During the early colonial era, from the arrival of Columbus to the end of the 17th century, the Caribbean economies were based on the extraction of minerals, mainly gold and silver, using indigenous labor. From Columbus’ first voyage, there was an interest in gold, in the gold adornments worn by the local indigenous people, as well as the assertions by the indigenous people that there was a city of gold on the continent, the mythical city of El Dorado, which ensured the continued financing of colonization of the region. The recently discovered and colonized islands and territories were seen as sources of wealth to meet the needs of the depleted coffers of the Spanish Crown. The effect of the discovery of silver in Mexico, and later of gold in Peru, during the early 16th century, was that the Caribbean islands were forgotten, as their only value lay in their strategic geographic position between the American continents and Spain. The extraction of gold was just as complicated as its transport to Spain, and the Caribbean islands became military bases for safeguarding the security of the ships loaded with gold and silver that sailed for Spain, as shown by the huge forts built in that era on the islands of Cuba and Puerto Rico. At the fringes of the military activities related to the transport of gold and silver, pirates and smugglers became regular parts of the business between the highly corrupt class of military officers, governors, and smugglers on all of the islands and of all nationalities, including locals in search of fortune.

Although Spain claimed exclusive rights to the newly discovered territories, its inability to impose its will in the Caribbean through military means led it to focus its efforts on the large islands, such as Cuba, Hispaniola, Jamaica, Puerto Rico and Trinidad. So while Spain maintained control over the Greater Antilles and Trinidad, the other European empires soon conquered the smaller islands, beginning with the colonization of Bermuda by the British in the 17th century. The British later conquered St. Kitts in 1623, Barbados in 1627, Nevis in 1628, Antigua in 1632, Montserrat in 1632, Anguilla in 1650 and Tortola in 1672. The French took the French parts of St. Kitts in 1625, Guadeloupe in 1635, Martinique in 1635, St. Martin in 1648, St. Barts in 1648, St. Croix in 1650, St. Lucia in 1643, Grenada in 1649, Dominica in 1715 and St. Vincent in 1719. The Dutch, meanwhile, colonized the islands of Saba, St. Martin, St. Eustatius, Curacao, Bonaire, Aruba, Tobago, St. Croix, Tortola, Anegada, Virgin Gorda and Anguilla. The Danish, finally, took the islands of St. Thomas, St. Croix and St. John in the 17th century. Following the model implemented by the Portuguese in southern Brazil, all of these islands were dedicated to agricultural products: tobacco very early in the era, sugar beginning in the early 16th century, and coffee from the coffee boom of 1860 and afterwards. The Caribbean economies, therefore, were closely tied to the growing demands of the European markets in this era for what anthropologist Marshall Sahlins has called the “soft drugs,” coffee, tobacco, spices, tea and others. By the middle of the 18th century, the major product imported into Britain was sugar. Because of the absence of indigenous labor, sugar production on these Caribbean islands was modeled after the slave plantations established by the Portuguese in northern Brazil and was fed by the market of African slaves. It is estimated that around 20 million African slaves were transported to the Caribbean to work on the sugar plantations.

The sugar industry under the slave plantation model began to decline after the Haitian Revolution in 1791, when the threat of slave rebellions began to make the viability of the system less attractive in the eyes of the plantation owners. For the first time, the threat of a rebellion like the one in Haiti seemed possible on any island, and the explicit plan of the Haitian revolutionaries was to support and promote rebellions on other islands. In any event, with the abolition of the slave trade, the desirability of the system was again affected. The prices of slaves rose dramatically and probably made the system as a whole no longer viable. The system collapsed with the abolition of slavery during the 19th century, but economic interests, in part, promoted the conditions that led the European empires to abolish slavery. In fact, there is a debate over the true reasons for the abolition of slavery. The official version is that the moral advance of the European societies led to the abolition of slavery under the liberal principles of the equality of all human beings or the rise of Jacobin ideas in the French Revolution. But according to Caribbean economist Eric Eustace Williams, the true reason was for economic reasons. His thesis is that slavery was abolished when hiring free labor became less onerous than continuing the system of slavery.

