Beijing is flooding the region with investment. Should America be worried?
By Jaime Daremblum
China’s interest in South America is easily explained: The Asian giant has a voracious appetite for commodities and raw materials, including Argentine soybeans, Brazilian iron ore, Chilean and Peruvian metals, Ecuadorean and Venezuelan oil, and Uruguayan beef. Therefore, Beijing has expanded trade ties with governments across the resource-rich continent, from Caracas to Montevideo.
At first glance, the recent surge of Chinese activity in the Caribbean is harder to understand. The small island nations that have been flooded with Chinese investment do not possess great commodity wealth, nor do they have large economies, nor do they wield any real strategic clout. And yet Beijing has been funding myriad infrastructure projects in countries such as Antigua and Barbuda, the Bahamas, Dominica, and Trinidad and Tobago. “Dominica has received a grammar school, a renovated hospital and a sports stadium,” the New York Times reported back in April. “Antigua and Barbuda got a power plant and a cricket stadium, and a new school is on its way. The prime minister of Trinidad and Tobago can thank Chinese contractors for the craftsmanship in her official residence.”
The Bahamas, meanwhile, opened a $35 million Chinese-financed stadium earlier this year, and Beijing is also bankrolling construction of a $3.5 billion megaresort in Nassau City known as Baha Mar. A September 2009 U.S. diplomatic cable released by WikiLeaks said that Chinese investment in the Bahamas “will have a major impact on the Bahamian economy and leave the [Bahamian government] indebted to Chinese interests for years to come.” In other words, “China is using this investment solely to establish a relationship of patronage with a U.S. trading partner less than 190 miles from the United States.”
Should Washington be alarmed? Not necessarily. Thus far, China’s growing presence in the Caribbean does not pose any type of military threat, and the region’s tourism industry is still heavily dependent on American travelers and American companies. Even as Caribbean governments have welcomed Chinese investment, it has led to various financial disputes, and the influx of so many low-wage Chinese workers has proved a source of tension with the locals. For that matter, given China’s mounting economic woes, it is unclear how much longer Beijing will continue splashing money throughout the tropics.
On the other hand, there is definitely a strategic element to China’s Caribbean adventure, and the United States would be foolish to ignore it.
Start with Taiwan: A majority of the 23 countries with which Taipei enjoys full diplomatic relations are located in South America (Paraguay), Central America (Belize, El Salvador, Honduras, Guatemala, Nicaragua, Panama), or the Caribbean (the Dominican Republic, Haiti, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines). That number has shrunk since the mid-1990s, thanks to an aggressive push by Beijing, which refuses to maintain formal ties with any government that recognizes Taiwan. Between 1997 and 2007, no fewer than five Caribbean and Central American countries—the Bahamas (1997), Saint Lucia (1997), Dominica (2004), Grenada (2005), and Costa Rica (2007)—switched recognition from Taiwan to China. Beijing rewarded them with massive economic aid, including expensive athletic facilities. (For example: Dominica and Grenada each got a pricey new cricket stadium, while Costa Rica got a $105 million soccer stadium.) In 2007, however, Saint Lucia reversed its decision and restored ties with Taiwan, prompting Beijing to denounce the tiny island nation (which has fewer people than Salt Lake City) for its “brutal interference in China’s internal affairs.” While China eased up on its diplomatic campaign after Taiwanese voters elected a more Beijing-friendly government in 2008, the Communist Party is still irked that nearly two dozen countries officially recognize Taiwan.
To be sure, China’s strategic interests in the Caribbean go beyond Taiwan. Beijing has longstanding ties with the Castro dictatorship in Cuba, but the future of that dictatorship is increasingly certain, and the death of either Fidel (who is approaching his 86th birthday in August) or Raúl (who just turned 81) could usher in a period of major political instability. The Chinese are undoubtedly eager to cultivate other strategic relationships in the region, in case the Cuban regime collapses. There is no question that, on some level, they are trying to undermine U.S. influence and convince Caribbean governments that Beijing is a more generous and reliable partner than Washington. Unfortunately, given the Obama administration’s persistent neglect of the Western Hemisphere, the Chinese have effectively been pushing on an open door.
“They are buying loyalty and taking up the vacuum left by the United States, Canada and other countries, particularly in infrastructure improvements,” a former Caribbean diplomat recently told the New York Times. “If China continues to invest the way it is doing in the Caribbean, the U.S. is almost making itself irrelevant to the region.” That last comment is an exaggeration, but it should concentrate the minds of U.S. policymakers, who have treated the Caribbean as an afterthought for much too long.
Ambassador Jaime Daremblum is a Hudson Institute Senior Fellow and directs the Center for Latin American Studies.