The following is a broadcast by Chief Minister, Osbourne Fleming, which is printed in The Anguillian in its entirety as a public service to the people of the island.

Fellow Anguillians, success has its own problems and challenges. Over the past three years, Anguilla has enjoyed quite significant success in stimulating foreign as well as domestic investment, especially in luxury tourism. This has returned our country to robust economic growth, full employment and increasing disposable income. The Government’s financial situation is the best it has ever been. The prospects are good for the growth we are now experiencing to be sustained well into the future. This is critical for us, as a people, in achieving economic self-reliance, self-determination and ultimately economic independence.

The economic success achieved in the past three years, now threatens to overwhelm us. The enthusiasm of foreign investors is extremely high. Many are scrambling to grasp the investment opportunities they perceive to be available in Anguilla.

The light at the end of the tunnel of which I spoke repeatedly during the dark economic days of 2000 to 2002 has now become so bright, that it threatens to blind us. It threatens to throw us off-course from the path of controlled, modest and steady economic growth. Indeed, as your Government, we are in serious danger of being distracted from our commitment to place the highest priority on social development over the next five years.

We find ourselves today facing the very real prospect of overdeveloping. We are in danger of creating unprecedented shortages in the labour force, of having to rely heavily on imported labour. We are experiencing the early symptoms associated with a rapidly deteriorating social environment. We are under tremendous pressure to deviate from the low volume high value investment strategy, which has sustained us over the years.
Fellow Anguillians, in the past week, September 19th to 25th, two events have powerfully demonstrated to the Government the immediacy and urgency of this reality. Firstly, the ongoing deterioration in behaviour among some elements of our youth again reared its ugly head. Fighting with dangerous weapons erupted resulting in serious injury to one male student of the Albena Lake-Hodge Comprehensive School. Government will ensure that this trend of youth violence and deviant behaviour is arrested.

The second event, which is the focus of my address, concerns the developments in the latest round of the on-going negotiations held during September 20 - 22 for a Memorandum of Agreement for the tourism project proposed for the Junks Hole Estate and adjoining lands. This past week, the Government was faced with extremely tough choices and placed under tremendous pressure by competing interests as we sought to finalize the terms for a Memorandum of Agreement for the Junks Hole Project. The Government was exposed to the harsh reality of the inherent danger in approving large projects in very small countries such as Anguilla.

Fellow Anguillians, in our 2000 Manifesto, a commitment re-pledged in the 2005 Manifesto, the Anguilla United Front Government, as part of our programme priorities, pledged and I quote “to review the tourism plant and supply and develop a phased investment strategy consistent with projected demand, carrying capacities, labour market supply as well as accessibility to the island”, unquote. This from a tourism perspective is consistent with the island’s positioning as an upscale tourism destination, offering an unrivalled and unique experience to its visitors.

In the recent past, when commenting on the surge in investor interest in Anguilla that has taken place since 2002, I have said that “whilst we are pleased with the interest in Anguilla, we must be careful that the increased demand for a bit of the peace and tranquility of Anguilla, does not lead to over-development, a huge mass of visitors, congestion, overcrowding, collapse of our social and physical infrastructure and eventual economic decline”.

One of the proposals to come before Government in recent times has been for a major tourism project in the eastern end of Anguilla. As we indicated in the 2005 Budget Address, Government in November 2004 received a formal proposal from Urban Nicklaus Holdings in conjunction with the Property Markets Group, which I will refer to as the UNH-PMG Group, to establish a major project on over 500 acres of land encompassing Junks Hole, Captains Bay and Windward Point. We indicated to the developers in November, that Government was in the midst of finalizing the 2005 Budget, and given our small administration, could not immediately devote resources to appraising the project. However, in the new year Government would turn priority attention to the project.

