China’s Engagement In The Caribbean And The United States’ Response
This past week ushered in the Chinese new year and the largest annual migration on the planet with over 200 million people traveling within China and from different parts of the world traveling back to China to visit family. While the global community marvels at such an event, what has gone unnoticed is the migration of Chinese people, capital, and resources flowing to the Caribbean. Traditionally, the United States has held unrivaled influence over the Caribbean. However, during the past few decades, America has become complacent in its position of power and competing foreign policy priorities, and has enabled China to erode America’s “soft power” and dominance. Although the U.S. contributes to multilateral financing of infrastructure projects across the region, there is still a lack of directly led U.S. financed infrastructure projects. Moreover, a genuine feeling of economic and political neglect permeating throughout the Caribbean has allowed China to take advantage of the economic vacuum created by the U.S. led economic model that relies on globalized supply chains. China is now one of the largest trading partners of many Caribbean countries and it finances infrastructure projects across the region as part of its Belt and Road (BRI) initiative.
China’s Share of LAC Exports, by Sector
Boston University Global Development Policy Center, 2022. Note: China includes Hong Kong and Macao.How China Gained a Foothold in the Region
Once hailed as one of the strongest partners of America, the perception by many leaders of the Caribbean and the public is that America's influence in the region is declining. As Prime Minister Philip “Brave” Davis of the Bahamas stated following an event at the Aqualina development in June 2022, “Those talks were about the fact that we in the Caribbean felt truly neglected by the leader of the world, the United States, and that we felt as though, as I indicated to the vice president, that sometimes we are only known when we’re needed and also that the approach to us, or about us, is always without us and we needed to be having conversations.” This lack of adequate attention has resulted in the U.S. treating the Caribbean homogeneously. Policymakers have spent little effort to understand the nuances and needs of individual nations. Instead, in an effort to deter Caribbean states from signing deals with China, Washington has repeated baseless claims that China is engaging in debt-trap diplomacy. This rhetoric has not worked in deterring African States from engaging economically with China and will not work in the Caribbean. Moreover, US Foreign Policy has been intentional in conveying that Caribbean leaders must choose between the US or China. On my most recent business trip to Jamaica when meeting with Daryl Vaz, Jamaica’s Minister of Energy he said “Jamaica is a sovereign country and will make decisions based on what is in the country’s best interest.”
The largest four-lane bridge in Jamaica is to be constructed over the Rio Minho in Clarendon as part ... [+]
Earl CarrChinese Economic Engagement
So far, Antigua and Barbuda, Barbados, Cuba, Dominica, Dominican Republic, Grenada, Guyana, Jamaica, Suriname, and Trinidad and Tobago have all signed Memorandum of Understandings to be part of the BRI initiative. The most prominent of these major infrastructure projects is the creation of ports, but they also range from bridges, highways, airports, and more. China Harbour Engineering Company (CHEC) is the most active Chinese company in the region, and loans to fund these projects come from numerous sources such as China’s policy banks, China Development Bank (CDB), China Export-Import Bank (Ex-Im Bank), and Caribbean countries’ governments.
As of 2022, Jamaica is the centerpiece of Chinese engagement in the region. China is currently financing $2.1 billion worth of projects there, followed by their investment in Suriname of $773 million.
AIIB and BRI Memberships in LAC from 2020-2022.
Boston University Global Development Policy Center, 2022.Chinese Diplomatic Engagement
It is important to note that Chinese engagement in the Caribbean is not solely economic. The Chinese make it a focal point of their policy to ensure that the representatives of the governments of the Caribbean believe that their respective nations are a priority, that their needs are not ignored, and foster a long term relationship. High-level Chinese officials have also engaged officials of the region. Examples include when in late 2022 Premier Li Keqiang met with President of Cuba Miguel Díaz-Canel, and, as well, when Special Representative Qiu Xiaoqi met with Dominican Republic President Luis Abinader and Foreign Minister Robert Alvarez.
