U.S. shouldn’t ignore China’s influence in the Caribbean

Hon. Ambassador Richard L. Bernal

Chinese President Xi Jinping is leading the way in hia country’s investments in the Caribbean.
Chinese President Xi Jinping is leading the way in hia country’s investments in the Caribbean.

In a Congressional hearing on U.S. policy in Latin America in July, Rep. Elliot Engels — co-author, with Rep. Ileana Ros-Lehtinen, of the U.S.-Caribbean Strategic Engagement Act of 2016 — concluded that, “Unfortunately, one year later, it still has not been implemented.”

This is unfortunate since the Caribbean, the so-called Third Border of the United States, is experiencing a period of turbulence.

The islands of the Caribbean are struggling with low economic growth, crime, recovery from massive hurricane damage in Dominica, Antigua and Barbuda, and high debt. Environmental threats related to climate change and the re-emergence of the Sargassum Weed are threatening tourism.

The Caribbean could benefit from a more supportive U.S. engagement.

But many think that the region is “too democratic and not poor enough” to get on the U.S foreign policy agenda.

Currently, the Trump administration is focused on migration issues with Mexico and Central America. It also is concerned about the political situation in Nicaragua, Cuba and Venezuela. Meanwhile, the People’s Republic of China continues to expand its diplomatic reach and increase its economic and political presence in the Caribbean and Central America. China’s elevated profile has come at the expense of staunch U.S. ally Taiwan as countries have switched their diplomatic allegiance to China.

In the past decade, China has intensified its high-level diplomatic initiatives in the Caribbean supported by loans and the promise of development financing, of which it has become a significant source. In June 2013, China’s President Xi Jinping met with 10 Caribbean countries and announced that his country would make available $3 billion in loans. Economic difficulties and large fiscal deficits impelled prime ministers and presidents of the Caribbean to make official visits to Beijing where they have been treated royally. In almost all cases, they were received by the president. Jamaica, Trinidad and Tobago, Grenada, Dominica, The Bahamas, Barbados, Guyana and Suriname all have made visits.

Loans are being made for public-sector infrastructure and construction projects executed by Chinese firms.

The projects include convention centers, prime ministers’ offices, foreign ministries, highways, sports facilities and hospitals. They have generated considerable goodwill. The funds come at a time when both the Caribbean Development Bank and World Bank have pointed to the urgent need for infrastructure investment.

In 2007 Costa Rica became the first country in Central America to switch diplomatic relations from Taiwan to China. This was followed by a free-trade agreement in 2011. When phased implementation is complete, approximately 90 percent of goods will trade at zero tariffs and it will liberalize some services sectors.

The latest move to consolidate China’s relations in the Caribbean is access to resources of the Belt and Road Initiative, which will be a further attraction to Caribbean Governments. Panama established ties with China in June 2017 and the Dominican Republic in May 2018, ending a 77-year relationship with Taiwan.

The motivation is the prospect of increased exports, development aid and direct foreign investment. Panama is negotiating a free-trade agreement with China following the establishment of Bank of China and Air China. Emblematic of the potential expansion of Chinese direct foreign investment is that there has been more than $1.3 billion from Chinese development finance institutions in sugar, bauxite and infrastructure in Jamaica.

The Caribbean is a region in which the United States has taken a complacent view of China’s increasing presence. Apparently, from Washington’s perspective, that presence has not reached a tipping point.

How long this policy approach will prevail is unclear given the spiraling tension between the United States and China over tariffs on trade and security in the South China Sea. Even the threat of a slowdown in global trade as a consequence of the retaliatory escalation of tariffs has not prompted the United States to view the increasing Chinese presence with more concern.

Ambassador Richard L. Bernal is pro-vice chancellor of Global Affairs at the University of the West Indies.