Caribbean investment: Following the flag?

With renewed interest, the U.S. government has turned its attention to the affairs of the Caribbean and Central America. Wary of Cuba's influence, unsettled by the Nicaraguan revolution, the U.S. wishes to forestall what it has seen as growing radicalization in the region.

Recent elections have buoyed U.S. hopes, as conservative, pro-U.S. government have come to power in Barbados, Dominica, and most notably Jamaica, with Edward Seaga defeating Michael Manley for the post of Prime Minister.

U.S. foreign policy in the region cannot be divorced from U.S. multinational investment there. Dominating the economies for decades, often in a controversial manner, giant agribusiness and oil corporations view U.S. commitment as critical for keeping their investments secure. Conversely, the U.S. government sees multinationals as a tool for shoring up "centrist" positions in the Caribbean and Central America.

This month, Multinational Monitor interviewed Peter Johnson, executive director of Caribbean/Central American Action (CCAA). Established in April with strong State Department backing and an approving nod from President Jimmy Carter, this Washington-based organization is chaired by Florida Governor Robert Graham. The president of CCAA is Robert West, chairman of Tesoro Petroleum.

Joining a small number of Caribbean officials on CCAA's board of trustees are such corporate heavyweights as Charles Bludhorn, chairman of Gulf and Western Corporation, Seymour Milstein, chairman of United Brands, and Archie L. Monroes, president of Esso Inter-America, Inc. CCAA's contributors include the above companies as well as Coca-Cola, Texaco, Bank of America, and other Fortune 500 luminaries.

CCAA grew out of the Committee for the Caribbean, a group founded by Tesoro's West in 1977. Now merged with CCAA, the Committee for the Caribbean viewed itself as "the timely instrument of enlightened U.S. business leadership." CCAA sees itself as carrying out a similar function. Recently, CCAA sponsored a conference in Miami on Caribbean trade, investment and development. Government officials form the U.S., Caribbean and Central America, as well as high ranking corporate guests, attended the conference, keynoted by Jamaica's Seaga.

Peter Johnson is a career foreign service officer, presently on leave without pay from the State Department. From 1965-1967, he served as political officer in the Dominican Republic, and from 1972-1975 he held the same post in Costa Rica. Before coming to CCAA, Johnson was in charge of the State Department's liaison with Congress on the SALT II treaty.

This month's interview was conducted by the Monitor's Jonathan Ratner, Matthew Rothschild and Beatrice von Schulthess. Joining Peter Johnson was Alice Booth, CCAA's director of communications and government affairs.

MULTINATIONAL MONITOR: Why was the Committee for the Caribbean, and then Caribbean/ Central American Action, established?

PETER JOHNSON: The main purpose of the Committee for the Caribbean was to raise awareness in the American community in its broadest sense, about the Caribbean, to stimulate a more sensitive and more appropriate Caribbean policy out of the U.S. government, and to get at the fundamental problem of job creation. Through job creation, through stimulation of entrepreneurship, through the stimulation of the right kind of American investment; we were trying to help create stronger private sectors, working always with our private sector counterpart in Jamaica, or Barbados, or St. Lucia, or wherever. The promise is that it would you know, assure the democratic process staying alive and vigorous, and the strong private sector, politically, would be a knitting together, a closer relationship between these island countries and the United States. That was the Committee for the Caribbean.

Monitor: Why did the change from the Committee for the Caribbean to Caribbean/ Central American Action come about?

Johnson:To telescope this thing fairly drastically, we were asked if we would change our name in such a way that the President of the United States could sort of formally and officially bless the whole thing. So we changed the name from Committee for the Caribbean to Caribbean/ Central American Action, we made very clear in our new by-laws that we were an apolitical organization, that we were unqualifiedly private sector with respect to funding. Those were the two key ingredients: apolitical in character and unqualifiedly private sector.

Monitor: And the contributors are mostly from the big businesses that have operations in the Caribbean and Central America?

Johnson: Most, but not all of them. The kinds of companies that we're most interested in getting, the most logical kinds of companies, are those that are involved in the region. But some of the major companies may not necessarily have involvement in the Caribbean; they're just interested in what we're doing.

Monitor: If we could focus in a little more on Caribbean/ Central American Action's links to the U.S. government, the nature of that relationship. You have said that your organization is unqualifiedly private enterprise, operating on a people-to-people basis. In light of the close ties that the organization has to the State Department, to government development agencies such as the Agency for International Development, and in light of the seemingly critical role that the White House played in getting this thing off the ground, in its new, more highpowered form, how much is the organization beholden to government? What sort of independent policy initiatives can it take?

