By Daniel P. Erikson*

Residents and volunteers begin clearing debris from Hurricane Irma on St. Maarten. / NLRC / Flickr / Creative Commons

This fall’s historically fierce hurricane season reminds us once again that the Caribbean remains extraordinarily vulnerable to natural disasters – especially in the lucrative tourist sectors – and needs to move beyond tourism.  The services sector in the Caribbean may serve as an important source of economic growth, but only if the region begins to take advantage of opportunities in banking and financial services; call centers and information and communication technology; off-shore education and health services; and transportation.

• While the impact of Harvey, Irma, Jose, Katia, and Maria in U.S. states like Texas and Florida has received wide attention, the small island nations of the Caribbean have also been left to contend with extensive damage to infrastructure and loss of life that has resulted in thousands of newly homeless and dozens of deaths. Irma struck the tiny nation of Antigua and Barbuda as a peak-strength Category 5 storm, and Prime Minister Gaston Browne estimated that 95 percent of the properties on the smaller island of Barbuda were destroyed.  Irma then raked across the U.K. territories of Anguilla, the British Virgin Islands, and the Turks and Caicos, the French territories of St. Bart’s, Guadeloupe and St. Martin (including the Dutch half of St. Maarten).  Cuba also suffered as the storm swept across its northern coast and ravaged the third-largest city, Camaguey.  Then, just as Hurricanes Jose and Katia rattled the islands only to retreat as minor threats, Hurricane Maria strengthened into a Category 4 storm that ravaged Dominica and the U.S. territory of Puerto Rico with winds exceeding 150 mph, devastating local infrastructure and knocking out the power grid, possibly for months to come.

Clearly, the focus of the near-term will be relief and recovery efforts, as these small islands seek to cope with the enormous damage.  But rebuilding a stronger and more diversified service sector may offer the best path towards a sustainable and much-deserved recovery for the people of the region.  Several years ago, the Centre for International Governance and Innovation in Waterloo, Canada, asked me to assess what steps the Caribbean islands could take to diversify their economies away from an over-reliance on tourism to create a more sustainable future.  The lessons of that study, Beyond Tourism: The Future of the Service Industry in the Caribbean, remain relevant today.  The bottom line:  Expanding the competitiveness of the Caribbean services sector beyond tourism is a way to draw on regional strengths and broaden the basis for economic growth.

The hurricanes have dealt a tragic and costly blow to the Caribbean, but the reconstruction efforts may also provide an opportunity to build back stronger and more resilient economies.  While the damage is still being assessed, it is already clear that the lives of tens of thousands of people who live on these islands will never be the same and that property damage will extend into the billions.  The recent damage to Puerto Rico from Hurricane Maria will likely jolt those figures substantially higher, while some of the smaller, remote islands hurt by earlier storms may be uninhabitable for weeks to come.  French President Emmanuel Macron and the King of the Netherlands traveled to the region to show solidarity with their afflicted citizens, while the United States deployed teams to assist in disaster relief and deployed over $1 million in aid to the smaller affected islands – and is beginning to launch a major relief effort in Puerto Rico as well.  Once the challenges of treating the injured and assisting with basic human needs are met, much of the early reconstruction effort is likely to focus on rebuilding tourist infrastructure.  This will be necessary, but not sufficient, to create a full recovery.  Caribbean leaders have increasingly recognized that developing globally competitive services industries offers one way to retain high-skilled workers and mitigate the risk of external shocks to the tourist sector. During the Obama administration, Vice President Biden made a major effort to deepen U.S. investments in the Caribbean’s energy sector, and new sources of financing through the Inter-American Development Bank, the Overseas Private Investment Corporation, and private U.S. companies could similarly lead to a major push to modernize services-related infrastructure throughout the islands.  Future storms cannot be prevented, but a more diversified services sector will help the islands to navigate the challenge of reconstruction more effectively.

September 28, 2017

* Daniel P. Erikson is managing director at Blue Star Strategies in Washington, DC, and previously served as a White House and State Department advisor on Latin America during the Obama Administration.