The Baha Mar saga is an epic and cautionary tale. It is a story of grand ambition, hubris and spectacular miscalculations by three major players now desperately seeking to rescue their reputations amidst the unravelling of one of the biggest single tourism projects ever in the Western Hemisphere.
While none of the players will come out as clear winners, the clear losers from the fallout of the unravelling are the Bahamian people who are watching in horror and anxiety as the country heads toward a possible recession and the potential loss of thousands of jobs. And while all of the players bear responsibility for the current mess at Baha Mar, the party most responsible for protecting the country's interests is the government of the day headed by a prime minister even more delusional and grossly incompetent than even his fiercest critics imagined.
The Baha Mar saga will be retold in books and studied in university classrooms. It is a case study in international relations and high finance in the 21st century, bringing together a small country, the Chinese state and a foreign investor in a relationship which began in mutual accord but that descended into recrimination amidst misunderstanding and misjudgement, and emerging questions of greed and mass corruption.
Once upon a recent time, Sarkis Izmirlian, a super ambitious young man in his thirties, brimming with the overconfidence of such youth, became fast friends with Perry Gladstone Christie, who finally achieved his ambition to become prime minister of The Bahamas and wanted to secure a legacy rivalling his former law partner, good friend and political colleague turned opponent.
The youthful Izmirlian, lacking the experience for such an enterprise, and Christie, the older man in his sixties, who had been a political player for decades, agreed a deal to transform the storied Cable Beach, some of the best prime land in the Caribbean, into a resort complex rivalling Atlantis, the megaresort that Sol Kerzner and Hubert Ingraham built.
Highly intelligent, Izmirlian at times proved naive about the global political game into which he had entered. At times he overplayed his hand and underestimated the other players in the game. And at times he was out of his depth.
Delusional
Giddy with what the prospect of Baha Mar would mean for his legacy, Christie often proved delusional and gullible. Many questioned his confidence in Izmirlian as well as the very nature of the Baha Mar deal, which many found too grand and unsustainable. It was Christie who first courted Izmirlian, a courtship that grew into a deal which gave away too many concessions, a number of which were clawed back by the Ingraham administration.
Why Christie reposed so much trust and confidence in Izmirlian, a man lacking in experience for the sort of development needed at Cable Beach, remains baffling to many, though theories abound.
During his first term as prime minister Christie gave away vast amounts of concessions and land. His grandiose ambitions and transfer of Bahamian treasure to foreign interests was reckless, some of his ambitions floundering on reality, some on a global economic downturn.
The much-touted massive megaresort in West Grand Bahama collapsed. The 10,000 acres his government gave away in Mayaguana proved a disaster. The deal he negotiated in secret with Baha Mar had to be rescued by the FNM.
The latest failure at Baha Mar is yet another in a series of blunders and missteps by Christie, seemingly easily taken in by foreign investors. In terms of managing the details of and bringing projects to fruition Christie has generally failed. He failed to start the new straw market, to commence the construction of Lynden Pindling International Airport and Thomas A. Robinson Stadium and to start or complete other projects.
Both Christie and Izmirlian, who became quite chummy, engaged in wishful thinking throughout the project, including at certain critical points like the shared but mistaken belief that a soft opening of the resort would take place earlier this year in March, despite the signs that this was near impossible.
In his mid-year budget review in February of this year Christie advised: "We expect to see a surge in new hires starting in earnest very soon as Baha Mar prepares to roll out its new resort in phases, beginning just a month from now."
For its part Baha Mar was taking reservations and planning for the opening. How both Christie and Izmirlian could be so spectacularly wrong raises serious questions about the mindsets of the two men.
Izmirlian, beloved by the employees of Baha Mar, who find him approachable and engaging, often proved to be supremely arrogant in his dealing with and comments toward both the government and his Chinese partners.
The tone he and his attorneys struck during various critical negotiations left a sour taste with both the Ingraham and Christie administrations. The series of bombasts he levelled against his Chinese partners raised eyebrows.
Descended
Over time, the relationship between Izmirlian and Christie descended into mistrust as both men seemed determined to undermine each other.
The failure of the Christie administration to pay funds owed to Baha Mar in compensation for road works and its decision to allow China State Construction to own and redevelop the Hilton property on Bay Street in the heart of downtown Nassau, heightened the mistrust which exploded when the developer filed for bankruptcy.
