Regaining the Initiative: Re-Evaluating the U.S. Approach to Competing with China in the Caribbean

By Major Berline Marcelin, U.S. Army; Major Robert Baber, U.S. Air Force; and Lieutenant Colonel Christopher D. Parker, U.S. Air Force

Editor's Note:  This thesis won the FAO Association writing award at the U.S. Joint and Combined Warfighting School.  The Journal is pleased to bring you this outstanding scholarship.

Disclaimer: The contents of this submission reflect our writing team’s original views and are not necessarily endorsed by the Joint Forces Staff College or the Department of Defense.

The Caribbean region is the United States’ “third border,” characterized by common interests and societal ties that yield daily, tangible benefits for U.S. citizens.

-- U.S. State Department 2019 

The People’s Republic of China’s (PRC) meteoric economic growth in the last decade has enabled the country to expand trade and investment relationships throughout developing regions and across sectors that the United States (U.S.) has been hesitant to fund. PRC’s rapid economic success has propelled them into a position to rival and overtake the U.S. as the most significant global player. Recently, the PRC has been making deep economic inroads with numerous Caribbean nations, creating emerging national security challenges regarding proximity and PRC’s growing influence in the region.

While PRC is intensifying its economic and geopolitical efforts in the Caribbean, the U.S. has yet to establish a cohesive long-term strategy to effectively challenge PRC's growing influence in the region. And while Chinese debt-trap diplomacy has been extensively studied and discussed, there has been little research into the nature of PRC’s FDIs in the Caribbean and how their approach to foreign investment is tailored to dismantle existing U.S. economic and geopolitical influence in the region.

Figure 1: Caribbean Google Map image depicting the four areas of study

This article aims to contrast the nature of PRC and U.S. FDIs throughout the Caribbean and determine how investment strategies may circumvent U.S. influence in the region. Through the analysis of three regional case studies, this article will explore the imbalances between PRC and U.S. investments in the Caribbean. Additionally, this article will evaluate how these investments closely align with the strategic priorities of Antigua and Barbuda, the Bahamas, and Jamaica. Lastly, the case studies will compare U.S. and Chinese investments in the last ten years and apply a theoretical framework to examine the nature of Chinese investments through a value proposition lens and is not intended to be a thorough study of Chinese Dept-trap Diplomacy.

Case Study: Antigua and Barbuda

Famous for its white sand beaches, Antigua and Barbuda is heralded as one of the top tourist destinations in the Caribbean. The United Nations classifies Antigua and Barbuda as a Small Island Developing State due to its remoteness, high vulnerability to the effects of natural disasters, and over-reliance on external markets for goods due to its narrow resource base. A seemingly neglected slice of the British Commonwealth, the nation’s economy was severely affected by effects of the global economic recession in 2009. Between 2009 and 2011 the island suffered a steep decline in tourism, the financial downfall of its largest private sector employer, and a rise in debt; Antigua has not yet returned to its pre-crisis growth levels while the island of Barbuda suffered significant damages after hurricanes Irma and Maria in 2017.

The country’s tourism-dependent fiscal crisis in the past ten years resulted in increased dependencies on FDI–particularly in industries that create jobs and enhance economic activity.  In light  the nation’s systemic economic woes and in an effort to set the country on an ambitious course towards prosperity, Antigua and Barbuda’s Prime Minister, Gaston Browne outlined the following seven national strategic priorities in 2014:

1. Adequate Transportation and Economic Infrastructure

2. Strong Tourism Industry as an Economic Anchor

3. Transform the Country into a Green, Low-Density, High-End Tourism Destination

4. Better Utilization of Our Marine Space

5. Export of Non-Tourism Services

6. Reducing the Cost of Energy and Improving Energy Security

7. Better Access to Adequate Housing

Vowing to turn Antigua into an “economic powerhouse,” in 2014, PM Browne inked a seemingly profitable $740 million industrial and infrastructure investment deal with one of PRC’s most prolific foreign investors, Yida Zhang. Today, the investment deal is collectively referred to as the Yida Project and memorializes Antigua and Barbuda as the first Eastern Caribbean nation to sign up for PRC’s global Belt and Road Initiative. Once realized, the project will span over 2,000 acres, include up to seven hotel resorts with casinos, a golf course, a commercial and retail space, a sports arena, a shipping port, and foster the development of the country’s first four-lane highway system. The deal also includes a ceramic and steel industrial hub aimed towards enhancing the countries’ market-economy.

