Washington — When President Reagan meets with the prime ministers of nine Caribbean nations today on the island of Grenada, he is likely to receive an urgent message: Without more aid, trade, and investment, the region could become a breeding ground for regimes hostile to the United States. The leaders will tell the President that, despite the administration's Caribbean Basin Initiative (CBI) and generally improving world economic conditions, the region's woes are growing worse, not better. Without some relief from high inflation, skyrocketing unemployment, and declining growth, the islands could face the kind of political turmoil that, just two weeks ago, helped topple the Haitian government of Jean-Claude Duvalier.
The nations represented at today's meeting, all members of the Caribbean Community and Common Market (CARICOM), are, for the most part, small dots on the map. But the Reagan administration considers the region strategically important. Key trade routes carry half of all US exports and imports through the region. The islands are themselves outlets for more than $7 billion in US exports. The region is also a major source of illegal immigrants to the US.
To help rejuvenate the flagging economies of the Caribbean, three years ago the Reagan administration launched the CBI, an ambitious trade-and-aid program designed to enhance stability and help retard the flow of illegal immigrants to the US. The centerpiece of CBI is the extension of duty-free treatment to a number of Caribbean exports to the US for a period of 12 years.
A senior administration official says the danger of widespread instability in the Caribbean is not ``imminent,'' but adds the region's nations are ``in a vulnerable situation because of the fragility of their economies.'' He continues: ``Symbolically, the visit reaffirms our commitment to economic development in the Caribbean.''
In today's meetings, the President is expected to remind his counterparts that US aid levels to the region have been higher since the start of CBI in 1984.
The President is also expected to underscore the interest CBI has generated within the US private sector. Since 1984, say State Department officials, US and other foreign companies have invested in more than 200 projects in the region, producing new, nontraditional products for export and creating 35,000 new jobs.
Even so, US officials concede that progress in diversifying the economies of the region has been offset by a sharp drop in the prices of traditional exports, such as Jamaican bauxite. As a result, the region's exports to the US actually declined last year by 23 percent.
Although cautiously optimistic about the long-term prospects for CBI, US officials and private trade experts say the program can only be as good as the ability of governments in the region to accommodate private investment. That is one point the President is certain to stress.
``CBI can't guarantee increased trade, investment, and employment,'' says one State Department official. ``But countries with domestic policies that encourage investment and exports are going to reap the greatest benefits.''
Trade experts also point out that Congress has yielded to pressure from American labor and industry and weakened portions of CBI, to protect some US products from duty-free competition from the Caribbean. At today's meeting, Caribbean leaders will be looking for relief from restrictive textile and sugar quotas that have reduced access to American markets.
Even if they get such relief, experts say the President may have to deal with the more basic problem of disappointed expectations.
Craig VanGrasstek, a Washington-based trade-policy consultant, observes:``By and large, the CBI's done a good job. The problem is that in order to sell a program like this to get Congress and the region to go along, you have to raise expectations. When all you get is gradual improvement and not the dawn of a new era, there's always the risk of a letdown.''
Today's meeting takes place at a site now famous in the annals of Reagan foreign policy. In October 1983, US troops invaded the tiny island nation and overthrew the Marxist government of Maurice Bishop. Historians say it was the only time since the Russian Revolution that an established communist regime has been overthrown by the forces of a democratic government.
The invasion was controversial abroad but highly popular at home. A senior administration official points to Grenada as a success story for the US in the Caribbean, noting the island nation last year had the highest economic growth rate in the region.