China’s Growing Influence in the Caribbean

Image Representation:  China Buying Control of the Caribbean

The question that may be asked of the future is whether China’s loans to countries in the Caribbean might lead to a debt-crisis with infrastructure being handed over to China as countries are unable to service their debts. Already the experience of Sri Lanka is being held up as a warning to the region but the lure of Chinese money seems almost irresistible to the region’s elites and as such, the risk of a “debt-trap” is very real. – Dr Sanjay Badri-Maharaj

In June 2013, during the visit of Chinese President Xi Jinping to Trinidad and Tobago, the then Prime Minister of the Caribbean nation, Kamla Persad-Bissessar, in a fawning speech, had lauded President Xi’s vision saying, “We see in your China Dream a splendid opportunity for China to become a model for the world.” 

Like royalty holding court, President Xi thereafter hosted the leaders of Antigua and Barbuda, Barbados, the Bahamas,Dominica, Grenada, Guyana, Suriname and Jamaica in Port of Spain, capital of Trinidad and Tobago, where he announced soft loans and investments worth US$ 3billion as well as grants of up to $8 million for the region. President Xi’s visit was an effective and a graphic demonstration of China’s growing influence and outreach in the English-speaking Caribbean region, coming at a time when the United States (US) had been somewhat less forthcoming with financial grants for the region.

Investment Outreach and the Taiwan Factor

In the past, China had used financial enticements to lure Caribbean nations away from Taiwan which has a long history of extending financial assistance to the region – of the 23 countries to keep formal diplomatic ties with Taipei, six are in the Caribbean: Belize, the Dominican Republic, Haiti, St. Lucia, St. Kitts & Nevis, and St. Vincent. However,China’s intensified outreach to the region seems independent of the “Taiwan factor” and also perfectly timed, as a combination of economic contraction and electoral compulsions have made regional governments desperate for the economic lifeline that the Chinese loans and grants might provide in lieu of having to make cuts in social schemes that are wasteful and of dubious efficacy but politically useful. The declining economic fortunes of the region have made governments grateful for the additional investment afforded by China, as the region has for years reeled under the impact of falling commodity prices,crippling government debt and endemic crime and corruption.

Political Compulsions

Image: AFP

Furthermore, the political compulsion of showcasing visible projects for maximising electoral gains has rendered the region peculiarly susceptible to the allure of Chinese fiscal blandishments. A telling example was a May 2018 decision to build a dry dock in Trinidad with Chinese assistance. This was pitched by Prime Minister Dr Keith Rowley as having the potential to create “5000 jobs” in politically sensitive area. However,no tender was floated nor was any feasibility study undertaken which may makethe project economically unviable

However, as elections are due in Trinidad in 2020, the need to have a major project to show as an achievement is tempting. An earlier Trinidadian government, under the late Patrick Manning, too had projected the visually impressive Chinese-built National Academy for the Performing Arts (NAPA) as a crowning achievement. Similarly, while the Bahamas pointed to the multi-billion dollar Chinese investment in the Baha Mar resort, Jamaica sought to benefit from the $300 million loan promised by China for the rehabilitation of its roads and bridges.

A Price to Pay

However, Chinese financial largesse has not come without its price as China insists on using its own contractors and labourers, bringing few employment benefits to the recipient nation. In fact, as early as 2009, Zhao Zhihai, a researcher with the Zhangjiakou Academy ofAgricultural Sciences in Heibei Province near Beijing, had suggested before the National People’s Congress that sending Chinese labourers to Africa would create about 100 million more jobs and solve the problem of Chinese unemployment. The impact on the chronic unemployment and underemployment plaguing Africa did not seem to attract any attention in his discourse. Furthermore, since Chinese labourers, whether legally or otherwise, have the propensity to stay on in the region, it could cause potential demographic shift among the small population of the islands of the region where even small numbers could have a significant impact.

Poor Quality Control

In addition, the quality of Chinese construction has left something to be desired for as serious structural flaws have resulted in the closure of NAPA for more than a year with substantial costs to be incurred in its repair. Trinidad also experienced the ignominy of having to demolish an apartment complex built by China Jiangsu International Corporation as it was deemed unsafe for habitation. Even in the Bahamas, the“Chinese Dream” became something of a nightmare as the vaunted Baha Mar resort, reputedly costing $3.5 billion, has failed to open, with China Construction America (CCA) missing deadlines and facing numerous allegations of shoddy workmanship and poor construction quality.