Additionally, the Antiguan government urges that the Yida Project would be investing more than $74 million (USD) annually in Antigua and Barbuda over the next ten years, along with broadening “Antigua and Barbuda presence in the PRC to attract additional economically viable investments.”

In response to increasing PRC investments in the region, during a January 2020 Caribbean Community (CARICOM) diplomatic conference in Jamaica, Secretary of State Mike Pompeo warned Caribbean national leaders to view PRC investments with suspicion. Pompeo made clear that PRC encroachment is a threat to national security in Latin America and the Caribbean while U.S. motives in the region remains anchored towards advancing democracy. Subsequently, in June 2020, PM Browne received a call from the U.S. Ambassador to Antigua, Linda Taglialatela threatening to “withdraw all U.S. military support they give to the Antigua & Barbuda Defense Force.” Prime Minister Browne publicly credited this action to U.S. concerns regarding the country’s growing diplomatic and economic relations with PRC. The following month, Antigua and Barbuda backed PRC’s position in the UN regarding a security law that imposed harsh penalties on Hong Kong protestors, which the U.S. vehemently opposed.

Figure 1 Antigua and Barbuda PM Browne and Director of Yida International Investment Limited, Yida Zhang

In clear reciprocity, in March 2021, Prime Minister Browne approved a deal to expand the Yida Project by one hundred acres, approving the $200 million (USD) foreign investment deal of an offshore medical university, an additional hotel, and a financial center. Once completed, the Yida Project is projected to create thousands of local job opportunities and annually generate over $3 billion in direct revenue for the country.

Meanwhile, the U.S. and Antigua and Barbuda share remarkably close trade relations, with the U.S. being the country’s number one importer followed by PRC.ⁱ However, compared to PRC, U.S economic investments in the country are slight. According to the State Department, the U.S. goal in Antigua and Barbuda is to support the economic development, protect public health, and improve its citizens’ security and standard of living. A significant amount of U.S. economic investment and assistance to Antigua and Barbuda flows primarily through multilateral agencies such as the World Bank and the Caribbean Development Bank, CARICOM, and through the U.S. Agency for International Development office in Bridgetown, Barbados. These organizations decide the appropriate levels of allocation for each country in the region.

Since 2010, the U.S. has supplied close to $8.5 million (USD) in foreign aid to the country which was mainly earmarked towards defense related initiatives. In 2017, when the two-island nation was devastated by Category 5 Hurricane Irma resulting in $200 million worth of damage, the U.S. donated $169,000 towards the economic recovery effort. In January 2022, Prime Minister Browne lamented during a televised interview that the U.S. should increase financing and aid to the Caribbean in order to maintain a basic standard of living. The U.S. responded in March 2022 by donating $1.5 million in support of purchasing COVID-19 vaccines which would be coordinated through the Caribbean Public Health Agency and split between nine Caribbean nations including Antigua and Barbuda.

The Antigua and Barbuda case study highlights how PRC is willing and able to immediately and effectively meet a country’s needs as outlined in their strategic priorities. The nature of these investments includes value propositions that encourage long-term financial growth with broader economic spillover. Additionally, PRC’s financial engagements with Antigua and Barbuda reveal PRC’s tendency toward peer-to-peer bilateral engagements while fostering partnerships that can be perceived as engendering self-agency. Whereas U.S. investments are distributed through third-party multilateral organizations and are principally focused on building trust and goodwill through humanitarian assistance efforts. Additionally, the U.S.’s regional role as a donor country fosters a less empowering donor-beneficiary relationship with Antigua and Barbuda. The effectiveness of PRC’s approach and growing influence is supported by Antigua and Barbuda’s backing of PRC’s position on Hong Kong at the UN Security Council in July 2020.

Case Study: The Bahamas

Eighty-five percent of the Bahamian GDP is driven by tourism, international banking, and investment management.ⁱ Their primary import partner is the U.S., which supplies most of the nation’s food and manufactured goods; The Bahamas is diversifying its supply chain to include Asian and Latin American suppliers. The Bahamian government continues to contend with a depleted healthcare system, a national inflation crisis, and the existential threats posed by climate change. The government is attempting to rectify these issues with a plan to stabilize their economy, governance, social policy, and the environment (Natural and Built).

