An initiative led by the Atlantic Council’s Adrienne Arsht Latin America Center in partnership with the US Department of State continues to focus on facilitating greater constructive exchange among multisectoral thought leaders and government leaders as they work to implement commitments made at the ninth Summit of the Americas. This readout was informed by a private, information-gathering roundtable and several one-on-one conversations with leading experts in the digital space.

Executive summary

At the ninth Summit of the Americas, regional leaders agreed on the adoption of a Regional Agenda for Digital Transformation that reaffirmed the need for a dynamic and resilient digital ecosystem that promotes digital inclusion for all peoples. The COVID-19 pandemic exacerbated the digital divide globally, but these gaps were shown to be deeper in developing countries, disproportionately affecting women, children, persons with disabilities, and other vulnerable and/or marginalized individuals. Through this agenda, inclusive workforce development remains a key theme as an avenue to help bridge the digital divide and skills gap across the Americas.

As part of the Atlantic Council’s consultative process, thought leaders and practitioners evaluated progress made in the implementation of the Regional Agenda for Digital Transformation agreed on at the Summit of Americas, resulting in three concrete recommendations: (1) leverage regional alliances and intraregional cooperation mechanisms to accelerate implementation of the agenda; (2) strengthen public-private partnerships and multisectoral coordination to ensure adequate financing for tailored capacity-building programs, the expansion of digital infrastructure, and internet access; and (3) prioritize the involvement of local youth groups and civil society organizations, given their on-the-ground knowledge and role as critical indicators of implementation.

Recommendations for advancing digitalization and workforce development in the Americas:

Report

May 31, 2024

PACC 2030 objectives: The road to implementation

By Wazim Mowla, Charlene Aguilera

The Atlantic Council organized a PACC 2030 Working Group and worked closely with governments, the business community, and civil society organizations to support the implementation of PACC 2030’s objectives.

Caribbean Climate Change & Climate Action

Report

Apr 16, 2024

Advancing health and resilience policies in Latin America and the Caribbean

By Isabel Chiriboga, Martin Cassinelli, Diego Area

During an off-the-record private roundtable, thought leaders and practitioners from across the Americas discussed how to further enhance access to and finance for health services and products in the region.

Coronavirus Latin America

Summit of the Americas

Amid global uncertainties and new challenges, the ninth Summit of the Americas is a renewed opportunity to bring about hemispheric cooperation and consensus to reach regional prosperity and security.

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Isabel Chiriboga

Assistant Director

Adrienne Arsht Latin America Center

Colombia Corruption

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Maite Gonzalez Latorre

Program Assistant

Adrienne Arsht Latin America Center

Americas Education

Staff

Diego Area

Deputy Director, Strategic Development

Adrienne Arsht Latin America Center

Crisis Management Democratic Transitions

The Adrienne Arsht Latin America Center broadens understanding of regional transformations and delivers constructive, results-oriented solutions to inform how the public and private sectors can advance hemispheric prosperity.

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The post The future of digital transformation and workforce development in Latin America and the Caribbean appeared first on Atlantic Council.

Female political representation is important. According to 2023 data, only fifty-nine of the 193 member states of the United Nations had a woman head of state or government in their history. Against this backdrop, four countries in the Caribbean have had or currently have women leaders: Jamaica, Trinidad and Tobago, Guyana, and Barbados. But representation still lags behind, with an average of 22 percent of ministerial portfolios and cabinet positions in the English-speaking Caribbean held by women. And according to World Bank data, only four Caribbean countries—Dominica, Guyana, St. Kitts and Nevis, and Grenada—have 30 percent or more seats in national parliaments held by women.

At the same time, greater and more effective female political representation must go hand in hand with bringing gender equity perspectives into all aspects policymaking in ways that improve the lives of citizens. In the Caribbean, women and girls face significant vulnerabilities, and gender mainstreaming is needed to address them, in particular gender-based violence.

The Caribbean has one of the highest rates of gender-based violence in the world. According to UN Women data, 46 percent of women in the Caribbean have experienced at least one form of violence in their lifetime. Jamaica, for example, has the second-highest femicide rate in the world, while 55 percent of Guyanese women have experienced at least one form of violence, including intimate partner violence or nonpartner sexual abuse. And data on gender-based violence is often underreported.

To tackle gender-based violence through gender mainstreaming in policymaking, governments in the Caribbean should work closely with civil society organizations that focus on gender and gender-based violence. They should also work with victims of gender-based violence to understand the bottlenecks of the system and its inadequate responses. With this deeper understanding, governments can map out specific areas to improve support for women victims of gender-based violence.

