were out-
bid by the higglers and others for black-market currency,
making it hard for them to obtain the foreign exchange
they needed to buy raw materials and capital goods: manu-
facturers still had to wait months to get their licenses.
"Deregulation has so far meant considerable losses for
many of us," Anthony Williams, president of the powerful
Jamaica Manufacturers' Association, told the group last
summer. According to JMA figures, government policies
had forced thirty-three
factories to close, throw-
ing thousands out of
work. By mid-1982, the
private sector was in re-
volt. Businessmen pro-
tested that they heard of
policy changes only
through the news media.
The Ministry of Industry
and Commerce, expected
to represent the interests
of manufacturers, be-
came one of their chief
targets, as a result of its
high-handed industrial
policies. Shoes and gar-
ments were particularly
hard hit. "Shoe Industry
for instance, the group of businessmen feted at the L
ambassador's residence last January. Their visit was sp
sored by the Overseas Private Investment Corporation
U.S. agency that has been actively promoting investor
in Jamaica as part of President Reagan's Caribbean P:.
strategy. The fourteen delegation members were a dive
lot, ranging from a Kansas popcorn packager to the ow
of a physical-fitness resort for executives in Palm Spr
Accompanied by a retinue of oPic aides and AID office
the investors became virtual celebrities during their wig
on Verge of Collapse," the Daily News declared in a Febru-
ary 11, 1983, banner headline. It reported that the indus-
try was "collapsing at a rapid rate" owing to competition
from 750,000 pairs of shoes that had been illegally brought
into the country by higglers. Half-a-dozen factories had
gone under, and nine others had laid off employees. Eleven
garment plants had also gone out of business.
"Jamaican manufacturers desperately needed a three-
year breather, instead of going immediately into structural
adjustment," says Paul Thomas, deputy president of the
JMA and owner of a large shoe company Instead, the IMF
and the World Bank "demanded structural adjustment in
one year," he says. "It has been put in place before indus-
tries have had a chance to put their infrastructure into
place. Remember, this is a country that, over eight and a
half years, suffered tremendous setbacks. Many of our fac-
tories were run down and had to be retooled."
Thomas hastens to add that he, like most Jamaican busi-
nessmen, supports the government's export drive. Ex-
porting hag helped his company grow by 400 percent since
Seaga took over. But Thomas feels that the way the drive
was implemented has caused unnecessary dislocations.
"What we are talking about is pace and coordination," he
says. "It's in the coordination that the World Bank and
IMF aren't getting down to realities."
At the same time, the JLP's projections for foreign in-
vestment have proved to be overly optimistic. Consider,
long stay, attendi
luncheons with lea''
businessmen, briefing:
government officials,
a private meeting witL
prime minister himself
Despite the special
tention, the business i
did manage to glimf
some of the costs of doi
business in Jamaica. DI
ing a fancy lunch at t
Pegasus, for instance, t
lights suddenly w:~
out-a rude introducti
to Jamaica's undependal
power supply. The gro
heard a great deal abc
Jamaica's vocal la')
movement, its high shipping rates to the U.S., and t
prospect of Michael Manley's return to power. For at lr!
one investor, a manufacturer from Hong Kong, it was
too much; he told me that he had decided to locate his ph'
tics plant in the Dominican Republic instead.
The majority of the visitors, however, were impres_;
by the hospitality shown them. "I sense a very upbnna
organized, 'We want to help you do business' attitude
Jamaica," said Gary Bechtel, head of a data-processh
company in New Jersey. Like others, Bechtel was her
erred by President Reagan's interest in the island. "Give
what Reagan is trying to pull off here," he said, "I cou
make a lot of money before worrying about getting cio
bered politically"-if Manley returned. Bechtel is nc
moving ahead with his plan to set up a keypunch operati'
in Jamaica. Many of the other oPic delegation membe
are also seriously considering investing in Jamaica.
Most of their businesses, however, are quite sma
Bechtel's, for instance, would represent an outlay of le
than $1 million and, initially, only about sixty jobs. TIv
far, very few large corporations, including the titans rep,
rented on the Rockefeller committee, have shown nu'
interest in Jamaica. The recession is partly responsihi
"Whereas in the past an IMF agreement was a seal
approval for investors," a prominent banker in Kingstc
says, "the tap is now dry." Since Seaga took office, fore',
investment has generated only a few thousand jobs, rep"
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senting a reduction of less than one percent in the coun-
try'.s unemployment rate.'In short, U.S. capital is proving
no panacea.
