VZCZCXYZ0023
OO RUEHWEB

DE RUEHBH #0897/01 3532157
ZNR UUUUU ZZH
O 182157Z DEC 08
FM AMEMBASSY NASSAU
TO SECSTATE WASHDC IMMEDIATE 5990

UNCLAS NASSAU 000897 
 
SIPDIS 
 
PASS WHA/CAR FOR ACADIEUX 
 
E.O. 12958: N/A 
TAGS: PGOV EFIN EAIR ECON BF
SUBJECT: TRIP REPORT FOR FREEPORT, THE BAHAMAS DECEMBER 10-11, 2008 
 
¶1. (U) SUMMARY: Pol/Econ/PD Chief traveled to Freeport, The Bahamas 
December 10-11 to attend the Chemical Weapons Convention (CWC) 
Stakeholders Consultation and meet with local Island Administrators, 
representatives of the Grand Bahama Chamber of Commerce, the CEO of 
Hutchinson Container Port, and U.S. Embassy personnel from DEA and 
CBP.  Freeport has been severely affected by recent economic 
downturn -- tourist arrivals are down from the same period last 
year, hotels are posting a 3-30 percent occupancy rate, several 
companies have closed their operations in Freeport, and many 
development projects are sitting idle.  USG and local government 
officials predict that the resultant loss of jobs could lead to 
increased crime, particularly in the illegal smuggling trade (drugs 
and humans).  Summary of the CWC Stakeholders meeting is reported in 
Septel.  End Summary. 
 
------------------------------------ 
Island Administrators Claim Freeport 
more Favorable to Foreign Investment 
------------------------------------ 
 
¶2. (U) During meetings with PolChief, two of four of Grand Bahama 
Island Administrators noted the recent downturn in the U.S. economy 
had caused a negative impact on tourist arrivals and hotels room 
nights in Freeport, but noted that the numbers had been declining 
for the past couple of years.  Alexander Williams, Administrator of 
Freeport, and Bradley Armbrister, Administrator of East Grand 
Bahama, said that some hotels had closed off portions of their 
properties and in one case closed the entire hotel (Sheraton at 
Lucayan) and transferred guests to an adjoining property (Westin at 
Lucayan) at the same rate, in an effort to reduce staff and 
operating expenses.  According to them, hotel occupancy rates 
island-wide were averaging between 3 to 30 percent.  These numbers 
are consistent with U.S. Customs and Border Protection (CBP) 
Pre-clearance figures which confirm that departures to the U.S. have 
been decreasing steadily for the last few years.  The resultant 
increase in unemployment worries local officials due to the 
expectant rise in crime, including illegal smuggling. 
 
¶3. (U) Several foreign owned companies had ceased operations in 
Freeport, most notably Pepsi Cola which closed its bottling plant in 
October 2008.  The Island Administrators noted that Pepsi's closing 
would have little effect on Freeport since Pepsi employed less than 
15 employees.  These closures though, were symptomatic of the loss 
of foreign investment that was hampering development projects, 
including proposed gambling resorts and residential properties.  The 
Administrators claimed that the local Grand Bahama government is 
"more efficient and favorable to foreign investment" than Nassau. 
As such, zoning and environmental impact approvals for projects are 
much quicker.  Further, they stated that Grand Bahama was the most 
"well-kept" of the Bahamian islands. 
 
¶4.  (U) Grand Bahama received another blow to its tourism industry 
on December 17 when Imperial Majesty announced that they would 
discontinue cruise ship stops into Freeport. 
 
--------------------------------- 
Keep Pre-clearance Open - Support 
Staffing a Consular Agent 
--------------------------------- 
 
¶4. (U) The Island Administrators noted the importance of the CBP 
Pre-clearance facility and requested that it be expanded to include 
general aviation (GA).  They believed that Freeport could easily 
handle the increased volume of GA traffic but told PolChief that 
Nassau was "dragging its feet" because the increased GA volume at 
Lynden Pindling International Airport would compete with commercial 
flights.  The administrators requested the U.S. Embassy provide a 
consular agent on a rotating basis to Freeport to handle the high 
volume of Bahamian citizens needing visas to travel to the U.S. 
Repeating a previous request, they noted that it was expensive for a 
family to fly to Nassau to get their visas.  PolChief explained that 
given the requirement to collect biometrics it would be difficult to 
conduct interviews offsite.  The Chamber of Commerce also made 
similar requests for maintaining the pre-clearance facility and 
periodically sending a consular agent to Freeport. 
 