Governments should also include chief gender officers in key government institutions, particularly within the judicial system and the police. Chief gender officers can help ensure appropriate support, accountability, and sustainability of policies for victims of gender-based violence. These officers should be appropriately trained to bring a gender-sensitive perspective to decision-making processes, and their authority and dedicated office to these issues can help to overcome institutional inertia.

In the legal sphere, these officers should revise and help update legislation through a gender lens, as a mechanism to avoid the perpetuation of laws and norms that might have pervasive negative consequences for women and girls. Within the police, chief gender officers can be trained to welcome and support victims of gender-based violence, helping them as victims instead of discriminating against them. Focus groups commissioned by the Atlantic Council in Jamaica and Guyana, for example, found a lack of trust that institutions, such as the police, can support women victims of gender-based violence. One Jamaican woman explained, “But sometimes you go to the police and the police take your statement and look at you and be like if you wear that then you don’t think the man is going to see you.”

Ensuring that women victims of gender-based violence feel heard and supported could lead to more accurate data on this issue, as underreporting is a significant challenge. This, in turn, could help governments gain a better understanding of gender-based violence and the policies and programs that can help solve it.  

Valentina Sader is a deputy director at the Atlantic Council’s Adrienne Arsht Latin America Center, where she leads the Center’s work on Brazil, gender equality and diversity, and manages the Center’s Advisory Council.

The post The case for chief gender officers in Caribbean states appeared first on Atlantic Council.

Unfortunately, this is a familiar scene for the region, which routinely battles the effects of extreme weather events and climate change. Hurricane Beryl once again spotlights why focusing on the mitigation of climate change, through such methods as cutting carbon emissions, alone is insufficient. Caribbean countries must prioritize climate adaptation as the primary mechanism to withstand hurricanes and other baked-in effects of climate change.

Climate adaptation is the answer to these extreme weather events, but it requires significant investment that governments in the Caribbean cannot afford. International support, including private finance, is needed. In five months, the United Nations Climate Change Conference of the Parties, also known as COP29, will take place in Baku, Azerbaijan. It has been dubbed the “finance COP,” and there governments and the private sector should come together and show the commercial utility of prioritizing climate adaptation. Doing so can unlock new financing and create project pipelines that are commercially attractive to global investors.

The Caribbean is often categorized as the world’s most vulnerable region to climate change. Seventy percent of the region’s population lives or works on the coast, meaning that storm surges from hurricanes affect businesses, lifestyles, and government operations. Hurricanes and strong storms also bring the tourism industry to a halt, disproportionately affecting the region’s tourism-dependent economies and severely slowing economic growth. Hurricane Maria in 2017 cost Dominica an estimated 225 percent of its gross domestic product, while Hurricane Irma in the same year cost Antigua and Barbuda more than $136 million in damages, of which the tourism industry represented 44 percent.

Strong storms damage critical infrastructure. Downed power lines cause widespread power outages, while flooded roads and bridges can prevent rescue operations. Already, Hurricane Beryl has caused power outages in Saint Lucia, and homes in Saint Vincent and the Grenadines have lost their roofs. And stronger storms lead to longer recovery periods, which can increase governments’ public debt as they borrow at high interest rates from multilateral institutions to rebuild after the storm has passed. Six years after Hurricane Maria, for example, citizens in Dominica are still rebuilding.

Withstanding strong storms and other effects of climate change requires new climate adaptation projects. For hurricanes with high wind speeds (such as Beryl, which sustained wind speeds of 150 mph at its peak), it is necessary to retrofit infrastructure to be resilient. To achieve this, governments need to require building codes for new homes and infrastructure that ensure sufficient resilience across structures. To brace for storm surges, governments need to move water and energy infrastructure underground where possible to avoid damage. New sea walls and flood protection systems also need to be built.

In all, the region needs more than $100 billion dollars in investment to meet its climate adaptation goals, but it has only been approved for less than one billion dollars from various climate funds. Governments are often left to fend for themselves, taking high-interest loans (due to the classification of many Caribbean nations as middle- and high-income economies by the World Bank) since they often do not qualify for concessional financing. At the same time, governments have borne the brunt of the responsibility because these types of climate adaptation projects are not always attractive to the private sector. Retrofitting infrastructure and other climate adaptation projects, for example, have high upfront costs with little return on investment.

COP29 is an opportunity to bring the public and private sector together to unlock new financing and advance climate adaptation projects. The private sector—both in the region and around the world—has access to needed technologies and has the capacity to undertake climate adaptation projects, from providing drainage on roads and bridges to help ease flash flooding to building decentralized energy grid infrastructure to limit widespread blackouts. Climate adaptation is, after all, in the private sector’s interest. If the effects of hurricanes and climate change worsen and the region’s economies slow, then businesses’ profits will be affected.

