In geo-politics it is the long game that matters

In a few days’ time, the outcome of theUS presidential election will be known. Whichever of the two principlecandidates wins, it is likely that sooner or later they will have to acceptthat the old global order has changed, and the country they need to reach anaccommodation with, as an equal, is China.

Although Europe and Russia would have itthat they too are world powers and opinion formers in the multipolar world thatis emerging, neither has as strong or convincing an economic, military, diplomatic,and political case as China has, tobe in the first division of global power.

While Europe continues to project itssocial achievements and humanitarian and other values, it seems to many, as theformer Australian Prime Minister, Kevin Rudd, has tartly observed, that it is“holding a seminar with itself”. Russia too, despite its military spending anddesire to project its power globally and to promote its greatness, does not,according to its own financial estimates, have the underlying future economicstrength to sustain its present posture.

Instead, the world’s future directionseems in years to come, more likely to be principally determined by the UnitedStates and China

If this is the global direction oftravel, it contains an important message for the Caribbean. As the ObamaAdministration comes to an end, and the unipolarity that enabled it to dominatethe decades following the collapse of the Soviet Union fades, the world’ssecond ranking and tertiary powers will have to adjust to an order in whichChina and the US vie for long term economic supremacy.

Irrespective of its smallness, marginaleconomic significance and lack of unity, the Caribbean may in this, like theSouth China Seas, come to have an unsought role.

In the last few weeks alone, Chineseinterests have demonstrated that they intend to have a central economic positionin the region, and through huge state backed investments will control facilitiesstrategic to the economies of the Caribbean nations in which they are located.

Recent announcements include, confirmationthat the Guangdong Zhenrong Energy Co (GDZR) is planning to invest more thanUS$5.5bn in upgrading the Isla refinery on Curacao; statements indicating thatthe Hong Kong based conglomerate, Chow Tai Fook Enterprises Ltd (CTFE), whichowns Rosewood Hotels, is to purchase the unfinished US$3.5bn Baha Mar megaresort in the Bahamas; a pledge of strategic cooperation between the governmentof the British Virgin Islands and the Chinese port city of Tianjin to developlong-term development cooperation, at a time when the BVI is seeking greaterautonomy in its relationship with London; and the reported authorisation by theBahamas government to its embassy in Beijing to begin negotiations on apossible US$2.1bn fisheries and agriculture project making use of leased crownland.

In other developments, it was confirmed inSeptember, during a visit to by the Chinese Prime Minister, Li Keqian, to Cuba,that the two nations intend to ‘raise their economic co-operation to the levelof their close political ties’ and to ‘intensify the mutual political trust’, aprocess that in part will involve China in helping finance Cuban infrastructureand engage in projects from biotechnology to banking.

Discussions also continue elsewhere inthe region, for example between Guyana and Brazil on accessing China’s US$10 billionLatin American infrastructure fund to finance an all-weather highway betweenGeorgetown and Boa Vista, and with countries from Jamaica to St Lucia on majorinfrastructural and private Chinese funded projects.

Of all of these, perhaps the most farreaching is the proposal by the largely state-owned Guangdong Zhenrong EnergyCo (GDZR) which will involve it investing more than US$5.5bn in upgrading theIsla refinery on Curacao and building a natural gas terminal with the support ofsome of China’s leading energy and finance companies.

Until recently Venezuela’s state ownedoil company PDVSA had planned to renew its lease on the facility, which expiresin 2019, but has been unable to proceed because of the country and thecompany’s precarious economic situation.

It is a decision that has implicationsfor Venezuela and almost every country in the Caribbean and Central America.

The 335,000 barrel-per-day refinery has becomecentral to Venezuela’s ability to overcome inefficiencies in its own refiningfacilities. In recent years it has been used regularly to make up shortfalls ofgasoline and diesel when PDVSA’s own refineries have been unable to operateefficiently or have been shut down through lack of maintenance or spares. It has also been central to the country’sability to meet its international commitments to supply oil and oil productsunder the oil-for-loans financing arrangement arrangements it has with China,or with the Caribbean which benefits from its concessional PetroCaribeprovisions.

Venezuela also uses the terminal tostore its heavy crude, some of which is shipped to China and India and to receiveimported light crude from the US for refining and to dilute Venezuelan heavycrude.

Curacao’s decision to turn to China wouldseem to set aside aspects of Venezuela’s hoped for long term strategic role inthe region. It also implicitly raises questions about its long-term ability tomeet its PetroCaribe commitments and other multiple promises relating toeverything from the creation of a Caribbean economic, commercial and financialspace, to the provision of energy security for the nations of the region.

If as seems likely, the internalsituation in Venezuela continues to deteriorate and its ability to deliver on itspromises is eclipsed, China’s economic role in the region will become even moresignificant. If this happens, the globaland geo-strategic context of the Caribbean in the Americas is likely to become ofgreater interest in a changed Washington.

Whether the region will be able toreconcile the pressures that may emerge from a process so far largelydetermined by economic need; what the long-term effect of changed relationshipson the region’s already fragmented politics and foreign relations will be; andhow this may relate to other regional divisions remains to be seen.

Despite this, Chineseengagement with the Caribbean is welcome. It reflects how much the old global orderis changing. China’s rise has been slow but it is about to become a globalsuperpower. In geopolitics, it is the long game that matters.

David Jessop is a consultant to theCaribbean Council and can be contacted at david.jessop@caribbean-council.org

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