Foreign Relations, 1977–1980, Volume XXIII, Mexico, Cuba, and the Caribbean

251. Airgram From the Embassy in the Bahamas to the Department of State¹

A–16

Nassau, March 31, 1978

SUBJECT

• Bahamas: US Goals and Objectives

REF

• State’s 037394 as amended by State’s 042729²

FOLLOWING AIRGRAM SHOULD BE SUBSTITUTED FOR NASSAU’s A–6.³

1. OVERVIEW STATEMENT

Our overall approach to achieving our goals and objectives in the Bahamas is conditioned by two factors: (1) our limited (but, in our opinion, sufficient) resources and (2) the GCOB’s inability to digest more than one bilateral issue at a time, and its resentment at being pressured (in its view bullied) into negotiations for which it is not prepared.

With regard to the former we feel that our limited Embassy personnel resources—augmented by the Department on an ad hoc basis—are sufficient to cope with upcoming facility and maritime delimitation negotiations. We do not feel that additional resources in the form of concessional economic assistance would be either justified or properly utilized at this time. We do recommend, however, that we begin to explore all available forms of non-concessional assistance which like our two Preclearance Facilities in Nassau and Freeport—both of great importance to the tourism industry—would help the GCOB to help itself.

With regard to the second factor almost five years experience in dealing with this newly independent Government has taught us that it does no good, and in fact is counter-productive, to push too hard or to push on too many fronts simultaneously for consultations, action or decisions. The fact, for example, that the Law of the Sea Conference was until recently the GCOB’s major and overriding concern made it impossible for us to pursue talks on our facilities here. Likewise, the imminent resumption of these talks will, along with other factors mentioned below, prejudice an early commencement of maritime boundary delimitation talks. The Department should thus be aware that impatience on our part to conclude all outstanding bilateral issues on a schedule devised by ourselves is both impossible and quite possibly could be prejudicial to our long range, substantive goals.

We therefore suggest a low keyed and measured approach in our dealings with this Government, being prompt and positive in responding to their reasonable (and not too frequent) requests for assistance and not overly anxious in attempting to resolve all outstanding bilateral problems.

2. DISCUSSION OF KEY POLICY ISSUES

The principal US objective in the Bahamas for the next two years is the continued existence of a politically stable and friendly neighbor. This in turn rests on a viable and healthy economy.

The Bahamian economy has not been immune to the worldwide economic difficulties of the last several years, and while there is no reason to believe that it will appreciably worsen in the next two years, there are, at the same time, few firm indicators on which to predict any significant improvement. The economy’s extreme dependence on tourism causes it to reflect outside economic trends and developments almost immediately. In addition, the newly reelected PLP government’s program to increase needed foreign investment is either disturbingly vague or remains largely unimplemented. The problems of increasing unemployment and long overdue family planning have yet to receive the attention they merit. While the politically moderate PLP is securely in power for the next five years, an economic downturn could produce unexpected and for us possibly adverse changes in its general direction if not its philosophy.

Government leaders as well as speakers for the fragmented opposition are almost unanimous in proclaiming 1978 as the “year of decision” i.e., the deadline for taking steps to prevent stagnation and possible further deterioration of the economy. They likewise concur that the problem could rapidly be compounded as an ever increasing workforce competes for a limited and non-expanding number of jobs. They are far from unanimous, however, on what needs to be done, and how to do it. Until they are and until they begin implementing some workable solutions (as opposed to rhetoric), the primary US objective here will become more difficult to project into the future.

Should the economy falter, or should it fail to keep pace with a rising population growth and rising expectations, we would be faced with several policy issues and have to answer some relatively difficult questions. Among those: (1) Should the Bahamas continue to be ineligible for concessional economic assistance because of its relatively (and misleadingly) large per capita income? (2) Should an exception be made in the Immigration & Nationality Act to permit Bahamians to enter the US, the traditional safety valve for excess workers? (3) Should we seek to make an exception for the Bahamas in laws, regulations and rules relating to Civil Air and Income Tax Matters (deductions for attending foreign conventions) and duty free Customs limitations? (4) Should we (assuming that a successful facility treaty has been negotiated) consider raising the agreed rental quid? (5) Should we accede to the Bahamians’ demand for equidistance in establishing maritime boundaries giving the Bahamians a larger share of mineral rights on the ocean floor than our present position would indicate with the proviso that we be given the first option to purchase. We would like to reiterate the importance we attach to the continued growth of this economy which in large measure translates into the tourism industry. In our opinion it is shortsighted and contrary to our long range interest to neglect or fail to respond positively to GCOB requests for assistance in the area whether for more passenger seats from New York City, more routes to other US destinations, or amendment to the Tax Act allowing for deductions for attending conventions in the Bahamas. By not responding positively now we run the risk of not attaining our objectives in the Bahamas. Finally, we should keep in mind the effects of a rapprochement with Cuba on the Bahamas tourism industry.

