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David Jessop | In geopolitics it is the long game that matters

Published:Sunday | November 6, 2016 | 11:00 AM
President of Venezuela Nicolas Maduro (centre) and Executive Director of Oil and Natural Gas Corporation Narendra Kumar Verma flash victory hand signs as they pose for a photo, at the Miraflores presidential palace in Caracas, Venezuela, Friday, November 4. Venezuelan state corporation PDVSA and ONGC agreed to invest more money to increase production of Venezuelan oil. Pictured right is PDVSA President Eulogio Del Pino.

Caribbean-Venezuela-China ...

In a few days, the outcome of the United States presidential election will be known.

Whichever of the two principal candidates wins, it is likely that sooner or later that they will have to accept that the old global order has changed, and the country they need to reach an accommodation with, as an equal, is China.

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

While Europe continues to project its social achievements and humanitarian and other values, it seems to many, as the former Australian Prime Minister, Kevin Rudd, has tartly observed, that it is "holding a seminar with itself".

Russia, too, despite its military spending and desire to project its power globally and to promote its greatness, does not, according to its own financial estimates, have the underlying future economic strength to sustain its present posture.

Instead, the world's future direction seems in years to come, more likely to be principally determined by the United States and China

If this is the global direction of travel, it contains an important message for the Caribbean. As the Obama administration comes to an end and the unipolarity that enabled it to dominate the decades following the collapse of the Soviet Union fades, the world's second-ranking and tertiary powers will have to adjust to an order in which China and the US vie for long term economic supremacy.

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

In the last few weeks alone, Chinese interests have demonstrated that they intend to have a central economic position in the region, and through huge-state backed investments will control facilities strategic to the economies of the Caribbean nations in which they are located.

 

MORE INVESTMENT

 

Recent announcements include confirmation that the Guangdong Zhenrong Energy Company (GDZR) is planning to invest more than US$5.5 billion in upgrading the Isla refinery on CuraÁao; statements indicating that the Hong Kong-based conglomerate, Chow Tai Fook Enterprises Limited (CTFE), which owns Rosewood Hotels, is to purchase the unfinished US$3.5 billion Baha Mar mega-resort in the Bahamas; a pledge of strategic cooperation between the government of the British Virgin Islands and the Chinese port city of Tianjin to develop long-term development cooperation, at a time when the BVI is seeking greater autonomy in its relationship with London; and the reported authorisation by the Bahamas government to its embassy in Beijing to begin negotiations on a possible US$2.1-billion fisheries and agriculture project making use of leased Crown land.

In other developments, it was confirmed in September, during a visit to by the Chinese Prime Minister, Li Keqian, to Cuba, that the two nations intend to raise their economic cooperation to the level of their close political ties and to intensify the mutual political trust, a process that in part will involve China in helping finance Cuban infrastructure and engage in projects from biotechnology to banking.

Discussions also continue elsewhere in the region, for example, between Guyana and Brazil, on accessing China's US$10-billion Latin American infrastructure fund to finance an all-weather highway between Georgetown and Boa Vista; and with countries from Jamaica to St Lucia on major infrastructural and private Chinese-funded projects.

Of all of these, perhaps the most far-reaching is the proposal by the largely state-owned GDZR, which will involve it investing more than US$5.5 billion in upgrading the Isla refinery on Curacao and building a natural gas terminal with the support of some of China's leading energy and finance companies.

Until recently, Venezuela's state-owned oil company, PDVSA, had planned to renew its lease on the facility, which expires in 2019, but has been unable to proceed because of the country and the company's precarious economic situation.

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

The 335,000-barrel-per-day refinery has become central to Venezuela's ability to overcome inefficiencies in its own refining facilities. In recent years, it has been used regularly to make up shortfalls of gasolene and diesel when PDVSA's own refineries have been unable to operate efficiently or have been shut down through lack of maintenance or spares.

It has also been central to the country's ability to meet its international commitments to supply oil and oil products under the oil-for-loans financing arrangement arrangements it has with China, or with the Caribbean which benefits from its concessional PetroCaribe provisions.

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

 

CHINA VS VENEZUELA

 

Curacao's decision to turn to China would seem to set aside aspects of Venezuela's hoped-for long-term strategic role in the region. It also implicitly raises questions about its long-term ability to meet its PetroCaribe commitments and other multiple promises relating to everything from the creation of a Caribbean economic, commercial and financial space, to the provision of energy security for the nations of the region.

If as seems likely, the internal situation in Venezuela continues to deteriorate and its ability to deliver on its promises is eclipsed, China's economic role in the region will become even more significant. If this happens, the global and geostrategic context of the Caribbean in the Americas is likely to become of greater interest in a changed Washington.

Whether the region will be able to reconcile the pressures that may emerge from a process so far largely determined by economic need; what the long-term effect of changed relationships on the region's already-fragmented politics and foreign relations will be; and how this may relate to other regional divisions remains to be seen.

Despite this, Chinese engagement with the Caribbean is welcome. It reflects how much the old global order is changing. China's rise has been slow, but it is about to become a global superpower. In geopolitics, it is the long game that matters.

• David Jessop is a consultant to the Caribbean Council. david.jessop@caribbean-council.org