Saipan — I was thinking. Maybe I should compare the CNMI’s dismal economic situation to a scene from an old (and not-so-politically correct) Western movie about a fort in the middle of nowhere, surrounded by hundreds of fierce Native American warriors.
Inside the fort are U.S. soldiers, women, children and other civilians. They are running out of food, water, ammunition and hope. But in the end, the U.S. Cavalry arrives. A happy ending for everyone who is not Native American.
Or maybe what we have now is comparable to Samuel Beckett’s play, “Waiting for Godot,” in which the two main characters, Vladimir and Estragon, talk about, among other things, how miserable their lives are while waiting for the arrival of Godot, who they believe will set things right. But eventually (spoiler alert) they get tired of waiting so they decide to leave.
Estragon: Well, shall we go?
Vladimir: Yes, let’s go.
They do not move.
Curtain.
And then there’s Newton’s first law of motion, of course: inertia.
I’m referring, in any case, to CNMI Gov. Arnold I. Palacios’ apparent indifference to the result, so far, of his economic policy based on a “pivot” from Chinese investments and tourists. To be sure, the governor said he welcomes “all tourists,” including the Chinese. But he won’t ask the feds to allow the resumption of direct flights from mainland China. And he doesn’t want the Marianas Visitors Authority to promote the CNMI in China. In a way, it’s like saying to the Chinese tourists, “Feel free to visit, but we’d rather you didn’t.”
The governor announced his pivot policy in March 2023 in a letter to the commander of the U.S. Indo-Pacific Command. The governor said the loss of the Chinese market “has had a considerable adverse economic and financial impact on the commonwealth.”
Because “CNMI economic stability and sustainability are directly tied to the strategic posture and military might of the U.S. in the Indo-Pacific region, we are formally seeking your advocacy for additional funding support to stabilize our economy as you testify before the U.S. Congress about the Department of Defense’s budget. Specifically, we request for your support in seeking direct aid to replace the economic loss that we have experienced as a result of the CNMI’s pivot away from China.”
This is how many elected officials and politicians think:
If we do this, that will happen.
In the CNMI’s case, the governor believes that his pivot from China will result in significant funding support from the U.S.
What is the actual result, so far, of his policy?
In an interview with Voice of America in January, the governor was asked, “Is there a revenue source to replace lost income from the Chinese tourism market?” He replied: “Not right now, so it’s very significant. We’ve had to make drastic sacrifices in government operations and public services. People are leaving the commonwealth because of the depressed state of the economy right now, because of the major impact of losing close to half-a-billion to a billion dollars’ worth of economic activities.”
That was before the closure of the Hyatt Saipan Regency and the Saipan office of Asiana Airlines. As I write this in mid-July, the local economic landscape looks as bleak as ever.
What is the governor’s response to those who dare question his economic policy?
Be patient. Things will get better soon. It’s not the end of the world. The government must raise taxes.
Sadly, I’m not making this up.
A small business owner told me that it would have been nice if the governor had consulted with the business community and other members of the public before announcing his pivot policy. If that had happened, someone, surely would have asked him, “Governor, what made you think the U.S. government would give you what you asked for — a CNMI bailout to the tune of hundreds of millions of dollars — as soon as possible?” Someone else would have said, “Governor, you know that the federal government tends to move at a glacial pace — unless there’s a national emergency. Do you think providing more federal funds to the CNMI government would be considered a national emergency?”
And meanwhile, while we all wait for Uncle Sam’s Cavalry — what do we do? The tourism-based local economy remains sluggish. Hotel occupancy rates are way below break-even levels. More tourism-based businesses are expected to downsize further or shut down. Many local residents are moving to Guam or the states — or are seriously thinking about it. Fewer people mean fewer workers and a smaller tax base.
The most infuriating part of the governor’s pivot is that he wants struggling taxpayers to pay more so the CNMI government, with its many redundant offices and agencies, will not have to implement cost-cutting measures.
But as a business community member said, if taxes go up, prices will also go up. “If the whole objective of [a tax hike] bill is to generate revenue [for the government], we feel it’s a misconception to think [that] businesses will make the same number of sales or more. It’s quite the opposite. As a matter of fact, we would make less, and therefore the government will generate less revenue.” In a “worst case scenario,” if wholesalers make less money, they will have to reduce their work hours and/or staff, which will again reduce tax revenue.
In an op-ed last month, the governor said he is “committed to do everything in my power to stabilize our fiscal condition, ensure our security, continue to deliver essential services, and execute plans for long-term improvements in infrastructure, education, and economic development.”
With what funding source?
Zaldy Dandan is editor of the CNMI’s oldest newspaper, Marianas Variety. His fourth book, “If He Isn’t Insane Then He Should Be: Stories & Poems from Saipan,” is available on amazon.com/.
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