China Power | Diplomacy | Security | East Asia

Washington’s Backyard: The Caribbean Amid Sino-American Competition

China’s engagement with the region is altogether more patchy than many popular prognoses make out.

By Bradley J. Murg and Rasheed J. Griffith for
Washington’s Backyard: The Caribbean Amid Sino-American Competition

The Secretariat of the Caribbean Community (CARICOM) in Guyana.

Credit: Flickr/David Stanley

Despite the steady stream of commentary framing geopolitics in terms of a “new Cold War,” a return to bipolarity, and widespread recognition that Sino-American competition is expanding beyond the confines of the Indo-Pacific, one region remains generally overlooked: the Caribbean. This is surprising in that the region is historically central not only to U.S. security policy, but also to the contemporary diplomatic realities that confront Taiwan; eight of the fifteen states that recognize Taiwan over Beijing are either within the Caribbean itself or are Caribbean-adjacent. It is also the home of Cuba: a state desperately in need of a new patron and which is confronting severe financial difficulties and a potential return to the grim, “Special Period” economic life that hallmarked the 1990s. This is the first in a series of three articles that examines the Caribbean in the context of Sino-American competition, the roll out of  Beijing’s Belt and Road Initiative (BRI) in the region, and the realities confronting the Caribbean in a period of geopolitical change.

After centuries of centrality in Europe’s empire-building competition, the Caribbean – with notable exceptions (e.g., the Cuban Missile Crisis and the 1983 American invasion of Grenada) – has largely faded from the geopolitical scene.  In 1823, a rising United States promulgated the Monroe Doctrine to secure the region for American “precene, power, and passage.” More recently, in April 2019, then-National Security Advisor John Bolton declared, “Today, we proudly proclaim for all to hear: the Monroe Doctrine is alive and well,” although the practical implications of his comment for the Caribbean remains an open question.

Given the inherent importance of the Caribbean to the United States, several trade and aid strategies have been advanced. These include the Caribbean Basin Economic Recovery Act of 1983 under Ronald Reagan and the Caribbean Basin Trade Partnership Act of 2000 under Bill Clinton. Together these form the core of what is called the Caribbean Basin Initiative (CBI), but these should be properly seen as security politics. A 1983 CBI report by RAND stated it explicitly: “by geopolitical fact, the Caribbean Basin lies within the North American security zone.”

The CBI, encompassing 17 countries, is essentially a program that gives participating countries preferential access to the U.S. market for certain categories of goods. On the surface it appears as if the Caribbean does $35 billion in trade with the United States; but a large proportion of this is “phantom trade.” That is, most everyday goods in the Caribbean are produced in China but appear as U.S. exports. The U.S. is essentially a transshipment point for Chinese goods and including all of this as U.S. trade is misleading. As a result, the Caribbean can potentially create direct trade links with China and bypass the U.S.

The stated goal of the CBI was audacious – invigorate the economies of the Caribbean and push holistic growth – but the results have been lackluster. In Barbados, for example, the primary improvement in the general standard of living occurred in the period of 1950-1980 and has not substantially improved since.

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Current American engagement with the Caribbean is primarily on “soft projects,” e.g., teacher training, environmental workshops, maritime security training, aid for small medical facilities upgrading, etc. These are not initiatives that materially affect economic growth or ultimately improve standards of living in the region. In September 2020, the U.S. Congress approved the renewal of the Caribbean Basin Trade Partnership Act; although expectations that this will yield any new, significant gains for the region remain low.

Late last year, Washington announced an expanded Growth in the Americas Initiative (América Crece) to facilitate private sector investment across Latin America and the Caribbean. However, practical outcomes of this initiative for the Caribbean are yet to be seen and it is viewed as heavily focused on countering China in continental Latin America rather than the Caribbean. Even Secretary of State Mike Pompeo left out the Caribbean when tweeting about it earlier this year, highlighting its status as a Latin American initiative. At best, Washington’s policy towards the Caribbean until very recently can best be termed as one of “benign neglect,” similar to its piecemeal policy towards Southeast Asia until China’s growing economic dominance woke the U.S. from its slumber. However, the Caribbean is only beginning to experience the full force of Chinese economic expansionism.