Nor has the JLP's divestment program lived up to ad-
vance billing. Continuing uncertainty about the tourism in-
dustry resulted in exceedingly modest bids for the eight
hotels on sale. Rather than settle for deflated prices, the
government decided to retain ownership and lease the ho-
tels. and by the beginning of this year it had arranged such
deals for most of them. Seaga made it clear that he had no
intention of selling off the public utilities Manley had na-
tionalized. Midway through its term, the Seaga adminis-
tration had divested only a handful of trifling enterprises
and shut down one, the Daily News.
It did, however, significantly expand its holdings. Last
September, Seaga dismayed the private sector by buying
the Esso refinery in Kingston, the country's only such fa-
cility. Seaga said that Jamaica could no longer afford to
have a foreign corporation set prices for the country's pe-
troleum products. "The government is still buying things
that we think should be in the private sector,"says Neville
James, director of a leading private-sector group. "Gov-
ernments like ownership, and this one is no different in
that respect."
Divestment is only one of the areas in which the Seaga
;overnment has had to change course. The growing explo-
siveness of the ho
i
us
ng
situation eventually per-
?uaded the JLP to intro-
duce a rent-restriction
net, which reinstated con-
trols. (It passed Parlia-
ment last March.) And,
recognizing that housing
rnnstruction could no
anger be left exclusively
o the private sector, the
'overnment announced
hat it would step up the
ace of public building
its year.
Seaga also conceded
at the structural-ad-
stnnent program was
it proceeding exactly as
cant move of all, Seaga announced that the country was
going on a dual exchange rate that would make Jamaican
exports more competitive abroad and imports (except es-
sentials) more expensive.
Seaga insisted that the new exchange rates did not con-
stitute a devaluation-an understandable position, since
he had persistently criticized devaluations under Manley
as evidenceand ofeconomistseconomifeltc mismanagedualmthe
ers
that ent.exchangeBut many bank-
rate was a
devaluation by another name. As the Daily News said,
Seaga's Speech was "reminiscent of those given by former
Prime Minister Michael Manley in the final years of his
administration
h
w
en economibl
c proems were mounting."
In all, 1982 was not kind to the Seaga government. In-
dustrial capacity dropped even lower than it had been un-
der Manley. The country's trade deficit increased. Unem-
ployment began to rise again, from 25.7 back to 27
percent. The GNP fell 0.2 percent for the year.
The government attributed the economic decline to the
world recession. The recession undoubtedly played a role,
as in the 30 percent drop in bauxite production. But the
JLP's own free-market policies were clearly culpable as
well. The phasing out of price controls had caused serious
hardship for the poor. Rent increases had compelled intro-
duction of new controls. Deregulating the economy had
proved disastrous for many manufacturers. Curbs on gov-
anned. Customs procedures were tightened up. The hig-
-rs, those models of free enterprise, were made subject
import quotas. The biggest change came in a major eco-
mic address made by Seaga last January. Admitting that
re had been a "breakdown in the issuing of licenses," he
roduced a new system that, as under Manley, would al-
Ite foreign exchange to each manufacturer for the pur-
se of essential goods. In an acknowledgment that the
ernment had not properly taken the needs of the pri-
sector into account, the Prime Minister introduced a
array of export incentives. Finally, in the most signifi-
ment, like its predecessor,
had discovered that
b
pu
-
lie ownership has its place.
The Jamaican "model"
was proving far different
from what Washington
had intended.
0 NE AFTERNOON, I
set out to visit a
farm started by
two Israeli investors in
central Jamaica. The "Is-
raeli farm" had been men-
tioned time and again by government officials, who as-
signed it a key role in the JLP's agricultural program. I
was particularly eager to see it, because of my growing
sense that the success of any government in Jamaica
hinges on how it meets the challenge of the countryside.
The rural sector is the island's biggest source of employ-
ment, providing jobs for 37 percent of the population. But
it contributes only 8 percent of the gross national product,
making it the most inefficient sector as well. Jamaica, an
all-year greenhouse, must import much of its food.
