By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas “will be a collapsed state” if Nassau suffers a Dorian-type hit within the next two years, a well-known QC warned yesterday, urging: “This is not the time for half measures.”

Fred Smith QC, the Callenders & Co attorney and partner, told Tribune Business that the potential for another category five storm to hit the Bahamian capital should be a “wake-up call” for the government to “save Freeport by opening the immigration and investment doors again”.

Demanding “big strategic thinking” from the Minnis administration, Mr Smith urged it to relax the government’s grip on the country’s second city and allow it to flourish as originally designed by the Hawksbill Creek Agreement’s founders.

The outspoken QC, suggesting that Dorian had reinforced the importance of reviving a Freeport economy that was already “catatonic” pre-storm, added that The Bahamas can no longer rely on one island to generate three-quarters of its economic activity given that hurricanes and natural disasters linked to climate change could virtually wipe it out overnight.

He also argued that the reluctance of successive FNM and PLP administrations to let go had made the Grand Bahama Port Authority (GBPA) “amateurs” when it came to fulfilling its governance and development responsibilities, and in attracting the new investment vital to Freeport’s growth and prosperity.

Mr Smith said the “red tape” and bureaucratic obstacles imposed from Nassau had also resulted in a “vicious circle” where the GBPA’s two family owners, the Haywards and St Georges, and their Hutchison Whampoa partner were constantly in “financial survival” mode and extracting any profits made via dividends - rather than reinvest in Freeport - due to the city’s inability to grow.

“Dorian should be a wake-up call for the Government,” he told Tribune Business. “It is once again the opportunity to say to the rest of The Bahamas that Freeport remains the only other viable economic area in The Bahamas, even though it was partially destroyed by Dorian. Abaco, which is the third leg, was completely destroyed.

“We have thousands of people displaced from Freeport, hundreds of homes destroyed, thousands damaged, businesses closed and collapsed, with many others struggling to get back on their feet. This is not the time for half measures; it’s time for big strategic thinking.

“By way of strategic planning, if a hurricane of the magnitude of Dorian hit Nassau in the next couple of years The Bahamas will be a collapsed state. By way of strategic planning the Government needs to take this opportunity and say the only way we’re going to resurrect Freeport is to get rid of all this red tape that never existed when Freeport was created in the first place,” Mr Smith continued.

“They need to revert to the initial plan, co-operate with the licensees, open the doors and create so many opportunities for licensees and Bahamians. We should not be afraid of open doors policies, and allowing joint ventures with Bahamians. We should let people in who want to invest, grow and make a future in Freeport.

“I urge the Government to go back to basics with the Hawksbill Creek Agreement, open the doors and let the good times roll again in Freeport. Stop being afraid of the rest of the world. Open the Immigration and investment doors again. This is the only thing that will save Freeport. Otherwise this leg of the economy will be crippled like I was on a mountainside in Italy.”

Mr Smith’s call to revive Freeport’s original model as a tax-free zone, or “free port”, with minimal government controls and interference may alarm those who believe that a sovereign nation must control everything that goes on within its borders.

Yet the outspoken QC remains firm that going back to the future with The Bahamas’ second city is the only way to build a resilient national economy capable of withstanding the extreme threats this nation now faces.

While praising the Carnival cruise port and Royal Caribbean/ITM Group plans to revive the Grand Lucayan, Mr Smith told Tribune Business that these investments were “miniscule” when set alongside Freeport’s already-constructed infrastructure and “are merely scratching the surface” of the city’s economic potential.

“Regrettably, the PLP, the FNM and bureaucrats in both administrations for 50 years have been terrified of our status, and have squabbled and quarrelled with the licensees and the Port Authority, which has resulted in the catatonic state of the Freeport economy,” he said.

“Despite the flaws facing them, they refuse to take the drastic steps necessary to resurrect this phoenix from the ashes of government interference..... Freeport licensees have just been able to survive, instead of there being co-operation with the Port Authority and the Government, which would result in a hugely expanded economy.

“This requires a big wide opening of the Immigration doors, not tentative baby steps like the Commercial Enterprises Bill, and recognising that the genesis of Freeport was an open doors Immigration and investment policy, the building of trust with investors, and letting the Port Authority do its job.”

Mr Smith called for the Government to return to that position while holding the Port Authority accountable for its governance and development responsibilities. He also urged it to relax controls such as exchange control, Investment and Immigration approvals, and to stop trying to replicate Freeport and its ‘free zone’ characteristics in other parts of Grand Bahama and The Bahamas.

The Minnis administration, upon taking office in May 2017, indicated it was placing a high priority on reviving Freeport and Grand Bahama’s economy by announcing initiatives such as the “technology hub” plans for the city.

However, Mr Smith said: “This is the reality. They can talk as much as they want about resurrecting Freeport’s economy, but until they accept this is a unique business environment which has dramatic potential for becoming a Singapore in the Caribbean, this won’t work.

“Tentative baby steps, approving projects here and there, is the same old, same old. People get frustrated, they can’t get anything done, and they throw up their hands and leave.”

Mr Smith also argued that increasing central government involvement in the city’s affairs had “resulted in the Port Authority families and Hutchison taking advantage of the Government, residents, licensees and homeowners of Freeport.

“Because the Government has been so constipated in its approach to investment, the Port Authority has not been able to do anything, and therefore has lapsed into financial survival and extraction mode,” he argued.

“There are hundreds of miles of paved roads, lots of subdivisions, canal systems and water and electrical infrastructure. All of it is collapsing from lack of investment and lack of use to maintain it.

“It’s a vicious circle being created. DevCo, LusCo have been unable to maintain the infrastructure because of a lack of service charges and land sales from people building homes,” Mr Smith continued. “As a result, they have been unable to invest enough money in infrastructure that has been dilapidated and collapsing.

“While we blame the Port Authority for the collapse of infrastructure, the real blame is on the Government for failing to allow the Port Authority to do their jobs. Over the years they’ve become amateurs at doing their job because they’ve not been allowed to do it, so they take in whatever money is made for themselves and Hutchison.

“This is a vicious circle, which the Government has created, which is self-perpetuating. The people suffering are the Bahamians and licensees who reside in Freeport. We are doing a disservice to Freeport.”

Mr Smith suggested incentivising “the rest of The Bahamas to go and develop Freeport”, using as an example the removal of exchange control restrictions on local investors buying shares in international companies doing business in this nation if they moved to or invested in the city.

“Nassau is quite Freeport phobic. The business community and politicians seem quite afraid of Freeport. They don’t understand it’s the future of The Bahamas. If only they get let it grow,” he added.