SEATTLE — Hurricane season may be over this year, but the devastation caused by Hurricanes Irma and Maria in the Caribbean remains.
That’s why Virgin Group founder Richard Branson, who lives on Necker Island in the Caribbean, is calling for and helping to organize what he calls a “Disaster Recovery Marshall Plan” to aid Caribbean islands with recovery. He wants to spark a sustainable economic resuscitation that will reduce debt in the Caribbean.
What Is the Caribbean Marshall Plan?
Branson recently announced that, along with Prime Minister Keith Mitchell of Grenada, he organized a plan to bring together Caribbean heads of state, the international community and business leaders around relief efforts in the Caribbean.
The World Bank and the Inter-American Development Bank have agreed to fund this Caribbean Marshall Plan, with an emphasis on green energy investment. Branson has also secured the support of IMF leader Christine Lagarde, who wants to help mediate debt relief negotiations for Caribbean nations.
Virgin Group’s purchase of BMR Energy (a Caribbean and Latin American green energy firm) late last year means that Branson’s company will likely be involved in some form as the Caribbean Marshall Plan goes into effect.
Debt in Caribbean Nations and Post-WWII Europe: The Parallels
As the Jamaica Observer notes, the Caribbean has experienced low economic growth since the financial crisis in 2007-08. Regional growth has hovered around 1 percent on average, with unemployment near 14 percent. To try to fuel the economic engine, Caribbean governments built up huge levels of external debt.
Debt in Caribbean countries is among the highest in the world: in fact, most have debt-to-GDP ratios between 50 and 100 percent. In that way, they are not unlike post-WWII Europe, where many countries were soaked in debt. According to The Economist, Germany owed some 300 percent of its 1938 GDP in official public debt after the war.
The original Marshall Plan gave more than $13 billion to Europe, which helped the U.K., France, West Germany and other nations get out of debt and become self-sufficient again. They were able to put their citizens to work, reduce poverty and avoid repeating the conditions that led to WWII in the first place.
Moving Forward with a New Marshall Plan
Hopefully, a Caribbean Marshall Plan will relieve debt and modernize energy grids in the Caribbean. The reduction of debt will give private companies more incentive to invest and governments more leeway to fund infrastructure, health and education. And green energy grids will likely be more resilient in the face of future storm damage.
It will be exciting to see how Richard Branson’s project helps transform the Caribbean in the months and years to come.
– Chuck Hasenauer