The prevailing narrative of China’s intensified investment and loans in the Caribbean has become a standard albeit flawed trope, which remains a severe point of contention among analysts in the region. A systematic analysis of Chinese loans across the Caribbean has not yet been published; but one can arrive at a somewhat crude estimate of the realities on the ground. In 2018, based on available data in China’s bulletin of outbound foreign direct investment, the Caribbean Community (CARICOM) collectively received approximately $207 million of Chinese foreign direct investment (FDI), and amount equivalent to just 0.3 percent of the region’s GDP. Not all of the 15 members of CARICOM received FDI from China in 2018 (consistent with other years) and it is still necessary to examine individual country profiles before claiming any particular trend over time, as well incorporating aid and loan numbers.

Jamaica provides a useful case in point, having consistently maintained diplomatic relations with China since 1972. The China-Latin America Finance Database indicates that since 2005, China’s Export-Import Bank has loaned Jamaica $2.1 billion for various infrastructure projects. As a raw number this may seem large but as of 2018 the amount of debt Jamaica owed to China was just 4 percent of total national debt. It would be erroneous to claim that Jamaica’s debt to China is at risk of becoming unsustainable. Most of Jamaica’s debt is owed to multilateral institutions and domestic bond holders. Yet Jamaica is often warned to be cautious of Chinese “debt traps” – although the “China debt trap” question for the Caribbean is certainly an issue for other, more tourism-dependent states in the region.

In an attempt to strengthen engagement with the region, Secretary Pompeo visited Jamaica in January 2020, highlighting the dangers posed by the “the meddling” of Cuba and Russia and “the easy money of China.” Not every CARICOM leader was invited to the meeting, a distinct choice in that regional engagement is generally done at the CARICOM level rather than via selective, bilateral invitations. This misstep led the prime minister of Barbados, Mia Mottley, to boycott the event. The heads of government of Trinidad and Tobago, Antigua, and Granada followed suit. Mottley accused the U.S. of trying to divide CARICOM and echoed the oft-used words of the country’s first prime minister regarding foreign policy: Barbados will remain “friends of all and satellites to none” – the same tightrope that many other smaller states are currently attempting to tread.

The question of Venezuela – China’s primary client state in the Western Hemisphere – provides further insight, particularly in the context of the idea of a mooted “new Cold War.” In this respect, the Caribbean is not adhering to expectations. CARICOM remains divided in its member states’ decisions as to who is the “rightful” leader of Venezuela, just as they remain divided on recognition of Taiwan.

As noted above, five of Taiwan’s 15 diplomatic allies are members of CARICOM (St. Lucia, St. Vincent & the Grenadines, St. Kitts & Nevis, Belize, and Haiti). Relations are unsteady; St. Lucia, for example, switched sides multiple times (Taiwan 1984-97; Beijing 1997-2006; Taiwan 2006-present). In the context of a “new Cold War,” there is little consistency here. At the Organization of American States (OAS) summit on Venezuela, Saint Kitts and Nevis and Saint Vincent and the Grenadines (which recognize Taiwan) supported the Maduro regime; while Saint Lucia and Haiti (which also recognize Taiwan) opposed the Guaido government.

A significant portion of the region – including Antigua, Barbados, Belize, Granada, and Trinidad and Tobago – attempted to side-step the Venezuela question, maintaining a position of neutrality. While inconsistent with expectations of states making decisions to bandwagon or balance with one side or the other, it is certainly consistent with Cold War-era “aid competition,” wherein smaller states played the Soviets off the Americans (and vice versa) in order to gain the best deals possible. In other words, “dollar diplomacy” appears to be back on the table.

While foreign policy coordination in CARICOM has always been frustrated by insular interests, one cannot rule out the possibility that the Caribbean countries that recognize Taiwan may eventually decide that it is in their best interest to align with the majority of CARICOM members to recognize China. This could facilitate a better trade agreement, tourism promotion, and increased investment from Beijing. If one accepts that diplomatic allies are necessary for the continued recognition of contested states, then CARICOM is of existential importance to Taiwan’s foreign relations. In part two of this series, we will explore the roll out of BRI in the region, the challenges it presents for Caribbean states, and the need for a multilateral approach grounded in the Caribbean Development Bank and CARICOM.

Bradley J. Murg, Ph.D. is Senior Advisor and Distinguished Senior Research Fellow at the Cambodian Institute for Cooperation and Peace.

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Rasheed J. Griffith is a Consultant at Kelman PLLC, based in Bridgetown, Barbados.