In geopol­i­tics, it is the long game that mat­ters

Jamaica Gleaner - - BUSINESS - David Jes­sop is a con­sul­tant to the Caribbean Coun­cil. david.jes­sop@caribbean­coun­

IN A few days, the out­come of the United States pres­i­den­tial elec­tion will be known. Whichever of the two prin­ci­pal can­di­dates wins, it is likely that sooner or later that they will have to ac­cept that the old global or­der has changed, and the coun­try they need to reach an ac­com­mo­da­tion with, as an equal, is China.

Although Europe and Rus­sia would have it that they, too, are world pow­ers and opin­ion for­m­ers in the mul­ti­po­lar world that is emerg­ing, nei­ther has as strong or con­vinc­ing an eco­nomic, mil­i­tary, diplo­matic, and po­lit­i­cal case as China has to be in the first di­vi­sion of global power.

While Europe con­tin­ues to project its so­cial achieve­ments and hu­man­i­tar­ian and other val­ues, it seems to many, as the for­mer Aus­tralian Prime Min­is­ter, Kevin Rudd, has tartly ob­served, that it is “hold­ing a seminar with it­self”.

Rus­sia, too, de­spite its mil­i­tary spend­ing and de­sire to project its power glob­ally and to pro­mote its great­ness, does not, ac­cord­ing to its own fi­nan­cial es­ti­mates, have the un­der­ly­ing fu­ture eco­nomic strength to sus­tain its present pos­ture.

In­stead, the world’s fu­ture di­rec­tion seems in years to come, more likely to be prin­ci­pally de­ter­mined by the United States and China

If this is the global di­rec­tion of travel, it con­tains an im­por­tant mes­sage for the Caribbean. As the Obama ad­min­is­tra­tion comes to an end and the unipo­lar­ity that en­abled it to dom­i­nate the decades fol­low­ing the col­lapse of the Soviet Union fades, the Pres­i­dent of Venezuela Ni­co­las Maduro (cen­tre) and Ex­ec­u­tive Di­rec­tor of Oil and Nat­u­ral Gas Cor­po­ra­tion Naren­dra Ku­mar Verma flash vic­tory hand signs as they pose for a photo, at the Mi­raflo­res pres­i­den­tial palace in Cara­cas, Venezuela, Fri­day, Novem­ber 4. Venezue­lan state cor­po­ra­tion PDVSA and ONGC agreed to in­vest more money to in­crease pro­duc­tion of Venezue­lan oil. Pic­tured right is PDVSA Pres­i­dent Eu­lo­gio Del Pino.

world’s sec­ond-rank­ing and ter­tiary pow­ers will have to ad­just to an or­der in which China and the US vie for long term eco­nomic supremacy.

Ir­re­spec­tive of its small­ness, mar­ginal eco­nomic sig­nif­i­cance and lack of unity, the Caribbean may in this, like the South China Seas, come to have an un­sought role.

In the last few weeks alone, Chi­nese in­ter­ests have demon­strated that they in­tend to have a cen­tral eco­nomic po­si­tion in the re­gion, and through huges­tate backed in­vest­ments will con­trol fa­cil­i­ties strate­gic to the economies of the Caribbean na­tions in which they are lo­cated.


Re­cent an­nounce­ments in­clude con­fir­ma­tion that the Guang­dong Zhen­rong En­ergy Com­pany (GDZR) is plan­ning to in­vest more than US$5.5 bil­lion in up­grad­ing the Isla re­fin­ery on Cu­raçao; state­ments in­di­cat­ing that the Hong Kong-based con­glom­er­ate, Chow Tai Fook En­ter­prises Lim­ited (CTFE), which owns Rosewood Ho­tels, is to pur­chase the un­fin­ished US$3.5 bil­lion Baha Mar megare­sort in the Ba­hamas; a pledge of strate­gic co­op­er­a­tion be­tween the govern­ment of the Bri­tish Vir­gin Is­lands and the Chi­nese port city of Tian­jin to de­velop long-term devel­op­ment co­op­er­a­tion, at a time when the BVI is seek­ing greater au­ton­omy in its re­la­tion­ship with Lon­don; and the re­ported au­tho­ri­sa­tion by the Ba­hamas govern­ment to its em­bassy in Bei­jing to be­gin ne­go­ti­a­tions on a pos­si­ble US$2.1-bil­lion fish­eries and agri­cul­ture project mak­ing use of leased Crown land.