The United States’ Response
The United States must realize that the countries of the Caribbean are no longer complacent actors. These countries have experienced a lack of direct initiative by the United States to help develop the region in the past few decades. The Chinese have taken advantage of this neglect and cumbersome conditions mandated by multilateral development institutions and inserted their economic and diplomatic presence into the region. These Caribbean countries are in dire need of infrastructure development and are happy to accept assistance in the form of Chinese investment and loans. As a result, China has gained unprecedented influence for a non-Western country in the Caribbean. This increase in Chinese soft power over the Caribbean presents several geopolitical and economic challenges for the U.S.
Although Chinese engagement in the Caribbean region is growing, it is not too late for the United States to reverse its faltering footing in the region. As Senior Caribbean Policy Advisor, Gerard Johnson, states regarding China’s place in the region, "An acid test of this will be China’s reaction to the anticipated spate of sovereign debt defaults in emerging economies. Will China forgive or restructure or will it claim infrastructure and land as collateral? Interestingly, when Caribbean borrowers from Venezuela’s PetroCaribe program faced economic hardship, Caracas forgave and restructured extremely concessional loans. What will China do?" This past week, Treasury Secretary Janet Yellen echoed this rhetoric and called on China to forgive debts owed by Zambia. Indeed, the current status in these regions have not gone unnoticed in Washington. U.S. officials have increasingly made statements designed to bring awareness to this developing situation and members of Congress recently introduced two bills in an effort to counter Chinese action in the Caribbean. The two bills are H.Res.1480-Promoting stronger economic relations between the United States and countries in Latin America and the Caribbean, and H.R. 9211- Las Americas Energy Security Act. Under President Obama, H.R. 4939 was passed to strengthen relations with the Caribbean by “requiring the Secretary of State and the Administrator of the U.S. Agency for International Development (USAID) to submit to Congress a multiyear strategy focused on enhancing engagement with the countries of the Caribbean.” Unfortunately, there has not been a new report published on the State Department’s website since 2020.
U.S. action so far is not sufficient to counter Chinese “soft” and “sharp” power. There needs to be greater attention brought to this situation and Congressional action if the United States truly desires to regain its traditional influence and greater cultural competence. One potential path to increase engagement derives from recent geopolitical events. Due to increased tensions with China and Russia, there is a greater desire in Washington to shore up supply chains. According to a recent CSIS report, the United States can use this development to shift more supply chains to the Caribbean. The U.S. can take advantage of newly created special economic zones by some of the countries in the region. This would help alleviate fears from Caribbean countries regarding a lack of U.S. attention to the region and ensure greater supply chain security. The United States can also utilize its vibrant private sector to encourage public-private partnerships (PPPs) in the Caribbean and not saddle the region with additional debt through traditional loans. As Johnson further states, "It is also important to not forget that most Caribbean countries are dealing with a debt crisis. As such, more loans are not the answer. The private sector has to step up. PPPs should be given priority over traditional loans to sovereigns."
Irrespective of the approach which the United States increases economic and diplomatic engagement with the Caribbean, time is of the essence or America risks ceding more influence of the region to China. The time to act is now.
Special thanks to Nathanial Schochet, Analyst at CJPA Global Advisors and graduate student at American University SIS for his exceptional research and editorial skills.
Earl Carr is Founder and Chief Executive Officer at CJPA Global Advisors, based in New York. With 25+years of experience, he manages a multidisciplinary team of global research analysts, software engineers, marketing specialists, geopolitical analysts, and media specialists to guide the firm’s global thought leadership, global strategic client advisory practice, and cross-border business mandate. Earl is an Adjunct Instructor at NYU’s Center for Global Affairs. Earl has expertise in banking, wealth management, consulting, geopolitical analysis, U.S. foreign policy, and international development. Mr. Carr previously worked as a Vice President at Morgan Stanley’s Institute for Sustainable Investing (ISI) working as a strategist and thought leader. Earl is a member of The Steering Committee for the inaugural National Asian American Book Club., and is a monthly columnist at Forbes.com.
https://www.forbes.com/sites/earlcarr/?sh=597ea1396429
Mr. Carr, Editor of the book “From Trump to Biden and Beyond: Reimagining US-China Relations,” published by Palgrave Macmillan, September 2021