Enter a third player, the People's Republic of China, with global economic and political ambitions, intent on re-emerging as a superpower and spreading its largesse and favors around the world in aggressive competition with the United States of America for global influence.
Even before President Xi Jinping announced China's intention to invest half a trillion in Latin America and the Caribbean, China was providing developmental assistance with low interest rates and befriending countries in the region no matter how small.
China's rise, and push for influence in the region comes as many in the Americas view the U.S. as taking Latin America and the Caribbean for granted. With the 2008 global economic meltdown, investment funds from the U.S. dried up or were limited. China, however, was sitting on trillions of dollars.
When the Great Recession hit The Bahamas, resulting in groups like Lehman Brothers halting investment projects in the country, Izmirlian desperately needed funding after the casino conglomerate Harrah's pulled out of a tentative partnership with Baha Mar.
China was all too happy to invest in such a project in The Bahamas right next door to the U.S. Just as Christie had courted Izmirlian, the latter, in turn, courted the Chinese. The Export-Import Bank of China and China State Construction Engineering Corporation rode to the rescue of Baha Mar and The Bahamas.
The former had a secure loan that would allow it to foreclose on various assets at Baha Mar, including Bahamian land, which could conceivably end up in the hands of a foreign government, a prospect alarming to many Bahamians and no doubt watched with great interest by the U.S., making the Baha Mar saga a case study in geopolitical manoeuvring.
Izmirlian, born in Switzerland and a Georgetown University graduate with a bachelor of science degree with a double major in international business and finance, is the scion of a wealthy family which earned enormous wealth through "the processing and export of groundnuts". The family controls much of the economy of the West African country of the Gambia.
Privilege
A child of privilege with huge ambition, the young Izmirlian saw Baha Mar in grand terms. The Baha Mar website captures some of his ambition: "His decision to completely redevelop the Cable Beach area of Nassau by acquiring over 400 hectares of land with one kilometer of beachfront, and re-routing Nassau's main road around the perimeter of the property, established his unique vision for the project and the rebirth of The Bahamian Riviera."
A 2010 press release from the development was titled, "Baha Mar to Redefine the Tourism Experience in The Bahamas."
The release publicized a speech made by Izmirlian in New York City "delivered at the celebration of the 25th Anniversary of China State Construction and Engineering Company's (CSCEC) presence in the United States."
Izmirlian boasted: "As some of you may know, my family and I have a vision for the country of The Bahamas, and its huge potential for tourism. We were approached by the Bahamian government to consider redeveloping a beautiful area of Nassau called Cable Beach.
"... Cable Beach had been the original leading tourism area of Nassau for many years, however over recent years had become sadly neglected. The Bahamian government wanted to restore this area to its former glory and asked us if we would be interested in the revitalization of this important landmark destination."
In addition to his infatuation with the Christie administration, Izmirlian was breathless in his praise of his new Chinese partners, though whether the infatuation and praise were strategic or genuine or both is an open question.
Izmirlian enthused in his New York address: "It became quickly apparent during the selection process that one organization stood out above all the others, China State Construction and Engineering Corporation. This is because they saw Baha Mar for what it is: a unique world-class resort that they could build, and in the process, showcase to the world China State's ability to deliver an intricately designed, and complex, resort metropolis on a somewhat remote island in the Caribbean. "
China Construction America intuitively understood the value of Baha Mar to The Bahamas but equally as important they understood the enormous value to their parent company as well as their home country.
"Building a resort project on an island so far from the shores of China is further visible proof - if it were even needed - that China State can and will deliver logistically challenging projects anywhere in the world and on whatever type of project, no matter how ambitious or complex."
Given allegations of shoddy work and the alleged failure of China State to meet certain obligations, and a breakdown of quality control and oversight by all three players, Izmirlian's breathless enthusiasm was grossly overstated. China, and by extension its state agencies, are taking a huge reputational hit in the region and worldwide.
Five years after Izmirlian's glowing address, mutual infatuation and praise have turned into bitter recrimination, grave mistrust and legal wrangling. How did things go so wrong?
More, next week.
o frontporchguardian@gmail.com, www.bahamapundit.com.
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