The current Bahamian administration believes the Bahamas is a “high value” brand in the international tourism marketplace,19F and remains willing and open to maintain strong economic and diplomatic ties with PRC. Deputy Prime Minister Chester Cooper has encouraged PRC investors to take advantage of opportunities in the tourism, agricultural, and renewable energy sectors and to partner with the government on projects such as the upcoming public/private partnership and an airport redevelopment project–meeting the Bahamas Island Priorities as outlined in their National Development Plan (Vision 2040).

Figure 3: Promoting China-Bahamas Co-operation

In the last ten years, the PRC has increased its resources in the Bahamas, aggressively increasing its influence in the region, primarily due to its geographic significance to the United States. Furthermore, PRC is working in the Bahamas include Bahamas recognition of the "one- China" policy and ending their diplomatic relations with Taiwan through economic coercion through loans and infrastructure. Over the past ten years, PRC has invested over $6.4 billion in infrastructure (roads, ports, resorts, and digital). Additionally, they recently committed to the poultry farmers with donated funds from PRC.

The nature of U.S. investments is largely focused on Economic and Health Programs, International Narcotics Control and Law Enforcement, and Nonproliferation, Antiterrorism, Demining, and International Military Education and Training–all of which strengthen our “Third Border.” Over the last 10 years the U.S. has given $185 million (USD) directly to the Bahamas towards development and indirectly through the Latin America and the Caribbean annual disbursement. The Bahamas receives this annual allocation through the Caribbean Community (CARICOM).

The Bahamas case study demonstrates that while their methodology is questionable the PRC is more likely to address the Bahama’s strategic long-term economic priorities–treating the Bahamas like a partner in bilateral engagements. The U.S. government primarily assists in urgent lifesaving, basic human needs. While the PRC has maintained an embassy on the island, it has been over ten years since the U.S. has had an ambassador to the Bahamas. The PRC works directly with the Bahamas to gain influence and build partners while U.S. investments are mostly distributed through third-party multilateral organizations and are largely focused on building trust and goodwill through humanitarian assistance efforts. The U.S.’s regional role is more of a parent-child relationship instead of partners. This speaks volumes to the Bahamians as to who wants to be a true partner. 

Case Study: Jamaica

According to the U.S. Embassy website for Jamaica, the United States has "a strong, growing, dynamic partnership. It also goes on to state that the two have historically cooperated on several wide-ranging international issues, addressing issues of mutual interests, all under a foundation of mutual trust and cooperation. The Top Jamaican priorities focus on; healthy and safe population, security, and effective governance. on the lower end of priorities include enabled businesses, strong economic infrastructure, sustainable development.

Jamaica has been taking economic loans and construction packages from PRC for the last two decades. The most notable or large-scale project was in 2010, when Jamaica used the Chinese state-owned construction firm China Harbor Engineering Company (CHEC). Between 2010 and 2015, CHEC owned a $400 million dollar Infrastructure Development Project , then again in 2013, CHEC took on another $350 million Major Infrastructure Development Program (MIDP). CHEC was the major developer of Jamacia's north-south freeway after the French contractor Bouygues Travaux abandoned the project in 1999 due to financial difficulties.

Because Jamaica did not want to burden itself with added loans, Jamaica and CHEC reached a different agreement–five hundred hectares of land adjacent to the new PRC-built North-South Highway for a 50-year concessionary period. As of 2016, the land transfer had not occurred, and the highway is now a PRC controlled toll road with charges exceeding what the average Jamaican can afford.

U.S. support to Jamaica is driven by Jamacia’s own national priorities. USAID’s support focuses on three key sectors: support to strengthen Jamaica’s resilience focus on disaster risk reduction; pursue greater partnership with the GoJ and other donor initiatives that address youth crime and violence, and through the President’s Emergency Plan for AIDS relief (PEPFAR) achieve HIV/AIDS epidemic control by working with a local NGO and the private sector. Other forms on U.S. support emphasis on elements that lead to safety and security of both the nation and region. By reducing corruption, increasing transparency and fair governance, fostering Jamaican participation in CARICOM security efforts, bolstering education, and decreasing energy reliance.