What will it take to get the private sector more involved? Attracting private sector participation requires regulatory reforms and carve outs by governments to ensure that companies yield a return on projects. Governments can provide incentives, such as giving exclusive benefits to companies participating in projects and providing subsidies or tax exemptions on materials used. Equally important is access to low-cost finance and capital. Governments can work with institutions such as IDB Invest and global donors that provide grant finance to funnel capital to companies undertaking long-term developments while engaging with insurance agencies that can underwrite riskier projects. 

Caribbean leaders have begun to explore private sector participation in climate adaptation projects, notably through the Bridgetown Initiative and the Blue Green Investment Corporation, but there is still work to be done. COP29 might well be the ideal forum to strengthen these initiatives and encourage commitments from governments and the business community. Doing so requires flexibility from both sectors and a focus on projects that are investment-friendly and can attract global donors. 

In the lead-up to COP29, governments will need to begin laying the regulatory groundwork and soliciting the required technical assistance from development institutions to encourage private sector participation. Moreover, Caribbean governments should consider adding or increasing the size of the private sector groups to their delegations for COP29 to ensure they have a seat at the table and are bought into any signed agreements. Building these public-private relationships can go a long way toward showing global donors and companies the viability of investing in climate adaptation projects in the Caribbean and unlock needed capital that can save lives in the long run.

Wazim Mowla is the associate director and fellow of the Caribbean Initiative at the Atlantic Council’s Adrienne Arsht Latin America Center.

The post Hurricane Beryl spotlights the importance of climate adaptation in the Caribbean appeared first on Atlantic Council.

• Introduction
• Severe consequences of energy insecurity
• Energy-transition barriers
• Applying the CEWG roadmap
• A global call to action
• Acknowledgments
• About the author
• About the Caribbean Energy Working Group Co-Chairs

Introduction

Countries in the Eastern Caribbean¹ are among the world’s most energy insecure nations. These countries grapple with high electricity costs that undercut economic competitiveness and growth, are heavily dependent on petroleum products, and are uniquely vulnerable to the effects of climate change. At the same time, a World Bank designation as middle- or high-income economies significantly limits access to concessional financing. The result is a slow transition to renewable energy power generation, including attracting commercial interest for the relevant infrastructure and unbundling utility systems that often stymie regulatory changes and curtail needed investments in the energy sector.

The time may be ripe for accelerating the pace of the transition in the Eastern Caribbean. A broad consensus exists among regional governments, the business community, and multilateral partners to further usher in a transition to renewable energy, given the unique vulnerabilities facing Eastern Caribbean countries. Meanwhile, countries in the Southern Caribbean (Guyana, Trinidad and Tobago, and Suriname) are leaning into their hydrocarbon reserves as they balance their own energy transition, while other countries are either attracting commercial interest or are far along in their renewable energy development relative to the Eastern Caribbean. Though there is an abundance of solar and wind power potential in the Eastern Caribbean—along with significant geothermal reserves in Dominica, Saint Vincent and the Grenadines, and Saint Kitts and Nevis—countries in this region are faced with defining how a realistic, affordable, and just energy transition can take place and unlocking new private sector and multilateral resources.

The Atlantic Council’s Caribbean Initiative engaged in a series of consultations with the Caribbean Energy Working Group (CEWG), whose members identified two main constraints to the region’s transition: the top-down vertically integrated nature of state-owned utility systems; and limited access to low-cost financing and credit to governments and clean energy developers. While recognizing that an energy transition requires a holistic approach, CEWG members propose that the starting points must be addressing utility constraints and access to finance to ensure a reliable and resilient energy system transformation that is sustainable and affordable for consumers, governments, and the private sector in the Eastern Caribbean. An energy transition in the Eastern Caribbean must ensure reliable power to combat price volatility for consumers while energy infrastructure should be resilient to the effects of climate change, hurricanes and strong tropical storms, and rising temperatures.

The CEWG brings together up to fifteen policy and technical experts from across the Caribbean, and was first convened in 2023 by the Atlantic Council. This publication builds off the CEWG’s first report, “A roadmap for the Caribbean’s energy transition,” which was published last year and outlined a five-step process that governments, developers, and regional partners can undertake to facilitate an energy transition in the Caribbean. The five-step process includes: conducting energy modeling and analysis; modernizing energy grids; diversifying utility structures; creating bankable projects; and scaling project investment to national and subregional levels. This publication focuses on applying steps three and four of the roadmap.

The CEWG met as part of two roundtable discussions, followed by five one-on-one consultation sessions across the group to identify barriers and solutions to accelerating a reliable and resilient energy transition in the Eastern Caribbean. This publication serves as a complement to existing initiatives and projects dedicated to facilitating an energy transition, with the aim of raising additional awareness of the reality and the urgency of the moment for the world’s most vulnerable countries.

