Influence Arbitrage: Beijing in the Caribbean

[dropcap]A[/dropcap]lthough active in the Caribbean for years, much of China’s early involvement with the region was tied closely to Beijing’s diplomatic arms race with the Republic of China (Taiwan). Chinese firms operating in the Caribbean were non-existent, save for a few frontier arbitrageurs like Hong Kong-based Jardin Matheson. In the early 2000s, however, things began to change. As China’s domestic population grew, and its level of economic development rose, the Chinese growth engine began to demand more and more resources. The acquisition of food and energy became strategic imperatives for the rapidly globalizing nation. Emerging markets like Africa, Latin America, and the Caribbean were rebranded overnight. The world’s most inefficient backwaters were soon transformed to China’s newest frontiers. The floodgates had opened.

In the emerging world, the One China Policy can be compared to an antenna; a rudimentary lightning rod. Through no more than a series of poorly-choreographed press conferences and a few awkward handshakes, Caribbean heads of state can become exclusive members of Beijing’s global club of convenience. Only the cash-strapped and debt-riddled need apply.

The whispering of this seemingly dubious incantation is a mere abstract. Something less tangible than a verbal agreement, yet more predictive than a campaign trail promise. Nothing more than shameless coquetry, the prelude to diplomatic intercourse. Driven solely by primal instinct – political self-preservation – and unspoken intention, a momentary infatuation is born. If only for the night. Despite countries like Grenada and Dominica, who’ve aptly demonstrated that it is in fact possible to attract billions in Chinese FDI by doing nothing more than having a pulse, Chinese investment of recent has become multifaceted. Though formal diplomatic ties with Beijing tend to foster deeper engagement, the two are no longer mutually exclusive.

Since 2005, Chinese policy banks have provided more than $141 billion in loan commitments to Latin American and Caribbean countries, dwarfing traditional partner lending from institutions like the World Bank and the Inter-American Development Bank.

“It’s no surprise that China was able slip in so easily. The door had been left ajar.”

Globalization is a phenomenon that ebbs and flows, and once again the Caribbean finds itself caught in the headwinds of America’s backyard. In a post-2008 world, in a region with some of the highest loan delinquency rates on the planet, it’s no surprise that China was able slip in so easily. The door had been left ajar. The global meltdown devastated the tourism industry – the bedrock of the Caribbean. As ambitious construction projects began to haemorrhage, and their investors quickly sobered, many opted to cut their losses in hopes of saving the host. Some were successful, most weren’t. The party was over and the Caribbean’s ‘traditional friends’ had all gone home. The only one left to help clean up the mess was China. The recession created a void of influence that the Chinese graciously filled. They had graduated from influence peddling with the Taiwanese, to a high-stakes game of chess against the West – using the Caribbean as its geopolitical pawns.

“They could do something like send a ship to fuel in a Latin American port,” says former Mexican ambassador to China, Jorge Guarjardo. “Little signals like that send a message: if the US wants to be in the South China Sea, we can just as easily push for our navy to make fueling stops in South America.”

‘Blessed is the Second mouse, for he shall inherit the Cheese.’