Here, differences between Seaga and Manley seem par-
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PAGE 48 THE ATLANTIC MONTHLY
ticularly sharp. The JLP has invited in large foreign com-
panies. To Manley, their very names evoke the plantation
system, but the government claims that it will be setting
the terms for their activities. It has signed a joint-venture
agreement with United Brands, for instance, the succes-
sor company to the infamous United Fruit, to plant more
than 2,000 acres of high-quality bananas. Seaga quickly
disbanded the sugar cooperatives so dear to Manley, and,
under the structural-adjustment program, promised to
shut down two of the country's most inefficient sugar mills
and lease four of the remaining five to private concerns.
Among the candidates to take them over are Gulf & West-
ern, a Rockefeller committee member with enormous sug-
at- holdings in the Dominican Republic, and 'fate & Lyle, a
British company that once owned plantations in Jamaica.
The government hopes that such measures will increase
sugar output from the 200,000 tons produced in 1982-the
lowest level in decades.
Even if production rises, sugar, an industry suffering
from the popularity of artificial sweeteners, will never
play the dominant role it once (lid in Jamaica. Seaga is
strenuously promoting exports of nontraditional products
such as flowers, honey, and vegetables. The Israeli farm
represents an intensive effort to show that Jamaica is ide-
ally suited to produce vegetables for the lucrative winter
market of the northeastern United States.
The farm is on 200 acres of prime land about fifty-five
miles west of Kingston. I flew there with one of the Israe-
lis, Eli Tisona, in a helicopter lent us by the Jamaican
armed forces-an indication of just how much the govern-
ment has riding on this project. Arriving in mid-morning,
we found the farm dotted with women stooping among the
symmetrical rows of tomatoes and green peppers. They
placed the ripe vegetables in baskets that, when full, were
picked up by tractors and transported to a nearby packing
plant.
"Three months ago, there was nothing here but a run-
down farm," said Tisona, who, with another Israeli, has
put up about half of the farm's $2.5 million cost. (The gov-
ernment has contributed much of the remainder.) "Al-
ready, we're sending two shipments a week to New York.
We bring in 747s to fly out the produce. It arrives on the
streets of New York within forty-eight or seventy-two
hours of being picked."
The farm employs about 250 Jamaicans, most of them
earning the equivalent of $6 to $8 a day. "Everybody
warned us about the employees," saidTisona, an ebullient
man who is eager to impress the farm's frequent visitors.
"They said the Jamaicans are lazy, you're going to lose all
your money. But most of these people haven't had jobs in
the last five years and are eager to work. Everything's
worked out perfect."
Notwithstanding that assessment, there have been sub-
stantial obstacles, not all of them overcome: power failures
can ruin vegetables under refrigeration; all equipment
must be imported; transportation can break down; and, as
Tisona says, "the bureaucracy is terrible." Many Jamai-
cans doubt that the farm will ever show a profit. "I can
count fifteen or twenty winter-vegetable projects in Ja-
maica that have not worked out," an official associated
with the project admitted to me. "This one looks good so
far, but we still need to see how it comes out."
While the government has lavished its attention on the
Israelis, what of Jamaica's hundreds of thousands of peas-
ant farmers? Traditional agriculture was the one economic
sector to prosper under Manley, growing by an average of
7 percent a year during his term. He had leased land to
small farmers, guaranteed them good prices, and protect-
ed them against imports.
Seaga, on the other hand, put free-market principles to
work. He began phasing out the price-support program
and removed restrictions on food imports. Jamaica was in-
undated with cheap food. The results were catastrophic for
small farmers. Domestic food production dropped by 19
percent in 1982; potatoes fell by 40 percent, and cereals by
57 percent.
Shortly after my visit to the Israeli farm, I made an-
other, quite different excursion into rural Jamaica, to a
small farming village in the Blue Mountains called Woburn
Lawn. Here, an hour east of Kingston, peasants cultivate
primitive two- or three-acre farms of scallions, gungo
peas, yams, and beans. I was greeted with tales of severe
unemployment and plunging incomes brought on by the
government's policies. One farmer, Anabelle Crosdale,
told me, "Most of last year was bad. We couldn't make a
profit-we were just able to feed ourselves." Crosdale,
who at sixty-two still climbs the side of a mountain each
day to reach her farm, explained that "the imports had a
great effect on our scallions and red peas." She added that
the state marketing facility was paying "too cheap" prices.
