PERSAUD

Wilberne Persaud, Financial Gleaner Columnist

Surviving regional operations of the colonial enterprise known as the British West Indies and the sabotaged West Indies Federation include cricket, meteorological services, University of the West Indies - morphed by UWI Alumni-led governments and compliant former administrations into a besieged dependent, struggling hybrid - and not much else.

Let me immediately avoid misinterpretation: Jamaica's referendum was no act of sabotage.

I refer to manoeuvrings of the former British Colonial Office which in a sense were calculated to end in that referendum. The British knew political expedience, poverty, uninformed opinion, conflict over Chaguaramas as United States Military Base vs. Federal Capital and political rivalry would take us there. Eric Williams aptly concluded: 'One from 10 leaves zero'.

Recently, P.J. Patterson checked with Patrick Manning, trying to make one plus zero ten again.

They too failed causing The Gleaner to replace 'one from ten leaves zero' with "Myopic economic nationalism" - the title of its February 25 editorial - its description of Prime Minister Manning's reneging on an "undertaking to supply Jamaica with liquefied natural gas (LNG) for an energy conversion project critical to Alcoa's proposed US$1.6 billion investment to double the capacity of its Jamalco alumina refinery here."

Sluggish growth

The Gleaner opines: "Jamaica, with its troubled economy with sluggish growth, is Trinidad and Tobago's largest and most lucrative market. Port-of-Spain enjoys a US$500 million trade balance with Kingston."

Discussing Trinidad's non-supply of LNG, The Guardian had resorted, according to The Gleaner, to jingoism in making an "inconsequential case [seeking] to claim it was an attempt by Prime Minister Portia Simpson Miller to divert attention from corruption and criminality in Jamaica ahead of a general election".

Stranger things have happened. Yet, The Guardian's views on supply of LNG, Jamalco expansion and the rationale for subsidy rested on solid foundation.

The case relies on the fact that subsidised LNG would facilitate the "profitable operation of a three million-tonne alumina refinery in Jamaica that would be 80 per cent owned by Alcoa. Alcoa would then transfer the alumina, which is being produced at a lower price because of subsidised LNG, to T&T, where it would be smelted into aluminium in the 100 per cent Alcoa-owned facility in T & T."

Subsidies

The question for Manning was how to justify subsidies to Alcoa in face of Trinidad and Tobago's other pressing needs.

But this question raises so many others in the saga of bauxite in Jamaica and West Indian economic cooperation. The idea of Jamaican bauxite with Trinidad and Tobago power generation is not new.

The LNG idea may be. Because Jamaica has no money to invest with Alcoa in expanding the plant, our ownership stake is diluted.

Of greater interest is why Jamalco becomes only 20 per cent Jamaica owned after significant contributions to capital potential in the form of the bauxite levy? And why have we seemingly moved away from a bauxite ore basis of payment back to an income tax basis after the long hard struggle to change it?

Bauxite is a wasting asset. Mining and processing create huge environmental and other problems.

In the deals colonial administrations brokered with mining companies it would not be uncommon for US$0.20 cents or thereabouts to be the norm a country realised per ton of ore extracted.

Bauxite has no known market price since really, no market exists. Our formula, the core of which was developed by Alfred Francis, now retired, Emeritus Professor of Applied Economics at UWI, used the revealed price of aluminium ingot, a commodity for which there is a ruling price on the London Metal Exchange.

Obviously, if bauxite becomes aluminium there is a conversion ratio for bauxite input to aluminium output - elementary really, and equitable too, it seems to me.

Bauxite levy

That formula was instituted around 1974 and the payment termed the bauxite levy. It provided Jamaica payments ranging from US$12-16 per ton of ore extracted.

Mylate friend Ronald Manderson-Jones, brilliant historian, foreign affairs practitioner and lawyer, always insisted that a different name should have been found for it and that Prime Minister Michael Manley should have refrained from discussing it as a triumph over the multinationals.

This,he suggested, created problems Jamaica did not need.

That aside, the question remains: Would Trinidad and Tobago have provided LNG if Jamaica owned 50 per cent of both Jamalco and the smelting operation in Trinidad and Tobago? Interesting questions, answers to which I could not provide.

wilbe65@yahoo.com