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The relevance and state of US-Caribbean relations – Part 2

This commentary continues the discussion on the relevance and state of US-Caribbean relations against the backdrop of a publication by the Washington-based, Centre for Strategic and International Studies (CSIS), entitled, “The Relevance of US-Caribbean Relations – Three Views”.   

In the discussion of the security relationship between the US and the Caribbean, Evan Ellis, identifies China as a problem, presumably for the US.  He rightly says that expanding loans and equity investment in the Caribbean will give China “increasing leverage in the region of critical issues”.   The latter point is true.  And, it should have been obvious to US government policy makers and planners a long time ago, particularly when the decision was made to reduce official development assistance and investment to their “third border” as they themselves describe the Caribbean. The latest affirmation of the region’s ‘third border’ status is contained in the first sentence of the most recent US State Department’s “Strategy for Engagement in the Caribbean”.
But the Caribbean did not choose China over the US, nor did it set out to encourage Chinese interest in the region.   China went into the Caribbean as part of its global strategy to end its own isolation, to expand its economic interests, and to gain support for itself as a global player.   When it got to the Caribbean, it found the US largely preoccupied elsewhere. Caribbean governments, faced with the need to provide employment and curb poverty by growing their economies through investment in infrastructural development, found a willing partner in China.   Unsurprisingly, they welcomed China, and naturally, as a result, they will listen to China’s voice on international matters.   If the US worries about a Chinese voice in Caribbean ears; it should place itself in the position to rival the voices to which the region is paying attention.
Ellis makes too much of training of the region’s military officers in PRC institutions and gifts of Chinese military equipment as a security issue.  Surely, it would require much more than a handful of training opportunities, and small gifts of military equipment to a few countries, for a security threat to be posed to the US.  If Washington is truly concerned about any undue influence on the Caribbean from China, it should match the level of China’s bilateral investments in these countries on the same terms of soft loans and without conditionalities of a non-economic nature.
What the US should concern itself with more is that, due to its own policies that have vastly reduced scholarships for Caribbean students and that do not encourage Caribbean students to study in the US, the present generation of younger people are getting their higher education mostly in Cuba and China which do offer generous scholarships.  Is it not axiomatic that they would lean more toward those countries than to the US?  
One of Mr Ellis’ disturbing conclusions is that, as part of its engagement with the region, the US should send “strong signals regarding engagement with Iran, Russia and China in the security domain”.   What is envisaged as “strong signals” is left to the imagination, but if it is a “sticks” not “carrot” approach, those signals will serve to worsen not improve US-Caribbean relations.  History has taught that intimidation breeds resistance over time.  And, it is cooperation that is needed, not coercion.
Turning to the view of Scott MacDonald on the economic issues.  He rightly identifies “de-risking” – the process by which US banks are withdrawing correspondent banking relations (CBR’s) from Caribbean financial institutions – and infrastructure needs as two big challenges for the region.  De-risking directly affects US-Caribbean relations and addressing Caribbean infrastructure meaningfully would help to improve the relationship.
MacDonald is correct that “de-risking could push transactions to informal channels, making it difficult to monitor illicit trafficking and in effect countering anti-money laundering efforts”.   The reality is that more than making it difficult to ‘monitor’ such transaction, it will be impossible to stop them.  MacDonald offers no solutions to the problem.  But, as a matter of record, the Caribbean, at various levels, have proffered a few, none of which have yet been taken-up by US authorities who see the issue through the prism of demanding higher levels of stringent anti-money laundering regimes in the region.  Everything has room for improvement and the Caribbean has continuously been upping its anti-money laundering game, both in relation to laws and implementation.  Factually, the majority of Caribbean countries are more in compliance with Financial Action Task Force rules on disclosure of beneficial owners of bank accounts, corporations and trusts than several states of the US. 
If concerted action is not taken by the relevant US authorities to improve the situation with regard to de-risking, not only will financial transactions go underground outside the reach of governments, it will also force Caribbean countries – through no fault of their own – to move their trade in goods and services from the US to other countries.  If they can’t pay, they can’t buy; and similarly, they can’t sell. The US will lose the trade in goods and services that earns revenues and provides employment.  More importantly, of course, the US will also lose influence in the region.
The US expends a great deal of money on an annual basis, producing reports on money laundering, people trafficking, terrorism financing, and arms trafficking.  Caribbean governments have questioned them every year. These reports are based on dubious sources and this year, many of the US agencies that were supposed to have participated in the International Narcotics Control Strategy Report, denied any involvement according to information they provided under the Freedom of Information Act.  The approach of the reports has not been constructive; it has not been geared to detecting real problems and identifying ways in which the US can help.  The reports have been condemnatory without showing hard evidence.  They are unnecessary irritants to US-Caribbean relations, particularly as they have contributed to increasing fear in the US banks that have severed correspondent banking relations with Caribbean financial institutions.
(To be continued)



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