Trinidad and Tobago's new government moves to diversify economy

Trinidad and Tobago stands out in the Caribbean and the Americas as a comparatively wealthy, hydrocarbons-based economy with rich and diverse cultural traditions and a robust democratic system. The twin-island country has a population of 1.35m people, a GDP of $35.2bn and a GDP per capita of $26,220, both calculated on a purchasing power parity basis in 2013, according to the World Bank. This level of per capita GDP places the country among the wealthiest in the Americas, behind the US and Canada, and ahead of most Caribbean and Latin American countries. As a point of comparison, GDP per capita calculated on the same basis and in the same year was $13,570 in Costa Rica, one of the wealthiest countries in Central America, and $21,060 in Chile, one of the wealthiest countries in South America.

The country’s abundant oil and gas reserves have driven this prosperity, and have underpinned its strong economic growth rate. While excessive reliance on the oil and gas sector is problematic at times of low international hydrocarbons prices, T&T has managed to achieve a degree of diversification into other sectors such as financial services, tourism and manufacturing. Situated in the south-eastern Caribbean close to the north-east coast of Venezuela, T&T lies outside the hurricane belt and enjoys a tropical climate.

The country has an ethnically diverse population with a strong African and Indian heritage dating back to the colonial period, when the British brought in slaves and indentured labourers to work on sugar plantations. T&T is famous for its annual Carnival, which dates back to a period of French rule when local high society held masquerade parties. The tradition of taking part in costume balls and parties has survived throughout the decades, and from the 1930s incorporated the now world-famous steel bands, using drums created from the oil barrels. Today the Port of Spain Carnival is one of the most important and well-known events of its type in the hemisphere.

Parliamentary Democracy

Despite one brief and unsuccessful attempted coup, the Jamaat Al Muslimeen uprising in July 1990, T&T has enjoyed uninterrupted democratic rule since independence from Britain in 1962. The country is a parliamentary democracy led Anthony Carmona, the current president, who was appointed to serve a five-year term in 2013. Political power is exercised by the prime minister, who must be a member of the 41-seat House of Representatives, and is the leader of the largest party or coalition. A general election was held on September 7, 2015, and brought Keith Rowley of the People’s National Movement (PNM) into office. Rowley will serve a term; however, under the parliamentary system it is possible for earlier elections to be called by either the government or due to a parliamentary vote of no confidence. The upper house comprises a 31-seat Senate, to which members are appointed by the president in consultation with the prime minister and leader of the opposition. The Tobago House of Assembly (THA) has power over local finance, planning and administration on the island of Tobago. The THA has 12 elected members, a presiding officer and four appointed members, three of which are selected by the majority party while the other is chosen by the minority party.

Slowing Population Growth

The population of T&T was 1.35m in mid-2015, according to the country’s Central Statistics Office (CSO). In recent decades the demographic trend has been for the growth rate to gradually slow, and the population itself has become slightly older. The growth rate averaged 1.2% per annum in the period from 1980-90, falling to 0.4% in 1990-2000. Growth seems to be stabilising around this lower rate in the 2000-11 period, where growth rose marginally to 0.5% per annum. The median age of the population has gradually increased from 24.1 years in 1990 to 28.1 years in 2000, and to 32.6 years when the last census was carried out in 2011.

In the 2000 census, the largest single age group was composed of those of both sexes aged 15-19, who represented just under 10% of the total population. By the 2011 census however, the largest single group comprised those aged 25-29, representing 9.3% of the population. One consequence of these changes is that the economically dependent segment of the population has been decreasing, from 32.4% in 2000 to 29.6% in 2011. Nevertheless, it is predicted that in the long term, as the population bulge moves toward retirement age, the dependent segment will grow again.

Ethnic Diversity

The 2011 census sought to identify ethnic groups, defined as “people of the same race sharing a common history and distinctive cultural characteristics”. The two largest groups by ethnicity have traditionally been people of East Indian descent on the one hand and people of African origins on the other; the two groups are often described as Indo-Trinidadians and Afro-Trinidadians. When the country gained its independence, Afro-Trinidadians were the larger group, accounting for 43.3% of the population in 1960, compared to Indo-Trinidadians with 36.5%.

