In­flu­ence Ar­bi­trage: Bei­jing in the Caribbean

The Star (St. Lucia) - - BUSINESS - By Chris­tian Wayne

Although 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 nonex­is­tent, save for a few fron­tier ar­bi­trageurs like Hong Kong­based 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 In­terAmer­i­can 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.’

Chi­nese pol­icy banks have pro­vided bil­lions in loan com­mit­ments to Latin Amer­ica and the Caribbean.

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