JAMAICA: SEAGA'S PROSPECTS

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• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00589R000100140005-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 23
• Document Creation Date: December 22, 2016
• Document Release Date: July 14, 2010
• Sequence Number: 5
• Publication Date: March 1, 1985
• Content Type: REPORT

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Directorate of Secret
Intelligence
Jamaica:
Seaga's Prospects
Secret
ALA 85-10033
March 1985
Copy 3 2 9
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Directorate of
Intelligence
Jamaica:
Seaga's Prospects
This paper was written by~ Office of
African and Latin American Analysis, with
contributions by
Issues;
Division, ALA,
I Office of Sc
Office of Global
tral Reference; and
ientific and
Comments and queries are welcome and may be
addressed to the Chief, Middle America-Caribbean
Secret
ALA 85-10033
March 1985
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Secret
Jamaica:
Seaga's Prospects
Key Judgments After four years in office, Prime Minister Edward Seaga and his Jamaica
information available Labor Party have yet to pull the country out of its economic doldrums. We
as of 25 February 1985 believe the slump is likely to continue, which will only compound the
was used in this report.
difficulties the government faces, including the Prime Minister's record-
low popularity, the return to more aggressive tactics by the opposition, and
a growing level of political and general violence. As a result, we see the
likelihood of substantially greater political turmoil over the next 18 to 24
months.
Both Havana and Moscow are hoping that the more turbulent atmosphere
will allow the return to power of opposition leader Michael Manley and his
People's National Party, whose radical wing has strong ties to Cuba. The
Prime Minister still holds most of the political aces, however, and, so long
as the defense forces can prevent prolonged disorders stemming from the
economic misery, he should be able to stave off opposition demands for a
new election.
We see little possibility of a turnaround in conditions that have wreaked
havoc with the country's balance of payments and dampened economic
growth: slumping US demand for Jamaica's bauxite and alumina, low
world prices for sugar and bananas, and sluggish inflows of loans and
investment capital. As a result, Seaga is unlikely to make any headway in
reducing an unemployment rate of nearly 30 percent that now matches the
one inherited from the Manley administration and an inflation rate
approaching 40 percent. Eroding confidence in Seaga's economic manage-
ment has also renewed the exodus of scarce skilled managers and
technicians. Continued economic stress is likely to encourage the recent
surge in violent crime, increase the attractiveness of marijuana production,
and further diminish Seaga's willingness to pursue crop eradication
vigorously.
We believe, nonetheless, that Seaga will make a respectable showing in
local elections scheduled for June 1985 and has a better-than-even chance
of staving off opposition demands for a general election over the next two
years:
? The Prime Minister's total control of Parliament in the wake of the
opposition's 1983 electoral boycott will prevent a no-confidence vote
under almost any circumstances short of overwhelming public pressure
and a widespread breakdown in public order.
? The politically adept Seaga probably will be able to continue to
capitalize on the widespread dissatisfaction with Manley's past steward-
ship and to exploit the deep internal divisions in Manley's party.
iii Secret
ALA 85-10033
March 1985
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Assuming Jamaica's economic outlook remains bleak and that opposition
activities against the Seaga government intensify over the near term,
Kingston almost certainly will petition more urgently for additional' US
assistance. This will be especially true after the current IMF standby
program ends in mid-1985. We believe Seaga will request help in such
forms as additional bauxite purchases, support for the country's security
forces, and concessional loans to tide the economy over at least until a new
IMF arrangement is forged. From a broader perspective, we believe other
moderate countries in the region will tend to evaluate Washington's success
in Jamaica as a measure of US effectiveness in promoting stability and
economic progress throughout the Caribbean.
If the Jamaican Government missteps badly, should Seaga be tarred with
scandal, or if the government proves unable to control rising disorders,
pressures for an election would increase. Under such conditions, Manley's
oratorical flair, combined with popular disgruntlement with present eco-
nomic conditions, could outweigh the memories of the radicalization of
Jamaican politics that Manley permitted. Should Manley return to power,
party moderates, now in the ascendancy, would become vulnerable to
pressure for a shift to more radical-and economically debilitating-
policies. In addition, Manley is committed to reestablishing relations with
Cuba and, over time, probably would permit an expansion of the Soviet
presence in Jamaica.
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Secret
The Ailing Economy
Containing the Political Damage
The Opposition's Strategy
The Havana/Moscow Angle
Grim Near-Term Economic Outlook
Implications for the United States
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Figure 1
Jamaica: Economic Activity
Runaway
Bav
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Montego
Lucea ayl
S v ann
la Me
C _! Bananas
[l Marijuana
Sugarcane
Alumina plant
~`; Bauxite deposit
-- -~ Railroad
Road
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Jamaica:
Seaga's Prospects
Introduction
The US-led intervention in Grenada in October 1983
generated a sudden surge in Prime Minister Edward
Seaga's popularity, which had been badly hurt by
Jamaica's worsening economic conditions. Subsequent
bungling by Michael Manley and his People's Nation-
al Party (PNP) provided Seaga-at the crest of his
popularity-with an excuse to call an election in
December 1983. The PNP's election boycott resulted
in Seaga's winning an uncontested new five-year
term, but the present one-party Parliament is an
abrupt departure from Jamaican tradition and has
disturbed many leading figures of the country's two
main parties. PNP leaders contend Seaga's only
legitimate mandate was won in the 1980 election and
will end in 1985
Now that Grenada and anxiety about the threat of
Communist subversion in the region have faded from
the front pages of Jamaica's press, the ailing economy
and an upsurge in violence are taking the spotlight. A
recent poll indicated Seaga's popular support is at a
record low. Moreover, the opposition has shifted to
more confrontational tactics. This paper examines
Jamaica's recent economic stresses, explores how
Seaga is maneuvering to limit the resulting political
damage, assesses how the country's economic pro-
spects will affect Seaga's tenure as Prime Minister,
and draws the implications for US interests in the
Caribbean area.