3. PROPOSED COURSES OF ACTION

III. Strengthened Bilateral Economic Cooperation⁴

a. Promote Bahamian Economic and Political Stability by Supporting Bahamian Requests to Strengthen its Tourism Industry

The Bahamian tourism industry accounts for 77 percent of GNP and is vital to the economy. The Embassy and the Department have already assisted it by opening a second preclearance unit in Freeport and by supporting additional air routes from the US. The latter, because of CAB’s autonomy, is considerably more difficult to accomplish and there has thus far been no resolution. We strongly urge that the Department make every effort in achieving a satisfactory and early conclusion to what we feel are reasonable Bahamian requests. It is unfortunate that the Administration’s tax reform proposals failed to take into account the Bahamian dependence on the American tourist dollar in formulating its formula for income tax deductions for attending overseas conventions and in our view this merits reconsideration.

b. Negotiate Mutually Agreeable Fishing Zones and Maritime Boundaries

The negotiations of mutually agreeable fishing and maritime boundary zones raise problems of priorities. US-based fishermen were excluded in 1975 from catching spiney lobsters in Bahamian waters under the terms of Bahamian legislation copied from similar US legislation. Theoretically, this Bahamian action could eventually enhance the Bahamian economy although at the same time it has created a hardship for Florida-based fishermen. Given the additional fact that the issue has strong emotional/nationalistic overtones for the Bahamian electorate, we must ask ourselves if we should continue to press the claims of the Florida fishermen (which in our view would be obtainable only at an exorbitant price, if at all) at the risk of prejudicing other interests. The question of eventually establishing fisheries zones and a fisheries agreement permitting fishing for fin-fish and lobster in Bahamian waters was made even more complicated because of our own unilateral action in October of 1977 when we issued tenders for seabed oil exploration in the undelimitated area of the Blake Plateau.⁵ The GCOB’s reaction (which had been predicted) was to respond that both fisheries and economic zones must be one and the same, that the former could not be negotiated until the latter had been agreed upon, and that it would not be possible to proceed with the latter until the Bahamas had likewise called for tenders in the area. Maritime boundary delimitation is thus at an impasse and successful negotiations will prove to be difficult, if not impossible, if in fact our position is not based on “the principles of international law and equity” or is incompatible with our stance vis-a-vis the Mexicans and Canadians. We should consider too whether anything less than an equitable settlement of the issue would outweigh our overall interests in the Bahamas, including both its long term economic stability and its continued friendship. Having already made clear our interest in negotiations, we strongly recommend that we not press the GCOB on the matter until they—by the issuance of their own tenders—have equalized their pre-negotiating stance.

IV a. Encouragement and Assistance to Increase GCOB Economic Stability

The Embassy has in the past encountered difficulties in achieving this goal principally for two reasons: (a) the Bahamian failure, thus far, to proceed with formulating planning goals and (b) what we understand are the limited assistance resources available to be offered. Until the Bahamian Cabinet agrees amongst itself as to the Government’s own goals and priorities there is little that we independently can or should do. Likewise the GCOB is still wary of the political risks inherent in implementing family planning and given its local racial and political connotations, we strongly believe that we remain in the background until we are unequivocally asked for advice or assistance. A US team is tentatively expected to visit Nassau this Spring to discuss possible assistance options and it remains to be seen if the GCOB will have formulated development plans or if the assistance we are capable of offering (non-concessional aid) meets Bahamian expectations.

I b. Negotiations of Continued US Use of Military Facilities

The long stalemated facility negotiations recently showed some movement when in a conversation with Assistant Secretary Todman in early December both Prime Minister Pindling and Minister of External Affairs Adderley stated that they would be ready to resume talks at any time after January 9, 1978 with the hope of reaching agreement by July of 1978.⁶ A US negotiating team is scheduled to come to Nassau in March for preliminary discussions. It appears that we remain far apart on the amount of the quid to be paid for use of the bases both in cash rental payment and possible additional economic assistance. While we have attempted to explain to the GCOB that it is most unlikely that our quid can, per se, contain anything but a cash rental payment, the Bahamians remain doubtful. We expect them to insist on a concurrent economic assistance package before they sign a facilities agreement and they will most probably demand concessional economic assistance as a part of this package. Given these circumstances it is essential that the Embassy and the negotiating team enter the discussions with a clear and accurate understanding of the bases’ actual value to DOD and the existence of resources to support that position.

