TNAG-1461-FCO40-1987-Future-of-the-Dependent-Territories-Hong-Kong--Gibraltar-and-1986 — Page 53

CONFIDENTIAL

Development Aid

-

£3.0 m

T.C.

£1.0 m

Economic

A small, mountainous, volcanic island, some 70% of St Helena's land is barren and the remainder consists largely of pasture, forest, and small areas of arable land. The rainfall is unreliable and droughts occur. The economy relies, to a very large degree, on imports, primarily (about 90%) from the United Kingdom and South Africa. The territory exports dried fish and handicrafts on a comparatively small scale and also derives revenue from the sale of postage stamps. About 75% of the workforce is employed by Government, many of them on "makework" schemes whereby unemployed males are guaranteed work for a reduced working week clearing flax and repairing roads for a low wage. This system is currently under strain due to the growth in the workforce both from natural increase and from workers returning from Ascension Island where they had been employed as contract labour. St Helena is therefore heavily dependent on UK budgetary, development and other aid which is expected to exceed £9.5 million in 1985/86. Moreover a replacement for the RMS St Helena, the territory's sole passenger and supply ship (now in her 23rd year), may cost £15-20 million depending on the size of the vessel. This amount cannot be accommodated in the existing aid provisions and new money will have to be found. The possibility of air links with the territory has been examined but even an emergency airstrip would be extremely costly.

CONFIDENTIAL