The Ailing Economy
One of the persisting legacies of former Prime Minis-
ter Manley was a deepening of the country's economic
problems. A long-awaited recovery seemed under way
early in the Seaga regime, but sputtered during the
next two years. The continuing world recession, which
caused a sharp decline in bauxite and alumina pro-
duction, was largely responsible. In addition, agricul-
tural production shrank because of prolonged drought
and strong competition from relatively cheap food
imports. Jamaica fared no better on the international
economic front. Despite the imposition of austerity
measures, Jamaica missed International Monetary
Fund (IMF) performance targets by wide margins,
and its two-year-old Fund program came unglued by
1983.[ 1 25X1
During the first half of 1984, Jamaican officials were
involved in prolonged negotiations to regain IMF
funding, according to US Embassy reports. To qualify
for new Fund credit, Seaga met a number of precondi-
tions that included:
? Unifying the exchange rate and instituting a curren-
cy auction mechanism.
? Eliminating almost all import-licensing
requirements.
? Reorganizing the government-owned sugar
company. 25X1
? Phasing out subsidies on most foods and basic
commodities.
? Implementing sharp hikes in electricity and tele-
phone rates.
? Tightening restrictions on credit and monetary ex-
pansion.
In keeping with the process of adjustment, the govern-
ment presented a budget for the fiscal year beginning
in April that slashed the deficit from 18 to 8.3 percent
of GDP, mainly by cutting 6,000 public-sector jobs
and raising revenues more than 10 percent over the
previous year. To cushion the impact on low-income
earners, Seaga implemented a food stamp program,
reduced income taxes on the poor, and increased the
minimum wage. When the United States declined to
purchase additional bauxite for its strategic stockpile,
the budget was slashed even further, mostly by cut-
ting current expenditures. With these measures in
hand, Jamaica qualified for a one-year, $143 million
IMF standby agreement in June. Jamaican officials
optimistically predicted that, despite the belt
tightening adopted to obtain the Fund's support, 25X1
Jamaica in 1984 could duplicate the 1.8-percent
increase in real GDP recorded in 1983.
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Economic Recovery Stalls, 1981-83
To rebuild the flagging economy he inherited in late
1980, Seaga endorsed new policies designed to dis-
mantle Manley's state-managed economic system and
release market forces in the private sector. The
recovery plan shifted the emphasis of the country's
development strategy from import substitution to the
boosting of exports. Initial reliance on foreign funding
was slated to be replaced by reinvigorated export
earnings and private capital inflows as the pace of
recovery quickened. To his credit, Seaga quickly
arranged a $650 million IMF package. The three-
year program required tough fiscal and monetary
measures and paved the way for substantial debt
relief and new funds from Western donors, particu-
larly the United States, and international banks.
Unprecedented foreign funding in 1981 sparked the
first real growth in GDP in eight years-3.9 percent.
All sectors, except the key bauxite-alumina opera-
tions, benefited initially. This spurt, however, quickly
fizzled to an annual.average of just I percent during
1982 and 1983 in response to the deepening world
recession and backsliding on Seaga's ambitious plans
to deregulate the economy. The major obstacle to
growth was the one-third drop in bauxite and alumi-
na output, which contributes 20 percent of GDP and
government revenue. This sector fell victim to the
The economic results, however, have been a disap-
pointing further erosion of living standards for most
Jamaicans. Seaga has publicly acknowledged that
Jamaica experienced an estimated 1-percent econom-
ic decline in 1984, although, in our view, the rapid
growth in drug trafficking complicates measurement
of Jamaica's actual national income. Based on first-
half performance and the recent rise in import prices,
the inflation rate in this import-dependent economy
approached .40 percent last year. As a result; real
wages for many Jamaicans fell roughly 20 percent
because of the government's success in holding most
wage increases to no more than 15 to 20 percent.
Some ground also was lost in the battle against
world recession and stiffer competition from produc-
ers outside the Caribbean. Residential construction
slowed after the reimposition of rent controls, and the
manufacturing sector suffered from bureaucratic
snarls as well as from shortages of domestic credit,
foreign exchange, and managers and skilled workers.
Agriculture declined in the face of bad weather and
fierce competition from relatively cheapfood imports.
Only tourism showed buoyancy throughout 1981-83,
thanks to an energetic promotion campaign in the
Jamaica's foreign payments situation matched the
intractable problems in the domestic economy. The
slide in bauxite and alumina sales, despite large US
purchases for the strategic stockpile, severely reduced
export earnings. The institution of multiple exchange
rates, designed to cut demand for foreign exchange by
discouraging imports and to encourage nontraditional
exports, proved to be self-defeating. The rate differen-
tials invited corruption and compounded existing
bureaucratic bottlenecks. As a result, Jamaica
missed IMF performance targets in March 1983.
