The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas' proximity to the US and safe reputation may mitigate any tourism fall-out as a result of heightened Middle East tensions, a Cabinet minister said yesterday.

Dionisio D'Aguilar, minister of tourism and aviation, told Tribune Business that past experience had shown American travellers tended to "stay close to home" when they or their country were threatened by geopolitical risks.

Speaking as to the likely consequences of the US decision to assassinate a leading Iranian military commander blamed for attacks that have killed hundreds of American troops, Mr D'Aguilar said The Bahamas and wider Caribbean's reputation as a destination far removed from the threat of Middle Eastern terrorism would stand it in good stead to withstand any future external shocks.

"Obviously there is a lot of concern about the state of affairs in the world as it relates to the threats being made by Iran against the US," Mr D'Aguilar told Tribune Business. "That will have an effect on oil prices and on people's decisions to travel.

"That has yet to be seen, but generally what happens - since 82 percent of our visitors come from the US - the American traveller is not minded to go far from home. And terrorism, when it happens, typically does not happen in our hemisphere.

"The Caribbean, and just south of the Caribbean, is perceived as being a safer place to travel to that's closer to home and has not attracted the attention of terrorists. The Bahamas, and Caribbean in general, become attractive because they're perceived to be safer. But we have to be vigilant, and everybody will have to up their game, which I think they are."

Iran has repeatedly threatened military retaliation against the US for last Thursday's assassination of Qassem Suleimani, the head of its Revolutionary Guard Corps' Quds force, and architect of much of its Middle East policy.

Among the targets vulnerable to such retaliation are the aviation industry, while there are growing fears that Iran might strike at the Middle East's oil industry. It has been accused of targeting oil tankers and Saudi Arabia's refining industry, and has the ability to close the Strait of Hormuz - the channel through which 20 percent of the world's oil is transported - if it chose, potentially sending oil prices skyrocketing.

Oil prices, as measured by the Brent crude index, jumped by 3.6 percent on Friday following the assassination to $68.60 per barrel and are projected to increase further this week amid the tit-for-tat threats going back and forth between the US and Iran.

The timing, never good, is especially bad for a Bahamian economy still struggling to recover from Hurricane Dorian. It could also dash Bahamas Power & Light's (BPL) pledge to reduce power costs for Bahamian consumers through its new, more efficient Wartsila engines, and again exposes this nation's energy security vulnerability and total reliance on imported fossil fuels in the absence of any hedging strategies.

Oil price increases will impact every corner of the Bahamian economy, raising energy and transportation costs; increasing airline ticket prices for tourists as a result of higher fuel prices; and spiking the cost of multiple products including asphalt used for road surfaces.

K Peter Turnquest, deputy prime minister, told Tribune Business: "For us locally it translates into higher transportation costs as well as higher energy costs. Any increase in that has a negative effect that can impact the economy.