"If they set up a better marketing system, people would do
more farming," she said.
Last year, the country's food-import bill was $200 mil-
lion-a surprising sum for a country as fertile as Jamaica,
and one that eventually forced the government to change
course. It reinstated import restrictions on many crops
grown domestically. Then, last spring, it introduced
AGRO 21, a "bold new program" to help peasant farmers.
Described as "more far-reaching in concept than anything
ever before designed," AGRO 21 predictably stressed ex-
ports, promising incentives tailored specifically to small
farmers. What was striking was the role carved out for the
state. "The government," Seaga explained in a speech,
"will be the organizer of capital, land, and skills for the
private sector. It will help to find the market outlets and
the technology with the objective of beginning a new era in
our lagging agricultural sector."
So, halfway into its term, the JLP had at last begun to
grapple with the immense problems of traditional agrieul.
ture. The neglect of the marketplace had proved anything
but benign. Seaga discovered that state intervention here,
as elsewhere, might not be such a bad thing after all.
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SEPTEMBER 1991 THE ATLANTIC MONTHLY
ON MY LAST DAY IN KINGSTON, I HAD THE OPPORTU-
nity to interview both Edward Seaga and Michael
Manley. Each was true to his reputation. Seaga was
aloof, dispassionate, precise, his responses studded with
sums, percentages, and projections. Manley was smiling,
outgoing, emotive, his talk at once grand, discursive,
philosophical. The contrasts in style were paralleled by dif-
fering perceptions of Jamaica's present and prescriptions
for its future.
On the performance of the JLP government:
Seaga: "First of all, we have managed to restore tour-
ism. It had virtually died under the previous government,
but we're now one of the most actively growing tourism
areas in the world. We have restored the construction in-
dustry, which had declined to the levels of the 1950s. It
grew 26 percent last year and is projected to grow 20 per-
cent this year. The manufacturing sector got off to a slow
start. It showed no growth in the first year, but at least
not the declines of the 1970s. It grew by 4 percent last
year, and is projected to grow 5 percent this year. Both
sugar and bananas, our two main export crops, are on the
way back up. We're expanding cocoa, citrus, and so on.
Furthermore, we're now entering a period of production of
agricultural products never before tried in Jamaica, like
horticulture and winter vegetables."
Manley: "Seaga did something extremely dangerous-
he took the lid off the Jamaican austerity program we had
put in place and settled his debts with the middle classes
by committing extravagant amounts of foreign exchange
to consumer satisfaction, through imports. In the course of
doing that, he played havoc with domestic agriculture. He
undermined small-business development by opening the
floodgates. He was depending on flows of foreign capital to
provide for the necessary foreign exchange, but of course
it didn't come in the quantities expected. Seaga, facing
this, seems to be beginning to back away from the belief
that the pure Puerto Rican model can save Jamaica.
Therefore, one is seeing him begin to revert to more reli-
ance upon state action than he contemplated at the start,
and which he criticized us for."
On the sugar industry:
Seaga: "This year, sugar will show a gain. The last gov-
ernment didn't fertilize the fields, because they had no for-
eign exchange. And they didn't have the machines to take
the cane out with. They handed the estates over to cooper-
atives, which went into debt for $80 million. The produc-
tivity of these estates was destroyed. We have disbanded
the co-ops and put them back under the control of the [gov-
ernment-managed] sugar mills. Productivity is rising."
Manley: "We're very disappointed they've dismantled
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the co-op program. It's true that we made mistakes, that
we failed to understand the need to lay the proper base for
them. But we were hoping to use them as a model of how
to resolve the conflict between economies of scale and
workers' participation. Disbanding them is a strategic re-
treat. You can't go on with peasant farming; do you instead
turn everything over to Campbell's, Tate & Lyle, and
United Fruit? Where else is there to go but back to the old
plantation relationship, which is itself at the heart of Ja-
maica's social crisis?"
On the fortunes of the shoe industry:
Seaga: "The demise of the footwear industry has been in
the cards for the last ten or twelve years. There have been
losses of jobs, but that's inevitable, regardless of the struc-
tural adjustment of the economy, because of their own lack
of adjustment. No small country can produce the range
and styles of footwear preferred by people who are sophis-
ticated in dress, like Jamaicans. We want to pick one or
two or three items and concentrate on them and gear the
whole footwear industry to producing them [for export].