However, over a number of decades that relationship has gradually changed and the Indo-Trinidadians are now the largest group by a narrow margin, with 35.4% of the population in the 2011 census, followed by Afro-Trinidadians with 34.2%. Along with this change in relative size between the two communities, the proportion of the population describing itself as mixed race has also been growing, from 16.3% in 1960 to 22.8% in 2011. None of the other various ethnic groups represent individually more than 1% of the population. They include whites (0.7%), Chinese (0.3%), Amerindians (0.1%) and people of Syrian, Lebanese, or Arab, heritage (0.1%). The main religions include Catholicism, Hinduism, Evangelical Christianity and Islam.

Political Background 

Between 1956 and 1986 the PNM, under the leadership of Eric Williams, won every general election in the country, and established itself as the dominant party, with most of its support concentrated in the Afro-Trinidadian community. Economic instability in the 1960s and early 1970s led to growing student discontent and the emergence of the Black Power movement. However, pressure on the government eased as a result of the surge in oil prices in 1973-1982, which allowed it to increase public spending and regain a degree of popular support. Williams died unexpectedly in office in 1981 and his PNM successor was defeated in 1986 by a new multi-ethnic coalition led by ANR Robinson, which campaigned under the slogan of national unity.

Nevertheless, the coalition suffered defections, and in 1990 was shaken by an uprising carried out by a Islamic militant group, Jamaat Al Muslimeen, which took the prime minister hostage amid violence and widespread looting in Port of Spain. The army ultimately defeated the insurrection, but the political shock it delivered to the country was a factor in bringing the PNM back into office in 1991, now under the leadership of Patrick Manning, who became the new prime minister.

By 1995 the new United National Congress (UNC), a split from the old coalition under ANR Robinson, succeeded in bringing Basdeo Panday into office as the country’s first prime minister of Indo-Trinidadian descent. A pattern of alternation in power between the UNC and the PNM began to develop. In 2010 the UNC, together with smaller parties in the Peoples’ Partnership (PP) coalition, won the elections under the leadership of Kamla Persad-Bissessar, who became the prime minister.

2015 Elections 

The 2015 general elections were held on September 7, and saw Persad-Bissessar, the incumbent prime minister, challenge the PNM led by Rowley, then leader of the opposition. T&T’s political alliances do not usually divide along left-right lines, with the major parties often competing for the centre ground and appealing to ethnic allegiances.

The largest party in the ruling coalition was the UNC, traditionally identified with the Indo-Trinidadian community, while Rowley’s PNM has historically gathered most of its support from Afro-Trinidadians. Yet there have been signs that local politics is becoming less ethnically based, with more floating voters.

Other members of the PP included the Congress of the People (COP) and the National Joint Action Committee (NJAC), which traces its roots back to the islands’ Black Power movement in the 1970s. Another significant player in the elections was the Independent Liberal Party (ILP), led by Jack Warner. Warner, who had been a minister in the PP government, faced a range of international football-related corruption charges in the US. He had fallen out with Persad-Bissessar after being dismissed from his ministerial role in 2013, and therefore campaigned for the 2015 elections on an anti-government platform.

Election Results 

According to the Commonwealth Observer Group, the elections were held in a peaceful and orderly manner. Heavy rainfall on election day may have led to a smaller turnout, which, according to conventional wisdom among national election analysts, tends to favour the PNM. The election results contradicted opinion polls that had been held earlier, with the PNM defeating the PP comfortably by taking 51.68% of the popular vote, compared to 39.61% for the UNC, 6.01% for the COP and 0.79% for the NJAC. Taken together the three members of the PP coalition polled a total of 46.41%.

In terms of seats, the PNM won 23 (11 more than in 2010), with the UNC on 17 (four less than in 2010) and the COP gaining only one (five less than in 2010). The ILP attracted 0.7% of the popular vote but failed to win any seats, with Warner losing his bid for re-election in his constituency, although the party did take votes away from PP candidates in key constituencies.

Electoral analysis indicates that the PNM won all 13 marginal seats on the back of a 13% swing in its favour, relative to the results of the preceding election in 2010. However, the UNC lodged a legal challenge in six constituencies, on the grounds that the Elections and Boundaries Commission had been wrong to extend voting by one hour in each of them because of bad weather and thunderstorms. The action was in turn challenged by the PNM who claimed that one of the UNC’s petitions had not been delivered within the five-day period after the election day as prescribed by the law. The matter was considered by T&T’s High Court. While the new prime minister downplayed the significance of the legal action, the appeal could have eventually forced the government to face new by-elections in the six constituencies involved.

