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“Truth, like light, blinds. Falsehood, on the contrary,
is a beautiful twilight that enhances every object.”
Albert Camus, The Fall.
“It ain’t what you don’t know that gets you into trouble.
It’s what you know for sure that just ain’t so.”
More than two years ago, I published a critical essay on the undertaking to build an international airport at Argyle. Within a week, Dr. Rudy Matthias, chairman and CEO of the International Airport Development Company (IADC), had published a reply. His response was styled “a beautiful story” and it ended on a lyrical note.
“Perfection on this side of paradise is sought, but will never be attained,” Matthias eloquently waxed. “IADC, as project manager is doing all in its power to deliver to the Government and People of St. Vincent and the Grenadines an international airport at Argyle, which would be substantially complete by December 2014, and would, God’s willing, become operational by mid 2015.”
Over two years have passed since then — and not one of the IADC chief’s beautifully-articulated predictions has yet come to pass. “Substantially complete” still eludes him, never mind “operational”. In the interim, Vincentians continued to be fed the usual tall tales about progress — but after hearing the same refrain every six months for the past several years, even the long-suffering faithful have abandoned any interest in an actual project completion date: when it finish, it finish, they say. Dr Ralph Gonsalves, the project’s chief proponent, has himself discarded the tattered fig-leaf of having “been advised” of a specific, definite completion date: at last month’s independence anniversary event, having nothing of substance to say 11 years after his ‘historic’ speech on the project, Dr Gonsalves declared the woefully overdue completion of the enterprise to be “imminent”.
Not surprisingly, the vacuum created by the absence of even a halfway-competent management of the AIA undertaking, was duly occupied by an over-heated, political stunt-making machine, cranked up to the highest possible gear. The 2015 independence celebrations, featured loud announcements (as bogus as they were boisterous) of US footballers and overseas nationals soon to be landing at Argyle for a World Cup qualifier match. A grand “opening ceremony” was held just days before the December 2015 general elections, featuring a farcical, 10-minute hop of a 68-seater aircraft from Arnos Vale, packed to the emergency exits with family, party acolytes and hangers-on, all courtesy of the financially-challenged regional airline LIAT.
Whatever their political value, such gimmicks had no bearing whatsoever on the “serious business” of the completion and commissioning of the airport facility, but they certainly served to highlight the starring role of Dr Gonsalves in his own ironic episode of the “mock entertainment industry”, at a time when the world was watching.
Project management and engineering
My conclusion two years ago was that the undertaking to build the airport had by then turned into “two overlapping disasters: one being a massive, costly project-management bungle that was costing the country tens (if not hundreds) of millions of dollars in lost time and cost overruns — and the second; a slow-motion economic disaster in progress”. And today, the sad fact is that any observer willing to engage his or her rational mind, would now see this conclusion to be true.
Admittedly, one of these disasters is easier to spot than the other. On the first matter; the project management fiasco is now plainly self-evident, even to those who badly want this airport. What better word than “fiasco” to explain how a project manager, for the entire eight years of running a project, has consistently and reliably been unable to get a handle on when the project he is managing might actually be completed? (Recall that the original project completion date, repeatedly confirmed and stoutly defended by both Drs Gonsalves and Matthias, was end of 2011).
As if that were not bad enough, recent developments have decisively added to the sense of a disastrous shambles, to the point where the state of affairs is now seen to be far worse than it was in September 2014. In a September 2016 summary report addressed to the Leader of the Opposition, Arnhim Eustace, engineer Glenford Stewart outlined a list of issues and problems that he considers “symptomatic of gross mismanagement and incompetence” in the design and construction of the facility, and he concludes that the AIA “cannot become operational before December 2018”. Within days of the publication of Stewart’s revelations — and following the passage of tropical storm Matthew — social commentator Peter Binose published an article which focused specifically on the design of the runway crossing at the Yambou River — and the implications of the article, illustrated with telling photographs from an IADC Facebook page, are staggering. Binose’ article highlighted a serious, fundamental and far-reaching engineering design error which completely exemplifies the gross inadequacy of the planning, design, organization and implementation of this AIA undertaking.
