Project Independence – After 56 Years: Part 4

Project Independence – After 56 Years:
 Windfall and Wastage – Saga of Unsustainable Economy
 When the NJAC leaders were rounded up in the early hours of April 21, 1970 as another State of Emergency (SoE) was declared and the army mutiny that morning was diffused, the Government thought that the conflagration was doused.
However, into 1973-74, the embers of disaffection continued to smolder. The strikes and labour unrest persisted and armed fighters persevered despite police crackdown.
In 1971, strikes at FedChem and Dunlop supported by close to 4000 oil workers raged. Strikes at Texaco, Badger and Wimpey involved more than 1000 workers. All these led by the OWTU.
Workers on the port, at TelCO and WASA wanted to join the OWTU and abandon the ‘responsible’ unions (which supported the ISA) in preference for the ‘radical’ ‘Butlerite’ unions.
Government’s response – Declaration of another State of Emergency in October 1971, banning public meetings, detention of 10 leaders and replacement of the ISA by the Industrial Relations Act (IRA) introduced in Parliament almost simultaneously with the SOE.
The price control provision in the ISA (never implemented) was repealed and to stop the spread of ‘radical’ unions a prohibition of representation of more than one “essential industry” by a single union was added. This prompted another split in the trade union movement into the Labour Congress and Council of Progressive Trade Unions (CPTU).
Unrest persisted into 1973 and PM Williams threatened to resign encouraging the refrain of ‘Don’t go, Doctor. Don’t go.’.
Oil Boom 1973-74
Dramatically, a development completely outside of this country’s control occurred. There was a sharp increase in world oil prices, triggered by the Arab oil embargo, triggering yet another boom for this oil-exporting country.
In both World Wars, because of the needs of the British military, TT oil experienced booms.
In the late 50’s, driven by the demands of the US market, the extension of marine drilling and refinery expansion out of Texaco acquisition of TLL, saw another boom to production of 70,000 bpd of oil and refinery throughput of 345,000 bpd by 1965.
The oil windfall of 1974-78 was the first based solely on increased oil prices. Oil prices were declining between 1960-70, multiplied by 7 between 1972-78. Government’s revenue rose from $591M TT in 1973 to TT1,398M in 1974 to $3,226M in 1978. Oil revenues increased 48 times by 1980 compared to 1972.
The balance of trade moved from -$360M TT in 1972 to +$340M in 1974 and +$1B in 1977.
On Independence Day 1974, Williams declared:
“In our case oil means (a) a large number of permanent jobs through downstream petroleum operations or new industries based on petroleum, (b) greater national ownership of our national resources….and local utilization and diversification of products which we formerly exported, (c) larger allocations for our domestic services, (d) more rapid progress….to supplement our own domestic efforts at greater self-sufficiency.” (emphasis mine)
TT was floating on oil dollars.
            YEAR            GDP ($M)
            1951             308.3
            1960             865.9
            1970            1630.9
            1972            2039.4 
            1973            2554.7
            1974            4101.5 
            1977            8552.2
            1980            14081.9
 
Government employment increased by hiring 100,000 people – 80,000 in the public service and 20,000 in partly government-owned commercial and industrial enterprises.
Oil windfall dollars were spent on increases in subsidies in food, welfare, utilities and petroleum, cuts in income and other taxes, employment creation, expanding state ownership in Texaco and Tate & Lyle and new joint ventures. This was the explosion in the state-owned enterprise (SOE) sector.
Despite the oil money, poverty and poor income distribution persisted.
Dissatisfaction Continues
In 1974-75, industrial unrest flared up again. By March 1975, 17,000 sugar workers were on strike, cane farmers launched ‘don’t cut’ campaigns, mass meetings in oil and protests at Neal & Massy and in other industries were escalating.
A rally and march were planned for March 18. More than 15,000 workers were on the move. The police refused permission for the march and brutally attacked in San Fernando, arresting 32 leaders of the ULF (a grouping of 4 unions). Police blocked the roads and overturned huge pots of food prepared for the marchers in Marabella and Saith Park, Chaguanas. That day became known as ‘Bloody Tuesday’. 
Within 6 days, the ULF converted into a political party dubbed a working-class party. The ULF had support from workers mostly in the ‘radical’ unions and organised among the university lecturers and students. It contested the 1976 General Elections in September of that year.
The outcome of the election was: PNM won 24 seats, ULF – 10 and the DAC (led by Robinson who left the PNM in 1971) – 2 Tobago seats.
Despite the large protests and strikes, the ULF failed to gain the majority of working class support. By September 1977, it had split into 2 factions, one led by Basdeo Panday, who enjoyed the support of the workers and people in the sugar belt.
The demands for unity of 1970 appeared to be silenced and the old pre-Independence pattern of politics based on appeals to race and division among the people seemed to be back.
Because of an elections boycott, the PNM formed a minority (33%) government in 1971. Largely because of the lavish spending of the oil windfall dollars, it was able to regain support by 1976.
But, by the early years of the next decade, windfall turned into downturn very much as the situation was at the approach to Independence in 1962 and again at the start of the ‘70’s.
The economy was like a roller coaster ride and the boom and bust pattern closely followed the pattern of prices for the main commodity on which the country relied – oil.

