Assessing China’s Presence And Power In The Caribbean

 

 

 

 

 

Foreign policy discussions around China-Caribbean engagement have been uniformly skewed toward speculation on China’s intentions in the Caribbean. It is not too late for the U.S. to arrest the deepening of China-Caribbean engagement that could result in policies that are contrary to U.S. strategic interests. But assessing U.S. interests in this area requires wrestling with the facts on the ground and countering Chinese influence with realistic and robust alternatives. 

U.S. policymakers have devoted little time and effort to gain a nuanced understanding of what the Caribbean has gained and hopes to gain from its engagement with China. The Caribbean is not an idle player. Regional governments actively seek deals from Chinese firms and government organizations—often with significant success. In addition to asking why China is engaging in the Caribbean, one needs to ask why do Caribbean countries so readily seek out deals with Chinese firms? 

One problem that prevents this question from being posed is that the U.S. (from think tanks to policy staff) tends to treat the Caribbean as a foreign policy Rorschach test—these people simply look through the island chain and see what they want, instead of what is actually there. This imprinting leads to policy miscalculations with consequences. A robust U.S. foreign policy must consider that the Caribbean region is heterogeneous and has its own agency. To fully examine the Caribbean’s agency and its interests, it will be useful to examine a few case studies, including Taiwan-Caribbean relations, offshore financial centers, Chinese construction in the Caribbean, and citizenship by investment programs (CIPs). 

Latin America and the Caribbean account for nine of Taiwan’s remaining 14 formal diplomatic allies. Within the Caribbean specifically, five of the 15 members of the Caribbean Community (CARICOM) formally recognize Taiwan. This feature of policy heterogeneity in the Caribbean often leads U.S. foreign policy in the region astray. A striking feature of the oft-repeated “debt trap” narrative is that, in the Caribbean, that narrative is linked with Taiwan and not China. If the U.S. persists in leveraging debt trapping as an argument to counter China in the region, it is likely to have the opposite effect. 

After Grenada was virtually decimated by Hurricane Ivan in 2005, the country’s leaders decided to switch Grenada’s recognition to China, which came to the nation’s aid in rebuilding key infrastructure. China was not the first choice for Grenada, but it was the only country willing to provide the necessary assistance. At that time, Taiwan was Grenada’s largest bilateral lender. Understandably, Taiwan did not take the news of the switch well. The Taiwanese foreign ministry reportedly accused Grenada’s leaders of “extortion-like behavior,” because Grenada allegedly demanded $245 million in exchange for not recognizing China. Grenada eventually defaulted on its debt owed, as Taiwan refused to participate in the debt restructuring program initiated by Grenada. 

Following the diplomatic switch, Taiwan sued Grenada in the U.S. In 2011, Taiwan went further and served restraining notices on Grenada’s assets in the U.S. In effect, Taiwan attempted to obtain any assets owned by or owed to Grenada from entities based in the U.S. This pushed Grenada to file a series of appeals in the U.S. to remove the restraining notices. After a decade-long legal battle, both sides agreed to settle out of court. Taiwan eventually agreed to join the restructuring program and allowed Grenada to reprofile its external debt. 

If the U.S insists on pursuing the rhetorically powerful but empirically baseless Chinese debt trap narrative in the Caribbean, then the U.S will continue to lose strategic policy engagement ground in the region. This was highlighted in 2020 when some Caribbean leaders boycotted a summit with U.S. Secretary of State Mike Pompeo because they disagreed “on principle” with particular U.S policy (and rhetoric) in the Caribbean. A better-calibrated policy on Chinese infrastructure and loans in the Caribbean would be based on competition and not contention.