Severe consequences for energy insecurity

Countries in the Eastern Caribbean are open facing, small market economies, vulnerable to ebbs and flows of the global financial system. The region’s import dependence means that supply chain constraints and rising global interest rates have a disproportionate effect on these economies. For example, when Russia’s war in Ukraine stemmed the flow of fertilizer to agriculture commodity exporters, food inflation in the Eastern Caribbean skyrocketed and remained high even as prices eventually declined in industrialized nations.² And although the price of renewable energy, such as solar photovoltaic (PV) power, has declined dramatically over the past decade, capital and investment in this sector naturally gravitated to the bigger economies in the Global North.

Stronger storms, more outages
Climate change is a significant driver of the energy transition in the Eastern Caribbean. Hurricanes and strong tropical storms cause flash flooding and high wind speeds that damage energy infrastructure. Global warming, as a result of increasing greenhouse gas emissions (GHG), is fueling stronger and more frequent tropical storms. The result is lost power for days and weeks, as was the case in 2017 when Hurricane Irma hit Antigua and Bermuda, damaging transmission lines and generators. Similarity, in 2019, Hurricane Dorian caused widespread power outages in Dominica.³

The makeup of these economies has resulted in Eastern Caribbean countries paying some of the highest electricity prices in the Americas, including double and sometimes triple of what the average consumer pays in the United States ($0.109 per 1 kilowatt-hour (KW/h).⁴ On average, consumer costs in Antigua and Barbuda ($0.367 per 1 KW/h) and Saint Kitts and Nevis ($0.333 per 1 KW/h) rank on the higher end of the spectrum, with Saint Vincent and the Grenadines ($0.185 per 1 KW/h) on the lower end, and the rest of the countries falling in between. These high costs coincide with an import dependence on petroleum products, with Antigua and Barbuda (100 percent), Dominica (92 percent), Grenada (93 percent), Saint Lucia (98 percent), Saint Kitts and Nevis (87 percent), and Saint Vincent and the Grenadines (95 percent) all relying on fossil fuels to satisfy almost all of their energy demand.⁵ The cost of these imports account for almost 7 percent of the subregion’s gross domestic product, cutting into public expenditure needed to invest in climate adaptation projects and social sectors such as education and health services.⁶

High electricity prices and energy imports undercut the competitiveness of key economic sectors in the Eastern Caribbean—notably the hospitality sector—and limit the purchasing power of consumers. According to the Inter-American Development Bank, six of the countries prioritized in this publication rank in the global top ten of tourism-dependent economies.⁷ The tourism industry accounts for a significant share of energy demand in these countries, increasing the prices for hotel rooms due to high usage of air conditioning and lighting.⁸ Given that the tourism industry is an economic driver, high energy costs can make industries uncompetitive vis-à-vis other tourist hubs in the region such as Jamaica and the Dominican Republic. Beyond the tourism sector, more than a quarter of energy demand in the Eastern Caribbean is for residential use.⁹ High power bills can take up a large share of household income and decrease the purchasing power of individuals, leaving them unable to spend money on local products and services, like food and transportation, which help to stimulate economic growth.

Despite the challenges facing the Eastern Caribbean, bright spots exist. Renewable energy, such as solar, wind, and geothermal reserves, are abundant. Across the region, the sun shines more than 200 days annually,¹⁰ has an estimated potential of almost 70 gigawatts of available offshore wind (excluding Dominica), and (excluding Antigua and Barbuda) houses an estimated 6,290 megawatts (MW) of available geothermal reserves.¹¹ But this potential has not been tapped. Current installed capacity of renewable energy (as a percentage) stands at: Antigua (4 percent), Dominica (25 percent including hydroelectric power), Grenada (4 percent), Saint Lucia (3 percent), Saint Kitts and Nevis (5 percent), and Saint Vincent and the Grenadines (17 percent including hydroelectric).