We want to do the same thing with the six or seven other
sectors we've targeted."
Manley: "Seaga really just opened the floodgates. virtu-
ally wiping out the shoe industry A very high price has
been paid. Once you improve exports at the expense of an
internally based economy, you're swapping a black dog for
a monkey [a Jamaican ex-
pression equivalent to
"cutting off your nose to
spite your face"]. What
an economy like ours
needs is to identify areas
where you see a chance
for exports, and go for
broke there. But don't
sacrifice your base. With
proper planning and the
use of carefully modulat-
ed protective walls, you
could have saved the local
shoe industry."
On Singapore, Puerto
Rico, and models:
Seaga: "Singapore and
ourselves were not far
at double the pace to restructure the economy in the
tion of exports."
Manley: "Seaga during the campaign committe
self to a resurrected Puerto Rican model. He didn't
use the word 'Puerto Rico,' because it's been discr.
so he preferred to talk about the countries of the Na;
But essentially the model is the same. In Puertc
after the most massive foreign-investment progt
the world over the last thirty years, it has produc .
30 percent unemployment, with 50 percent of the
on food stamps and a massive migration to thr
The model does what all models of a colonial natun
it increases dependence. Seaga began with the vc
sence of a dependent capitalist strategy of do
ment-consumer satisfaction, massive foreign c
deregulation of the economy. We believe complete)
reverse, in inviting people to face self-restraint eu
provide the internal basis for a self-reliant econo.n
main question is, How do you develop the capacit,,
velop yourself? You can't develop if you depend on
one else."
One small country, two conflicting philosophies
ing the course it should pursue. Scaga's Jamaica it
chine in need of proper maintenance-investment., e
incentives, good management, social discipline. Ma
Jamaica, on the other hand, is founded on first print:
social justice, eco:
sovereignty, and,
all, self-reliance.
apart in the 1960s. The difference is that Singapore ex-
panded in the 1970s, while we went the route of political
adventutism, twisting Jamaica into the mold of Cuban so-
ciety., In the 1960s, our gross domestic product grew 60
percent; in the 1970s, we lost 20 percent. The model we
started with in the 1960s was adapted from the import-
substitution model. But that has only so much life in it.
Our, intention in the 1970s was to have begun to shift gears
and move to an export. orientation on a gradual basis. But
that didn't happen. The government started screaming
'Export or die,' but it was too late. So we've had to pick up
B UT WHAT
these diffe
mean practi
"The rhetoric of the
ent administration
less thick than in tin,
mer one," says
Nettleford, a proia
Jamaican sociologist
hastens to add, "You
to get beyond the rtr
to see what they're at
ly doing. The PNP c
go around expropii,
people's property. Similarly, the current government
deregulate everything. Maybe the polarization is a
one, more perception than reality." Indeed, all Ame
who spends any time in Jamaica quickly learns to loot
yond the images and mythologies that have attache
Seaga and Manley like clouds around a mountain pea
Consider, for instance, the common perception of S
as a throwback to nineteenth-century laissez-faire cal
ism. In fact, he has an activist past. In his maiden sp
to Parliament, in 1962, he inveighed against the gull's
rating the haves and the have-nots. In Denham Town
 constituency he represents, Seaga set up a community
complex that continues to be widely admired in Jamaica as
a model of progressive welfare. As finance minister in the
JLP government of 1967-1972, Seaga established such a
reputation as a tax reformer and strict regulator that dur-
ing the 1972 election it was he, not Manley, whom the busi-
ness community most, feared.
"There's no doubt that Seaga's commitment is to state
capitalism and regulation of the economy," a leading Jamai-
can executive told me. "He's no different from Michael in
that respect. But Seaga
is more likely to screw
business, because if he
says he's going to control
something, he'll do it." A
high U.S. official in Ja-
maica was frank in vent-
ing his frustrations:
"Seaga really has a blind
spot about markets and
prices. He's in favor of
the private sector, but he
doesn't really trust it. He
sees the need for govern-
ment policy to shape it, to
make it do what is right."
