Promises of the Republic: The Future of Economic Policy in Barbados
Carlise Bay, Barbados. Photo courtesy of P. Hughes.
In a vibrant and globally reported celebration, Barbados recently severed ties with the British Monarchy, declaring itself a republic after nearly 50 years of independence. The official shift, which fell on November 30th, the same day as the ceremonial end of the Caribbean hurricane season, has been long-awaited since the island’s first referendum on the issue in 2007, and again in 2015.
“We cannot pat ourselves on the shoulder at having gone into independence; having de-colonised our politics; we cannot pat ourselves on the shoulders at having decolonized our jurisprudence by delinking from the Judicial Committee of the Privy Council and explain to anybody why we continue to have a monarchical system.”
The decision marks a generational shift in the island's political scene. With the induction of Sandra Mason as the first appointed President, the separation from colonial ties comes after the island's significant participation within the Black Lives Matter movement in 2020, as well as a predicted decline in remaining benefits from Great Britain after Brexit. As many of the existing constitutional articles are dependent on Queen Elizabeth as the Head of State, the Constitution is to be reevaluated in 2022. The changes could point to compelling policy shifts towards economic autonomy in the years to come. At present, many of the existing land and investment guidelines are based on the English common-law system, which has historically allowed foreign investors to purchase and develop land on the island with great ease. Additionally, with a tax at the rate of 0.25% (on profits over 15 million USD) up to 2.5% (on profits up to 5 million USD), no direct tax or capital gains, no withholding tax on interest, dividends, royalties or fees, and no exchange control on foreign currencies, Barbados thrives off a growing off-shore economy. In fact, tourism, the international business sector, and foreign direct investment are listed as the country’s primary economic drivers. There exists a fundamental conflict, however, with the intent to decolonize the island while supporting its people on foreign means. In the island’s new age of codified independence, Barbados faces a crucial balancing act between decolonization and preserving the wellbeing of its citizens. Since the Barbadian economy is heavily import-dependent, if policymakers should choose to tighten restrictions on foreign currency inflow to strengthen Barbadian Dollar, the island could face massive loss as it redevelops its focus on developing domestic industries, a challenge intensified by the looming annual threat of natural disaster. The path is unlikely, however, as amidst the pandemic, Barbados has sought to increase the presence of expats through encouraging 12-month stays for remote foreign workers, with past Prime Minister Mia Amor Mottley offering her welcome. Additionally, considering that Puerto Rico, the Bahamas, and the Cayman Islands are all taking steps to attract foreign investment, it can be expected Barbados will follow suit to maintain competitiveness as the islands aim to emulate Singapore-like status.
The looming threat of exacerbating the already dire wealth disparity is immensely pressing, especially given the promises the Republic holds to the younger generation. The “Puerto Rico no se vende” [Puerto Rico is not for sale] movement among the youth reflects a similar narrative of resisting the influx of foreign buyers in other Caribbean states. Barbados has an incredibly strong education system, with a literacy rate of 98%; the population is not one to be naive to a civil preference for foreign investment. If President Mason continues the tax haven policy tradition, and the changes to the constitution lean towards its favor, then policy must continue to support and enrich the culture of the island, while developing a long-term means for growth. The existing economic foundations in tourism and real estate development inevitably face cyclical crashes with the annual presence of natural disasters. For Barbados to maintain a healthy republic status, both in the classical sense and regarding political climate, it must chase growth beyond capital development. If the presence of foreigners is to increase, then prioritizing the culture and well-being of the local community must occur in order to prevent conflict similar to the climate of the 1970s Caribbean, which saw a sharp increase in violence against tourists as the island service industries began to flourish. Locals must be prioritized outside of foreign investment; growing the tourism sector while expecting locals to benefit from filling hierarchical roles as service providers, recreates a rather colonialist relationship between the people, foreigners, and the newfound state. This isn’t to say that choosing to expand tourism and offshore sectors is inherently hypocritical to the aim of the republic's independence, but the sector must seek further sustainable, home-grown development if Barbados is to serve as a leader to other commonwealth nations.
The future of Barbados’ economic policy will teeter on the political climate of the island as the government attempts to live up to the promises of the Republic. Mason’s government has an immense role to play in the future of the Caribbean’s policy as it continues to reconcile with the colonial past. Whether Barbados' future will seek radical political change or not, for growth to be maintained, there must be a radical shift in sector development.
Evelyne Williams is a staff writer at CPR and a second-year student at Barnard College. She is from San Juan, PR, and is a certified cashew-butter enthusiast.