¶5. (U) U.S. CBP Port Director noted that passenger averages to the 
U.S. were currently less than 300 daily. CBP passenger statistics 
confirmed that departures to the U.S. fell steadily for the last few 
years: weekly totals for the same period (December 4-10) decreased 
from 3,300 passengers in 2006, to 2,800 in 2007, to 2,400 in 2008 
 
¶6. (U) The administrators said that illegal immigrants, especially 
Haitians, continue to be a problem for Grand Bahama.  Due to the 
already high number (estimates as high as 3,000 - 5,000 Haitians out 
of a total population of 47,000) of Haitians on the island it is 
easy for new illegal arrivals to assimilate into the population so 
exact figures are unknown.  They said that organized crime to 
include violent crime is common among the Haitian population. 
Comment:  This is a common accusation that is not supported by the 
incarceration statistics, though the anecdotal evidence cannot be 
denied.  End Comment. 
------------------------------- 
Chamber Of Commerce - "Freeport 
Needs Better Branding" 
------------------------------- 
 
¶7. (U) Chamber of Commerce Executive Director, Mercynth Ferguson and 
Vice President, Greg Langstaff echoed the administrators' assessment 
of the economic situation in Grand Bahama.  They noted that 
previously it had been easy to entice U.S. tourists to Freeport due 
to the inexpensive cost of airfare and hotel accommodations. 
Increased taxes and tariffs on the flights caused airfare to 
Freeport to be higher than longer distance destinations in Latin 
America and Mexico.  They further noted that most tourists now 
associate The Bahamas with Paradise Island and book Nassau not 
knowing what Freeport has to offer.  Langstaff explained that 
Freeport is less congested, cleaner and has many or more of the same 
attractions as Nassau but at a cheaper price.  He said that Freeport 
needs to do a better job of branding itself.  Both Chamber of 
Commerce and Island Administrators voiced their satisfaction with 
the new Ministry of Tourism plan for increasing tourism. 
 
¶8. (U) The Chamber said that there were several development projects 
in the works including a few new casinos; however most of these 
projects were on hold while they sorted out financing.  Ferguson 
said that future projects would be planned to place several casinos 
close together on the beach to give tourists options.  She noted 
that one of the main reasons that the Royal Oasis never reopened 
after being damaged by Hurricanes Francis and Jeanne, was that the 
property was located in an unfavorable location -- isolated away 
from the beach and other resorts. 
 
¶9. (U) High electricity costs prompted several companies to explore 
alternative energy sources, including solar and wind.  Langstaff 
said that due to the government's monopoly of the power plant, 
legislation has been unfavorable to these ventures.  He said that 
the zoning commission did not permit solar panels on rooftops due to 
"aesthetic considerations."  In another example, he cited that 
Siemens had proposed a plan whereby homeowners would purchase solar 
panels, Siemens would pay to install the panels and provide the 
switches necessary to connect the excess power to the city grid in 
return for the monthly power company rebate checks sent to the 
homeowners.  The homeowners would receive free electricity for the 
life of the panels and the power company would receive low cost 
(lower per kilowatt than its diesel generators) power. According to 
Langstaff, the utility company refused to allow the panels to be 
connected to the grid.  Langstaff said there had recently been a 
privately funded proposal for a wind farm which died because the 
investor could not gain permission to connect to the grid as well. 
 
----------------------------------- 
Freeport Container Port Seeks Pre- 
Clearance for U.S.-bound Containers 
----------------------------------- 
 
¶10. (U) PolChief accompanied by Freeport's DEA supervisor met with 
Hutchinson Container CEO Christopher Gray at the Freeport Container 
Facility.  DEA thanked Hutchinson for their support and assistance 
in preventing and detecting illegal smuggling through the port 
facility.  Representatives from Hutchinson had participated in the 
CWC Stakeholders meeting and were encouraged by the participation 
from Bahamian authorities.  Gray noted that he had previously been 
concerned about security and incident response at the port because 
it was hard to get the Bahamian authorities to believe that there 
was a threat.  Gray was most concerned about the response to a 
radiological event detected by Megaports and would welcome a 
tabletop response exercise between all stakeholders including the 
USG. 
 
¶11. (U) Gray requested that the USG re-explore the possibility of 
establishing a CBP pre-clearance facility for containers at the 
port.  A pre-clearance facility would permit US-bound containers to 
be pre-cleared in Freeport expediting their processing at U.S. 
ports.  Gray said he had previously passed the request to the 
Embassy and was informed at that time that CBP had no plans to 
pursue a pre-clearance facility at the port Bahamas. 
 
---------------------------------- 
DEA - Freeport the Hub for Illegal 
Smuggling 
---------------------------------- 
 
¶12. (U) Freeport DEA Chief briefed PolChief on trends noting the 
recent upturn in seizures, citing better enforcement techniques and 
increased trafficking volume.  The container port facility, number 
of unsupervised docks and landings, and proximity to the U.S. make 
Freeport an attractive staging and transit point for illegal drugs 
and immigrants.  Cooperation with local law enforcement personnel 
has increased with the appointment of a new Royal Bahamas Police 
Force Drug Enforcement Unit (DEU) Chief.  Several DEA staffers 
expressed the need for high surveillance assets along traditional 
shipping routes. 
 
SIEGEL