II. Cooperation on Narcotics Interdiction and Control of Tax Evasion

We continue to enjoy full support from the Bahamian Police authorities in our efforts to interdict narcotics shipments passing through the Bahamas. Given the fact, however, that illegal trafficking is rapidly increasing and that the Bahamian resources remain modest there is the real possibility that they will be unable to comply, or comply in a sufficiently prompt manner, given the growing number of requests for assistance. While this situation may be partly alleviated by the creation of the Bahamian Defense Force i.e., Coast Guard, we feel that we should begin examining now what steps we should or could take to be of further assistance to the Bahamas to help them better police their own territory. Likewise given the GCOB’s strong sensitivity to real or imagined breaches of their sovereignty, we should explore whether present arrangements of liaison and cooperation could be improved.

With regard to the control of tax evasion we are satisfied that the present informal arrangement whereby IRS operations in the Bahamas are carried out under guidelines formulated by the Embassy, and where necessary with the knowledge of the Office of the Attorney General of the Bahamas, are working to the satisfaction of all parties concerned. Consequently, and in light of public statements by the Prime Minister and Minister of External Affairs rejecting the idea, we see no reason to push at this time for an exchange of information agreement even if those US agencies involved were able to agree among themselves to the language for such an agreement.

4. CURRENT SITUATION

A. Facilities negotiations are due to commence in March of 1978. Given what appears to be the difference between what we are willing to pay for rental and Bahamian expectations of how much they should receive, we are not confident of reaching an early agreement.⁷

B. Maritime boundary and fishing discussions are at a temporary impasse. As it takes two sides to enter into discussions and as the GCOB has indicated in no uncertain terms its unwillingness to talk at this time, we do not see an early resolution of this issue.

C. The CAB continues to defer a ruling on American Airlines’ request to compete on the New York-Nassau run relinquished by PANAM pending a decision whether to consider the Bahamas’ application separately from the other applications contained in the “Caribbean Services Investigation”. The ruling, which was expected as early as last October, continues to be unforthcoming to the detriment of the local tourism industry.

Schwartz

1. Source: National Archives, RG 59, Central Foreign Policy File, P780060–1186. Secret. Drafted by Rush W. Taylor and Ambassador Schwartz on March 28; cleared by Garner, McGee, and Madden; approved by Schwartz.
2. In telegram 37394 to Nassau, February 13, the Department transmitted the approved version of the Ambassador’s goals and objectives for the Bahamas, focused on base negotiations, narcotics interdiction, economic cooperation, and participation in the Caribbean community. (National Archives, RG 59, Central Foreign Policy File, [no film number]) In telegram 42729 to Nassau, February 17, the Department clarified the plan for implementing the goals and objectives statement, placing more emphasis on U.S. security interests and adding more detail about promoting American investment. (National Archives, RG 59, Central Foreign Policy File, D780074–0657)
3. Airgram A–6 from Nassau, February 9, transmitted the Embassy’s initial implementation plan for the goals and objectives statement. (National Archives, RG 59, Central Foreign Policy File, P780020–0086)
4. These headings correspond to the goals and objectives statement in telegram 37394 to Nassau (see footnote 1 above).
5. In telegram 1720 from Nassau, November 8, 1977, the Embassy reported on the November 7 meeting with Adderly in which the Foreign Minister expressed displeasure at the U.S. decision to begin seabed oil exploration before maritime boundaries had been set. (National Archives, RG 59, Central Foreign Policy Files, D770412–0518)
6. During his visit to Nassau, Todman discussed the base negotiations with Prime Minister Pindling and Foreign Minister Adderley on December 2, 1977. A memorandum of conversation was transmitted in telegram 1968 from Nassau, December 13, 1977. (National Archives, RG 59, Central Foreign Policy File, D770465–1123)
7. In telegram 98221 to Nassau, April 18, the Department transmitted a message from Todman to Adderly designed to “answer Adderly’s concerns,” as well as keep “momentum gained in the March 6–7 technical negotiating session.” (National Archives, RG 59, Central Foreign Policy File, D780165–0265)