Conversely, Michael
Manley's nationalist poli-
cies won him the support
more evident than in attitudes toward foreign investment,
an emotionally charged topic that has traditionally divided
left and right. As Manley told me, "We see foreign invest-
ment as a desirable addition to, but not the heart of, our
economic program. You need to identify the areas where
foreign capital can genuinely assist you, but never see it as
the linchpin, as Seaga does." Manley's view, however, is
not all that different from Seaga's. Far from constituting
the "linchpin" of the -JLP program, foreign investment is
expected to make up only about one seventh of total in-
vestment. Nor is Seaga
promiscuously welcoming
all investment applicants.
For example, the govern-
ment almost called off the
oero mission last Janu-
ary, because the types of
companies represented
on it did not square with
the sectors the Prime
Minister had set as priori-
ties. As for Manley, he
states emphatically in his
book, "Make no mistake
of many Jamaican businessmen. "A lot said about Manley
is pure, unadulterated political propaganda," a food manu-
facturer told me. "Certainly, he was left of center, but so
was Harold Wilson, and so is Mitterrand, and a number of
other Western leaders. Manley provided a tremendous
number of incentives for the private sector that no pre-
vious government had provided. And he believed whole-
heartedly in exports." It was the PNP government that
set up the Jamaica National Export Corporation in order
to stimulate exports-a function it continues to perform
under Seaga. And it was Manley who created Jamaica's
first "export free zone," an enclave where foreign manufac-
turers can operate virtually free of regulation. Today, Man-
ley recognizes the importance of remaining on good terms
with the private sector.
Regardless of who is at the helm, Jamaica presents some
inescapable realities. As Rex Nettlefo l says, "Look at
how Seaga has been forced to go back on his statements.
It's not because he's silly, but because the options open to
developing countries are very limited." Seaga, like Manley,
has had to confront suffocating shortages of foreign ex-
change, a lack of managerial talent, the sluggishness ofJa-
nmaica's private sector, and utilities forever on the verge of
breakdown. From one perspective, Seaga's term can be
read as an extended lesson in how such circumstances
mandate vigorous state intervention.
The power of rhetoric to obscure is perhaps nowhere
about it: we wanted for-
eign investment, and in
the end this was one of
the areas in which we
failed most completely."
Even on an issue as divisive as foreign relations, one
detects convergence. True, Manley embraced Havana and
accused Washington of destabilizing Jamaica; Seaga did
the reverse. Under Manley, visits by the IMF set off loud
street demonstrations; in the first two years of Seaga's ad-
ministration, they barely rated a mention in the national
press. In both cases, however, reality intervened. For
Manley, that reality was money, and the fact that a country
like Jamaica needs enormous sums of it. Most of it is con-
trolled by Washington and comes with conditions, which
often makes proclamations about economic independence
seem empty. Of course, there are alternatives. One is to
look to the East, as Cuba did, but that entails its own form
of dependence. The other is to go broke. This is, in effect,
the option the PNP pursued by deciding to break with the
IMF in 1980, but it hardly proved satisfactory.
Seaga has played the Washington connection brilliantly,
and many Jamaicans consider that his greatest achieve-
ment. But, as he has learned, his deal with the West is
something of a Faustian bargain. Since he took office, poli-
cy for Jamaica has been formulated as much in Washington
as in Kingston; a high official at the U.S. Embassy re-
marked: "We're undergoing a joint education process. We
learn how Jamaica ticks and how Jamaicans believe, while
we provide them an education in the free market." That
education has proved costly for many Jamaicans, among
them shoe manufacturers, small farmers, and the poor.
 Of late, Seaga seems to be putting some distance be-
tween himself and his benefactors. His pronouncements on
the world economic Oder have become more militant in
tone. Last March, the government threatened to break off
talks with the IMF over new demands for budget cuts. in a
complaint eerily recalling the previous government's expe-
rience, the JLP said that agreeing to them would throw an
additional 10,000 Jamaicans out of work. (A compromise
with the IMF was eventually worked out.)
Criticism in Jamaica of the international lending institu-
tions is no longer limited to the left but comes from the
highest reaches of the establishment. For instance, Carl-
tell Alexander, the country's most prominent business-
man, and head of Jamaica's counterpart to the Rockefeller
committee, told me, "With all due respect, people at places
like the IMF don't understand how Jamaicans live,
think, react to things. What is needed is real, in-depth un-
derstanding of this country. How much time do all these
consultants spend with the people?"