This we did and beginning in January 2005, Government through the Ministry of FEDICT and the Tourism Investment Review Committee began the painstaking task of conducting the due diligence and appraisal of the project proposal. This task was completed at the end of March and in April, following the decision of the Executive Council to this effect, Government communicated to the developers that it had approved the grant of “Investment Approval in Principle” for the project. This meant that the project concept and UNH-PMG, as the proposed developers, along with their strategic partners, which they had identified, were acceptable to the Government. Government was at pains though, to stress that the granting of “investment approval in principle” should not be taken as implying that Government committed itself to the details of the project as proposed by the developers. The design, scope, and scale of the project, as well as any concessions to be granted had to be determined during negotiations between the GoA and UNH-PMG, which if successful, would lead to a Memorandum of Agreement representing “Investment Approval in Full”. It was furthermore communicated that investment approval in full could only be granted by the Executive Council.

Negotiations on a Memorandum of Agreement (MOA) commenced on May 2, 2005 and have continued on a start-stop basis, as both parties tried to come to grips with the issues that a project of this magnitude (over 500 acres of land and 2083 bedrooms) would have on Anguilla. Government was mindful of its responsibility to take into consideration the overall investment situation in the economy, the rate of growth, employment, income generation and the social impacts and implications arising as a result of other investment projects and other economic developments as a whole, which have been taking place in Anguilla since 2002. The negotiations have therefore been conducted at all times by the Government against the backdrop of the total economic and social picture. This framework was painstakingly laid out to the UNH-PMG Negotiating Team by the Government’s Negotiating Team from the first day of formal negotiations in May.

Two key concerns of Government with the Junks Hole Project were the start date and phasing of the project. Government was mindful that major construction of buildings (hotel, estate homes, villas, condos, etc) should not coincide with peak construction activity of the Flag Temenos-St. Regis and Viceroy Projects at Merrywing-Rendezvous and Barnes Bay, respectively. Government has consistently underscored its grave concern over the growing labour shortage situation and wished at all times to avoid the need to undertake the massive importation of labour.

We are extremely concerned about the significant attendant stress this would place on social and physical infrastructure and services (including housing, education and health). These and other issues were debated between both sides over the course of May and June and were informed by the public consultations, which Government held concerning the project. Of course the large scale of the project was an underlying cause for concern and was a most significant factor in Government’s concerns about the timing and phasing of the project.

In late July, an impasse developed between the two negotiating teams. Government by way of an Executive Council decision, took a firm position on the issues on which the negotiations had become deadlocked and communicated its position to UNH-PMG. UNH-PMG responded to the Government, that it accepted the GOA’s position. As a result the Government and the UNH-PMG came to agreement in principle on all of the major issues raised during the negotiations, including a project building construction start date and a project phasing, which would balance the needs of both parties. Further consideration of the project proposal however, would be subject to the developers submitting certain documentary evidence as it related to, inter alia, business plan, financing plans and contracts entered into and under consideration before the investment approval in full process could be further advanced. Negotiations towards the finalisation of the MOA were recessed, due to the start of the Annual Summer Festival activities.

When negotiations resumed on September 6, UNH-PMG represented to Government that they wished to reopen the issues surrounding the project building construction start date and indicated that their project was not viable if they could not start construction within nine months of the approval of the Memorandum of Agreement, owing to commitments which they had to make to their bankers. Negotiations with UNH-PMG at this stage reached an impasse after Government indicated that it could not agree to such a request.

Fellow Anguillians, from time to time, any and all Governments face pressure from stakeholders and parties seeking to promote their particular interests.

The owners of the Junks Hole Estate after learning that there was impasse in the negotiations between the GoA and UNH-PMG during the three weeks from September 4, 2005 exerted relentless pressure and lobbied extensively with Ministers of Government to accommodate the demands of the developers and thereby enable the project to proceed speedily.

In the face of this pressure and mindful of its commitment to having a significant project in the East, Ministers reluctantly yielded to the pressure to make further concessions to the developers. As a result Ministers indicated to the developers that they would be prepared to concede that the building construction could start some twelve months after the signing of the Memorandum of Agreement. The developers indicated that this was acceptable to them.