Subsequent austerity measures also proved inade-
quate, largely because they sidestepped the funda-
mental problem of Jamaica's overvalued currency. As
a result, the IMF ro ram was abandoned altogether
by yearend 1983
unemployment-Jamaica's most intractable social
problem, in our view. Public-sector layoffs, cutbacks
in the sugar and banana industries, and the financial-
ly driven closure of the Reynolds Jamaica mine were
the major factors in pushing the unemployment rate
to nearly 30 percent-roughly on a par with that
inherited from the Manley administration. The em-
ployment picture was further complicated as short-
ages of skilled workers, managers, and professionals
worsened as the country experienced a resurgence.of
the exodus of trained personnel that had character-
ized the Manley years.
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Drug Trafficking
Jamaica, the third-largest producer (after. Colombia
and Mexico) of marijuana for the US market, now
supplies about 15 percent of US demand. At least
4,500 acres in Jamaica are used for marijuana
cultivation, according to US Government estimates.
The Drug Enforcement Administration (DEA) esti-
mates the total crop is at least 2,400 metric tons
annually with about 1,750 metric tons smuggled into
the United States.
Until recently, Jamaican participation in marijuana
trafficking was limited to the island, with the rest of
the pipeline controlled- by US citizens. Since 1981,
however, DEA reports indicate that Jamaican bro-
kers and pilots have become increasingly active in the
transshipment of marijuana, to the United States.
Jamaica also has become a significant transit area
for Colombian cocaine bound for the United States,
.but we have no evidence of coca cultivation or
processing on the island, and cocaine is not a major
source of Jamaican revenue.
The net economic impact of marijuana is difficult to
assess and is hotly debated in Jamaica. Some, in-
cluding influential newspaper columnists and politi-
cians, believe that trafficking provides major econom-
ic benefits to Jamaica and should be legalized. These
proponents often mistakenly quote the total US retail
value of the crop-about $2.5 billion-as the sum
earned by Jamaica. We believe foreign exchange
earnings from marijuana are equivalent to as much 25X1
as one-third of Jamaica's export receipts. We believe,
however, that most of the money brought into Jamai-
ca is allocated for consumer imports and soon returns
to the United States. As a result, we doubt that much
drug-related money becomes available to finance
producer goods or local investment
Government Control Measures. Seaga's strategy to
control marijuana consists of aircraft interdiction
and taxation of major violators. In late 1984, Seaga
won legislation authorizing security forces to destroy
illegal airstrips. He recently announced a plan to tax
drug traffickers' incomes and indicated that at least
The Economics of Marijuana. The island's brokers
are by far the largest beneficiaries in dollar terms,
but press reports indicate that marijuana has become
the most lucrative crop for many Jamaican farmers.
We believe marijuana smuggled into the United
States probably earns the Jamaican economy $ 100-
225 million annually, assuming that Jamaican bro-
kers keep half their profits and send the rest out of
Jamaica immediately without cycling the money
through the local economy. As banana and sugar
prices have fallen, we believe many of the island's
rural poor have shifted to marijuana as a far more
valuable alternative than such crops as manioc,
yams, or beans
Domestically, the economic decline was more or less
across the board. The continued slump in traditional
agriculture was a major factor in the pervasive deteri-
oration of the economy. Production of sugar and
bananas-Jamaica's leading farm exports-and the
domestic food harvest were severely hurt by low world
$29 million will be collected from 30 individuals, but 25X1
we believe collection of this sum will prove difficult.
These measures probably are designed to meet US
pressure to clamp down on marijuana production
without offending any influential constituency. Seaga
is concerned most about small farmers, a key seg-
ment of the electorate. According to the US Embassy
in Kingston, high-level Jamaican officials, including
Seaga, fear the backlash they believe would follow
any serious attempt to eradicate marijuana, especial-
ly if it involved aerial spraying.
prices, bad weather, misguided regulations, shortages
of essential imports such as fertilizer and pesticides,
and tight domestic credit. As a result, banana and
sugar output declined more than 50 percent and 6
percent, respectively, according to US Embassy
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reports. At the same time, government spending cuts
and high interest rates also buffeted the construction
sector. Moreover, manufacturing aimed at the local
and regional markets was crimped by restrictions on
credit and imports of raw materials, machinery, and
parts. Manufacturing's only relatively bright spot was
the production of textiles for sale in the US market,
which was buoyed by the beneficial provisions of the
US Tariff Schedule and the international Multifiber
Arrangement that attracted a number of US and East
Asian investors.
The deterioration in Jamaica's foreign payments situ-
ation in 1984 mirrored that in the domestic economy.
Export earnings stagnated: the $60 million increase in
nontraditional farm exports under a government-
sponsored program was insufficient to offset sluggish
sales of Jamaica's leading foreign exchange earners-
bauxite, alumina, and tourism. According to Jamai-
can statistics, bauxite ore production increased about
12 percent over the 1983 level-the lowest production
in 20 years. This improvement occurred in the first
half of 1984, however, and reflected one-time only
shipments under a US strategic stockpile agreement
and accelerated deliveries from the Reynolds Jamaica
mine prior to its closure in June after 40 years'
operation. In the second half of 1984, bauxite produc-
tion declined sharply, a development traders attribute
to both declining world aluminum demand and high
operating costs that have long hurt the profitability of
US- and Canadian-owned bauxite and alumina opera-
tions in Jamaica. Net earnings slipped 12 percent,
according to press reports. Mining is not the only
front on which Jamaica was buffeted. Tourist arrivals,
which jumped 17 percent in 1983, increased only 7
percent last year, according to US Embassy reports.
The industry was hurt, by
reduced spending on advertising, a strong US dollar
that increased competition from Mexico, Western
Europe, and other areas, and tourist fears stemming
from publicity about the Grenada intervention and
growing domestic security problems.
