The Tribune

By MALCOLM STRACHAN

ALARM BELLS are ringing over the terms of the loan from China to build the new hospital (after the hospital itself being a bone of contention in the first place.)

Last week, it emerged that if there are any disputes between the lender, the China Export-Import Bank, and the Bahamian government, it will be the courts in China that have the final say.

One of the most startling aspects of the news is that the Minister of Health and Wellness, Dr Michael Darville, didn’t even seem to know why that was the case. He said perhaps because it’s a government-to-government loan, but he would have to check with the government’s legal advisors.

So meekly is our sovereignty surrendered, that the minister responsible for the facility being built with the loan doesn’t even know why the decision was made.

Immediately, there has been some international sparring. The US Ambassador to The Bahamas, Herschel Walker, got his first major issue to sink his teeth into since his appointment and warned that the financing terms are not in the best interests of our country.

“We stand ready to work with The Bahamas to help secure a better deal – whether for private or public sources,” he said.

The thing is, this deal has not exactly been a secret before now. There has been plenty of time to offer terms for a better deal. The United Kingdom, in fact, offered a deal previously that the government shrugged off because they said the China agreement was too far along.

On Friday, Prime Minister Philip Davis said the government had gone to the US for funding in the first place, implying that no deal was on the table then, despite what Mr Walker might be offering now.

The Chinese Embassy in The Bahamas also responded on Saturday. “It is China’s consistent policy and practice to respect the sovereignty of The Bahamas and to support its independent choice of development paths and partners. China-Bahamas cooperation involves no geopolitical calculations, targets no third party, and should not be interfered with by any external party.”

That external party would be Mr Walker, presumably.

“China remains committed to developing long-term friendly and cooperative relations with The Bahamas on the basis of equality, mutual benefit and win-win cooperation,” the embassy went on to say.

So how did we get here?

I imagine a fair amount of the answer dates back to the battle between Baha Mar’s original developer, Sarkis Izmirlian, and China Construction America (CCA), which largely took place in Delaware in the United States.

Back in 2015, in fact, CCA was arguing that The Bahamas should be the jurisdiction for that fight, arguing against the Chapter 11 bankruptcy filed in the US and saying the winding-up petition filed by the Bahamas government in the Supreme Court here would be adequate.

It took until December last year, another 10 years on from that project, for a US court to approve Izmirlian’s deal to settle the legal battle, after he was awarded $1.8bn in damages. Even near to the end, CCA was arguing that the verdict in favour of Mr Izmirlain by a New York court was “incorrect as a matter of law”.

There was a feeling that CCA felt they were getting a raw deal from the US courts. And while CCA is not involved in the new deal for the hospital, is it a case of once bitten, twice shy on the legal front?

After all, that US ruling ended up in a devastating $1.8bn in damages in favour of Mr Izmirlian.

This new deal is not on that scale, but it’s still a fifth of a billion, or just short.

The $195m loan is part of a quarter-billion cost for the project, earmarked at $268m (although who wants to bet the project will really be on time and on budget?). So perhaps there’s a good reason for the lender to be cautious and trying to ensure protection.

Regardless of that caution, The Bahamas as a borrower must make sure it also has protection, to assure that we don’t have to surrender our courts’ sovereignty in the matter.

As mentioned, the United Kingdom put an offer forward that was not accepted – we do not know the terms, of course, but the possibility of a rival bid gives leverage to ensure we get the best deal we can.

And now the US is back in the game as a player for the loan, if Mr Walker backs up his words with financial action.

The question is: is it too late?

The US also has its doubts over the contractor, China Railway Construction Corporation, which is a state-owned business that was the subject of action from President Donald Trump in his first term, when he issued an order banning Americans from owning shares in this firm because of its links to the Chinese military.

Ukraine also called the company an “international sponsor of war” for continuing to do business in Russia after the invasion of Ukraine. Part of that work involved a tunnel to the Crimea region, annexed by Russia, which was a direct connection to actions in the area rather than simply doing business somewhere else in Russia.

For us Bahamians, what we want is the best deal, of course, and the best prospects of a fair legal outcome if anything goes wrong.

It’s not uncommon for projects of this scale to run into some kind of legal entanglement in some way or another. Plenty of things can go wrong on much smaller projects. So when you’re talking a quarter billion plus, there’s always the possibility of arbitration or litigation somewhere along the way.

You hope not, but you prepare for the worst just in case.

Now perhaps the Beijing courts will provide that fair outcome. But here’s the thing: we’ve had at least one other option on the table and may perhaps have more now.

Is this still the best option?

With the minister seemingly not knowing much about the decision, and little public discussion of the subject from the rest of the government, there’s also the worry we might be sleepwalking into the loss of judicial sovereignty.

It’s only when the deal, signed in December by the Prime Minister, was tabled in the House that the details of Beijing court jurisdiction emerged. It seems that was something that should have been stated earlier and explained.

There are other concerns, separately, about the hospital project – about how it will be staffed, about the flooding concerns from neighbours, etc. And while some of those have again not been fully explained or explored, those are topics for another day.

Ultimately, if we do need international financing for projects, whether it’s this one or another, we need to make sure we get the best deal for The Bahamas. That includes ensuring the best legal options if things go wrong, with court proceedings capable of handling large dealings with fairness and independence.

Right now, no one is explaining how this is the best option for Bahamians – and that is the area that people are concerned about. We are not a satellite of China, nor of the US, but our own nation. That should not be so quickly signed away for a loan.