Both sides resumed face to face negotiations on Tuesday September 20 with a view to ironing out remaining issues standing in the way of investment approval in full. At the close of these negotiations on Wed Sept. 21 the significant issues remaining to be resolved was language as it related to:

(i) the Environmental Impact Assessment process;

(ii) the Economic-Social Impact Assessment process;

(iii) the Government of Anguilla’s processes and procedures governing the grant of permits and approvals particularly in regard to labour, immigration, physical planning, building and other required approvals;

(iv) provisions as they related to the project lenders;

(v) intra-company transfers; and,

(vi) performance provisions.

Legal counsel for UNH-PMG was then expected to revise the draft MOA to take into account all negotiations and discussions to date and forward the revised draft MOA to the Attorney General’s Chambers for consideration.

Government took great pains to point out that the AG’s Chambers would take at least 2-3 weeks to fully vet and revise the latest draft of the proposed MOA. Subject to the language in the revised draft MOA being satisfactory to both the GoA and the developers, the Minister of FEDICT would then submit the draft Memorandum of Agreement to Executive Council for consideration.

Upon hearing that the GoA was close to resolving the outstanding issues that could serve to prevent another golf tourism and resort residential real estate project for the island to be located in the east, the principals of Flag Luxury Properties strongly represented to Government that approval of such a project to proceed at this time would jeopardize the viability of their project which had commenced since early 2003. The Flag principals further indicated that if approval was granted to the project proposed by UNH-PMG, at this time, the lending institutions with whom they had been in contact would not lend the funds necessary to continue with the project. If no loans funds were forthcoming the project would have to be discontinued with immediate effect.
The apparent fears in some segments of the banking community is that if two such large projects were to come on stream at the same time, there was the strong possibility of product oversupply and that the market, in terms of the sales of vacation homes which are critical to the success of the financial model of both projects, could in fact only bear one such project at the current time.

Fellow Anguillians, my Ministerial colleagues and I came face to face in the past week with the possibility of suddenly losing the economic growth we are now enjoying and slipping back to where we were just a few short years ago. We were faced with representation from the owners of Flag Luxury Properties of the possibility of the immediate cessation of work on the Temenos-St. Regis golf tourism project, if the Government signed a Memorandum of Agreement with Urban Nicklaus Holdings and the Property Markets Group for the development of the Junks Hole Project with a commencement date sooner than 30 months into the future from the signing of an MOA.

My Ministerial Colleagues and I carefully considered the situation and did much soul searching. We seriously contemplated dis-regarding the representation made by Flag Luxury Properties. However, out of an abundance of concern firstly for the approximately 500 construction workers currently employed on the Temenos-St. Regis Project and their dependents, which could well amount to another 1000 or more persons, we decided against this. The decision was not easy and it was and is quite painful. We also considered the negative ripple effects likely to spread throughout the entire economy in the immediate future. We came to the stark conclusion that our responsibilities to and on behalf of all of us, the people of the Anguillian community, required that we should not risk the robust, yet fragile growth, which we have been enjoying for less than two years in a head on confrontation. This growth fellow Anguillians has been stimulated and made possible to a significant degree, as a result of the implementation of the Temenos-St. Regis project over the past two years.

In the circumstances, we felt that it was our primary duty in the short term, and in the interest of Anguilla to err on the side of protecting the economic gains already being realized by all of us and to seek an accommodation in terms of the timing of the development of the Junks Hole project that could be a win-win situation for all concerned over the medium to long term.

Fellow Anguillians, what would be the implications you may ask of the Flag project closing down due to lack of funding to continue. 500 construction workers would be out of work, heavy equipment and other suppliers would have their contracts terminated, their loan commitments to the local banking community would be in serious jeopardy. The ripple effect on Anguilla’s economy would be disastrous. The Government was faced therefore with a potentially very painful option, even if the pain could have begun to ease significantly within a year or two.