In other de­vel­op­ments, it was con­firmed in Septem­ber, dur­ing a visit to by the Chi­nese Prime Min­is­ter, Li Ke­qian, to Cuba, that the two na­tions in­tend to raise their eco­nomic co­op­er­a­tion to the level of their close po­lit­i­cal ties and to in­ten­sify the mu­tual po­lit­i­cal trust, a process that in part will in­volve China in help­ing fi­nance Cuban in­fra­struc­ture and en­gage in projects from biotech­nol­ogy to bank­ing.

Dis­cus­sions also con­tinue else­where in the re­gion, for ex­am­ple, be­tween Guyana and Brazil, on ac­cess­ing China’s US$10-bil­lion Latin Amer­i­can in­fra­struc­ture fund to fi­nance an all-weather high­way be­tween Ge­orge­town and Boa Vista; and with coun­tries from Ja­maica to St Lu­cia on ma­jor in­fras­truc­tural and pri­vate Chi­nese-funded projects.

Of all of these, per­haps the most far-reach­ing is the pro­posal by the largely state-owned GDZR, which will in­volve it in­vest­ing more than US$5.5 bil­lion in up­grad­ing the Isla re­fin­ery on Cu­raçao and build­ing a nat­u­ral gas ter­mi­nal with the sup­port of some of China’s lead­ing en­ergy and fi­nance com­pa­nies.

Un­til re­cently, Venezuela’s state-owned oil com­pany, PDVSA, had planned to re­new its lease on the fa­cil­ity, which ex­pires in 2019, but has been un­able to pro­ceed be­cause of the coun­try and the com­pany’s pre­car­i­ous eco­nomic sit­u­a­tion.

It is a de­ci­sion that has im­pli­ca­tions for Venezuela and al­most ev­ery coun­try in the Caribbean and Cen­tral Amer­ica.

The 335,000-bar­rel-per-day re­fin­ery has be­come cen­tral to Venezuela’s abil­ity to over­come in­ef­fi­cien­cies in its own re­fin­ing fa­cil­i­ties. In re­cent years, it has been used reg­u­larly to make up short­falls of gaso­lene and diesel when PDVSA’s own re­finer­ies have been un­able to op­er­ate ef­fi­ciently or have been shut down through lack of main­te­nance or spares.

It has also been cen­tral to the coun­try’s abil­ity to meet its in­ter­na­tional com­mit­ments to sup­ply oil and oil prod­ucts un­der the oil­for-loans fi­nanc­ing ar­range­ment ar­range­ments it has with China, or with the Caribbean which ben­e­fits from its con­ces­sional PetroCaribe pro­vi­sions.

Venezuela also uses the ter­mi­nal to store its heavy crude, some of which is shipped to China and In­dia, and to re­ceive im­ported light crude from the US for re­fin­ing and to di­lute Venezue­lan heavy crude.


Cu­raçao’s de­ci­sion to turn to China would seem to set aside as­pects of Venezuela’s hope­d­for long-term strate­gic role in the re­gion. It also im­plic­itly raises ques­tions about its longterm abil­ity to meet its PetroCaribe com­mit­ments and other mul­ti­ple prom­ises re­lat­ing to ev­ery­thing from the cre­ation of a Caribbean eco­nomic, com­mer­cial and fi­nan­cial space, to the pro­vi­sion of en­ergy se­cu­rity for the na­tions of the re­gion.

If as seems likely, the in­ter­nal sit­u­a­tion in Venezuela con­tin­ues to de­te­ri­o­rate and its abil­ity to de­liver on its prom­ises is eclipsed, China’s eco­nomic role in the re­gion will be­come even more sig­nif­i­cant. If this hap­pens, the global and geostrate­gic con­text of the Caribbean in the Amer­i­cas is likely to be­come of greater in­ter­est in a changed Wash­ing­ton.

Whether the re­gion will be able to rec­on­cile the pres­sures that may emerge from a process so far largely de­ter­mined by eco­nomic need; what the longterm ef­fect of changed re­la­tion­ships on the re­gion’s al­readyfrag­mented pol­i­tics and for­eign re­la­tions will be; and how this may re­late to other re­gional di­vi­sions re­mains to be seen.

De­spite this, Chi­nese en­gage­ment with the Caribbean is wel­come. It re­flects how much the old global or­der is chang­ing. China’s rise has been slow, but it is about to be­come a global su­per­power. In geopol­i­tics, it is the long game that mat­ters.



David Jes­sop


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