China-Distrustful Lawmakers Seek to Boost US Investment in the Caribbean | Business

The Caribbean has long been an afterthought for US policymakers, but as China has steadily increased its investment there, Washington has started to take notice.

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

These steps include the launch in March of a new White House initiative, the Small and Less Populated Island Economies Initiative, which aims to strengthen the United States’ economic collaboration with island countries in the Caribbean and beyond. . Similarly, the U.S. Agency for International Development is in the middle of a five-year, $ 25 million investment plan to diversify the region’s energy sources and prepare its grids. to future storm surges.

The Biden administration announced in August 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 the disastrous 7.2 magnitude earthquake this summer and $ 5 million to help the thousands of people displaced by the recent volcanic eruption in Saint-Vincent. -and the Grenadines.

This assistance is characteristic of so many American engagements there: reactive rather than proactive.

And with so many hot spots demanding U.S. attention, it’s unclear whether Washington will be able to keep enough attention on its backyard to successfully execute a strategy of reclaiming US influence. China while simultaneously helping the tourism-dependent Caribbean economies to recover from the severe blows. they took in the wake of the COVID-19 pandemic.

“We keep reaffirming and rediscovering the importance of the Caribbean, but ultimately that translates into tickets and visits from leaders,” said Evan Ellis, who from 2019 to 2020 was secretary of the Caribbean. State of the day, 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 the US discourse on the importance of the Caribbean is matched with action this time around.

These include Representative Barbara Lee, Chair of the House Foreign Operations and State Appropriations Subcommittee, who used her first round table this summer to draft the annual spending bill. foreign aid to propose a 25% increase in Caribbean development assistance.

“This has been a big deal for me my whole life,” Lee, D-Calif., Said in an interview. “We were reported missing in action. We haven’t invested in the Caribbean like we should have.

Lee is joined by other senior Democrats on foreign policy. They include Speaker of the House of Foreign Affairs Gregory W. Meeks of New York; Senate Foreign Relations President Bob Menendez of New Jersey, who has a particular focus on Cuban issues; and Chris Coons of Delaware, an international development specialist who now heads the Senate Subcommittee on Credits for Foreign Operations.

While Republicans have generally shown less interest in the Caribbean, China’s oversized foreign investment in Caribbean agricultural interests, resorts, highways, and ports caught their attention, as did the checkbook’s diplomacy efforts. from Beijing to persuade the Caribbean countries to change their diplomatic relations. recognition far from Taiwan.

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

“It is a vital part of the national security of the United States and it holds the largest bloc of diplomatic allies in Taiwan,” said Representative Mark E. Green, R-Tenn., A leading member of the sub – Western Hemisphere Foreign Affairs Committee, at a hearing in June. over the Caribbean. “It appears that over the past 15 years, China’s economic influence in the Caribbean region has grown from $ 1 billion to $ 8 billion.”

Grants and loans

Lee said one of his priorities was to look for ways to increase foreign aid to the Caribbean, which is sometimes referred to as America’s “third frontier”.

The 2022 state-foreign operations spending bill provides $ 80 million for the Caribbean Basin Initiative, a grouping of 13 Caribbean countries that receive US funding for programs aimed at combating drug trafficking, improving public safety and preventing violence. That funding level is slightly above the currently adopted levels of nearly $ 75 million and even higher than the $ 66 million requested by the Biden administration for the next fiscal year.

The Trump and Biden administrations have both sought funding levels for the regional security initiative lower than what Congress was prepared to accept. House lawmakers are even trying to establish a minimum level of annual funding for the program.

On Thursday, the House of Commons Foreign Affairs Committee is expected to draft a law that would authorize each year, until fiscal year 2026, nearly $ 75 million for the safety basin initiative. Since the program began in 2009, the Dominican Republic and Jamaica have received the most funding, according to a 2019 report from the Government Accountability Office.

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

An additional $ 15 million is earmarked for activities to strengthen the region’s resilience to natural disasters, which are only worsening and multiplying due to climate change.

In addition to grants to the region, lawmakers want to see more loans guaranteed by the federal government. But getting there was tricky.

The American 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 wanted the DFC to be a more attractive alternative to developing economies than China’s One Belt, One Road initiative, in practice, it has been difficult for Caribbean countries to obtain loans because many island economies are slightly too developed to qualify under the terms of the bank.

“Unless you change programs, the 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 US Army War College.

Testifying before the House in June, Barbara Feinstein, Acting Senior Deputy Administrator of USAID’s Latin America and Caribbean Office, acknowledged that income thresholds have been a “barrier” to greater Caribbean participation in DFC.

“Caribbean countries are essential 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 in the Caribbean, including to address climate change, strengthen health systems, promote gender equality and advance the Internet, connectivity and technology. “

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