CHINA’S BRI A CARIBBEAN DEBT TRAP?

NEW concerns are being aired about Trinidad and Tobago and other fragile Caribbean economies being caught in a debt trap with China’s lavish Belt and Road Initiative (BRI).

BRI is an enormous global project of the Chinese authorities providing financing while carrying out major infrastructural projects in countries that cannot afford to fund such key ventures.

China, through State-owned construction agencies, has undertaken projects in 68 countries around the world, including in the Caribbean.

A further US $8 trillion is being assigned.

The powerhouse nation has touted BRI as an effective means of developing productive relations with emerging nations, but experts say there is little evidence of that reality.

Apart from T&T, Jamaica, Antigua, Guyana, Barbados, Dominica, Suriname, Grenada, Cuba, and the Dominican Republic have signed up for BRI.

A total of 22 of the 24 countries of the Caribbean and Latin America have initialled BRI agreements.

Through BRI, China has so far built some 150 transportation facilities or expanded ports in the Caribbean and Latin America.

The Asian giant has both geopolitical and economic motivations, and possibly military designs, analysts are saying.

Then-United States Secretary of State Mike Pompeo warned the Caribbean two years ago that Chinese investments are “corrosive, giving life to corruption, and eroding good governance.”

Pompeo termed BRI a “predatory economic activity.”

US Admiral Craig Faller, head of the Southern Command, said: “Chinese influence is global, and it is everywhere in the hemisphere, and moving forward in alarming ways.”

India has drawn international attention to the negativity of BRI, saying that China is wooing vulnerable countries in order to further its self-interests.

India has pushed for BRI to include global standards for transparency and accountability.

One US commentator termed BRI “a potential poisoned chalice” in prompting developing countries to enter into large and unmanageable debts.

He said that in selecting Chinese contractors, countries may face inflated costs, substandard quality, and unfinished projects.

And they could have hefty debts – including exorbitant interest rates – they can’t service.

Pakistan, Laos, Maldives, and Mongolia are among 23 countries struggling to meet stringent BRI financial obligations.

Sri Lanka handed over control of the US $1.7 billion Hambantota port after being unable to service an onerous loan to a Chinese financial group.

Through BRI, Jamaica built the massive North-South Highway but has also been left with a huge US $730 million debt.

A hospital is now being constructed at Montego Bay.

Jamaicans have protested that local professionals and workers are not being employed.  

BRI is responsible for the gigantic St. John’s Harbour in Antigua, with some 12,000 square metres, which could accommodate two 10,000-ton ships at the same time.

Observers have questioned why such a large project is on a tiny island with limited trade.

The US $600 million loan is financed by a Chinese agency.

But Prime Minister Gaston Browne is standing firm, saying that BRI is opening up “unimpeded trade and investment flows.”

Browne gushed: “We would not let this unique opportunity slip our grasp.”
Experts point to the strategic location of the Caribbean in relation to Latin America and the Panama Canal, with vast opportunities for trade and global influence.

Some ask whether China has military designs in this part of the world hence its tactical interest in certain well-placed projects.

There is speculation that a Chinese agency would lease the ports of Port of Spain and Point Lisas.

There has been no official word, but speculation abounds that the proposed $900 million deepwater Toco Ferry Port would be financed by a Chinese agency.

In recent years, China has built a military facility at a port in the United Arab Emirates and is said to be moving to construct a military base in Equatorial Guinea.

The Asian giant has also been constructing similar facilities in other geographically strategic areas.

Several Chinese companies have undertaken multi-million-dollar infrastructural projects in T&T, and there have been claims of the exploitation of migrant workers.

A Chinese contractor was recently fined $30 million for shoddy work on a botched public housing project at Morvant.

One analyst said that within the next few years, China could “circumnavigate the globe, from the South Pacific to Latin America, through the Panama Canal and the Caribbean to Brazil, and then to West Africa.”

Cuba’s membership in the BRI has also given China greater access to the Caribbean.

China is expected to deepen its involvement through assistance to the region in technology, energy, tourism, sustainable development, sports and culture, and other means.

But experts fear that China’s engagement could leave Caribbean countries in serious debt as Beijing increasingly becomes a dominant world player.

A senior official of the Bookings Institution recently warned BRI client nations about “growing indebtedness” to China.

That caution may be relevant to Trinidad and Tobago and other Caribbean countries.