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The Impact Of War On Caribbean Nations…Loss Of Visitors Feared

The Impact Of War On Caribbean Nations

By Matthew Hay Brown

March 12, 2003
Copyright © 2003 South Florida Sun-Sentinel. All rights reserved.

SAN JUAN, Puerto Rico -- As the Bush administration presses for war with Iraq, the Caribbean is bracing for more hardship.

Deeply dependent on the outside world for tourists, oil and other trade, and still recovering from the economic fallout of the attacks of Sept. 11, the region of mostly poor nations would be profoundly affected by hostilities in the Middle East.

"The context is already a bad one," said Anthony Gonzáles, director of the Institute of International Relations at the University of the West Indies. "If you impose a war on the current situation, you'll see how much worse it can get."

Governments in the 30 island nations and territories have attempted to soften the anticipated blow by seeking price guarantees on oil and developing plans to boost travel promotion.

But their ability to ease the impact may be limited.

"No one believes this war would be good for business," said Jean Holder, secretary-general of the Caribbean Tourism Organization. "We pray that it doesn't break out."

The region is accustomed to buffeting by outside forces. Tourism has yet to recover fully from the attacks in the United States. The flow of oil from Venezuela remains uncertain. The European Community is phasing out preferential prices for bananas and sugar. Foreign investors continue to flee offshore banking.

A U.S. attack on Iraq would strike directly at the Caribbean's largest industry. As many as 20 million visitors, more than half of them from the United States, pump billions of dollars into the region annually. That trade, which employs as much as three quarters of the work force on some islands, still is recovering from a 10-percent drop in arrivals after the attacks of Sept. 11, 2001.

War in the Middle East likely would threaten that recovery. Edward Carrington, secretary-general of the Caribbean Community, said last month, "If there's a war, people don't go on holidays."

During the 1991 Persian Gulf War, tourist visits to some islands fell by as much as 30 percent. Simón Suárez, president of the Caribbean Hotel Association, said a similar experience now would be "a terrific blow."

"There are quite clear signs of recovery, but that could come to a sudden stop if this war actually goes and if it lasts a long time," said Suárez, an executive with Coral Hotels and Resorts in the Dominican Republic. "The long-term effect will be that there will be a gap in the growth pattern."

Holder said the impact might not be as negative as feared. In 1991, some vacationers from the United States who would otherwise have gone overseas to Europe came to the Caribbean instead. After the war, the region recovered more quickly than other parts of the world.

Holder said any additional decline would further burden an airline industry struggling since Sept. 11. United and US Airways already have declared bankruptcy and analysts have speculated American Airlines, the leading carrier to the Caribbean, could follow.

Reliance on fuel imports makes the Caribbean vulnerable to oil price hikes. The recent reduction in flow from Venezuela during the general strike against the government of President Hugo Chávez sparked walkouts by transportation workers in Guyana and Haiti and raised consumer prices on several islands.

"There is concern about cost and availability," said Gonzáles, of the Institute for International Relations. "It may be fair to assume oil prices go up a bit. That could have drastic consequences in terms of economic development."

Oil-producing Trinidad and Tobago has told its neighbors it would not be able to hold prices to a "pre-Iraq War" level should hostilities break out. The nation imports half the petroleum it refines and so it is also vulnerable to world price fluctuations.

"Our willingness to empathize is not supported by the realities of our own situation," Prime Minister Patrick Manning said.

War plans are affecting the U.S. territories in another way. In Puerto Rico and the U.S. Virgin Islands, thousands of Army reservists and National Guardsmen are answering the call to service, in the case of Puerto Rico, the call-up is the largest in island history. While troops train with weapons and gas masks, the government has opened several family-support centers.

The region's leaders are preparing contingency plans. In Puerto Rico, the government has pre-purchased 10 million barrels of petroleum at a fixed price, and invested in hedges, insurance to protect against fluctuations in fuel prices, for 2.7 million barrels more. The U.S. commonwealth has set aside $3.5 million for additional tourist promotion.

The Caribbean Hotel Association has advised members on public relations messages, promoting, for example, perceptions of the region as safe and affordable, while urging them to establish more flexible cancellation policies for travelers stranded by events.

Caribbean Fears Loss Of Visitors

By Stevenson Jacobs

March 21, 2003
Copyright © 2003 The Associated Press. All rights reserved.

KINGSTON, Jamaica · Caribbean leaders fear the U.S. war against Iraq will hurt their struggling economies, keeping tourists away just as they recover from a slump following the World Trade Center attacks.

The 15 nations of the Caribbean Community are considering holding a special summit to discuss potential fallout, with tourism high on the agenda, officials said.

Jamaican Prime Minister P.J. Patterson said Tuesday that some Caribbean countries are "ill-prepared" to deal with the global downturn that economists predict will accompany war.

Patterson said it would set back plans for economic development, "erode confidence in the economy and wipe out anticipated gains from any investment."

Some governments are trying to head off potential declines in visitors with advertising campaigns as they step up security in areas frequented by tourists.

The Dominican Republic is launching a campaign promoting the Caribbean as a safe destination.

"I hope war is brief," Dominican President Hipolito Mejía said. "What worries us most about the repercussions that war will have in our country is how it will affect tourism."

Puerto Rico has activated a $3 million emergency fund for advertising to promote the U.S. territory as a destination with strong ties to the mainland United States.

Carnival Corp., the world's largest cruise line, is lowering prices in hopes of luring passengers.

The war comes as regional tourism officials report some recovery this winter season, with 60 and 90 percent of rooms at many hotels occupied.

Tourism officials say there haven't been mass cancellations, but a slowdown in passenger arrivals already has started.

Air Canada announced two weeks ago that it was stopping flights to Grenada at the end of March, depriving the tourist-dependent island of more than 400 visitors a month. Grenada has attracted about 9,200 travelers a month recently.

On a white-sand beach in Barbados the day before the start of the war, tourists were not much concerned.

"I don't think it will affect my vacation," said Guthier Gilbert, 50, of Montreal.

Top 10 Caribbean destinations:

  1999 2000 2001 2002
U.S. Virgin Islands* 560,134 628,153 609,646 597, 958
Aruba 683,320 721,224 691,419 642,267
Bahamas 1,577,068 1,596,160 1,428,172 1,402,894
Barbados 514,614 544,696 507,086 497,899
Cancun, Mexico 2,072,218 2,255,287 2,178,715 1,815,364
Cuba 1,602,781 1,773,986 1,774,541 1,685,231
Dominican Republic 2,649,418 2,972,552 2,868,915 2,793,581
Jamaica 1,246,827 1,322,690 1,276,516 1,266,366
Martinique 564,308 526,290 460,383 447,891
Puerto Rico* 1,089,955 1,178,700 1, 218,776 1,065,462

* Puerto Rico and the U.S. Virgin Islands are U.S. territories.

Source: Caribbean Tourism Organization

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