Johnson: We can take any policy initiative we want, number one. Number two, we didn't turn to the White House, they turned to us. It's very very clear. They came to us; we didn't go to them. It's very important. They came and sat in our conference room for two hours, and said this is what we want.

Monitor: Last year the Committee for the Caribbean, now merged with CCAA, commented: "The demise of free societies in the Caribbean would be a tragic loss for the Caribbean peoples themselves, and because of their proximity and importance to us it would also be a serious economic loss and. ideological defeat and indeed, a national security risk for the United States. "How much do national security concerns inform the activities of CCAA?

Johnson: With respect to the national security thing, we're interested, I'm interested, CCAA is interested in helping relationships between the United States and these island countries. It would seem to me that that relationship, that political relationship, you can call it national security if you want to, is best served if you've got the kind of societies that we've mentioned a couple of times--freely functioning and consistently functioning democratic systems, and vigorous private sector, trade and business occurring on a mutually respected basis between those island countries, with what they can produce and manufacture, and this country, with what it can provide and buy and sell.

Monitor: Rut what precisely is the national security risk involved?

Johnson: Well, I mean, the national security risk, the national security ingredient in all this, would be, if the private sectors cannot perform, and if we can't produce, or for some reason are stifled in the process, then you're not going to have the kind of productivity, the kind of results for the people of these countries that you could best have.

Monitor: But that's different than posing it in terms of a security risk to the U. S.

Johnson: No, if you've got a real super super basket case in the Caribbean; if you had 70 percent unemployment, or 75 percent unemployment; if a particular country really got itself in incredibly bad shape; and if then you're going to have a population that's going to say, "Hey, this is just for the birds, we're going to have to go for something else, whether we think it's going to work or not...

Monitor: So is this assuming that the . . .

Johnson: Well, essentially a situation like that would clearly be ripe for a political adversary on the world scene. If you had a situation that was terribly terribly susceptible, because of its own frailty, despair, hopelessness, and a major political adversary were to exploit that situation, you would have a national security risk situation, it would seem to me. And I'm not interested in promoting that kind of a national security risk, not because I love the State Department or any of that, but because I'm an American.

Monitor: In a recent newspaper article, you denied that the CCAA grew out of a perceived need to respond to Cuba. But certainly the White House moves to upgrade the organization came in that period of greater concern about Cuba and "the rising red tide in the Caribbean. " What effect did Cuba have on the formation of the group?

Johnson: We're not operating against Cuba. That's never been part of our premise at the Committee for the Caribbean or (CAA. But if you're engaged in an enterprise where, as I think we are, you're trying to help strengthen the private sector, out of which will invigorate the democratic process in these countries, then you could say that this is against Cuba, if you want to. I just don't look at it that way.

Monitor: From the statements that you made about strengthening the private sector, and the statements about national security, it seems there is a little tension between those and the statement...

Johnson: A little bit of what?

Monitor: Tension. Between those latter statements and the statements made at the outset, that CCAA is an apolitical organization in character. Governor Graham, chairman of CCAA, said at your Miami Conference recently: "We believe the way to answer socialism is not by arguments, certainly not by aloofness or hostility whether in the private or the public sector, but by superior performance in the marketplace. Is CCAA s mission to preempt socialism?

Johnson: Yeah, I think those remarks were made in a speech, and you put different kinds of phraseology in a speech than you do when you're really trying to get at something. When you talk about socialism in the sense that he's talking about it, you're talking about a political, an adversarial political type of socialism.

Monitor: You claim to be apolitical in character. Governor Graham recently said: "We recognize the right of each society to design its own model. We welcome the opportunity to engage in constructive cooperation in the context of whatever model each society chooses to adopt. "Is it ever possible not to be political in your activities?

Johnson: The political reference that keeps coming up, that has nothing to do with . . . it really is referring to the United States. We're trying to say that we're not a Republican enterprise; we're not a Democratic enterprise in the partisan sense; we're something that'swe think, we like to think-coming out of the strength of the American system, which is its private sector. And that's apolitical.

Monitor: Can we turn to CCAA's business activities? You speak of bringing "the right kind of investment" to the region. Could you speak a little more concretely, with reference to some examples. What is "the right kind of ,investment "that you are trying to bring in?

Johnson: There are certain needs that anybody, could identify that should be promoted in the Caribbean. Agriculture comes out right on top every time.

There's other kinds, too, such as the enclave industry. It doesn't provide long term needs in the Caribbean, but it does create certain things fast. It can create employment; it can provide training; it can provide, if the access is open to the nationals, some managerial experience. So you got enclaves; you got the agricultural sort of stuff. When I say the right kind, those are the two broadest areas that I'm shooting at.