Source: T&T: Economic Growth in a Dual Economy, IDB, 2007
 
Into Recession Again - 1982
While oil prices ‘bumped up’ in 73-74 and again in 79-80, by 1985-86 they were halved.
By 1980, oil business amounted to 42% of GDP, provided 65% of government revenues and accounted for 94% of export earnings. Dependence on oil was a benefit and a threat.
Partly because of falling US demand for imported oil as refineries there stepped up production in response to the 1973 ‘oil crisis’, both oil production and refinery throughput were on the decline in TT from around 1978.
The oil windfall, while it created the opportunity for government and the private sector to diversify, did not result in moving toward a less oil-dependent sustainable economy.
Government concentrated on very expensive economic projects with less-than-expected returns like ISCOTT, the private sector preferred the comfort of retail operations and ‘screwdriver’ industries with high import content like the multiple car agencies and assembly plants and corruption assumed massive proportions. The bus station racket and Caura Dam scandal of Gene Miles’ days paled in comparison to the new wave of feeding off the state trough.
Between 1982 and 1989, there were 7 years of negative growth in GDP (more than enough to satisfy any definition of recession). GDP was $6229M US in 1984 and dropped to $5610M US in 1987. The burden of debt reached $1.41B US in 1987 and external debt servicing/GDP escalated from 2% in 1982 to 24.3% in 1987.
The1981 Chambers government devalued the currency by 50% in 1985 and added a 10% tax on some consumer goods.
The 1986 NAR government rode in on a wave of ‘one love’ and a massive 33-3 majority and continued Chambers’ “adjustment” measures:

1. 1987 – suspension of COLA for public employees, plan to retrench 7000 sugar workers
2. 1988 – second devaluation of TT dollar, 5% ‘mobilisation’ both led to increased prices for basic goods. In July, refused to implement a pay increase ordered by the industrial court, announcement in Budget of intention to go to the IMF and first IMF loan
3. 1989 – 2nd IMF loan, 10% pay cut for public employees
4. 1990 – introduction of VAT at 15%

The ‘austerity’ programme of the NAR included mass retrenchment - more than 30,000 construction workers, 8000 jobless on closure of DEWD in 1987, attrition in the public officers and daily-paid government workers. Unemployment rose from 10% in 1981 to 18% in 1986 and 23 by the end of the 80’s. A huge debt of over $2B was owed to over 100,000 public sector employees resulting from the pay cuts which were ruled illegal by the Courts.
Unemployment, poverty, vagrancy and vending spread all over the country. The Kirpalani conglomerate collapsed in 1986 and bankruptcies dealt with many other private companies.
The savagery of the attack on the workers and poor to ensure the ‘inescapable obligation’ of debt payments drove the divided trade union movement to act together against the state and private sector assault. Neal & Massy froze wages, cut work time and contracted out work. That conglomerate locked out workers at its subsidiaries – Polymer Caribbean, Edgar Borde, Electrical Industries, Automotive Components and N&M Motors. Unions rallied with TIWU which bore the brunt of these attacks.
March 6, 1989 was declared a Day of Resistance – a massive one-day national strike, led by the Joint Trade Union Movement (JTUM). It was followed by strikes in oil, PTSC and WASA, among others.
The 1990 Budget and 15% VAT drove the unions to expand the coalition of resistance in a single labour day march that year and the creation of the Summit of People’s Organisations (SOPO). Eventually, a new single trade union federation, NATUC, was created when the PSA Rooftop Accord was signed in 1991.
The NAR disintegrated in 1988 when Panday and some Ministers supporting him were fired by Robinson. They formed Club 88 and founded the UNC in April 1989.
By 1990, the NAR which began with ‘One Love’ was facing unceasing social unrest and eventually on July 27, the Jamaat al Muslimeen attempted to overthrow it in an unsuccessful coup.
The oil windfalls passed through the society ‘like a dose of salts’ and TT marched into the ‘valley of debt’.
Heading Where?
The economic strategy adopted before, continued at Independence, persisted in through 2 major windfalls in the 70’s and 80’s left Project Independence floundering and the nation-building project in tatters.
The shift in dependency from liquid to gaseous hydrocarbons did nothing to free the economy and the country from the single-commodity ‘plantation’ economic construct inherited from colonial times.
The structure of the economy never changed, and the diversification promised by Williams on Independence 1974 and other PMs since boom has never materialized. Agriculture has been annihilated and the mounting food import bill stands testimony to a persistent subsistence sector despite the various Oil and Food Conferences and plans touted over the years.
The tourism sector has never contributed as much as 10% of GDP and the economy rises and falls as global hydrocarbon prices fluctuate.
The dependence on foreign capital and the US gas market after its oil market collapsed left project Independence without the economic base for success and recurring crises of boom and bust up to the 2014-18 recession accompanied by huge deficit-financing and mounting public debt and debt payment issues.
The governance remains the maximum leader PM and Cabinet dictatorship patterned on the Colonial Governor-ship as the demand for ‘Power to the People’ raised in the call for Home Rule in the 30’s and 40’s and rekindled in 1970 remains a hope and prospect yet to be realized.
The SOE’s in the economy and SoE’s in suppressive rule every time the people demand a new way continue to suffocate the advance of the nation-building project and Project Independence.
 
In part 5, we look at the state of things at the jubilee celebration of the 50th anniversary in 2012.
 
Clyde A Weatherhead
A Citizen Fighting for
Democratic Renewal of
Our Society
24 August 2018

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