In any event, with the abolition of slavery during the 19th century, the Caribbean economies experienced a shortage of labor, in part because the former slaves refused to work on the plantations. The lack of labor was offset by workers from other countries, mainly China, Indonesia and India, who came under arrangements known as tied labor or indenture contracts. It was at this historical juncture that the Caribbean became a multicultural region. In fact, it has the highest concentration of different racial and ethnic groups on the planet. In any event, the new capitalist production system, based on free labor, also brought problems for an industry such as the sugar industry, which required huge numbers of seasonal workers during the cane harvest but left most of those workers without jobs for most of the year. This situation, along with the mass of former slaves who were unemployed or working outside the formal labor market, would create societies with high levels of poverty and social inequality. The problems with the cane workers were strongly felt in the early 20th century. Competition from sugar plantations in the southern United States, as well as the discovery of beet sugar in Europe, threw the sugar cane market into crisis, with catastrophic consequences for the Caribbean region economies and particularly for the working class. In fact, in the early decades of the 20th century, the Caribbean economies recorded the lowest worker pay in history and thousands of cane cutters and agricultural workers were displaced and unemployed. With no alternative source of employment that could absorb the unskilled and impoverished workers, protests by workers arose throughout the Caribbean and Central America. Charismatic labor leaders began to emerge, often acting in the name of nationalist or anti-American causes or on behalf of the struggles of blacks. Leaders such as Augusto César Sandino in Nicaragua, Pedro Albizu Campos in Puerto Rico and Tubal Uriah “Buzz” Butler in Trinidad and Tobago arose, to mention just the best known.

The United States, in an effort to control and protect its interests in the region — including the Panama Canal — and prevent foreign interests or communism, as well as defending the financial interests of U.S. corporations in the Caribbean (in particular the United Fruit Company, which had important sugar, banana and coffee operations throughout the region), decided to use military force against the labor movements. The result was interventions by the Marines in Caribbean Basin territories under the foreign policy of President Theodore Roosevelt known as “big stick diplomacy.” These military actions were collectively known as the Banana Wars. In 1898, the Spanish-American War began and the United States took possession of Cuba and Puerto Rico. Between 1898 and 1934, the U.S. military occupied a dozen countries in the Caribbean region: Panama (1903), Honduras (1912), Nicaragua(from 1912 to 1933), Mexico (1914, and later 1916 to 1917), Haiti (1915 to 1934) and the Dominican Republic (from 1916 to 1924).

The stage was set for a communist revolution, but it would have to wait until after the war to arrive: the Cuban Revolution of 1959. The United States, in response to the Cuban Revolution, did not hesitate in implementing modernization projects aimed at adapting the Caribbean economies to new labor markets, such as Operation Bootstrap on the island of Puerto Rico. It was an effort to bring about a transition from an agriculture-based economy to an economy based on manufacturing, with the goal of providing jobs in the textile, tuna, pharmaceutical and technology industries to the unemployed workers, who were inclined toward rebellion. During the 1970s and 1980s, however, new labor problems arose and Cuba’s growing influence in the region led to communist governments in other parts of the Caribbean. Pro-Cuban leaders appeared in the Caribbean and Central American regions during the 1970s, such as Michael Manley and Edward Seaga in Jamaica and Maurice Bishop in Grenada, but even more importantly the successful Sandinista Revolution in Nicaragua in 1979 and the emergence of the Marxist guerrilla group, the Farabundo Martí National Liberation Front in neighboring El Salvador during the early 1980s. To try to counteract the communist ideology in the Caribbean region, the United States implemented the Caribbean Basin Initiative (CBI) in 1983. It created a free trade zone that has included 24 Caribbean basin countries from 1983 to today. The CBI created a free trade zone with customs benefits that are equal to those achieved by Mexico and Canada under the North American Free Trade Agreement (NAFTA) and has had a significant impact on the economic development of the Caribbean region.
In any event, another major impact of the Cuban Revolution, in this case an unintended impact, was the displacement of tourists from the United States to other islands in the Caribbean. The tourism industry is one of the few industries that have shown sustained growth since the 1970s and has come to play a central role in many Caribbean island economies. More than 20 million people from hundreds of corners of the world pass through the Caribbean each year, and this creates an indirect source of jobs in industries such as construction and the service industry (restaurants, tour operators). Income from tourism for the entire region surpasses $18 billion annually and represents more than 50% of the income for many island states. Tourism income also represents the largest source of revenue in the region as a whole, beyond that generated by petroleum, offshore banking or any other source of income. In the U.S. Virgin Islands, for example, tourism represents more than 70% of the gross national product (GNP) and provides more than 70% of jobs. In general, tourism accounts for approximately 30% of the GNP of the Caribbean region as a whole. In countries such as Cuba, by the middle of the 1990s the revenues from the tourism industry surpassed those from sugar. The same pattern can be seen for the region as a whole.
Author: Luis Galanes
Published: March 20, 2012.

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