The argument is simple. If you are planning to build an international airport that crosses the path of a river which drains a major watershed, the first thing you must do is to recognise that fact as a critical and fundamental engineering design issue, to be dealt with at the beginning of your design process. Accordingly, on a properly planned and organised project, the detailed design of the river crossing and its ancillary works (ie: the hydraulic engineering works) would have been one of the first aspects of the overall project design to be completed. This design would consider that the river flow channel under the runway must be adequately maintained over the lifetime of the facility — and it can only be effectively maintained if it has internal clearances (height and width) such that heavy equipment can enter and operate along the entire length of the channel.
The important point here of course, is that the external height of the river crossing will determine the elevation (or the level, in layman’s terms) of the entire runway and therefore the rest of the facility, since the runway, taxiways, aprons and terminal building all must have a consistent elevation. Or to put it another way, you can’t have the river crossing at one height and the runway at another. And all of this has fundamental implications for the design and cost of the entire civil works and the associated structures. For example, the entire pavement structure may have had to be at a higher elevation than it currently is, in order to accommodate the appropriate hydraulic engineering design.
In other words, the project’s planners, designers and managers needed to have first looked at the big, overall picture; recognized the critical elements in that picture, and then designed the project accordingly. But it is now clear that the people responsible for this country’s “largest capital project since conquest and settlement” missed that basic and fundamental requirement — and eventually were forced to design (if that’s the right word) a river crossing that was fundamentally flawed and unfit for purpose.
The eventual scheme that was adopted involved straightening the path of the river and channelling it through five parallel semi-circular culverts, each 1,000 feet long and having a tiny cross-section in comparison to the operating dimensions of a commercial backhoe. On paper, those five culverts in their original state may well be sufficient to discharge an anticipated volume of flood water caused by a big storm, but they categorically will not do so when they are choked with an accumulation of rocks, boulders, silt, logs and other forest debris — which is exactly what they will be, after a few more big flood events in that watershed.
The upshot of this is that the aforementioned project management fiasco, identified two years ago, has since been joined by an epic engineering design blunder, creating the conditions for a technical disaster of unprecedented proportions. The flooding and physical failure of this runway river crossing is not merely a possibility or a likelihood — it is a predictable physical disaster waiting to happen, courtesy of our Doctors Ralph E Gonsalves and Rudy Matthias.
And still, the economics
The matter of the economic disaster is not as obvious, but the bottom line is just as clear: the so-called project to build this international airport was based on bogus economic premises, from the very beginning. Let’s examine the case.
Imagine yourself in conversation with an acquaintance and the subject of the airport comes up. You ask: “So what’s your take on this international airport?” And your friend might reply:
“Well, I think we need it. We need to have direct flights from New York and them places man. This passing through Barbados thing ain’t working out for us. If we can fly direct, it’s one flight instead of two — everything will work out cheaper. We definitely need this airport, man.”
Or, a more considered opinion might be along the lines of:
“Well, if the country is to make economic progress, we need to have an international airport, so tourists can have direct flights to come here. Then we will be able to compete with our neighbours — you know, like St Lucia and Barbados and so on. We’ll get more tourists and more visitors, and also we’ll be able to ship more goods overseas and increase our exports and so on. We will have more jobs because the airport is there. It will definitely be good for the country.”
These examples are not entirely hypothetical: I have heard variations on these responses many times from friends, acquaintances and strangers of all walks of life, and they appear to sum up the feelings of a great many Vincentians on the matter. However, these responses all share one crucial characteristic — which is that they are all entirely based on opinions, rather than any objective analysis or evidence. Referring to the man on the street, this is clearly the case. Those of us outside the small inner circle of the IADC have certainly never seen an actual economic analysis that considers the various costs and offsetting benefits of the project. In the absence of such a study, any conclusions we may draw on the matter are based on our own incomplete knowledge, supplemented by our own ideas, suppositions, wishes, hopes and dreams.
