Critics suggest that the United States can ill afford to lose geopolitical maneuvering space to China in a region where the United States is the main trade partner and longtime stalwart. Sadly, the United States has ignored the Caribbean at its doorstep, which has opened opportunities for stronger Caribbean-China relations that in turn greatly risk environmental, climate, and sustainability goals in the region. Emerging from the pandemic, these countries are economically vulnerable, potentially making China-led infrastructure projects—poor environmental standards and all—more appealing.

 In its investment in the Caribbean, China is focusing on trade, infrastructure projects, cheap, often opaque loans to regional governments, and the purchase of fossil fuels or other raw materials on a small but growing scale. The recent China-Community of Latin American and Caribbean States (CELAC) Joint Action Plan for 2022-2024 laid out Beijing’s plans to expand cooperation over a broader range of areas, including defense, finance, trade, public health, and cultural exchanges.

From 2005-2020 it is estimated that China has financed energy and infrastructure projects in the Caribbean islands in excess of $7 billion. This is not a small sum and yet it is a small echo of China’s investments in neighboring Latin American countries. Because Caribbean investment is often lumped in with all of Latin America, it is easy to overlook environmental risks of the projects shaping and reshaping these small island economies and their natural environments. A lack of international compliance mechanisms to hold Chinese activities to appropriate environmental standards make it difficult to ensure that investors are complying with proper regulations, creating transnational challenges for energy and climate issues.

Increased investment, increased environmental concern

While mostly welcomed by Caribbean leaders, some international observers voice growing environmental concerns with such activities, given China’s track record in other parts of the world. The Caribbean countries already grapple with extreme climate impacts, land and marine pollution and biodiversity losses, and economic ravages to their “bread-and-butter” tourism sectors due to ongoing pandemic travel restrictions.

Many Chinese loans and investment opportunities are primarily aimed at cultivating raw materials while also establishing influence in the host country, much of which comes in the form of mergers and acquisitions. The Caribbean economy is extremely susceptible to economic and political control from foreign investment and highly unregulated projects create a multiplier effect of risks on the environment, industry, society, and culture.

Ironically, the urgency for climate resilient investment is increasingly becoming a justification for island nations to accept what China is offering. China’s Belt and Road investments have been hitting some bumps in the region. 

• Trinidad and Tobago’s government terminated a $71.7 million project between China Gezhouba Group International Engineering Company and the Housing Development Corporation for the construction of housing units in 2019 due to a lack of transparency regarding environmental impact assessments.
• Guyana denied a request by China Harbor Engineering Company to extend the time of completion of an upgrade to its international airport. The $150 million project remains incomplete due to shoddy materials, and environmental health and safety issues. Ironically, Guyana is now contracting China Railway Group to build the Amaila Falls hydroelectric project, taking out $1.5 billion in loans for China-built infrastructure.
• In the Bahamas the $3.5 billion Baha Mar Resort investment was financed by the Export-Import Bank of China. Disputes about quality and environmental impacts delayed construction, and eventually the CCA Bahamas Ltd, a subsidiary of China State Construction Engineering Corp Ltd, was found in breach of the primary construction contract.
• The Antigua and Barbuda Special Economic Zone was created primarily for the development of a series of massive China led projects, including a 20-year government-approved “master plan” that includes a five-star hotel, cliff villas, an international finance center, an international education zone, a casino zone, and more. Critics warn that the planned coastal infrastructure could be vulnerable to hurricane damage. Controversy ensued as the government approved all related environmental impact assessments in record time.
• With 93 percent of its land covered by Amazon forest, Suriname’s vast carbon sink makes it one of three countries in the world considered carbon neutral. Suriname currently owes China $1 billion and is welcoming Chinese investment in its 10 billion barrels of oil and gas reserves that were discovered in 2020. China’s drive to expand its energy development coupled with Suriname’s skeletal environmental regulatory system poses a threat to its biodiverse Amazon forest carbon sink.

U.S. diplomacy beneficial to Caribbean environmental sustainability

Across the region, these projects have sparked lively public debates between communities negatively impacted and officials and businesses that see them as economically beneficial. Although China has committed to environmentally sustainable infrastructural development in BRI countries, evidence of such efforts is mixed. 

Weak island nation governance mechanisms make it difficult to ensure that investors are complying with environmental regulations. Where environmental impact legislation remains weak, tension is growing between island governments and local environmental watchdogs. Most recently, China has been pursuing clean energy projects across the Caribbean, including wind farms and solar generation facilities, alongside fossil fuel investments. As it is, the capacity of Caribbean countries to repay Chinese loans may be handicapped by the pandemic, leaving them vulnerable if Beijing should call for their support, be it in the geopolitical realm or in the form of lowering market entry for more trade. Welcoming so much Chinese investment is also causing tensions in U.S.-Caribbean relations.

U.S. diplomacy that finger wags to Caribbean allies will do little good. Instead, Caribbean environmental safeguards could be strengthened through the provision of more technical assistance to island governments. This will allow Caribbean countries to better leverage the potential of Chinese investments while mitigating the associated risks. If the United States can provide “carrots” to Caribbean governments while insisting that doing business depends on their observance of transparency, the rule of law, and competent institutions that enforce environmental laws, island leaders will be prompted to reevaluate the risks of accepting Chinese investments that could jeopardize these criteria.

The Heritage Foundation suggests that the U.S. Development Finance Corporation is a logical tool for such efforts. The Biden administration recently visited Colombia, Ecuador, and Panama to explore green, climate sensitive private investment opportunities as part of the Build Back Better World. Such investments should extend to Caribbean nations as well. Geopolitically, the United States may do well to monitor China’s activities on its Caribbean front doorstep.