China’s Growing Influence in the Caribbean

This article was originally published by the Institute for Defence Studies and Alalyses (IDSA) on 3 August 2016.

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.”(1) Like a 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$ 3 billion as well as grants of up to $8 million for the region.(2) 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.

President Xi’s visit to Trinidad was followed by a reciprocal visit by Prime Minister Persad-Bissessar to Beijing in February 2014, when, in a major breakthrough for Chinese arms sales to the region, the controversial purchase of a long-range maritime patrol vessel was agreed upon.(3) This was again a demonstration of the growing Chinese influence over the governments of the region, which so far had been firmly under the largely benevolent gaze and geopolitical sway of the US. The decision to buy Chinese patrol vessel also marked the first sale of a non-Western military hardware to the Caribbean nation since the end of the Cold War.(4) In fact, acceptance of Chinese aid and investment has since become a norm in the English-speaking Caribbean, where the US has been conspicuous by its absence in respect of doling out large bilateral loans and grants. In quite a contrast, while the private American investment declined post the 2008 financial crisis, the Chinese investment in the region grew by more than 500 per cent between 2003 and 2012.(5)

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.(6) 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.(7) 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.(8)

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 Persad-Bissessar’s purchase of the aforementioned Chinese patrol ship, which was selected against technical advice but which had the critical virtue of being deliverable prior to the elections. Trinidad’s previous government, under 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.(9)

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.(10) In fact, as early as 2009, Zhao Zhihai, a researcher with the Zhangjiakou Academy of Agricultural 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.(11) 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.

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.(12) 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.(13) 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.(14) 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.(15) 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.

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.(16) In contrast, the US prefers to conduct its economic assistance programmes 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.(17) 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.

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.(18) 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.

Rather surprisingly, the US does not seem to be perturbed about 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.

Notes

1. “Trinidad and Tobago PM hails Chinese dream”, China Daily Europe, June 02, 2013 (Accessed August 01, 2016)

2. Robin Wigglesworth, “Caribbean in crisis: Chequebook diplomacy”, Financial Times, December 17, 2013 (Accessed August 01, 2016)

3. “China to sell long range border patrol vessel to TT”, Trinidad Express, February 25, 2014 (Accessed August 01, 2016)

4. Between 1979 and 1983, Grenada was a recipient of substantial military largesse from the former Soviet Union and Cuba.

5. Robin Wigglesworth, no.2.

6. Ezra Fieser, “Why is China spending billions in the Caribbean?”, GlobalPost, April 22, 2011, pp. 4-6 (Accessed August 01, 2016)

7. Benedict Mander and Robin Wigglesworth, <href=”#axzz4G9HlSpcQ”>“China steps up Caribbean strategy”, Financial Times, May 20, 2013 (Accessed August 01, 2016)

8. Robin Wigglesworth, “Paradise Lost”, Financial Times, December 19, 2015 (Accessed August 01, 2016)

9. Robin Wigglesworth, no.2.

10. Ibid.

11. Andrew Lumsden, “Jamaicans must read China’s record, not just its lips”, Council on Hemispheric Affairs, June 15, 2015 (Accessed August 01, 2016)

12. Reshma Ragoonath, “Serious structural flaws keep NAPA closed”, Trinidad Guardian, May 10, 2015 (Accessed August 01, 2016).

13. Lara Pickford-Gordon, “Las Alturas to be demolished”, Newsday, May 29, 2012 (Accessed August 01, 2016)

14. Jeniffer Jett, “Bahamas Mega-Resort Stands Empty, Casualty of Dispute With Chinese Partners”, The New York Times, February 02, 2016 (Accessed August 01, 2016)

15. John Lippert and Dawn McCarty, “The Ghosts of Baha Mar: How a $3.5 Billion Paradise Went Bust”, Bloomberg, January 04, 2016 (Accessed August 01, 2016)

16. Robin Wigglesworth, no. 2.

17. Fernando Menéndez, “China comes to the Caribbean”, China US Focus, January 25, 2014 (Accessed August 01, 2016)

18. Robin Wigglesworth, no. 2.

---

About the Author

Dr. Sanjay Badri-Maharaj is an independent 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.

For more information on issues and events that shape our world, please visit our CSS Security Watch Series or browse our Publications.

Save

Save

Save