Geothermal development is a high priority in the Eastern Caribbean
Dominica has an estimated 1,390 MW of geothermal potential. The country’s small population and energy grid had not provided adequate incentive to develop that capacity, due to the high capital costs of exploring its geothermal reserves at scale- until recently. Commitment by the government in 2023 to develop its reserves and support this year from the World Bank have helped the country begin developing its geothermal potential. The World Bank is financing a new project at $38.5 million to support drilling of new geothermal wells and helping construct new transmission lines and substations to connect the future geothermal plants to consumers. Meanwhile, St. Kitts and Nevis is consistently looking for new partners to support its own geothermal ambitions for close to a decade, with a total project cost estimated at US $505 million. A mixture of bilateral and multilateral financing will be needed to bring this project closed to Dominica’s stage.¹²

Energy-transition barriers

The utility systems in the Eastern Caribbean are state-owned entities—excluding Saint Lucia, which has a public-private model—tasked with providing power to citizens. Tax revenues are used by governments to invest in critical and social services. These are top-down systems in vertically integrated structures, meaning that they single-handedly operate the generation, transmission, and distribution of power. This model can stifle innovation and competition, leaving customers without alternative choices and increasing the cost of electricity. Further, it means that introducing new clean energy technologies, when possible, must be financed and implemented by the utility, which is often devoid of the needed capital and technical assistance to act. Therefore, incorporating renewable energies into this model can be expensive—particularly since these technologies have high upfront costs. It is both a political and economic challenge that clean energy is not necessarily cheap energy.

However, unbundling utility systems is not a straightforward solution and not all state-owned entities are necessarily bad. Breaking these systems apart might divide consumer bases and may not lower the cost of electricity given the small size of Eastern Caribbean countries’ populations. Instead, as discussed below, the best-case scenario is to introduce innovation into the utility system, such as diversifying the utility structure across generation, distribution, and transmission by using public-private models. Maintaining an intact customer base is critical for utilities to keep the costs low for consumers while ensuring that utilities and the private-sector entities are still turning a profit. This does not mean that breaking up systems is the sole way to ensure low prices for renewable energy generation. Some markets, particularly in micro economies like in the Eastern Caribbean, might be too small to introduce competition and keep prices affordable. There is no one-size-fits-all solution, as changes in utility structures need to adapt to and be contextualized for each individual country.

Changing the business model of the utilities can help to create more incentives to incorporating renewable energy generation by factoring in the social cost externalities (the associated costs of fossil fuels on the broader public and society) of depending on fossil fuels as a realistic price comparison. Current models determine the price of electricity based on the cost of petroleum imports. But the emissions of fossil fuels—not just carbon dioxide but also other toxins that cause respiratory illnesses—increase cancer risks and, generally, overall poor health. The future healthcare costs for the consumer and the burden on governments to invest in adequate healthcare infrastructure are typically not added to the total cost of importing fossil fuels. If a full cost analysis and reformed business model are developed, then the price of importing fossil fuels might be higher than renewable power generation.

Commercial developers fund projects initially on their own before seeking to make projects bankable by obtaining loans that are backed by cash flow. Projects in the Eastern Caribbean take a long time to develop, given financing challenges due to unclear regulations and permitting, and a lack of investment-grade utility systems to guarantee payments under negotiated power purchasing agreements. Due to the long period of development, investors and governments look to derisk their projects by seeking full grants or convertible loan grants to help them clear these hurdles.

Commercial renewable energy projects also suffer from limited access to low cost and concessionary finance and capital. As discussed, state-owned utilities and governments are responsible for financing new renewable energy projects. These countries do not have the fiscal space or national budgets to self-finance these projects, leaving them to seek loans and grants from multilateral development banks (MDBs) and bilateral lenders. However, the World Bank classifies Eastern Caribbean countries as middle- and high-income economies, disqualifying them from accessing low-cost loans from the World Bank and those that also use this classification, such as the US Development Finance Corporation. This also applies to the business community and energy developers who need access to financing during the pre-project phase (prefeasibility studies, production of design drawings, and environmental social and impact assessments, among others).

Applying the CEWG roadmap

Addressing utility constraints and unlocking new access to finance and capital both are needed, but a well thought-out process that takes the context and nuances of each country into account is needed. To the international community, these countries are bound by their similarities (e.g., population and market size, and geographic location). Realistically, there are enough differences between them that suggest that no solution to the region’s energy transition challenges can be a one-size-fits-all approach. Each country’s context will determine how the below solutions are applied, from unbundling utility structures to attracting finance and capital based on renewable energy. While each country needs a transition that is contextualized to its own reality, technical assistance and transmission upgrades are at the core of the energy transition. Policy action and financial resources are both required, and Caribbean governments and regional institutions will need the assistance of partners like the US Trade and Development Agency and the Inter-American Development Bank (IDB) to deploy the assistance throughout the transition process.

Based on the small consumer bases and state-owned nature of utility systems in the Eastern Caribbean, unbundling utilities might not actually lower electricity costs. Instead, the structure of the utility might be reformed to a public-private partnership (PPP) model that also accounts for price comparisons between fossil fuel imports with social cost externalities attached to a transition to renewable energies. In essence, PPPs are a collaborative model that leverages the strengths of both the public and private sectors, which can help accelerate the deployment of renewable energy infrastructure while ensuring cost-effectiveness and financing sustainability. For example, needed transmission upgrades can be undertaken by governments to help absorb costs and prevent them from being passed to consumers. And the private sector can take responsibility for generation projects, driving down costs and improving competitiveness. Governments and utilities are still able to benefit from the revenue to use for public-sector investments while private-sector entities can streamline innovation in the energy sector, helping to attract more commercial interest.

