The possibility of rising tensions becoming military conflict between the United States (US) and Venezuela means that it cannot be business as usual for the Caribbean business community or the region’s economies.
That is the consensus of a panel of regional business leaders and industry experts, who are calling for the private sector and Caribbean governments to unify and come up with a plan to make their countries more resilient whether or not there was military action.
This was in the context of three scenarios involving the US and Venezuela military conflict, protracted standoff, or a negotiated deal.
These issues were in focus last week when the Trinidad and Tobago-based Caribbean Corporate Governance Institute (CCGI) assembled a panel to discuss how tensions between the United States and Venezuela could impact on the Caribbean business community.
The panel, which was moderated by CCGI chief executive officer (CEO) Kamla Rampersad de Silva, included Reshma Advani Rojas, managing director of Advance Commercial Equipment Ltd and CEO of the Odin Group of Companies in Trinidad and Tobago, and Ken Hackshaw, who is managing director and lead consultant at KH Business Consulting Limited.
The others were Lorraine Pouchet, president of The Trinidad & Tobago Incoming Tour Operators Association and interim chair of The Trinidad and Tobago Coalition of Tourism Associations; and Martha Miller, CEO of National Rums of Jamaica, who is also first vice president of the Jamaica Chamber of Commerce.
Key points discussed included the need for regional cooperation, supply chain security, energy diversification, risk management, proactive planning and regional unity.
Rojas said she was “a Caribbean business owner who has to live with the knock on effects in real time”
of the US-Venezuela issue.
“When these big countries have disagreements, small, open economies like ours feel it in ordinary places – so the ports, the foreign exchange queue, the cost of insurance and the mood in the boardroom,” she warned.
“We sit in a region that depends on three fragile things – confidence, connectivity and cooperation. When tensions rise between the United States and Venezuela, all three of these things come under quiet pressure, and that’s where us as boards and private sector have the real work to do.”
Her concern was that “if tensions were to harden into a visible conflict zone in our basin, the headlines would focus first on security and on energy, but the private sector would feel a tightening around the chest when it comes to money and when it comes to movement”.
“The practical response for boards is to treat access to capital and trade routes as strategic assets, not background services. That means reviewing how dependent the business is on short term credits that can be repriced very quickly and deliberately hitting some shifts into more stable facilities while the markets are still relatively calm,” she advised.
“It also means looking at where your goods actually travel, because if you are reliant on [specific] ports and . . . hubs, if you don’t have a regional alternative, you’re talking about your preferred route becoming more complex or more expensive.”
Rojas also identified a key role for CARICOM, stating: “CARICOM has to stop treating us as though the single market and economy is an academic exercise. We have to remove petty non-tariff barriers, harmonised basic standards and fixed inter-island transport so they’re not nice-to-haves anymore; this is risk mitigation.
“But this is also where the private sector participation in regional investment really matters. When each country does its own quiet analysis in isolation, we get 15 versions of the same anxiety, but when business leaders engage through CARICOM structures, through chambers or board industry groups like [CCGI], we can start building common positions around energy projects, around shipping, correspondent banking, and present a more coherent face to the world.”
The business woman added: “From my perspective, sitting in a Trinidad company that trades across the region, the most useful thing we can do is behave as though the Caribbean is like an interconnected space, and organise our risk thinking accordingly. So that means seeing a Trinidad risk, Guyana risk, a Barbados risk, and the Venezuelan and US risk as part of a bigger picture, not all these disconnected stories.
“If tensions escalate, the companies . . . that have built regional shock absorbers will bend rather than
break. But if the tensions drag on, those who have embedded regional data and cooperation into their governance will have fewer blind bets that they’re making.
“We cannot script Washington or Caracas, that is not our purview, but we can absolutely decide whether we show up as a collection of spectators or as a region that understands vulnerabilities and prepare ourselves to act together.”
Pouchet said there was a need to “find a creative and positive way as to how we are going to respond to these external factors that will affect us”.
Noting that most Caribbean islands “pride themselves on tourism being the backbone of their economies, while her homeland long focused on oil and gas, she said the Trinidad and Tobago tourism sector was already feeling fallout from the US-Venezuela stand-off.
This included groups cancelling trips to the twin island republic and the fact that “we have seen one cancellation of a cruise line”.
“It is affecting us. We have received notice of cancellations of bookings in the hotels, some of the bed and breakfast cancellations for groups coming in for tours. We have also have had cancellations for groups coming off the cruise lines,” Pouchet reported.
She saw it as an opportunity “domestically to help our people to be able to holiday at home, to help our people to be able to understand that they are going to be called upon to be ambassadors for the destination, [and] for the government to also look at how can they assist the various stakeholders to stay afloat”.
“When we don’t have the numbers, then we have a problem. St Lucia, for example, has over 600 calls this cruise ship season, we have 40-something. So we need to understand why we’re not having what we’re supposed to have,” said Pouchet.
Hackshaw, who is founder and president of the Caribbean Risk Management Academy and CEO of the Trinidad and Tobago Risk Management Institute, stated: “If US attacks, I would advise folks to throw out whatever business continuity plans they may have had in the past, whether it’s COVID or for hurricanes.
“This is a game changer, this is unprecedented for the Caribbean. God forbid, [and the] US attacks Venezuela, . . . and this is not fear-mongering here, literally, all bets are off as we know [for] business transactions today. Airspace is going to be locked down, maritime traffic is going to be locked down. I need us to be very realistic when dealing with this possible scenario.”
His view was that “it’s more likely than that” there would ultimately be military conflict involving the US and Venezuela, warning that “if the first scenario comes to pass, there is just so much impact and not just Trinidad, [but] to the wider Caribbean.
“All three scenarios are very much possible and as the movies will sometimes tell us, . . . pray for the
best, but plan for the worst – and a plan is needed.”
Miller said the unfolding situation between the US and Venezuela had the Caribbean sitting “directly
in line of economic, social and security consequences”.
“We’ll have an active conflict zone in the Caribbean if the United States were to launch an attack on Venezuela. The impact on Jamaica and region would be immediate and severe,” she stressed.
“For NRJ, the first challenge would be shipping disruption, our rum exports, molasses imports, fuel deliveries, container movements rely on safe and predictable Caribbean sea lanes.
“In a conflict, insurers raise premiums overnight, vessels re-route, transit times increase, costs surge.
That directly affects production, cash flow and our ability to fulfil international contracts.
“Second is energy cost volatility. Any instability in Venezuela reverberates across the Caribbean. Third, financial and foreign exchange volatility, and more broadly, a decline in tourism, which affects on island consumption.”
Miller called the current situation “another catastrophe like COVID looming in the background”.
“The risks are here, we need to now recognise that we’re in this period, and as a board, as private sector individuals, engage the people we need to engage. If we need to engage the government, we need to do so. But this is an opportunity for us to deal with all the risks that we face,” she said.
“We know that whenever Russia becomes involved in geopolitical conflict, critical industries become targets of cyber security attacks. Energy facilities, logistics systems and manufacturers must be prepared for heightened cyber threats.
“War doesn’t start the day they fire the first bomb they have done their planning before, and everything will hit you. So we have to be prepared at this point for all of the cyber security risks, et cetera, that could come at us,”Miller suggested.
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