It is being said on the street that Government has relinquished its power as Government to the principals of Flag. We argue to the contrary. We argue that Government has been decisive in the face of an exceedingly difficult position. Protecting jobs on the ground has always been something that Governments in small countries like ours and big countries like the UK have faced.

The possibility of cessation of work on the Temenos-St. Regis project coupled with the Government’s strong reservations about allowing an early build out of the proposed UNH-PMG project, convinced Ministers that Government ought to maintain its original position about judiciously phasing major construction on Anguilla and to re-open the issue with UNH –PMG about a start date for their proposed project. This decision was communicated to the members of the UNH-PMG team on the island on Thursday September 22, 2005.

While it is entirely fortuitous, it is instructive that the violent incident at the Comprehensive School, to which I referred earlier, should have taken place on the very day when my colleague Ministers and I had to grapple with the fundamental challenge of how to respond in the face of competing interests of large projects on the island.

Ministers informed UNH-PMG’s representatives at the meeting on September 22, that the project building construction would have to be timed to commence 30 months after the signing of the Memorandum of Agreement. The members of the UNH-PMG indicated that that this was not acceptable to them and that Government should be prepared to face the consequences of its decision.

In my speech amidst economic recession in 2002, I assured you the people of Anguilla that there was light at the end of the tunnel. Today however, we cannot allow ourselves to be blinded by this light but rather allow our eyes to gradually adjust as we transition from the darkness of the tunnel to the light on the outside. We must make our assessments and then take action. Our decision of the past week must be viewed within this context.

Let me elaborate. We must take into consideration the labour realities on Anguilla, the physical, environmental and social infrastructure of the island, the human and financial resource capacity of the Government, the supply of accommodation facilities in the tourism sector, and the stages of implementation of already approved local and foreign projects when considering applications for further investment projects. We must also be aware of the history of failed projects on Anguilla and the need to avoid such recurrences. These are the sorts of considerations that the Government has taken into account concerning its present position with regards the proposed UNH-PMG project for Junks Hole-Captains Bay-Windward Point.

Indeed in that meeting last Thursday 22, I indicated to the UNH-PMG team that Anguilla seemed to be a “convict of its own success”. Anguilla is currently at a state of full employment, particularly within the construction sector, as a result of the development at Flag Luxury Properties project, other tourism, commercial and residential projects as well as public sector projects such as the on-going road development programme. Economic growth last year was 13.7%, the highest among Caribbean Development Bank borrowing member countries. One side effect of rapid economic growth is usually rising inflation. We are beginning to see this, with inflation for the year so far running at around 5% compared to 3% in 2004. As Government, we have to guard against this and other effects of over expansion, such as the need to import massive amounts of labour, which I mentioned earlier in this address.
On Thursday 22 we met with some of those family members (who were available to attend) whose lands would be sold to the UNH-PMG Group in order for them to undertake the project. We indicated to them that in keeping with its manifesto pledge for a major project in the East, the Government of Anguilla is keeping the door open for the UNH-PMG Group.

Fellow Anguillians, most people who know me, would agree that I am always optimistic. As I have indicated, Government’s desire to re-open the issue of the project building construction start date has been communicated to UNH-PMG and I am hopeful that some way can be found to continue with the negotiations. At this time, when emotions are running high, I implore all stakeholders involved – the principals of UNH-PMG, members of the Junks Hole and Webster Estates, residents of the East – to let us all keep a sense of perspective. Anguilla is a beautiful jewel, which none of us wishes to see despoiled or destroyed.

The self-reliant, self-determined, orderly and sustained development of Anguilla is the underlying motivation of your Government. The struggle for the sustained economic and social development and security of all of us is not won nor lost on a single turn of events. The progress we have made in two short years is too fragile to suffer any major shocks at this time.

Thank you for listening. And may God bless you all and continue to bless Anguilla.

CM Osbourne Fleming

| Printer-friendly page | Send this article to a friend |

World News