Monitor: Could you talk about what sort of companies you're going to, with these sorts of plans?

Johnson: We find a major company which is involved in the Caribbean that we can sit down with and say: "You know, you're doing well in this area; now there are some real high needs over in that area; why don't you go into that area as well. For profit; I'm not asking you to be a philanthropist about it. Go into whatever the hell you want, you know, you go in and you can make some money at it and provide some jobs, you can transfer some technological expertise, which would benefit the particular fertility or situation that that particular island country has, but hasn't been exploited." When I say the right kind of investment, I'm trying to lay that against the priorities that they set.

Monitor: What would you consider the wrong kind of investment? I'm sure you've given that a lot of thought.

Johnson: Oh, wow, yeah. Well, look at Dominica, and what happened when some folks out in Los Angeles, I forgot what the hell the name of the company was ... It was basically one of the key ingredients in bringing down the Oliver Seraphin government.*

Monitor: The passport thing ...

Johnson: The passport thing. Now that clearly is the wrong sort of thing. There's a lot of that kind of stuff that has gone on, and they're ripping them off.

Monitor:. In terms of what has basically shaped those economies in the Caribbean, things like the passport scam are not the real focal point of what's happening there. In fact, the companies you re going back to now to ask to invest are the companies that have dominated the region in terms of foreign investment for decades. Could you give us a better sense of what has been done wrong in the past, besides the question of a passport firm.

Johnson: -You know, I read the literature too. I've worked in these parts of the world. I worked in Costa Rica where United Brands for years and years had a horrible image, and some of that is still baggage in Costa Rica. The way United Brands operates, behaves as a corporate citizen today in Costa Rica is dramatically different than the way it operated under Eli Black. And I would submit that businesses and countries and people as they grow up and mature learn to deal differently with each other. I would not, because Gulf and Western had a problem, or United Brands had a problem in 1955, 1 would not exclude them. The last thing I would do is to exclude those kinds of companies from the kind of productive role they have to play in this region. -

Monitor: In terms of not just crooked financial deals, but some more basic questions of manufacturing and large scale investments, what are the wrong kinds of investments in the Caribbean? You mentioned Gulf and Western earlier; it's one of the biggest agribusiness companies in the region. After closely studying Gulf and Western in the Dominican Republic, many people and organizations-including the Interfaith Center on Corporate Responsibility-say that Gulf and Western is an example of the wrong kind of investment because of the domination it exerts on the economy, controlling more than one-third of the sugar crop and virtually all the tourist industries. As a result of its investments, Gulf and Western has a lot of leverage with the government, too much, according to many critics in the Dominican Republic. Would you consider Gulf and Western in the Dominican Republic to be the 'right kind or the wrong kind of investment?

Johnson: I'm aware just like everybody else is about problems Gulf and Western has had in its history in the Dominican Republic. Gulf and Western is a good company; they're a good company.

Monitor: What is a good company, I mean that's the question ...

Johnson: I'm certainly not paid to puff Gulf and Western or anybody, nor would I respond favorably if any company were to ask me to carry some of their water for them. But they're into things that probably wouldn't be done if they weren't in there. I try to look at a different kind of bottom line: would it be done if they weren't there, and are people being ...

Monitor: They have streamlined the sugar industry down there, there's no question about that. The question that the critics of Gulf and Western raise is, at what cost do they do that? According to the Interfaith Center on Corporate Responsibility, workers employed by Gulf and Western since the company came to the Dominican Republic in 1967 have suffered a 100 percent decrease in their real wages.

Johnson: 1 can't respond to that. All I can say is that if you talk to the people in the Guzman government, I understand they have resolved their differences. I'd like to see Gulf and Western in as many places as they're welcome to come in.

Monitor: For the most part, your contributors are all very big companies -the old guard of Caribbean investment. Are these backers the ones that you're trying now to bring into the Caribbean in a different way? Is the expectation that Gulf and Western or Reynolds is to express an interest and confine that mutually, beneficial relationship with a country like Bonaire or Barbuda, essentially microstates?

Johnson: Let me give you an example. If you've been to Dominica recently or at all, you just can't help but come back in a very depressed state of mind. When I come back out of a country like that, it takes me a couple of days to get over it. We've asked Gulf and Western to go down and do something in Dominica. They said they would, and we're going down in their plane on December 17, to meet with the Prime Minister, to meet with some private sector people, and just see what Gulf and Western could do in Dominica. They'll lay out their priorities; I have a sense of what it's going to be; and Gulf and Western will take a look at that and see if they can get involved.