J N A SENSE, THE WHOLE NOTION OF ECONOMIC
"models" flies in the face of people-their history; tra-
ditions, and needs. Jamaica's structural-adjustment
program is a good example. It is adapted from a World
Bank formula that was developed only three years ago, in
the wake of the 1979 oil crisis, when soaring interest rates,
bloated fuel bills, and crushing debt burdens seemed to
doom developing countries to self-perpetuating poverty.
The Bank's sister institution, the IMF, was limited by its
charter to dealing exclusively with short-term balance-of-
payments problems, and its medicine-budget cuts, wage
freezes, and tight monetary controls-seemed inadequate
to deal with the deep-seated problems that were
emerging.
So the Bank, which is more concerned with long-term
development needs, began devising an economic program
that, by requiring structural economic changes over a five-
or six-year period, would result in self-sustaining growth.
It adapted many of the components of East Asia's export-
oriented industrialization, fashioning them into a compre-
hensive package of recommended reforms. Thus was
structural adjustment born. In return for a sizable loan
from the Batik, countries agree to transform their econo-
mies in the export mold. The Bank is now aggressively
pushing structural adjustment throughout the developing
world; Jamaica is the twelfth country to sign on.
As applied there, however, structural adjustment seems
almost a caricature of the East Asian experience. For in-
stance, the forced pace of Jamaica's march toward an open,
export-oriented economy-to be accomplished within a
there five years-contrasts greatly with the gradual strat-
egy pursued in Asia. There, import restrictions were re-
moved selectively according to the evolving needs of the
countries' economies. In South Korea, for instance, the
proportion of imports automatically allowed into the courr
try grew from 50.4 percent in 1967 to only 52.7 percent a
d
ecade later
.
Likewise, the single-minded championing of the market
-
place by the Bank, the IMF, and the Reagan Administra-
tion bears little relation to the-record of these countries. To
cite one exam
le Si
'
p
ngapore
s high grotht d
,w rae wasue in
no small part to the active role played by its government in
ri.-__ _. - -
setting producti
i
on pr
o
country like Jamaica at a time when industrial experts in
h
t
e U.S. have finally awakened to the central importance
of stun re
ulati
i
r..__-_'_ . .
g
n
n
countries on the other side of the political divide. In recent
years, for instance, both India and Egypt have backed
away from hi
hl
d ___--. ... . -
c
t
li
g
y
en
ra
ze
couraging their private sectors-within the context of con.
after the Sandinistas took power in Nicaragua, Fidel Cas.
tro admonished them not to repeat Cuba's mistakes, chief
amonv them abolitio
r th
n o
e
guans have since committed themselves to a mixed econa
economy-a proportion not too different from Seaga's Ja.
maica. Furthermore ,
intended to attract foreign capital.
Nowhere has model-making caused more harm than in
agriculture. The literature of Third World development is
rife with examples of how failure to resolve structural
k
wea
nesses in the countryside can stymie all efforts at
modernization. In both Mexico and Brazil, land reform was
neglected in the rush to industrialize. As a result, the gap
between the urban and rural sectors widened, undermin.
i
ng domesti fddi
coo proucton, spreading misery among
peasants, and setting off torrential migrations to the cities.
And, to take a "model" country, Puerto Rico's social prob.
ment of peasant farmers: agricultural production declined
from 21 percent of the GNP in 1947 to only 4 percent in
1977, and employment in the sector dropped to a fifth of
h
t i
h
w
a
t
ad been.
Seaga told me, "Our agricultural program will have the
biggest impact on unemployment. That's where the main
unemployment centers are." Unfortunately, however, it
looks
th
h
as
oug
agricultu i did t
resestne to continueo be
the poor stepchild of the Jamaican economy. Reflecting the
biases of the World Bank, the structural-adjustment pro.
gram for Jamaican agriculture is founded on increasing ex.
ern farms. A few morsels are thrown the way of small
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 Approved For Release 2009/02/09: CIA-RDP86T00302RO01101670030-6
I PAGE 56
tion and prevent praedial larceny (an archaic Caribbean
term for crop theft). But these don't begin to tackle the
real problems of traditional agriculture, which include the
impracticality of small plots, backward cultivation tech-
niques, inadequate technical and financial assistance, and
poor marketing facilities.