Adding to the government's external financing prob-
lems, trade statistics show that import demand re-
mained fairly strong. Despite a plummeting Jamaican
dollar-its value in 1984 had fallen 35 percent by the
time it was set free to float against the US dollar in
November-imports were buoyed by pent-up consum-
er demand. Before the Jamaican dollar was floated,
Seaga relied on bureaucratic harassment, jawboning,
and scolding to dampen demand for dollars at the
twice-weekly foreign exchange auctions. While this
hostile environment helped hold down import levels
somewhat, it also had the side effect of discouraging
potential investors and accelerating capital flight,
according to the US Embassy. Under IMF pressure,
Seaga belatedly relaxed these methods but instituted
further interest rate increases and credit restrictions
to halt the depreciation of the Jamaican dollar by
mopping up excess liquidity and dampening demand.
Containing the Political Damage
Jamaicans began turning their attention to the coun-
try's economic malaise as the euphoria over King-
ston's support for the successful Grenada operation
vaporized in early 1984. Polls show that the initial
boost in Seaga's popularity associated with his back-
ing of the Grenada intervention was quickly eroded by
popular dissatisfaction with the weakening economy
and associated price increases in 1984 and also with
the uncontested election in late 1983.
Seaga laid the groundwork to deal with potential
social unrest as the impact of austerity deepened.
Public outrage over disruptive electricity outages
caused by power worker walkouts last summer and
the alarming increase in crime since June 1984
created a receptive climate for strengthening the
government's legal and police powers. In recent
months, Seaga exploited this sentiment-and the
Jamaican preference for strong political leadership-
by setting in motion parliamentary action to:
? Revise the Labor Relations and Disputes Act to
increase penalities for illegal strikes.
? Renew for six months the Suppression of Crimes
Law, which lessens restrictions on government and
security forces.
? Create a National Advisory Council on Crime.
These tactics enhanced Seaga's image as a tough, no-
nonsense leader-a valuable asset in the Jamaican
political context.
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Figure 2
Jamaica: Economic Indicators, 1978-84
-600 1 1 1 1 1 1
Still, worsening economic conditions, particularly the
closure of the Reynolds mine, and opposition and
press charges of official corruption and economic
mismanagement have diminished the popularity of
Seaga and the Jamaica Labor Party (JLP) to record
lows. According to a poll conducted in September by
the respected Jamaican pollster Carl Stone, only 15
percent of those sampled characterized Seaga's per-
formance as good, 38 percent as poor, and the remain-
der as "trying but could do better." If an election
were held immediately, 26 percent said they would
vote for the JLP (compared with 43 percent in
October 1983), 38 percent preferred the PNP, 2
percent, the Communist Party (WPJ), with 34 percent
undecided. Stone interpreted these results as provid-
ing a 59- to 41-percent lead for Manley's party-the
same margin by which Seaga trounced Manley in
1980.
The economy is not the only sensitive issue that has
contributed to discontent among Jamaicans; they also
have been unsettled by the absence of two-party
representation in the government. We believe that
Jamaican press comments accurately reflect the views
of many Jamaicans in blaming both major parties for
the present one-party Parliament.' Seaga's call for a
snap election was viewed by these commentators as an
opportunistic ploy to capitalize on his new popularity.
At the same time, the PNP's decision to boycott the
election was criticized as an abandonment of its
constitutional reponsibilities as the official opposition.
Manley's claim that Seaga and the ruling JLP had
violated a solemn promise by calling an election
before revised registration lists were available-alleg-
edly disenfranchising more than 100,000 voters-was
labeled an inadequate excuse by the press; the PNP's
unpreparedness and Manley's unwillingness to risk
another defeat by Seaga were suggested as being the
real reasons behind the boycott
Manley only succeeded in
persuading the PNP's National Executive Council to
back the boycott by threatening to resign.
25X1
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' The Communist Worker's Party of Jamaica (WPJ), the largest of
1978 79 80 81 82 83 b 84 b the country's several fringe parties, also boycotted the election. The
WPJ has a fairly steady following of 2 percent of the electorate.
Like other fringe parties, it has never held a parliamentary seat. 25X1
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Seaga maneuvered skillfully early to blunt public
dissatisfaction over the election and to reassure those
fearing that the JLP would abuse its unprecedented
power. A postelection survey conducted by pollster
Stone revealed publicly that 70 percent of the Jamai-
cans sampled wanted a new election as soon as new
voter registration lists and other electoral reforms
were in place. In response, Seaga:
? Appointed eight respected political independents to
the Senate in place of those the PNP would have
appointed under the Constitution as the official
opposition party.
? Revived a little-known standing order of the House
of Representatives to permit members of the public
to make presentations and take part in debate.
? Arranged for continued PNP representation on the
Electoral Advisory Committee and for the inclusion
of PNP observers in the voter registration process to
compensate for the PNP's losing its constitutional
right to representation on government commissions.
? Set up a Bureau of Consumer and Public Affairs to
provide a forum for citizens' views.
These tactics succeeded in forestalling serious charges
of JLP manipulation of the levers of power and,
together with the favorable record of the first session
of the one-party Parliament, appear to have cooled
public demands for another election. According to the
Jamaican press, debate in the Senate was impressive,
and lively intraparty opposition characterized the
House of Representatives-reassuring those who had
feared the Parliament would become merely a rubber-
stamp for the JLP. The poll by Carl Stone in Septem-
ber indicated that the share of respondents who
wanted a new election immediately had dropped to 49
percent, with 47 percent preferring to wait until 1987
or 1988.
Seaga took other steps to outmaneuver the opposition.