Which in itself is not a problem: a citizen of a free country is entitled to have whatever opinion on any matter, whether that opinion makes sense or not. Opinions, by their nature, are encouraged, but are non-binding. More importantly, your or my opinion in this particular case is of no relevance to the likely outcome, because neither you nor I have the public purse at our disposal. I can wake up one morning and opine that the country definitely needs an international airport for whatever reasons — but I certainly cannot go about building one. My opinion, whether nonsensical or brilliant, is of no practical value in this matter.
But now, consider the minister responsible for finance, planning and economic development in this country. This is the person who does in fact have the public purse at his disposal. He can wake up one morning and deem it necessary that the country should have an international airport and he — unlike the rest of us — can indeed go about building it. And since this is exactly what he has done, the question must be raised: what was the basis for his decision?
In a wonderfully brief commencement speech to the class of 2007 at the University of California at Berkley, Nobel Prize-winning economist Thomas J Sargent proposed that “economics is organized common sense” and went on to present a short list of twelve valuable lessons taught by the “beautiful subject”.
First on his list was the fundamental lesson understood by any student who has completed economics 101, which is that “Many things that are desirable, are not feasible.” Second was that “Individuals and communities face trade-offs”, which progresses logically from the first point. Now, a person in Dr. Gonsalves’ position, armed with basic economic knowledge such as Professor Sargent summarised should have, prior to committing his country to an investment of hundreds of millions of dollars, ensured that the proposed investment (a) was economically feasible and (b) would represent a good trade-off between possible alternatives.
The first question, of economic feasibility, can generally be answered in a straightforward fashion. Before the investment is made, a detailed economic feasibility study would be performed by impartial and capable experts. Their analysis would consider the estimated costs of financing, constructing, operating and maintaining the enterprise over its lifetime, and would also estimate the dollar values of the various (direct and indirect) benefits that would be expected to flow over time from operating the enterprise. In the simplest analysis, in the case of an economically viable project, the total present dollar value of estimated benefits would be greater than the total present dollar value of the estimated costs.
If the study concludes that the investment is not economically feasible, then for a finance/economics minister considering the investment of public funds, that should be the end of the matter: there is no economic justification to proceed. If on the other hand the study concluded that the project is economically feasible, then Professor Sargent’s second point, on trade-offs, would become relevant.
Consideration of trade-offs is always necessary in national economic decision-making, and is especially critical in circumstances where resources (in this case, mostly money) are particularly scarce. So even after economic feasibility of a project is indicated, the minister of finance of a relatively poor country still must consider whether his proposed investment would provide better value to the country than an equivalent investment in something else.
For example (if we were to use the “official” figures), the EC$481 million originally estimated to be required for the AIA could have been spent on: developing a geothermal energy project (for EC$216 million), plus a state-of-the art hospital facility (about EC$100 million) with the remaining EC$165 million invested in a comprehensive revitalisation programme for the banana industry, some schools, some roads, and an occasional clean-up of capital city Kingstown.
So, the question is: did Dr. Gonsalves carry out any of these basic steps in economic planning, prior to embarking on the AIA project? Was his decision to proceed made based on the positive findings of a detailed economic feasibility study conducted by capable and impartial experts? Did he then consider the relevant trade-offs?
Incredibly, the answer to all of the above is no. When, on Aug. 8, 2005 Dr. Gonsalves announced his government’s plans to proceed with the AIA, no economic feasibility study had been performed on the AIA project. In its place, Dr. Gonsalves presented his own conclusion on the matter, summarised in a single paragraph of a 26-page speech:
“In replying to the query: can we afford an international airport? I retort with another: can we afford not to have an international airport?” Dr. Gonsalves expounded. “I appreciate the genuine concern about the huge cost of constructing and operating an international airport. I realise that the international airport in the short-to-medium term will not be able to generate enough revenues to pay for the costs of its construction. However, in the long-run it will be economically viable. In any event, without it we are likely to be severely hampered in our thrust for further economic development.”