Little Recourse

An added complication is that with China’s Exim Bank having financed the deal, it has become virtually impossible to fire the Chinese contractors for sub-standard work. Given the strings attached to the Chinese financing, the benefit that the region seeks to derive from Chinese construction projects is therefore very questionable. Moreover, given the relative negotiating strength of the parties, it is evident that the Caribbean nations lack the means to leverage better contractual terms with the Chinese, the inevitable result being that construction contracts are skewed in favour of the Chinese contractors. China’s willingness to subvert tendering processes as well as to avoid competitive bidding, preferring to rely on its influence among the business and political elites of the region.

Courting the Elite with no Transparency

China’s push for influence among the Caribbean political elite has been replicated with an equally determined effort to court the military and the bureaucratic elite in the region, often deftly stepping in to take advantage of senseless overreactions on the part of the US such as the suspension of military aid to Barbados after it refused to sign a Bilateral Immunity Agreement (BIA), which in turn led Barbados to avail itself of China’s offer of military training and assistance. The end result is that China’s military training establishments now annually host a substantial number of officers from the region with an attendant increase in influence over their military leadership.

Lavish trips to China are offered to bureaucrats, politicians and functionaries ostensibly to study Chinese methods while governments are actively courted by a highly effective combination of Chinese influence peddlers, a capable Chinese diplomatic corps and a determined effort on the part of the Chinese leadership to court the media. The result has been an overwhelmingly pro-China viewpoint on the part of the civil and military elites of many countries in the region.

The American Reaction

Rather surprisingly, the US does not seem to be reacting aggressively to China’s creeping influence in the Caribbean region. At first glance, this might seem to be the case of complacency at work, but a more nuanced assessment indicates that the US still enjoys potentially much greater influence than its current “hands-off” approach suggests.

All countries of the English-speaking Caribbean region rely heavily on the US for their economic well-being – whether in the form of tourist arrivals, or, as in the case of Trinidad & Tobago, as a market for gas exports. In addition, the US continues to provide considerable assistance and support in the ongoing fight against drug trafficking as well as in judicial and law-enforcement in the region. Nonetheless, in the absence of financial largesse, the US is no longer seen as a favourite ally by the region’s elite. For now, it is into this fiscal vacuum that China has stepped in, and as expected, quite effectively.

Replacing the US?

Compared to the US, which has been wary of providing large-scale bilateral financial support due to endemic corruption in the Caribbean nations, the Chinese appear less concerned about such issues, thus further enhancing their prospects among the governing elites of the region where lack of transparency enables potentially shadowy deals between them to flourish.

In contrast, the US prefers to conduct its economic assistance programs through such agencies as the Inter-American Development Bank (IDB), the International Monetary Fund (IMF) and the World Bank (WB), all of whom have some veneer of monitoring the use of funds, in contrast to the Chinese who seem to be unconcerned with issues regarding either the misuse or misappropriation of funds.

What is yet unclear is the motive behind China’s outreach to the English-speaking Caribbean region. As a market, the islands of the Caribbean, with their tiny populations, do not offer much by way of a market for Chinese goods and services. Similarly, the resources of the region, oil and gas in Trinidad and bauxite in Jamaica, are too small and limited to offer much by way of economic incentives for the Chinese. China’s significant economic and political engagement in Latin America suggests that it does not look at the Caribbean as a gateway to that region. Rather, it can be cogently argued that the Chinese have been building their economic clout through “Chequebook Diplomacy” in various regions and that Caribbean is no exception.

The question that may be asked of the future is whether China’s loans to countries in the Caribbean might lead to a debt-crisis with infrastructure being handed over to China as countries are unable to service their debts. Already the experience of Sri Lanka is being held up as a warning to the region but the lure of Chinese money seems almost irresistible to the region’s elites and as such, the risk of a “debt-trap” is very real.

*Dr. Sanjay Badri-Maharaj was a Visiting Fellow at IDSA. He is an independent defense analyst and attorney-at-law based in Trinidad and Tobago. He holds a Ph.D. on India’s nuclear weapons programme and an MA from the Department of War Studies, Kings College London. He has served as a consultant to the Trinidad and Tobago Ministry of National Security

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Kootneeti Team.

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The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of The Kootneeti Team

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Dr Sanjay Badri-Maharaj

Dr. Sanjay Badri-Maharaj is the author of the books "Indian Nuclear Strategy: Confronting the Potential Threat from both China and Pakistan" and "The Armageddon Factor: Nuclear Weapons in the India-Pakistan Context". He is an independent geopolitical, security and defence analyst and attorney-at-law based in Trinidad and Tobago. He holds a PhD on India’s nuclear weapons programme and an MA from the Department of War Studies, Kings College London. He has served as a consultant to the Trinidad and Tobago Ministry of National Security. He was also a Visiting Fellow at IDSA - New Delhi. HE can be reached at sbmvv_2000@yahoo.com

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