In keeping with his apparent strategy to avoid elec-
tions until the economy improves, Seaga won parlia-
mentary approval in October to postpone local elec-
tions for parish council posts until June 1985.
Moreover, Seaga further diminished the importance
of these elections-and lessened the possibility of an
impressive PNP victory in them-by abolishing King-
ston's governing body, the Kingston St. Andrew Cor-
poration, for two years. A team of independent audi-
tors found gross mismanagement rife in the
organization-traditionally a PNP stronghold-and
recommended restructuring. Seaga seized upon the
report as justification for abolishing the organization's
43 local council seats, the largest block of political 25X1
posts in the country's urban areas.
Manley cal- 25X1
culated after the December one-party election that
the country's prolonged economic problems would
shift voter support automatically to the PNP and
generate a wave of sentiment for new elections. He
also believed that the use of confrontational tactics
would prompt violence and alienate the conservative
business and middle-class voters that the PNP was
trying to attract. Manley insisted that the party stick
to this strategy even though local party workers were
complaining by mid-1984 that inaction was eroding 25X1
their credibility and sowing doubts about the strength
of the party's commitment to press for an election. 25X1
By late October, party leaders were concerned,
that the PNP had failed
to follow up on its theme of "Elections Now" that was
announced at the party's annual congress the previous
month. With this-and probably the results of the
September poll in mind-Manley took the lead at a
PNP session in November to develop an aggressive
new strategy to immediately challenge the Seaga
government. The measures include:
? Initiating a suit challenging the legality of the
dissolution of the Kingston St. Andrew Corporation.
? Providing leaders for peaceful demonstrations and
roadblocks to protest economic conditions. 25X1
? Sponsoring strikes through the PNP-affiliated
National Workers Union (NWU) in sympathy with
laid-off government workers.
? Initiating regular meetings to gain support from
business and other interest groups that would lose
money because of the planned protests and strikes.
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The PNPs Struggle To Recover
The PNP's and former Prime Minister Manley suf-
fered a .humiliating election defeat in 1980, in a
contest in which Manley's support of the radical wing
of his party, close ties to Cuba, and socialist econom-
ic philosophy were major liabilities. The violent
events in Grenada and the evidence of extensive
Cuban and Soviet involvement there renewed the
focus on the party's radical. ties.. Government docu-
ments captured by US forces revealed that some PNP
members had close links with former Prime Minister
Maurice Bishop's New Jewel Movement and other
regional subversives. PNP moderates, who had been
trying to bury the party's radical past, were further
irritated when Manley then attempted to justify the.
PNP's past. close ties to Cuba,
Moreover, his frequent denuncia-
tions of the popular US-led intervention frustrated
their efforts to play down the Grenada events. The
impression among many in.Manley's party that he
had been, duped concerning the true nature of the
Finance Minister on grounds of deception, and Seaga
capitalized on his post-Grenada popularity by calling
a snap election, leading to the PNP boycott.
A longstanding rift between radicals and moderates
continues to hobble the PNP in its effort to formulate
strategy.
several moderate leaders-Carlyle Dunkley, Derrick
Rochester, and Frank Pringle-openly warned Man-
ley in early September that it was imperative that he
clarify his political goals. They claimed that middle-
class PNP supporters, disaffected JLP adherents, and
independents were demanding to know -if Manley
intended to offer high positions to radical leftists
should the party return to power. They warned
Manley that, unless the PNP publicly denounced the
radicals and ruled out their sharing power in a future
PNP government, the party would lose public sup-
port. Manley refused to permit such a statement.
Bishop regime and its relationship with Havana and
Moscow particularly damaged his reputation.,
The publicity stirred. old fears among Jamaicans
about Manley's relationship with Castro and the
party's real intentions should it return to office,
according to several polls published in late 1984.
From the PNP's perspective, untimely circum-
stances-the presence of a PNP delegation in the
USSR when the Grenadian crisis broke and state-
ments only a few days previously, by the deputy party
chairman advocating resumption of diplomatic rela-
tions with Havana-were played up by the Jamaican
press and exploited for political advantage by the
Perhaps, in its haste to, counterattack at its first
opportunity, the PNP allowed the. Prime Minister to
convert a. blunder into political opportunity. Seaga,
retracting an earlier statement that Jamaica had
passed its September 1983 IMF targets, revealed that
an impasse had been reached in negotiations with the
Fund. The PNP demanded Seaga's resignation as
Tensions between Manley and the moderates height-
ened during the party's 46th annual congress in late
September. Although Manley did not interfere with
the moderates'successful tactics to shut the radicals
out of the proceedings, he blocked their efforts to oust
radical Donald Buchanan from his position as deputy
party secretary. Manley
opposed the move because it represented a major shift
in the PNP's ideological position
The ambiguity, surrounding the party's ideological
orientation has stymied local fundraising efforts and
precluded the PNP from presenting a convincing
blueprint for the island's economic recovery.
potential financial
backers have refused to.contribute money unless
prominent radicals are expelled. After his well-
publicized trip to Havana in November 1984, ostensi-
bly on Socialist International business, prospective
donors in the business. community told Manley they
would not provide funds to the PNP as long as he
supports Castro,
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The PNP seized the opportunity to implement its
plans in January 1985, when the government
announced the increases in petroleum prices.
the PNP leadership decided to implement an already
prepared contingency plan designed to disrupt traffic
throughout Kingston for two days. PNP leaders
reportedly did not coordinate their plan with the
Communist party and instructed their activists not to
seek Communist assistance.