Now, let’s leave aside the breath-taking levels of self-delusion (as to one’s persuasive powers) or contempt (for the intelligence of one’s audience) inherent in the thought that these ninety-something words could replace an actual, objective analysis of the project’s economics. When Dr. Gonsalves’ presentation is reviewed in its entirety, we see that what he had done was to repackage the previously conceived (but never properly analysed) suggestions and assumptions, that the economic future and “progress” of the country required an international airport for their realisation. In August 2005, at the moment of his “historic” speech announcing the project, Dr. Gonsalves had added no objective analysis or any salient arguments that would provide economic grounds for what he was proposing. He was simply repeating an already-accepted notion, a conventional wisdom; a beautiful dream which had been implanted in the minds of Vincentians over the previous 30 or so years. His innovation (to use his words) was a far-fetched, speculative and ultimately failed financing plan (we’ll say more on financing in a while).
So in relation to the economics of the matter, we can conclude that the prime minister’s decision to proceed with the largest capital project in the history of this country was made on a basis no different from that of the man on the street: it was based on Dr. Gonsalves’ opinion.
Supporters of the prime minister’s decision could point out that his opinion would obviously be better-informed and more carefully-considered than that of the man on the street. Which would be true, but trivial. The simple fact is that in an impoverished, heavily indebted country (and never mind the “official” debt figures, which have consistently understated or omitted the national debt to Petrocaribe), it is the first job of a competent finance minister to ensure that public funds are invested in a prudent and economic fashion, after considering the alternatives. This cannot be a matter of opinion, no matter how well-informed. It must be based on a detailed, thorough, expert and impartial analysis of the various objective facts, factors, circumstances and alternatives. Anything less amounts to dereliction of duty and professional negligence, if not reckless incompetence. You or I, committing an equivalent offense at the workplace, would (and should) be dismissed forthwith.
Incredibly, this sorry tale gets even stranger. Dr. Rudy Matthias, a man who (unlike Dr. Gonsalves) has actual and highly prestigious qualifications in finance and economics, not only went along with this unprecedented and egregious breach of economic fundamentals; he defended it, in his response to my earlier article. But he too, failed to demonstrate any economic basis for the idea that the AIA is “an absolute economic necessity”, as his employer Dr. Gonsalves called it in a January 2014 budget speech.
Now, here’s the fascinating twist in all of this. Dr Matthias advised that an “economic and technical feasibility study on the AIA project” was eventually done in 2009/10, commissioned by the CARICOM Development Fund (CDF) after they were asked to assist with the financing of the project. However, Dr Matthias also advised that he was not at liberty to release the report of the study. He helpfully suggested though, that I could contact the CDF, who would be happy to confirm the existence of the study — which of course is quite beside the point. The question is not if the study exists, the salient question is: what does the study conclude regarding the economics of the enterprise? Dr. Matthias ignores this simple point and thereby creates a critical conundrum.
The largest capital project since conquest and settlement commences without an economic feasibility study; therefore, no objective evidence exists to justify the undertaking. Then at some point, supposedly midway through the project construction period, an economic feasibility study is performed, which ostensibly would provide an economic basis for the project, but the study report is never released to the public. All of which only raises more questions than answers, does it not? Imagine you are a public official, responsible for spending unprecedented amounts of public funds on a project that is controversial, and you happen to have an actual analysis, a feasibility study, that confirms the correctness of the course of action you are taking. What would you do? Would you keep the analysis a secret, so that the controversy surrounding your decisions is intensified? Or would you publish the analysis, so as to set the matter to rest?
Because clearly, if after a feasibility study was eventually done in the “middle” of the project’s implementation, and the chief proponent of the enterprise subsequently categorizes the undertaking as “an absolute economic necessity” then logically, the feasibility study must have come to that conclusion (this of course assumes that the chief proponent is not lying, which is the place where all logic fails). So the solution is quite simple, and this particular discussion about the economics of the enterprise can easily be put to rest. The good doctors simply need to release the CDF feasibility study report. Otherwise, the public has the reasonable right to ask whether Dr. Gonsalves is (again) simply attempting to impose his opinion on us, even after the objective evidence about the matter is known — and whether the evidence contradicts his opinion.