Monitor: And how do you suggest that it's good for Gulf and Western? Does it add to their bottom line in any direct or significant way?

Johnson: Oh, I can't imagine that it's going to add to their bottom line in a very significant way. I mean, you've just got 390 square miles, most of it mountains.

ALICE BOOTH: We're engaging these companies in looking at the region not only out of their own personal self-interest in terms of their immediate profit, but also out of perhaps what they perceive as a broader self-interest, which is the economic growth and stability, political stability, whatever you want to call it, of the region as a whole. They're not funding us to be advocates of their I personal interest. We're not an association or company that exists in order to promote their personal interests, or their self-interests. We see ourselves as engaging in a broader kind of role which is really fundamentally to get the development of the region going in a positive way.

Monitor: Is there a difference, say, in the way Gulf and Western thinks about these things, the reasons it would go in there, and why some corporation with 300 people on its payroll, in Hartford or in Memphis or someplace, why it would be going in?

Johnson: If I could get the Hartford company, or the Memphis company, or the Miami company, to go down, I would do it. I don't know where they are. I've been sitting here for a year and a half trying to dope this out, to get a handle on these 400,000 small and middle-sized American companies with potential. But how do you find them? And get them so they're on stream, or excited about doing business in a place like the Caribbean? Now, if you can turn that around, and get a company like Gulf and Western, a leader in its field, or a United Brands, or a Standard Brands, or a Hershey's, and show them that they can do something for their benefit, their profit, then the others are going to begin to seek us out; that's the only way you can find them.

Monitor: OK, one more question on this notion of what companies you're trying to involve. It is very noticeable how many of the oil corporations are among the members, the contributors to the group. It 's clear that the oil companies have more strategic interests in the region, since more than 5O percent of the oil that comes to the United States travels through the Caribbean. Is this why there are so many oil companies' on your contributors' list?

Johnson:I he reason that there are so many oil companies on the list is because Bob West knows oil companies better than he does agricultural companies or manufacturing companies. When the Committee for the Caribbean first came into being, as he was, trying to put things together, he obviously contacted people he knew well, and who he could relate to and who would be responsive to his requests.

Monitor: What do you expect the oil companies to do to promote labor-intensive projects to solve the basic sorts of' problems we're discussing?

Johnson: One of the things that Bob talked about is going into a biomass project in Jamaica. If it works out, it would be tremendous from the standpoint of making the first step toward energy self-sufficiency. It would begin to take some of that sugar and cassava, and begin converting it into gasohol and ethyl alcohol. It would begin to make the Caribbean something of an energy exporter from the basic agricultural products that they produce so much of.

Monitor: What is your view on the role of illicit payments in the Caribbean and U.S. participation in that? Very concretely, some corporations on your list have been involved. For instance, Tesoro. You had a consent decree signed within the past two weeks; you have a scandal in Trinidad in which Tesoro-a company that is being run by the president of Caribbean/ Central American Action-has been implicated. In recent years, these things have gone on. We were wondering what is the CCAA position on illegal payments, on the Foreign Corrupt Practices Act. Is that a law you would lobby to see changed?

Johnson: No, no, no, no, no.

Monitor: What does it mean, in going to other corporations, and in going to these countries, and in going to the local private sectors in these countries, to have on your list of members and so prominently on your board, Tesoro?

Johnson: Well, I mean, yeah, I don't think, I don't know the inside. Bob is in the petroleum business. I don't know how that works; I'm not a petroleum person. But, you know, the illicit payment, quote-unquote, goes back a long way into a lot of different companies in ways that don't operate today. As I read that story, that was something which occurred between 1970 and 1972, or something like that, and you know, I presume it's not happening today.

Monitor: It does involve a company that Mr. West was managing at that time.

Johnson: Are they going on today? Many, many major companies in the U.S. have had this particular kind of a problem back in their pasts. I have no reason to believe that they're doing it today, that they're operating against the law. I have every reason to believe that they're operating within the law. Were they operating against the law back then? Was there even a law that was pinpointing this kind of a thing? They're operating today in a way that I have respect for, and the kinds of things they're doing are beneficial to these economies. What a company or institution or this government did in the past that is looked upon now as illegal doesn't terribly concern me.

Monitor: Well, the fact that the consent decree was signed suggests that there were some very real legal issues involved.

Johnson: 1 hear where you're coming from. I just don't know enough about it. I'm not a lawyer in that kind of stuff.