(Communist and PNP
activists, nonetheless, worked together during the
protests.
the PNP leader-
ship was pleased with the results-the essentially
nonviolent, demonstrations paralyzed traffic through-
out the island for three days. Subsequent press
comment, however, criticized the PNP for having
dealt a massive blow to an already faltering economy
in order to score political points. The moderate tone of
the party's "Elections Now" rally on 3 February,
reported by the press, suggests that the party leader-
ship temporarily has ruled out further aggressive
tactics as counterproductive.
Other Domestic Security Concerns-
The Political Gangs
Jamaica's security concerns go beyond the govern-
ment's ability to handle popular demonstrations over
economic and political issues. Another key element in
the country's security picture is the role of armed
gangs in Jamaican politics. Political parties in
Jamaica traditionally have relied on armed thugs,
especially in Kingston's ghettos, to protect party turf,
distribute benefits, and demonstrate power by chal-
lenging and humiliating rival gangs.
fin late 1983
police records showed some 2,675 gunmen, organized
into nearly 50 gangs varying in size from 20 to 300
members, active in the. Kingston corporate area.
About 17 gangs were affiliated with the PNP, 19 with
the JLP, and 12 with the WPJ. Gang-related murders
in 1984 were up almost 60 percent in comparison with
1983
Political reliance on gangs appears to be increasing.
According to the US Embassy, several prominent JLP
leaders believe their party's vulnerability on economic
benefits make it even more imperative to demonstrate
its authority on the streets. Moreover, these hardliners
consider the national police so biased against the JLP
that the party's own "community authority struc-
tures" are needed to protect its members, according to
the Embassy. They also worry that, once new voting
procedures are in place, demands for a new election
would regain momentum if the JLP is widely seen as
too weak to control the streets. We believe Seaga's
decision to pay armed JLP activists from his own
West Kingston constituency to clear roadblocks dur-
ing the January demonstrations
may have been motivate y
PNP are equally aggressive.
Manley told a select group of party
activists and gunmen in September that he would
to force the JLP into calling a new election
While political reliance on gangs appears to be on the
rise, the gangs themselves may be in the process of
raising the stakes. In mid-1984, a new gang emerged.
The new group, with PNP links, was uniformed and
evinced the discipline and sophistication of organiza-
tion and weaponry more typical of a military unit
than the usual street gang. The band operated out of
the cave-dotted hills east of Kingston for more than
four months before a major security operation in July
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associated with the PNP's Youth Organization-
directed the group and PNP leftist gunman Larry
Robertson trained it and that these activists have
coordinated their efforts with Communist party lead-
er Trevor Munroe. Burke,
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ordered similar bands organized throughout the island
to undermine confidence in the government's ability
to provide security. It would not be difficult to arm 25X1
such groups. Burke
controls 55 percent of the PNP weapons in Kingston, 25X1
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interdiction of arms shipments indicate that the num-
ber of weapons on the island is proliferating.
all three parties are
actively smuggling arms, including automatic weap-
ons, into the country for their partisans and, in some
cases, financing these operations by drug trafficking.
For example, Munroe has increased arms supplies to
Communist gangs in West Kingston since June, re-
sulting in violent clashes between his gunmen, JLP
Jamaica's security forces could be overwhelmed if
they were faced with a spate of simultaneous, widely
dispersed incidents. Cuts in the budget of Jamaica's
6,000-man police force have played havoc with mo-
rale, recruitment, and equipment maintenance. =
low salaries,
soaring prices, and stepped-up drug trafficking have
further increased widespread corruption. The 3,660-
man Jamaica Defense Force is better trained, led, and
equipped and enjoys a far superior reputation for
professionalism and integrity than the police. It large-
ly overcame the deterioration suffered during the
Manley years by the judicious use of US aid to
reequip and retrain the force. Recent budget slashes
and resignations of officers seeking better paying
positions, however, are creating serious operational
problems this year
In addition, a longstanding interser-
vice rivalry has undermined the efficient use of
limited resources and compromised the effectiveness
of joint operations,
Outside Interference
Jamaica's combination of economic depression, strong
political tensions, a growing guns-and-drugs under-
world, and simmering political instability is a condi-
tion ripe for exploitation by Moscow and its allies.
Operationally, however, both Moscow and Havana
have been hampered by the Seaga administration's
countermoves. Seaga's hostility to the Castro regime
has been unremitting. He severed diplomatic relations
in 1981 shortly after his inauguration and expelled the
representative of Havana's press service, Prensa La-
tina, in November 1983 on charges of spying. Cuba
consequently lacks a diplomatic presence in Kingston,
and its only remaining representative is the Cubana
Airlines chief. Moreover, Seaga's expulsion of four
Soviet diplomats for spying simultaneously with the
ouster of the Cuban press representative has probably
made remaining Soviet Bloc diplomats more cautious
in their local contacts.
The Havana/Moscow Angle:
both Moscow and Havana view the return
to power of Manley and the PNP as their best chance
for future gains in the region. Havana's decision to
give priority to the election of a PNP government-
rather than to strengthen the Communist WPJ-is
reflected in its circumspect dealings with Trevor
Munroe and the Communists since the Grenada
operation. for exam-
ple, the Communist Worker's Party of Jamaica tem-
porarily lost its Soviet and Cuban financial support
immediately after the intervention. Havana resumed
funding in the fall of 1984 with the stipulation that
the party help the PNP return to power,
Communist WPJ.
the USSR contributed funds for the Commun-
ists' party congress last December. Moreover, during
a private session of the congress, Munroe announced
that the USSR, Hungary, and East Germany had
promised financial and technical assistance to the
party for an agricultural project,
arms deliveries is fragmentary.
