CONFIDENTIAL
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association among themselves or with their neighbours in theirpresent dependent status they will not look at. does the State Department think? Do they see any hope for some Eastern Caribbean federal solution? How might we encourage for example Jamaica, Barbados, Trinidad and Guyana to play a more positive part? The "Demas" Fund to provide certain common services in the Eastern Caribbean has so far made little headway. But if there were signs of political will within Caricom to make a success of it, we should be prepared to try again. What do the US Government think? Venezuela has been active in discussing technical cooperation in the region but has not yet actually attempted much. How might their resources be
harnessed in a more positive way?
9. The dependencies are equally reluctant so far to associate with their neighbours although this would make sense - Montserrat with Antigua; Turks and Caicos with the Bahamas; Anguilla with St Maarten; the BVI with the USVI. There are already close trade and family links between each pair. We cannot push for this ourselves. Do the Americans see scope for some form of organic association between the British and the US Virgin Islands?
Economic Aspects (if the occasion seems suitable)
10. With the exception of Bermuda, the Caymans and the BVI we are generally gloomy about the economic prospects for these territories. We are particularly concerned that rapid population growth, combined with severely reduced opportunities for emigration, will produce serious problems of unemployment which may threaten political stability. With this in mind our aid policy is now orientated towards the promotion of economic self reliance distant though the goal of viability may be for most of these territories. This means less for administrative and social expenditure and an enhanced priority for productive investment. Where opportunities for income-producing investments are limited or absent we shall allow the flow of development aid to diminish.
11.
There are various ways in which the United States might help economically. Handsome agreements for the use of defence facilities in Antigua, the Turks and Caicos and Anguilla (if Dog Island goes ahead) would be of major significance to the revenues of these grant-aided territories. Private investment in the tourism sector, and conceivably in light manufacturing, would also help, as would the provision of seasonal employment opport- unities in the United States. (On the reverse side of the coin there is the point that the United States Government could seriously upset the important tax haven activities of Bermuda and the Caymans by enacting legislation designed to halt or reduce the flow of funds seeking refuge in these territories.)
West Indian and Atlantic Department
May 1977
3 CONFIDENTIAL
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