Economy - Peripheral Factors

Economy - Peripheral Factors

Two small but significant factors must be mentioned in any discussion of Belize's economy: the role of British troops and the illegal drug trade. At independence, Belize and Britain agreed that the latter would maintain a garrison of 2,000 soldiers in Belize to deter possible aggression by Guatemala. As of 1991, Guatemala had established diplomatic relations with Belize but continued to claim an undefined part of its territory. The economic impact of the British garrison, than numbering about 1,500 troops, was substantial in the early 1990s. Because of their relatively high incomes and the support services they required, the troops have had a significant impact on the level of employment and the Belizean economy in general. Some analysts have estimated that the British garrison directly or indirectly generated about 15 percent of Belize's GDP.

The drug trade was not factored into the country's GDP statistics, and the impact of this illegal activity on the economy was difficult to measure. Belize played three roles in the drug trade in the early 1990s; the country served as a marijuana producer, as a transshipment route for other drugs, and as a moneylaundering center. In the early 1980s, the United States Drug Enforcement Agency placed Belize on its list of leading marijuana producers. Aerial spraying of pesticides was begun in 1984, but was ended that same year because of Belizean concerns about the safety of spraying on legal crops and on the population. The United States government estimated that annual marijuana production in Belize subsequently rose from 35 tons to 850 tons, with an approximate street value of US$120 million. Spraying was resumed in 1985 with different chemicals, and marijuana production declined substantially thereafter.

Belize remained an important transshipment site for drugs other than marijuana in the early 1990s. For instance, in September 1990 Mexican federal judicial police seized approximately 457 kilograms of cocaine, which they suspected had been smuggled into Mexico through the border area between Belize's Hondo River and Santa Teresa, Mexico. The shipment apparently was destined for the United States.

Finally, concerns existed that Belize served as a center for money-laundering. The Central Bank of Belize had the authority to trace large transactions, as well as all foreign-currency transactions. However, the nation's investment law allowed offshore banking in Belize and specifically exempted such activity from the regulatory oversight of the Central Bank.

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