PNP radical Paul Burke was
rebuffed when he requested weapons from his Cuban
contacts soon after the Grenada intervention, al-
though he and his comrades in the PNP Youth
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Organization had received arms from Cuba in the
past,
during 1983 and early 1984, PNP and PNP
Youth Organization radicals smuggled weapons, am-
munition, and other supplies into Jamaica from Cuba
using an illegal rural airstrip.
Other Radical Actors. Other radical actors such as
North Korea and Libya appear to be more at the
periphery of PNP and Communist WPJ activity,
although they are cultivating assets and providing
some funding. In line with North Korea's policy of
strengthening ties with leftist and moderate govern-
ments in the region, its diplomats,
have tried to draw closer to
the PNP but were rebuffed by Manley both during his
tenure as Prime Minister and after he left office.=
the North Koreans conse-
quently decided last July to restrict their efforts to
aiding potential parliamentary candidates on an indi-
vidual basis.
a North Korean diplomat had
covertly supplied funds to the PNP and to an action
committee of various leftwing Jamaican organizations
to support activities to force early elections.
(North Korean diplomats
have been involved with Jamaican leftists in training
in paramilitary tactics at an unidentified location.
during
1984 North Koreans frequently attended Con munist
party meetings and were observed passing money to
Jamaican leftists.
Libya, like Cuba and Moscow, apparently is hoping to
widen its influence via a return of the PNP to power.
two PNP
members, while visiting Libya in April 1984, were
offered a large loan for a reelected PNP government
in exchange for a promise that such a government
would adopt a strong anti-US stance. No firm com-
mitments reportedly were made by either side
Grim Near-Term Economic Outlook
Domestic and international trends provide little cause
for optimism that the Jamaican economy will post
much, if any, growth in 1985. Nor is Seaga likely to
make any real headway in slashing unemployment
and inflation. In our view, any recovery would hinge
largely on an unexpected pickup in commodity ex-
ports and tourism, on Seaga's ability to stimulate
investor interest-particularly in nontraditional agri-
culture and light manufacturing-and on his success
in tapping foreign capital markets.
The likelihood of reviving the bauxite-alumina sector
is bleak, despite currency devaluations that, in effect,
have cut wages and other local costs in US dollar
terms, or even in the unlikely event that world
demand for aluminum picks up significantly.
US producers probably would
satisfy their needs from lower cost operations in
Guinea, Australia, Brazil, and elsewhere before trying
to increase purchases from Jamaica. This year Alcoa
has suspended its bauxite and alumina operations for
at least one year. According to Seaga, the closure will
cost Jamaica $40 million in exports and $25 million in
government revenues this year as well as 900 direct
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As an illustration of the problem being faced, the 25X1
manager of the ALPART alumina refinery, the larg-
est US investment in Jamaica, in October 1984
indicated to US Embassy officials that its operations
may close this year. The plant processes more than 15 25X1
percent of Jamaica's bauxite production, earns 10
percent of the island's foreign exchange, and employs
1,200 workers. The manager claims that only com- 25X1
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s bauxite tax
plete exclusion from the government
might keep the plant open. Any tax relief probably
would not increase production sufficiently to maintain
vital government revenues from this source. In any
case, Jamaica's eroding competitiveness will severely
limit the government's recently announced plans to
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In addition to the dismal bauxite/alumina picture, the
government's initial hopes for a banner tourist year
were quickly dashed by the January protests in re-
sponse to the steep rise in oil prices that came on top
of a recent upsurge in domestic crime and harassment
of tourists by drug peddlers. According to local press
reports, occupancy rates and new reservations at
many hotels have dropped sharply since mid-January
despite a new advertising campaign in the United
States. Seaga mentioned in a press interview that. all
but two of the business conventions expected to be
held in Jamaica during 1985 and 1986, have been
The prospects for agriculture are mixed, in our judg-
ment. Recent currency devaluations-by making
Jamaican exports relatively cheaper and imports cost-
lier-should increase the competitiveness of food pro-
duction geared to both the foreign and domestic
markets. Jamaican Government efforts under the
trade provisions of the Caribbean Basin Initiative will
continue to encourage the expansion of such higher
value products as spices, cut flowers, and winter
vegetables. Sugar and banana prices, however, are
likely to remain too low in 1985 to encourage much, if
any, increase in production of these traditional crops.
Shortages. of foreign investment and loan capital will
continue to crimp the performance of most sectors,
particularly heavily import-dependent manufacturing
activities. Economic and political uncertainties are
prompting a number of international banks to de-
crease their loan exposure in Jamaica,
The current
IMF standby accord is scheduled to end in mid-1985,
and Jamaica may well have to weather some months
without a Fund-supported program. If Seaga's com-
mitment to austerity weakens in the face of the
coming local elections, negotiations for a new IMF
agreement could drag on even longer than.in the past.
Kingston's recent moves, to try to reschedule part of
the country's $2.2 billion medium- and long-term
external debt will further discourage potential lend-
ers. Still, Jamaica's relatively low wages-recent de-
valuations have cut labor costs well below those in
Hong Kong, for example-and proximity to the US
market will lure some investors.
Election Prospects
Despite the likelihood of continuing economic stress,
we believe Seaga has a better-than-even chance of
staving off opposition demands for a general election
over the next two years at least. Seaga's-.conviction
that a new national election must be avoided until the 25X1
economy posts some gains was strengthened by the
results of the September poll,
perceptions.
