On March 22, 2019, U.S. President Donald Trump met with the leaders of five Caribbean nations—Haiti, Jamaica, St. Lucia, the Bahamas, and the Dominican Republic—at his resort in Mar-a-Lago. Although there are a number of pressing problems facing the Caribbean, the U.S. president set the agenda. As a result, a potentially important summit revolved around two issues: Chinese involvement in the Caribbean Basin and the Caribbean position on the on-going Venezuela crisis. Notably not on the agenda were issues of greater concern to Caribbean governments—including the current HIV/AIDS epidemic, with the second largest HIV prevalence in the world, narcotics and human trafficking, climate change, and crime’s devastating effects on the region’s development.
Among all of these, the region’s most pressing issue is the need to address climate change and the damage it is already inflicting Caribbean economies. With hurricane season rapidly approaching, the Caribbean is bracing for another round of powerful storms. Instead, President Trump offered to provide loans to the Caribbean through his favorite aid organization—Overseas Private Investment Corporation (OPIC), largely as an alternative to Chinese financing for infrastructure and business investment.
If the Trump administration truly wishes to limit Chinese influence in the Caribbean and shift the Caribbean’s position toward Venezuela to one more aligned with the geostrategic interest of the United States, it has to first recognize the role of China and Venezuela in the Caribbean and develop policies that compete with these rivals rather than simply telling the Caribbean to get in line and consider the significant smaller pool of funds from OPIC.
The Trump administration’s efforts to limit Chinese involvement in Latin America and the Caribbean are founded on the meteoric rise of Chinese engagement with the region. Although there have been concerns about China using its influence in the Caribbean Basin to develop spy posts, Chinese involvement in the region has been largely financial and targeted at increasing Chinese influence vis-à-vis the United States and Taiwan. Within China’s increased financial activity in much of Latin America, the Caribbean has been of particular interest due to the region’s high rate of recognition of Taipei as the seat of the Chinese government. Of the 17 countries around the word that recognize Taiwan, over half are in Latin America and the Caribbean, with five in the Caribbean alone. In an effort to convince states to shift their recognition from Taipei to Beijing, the Chinese government has employed checkbook diplomacy, primarily foreign aid and loans, as a counter to similar efforts by Taiwan. This strategy has been particularly effective in recent years, with six Caribbean and Central American countries switching recognition from Taipei to Beijing since 2004.
Countries recognizing Taiwan
One of the reasons that this strategy has been so effective in urging small states in Central America and the Caribbean to adjust their recognition has been the region’s unmet need for foreign aid and finance. Although Chinese financing to the Caribbean has historically been relatively small, since the mid-2000s, China has become an important source of financing for the Caribbean. While much of the aid from China is focused extractive industries and infrastructure, the region is desperately in need of foreign aid and is happy to receive it from Beijing.
Chinese foreign aid, government sponsored investment activity, and private investment to the Caribbean (excluding Cuba), 2000-2017
But the Trump administration’s policy of cutting aid to countries that change recognition from Taipei to Beijing and warning nations that they are selling away their sovereignty is unlikely to have much of an impact on decisions to engage with China. Recent studies have highlighted the inverse relationship between U.S. and Chinese foreign aid in Latin America. While some of this is likely due to U.S.-Chinese competition for influence, it is also due to nations’ desire to seek out sources of foreign aid and finance from any source possible. Threats of cutting U.S. aid to punish the countries that do receive Chinese investment would do little more than further encourage nations in the Caribbean to seek alternative forms of financial support.
The five Caribbean leaders that met with Trump at Mar-a-Lago all support the U.S. position toward Venezuela. However, many Caribbean leaders have taken a different tact regarding the conflict between Nicolas Maduro and Juan Guaidó over the future of Venezuela, calling for a peaceful resolution through dialogue. On January 10, 2019, the Organization of American States (OAS) voted to declare Maduro’s elections illegitimate and to recognize Guaidó as the President of Venezuela. In the vote, only five Caribbean countries voted in favor of the resolution. Given the role that the Caribbean has consistently played in halting OAS efforts to play a more constructive role in Venezuela, the U.S. must urge Caribbean states to assist in finding a solution to the on-going crisis. This is particularly important given the sheer number of OAS voting members that are in the Caribbean. In fact, with the exception of the Dominican Republic, four of the five countries that met with Trump are part of the Caribbean Community (CARICOM), a sub-regional organization with a total of 15 of the OAS’s 35 members (note that the Cuban state is a member, but the government has been suspended since the 1960s), giving the Caribbean an enormous of leverage in shaping OAS policy, not just on Venezuela but on a range of issues.
Caribbean votes in OAS resolution to recognize Juan Guaidó
For the United States to successfully shift the position of many Caribbean states, the Trump administration first needs to consider why Caribbean states have been such staunch supporters of Maduro and his predecessor, Hugo Chávez. Caribbean support is largely due to the 2005 creation of Petrocaribe and the role it plays in the region. Through this oil alliance, Venezuela has provided oil to Caribbean nations at low cost (with discounts of up to 50 percent in some cases) and paid for through low interest rate loans. Tourism-dependent Caribbean nations became dependent on Venezuelan oil. Although the benefits of Petrocaribe have dried up as the Venezuelan economy collapses, many Caribbean countries remain loyal to the Maduro regime.
What to do
If the Trump administration wants to limit Chinese influence in the Caribbean and urge these nations to support Guaidó in Venezuela, it is going to need to do more than simply invite a handful of regional leaders to Mar-A-Lago. For the Trump administration to compete with China and Venezuela for influence in the Caribbean, the administration should seek to expand foreign aid to the region. Trump’s OPIC loans can provide funds to the Caribbean but are not enough to shift the calculus. In part, these loans weaken U.S. claims that Chinese loans are harmful to recipient nations as they are not true aid but insurance to would-be private sector investors.
It’s sure to play better than its current strategy of one-sided conversations. True dialogue and foreign aid packages must also include all Caribbean nations instead of a select few, given the voting weight of the Caribbean bloc in the OAS. If the Trump administration is legitimately interested in increasing its own influence in the Caribbean and countering Chinese advances, it must expand foreign aid to levels to compete with China’s offers. But most importantly, they must reflect and be directed toward the legitimate concerns and demands of the governments and citizens of the Caribbean Basin.
Adam Ratzlaff and Wazim Mowla are PhD students in international relations at Florida International University.
*Authors’ tabulations using data from: American Enterprise Institute and Heritage Foundation. 2018. China Global Investment Tracker. Washington, DC: American Enterprise Insitute. Dreher, Axel, Andreas Fuchs, Bradley Parks, Austin M. Strange, and Michael J. Tierney. 2017. Aid, China, and Growth: Evidence from a New Global Development Finance Dataset. AidData Working Paper #46. Williamsburg, VA: AidData; Gallagher, Kevin P, and Margaret Myers. 2014. China-Latin America Finance Database. Washington, DC: Inter-American Dialogue. Accessed February 2016; Wolf, Charles Jr., Xiao Wang, and Eric Warner. 2013. China’s Foreign Aid and Government Sponsored Investment Activities: Scale, Content, Destinations, and Implications. Santa Monica, CA: RAND Corporation. Updated April 2015.