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China-wary lawmakers look to boost U.S. investment in Caribbean

Beijing has been steadily upping investments in Caribbean agricultural interests, resorts, highways and ports

The United States sent aid to Haiti after a deadly earthquake there in August, but some lawmakers say American help too often is strictly reactive.
The United States sent aid to Haiti after a deadly earthquake there in August, but some lawmakers say American help too often is strictly reactive. (Richard Pierrin/AFP via Getty Images file photo)

The Caribbean has long been an afterthought for U.S. policymakers, but as China has steadily expanded its investments there, Washington has started to take notice.

After decades of alternating between a hands-off approach and intermittent interventions largely reactive to natural disasters and migration crises, the Biden administration is taking small steps toward more sustained engagements.

Those steps include the March launch of a new White House initiative: the Small and Less Populous Island Economies Initiative, which is aimed at strengthening U.S. economic collaboration with island countries in the Caribbean and elsewhere. Along similar lines, the U.S. Agency for International Development is in the midst of a five-year, $25 million investment plan aimed at diversifying the region’s energy sources and preparing its power grids for future storm shocks.

The Biden administration in August announced the donation of 5.5 million doses of the Pfizer COVID-19 vaccine to the 15 countries that make up the Caribbean Community (CARICOM). USAID is also providing $32 million in humanitarian assistance to Haiti following this summer’s disastrous 7.2 magnitude earthquake and $5 million to help the thousands of people displaced by the recent volcanic eruption in St. Vincent and the Grenadines.

That assistance is characteristic of so much U.S. engagement there: reactive rather than proactive.

And with so many hot spots demanding U.S. attention, it is unclear whether Washington will be able to keep enough attention focused on its backyard to successfully execute a strategy of clawing back influence from China while simultaneously helping tourism-dependent Caribbean economies recover from the severe battering they took as a result of the COVID-19 pandemic.

“We repeatedly keep reasserting and rediscovering the importance of the Caribbean, but at the end of the day it translates into dribs and drabs of money and leadership visits,” said Evan Ellis, who from 2019 to 2020 served on then-Secretary of State Mike Pompeo’s policy planning staff with a focus on the Caribbean.

‘Missing in action’

A handful of lawmakers say they are determined to ensure that U.S. talk about the importance of the Caribbean is matched by actions this time.

They include Rep. Barbara Lee, chair of the House State-Foreign Operations Appropriations Subcommittee, who this summer used her first go-round writing the annual foreign aid spending bill to propose increasing Caribbean development aid by 25 percent.

“This has been a big issue for me all my life,” Lee, D-Calif., said in an interview. “We’ve been missing in action. We have not invested in the Caribbean like we should have.”

Lee is joined by other senior foreign policy Democrats. They include House Foreign Affairs Chairman Gregory W. Meeks of New York; Senate Foreign Relations Chairman Bob Menendez of New Jersey, who is especially focused on Cuba issues; and Chris Coons of Delaware, an international development wonk who now leads the Senate’s State-Foreign Operations Appropriations Subcommittee.

While Republicans have generally been less interested in the Caribbean, China’s too-big-to-miss foreign investments in Caribbean agricultural interests, resorts, highways and ports have attracted their attention, as have Beijing’s checkbook diplomacy efforts to persuade Caribbean countries to switch their diplomatic recognition away from Taiwan.

Five Caribbean countries still recognize Taiwan: Belize, Haiti, St. Vincent and the Grenadines, St. Kitts and Nevis, and St. Lucia.

“It’s a vital component of U.S. national security, and it holds the largest bloc of Taiwan’s diplomatic allies,” Rep. Mark E. Green, R-Tenn., the ranking member of the Foreign Affairs Western Hemisphere subcommittee, said during a June hearing on the Caribbean. “It would appear that over the past 15 or so years, China’s economic influence in the Caribbean area has gone from $1 billion to $8 billion.”

Grants and loans

Lee said one of her priorities is looking for ways to increase foreign assistance to the Caribbean, which is sometimes called America’s “third border.”

The fiscal 2022 State-Foreign Operations spending bill provides $80 million for the Caribbean Security Basin Initiative, a grouping of 13 Caribbean countries that receive U.S. funding for programs aimed at countering drug trafficking, improving public safety and preventing violence. That funding level is modestly higher than current enacted levels of almost $75 million and higher still than the $66 million the Biden administration requested for the coming fiscal year.

Both the Trump and Biden administrations sought funding levels for the regional security initiative that were lower than Congress was willing to accept. House lawmakers are even attempting to establish a minimum level of annual funding for the program.

On Thursday, the House Foreign Affairs Committee is scheduled to mark up legislation that would annually authorize, through fiscal 2026, nearly $75 million for the security basin initiative. Since the program’s 2009 inception, the Dominican Republic and Jamaica have received the most funding, according to a 2019 Government Accountability Office report.

In addition to the higher levels of security initiative funding, Lee secured a first-time $10 million allocation for development assistance projects focused on “inclusive economic growth,” with a primary focus on small grants that “advance entrepreneurship efforts of women, youth, and other disadvantaged populations,” according to the accompanying bill report.

An additional $15 million is provided for activities aimed at strengthening the region’s resilience in the face of natural disasters, which are only growing more severe and frequent because of climate change.

On top of grants to the region, lawmakers want to see more federally backed loans awarded. But achieving that has been tricky.

The U.S. International Development Finance Corporation (DFC) was established by Congress in 2019 to provide government-backed infrastructure loans to low-income and lower middle-income countries. Although lawmakers intended DFC to be a more attractive alternative for developing economies over China’s One Belt, One Road initiative, in practice it has been difficult for Caribbean countries to secure loans because many of the island economies are slightly too well-developed to qualify under the bank’s terms.

“Unless you change the program, income levels are too high and the difficulty of getting special exceptions is complicated,” said Ellis, a research professor of Latin American studies at the U.S. Army War College.

Testifying before the House in June, Barbara Feinstein, acting senior deputy assistant administrator for USAID’s Latin America and Caribbean Bureau, acknowledged the income thresholds have been an “impediment” to greater Caribbean participation in DFC.

“Countries in the Caribbean are critical partners in promoting prosperity, stability, and development throughout the Western Hemisphere,” DFC spokesperson Pooja Jhunjhunwala said in an emailed statement. “DFC is committed to supporting investments that address critical development challenges throughout the Caribbean including to counter climate change, strengthen health systems, promote gender equity, and advance internet, connectivity, and technology.”

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