THE CARIBBEAN: ECONOMIC AID REQUIREMENTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83M00914R002700030013-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 5
• Document Creation Date: December 19, 2016
• Document Release Date: January 24, 2007
• Sequence Number: 13
• Publication Date: April 23, 1982
• Content Type: REPORT

Approved For Release 2007/01/%&L,~,f DP83M00914R002700030013-0
Central intelligence Agency
Directorate of Intelligence
23 April 1982
The Caribbean: Economic Aid Requirements
SUMMARY
This memorandum identifies four nations in the Caribbean region--
Jamaica, the Dominican Republic, Dominica, and St. Lucia--that would benefit
most from additional US assistance. Because economic problems are the chief
threat to political stability in the region, increased economic aid is needed
far more than military assistance. The amounts suggested here (see Table 1)
would supplement existing aid packages such as the Caribbean Basin Initiative
(CBI). Combined with an improved world economic situation, this assistance
would strengthen democratic institutions in the recipient countries and
increase US influence in the region.
The countries of the Caribbean Basin, except for oil-rich Trinidad and
Tobago, have been hard hit by the escalating cost of oil and other imports and
declining prices for their major exports--sugar, coffee, bauxite, This, in
turn, has exacerbated the deep-rooted structural problems of such countries as
Jamaica, the Dominican Republic, and the mini-states of the Eastern Carib-
bean. The result has been high unemployment, serious inflation, declining GDP
growth, huge balance of payments deficits, and a pressing liquidity squeeze.
This economic crisis threatens political and social stability throughout the
region and creates conditions which Cuba and others seek to exploit through
terrorism and subversion.
This memorandum was requested by the Executive Director of the Central
Intelligence Agency. it was prepared the Middle America/
Caribbean Division of the Office of African an Latin American Analysis.
Information available through 20 April 1982 was used in preparing this
memorandum. It was coordinated with the Directorate of Operations and the
National intelligence Officer for Latin America. Questions and comments are
welcome and should be directed to Chief, Middle America/Caribbean Division,
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The US program for the Caribbean Basin Initiative (CBI) is
an integrated approach, encompassing trade, investment, and aid
to attack both emergency problems and structural impediments to
long-range economic development. The CBI will supplement other
US assistance programs for the region. (US economic aid to
Jamaica, the Dominican Republic and the Eastern Caribbean is
shown in Table 2). The CBI offer of one-way free trade rather
than the more publicized $350 million aid package, is the back-
bone of the CBI program. Incentives, particularly a significant
tax break for US direct investment in the Basin, promise to boost
the return to US investors and thus encourage the location of new
production in the Basin even given the risks. The emergency
economic aid program addresses the acute liquidity crisis faced
by many countries in the region, a crisis threatening prospects
for private sector investments.
But aid in addition to the CBI package--such as balance of
payments support--would have a dramatic short term impact where
growth has been stymied by foreign exchange constraints. Jamaica
and the Dominican Republic fall into this category. In Jamaica,
Prime Minister Seaga has reversed the trend of economic decline
of the last seven years. Under the CBI, $50 million is earmarked
for supplemental aid to Kingston this year. Other US aid will
bring the total to $137 million (see Table 2). At currently
projected aid and foreign investment levels, growth is expected
to be the same as last year--about 1.5 percent. Increased aid,
however, would quickly raise this growth rate. An infusion of
$300 million, for example, could enable Kingston to meet the
targeted 4 percent level this year, by allowing an increase in
imports of sorely needed raw materials and capital goods.
In the Dominican Republic, the recession in the US and
Europe has eroded the values of all of the major exports--sugar,
cacao gold, silver, and nickel--with coffee the only bright spot
on the horizon. With a hotly contested election scheduled for
May, the government has been reluctant to seek IMF assistance. A
tough austerity program introduced last year caused a sharp slow-
down in economic growth with imports cut back sharply to slow the
soaring current account deficit. Supplemental aid of $40 million
is already programmed under the CBI in 1982 and the Dominican
Republic will also benefit from the CBI's special treatment for
sugar exports to the US. Nevertheless, additional balance of
payments support of some $150 million would enable inventories to
be replenished and arrest the decline in GNP which otherwise will
decline by as much as 3% this year.
2
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Summary: Increased Aid Requirements
(million US$)
Jamaica 300
Dominican Republic 150
Dominica 5
St. Lucia 15
TOTAL $470
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SECRET
US Concessional Assistance: 1980-1983
(1,000 US$)
1980
Actual
1981
Actual
1982
Current
Budget
1983
Congressional
Presentation
Jamaica
Development Assistance
2,684
12,924
29,571
37,000
Economic Support Fund
41,000
40,000
55,000
PL 480 - Food for Peace
10,010
15,208
17,527
20,014
CBI - 1982 Supplemental
50,000
TO'T'AL
12,694
69,132
137,098
112,014
Dominican Republic
Development Assistance
34,640
17,393
24,700
26,000
Economic Support Fund
PL 480 - Food for Peace
20,163
19,356
20,522
20,783
CBI - 1982 Supplemental
40,000
TOTAL
54,803
36,749
85,222
46,783
Caribbean Regionall
Development Assistance
41,183
27,044
30,605
30,000
Economic Support Fund
4,000
20,000
31,000
PL 480 - Food for Peace
927
55
40
CBI - 1982 Supplemental
10,0002
46,110
27,099
60,645
61,000
'Encompasses all Eastern Caribbean Ministates, including
Dominica and St. Lucia; further breakdown not available.
2$10 million allocated entirely to Dominica.
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SUBJECT: The Caribbean: Economic Aid Requirements
Original - Requestor
1 - SA/DCI/IA
1 - DDI
1 - ADDI
1 - NIO/LA
1 - NIC/AG
1 - PDB Staff
1 - FLS
1 - DDI Rep/CINCLANT
1 - C/DDI/PES
1 - D/ALA
2 - ALA/PS
1 - ALA/Research Director
4 - OCPAS/IMD/CB
1 - C/ALA/MCD
1 - C/ALA/MCD/CC
1 - ALA/MCD/Country Files
ALA/MCD/CC 23 April 1982)