The U.S. focuses more on stability essentials, natural disaster resiliency, and fighting destabilizing corruption and crime. PRC focuses more on economic infrastructure–large value- building projects that will potentially improve the economy. The focus areas for the U.S. are altruistic and in first order effects the projects; PRC supports are good as well but come with negative second and third order effects. The way PRC completes projects creates an adverse impact on the local economy; while many laborers come from local populations, other qualified contractor companies in Jamaica are not able to compete with PRC on larger projects. Rather than large sums of financial sourcing being channeled into Jamaica, it is instead handed directly over to PRC which, in most cases, pays no taxes back to the Government of Jamaica. When economics work this way, it ultimately comes to the people of Jamaica who pay the PRC bank loans, and again no money through taxes is funneled back into the country and local economy. This lack of financial cycling takes more money away from the country instead of stimulating its economy.

Conclusion

Analysis of the three case studies demonstrates that the differences between how the PRC and the U.S. approach foreign investment in the Caribbean directly affects levels of geopolitical and economic influence. Conceptually, the nature of PRC investments in the Caribbean are more proactive and are focused on encouraging and advancing CCP priorities and BRI initiatives. PRC FDIs throughout the region are predominantly centered on tourism growth, manufacturing facilities, establishing distribution hubs such as deep-water ports, and developing critical transportation infrastructure. The value proposition of PRC investments seems to be tailored to strategically align with the stated long-term national priorities of a specific country. Additionally, the PRC tendencies toward direct bilateral engagements better address the separate needs of each Caribbean nation, potentially allowing the PRC to have more influence within a specific country. Ultimately, by applying these approaches the PRC may conceivably outmatch U.S. economic and geopolitical influence in the Caribbean.

U.S. investments tend to be more reactive in nature and focus on encouraging democratic governance and addressing humanitarian needs as a vehicle for goodwill, trust, and influence. While altruistic in nature, U.S. aid tends be perceived as wholly short-term, crisis-management investments. Additionally, U.S. investments in the region tend to funnel through multilateral organizations where a third party makes allocation decisions. The Antigua and Barbuda case study demonstrates that distributing investments through multilateral organizations can foster perceptions of inequality, and unlike the PRC bilateral approach, this method can weaken U.S. influence in the region.

To maintain a favorable balance of power in the Caribbean, the U.S. should reevaluate its investment and aid practices. Adopting a more bilateral direct approach will foster synergistic communication between nations, strengthen trust, enhance conflict resolution, while also creating conditions that position the U.S. as the preferred economic and geopolitical partner.

Additionally, the U.S. should adopt investment strategies that create more opportunities for Caribbean nations to achieve their economic potential. The U.S. should adopt investment mechanisms that further incentivize private U.S. corporations to invest in the Caribbean.

About the Authors

Major Marcelin is currently assigned with the Defense Threat Reduction Agency (DTRA) as a strategic planner. She was commissioned through ROTC at Norwich University in 2008, where she earned a degree in political science and earned an M.S. in environmental science through Webster University in 2012. In 2019, she earned a master's in international public policy from Johns Hopkins University. Her military career includes various assignments as a CBRNE Officer and FA-59 Strategic Planner. 

Major Baber is currently serving as Intelligence Planning, J2, NATO Joint Forces Command Brunssum, Netherlands. He was commissioned through ROTC, University of Portland in 2008. Major Baber earned his B.S. in history from Portland State University, and a M.A. in Theology from Liberty University in 2013. Prior to this assignment he served as Deputy Chief of Staff, AFCENT, Al Udied Qatar.

Lieutenant Colonel Parker currently serves as the Deputy Surgeon/ Chief, Medical Plans and Operations for Special Operations Pacific (SOCPAC), Camp Smith, HI. He received a direct commission in 2007 as a Medical Service Corps Officer. He earned his B.S. in Microbiology from Idaho State University in 2000, and his master’s in Healthcare Administration (M.H.A.) in 2013 from Grantham University. Prior to his current assignment, he served as Medical Readiness Flight Commander at 59^th Medical Wing.