Designing PPP models will be complex. Each country and its utility or utilities are unique. The challenge will be designing the appropriate model. Here, entities such as the IDB should work with the Caribbean Development Bank (CDB), and use input from private-sector companies in the region, to design a PPP model for utility structures. The IDB houses the experience and expertise in designing PPP models, and through its new One Caribbean program is already building a project preparation facility that can incorporate PPP designs into its model.¹³ The challenge is that Eastern Caribbean countries are not members of the IDB, though they are borrowing member countries of the CDB. In the past, the CDB and the IDB have worked together to streamline assistance to and analysis for the Eastern Caribbean. The same can be done here, with the added benefit of the CDB already understanding the nuances of each of the countries in the subregion.

However, designing and implementing a PPP model requires political will and government support. Governments might not be anxious to adopt renewables if the cost of the electricity does not lower prices—affecting key political constituents—and if accelerating an energy transition comes with increased public debt through high-interest loans. Simply put, a transition is only possible if governments are given assurances and feel comfortable that incorporating renewables will not affect their standing with their constituents, meaning that entities like the IDB, CDB, and partners, such as the United States, will have to secure government support before an energy transition can take place.

As utility systems are able to reform their models to ensure that renewable energy projects are affordable for governments and consumers, support to countries and investors is needed to finance projects through the project pipeline. As discussed in the CEWG’s first report, the projects in the Caribbean tend to fall in the “valley of death,” due to project delays ranging from limited site access to an inability to secure additional financing. Key to moving projects through the pipeline is to derisk them and ensure their bankability. Two steps are needed. First, Caribbean countries need access to the expertise and capacity to conduct feasibility studies, environmental social and impact assessments, and design power purchase agreements, among other things. Second, Eastern Caribbean countries need access to investment vehicles that prioritize grants or low-cost loans for the upfront costs of renewable energy projects. Entities like IDB Invest have pockets of financing that allows the institution to inject equity into projects, but the pool of funds is small relative to what is available for other countries or subregions in Latin America.

This is where regional partners like the United States and existing regional programs like the CARICOM Development Fund (CDF) and the Bridgetown Initiative¹⁴ should be utilized. The United States government, through the International Development Finance Corporation (DFC), should take advantage of the current DFC reauthorization process to create a carve out for clean energy projects in the region. The scale of investment is minimal compared to other DFC-financed projects and would have outsized effects in the small markets and grids in the Eastern Caribbean. This would take an act of the US Congress—particularly for a middle-income country exception—but there is precedent and increasing appetite to prioritize energy security in the Caribbean. Further, the United States should encourage the IDB and the CDB to work with the CDF and the Bridgetown Initiative to create a project pipeline (with attached equity investments available) to attract large-scale financing and grants from global donors. Capital and finance around the world are available if regional partners and entities are able to build mechanisms that streamline funding to energy projects in the Eastern Caribbean and build a project pipeline to attract commercial investors.

A global call to action

An energy transition in the Eastern Caribbean requires political will, regional coordination, and consistent technical assistance. Relative to the cost of the global energy transition, the needed capital in the Eastern Caribbean is minimal. But the tides are changing in the region, as more political actors and financial institutions are thinking creatively of how to accelerate an energy transition. Still, human capital and capacity limitations stifle the region’s ability to undertake this process alone. Partner governments like the United States and Canada have committed to the region’s energy security in the past few years, but these two countries do not have the funding or domestic political will to direct their attention consistently to the Eastern Caribbean. Addressing the climate crisis and facilitating a global energy transition is increasing in urgency each day, meaning that more actors across governments, international bodies, the business community, and foundations are unlocking new forms of support. Tapping into these resources will be critical. Regional governments and their partners need to continue raising the profile of the Eastern Caribbean and using regional and global platforms, from the Group of Twenty to the UN General Assembly to the COP29 climate talks in November to ensure that these countries are not left behind.

Acknowledgments

The Atlantic Council thanks board member Melanie Chen for her financial support of this publication and the corresponding working group. A thank you also goes to the CEWG members who joined the numerous one-on-one consultations and roundtables that informed this publication, including co-chairs David Goldwyn and Eugene Tiah. A special thank you goes to Jason Marczak, vice president and senior director of the Adrienne Arsht Latin America Center, which houses the Caribbean Initiative, for his guidance and comments throughout the working group and during the drafting of this publication. Maite Gonzalez Latorre managed the production flow of this publication.

