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Thursday, October 21, 2021
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Blue bonds or blue wash?

On Friday last week, Belize announced a smart move.
The international Òloan sharksÓ holding the Superbond which made up around a quarter of the country’s total debt will sell back their holdings at a heavily discounted 55 cents to the dollar.

The deal was arranged by Nature Conservancy, a 70-year-old non-profit based in Washington with strong ties to big oil, finance, chemicals and mining companies. The financial backing is from a Swiss bank, Credit Suisse.

The real-world sharks and other marine wildlife in the blue seas offshore will also benefit.

The new Blue Bonds which replace the Superbond will carry a lower interest rate. And there’s an extra seven years for repayment. It sounds like magic.

Belize was badly in need of magic. Earlier this year, the IMF reported their domestic and foreign debt at 127 per cent of GDP—that’s one quarter more than their total annual economic output. For comparison, T&T’s growing debt was just under 60 per cent of GDP at the end of last year.

Belizean tourism crashed last year because of Covid. Their tiny oil resources are close to depletion. A newly-elected government this year cut public servants’ and teachers salaries by ten per cent. And their gang-related murder rate closely rivals T&T’s.

This is the fourth time Belize has restructured its foreign debt. Bondholders and other creditors took a haircut of 24 per cent on the total value of their debt in 2008, another 29 per cent in 2013, and 20 per cent in 2017. In those three restructurings, they lost more than half their original money. And now, they’ve accepted 55 cents to the dollar on what was left of their cash.

In the early 2000s, much of the original debt was snapped up by the former RBTT and other T&T institutions. The bonds always looked iffy, but investors were reassured that they carried a government guarantee. Three haircuts and a Blue Bond later, the guarantee was not worth a lot. The original investors, I would think, have long since cut their losses, selling out for what they could get.

It’s easy to see why Belize is celebrating. But why the ÒBlueÓ? And why is Nature Conservancy mixed up with the deal?

Belize has agreed to pay US$23.4 million into a marine conservation endowment account, to be administered by a Nature Conservancy affiliate, with Òenhanced protections for its coastline, reef and ocean territory as well as the funding of an endowment to support future marine conservation projectsÓ.

They will then pay in an additional US$4 million a year. The aim is to accumulate a US$100-million marine conservation trust fund by 2040.

Belize has the world’s second-longest barrier reef, after Australia’s. Their lifeblood is a tourist industry largely dependent on the marine environment.

Belize already has a good record in marine conservation. Shocked by the 2010 Deepwater Horizon disaster in the Gulf of Mexico, they have permanently banned oil exploration in their offshore Exclusive Economic Zone since 2017.

That meant turning away potential investors who wanted to investigate promising prospects. Guyana, meanwhile, has discovered nine billion barrels or more since 2015, and started pumping crude two years ago.

In 2010, Belize banned trawler fishing offshore. Last year, they banned the gillnets, up to a mile long, which scooped up and killed turtles, dolphins and immature fish alongside the commercial cash.

But what isn’t clear is how the new marine conservation account will operate, or which projects will benefit. Trade unions on Wednesday welcomed the deal, but asked for the agreement with Nature Conservancy to be made public.

The influential Belize Network of NGOs also likes the deal—who wouldn’t? But expresses Ògrave concernÓ over cruise ship tourism, which is not so blue-friendly.

Belize has three big cruise ship developments in the pipeline. One is in construction, one has environmental clearance, and one has its environmental applications under consideration.

Two cruise ports are already in operation—one in Belize City, and the other on Norwegian Cruise Line’s Harvest Caye in the south.

With close to 9,000 passengers and crew, cruise ships sail gracefully in and sail gracefully out again, spending very little money ashore. I don’t have the figures for Belize, but in the Bahamas, the average cruise passenger spends US$79. The average stopover tourist spends US$2,065.

Cruise ships are big polluters, big on carbon dioxide, and major contributors to the climate crisis. Most burn heavy fuel oil.

Figures from the two largest cruise lines—Carnival and Royal Caribbean—reported close to 15 million tonnes equivalent of carbon dioxide emissions in 2017. Cruise ship carbon emissions are not covered by the Paris climate agreement.

The entire onshore economy of Belize produces just 1.1 million tonnes of carbon emissions.
An average cruise emits as much carbon per passenger as the average Belizean produces in three months.

Belize hosted more than a million cruise passengers in 2019.

Worldwide, cruise ships carried 20.0 million passengers in 2019—up from 1.4 million in 1980. Encouraging more cruise ports is not the best way to build a blue—or green—economy.

—Mark Wilson is an international journalist based in Port of Spain
Opinion piece published at: https://trinidadexpress.com/opinion/columnists/blue-bonds-or-blue-wash/article_db03a8a8-2247-11ec-b90c-07e693033a9e.html

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