About half a century ago, in an introduction to a World Bank paper on project appraisal, development banker Hugh Ripman pointed out that when the Bank is asked to finance a development project, “it does not take the project on trust. Whether it is for a highway or a hydroelectric scheme, an iron ore mine or irrigation works, it is subject to exhaustive investigation from many points of view.” I strongly suspect that — if asked — such a statement would also sum up the position of the Caribbean Development Bank (CDB); the Caribbean’s equivalent of the World Bank. I also suspect that the general public does not know that the CDB indeed was asked to provide financing for the project — a position which they declined to take.
Why should this be so? How is it possible that the region’s pre-eminent development financing institution is not involved in financing this “absolute economic necessity” of an infrastructure project, for a country that clearly needs development assistance? The CDB boasts a wide-ranging portfolio covering numerous other public sector activities deemed important to regional development (including provision of a US$65 million loan to the aforementioned LIAT). Why nothing for the AIA?
One could speculate about the reasons. Indeed, given the general air of secrecy surrounding the financial details of the enterprise, one cannot help but speculate. I myself would imagine that, high on the CDB’s list of requirements for approval of financing would be a feasibility study that indicates actual feasibility. Not to mention audited accounts of the project’s finances so far. Also, the bank would be concerned about the overall quality of the management of the enterprise they are being asked to finance — and so on. But the simple fact that the region’s premier development financing institution has not invested a cent in Dr. Gonsalves’ AIA, must be cause for grave concern to thinking Vincentians. It suggests that the airport project, far from being the development panacea touted by its proponents, instead is the opposite — and reinforces the suspicion that Vincentians are being forced to take the opinion of Dr Gonsalves on trust. If the CDB isn’t buying it (and it’s their job to buy stuff like this) why should we?
The Big Picture
In the public mind, the sheer magnitude of this undertaking has helped to create and sustain a mantra which dictates that the AIA is this country’s development equivalent of the holy grail; a self-evidently-necessary, must-have-at-any-cost, piece of infrastructure. After all, one can’t help but think: something this big, this bold, this unprecedented, must be a vital necessity for the country!
What has been overshadowed by brute size, however, is the bigger-picture realisation that Dr. Gonsalves, who took office exactly at the turn of the new century, has not actually had a big, coherent and transformative vision for the development of his country in the 21st century. His duration of tenure has been characterised by stylish, inspiring rhetoric on magnificent components of noble Caribbean civilisations, littered with revolutionary slogans about education and wellness, and interspersed with pithy soundbites designed to secure the speaker’s place in the written history of the nation and the region. All of which makes for memorable, even controversial, appearances at the United Nations and other regional and international venues where talk takes precedence over actual outcomes. But the totality of it is best metaphorically described by Shakespeare’s Macbeth, who laments how “Tomorrow, and tomorrow, and tomorrow, creeps in this petty pace from day to day” and imagines life as “a poor player that struts and frets his hour upon the stage and then is heard no more.” It is all, Macbeth concludes, “a tale told by an idiot, full of sound and fury, signifying nothing.”
Because the facts on the ground show that Dr. Gonsalves has been unable, after 15 long years, to translate his brilliant soundbites into an actual development vision and a workable set of plans designed to deliver positive outcomes for the country at this time in our history. To be about “serious business for serious people” is his claimed mission, at every occasion where he is presented with a microphone — but what exactly have been his actual deliverables, over 15 long years? (And bear in mind that Dr. Gonsalves has been in office now for a period almost equal to that of two U.S. presidents who both won second terms). What has SVG to show for this 15-year tenure?
Objective and anecdotal evidence overwhelmingly paint the same dismal picture: St Vincent and the Grenadines is now the least-developed country in the OECS, by a glaring margin. Healthcare outcomes in this country are competing with school dropout rates in a race to the bottom of the OECS ranking (according to information not yet published); SVG is already at the bottom of the regional league in tourism arrivals and our exports of bananas have trended to zero over the past 15 years, in contrast to significant tonnages still enjoyed by our sister Windward Islands.
