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Anti-Terrorism Costs Bring Caribbean to Its Knees

1250 Connecticut Ave. NW, Suite 1C, Washington, D.C. 20036 Phone: 202-223-4975 Fax: 202-223-6035
Email: coha@coha.org Website: www.coha.org

Council On Hemispheric Affairs
Monitoring Political, Economic and Diplomatic Issues Affecting the Western Hemisphere
Memorandum to the Press 04.50

Anti-Terrorism Costs Could Bring Caribbean to Its Knees
Newly Implemented Port and Ship Security Standards to Cost the Region Millions

• The International Ship and Port Facility Security (ISPS) code deadline expired on July 1, severely dimming trade prospects throughout the region.
• ISPS requires all ships and ports to comply with a series of strict security measures.
• Vessels in non-compliance are refused entry into U.S. territorial waters; countries that fail to comply are now subject to trade embargos.
• Caribbean islands have had great difficulty adhering to the new regulations due to their small size, limited economies and chronic shortage of funds. For some Caribbean nations, the cost of compliance totals over 100 million dollars annually.

In October 2000, terrorists attacked USS Cole, a navy destroyer docked in Yemen’s territorial waters. The bombing left seventeen sailors dead, revealing both the limited ability of the U.S. to protect its own naval vessels even in a friendly port, and the ominous capability of terrorist organizations to successfully attack units of the world’s most powerful navy. While sensitivity to terrorist activity has increased dramatically since the Cole incident, (largely as a result of September 11), the shipping industry—particularly the Caribbean segment of it—remains woefully unprepared for similar attacks in the future. In contrast to airport security, the Bush administration, aside from some empty rhetoric and a few showcase programs, has not made protecting America’s seaports a priority. Thus far, a modest 500 million dollars has been allocated to fund U.S. maritime anti-terrorism measures, while 11.7 billion dollars have been allocated to secure national and international airports.

While funding to prevent maritime terrorism has been wholly inadequate, security requirements have increased for both U.S. and foreign ports and vessels. The new rules emerged from the UN International Ship and Port Facility Security (ISPS) resolution requiring all ships and ports to adopt standard security measures. Among other regulations, vessels must maintain a security expert on board, file a written security analysis before embarking, include a detailed inventory of goods shipped and radio the port of destination 96 hours prior to arrival. In addition, all ships must display an identification code visible from the air. Port security measures under ISPS are even stricter. The establishment of buffer zones denies access to unauthorized vessels, underwater cameras and sonic sensors protect ports from submarine attacks and customs agents monitor the loading and unloading of goods to prevent the smuggling of illegal weapons and drugs.

Non-Compliance Brings Fateful Consequences

In 2002, the U.S. Congress passed the Maritime Transportation Security Act (MTSA), increasing penalties on vessels and ports that fail to comply with ISPS standards. The measure mandates that the Coast Guard turn away or detain ships that are non-compliant with ISPS. In addition, the MTSA blacklists ports that are not compliant. If a port fails to comply, the act would deliver a crippling blow to islands that depend on revenue generated by the steady influx of tourists and cruise ship passengers. Despite the potential economic strain, Caribbean Central American Action (C-CAA), an organization that has helped ports throughout the Caribbean comply with ISPS, considers the act “a tough love approach” that encourages Caribbean ports to reform.

For Caribbean shippers, failure to meet ISPS security measures carries dire consequences. Since the majority of Caribbean exports are agricultural and often perishable (coffee, sugar and bananas), any delays in shipping would be particularly devastating. If a port fails to meet the code’s guidelines, the consequences are even greater due to the likelihood of severe U.S. sanctions. With restricted sea trade, many islands that depend on imported fuel and food may suffer from an extreme shortage of these essential commodities. According to C-CAA, “non-compliance is not an option” for Caribbean ports. Fortunately, countries have rapidly recognized this potential crisis, and 89.5 percent of over 9,000 port security plans have been approved by the International Maritime Association. Nonetheless, according to C-CAA, complications remain since “compliance requires maintaining [security standards] forever (just like dieting to keep a certain bodyweight),” which may be extremely difficult for poor Caribbean nations to achieve.

The High Cost of Security

While maritime terrorism threats are real, so are the costs of the new security measures. Neither Washington nor the Organization of Economic Cooperation and Development (a group of developed nations) has spearheaded an initiative to help developing countries offset ISPS’s implementation costs. After already spending hundreds of millions of dollars on implementing ISPS measures, Caribbean countries are now solely responsible for continuing to finance the imposed regulations. Costs for particularly active trading countries like the Bahamas are estimated to exceed 100 million dollars. If a country elects to meet the ISPS requirements, funding for essential social programs will be severely decreased. Nonetheless, most countries have concluded that the consequences will be even greater if they fail to comply. As Professor Griffith, a highly regarded Guyanese researcher at the Florida International University, has noted, “The ISPS code is of such that you have to ask yourself, ‘can I afford to meet the requirements, to comply?’ The answer of course is that you can’t afford not to comply.” Jennifer Gonzalez of the Trinidad and Tobago Shipping Association agrees: “There will be increasing demands on the ports for the maintenance of minimum standards, but Trinidad must move beyond minimum standards if it aims to maintain its status as one of the Caribbean’s most important hubs.” Ms. Gonzalez believes that stakeholders in Trinidad shipping will support the security measures because in the long run, “it’s in their best interest.”

Besides being prohibitively costly, ISPS illustrates the continued existence of a cold war mentality within the White House. For example, the implementation of top-tier underwater sonar and cameras may have been highly effective in countering possible Soviet submarine attacks, but these measures do not cost-effectively prevent the spread of illegal drugs and weapons. This advanced technology also fails to curb rampant corruption among Caribbean officials, what C-CAA calls “the root of seaport security vulnerabilities.” By blacklisting ports that fail to meet ISPS regulations and forcing islands with weak economies to decrease funding for social programs, the U.S.-promoted security code may have negative, destabilizing repercussions on the Caribbean, America’s so-called “third border.” These new measures could further impoverish the islands and motivate the newly unemployed to join the wave of illegal immigrants arriving in the U.S. This increased immigration would provide the perfect cover for would-be terrorists, thus bringing a potential crisis ever closer.

Despite serious flaws in the ISPS code and the potentially backbreaking costs involved, Washington has unflinchingly turned away a growing number of Caribbean ships. Although initial results indicate that ISPS has been a “model international achievement” due to the higher-than-expected compliance rates, the code may ultimately lead to a security breakdown because poor countries are not compensated with financial assistance to help weather the difficult transition. Furthermore, the ISPS code represents an outdated concept of security that inadequately addresses current terrorist threats. Funds allocated for low-risk dangers might instead be devoted toward easing compliance costs for struggling Caribbean nations.

This analysis was prepared by Edward Kenney and Lauren Meyer, COHA Research Associates

August 12, 2004

The Council on Hemispheric Affairs, founded in 1975, is an independent, non-profit, non-partisan, tax-exempt research and information organization. It has been described on the Senate floor as being “one of the nation’s most respected bodies of scholars and policy makers.” For more information, please see our web page at www.coha.org; or contact our Washington offices by phone (202) 216-9261, fax (202) 223-6035, or email coha@coha.org.

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