(Bloomberg) -- The monster hurricanes that devastated much of the Caribbean left tens of thousands homeless and many residents asking themselves whether they have a future on the once paradisaical and now debt-ridden islands.
“How are we going to stay here if we have no money, no house, nothing?” Miriam Martinez said after Hurricane Irma destroyed her home in St. John, one of the three main US Virgin Islands. Martinez sent her two children and grandchildren to live with family in Boston and plans to join them next month.
Both hospitals on the Virgin Islands were destroyed, most lines of communication are down and it will be four to six months before electricity is fully restored. Paying to rebuild the islands of 110,000 people will mean more borrowing, adding to the $5.1 billion Fitch Ratings said the government already owes in debt and pension obligations. The ratings agency downgraded the US territory's rating deeper into junk status in August.
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It's a story repeated across the Caribbean. The value of damage on some islands was more than their entire gross domestic product. And that is after debt loads had already led a dozen Caribbean governments to default on or restructure debt since 2000, according to Moody's Investors Service.
Getting Out
Serena Gagliotti is taking her 80-year-old father to New York after her home on St. John was destroyed by Hurricane Irma. She'll be back to deal with what remains of her house once she's got him settled.
“We're going,” Gagliotti said, starting to choke up. Her father needs medical help and “there's just nothing here”, she said.
The exodus threatens to reduce a population that the United Nations had previously forecast would start to decline by 2045.
For years, a mix of natural disasters, crippling levels of government debt, and economic stagnation with few job opportunities, has been pushing residents, especially the young, to leave. These trends seem set to get worse following the hurricanes Irma and Maria, which caused damages in the Caribbean of as much as $13 billion and $85 billion, respectively.
‘War Zone'
As assistance pours into the region, aid agencies could be overwhelmed by the extent of the disaster.
The Virgin Islands sole representative in Congress, Stacey Plaskett, said she fears that the small islands are being overshadowed by the dire situation in Puerto Rico, and that aid isn't getting through quickly enough.
“Everyone is talking about Puerto Rico and I don't want to diminish what's happening there. But we were hit by two category 5 hurricanes that caused complete devastation,” she said in a telephone interview from St. Thomas. “I'm concerned the resources are going to be diverted to Puerto Rico.”
Only this week did federal aid workers begin to put tarps on homes that lost their roofs on St. Thomas.
The situation is no better elsewhere. Already straining to care for the 1,600 people that were evacuated from Barbuda, Antigua is now receiving thousands of residents of the neighboring island of Dominica, which was decimated by Hurricane Maria.
“Our landscape reflects a war zone,” Prime Minister Roosevelt Skerrit said at the United Nations.
Trump Visit
European, Latin American and fellow Caribbean governments are pledging assistance, while President Donald Trump plans to visit the Virgin Islands next week amid vows to ramp up federal aid. Many islands will need more than short-term help with rebuilding though.
“The US Virgin Islands has no ability to make debt payments in the near future,” said Eric LeCompte, executive director of Jubilee USA, a charity that is calling for debt relief for the Caribbean after the hurricanes.
The fiscal outlook is similarly bleak on other islands.
“Even though we are struggling to pay our debts, the only option available to us is to borrow at commercial rates, which makes it even more onerous,” said Gaston Browne, prime minister of Antigua & Barbuda, which defaulted in 2009. The smaller of the two islands that Browne governs was damaged so extensively that it was left “uninhabitable” by Hurricane Irma, he said.
It is in that context that Martinez's and Gagliotti's decision whether to leave the US Virgin Islands or not takes on more than just a personal significance.
“People are in a quandary about whether to leave or not,” Plaskett said. “People are going to leave because they have no choice. But we need those people here if we're going to rebuild our economy.”
--With assistance from Jordyn Holman and Daniela Guzman
To contact the reporter on this story: Ezra Fieser in Santo Domingo, Dominican Republic at efieser@bloomberg.net.
To contact the editors responsible for this story: Matthew Bristow at mbristow5@bloomberg.net, Philip Sanders
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