Nowhere is the lack of actual substance better illustrated than when any random supporter of the regime is asked to point out something — anything — of special significance that has been achieved by Dr. Gonsalves’ government in the past 15 years. “He building the airport” comes the answer; a reflex action without so much as a moment’s thought, the respondent being satisfied with that proposition as an end in itself. Indeed, when he has nothing left to fall back on, Dr. Gonsalves himself repeats this inane canard, as he did at a September town hall meeting with Vincentians in Brooklyn, New York.
But let’s think about it for a minute. In 2001, when our immediate neighbours (except Dominica) all had long-standing international airports and well-established mass-tourism sectors, what was needed was not a leader whose development vision amounted to “Well, I want one too”. What was needed was a leader with an informed, strategic and practical approach, grounded in sound economic and project planning, and cognisant of the rapidly-changing realities of the 21st century he had just inherited.
Ask yourself how is it that Dominica, an island with a smaller population than ours; even more mountainous and without the sparkling Grenadines; a place generally more difficult to get to than SVG, is a place so far ahead of SVG when measured by tourism arrivals over the past 15 years? (See chart).
The difference, gentle reader, is created by capable leadership and competent management –or the lack thereof. In contrast to what we needed, what this country got in 2001 was a leadership whose big idea was to resurrect, with absolutely no scientific basis, a conventional, run-of-the-mill, 20th-century idea that SVG needed a massive, prohibitively expensive infrastructure project to transform its fortunes. A build-it-and-they-will-come infrastructure that — somehow — would magically cause international airlines (who are themselves operating in one of the most financially fragile industries in the world) to drop everything in a rush to fly to our shores; crammed with tourists hungry to experience the breath-taking wonders of SVG; filling our few hotel rooms overnight; creating massive demand for new accommodations and attractions, and miraculously increasing exports of our agricultural produce.
The obvious fallacies inherent in this idea should be evident to anyone willing to spend some time thinking and observing the facts in the real world (many of which have been ably chronicled by C Ben-David, our most prolific essayist on the folly of the AIA). But such clear thinking is apparently beyond the capabilities — or not on the agenda — of Dr Gonsalves, so what we got instead was the resurrection of an idea whose time had passed, implemented in the shoddiest, most incompetent manner possible, compliments of the man who some of his followers have anointed “the brightest prime minister in the Caribbean”.
Professor Sargent, in his aforementioned commencement speech also advised that “When a government spends, its citizens eventually pay, either today or tomorrow, either through explicit taxes or implicit ones like inflation.” The taxes are already piling up — and there will be more. One example: the mere act of moving LIAT and Amerijet to Argyle will cause costs to be incurred that will be in addition to the existing costs of providing flights for passengers or cargo space for goods. Monies will have to be spent to cover those costs. Guess who will have to pay to reimburse those monies spent?
The airport at Argyle will one day be completed and will one day be put into some sort of operation. But the waking reality of this country’s international airport dream, will be that Vincentians will continue to pay far more, and far into the future, for the dream. In the meantime, the necessary scale and variety of benefits will not materialise — and the enterprise will turn out to be transformative downwards: it will be a net drag on the economy of this country. Instead of becoming our development holy grail, the AIA will instead come to be known as the largest failure of project planning, design, implementation and management in the history of this country; one for the books, a case-study in how not to do development in the Caribbean.
Some parts of the above article, of course, represent my opinion — and this piece no doubt will elicit a swift response from the doctors. But I can save them much of the heavy lifting. There’s really no point in their attempting to address the project management issues, as their combined credibility in that area has trended decisively to nil over the past two years. The engineering issues are clearly outside their grasp (as the above discussion explains). Therefore, I would suggest they stick to the economics of the matter, where at least one of them is qualified and the other has claims of some sort. In which event, their response needs be but one sentence long — something like: “In response to Mr. Samuel, please click this link to download the 2010 report of the economic feasibility study performed on the AIA. It should make interesting reading.”
Herbert A (Haz) Samuel