US response to China good for the CaribbeanSunday, October 10, 2021
The global rivalry between the two superpowers, the United States and China, is so fierce that many countries think that the wise course for their foreign policy is to choose to align with one or the other. We think it might be better to have good diplomatic relations with both, as they see the Caribbean countries as willing allies.
Their interests are many-fold because of the strategic location of the Caribbean, the energy deposits and the fact that in certain circumstances the votes of these small states, collectively and even at times individually, can be valuable to a superpower.
For example, the Caribbean commands almost 50 per cent of the votes in the Organization of American States. In the United Nations, Jamaica has been a member of the all-important Security Council and St Lucia and St Vincent have chaired the UN General Assembly.
The Caribbean countries are suffering an economic crisis caused by the pandemic, compounded by growing budget deficits, escalating debt, a badly hit tourist sector and regular natural disasters consequent on climate change.
These countries desperately need aid, debt relief and loans for infrastructure development. They have witnessed the steady decline in US economic aid because of their middle-income per capita gross domestic product (GDP) but have benefited from loans on favourable terms from China which have been used to finance construction of buildings and infrastructure projects. The political leadership of the region has repeatedly asked the US for financial assistance but were rebuked for taking loans from China.
There now seems to be a change in US approach to competing with China in the Latin American and Caribbean region, or at least in pushing back against China's growing influence. The previous approach was to discourage governments from borrowing from China using the big stick.
It is noteworthy that Chinese loans for infrastructure became available at a time when US financial aid was continuing to decline concomitant with a huge infrastructure deficit and severely constrained fiscal budgets.
The Biden Administration has decided to compete with China by mounting an aid programme to compete with the Belt and Road Initiative (BRI). The US will aim for infrastructure projects meeting higher labour, environmental, climate-friendly and transparency standards. This could be a competitive advantage in engaging borrowers.
The new Biden approach mirrors his domestic infrastructure programme at home and would give effect to the Group of Seven of Build Back Better for the World (B3W) to create a coordinated infrastructure initiative for developing countries to counter China's BRI. The infrastructure needs of the developing world is estimated at $40 trillion by 2025.
In another change, from the US will take soundings from potential beneficiaries before formalising the programme. The question is: whether Congress will approve funding given the difficulties experienced in funding the domestic infrastructure programme? But this may not imperil the B3W programme as it is anticipated to leverage private sector financing.
It is hoped that the new US initiative will come to fruition and that the region will see a visit by the team of American envoys now on their way to Central and South America.