About the author

Staff

Wazim Mowla

Associate Director & Fellow, Caribbean Initiative

Adrienne Arsht Latin America Center

Caribbean China

Wazim Mowla is the associate director and fellow of the Caribbean Initiative at the Atlantic Council’s Adrienne Arsht Latin America Center. He leads the development and execution of the initiative’s programming, including the Financial Inclusion Task Force, the US-Caribbean Partnership to Address the Climate Crisis (PACC) 2030 Working Group, and the Caribbean Energy Working Group. Since joining the Council, Mowla has co-authored major publications on the strategic importance of sending US COVID-19 vaccines to the Caribbean, strategies to address financial derisking, and how the United States can advance new policies to support climate and energy resilience.

About the Caribbean Energy Working Group Co-chairs

David Goldwyn is president of Goldwyn Global Strategies, LLC (GGS), an international energy advisory consultancy, and chairman of the Atlantic Council Global Energy Center’s Energy Advisory Group. He is a globally recognized thought leader, educator, and policy innovator in energy security and extractive-industry transparency.

Eugene Tiah is a senior business executive with in-depth knowledge and more than forty years of experience in the oil and gas business within the United States and the Caribbean region. He is also the president and CEO of the Caribbean Energy Chamber.

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The post Accelerating the energy transition in the Eastern Caribbean appeared first on Atlantic Council.

This is a report from the Atlantic Council’s Adrienne Arsht Latin America Center in partnership with the US Department of State. This readout was informed by multi-stakeholder dialogues focused on facilitating greater, constructive exchange among multi-sectoral thought leaders and government leaders as they work to implement commitments made at the Ninth Summit of the Americas.

Executive summary

On March 14, the Atlantic Council’s Caribbean Initiative partnered with the US Department of State to organize the PACC 2030 Road to Implementation Summit on the sidelines of the Energy and Climate Partnership of the Americas Ministerial Meetings in the Dominican Republic. The summit built on the PACC 2030 Climate Resilient Clean Energy Summit, which took place on the sidelines of US Vice President Kamala Harris’s inaugural trip to the Caribbean in June 2023, and previous partnerships with the Department of State to advance commitments adopted at the Ninth Summit of the Americas in Los Angeles in 2022. Since then, the Atlantic Council has organized a PACC 2030 Working Group and has worked closely with governments, the business community, and civil society organizations to support the implementation of PACC 2030’s objectives.

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Americas Caribbean Climate Change & Climate Action Latin America

Online Event Fri, June 10, 2022 • 10:00 pm ET

The joint future of the Caribbean working with Latin America

A series of discussions featuring heads of state and government following the conclusion of the Summit of the Americas.

Staff

Wazim Mowla

Associate Director & Fellow, Caribbean Initiative

Adrienne Arsht Latin America Center

Caribbean China

Staff

Charlene Aguilera

Program Assistant

Adrienne Arsht Latin America Center

Caribbean French

The Adrienne Arsht Latin America Center broadens understanding of regional transformations and delivers constructive, results-oriented solutions to inform how the public and private sectors can advance hemispheric prosperity.

Learn more

The post PACC 2030 objectives: The road to implementation appeared first on Atlantic Council.

The region has an urgent need to prepare for the scope of climate change. Many of the region’s countries rely on tourism to drive economic growth, with ten of the world’s twenty most tourism-dependent economies residing in the Caribbean. When hurricanes roll through the region, damaging infrastructure and halting flights, the tourism industry halts as well, diminishing economic prospects. Most Caribbean countries face the brunt of the Atlantic hurricane season, which is producing stronger and more frequent tropical storms. At the same time, most of the region’s populous cities are coastal, making sea level rise a threat to homes and the day-to-day functions of society. Further, changing precipitation patterns and higher average temperatures result in agricultural degradation and more acidic oceans, decreasing crop yields in rural areas and limiting fishery supplies.

While the entire region faces daunting consequences from climate change and related natural disasters, women and girls face disproportionate effects across four areas.

First, women and girls are “especially vulnerable to sexual violence and coercion” in the wake of a natural disaster, according to the United Nations Population Fund. This risk includes and extends beyond domestic violence, which is known to spike in crisis situations, such as during the COVID-19 pandemic in Trinidad and Tobago. Disproportionate risks mount, the World Bank notes, “in the face of uprooted housing and traditional support structures, disrupted access to services, and both structural and social obstacles to accessing food, relief, supplies, and latrines.” A lack of privacy and security in shelters is problematic, especially for young and teenage girls.

