Last Thursday evening, amidst all the hustle and bustle associated with Christmas preparations, Moody’s announced a credit rating downgrade that was in line with a similar assessment from Standard & Poor’s a few months ago.
Like Minister of Finance Christopher Sinckler, I was not terribly surprised since the ratings agencies tend to feed from the same “trough” and the fundamental bases of their concerns (our debt) are not in dispute by either political party here.
The central issue of our debt presents an interesting political dichotomy since it cannot be disputed that the Barbados Labour Party (BLP) is responsible for the vast majority of that debt. However, it is equally clear that the Democratic Labour Party (DLP) is being blamed for what appears to be the mismanagement of the debt crisis.
Debt issues aside, there are major political implications in all of this and these issues will come into focus this week. It is interesting that these implications are related directly to public perceptions that appear obvious to me but which I do not necessarily share. In the same way that the majority of us appear to believe that this debt situation reflects poorly on the Government, the majority are also likely to believe that a BLP Government could do a better job of things.
Like the Minister of Finance (presumably), I genuinely believe this crisis is entirely exogenous and, with the best will in the world, there is little more that any Government could do. I am, however, equally convinced that I am in the minority regarding this opinion and this is the great political danger that the DLP faces.
In the wake of the Standard & Poor’s downgrade in July, I suggested it was unwise of Government’s spin doctors to castigate that organization since it was not unlikely that the other agency would offer a similar opinion eventually. Instead, I argued that the Government’s intellectual energy should have been focused on the contextualization of this crisis and articulation of a plan that would help to emancipate us from this precarious situation.
I also argued that it was unwise for the Stuart administration to prolong the calling of an election since it was essentially placing itself in a precarious political position.
As fate would have it, the Stuart strategy steered the ship of the DLP in an entirely different direction. In the interim, we had the most peculiar spectacle of the BLP being berated for articulating a controversial plan to resolve a debt problem which the DLP seems not to think is a pressing issue. Several months have passed and the DLP is now entirely without flexibility regarding the possible election date.
It is useful that the Prime Minister addressed this issue recently and indicated that his unwillingness to call an election thus far was not an accident. Instead, it was a deliberate strategy to fulfil the promise made by the DLP in January of 2008 and that there was an intention to remain in office for the full five years, so there would be no election in 2012.
Certainly, the Prime Minister is free to steer “his” ship in whatever direction he sees fit, and it is abundantly clear to us that he enjoys the support of his parliamentary colleagues in this regard. It does, however, seem strange to those among us who reflect seriously on politics that a leader who is not about to retire, is prepared to so willingly surrender the few strategic advantages that are legally available to him.
In this instance, it is instructive that we are now witnessing the problems inherent in “hanging about” in office this long since the Prime Minister has literally boxed the DLP into a corner and will therefore be forced to fight an election in times that are not the best politically.
Arguably, this administration has a maximum of two months remaining. During this period, one would think that the political and economic environment should be heavily “scripted” with the Government being reflected at all times in the best possible light. This is possible only as it relates to matters within its control and the matter of a rating agency downgrade is one such issue that it cannot control.
Sadly, as the new year opens and the campaign begins, the Government will undoubtedly begin on the defensive regarding this most recent downgrade. This situation is made worse by the fact that the substantive issue at the root of the downgrade (debt) is not one the DLP appears comfortable speaking to beyond the scope of its Medium Term Fiscal Strategy, which is clearly not having the desired impact.
In better times, a Government could stand behind the fulfilment of its manifesto promises. However, that too, is not an issue the DLP would be wise to open discussion on at this time.
It is therefore difficult not to conclude that this downgrade, coming at this stage in the life of this Government, is perhaps the worst possible news for it now. Thankfully, it was delivered during a slow news period and it is entirely possible that when we return to work (and consciousness) on January 1, we might have forgotten this news item.
In the meantime, I would want to wish both Dems and Bees all the best for this holiday season, and health, happiness and political prosperity in 2013.
• Peter W. Wickham (peter.wickham@caribsurf.com) is a political consultant and a director of Caribbean Development Research Services (CADRES).