New Cabinet Appointed

Rowley took office in September 2015 and appointed a reduced, 21-member cabinet – almost one-third smaller than its predecessor. Colm Imbert, an engineer with previous experience as minister for works and transport, was appointed to the key position of finance minister, while Nicole Oliverre, a former energy professional from the National Gas Company, became the minister of energy. The new prime minister said he had sought to choose a combination of younger appointees together with a sprinkling of more experienced ones to form a balanced team. Only six ministers have previous cabinet experience and at least three are still in their thirties. Retired brigadier Edmund Dillon was appointed national security minister.

Although there is no longer a ministry for Tobago affairs, the smaller island is represented in the cabinet. There are two Tobagonian appointees – Shamfa Cudjoe serves as minister of tourism and Ayanna Webster-Roy as minister of state in the prime minister’s office. Dennis Moses is the new minister for foreign and CARICOM affairs. Local government elections are due in late 2016 and are likely to present the first electoral assessment of the new government, as well focusing attention on the effectiveness of the opposition.

Security Issues

For the last 10-15 years T&T concern about rising crime rates and falling levels of personal security has grown. While there have been ebbs and flows in reported crime, security is seen to be a genuine issue. Speaking in September 2015, acting police commissioner Stephen Williams said that reports of rapes, larcenies and kidnappings were all down, relative to previous-year levels, but that the homicide rate, at 308 people killed in the year to date, had already exceeded the total for 2014 as a whole. Worries were heightened by a number of high-publicity cases, including the October 2015 murder of a British man and his wife in Tobago, and the February 2016 murder of a Japanese woman during carnival celebrations. The murder rate remained high in the first six months of 2016, exceeding 200 deaths.

Murders have mostly been linked to the activity of criminal gangs, many of which are involved in drug trafficking, as T&T is widely believed to have become a transit point for South American drugs heading to North America and Europe. According to the UN Office on Drugs and Crime, T&T’s homicide rate peaked at 41.6 per 100,000 inhabitants per annum in 2008, falling steadily to a low of 26.4 in 2011. The homicide rate began to rise steadily again, reaching 30.2 per 100,000 in 2013, the last year for which full data was available. The World Health Organisation considers anything above 10 per 100,000 annual homicides to be an epidemic level. T&T’s homicide rate in 2013 was above that of the US (3.8 per 100,000) but below those seen in Jamaica (42.9) and El Salvador (39.8).

Rowley’s government promised to tackle the crime issue during the 2015 election campaign, and once in office increased funding for national security in the government’s first budget. He has warned that the high murder rate is bad for tourism and is “damaging us at home at a personal level and at an international level”. However, the new administration faces complex challenges, including an overstretched police force, overcrowded prisons as well as some political obstacles. The T&T Police Service has not had a permanent head since 2012, largely due to disagreements between the different political parties over the appointment.

To bolster investigations, in May 2016 the Strategic Services Agency (SSA) Amendment Act was approved by Parliament, providing the SSA with widened investigative powers for crimes involving money laundering, terrorism and corruption.

Democracy Index

T&T is ranked 47th out of a total of 167 countries listed in the Democracy Index 2015, published by the Economist Intelligence Unit (EIU). This is an improvement on the two previous years when it had been ranked 48th.

The EIU puts it in a category called “flawed democracies” ahead of many of its local and regional neighbours in the same category such as Jamaica, Suriname, Guyana, the Dominican Republic, Mexico, Colombia, Chile, Argentina and Brazil. T&T is deemed to score highly in the electoral process and civil liberties categories. It is also praised for having a stable multi-party system and a free media. The main areas for concern include the failure of successive governments to tackle the problems of violent crime, corruption and excessive bureaucracy. However, the EIU notes that in December 2014 Parliament approved legislation designed to reduce corrupt practices in public procurement. As of mid-2016, however, the legislation had not yet been implemented.

Outlook

As with most economies that rely largely upon hydrocarbons exports, T&T might face a challenging few years in the immediate future, as the steep and potentially long-lasting slump in oil and gas prices could possibly force an extended period of fiscal austerity, perhaps the most severe in the last four decades.

While the adjustment process may prove difficult, on the positive side there are strong indications that the country’s institutions, including its democratic political system and independent media, remain robust and capable of responding creatively to economic difficulties. It is possible that this situation will lead to real progress in ongoing attempts to diversify the economy, for example by moving towards greater use of renewable energies and expanding other sectors.