Jamaica's Bauxite Strategy: The Caribbean Flirts with the International System

JAMAICA'S BAUXITE STRATEGY: _ THE CARIBBEAN FLIRTS WITH THE INTERNATIONAL SYSTEM Adam Boulton .he International Bauxite Association (IBA) was formed in the spring of 1974 by the major bauxite producers of the noncommunist world.1 Inspired by OPECs recent ascendance, the IBA declared that it would promote "the orderly and rational development of the bauxite industry and secure fair and reasonable profits for member countries . . . bearing in mind the interests of the consuming countries."2 The members agreed to ensure that the multinational companies, six of which controlled 70 percent of IBA bauxite production capacity,3 would not operate to the detriment of any one country. IBA member countries were to pursue "maximum national ownership of their natural resources ." Such pronouncements sounded ominous to the developed countries . Henry Kissinger was moved to comment on the New International Economic Order advanced in the name of the Third World: "The objective , as with the oil price increases, is a massive redistribution of the world's wealth."4 September 1974 was a bad month for the Western world, then, when Prime Minister Michael Manley of Jamaica announced his country's new system for the payment ofbauxite royalties by the foreign companies mining in Jamaica. In 1974, Jamaica provided 'Australia, Dominican Republic, Ghana, Guinea, Guyana, Haiti, Indonesia, Jamaica, Surinam, Yugoslavia^ 2Declaration, IBA first meeting. February 28-March 8, 1974, Conakry, Guinea. 3Alean (Canada); Alsuisse (Switzerland); Pechiney Ugine Kuhlman (France); and Kaiser Aluminum and Chemical Corporation, Reynolds Metals, Aluminum Company of America (ALCOA) (all United States). 4U.S. Secretary of State, Speech at Kansas City (Washington, D.C: Department of State, Bureau of Public Affaire, May 1975), Number 13, p. 1. Adorn Boulton is o candidate for the M.A. degree at SAIS, having completed his undergraduate studies at Oxford University in his native England. He serves as a research assistant with the Overseas Development Council and with The Johns Hopkins Foreign Policy Institute. 81 82 SAIS REVIEW about a fifth of the West's bauxite needs. Manley predicted that his government's bauxite income would rise from less than $30 million5 to about $300 million each year. The immediate need for foreign currency was OPECs second legacy to the IBA. Jamaica, for example, was facing a 200 percent ($100 million) jump in its fuel bill, and a rise ofup to 300 percent in the cost of other imports. Manley's bauxite strategy had two long-term aims. Both were designed to alter the nature ofthe bauxite industry in Jamaica. He sought first to improve Jamaica's foreign earnings and then to transfer multinational bauxite corporations from the owners to the operators of the industry. Now, seven years later both of these plans are in ruins. The $215 million earned from bauxite in 1980 will not even cover the $300 million service payments due on debts contracted since 1974. The 51 percent shares of mining operations that were negotiated in the 1970s have now been parlayed into minority equities in the multinational companies. Manley himselfled his party to a crushing defeat in the 1980 election. The structural reasons for the IBA failure are not difficult to isolate. Although the members ofthe group failed to act cohesively, the structure of the world market and availability of supply also defined many ofthe limits ofcartel power. Jamaica's share ofthe world market between 1974 and 1980 did not merely decline; its markets were taken up by fellow G?? members. The strategy, however, was as comprehensively undermined within Jamaica: Jamaican levies, which were never coordinated with IBA, have been reduced as the country once again chases the world market hand-in-hand with the multinationals. Most of these changes took place during Manley's administration, well before his defeat by the "Westward-leaning" Edward Seaga. Indeed, Seaga has little more to concede and his present bauxite strategy, including his plans for Jamaica's role, differs little from Manley's. It is the thesis of this article that the political interpretation of Jamaica's poor performance in the 1970s, which places the blame on Manley's leftist stridency, is misguided. The history of the bauxite industry shows real gains—a fairer revenue and a Jamaican repossession of territory. But...