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In early 2001, Grenada announced plans to crack down on its offshore financial sector. However, in September, the country was nonetheless placed on a revised list of governments considered by the Paris-based Financial Action Task Force (FATF), which issues advisories to companies and governments in developing countries, to be uncooperative in the fight against money laundering. The action came in the wake of a controversial August visit by Prime Minister Keith Mitchell to Libya, a move that seemed particularly ill-advised a month later, when terrorists attacked the World Trade Center and the Pentagon. In October, Grenada announced that it had suspended a controversial program allowing foreigners to buy Grenadian passports, saying the practice was too risky after the terrorist attacks in the United States.
Grenada, a member of the Commonwealth, is a parliamentary democracy. The British monarchy is represented by a governor-general. Grenada, which gained independence in 1974, includes the islands of Carriacou and Petite Martinique. The bicameral parliament consists of a 15-seat house of representatives and a 13-seat senate, to which the prime minister appoints 10 senators and the opposition leader, 3.
Maurice Bishop's Marxist New Jewel Movement seized power in 1979. In 1983 Bishop was murdered by New Jewel hardliners Bernard Coard and Hudson Austin, who took control of the country. A joint U.S.-Caribbean military intervention removed Coard and Austin, who along with two others were originally sentenced to death, only to have their sentences commuted to life imprisonment. In the 1984 elections, the New National Party (NNP), a coalition of three parties, won the majority of seats. Herbert Blaize became prime minister until his death in 1989, when Deputy Prime Minister Ben Jones replaced him.
In the 1990 elections the NNP coalition unraveled, and there were five principal contenders: The National Party (TNP), headed by Jones; the centrist National Democratic Congress (NDC), led by Nicholas Braithwaite, head of the 1983--1984 interim government; the NNP, headed by Keith Mitchell; the leftist Maurice Bishop Patriotic Movement (MBPM), led by Terry Marryshow; and Eric Gairy's rightist Grenada United Labour Party (GULP).
The NDC won 7 seats and took in a defector from the GULP, and Braithwaite became prime minister with a one-seat majority. After implementing unpopular economic reforms, the aging Braithwaite stepped down in early 1995 in favor of Agricultural Minister George Brizan.
The 1995 campaign was a raucous affair. Brizan sought to retain power by pointing to the improved economy. The other candidates accused the ruling NDC of corruption and harped on high unemployment.
The NNP startled local observers by winning 8 of 15 seats. The NDC won 5 seats and the GULP, 2. Mitchell became prime minister. Afterwards, NDC deputy leader Francis Alexis split off to form the Democratic Labour Party (DLP), in a move that underscores the fractious nature of Grenadian politics.
In his first months in office, Mitchell was accused by opposition leader Brizan and others of censoring news unfavorable to the government in state-run television and radio broadcasts, and of purging civil servants appointed during the NDC administration. Mitchell denied the allegations. In 1996 Mitchell's reorganization of the state-owned Grenada Broadcasting Corporation (GBC) was viewed by some as another attempt to fill political positions with NNP supporters and to control the dissemination of information at GBC. In 1997 the NDC charged the government with granting a casino license to a foreign company that the NDC alleged had gangster connections.
In May 1998, former Deputy Prime Minister Herbert Preudhomme was elected leader of the bitterly divided GULP, a year after Gairy died. The ruling NNP was plunged into crisis over the resignation of its foreign minister, whose loss left it with only 7 of 15 parliamentary seats. Grenada's parliament was dissolved in December 1998, paving the way for elections in 90 days. In 1999, the NNP made a sweep of all but 1 of 15 seats in parliament. Opposition complaints of alleged corruption seemed to miss the mark, as the NNP entered into the electoral fray boasting an enviable economic record; in four years, unemployment had plummeted from 25 to 14 percent, and the economy posted a strong performance. Mitchell was also aided by a divided political opposition which, after the crushing defeat, seemed in danger of disappearing altogether.