"The export-oriented economy will never be on in the
Caribbean," says Carl Stone, a sociologist at the Universi-
ty of the West Indies, in Kingston, and Jamaica's most re-
spected political analyst. "You have to push exports, but in
combination with land reform that can secure a base for
small agriculture and domestic food production. You need
import substitution for industry and agriculture in the
short run, accompanied by a timetable for becoming
efficient."
Manley's recognition of this represents one of the princi-
pal differences between him and Seaga. Manley was deep-
ly troubled by the divide separating the traditional Jamai-
ca of machete-wielding peasants and the modern Jamaica
of bauxite companies, sugar estates, and manufacturing
plants. His agrarian program was an effort to attack agri-
culture's weaknesses at their source. The fact that he ulti-
mately failed attests to just how intractable the structural
deficiencies in Jamaican agriculture are.
T HE CONTRASTING APPROACHES TO THE COUNTRY-
side finally point up what is perhaps the chief, irre-
ducible difference between Jamaica's two world
views. It has to do with distribution. For Manley, Jamaica's
inequality and mass deprivation constituted a glaring so-
cial problem demanding direct government action. Tack-
ling it was a simple matter of "conscience," as Manley said
in his interview with me. And, as his criticism of the Puer-
to Rican model shows, he believes progress cannot be mea-
sured by growth rates alone, but must also take into ac-
count a multitude of social indicators.
Seaga, too, is disturbed by Jamaica's poverty; contrary
to the predictions of his political opponents, he has re-
tained many of Manley's benefit programs, and has even
introduced some of his own. But Seaga's top priority is
clear-economic growth. Achieving it is expected in and of
itself to alleviate the plight of the poor, even if distribution
becomes more unequal in the process. In short, though he
bristles at the term, Seaga's program is very much a
"trickle-down" one.
Manley's approach failed. Will Seaga's fare any differ-
ently? The ,Prime Minister says that if the U.S. economy
revives, Jamaica's is sure to rise again too. Both invest-
ment and trade should pick up, especially if the frill C:
bean Basin Initiative ever passes. Manufacturers au
ginning to respond to export incentives, and both ton
and construction seem buoyant.
Even if Seaga does get Jamaica moving again, how(
it will not be according to the prescriptions written for
in Washington. Far from demonstrating the superiorih
the marketplace, Seaga's term has shown just how dar
ing such a conviction can be. Yes, growth requires a st!
private sector. But in a country like Jamaica, it also
quires an activist state willing to undertake consider
regulation and public ownership. While promoting exp
is essential, it should not come at the expense of dome
manufacturers and small farmers.
In any case, Seaga faces a monumental task. Bair
shows little prospect of an upturn; sugar must ultim?a
be phased out; protectionist sentiment is growing in
West. Even with a dangerously high foreign debt, Jam:
is $2 billion short of the amount it needs to meet its b.
development requirements. Because of the continr:
shortfall in capital, the government was forced in Ju:u
impose strict new austerity measures, in what So
called "tough measures for tough times." Most seriore
all, unemployment remains exceedingly high and sh+
few signs of abating. As a result, social tension is builri
once again, and pressure for change is mounting.
In a repressive country, such developments might
matter. But in Jamaica, which is intensely political, r
pleasure with JLP policies will be registered at the ba:
box no later than 1985. According to recent polls, the P:
has taken a sizable lead over the JLP. Ironically one re,
of the Reagan Administration's great interest in Jama
may be to propel Manley back to power.
Would he have any better luck the second time arou::
Jamaica's recent history does not leave much room for op
mism. Seaga's term in office has shown just how hear
the odds are stacked against a country like Jamaica. Ev
with one of the most intensive aid efforts in U.S. histor
the island seems little better off than it was before. fit ;
greatest paradox of all, the Jamaica experiment may he
demonstrate what Michael Manley has claimed all along
that change in Jamaica is impossible unless preceded t
change in the world economic order. Until commodity ma
kets are stabilized; until the terms of trade between Nor
and South are equalized; until technology is made mm
widely available; and, above all, until small nations are a
lowed to determine their destiny independent of East ac
West-until then, countries like Jamaica seem condemn;
to a deepening spiral of misery and despair. ^
 ROUTING AND RECORD SHEET
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