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Politics before diversification

Sunday, November 12, 2017

Last Thursday, the Guardian reported that the Chairman of the Economic Development Advisory Board, Terrence Farrell, raised the issue of the priorities for development projects in the Public Sector Investment Programme (PSIP). One of the issues that he flagged was the question of why the proposed highway from Cumuto to Manzanilla was given a higher priority than the improvements to the Crown Point International Airport.

He reckoned that with the Government completing the signing of a Memorandum of Understanding with the Sandals Group for the development of a Sandals hotel in Tobago the improvement to the airport ought to have had a higher priority.

But alas, Farrell has to face the gap between policy and politics. The two Tobago constituencies are solidly PNM-controlled as is the Tobago House of Assembly. The Toco-Sangre Grande seat together with its boundary seat of La Horquetta-Talparo are important pieces of the puzzle for the PNM to continue its hold on power by the time the next general election comes around. The highway would have been fairly advanced by that time, if not opened already.

Sandals will not materialize just yet and upgrading the airport in Tobago may happen later, rather than sooner. There is more bang for the political buck in these eastern constituencies of Trinidad than in the two constituencies of Tobago.

The scare suffered by the PNM in the 2016 local government elections that saw the party literally having to pull out all of the stops to controversially cite incumbency in a tied local government election in the Sangre Grande Regional Corporation demonstrates that there was PNM slippage in that area and a mega project like highway construction is an urgent matter demanding priority attention.

It might not make logical economic development sense to the chairman of the Economic Development Advisory Board.

However, it makes a lot of sense to the political handlers of the ruling party who know what they need to do in that area in order to give themselves the competitive edge in the next general election.
This kind of approach to policy-making has been part of our political model since independence.

According to the Guardian report by Nadaleen Singh last Thursday, Farrell said:

“The infrastructure that we are talking about is the infrastructure that supports diversification. When the Government has its PSIP with all the infrastructure projects it wants to do—in terms of prioritising the infrastructure projects, it must look and say, are these projects going to support diversification?”

The Government is not going to ask itself, as a first question, whether a project is going to support diversification. The first question that will be asked is whether there is political value in pursuing particular projects before getting to the question of “diversification”.

The ultimate sweet spot is for diversification and electoral marginality to coincide. Otherwise, electoral marginality will trump diversification.

In dealing with the raw politics of policy situations, one has to make the connection between policy decisions and political realities.

For example, the Government decided to increase its debt ceiling on December 1, 2015. What made that even more politically significant was the fact that the day before (November 30), the UNC had been granted leave to pursue six election petitions by the Court of Appeal. The connection was clearly there.

Others may have argued about the debt-to-GDP ratio, while what really lay underneath was that the Government had to be able to spend as it was preparing for a possible election year if the courts were to rule to vacate those seats in 2016, having conceded that there was an arguable case by granting leave to proceed.

Farrell’s frustrations are real. As an economist, like most economists, he would be perturbed about the decision-making on the PSIP.

However, in most of these decisions, politics simply trumps economics. Unfortunately, the country has suffered from such an approach.


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