Cruise ship contracts spout controversy

The Island Newspaper, Ambergris Caye, Belize            Vol. 14, No. 34            October 7, 2004

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Tourism represents the biggest industry in the world with cruise ship tourism generating more and more money every year. Although many Belizeans support this type of industry, last week’s Cruise Ship Forum hosted by the Belize Hotel Association seemed to have opened a proverbial "can of worms" in opposition of it. Many concerns were raised at this gathering, but it was Channel 7 News that broke the story this past Friday night about a closely guarded Government of Belize (GOB) secret – the Carnival Cruise Line contract.

   Only portions of a 30-page agreement were obtained at the time regarding this BZ$100 million project (including plans for a casino and hotel), which gives the Carnival group a number of unprecedented concessions. A reportedly "sweet deal," the Carnaval project was created in partnership with Belize Ports Limited, forming a new company called Belize Cruise Terminal Limited (BCTL).

    According to Friday’s newscast, the terms of agreement first state that "the...agreement will bind government agencies including and without limitation, the Belize Tourism Board (BTB) to adhere to and fully comply with their...obligations."

   The next part of the contract states, "neither GOB nor the BTB will "impose any additional fee, assessments, impositions, charges or levies of any kind or nature on the Belize Cruise Terminal, Carnival or Belize Ports Limited." Although a Belize Cruise Tourism Policy had already been drafted with a policy establishing a carrying capacity that regulates the number of cruise ship passengers, the contract states, "any law policy or regulation including the cruise ship policy, which limits in any manner the number of cruise passengers...shall not apply to passengers who arrive on Carnival lines."

   Another alarming clause issued states that, unlike other investors, "the government of Belize will not require (Carnival) to use any third parties including Belizean entities, nationals or government agencies in connection with...docking...(or) any aspect of the project and/or any business operations relating to the project."

   More than just conflicting arguments, bitter opponents of the project are reportedly set to launch a formal legal challenge.

   The Belize Hotel Association (BHA), Belize Tourism Industry Association (BTIA), Belize Cruise Ship Industry Association (BCSIA), Belize Eco Tourism Association (BETA), and Belize National Tour Operators Association (BNTOA), all expressed their concerns and positions at the recent Cruise Ship Forum. The overriding fear, according to Tourism Minister Mark Espat, is that "cruise passengers by the hundreds and thousands will overrun the popular destinations, diminishing the premium you can charge, destroying the exclusivity of Belize and after a few good years, Belize would lose its cruise industry charm and with the loss would be the loss of a steadily growing overnight sector.

   In his speech, Minister Espat continued to explain that investors in the overnight industry are skeptical, "not of cruise tourism as a vehicle for tourism development but skeptical of unregulated, under-managed, under-taxed cruise, unsustainable cruise tourism." He added, " tourism should be subject to the same environmental, social and economic review as any other development. When the overnight guest is spending more than four times as much as the cruise passenger, when the overnight guest spends an average of eight days versus the eight hours of the cruise passenger, government has an obligation to safeguard the 600 million dollars plus already invested in the overnight industry and seek a level playing field."

   This week’s follow-up report on the Channel 7, revealed the remainder of the 27 page contract between GOB and Belize Cruise Terminal Limited which contained the following (not in its entirety): Most notably the contract states that it is for 20 years, but is renewable for another 10 years unless there is an outright default. Barring that default, it says that, ‘any refusal to renew the agreement shall be ‘unreasonable,’" which, to our reading, pretty much makes renewal automatic.

   And for that thirty years, Carnival is only agreeing to a marginal increase in the head tax. Starting next year, government can increase the head tax by two dollars to $7 US dollars. After that, in 2010, and for the remaining 24 years of the life of the contract, government can only order a maximum increase of 3% per year, which is only a few cents.

   And if that wasn’t clear enough, the agreement goes on to say that BCTL will be entitled to all tax exemptions, just as if it were a company in the free zone. But apart from paying no taxes, Carnival will not even have to go through any red tape. Presently, cruise agents must apply regularly to the tourism board, for licenses for the ships they bring in. But this agreement bypasses all that and gives government that job; it says "GOB shall procure, on an annual basis...the grant...of a license for cruise ships to each of the Carnival Lines.

   The Government of Belize signed two "exclusive" contracts in the last year to two separate cruise lines. The first, in April, established Royal Caribbean as part owner of the Fort Street Tourism Village, an investment of tens of millions. The other, Carnival, proposes to spend BZ$100 million at the Belize City Port for a pier and tourism village. Reportedly, government must now defend itself against a potential breach of contract lawsuit with Royal Caribbean, by promising them outrageous compensation for breaking this "exclusive" deal. This includes guaranteeing head tax on 900,000 cruise ship passengers per year whether Royal Caribbean delivers them to our shores or not.

   Re-stating the BTB policy on these recent contracts, Tourism Minister Espat commented, "Our cruise legislation and licensing process must include strict environmental monitoring and make clear that cruise ships will be liable for any violation of our environmental laws. Belize should continue to support regional per ticket levy on cruise trips sold so that as a region, the Caribbean can cater to our urgent marketing and product development needs. Regulations, specifically for the cruise industry, already in draft, must be passed by the House of Representatives this year, enshrining a licensing process and further strengthening the Cruise Tourism Policy."

   For their part, the Belize Hotel Association (BHA) stands firmly behind its decision to address the impacts of Cruise Tourism in Belize. They state they have the largest sector investment to protect, are concerned about the future of the industry, and know that for Belize to have a successful tourism industry in the future, Belize must protect, preserve, and manage our natural and historical resources. Quoting a BHA press release, "The implications of the uncontrolled growth of Cruise Tourism in Belize must be examined critically, particularly in light of our country’s commitment to its market place position as an eco-tourism destination."

   Belize Tourism Industry Association National President Steven Schulte shared BTIA concerns as, "the overcrowding at our parks and archeological sites, lack of bathroom facilities, parking, deterioration of roads and safety concerns for the tourists are constant complaints. The rate of growth has taxed the financial resources of the country. In spite of the problems brought on by rapid growth the Government has signed an agreement with Carnival Cruise Lines, which we believe fails to address any of these problems. The association and its over four hundred members are committed to the growth of tourism including cruise tourism. However, we recognize that unlimited and unregulated growth in our industry will result in self-destruction. We must practice sustainability so that we, our workers and the citizens of Belize, can benefit from our industry for generations to come."
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