We expect that Seaga will schedule local elections by
June 1985. The ruling party has-several strengths as it
enters the campaign, and opposition PNP hopes of
trumpeting the results as proof that it has achieved
majority status may be frustrated, in our view. The
ruling JLP's chances in rural areas-where it tradi-
tionally has done well-are further enhanced by its
incumbency, which gives it control over the disburse-
ment of all central government funds appropriated. for
local use. Moreover, by dissolving the Kingston St.
Andrew Corporation, Seaga has reduced the ratio of
urban to rural posts, thereby diminishing the PNP's
chances of being able to win overwhelmingly in these
races. A JLP victory, while less likely in our view,
could occur if an unexpected event-such as Manley's
death-or a tactical error by his party alters voter
Even if the PNP makes a strong showing in the local
election, it probably would not. be sufficient to force
an early general election. Only overwhelming public
pressure would be likely to overcome Seaga's resis-
tance to call an early vote. In any parliamentary
system, the incumbent party can dictate the election
timetable if it holds a solid majority. With the JLP in
control of all 60 seats in the House of Representatives,
Seaga is shielded from a parliamentary vote of no
confidence that automatically would trigger a new
election. Based largely on the results of the September
poll,. we believe that any further erosion of Seaga's .
public support stemming from the country's.economic
difficulties would not proportionately boost pressure
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The PNP's aggressive new strategy could prove a two-
edged sword. While it could force an early general
election, PNP support at the polls could be undercut if
the populace blamed the party for any pickup in
violence. If the party launches its effort as planned
during the crucial winter tourist season through April,
when both parties traditionally have refrained from
confrontational politics, the PNP also risks the charge
of sacrificing the country's economic welfare for its
own political ambitions.
The PNP also faces difficulties in trying to maintain
the cooperation of organized labor, an element essen-
tial to the success of its planned strategy.
many union officials privately expressed
reservations when Manley was elected president of the
PNP-affiliated National Worker's Union in June
1984. They noted that, after the PNP came to power
in 1972, it essentially abandoned the union. We
believe that union leaders, primarily concerned with
maintaining credibility with their rank and file, will
cooperate with the PNP only as long as they judge the
party's interests dovetail with those of their member-
ship.
Implications for the United States
Seaga's success or failure in bringing economic recov-
ery to Jamaica will directly affect US political and
economic policy in the region, in our view. Jamaica is
seen by regional leaders as the linchpin of Washing-
ton's Caribbean policy because of its size and political
importance among the English-speaking islands. This
view has been reinforced by Seaga's actions in swing-
ing Jamaica firmly into the US camp, his vigorous
support of the US-led Grenada intervention, and his
espousal of free enterprise economic policies. We
believe other moderates in the region will read the
outcome in Jamaica as a barometer of Washington's
effectiveness in promoting stability and economic
progress throughout the Caribbean over the long
term. Considering the generous US economic support
provided to the Seaga administration, his political
defeat would raise doubts about the suitability of the
free market approach as a cure for the region's
economic doldrums.
Assuming Jamaica's economic outlook remains bleak
and that opposition activities will intensify over the
near term, Kingston almost certainly will seek addi-
tional US assistance with an increasingly urgent tone,
especially after the current IMF standby program
ends in mid-1985. We believe Seaga will request help
in such forms as additional bauxite purchases, support
for the country's security forces, and concessional
loans to tide the economy over should agreement on a
new Fund arrangement be delayed. At the same time,
continued economic distress is likely to further dimin-
ish the Seaga government's willingness to provoke the
wrath of farmers by pressing efforts to eradicate
marijuana crops.
We would expect a Manley government, even one in
which moderates occupy influential positions, to de-
part from the economic policies advocated by Seaga in
several key respects. Based partly on statements made
at recent PNP caucuses, we believe the party's eco-
nomic program would include a return to a fixed
foreign exchange rate and import licensing. The PNP
also supports an end to further divestitures of state-
owned enterprises and cuts in government payrolls.
Although PNP leaders have not ruled out pursuit of
IMF support, enactment of these nonmarket policies
probably would preclude a Fund program. Without
IMF support, access to credit from other international
lending agencies and commercial banks would be
severely limited as would investment capital. The
chances of Jamaica declaring a moratorium on its
external debt-of which $700 million, or nearly one-
third, is owed to the United States-would increase.
The deepening economic crisis that would inevitably
follow, in our view, would make moderates in the
PNP increasingly vulnerable to radical pressure for a
shift to a more leftist orientation.
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likely to reestablish relations with Cuba and permit
an expanded Soviet presence.
Manley indicated
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future PNP government would maintain correct and
open relations with Cuba, reflecting Jamaica's sover-
eignty and its position as Cuba's closest neighbor. He
added that the PNP would recognize the reality of US
hegemony in the Caribbean region but not to the point
of obeisance. We believe Manley would be correct,
but cool, in his relations with US officials-he blames
Washington in large part for Jamaica's economic
woes during the 1970s and for his humiliating election
defeat. Pressure by the moderates and the country's
economic aid needs probably would limit the govern-
ment's anti-US rhetoric. As in the past, Manley
would openly criticize such US policies as support of
the anti-Sandinista insurgents in Nicaragua, which he
views as violating international law
With respect to such US interests as the curtailment
of drug trafficking and illegal emigration, the impact
of PNP policies would most likely be negative. We
believe the economic deterioration that would follow a
PNP victory would foreclose much progress on inter-
diction and eradication and would increase the al-
ready substantial flow of legal and illegal Jamaican
emigrants to the United States.
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