Monitor: If we could shift the discussion to some of the Central American countries for a moment. Is the goal there the same that it is in the Caribbean, that is, to hook up with the private sector?

Johnson: Yeah, but there are a couple of paragraphs under that. There are private sector strengths already. There is an infrastructure. as you well know, in Costa Rica and Honduras.

Monitor: Do you see there being any special problems or constraints placed on your activities by the political situations in Guatemala and El Salvador?

Johnson: Sure, absolutely.

Monitor: What are they?

Johnson: The constraints there clearly are. I mean, American investors are scared to death.

Monitor: Both the Guatemala and El Salvador governments have been accused of human rights violations Implicated along with the governments:, in many of the deaths in Guatemala and Salvador have been members of the private sector. Doesn't this pose a difficult problem for you, a group that is trying to hook up with the private sector?

Johnson: Well, I mean, take Guatemala for instance. The figures 1 saw the other day: 200 or some odd, regarded as political, murders committed in Guatemala and the numbers were almost even from the left and from the right. You know, it's a cause of great instability and uncertainty which affects the business community.

Monitor: Sometimes there seems to be private sector, real private sector involvement in the actual death squads. Coca-Cola in Guatemala is one example. If the mode of operation of CCAA is to hook up with private sectors in the Caribbean and in Central America, and if some of these private sectors are involved in human rights violations, doesn't that affect the model?

Johnson: Well, we're obviously not going to hook up with a death squad.

Monitor: What room really is there in Guatemala-if we can use that as the example for the kinds of activities you have spelled out in regards to the Caribbean.

Johnson: In such a polarized situation, we have to be very, very, careful to pick the right kind of private sector board member, from Guatemala and the rest of the countries, who clearly identifies with the moderate center of the private sector.

Monitor: You're an advocacy group. Advisors to President-elect Reagan are on record favoring the restoration of military aid to Guatemala. You've staked out aid as an area that you're interested in lobbying on. What does the CCAA think about restoration of arms sales?

Johnson: Well, we haven't taken a position, but I'll tell you where I'm coming from. I would think that there's a point where we would go contrary to the U.S. government.

Monitor: Which U.S. government?

Johnson: The current U.S. government. I would like to see some military hardware going into Guatemala. Not lethal stuff, but I'd like to see some of the basic little things go in, like helicopters. Things that would enable the United States government to have a better access to the current Guatemalan government, which has a lot of military people in it.

Monitor: How would that give you access to it?

Johnson: Well, do you have any feel for the way the U.S. government and the Guatemalan government interact today? It's almost none.

Monitor: A lot of the interaction is informal, in fact, through the business community.

Johnson: It is, but that's a function of the lack of communications between the United States government and the Guatemalan government. A couple of years ago, or a year and a half ago, there were certain channels open. Now, we don't have that kind of relationship with the Guatemalan government. The reformist minded people in the middle of that government have become increasingly frustrated with the stance of the, United States, and it has forced a certain polarization within the Guatemalan government. I think that's kind of tragic.

Monitor: But since the government of Guatemala is one of the governments in the region with the most human rights violations, and since you're suggesting the U.S. should change its policy towards arms sales-that is, give military aid to Guatemala-doesn't that amount to feeding the agent of human rights violations?

Johnson: No, no, we're not really communicating very well. What I'm suggesting is we're not giving them more bullets to kill people. The U.S. government could be providing a certain kind of equipment-spare parts and things like that-that would enable the reformist-minded folks within to hold firm and say: "Hey, we're getting this out of the U.S. government.. We've got this dialogue going; let's hold fast to a center kind of position."

Monitor: But there doesn't seem to be much center in Lucas Garcia's government.

Johnson: Not now.

Monitor: So by giving them military...

Johnson: But I'm saying, a couple of years ago, a year and a half ago, there was some possibility that I saw.

Monitor: But if there's no possibility now, then why would you recommend giving them arms now?

Johnson: It's much more difficult, much more difficult. I'm not sure that it could be recovered, recaptured.

Monitor: What do you think the change in administration will mean for Caribbean/ Central American Action?

Johnson: How the new administration will look upon this, I don't know. I would like to think that we would have the same kind of blessing or whatever from this administration as we had from the past. And we're doing something, at least we're trying to do something, that's fundamentally in the interest of the United States, but not in a one-way direction.

*The U.S. Justice Department is currently investigating an agreement made early this year between the newly-created finance corporation, Intercontinental Development and Management Co., Inc. (ICDM), and the Dominica government of then-Prime Minister Seraphin. As part of the arrangement, ICDM briefly sold Dominican passports through an unauthorized "consulate" in Los Angeles.