Mitchell announced in February 2000 a "zero tolerance" anticrime crackdown in the wake of growing concerns over an upswing of violent, often drug-related, delinquency. In August, the First International Bank of Grenada collapsed, leaving thousands of depositors--mostly U.S. citizens--facing a combined loss of millions of dollars. That same month, Mitchell reshuffled his cabinet, a move the lone opposition deputy blasted as an attempt to deflect attention from the First International scandal, as the bank admitted contributing thousands of dollars to the NNP's 1999 election campaign.
The crisis created by the government takeover of the First International came after a local auditor warned that the bank, which had increased its assets from $110,000 to $14 billion in one year, was "in complete violation" of Grenadian offshore laws. However, Mitchell had been warned possibly 17 months earlier that the bank was in serious difficulty. Grenada's strict bank secrecy regulations and offers of citizenship, complete with passports issued together with a new name, created worries of "one-stop shopping" for international criminals. The relatively few protests about the bank's failure heard from depositors in the United States and Canada very likely reflected their wish not to advertise themselves as tax evaders in their own countries.
During the first eight months of 2001, the government had pushed to improve Grenada's framework for regulating the offshore financial center, including measures to improve its transparency. The FATF's ruling made it harder for the country to attract foreign investors and business partners.
Mitchell's August 2001 trip to Libya, made together with the heads of Dominica and St. Vincent and the Grenadines, resulted in Grenada receiving an attractive financial assistance package, including $1 million in grants and some $9 million in soft loans. Officials said most of the money would be used to promote micro-enterprises, economic diversification, and worker training. The visit to a country accused of sponsoring international terrorism received additional criticism after the September 11 attacks on the World Trade Center and the Pentagon. The end of Grenada's "economic citizenship" program, introduced in 1998, in which foreigners could purchase passports for $19,000, came in reaction to those attacks. Grenada Finance Minister Anthony Boatswain said, announcing the move, "Grenadian passports can end up in the wrong hands and be used for purposes other than for that which they were intended."
Citizens are able to change their government through democratic elections, and the 1999 elections were considered free and fair, although in light of the 2000 banking scandal, a lack of credibility was added to complaints of questionable contributions to the NNP. Many political parties exist, and few obstacles face those establishing new parties. However, there has been a decline in turnout, as young people, in particular, appear to have lost confidence in a system riddled with fragmented politics and allegations of corruption. Following the crushing defeat suffered by Grenada's opposition parties, their role as alternatives in future elections was seriously in doubt.
The independent, prestigious judiciary has authority generally respected by the 750-member Royal Grenada Police Force. There are no military or political courts. In 1991 Grenada rejoined the Organization of Eastern Caribbean States court system, with the right of appeal to the Privy Council in London. Detainees and defendants are guaranteed a range of legal rights that the government respects in practice. Like many Caribbean-island nations, Grenada has suffered from a rise in violent, drug-related crime, particularly among increasingly disaffected youth. Prison conditions are poor, though they meet minimum international standards and the government allows human rights monitors to visit.
Newspapers, including four weeklies, are independent and freely criticize the government. Television is both private and public, and the main radio station--there are six in the country--is part of the Grenada Broadcast Corporation, a statutory body not directly controlled by the government. Since the 1995 elections, a number of new radio and television stations, not one of which is aligned with the NNP, were issued licenses to operate. In October 1999, the arrest of two journalists critical of the government caused an uproar among the opposition and human rights groups.
Constitutional guarantees regarding the right to organize political, labor, and civic groups are respected. The free exercise of religion and the right of free expression are generally respected.
Numerous independent labor unions include an estimated 20 to 25 percent of the workforce. A 1993 law gives the government the right to establish tribunals empowered to make "binding and final" rulings when a labor dispute is considered of vital interest to the state. The national trade union federation claimed the law was an infringement on the right to strike. Workers have the right to organize and to bargain collectively.
Women are represented in the government, though in greater numbers in the ministries than in parliament. No official discrimination takes place, but women generally earn less than men for equal work. Domestic violence against women is common, and sexual harassment in the workplace is a problem. Police say that most instances of abuse are not reported, and that others are settled out of court.