Tuesday 26th December, 2006

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More harm than good in PM’s Alcoa message

IN announcing that the Government would “immediately discontinue all plans to establish an industrial estate” in Chatham, Prime Minister Patrick Manning seems to have gambled on attempting to protect his short-term political future rather than the nation’s long-term economic future.

The measure, aimed at resolving a perceived problem with Alcoa, may in fact backfire to the detriment of T&T’s national interests.

In his Christmas address to the nation, the Prime Minister said that the Government took “significant steps to generate a whole new wave of business activity in T&T” which will mean “new wealth, more jobs, greater security and continuing improvement of the lives of our people.”

It was part of the Government’s thinking that in introducing the “new industrialisation,” T&T would go further downstream in the use of its natural gas than had previously been the case. This would mean, as the Prime Minister clearly understood and as he outlined in his address, new jobs and wealth for the country.

Another rationale behind the Government’s drive to introduce the “new industrialisation” to T&T is that the country would take advantage of its natural gas to leverage the establishment of industries here, which are being driven out of developed countries because of the higher cost of energy. These industries include steel, plastics, petrochemicals and aluminium—all of which are likely to remain in strong demand throughout the world in the foreseeable future.

The Prime Minister made it clear in the address that the aluminium industry was of “great strategic importance” to the implementation of what he had called previously the modern industrial state.

Having established the rationale for the modern industrial state and aluminium’s importance in it, the Prime Minister said the symposium on the aluminium smelters held earlier this month had concluded that the “two proposed aluminium smelters present no unmanageable threat either to the environment or the health of the population.”

The Government was “now able to arrive at conclusions based on the symposium,” said the Prime Minister, immediately followed by the announcement that the Government had decided to discontinue the establishment of an industrial estate in Chatham and would instead “accelerate development of a new industrial estate offshore at Otaheite Bank from which aluminium production can now be pursued together with other industrial plants.”

Having dismissed health and environmental explanations for the decision, (and not having mentioned the more important economic factors) the only conclusion which can be drawn is that the Prime Minister decided that Alcoa was expendable—given the furore caused by the US company’s proposal to establish a 341,000-tonne smelter in Chatham.

The Prime Minister seems to have concluded that blanking the Alcoa proposal, while allowing the Alutrint facility to continue, was politically expedient as T&T moves into an election year.

The expectation is that this concession to the views expressed at the symposium would defuse the political heat that was focused on Alcoa.

It is clear from the reactions of the anti-smelter activists, reported in today’s newspaper, that the Prime Minister’s calculation is not likely to be realised.

If anything, the proposal to build a new industrial estate at the Otaheite Bank would attract an even greater environmental backlash than the proposal to build at Chatham as the former will need extensive land reclamation in an area with an unstable coast.

It is also likely that Alcoa will view the offer of the new site as nothing more than T&T showing the US$36 billion company the door and asking it to leave.

In his address, the Prime Minister said T&T’s ability to attract a pipeline of US$8 billion in investment in the last five years spoke volumes for the country’s “positive international reputation” with foreign investors.

It may be that the voice that existing and prospective investors hear from T&T would not be a message that enforces T&T’s reputation but one that speaks of prevarication, lack of support for investors, discourtesy and political expediency.

This message may do tremendous unseen future damage to this country’s reputation as an investor-friendly country.

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