Country Profile - Grenada

Zoe Leigh Smith reports on the tiny Caribbean island's strangling debt burden.

Touching down at Grenada’s international airport, few visitors to the tiny Caribbean island may be aware that the 900-metre runway on which they have landed played a central role in one of the country’s bloodiest episodes. In 1983, US President Ronald Reagan sent thousands of US troops to ‘liberate’ the island, claiming that the Cubans were constructing an airbase.

Carnival revellers celebrate, St Georges

Photographs by Zoe and Gabrielle Smith

Grenada’s insistence that it was building a commercial airport (with Cuban help), and not a hub for shipping arms to Marxist insurgents across Latin America, failed to prevent the invasion. Over 280 people were killed, including Grenada’s charismatic young leftist leader, Maurice Bishop, shot by firing squad along with many of his ministers. The last of those jailed for the murders were released from prison in 2009 but the country’s revolutionary past remains very much part of its present – the airport is now named after the slain leader.

Revolutions and invasions aside, many Grenadians believe theirs to be an island blessed by God. Such beliefs were shaken when the island was struck by two ferocious tropical storms – Ivan in 2004 and Emily in 2005. The hurricanes damaged 95 per cent of the buildings and destroyed the equivalent of two-and-a-half times the country’s annual GDP. The call of then Prime Minister Keith Mitchell was for the country to ‘build back better’ and today the freshly tarmacked roads, sturdy new jetties and massive national stadium seem to testify to the success of the reconstruction project.

Paradise Beach, Carriacou

Photographs by Zoe and Gabrielle Smith

Yet high up in the mountains amid the country’s rainforests a more complex story is revealed. The trees are no longer in their post-hurricane state – stripped bare of fruits, bark and leaves – but what on first glance seem to be green shoots of recovery are in fact thick blankets of ivy that are slowly choking the regrowth. It could be seen as a metaphor for the country as a whole. Grenada seems to be back on its feet but more damaging than any storm has been a rising debt burden that is strangling its prospects of economic improvement.

Between 2003 and 2008 Grenada’s average growth rate was one of the highest in the region. The island’s construction boom saw a wealth of projects funded by foreign finance enrich a newly emerging middle class. Yet when, in early 2012, the International Monetary Fund placed Grenada on a list of 12 states at high risk of debt default – alongside the likes of Haiti, Tajikistan and DR Congo – many wondered what had gone wrong in this middle-income country.

Much of the trouble centred on a loan dispute. In the aftermath of the hurricanes, tempted by lucrative offers from the Chinese, Grenada abruptly severed its diplomatic ties with Taiwan. In response the Taiwanese recalled a series of bilateral loans dating from between 1989 and 2001. When a US court ruled in 2011 that Taiwan’s Development Bank could receive payments owed to Grenada by airlines and cruise ship companies into an escrow account controlled by Taipei, it posed a lethal blow to an island hugely dependent on tourism.

Guatemalan flag

The affair underlines how vulnerable the country remains to external factors. As it struggles to supplement foreign loans with economic strategies that can stimulate internally driven development, it slips deeper into debt. The implications for the average Grenadian are that poverty, especially in rural areas, remains a stubborn blight that successive governments have failed to erase.

As Grenada approaches the 30th anniversary of the US invasion, Maurice Bishop’s warning to shun the ‘easy approach’ of aid and foreign assistance in favour of self-reliance and self-sufficiency seems less like revolutionary talk and more like common sense.