Friday, November 30, 2012

Who says Tobago can't mind itself?

My favourite economist, the adjunct distinguished UTech professor Vanus James and mi bredren, invited me to school again last Friday. He had gathered additional data on the Tobago economy and so had updated his analysis of the economy and wanted to share both data and analysis with me and all others. He invited us to class at the Victor E Bruce Financial Complex.

The research was part of a broader WIPO (World Intellectual Property Organisation) project and was funded by the THA. So Chief Secretary Orville London and some of his secretaries were also part of the class. Indeed, Vanus' presentation was being done under the auspices of the THA.

Now, in the first class — conducted via Skype with me only — Vanus had shown that Tobago could mind itself, since its GDP for 2011 — calculated on the basis of incomplete data for both the petroleum and non-petroleum sectors and without factoring the contribution of taxes — was TT$2.611 billion, which was $255.6 million in excess of the budgeted upkeep for 2013.

In the class last Friday, he had updated his analysis, having had the benefit of additional data. And that data was absolutely mind-boggling and exciting at the same time! It yielded the following analysis and projections in brief, using the most conservative assumptions and estimates. The Tobago economy:
• Generated value-added of TT$4.85
billion in 2011.

• Grew by 27.4 per cent in nominal
terms from TT$3.8 billion in 2010.
• Is projected to generate a GDP of
TT$6.5 billion in 2012.
• Is projected to generate a GDP of
TT$17.02 billion by 2015.
• Is projected to yield a per capita GDP
of US$18.172 in 2012.
• Is projected to yield a per capita GDP
of US$39, 974 by 2015.

Vanus observed that the revenue capacity of the economy, assuming a "prudent policy of 30 per cent tax on the GDP and borrowing at 46.6 per cent'' would have been TT$3.8 billion in 2011 and would rise to TT$7.4 billion in 2015.

I don't know about you but these, for me, are absolutely stunning figures! According to Vanus, they "would make Tobago the island with the highest potential GDP per capita in the Caribbean' and 'would be adequate to finance necessary restructuring of the economy towards a strong capacity-building sector that can lead the path to sustainable development.'

Now, some of you may be asking yourselves what Vanus used to assign Tobago its GDP share of the proceeds from the petroleum sector (as distinct from the non-petroleum sector). After all, the THA Act assigns the island a six-mile radius of maritime waters; the government's Green Paper proposes a ten-mile radius; and the THA's John Prince Report proposes a 12-mile radius. These boundaries are set more or less arbitrarily and, if we were to go with them, Tobago would likely have no claim on the gas and oil resources that are clearly to be found in the seawaters near it, in which case, Vanus' figures would immediately evaporate, leaving everything to an entity called Trinidad and Tobago, which, from a government point of view, practically amounts to Trinidad.

Indeed, having regard to 1. the fact that the marine areas to the northeast of Tobago are proximate to Tobago and not to Trinidad and 2. the fact that international law confers on the state of Trinidad and Tobago ownership of only the marine areas and resources therein up to a distance of 12 miles but only sovereign rights over the waters outside of the 12-mile limit, it is up to the parliament of the country to assign to the each of the two islands responsibility to exercise those sovereign rights in the waters proximate to each.
Thus, there is a need to define the boundaries of each island, especially if there is a dispute as to boundaries. In this regard, a commission set up by the THA proposes a definition based on international law, using the equidistance principle. That is, we must measure the distance in nautical miles between the two islands and draw a line down the middle.

If we were to use such international boundaries, it is clear that exploration and production companies like Centrica, Petrotrin, Kerr Mc Gee, Primera, British Gas, Niko Resources, RWE, EMI, Venture North Sea Oil, bpTT, and BPEOC would be operating in Tobago waters.

So Vanus' figures were calculated on the assumption of Tobago as an 'independent' state.
He asked his audience which scenario they would prefer as Tobagonians interested in the development of their homeland: one where Tobago's boundaries are set — ridiculously (my word choice) — at six, ten, or 12 nautical miles from its coastline? Or one where they are set by a line down the middle of the maritime distance between the two islands?

Finally, if you are interested in a consequential definition of Tobago, here is one from the THA Commission:
"Tobago shall comprise the island of Tobago, Little Tobago, St Giles Island, Marble Island, Goat Island, Sisters Island and other off-shore islands, the archipelagic waters lying landward of the established straight base-lines as well as the 12-mile Territorial Sea measured seawards from the said base-lines and the super-jacent air-space above these two aforementioned maritime areas and over the land-space and shall exercise sovereign and other rights over the living and non-living resources in the area around Tobago designated as the Exclusive Economic Zone under Part III of the Archipelagic Waters and Exclusive Economic Zone Act No 24 of 1986 which extends to the limits established by internationally-recognised maritime boundaries and limits agreed to in maritime areas lying between T&T and in maritime areas where no bilateral limits have been agreed to with the two neighbouring states concerned, to 200 nautical miles measured from the relevant baselines drawn around Tobago." (Emphasis mine)

Reproduced unedited from Express Editorial 
Written by Winford James a UWI lecturer and political analyst

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