Second, women are responsible for a greater share of caregiving for families and households. After Hurricane María knocked out the power grid in Puerto Rico and made potable water scarce, it was women who bore a greater burden in doing the cooking, laundry, and cleaning to keep households going. Moreover, across multiple climate change events, when schools close, women with school-age children are often unable to return to work or attend school themselves.

Third, Caribbean women tend to work in the informal economy, including small-scale businesses and the hospitality sector, both of which are adversely affected by tropical storms. Storms can damage crops and roads, making it difficult to get produce to markets, while also leaving restaurants, shops, and hotels closed for days, affecting incomes.

Finally, women often have unequal access to finance, capital, and other assets, which can affect their resilience after a disaster. In addition, as governments finance the reconstruction of damaged infrastructure after natural disasters and fortify existing structures, there are fewer resources devoted to the education and health sectors—both of which are integral to providing care to and lifting family responsibility burdens from women.

Caribbean governments and regional partners must factor in the disproportionate challenges facing women and girls at the earliest stages of climate resilience and adaptation policymaking. Policy designs should incorporate government funding or subsidies dedicated to women-owned businesses adversely affected by climate change. Historically, Caribbean women face barriers to accessing finance and capital to start or invest in their businesses. Limited track records in operating a business relative to men and frequent climate events increase the risk profiles for women-owned firms. Here, governments can work with regional institutions like the Caribbean Development Bank to level the playing field for women-owned firms by providing grants to businesses in climate-affected sectors, like hospitality and agricultural work.

Further, resources can and should be dedicated to women-owned firms that are physically affected by climate events and to create shelters where at-risk women and girls can stay after natural disasters to limit spaces where gender-based violence can occur. This should include shelters that can care for children and allow working parents to return to their jobs to offset the disproportionate costs borne by women resulting from family responsibilities.

Involving women in policy designs also includes making them part of the decision-making process. Only women and girls can provide first-hand information to contextualize policies and streamline resources that address the unique challenges they face due to climate change. One way to do this is to incorporate perspectives from gender-focused civil society organizations.

Civil society organizations are uniquely intertwined with the realities of each country at national and subnational levels, allowing them to understand the day-to-day challenges facing women and girls across different communities. Governments can work with civil society organizations to ensure that policies are not blanket approaches but are bottom-up in nature, so that each community of women and girls receive the resources and attention they require. Regular consultation with these groups, particularly in the advent of hurricane season, during rainy seasons, and in the lead-up to drier months can provide real-time insights into the types of government resources that should be devoted to women and girls.

Given that the Caribbean is a heterogeneous region, with different climate events affecting different countries, it is essential for policy design and decision making to be country-specific as well as gender inclusive to best serve local populations. Climate change does not have to result in increasing gender inequity in the Caribbean—as long as the voices and interests of women and girls are incorporated in policy design and resource allocation in regional planning to combat climate change.

Wazim Mowla is the associate director and fellow for the Caribbean Initiative at the Atlantic Council’s Adrienne Arsht Latin America Center. 

This article is part of the Adrienne Arsht Latin America Center’s partnership with the UN Women Multi-Country Office–Caribbean.

The post Climate change doesn’t have to result in greater gender inequity in the Caribbean appeared first on Atlantic Council.

On April 19th, Global China Hub Nonresident Senior Fellow Didi Kirsten Tatlow published an article in Newsweek regarding the expansion of Chinese state-owned companies and aligned private businesses in Antigua and Barbuda and other Caribbean countries.

The post Global China Hub Nonresident Senior Fellow Didi Kirsten Tatlow in Newsweek appeared first on Atlantic Council.

A major obstacle is that the Caribbean’s development model does not yet utilize the full extent of its human capital. Too often, women are not part of the Caribbean’s current development equation, with gender disparities limiting economic opportunities for women and thus holding back economic growth across the region. As Caribbean countries navigate the global financial landscape, governments should look at how increasing economic empowerment opportunities for women can be a new development tool for the region.

Caribbean countries face a host of economic challenges. The region houses small market and import-dependent economies that rely on tourism to drive economic growth. Strong tropical storms, global inflation, and supply chain constraints all have adverse effects on Caribbean economies. Often, as countries import goods and services at high prices, the cost is passed down to the consumer. At the same time, the region has a relatively small population compared to its neighbors in Latin America. This means that capacity is a barrier to economic growth. Simply put, there are not enough people in the region, and by extension, not enough technical expertise and businesses to carry out needed functions that stimulate growth and drive innovation.

But the Caribbean’s small populations are even smaller given that fewer women than men are in the workforce. In many Caribbean countries, female participation in the labor force is around 60 percent, and in some nations it’s closer to 40 percent, according to the World Bank. Compare this with male labor force participation, which often approaches or surpasses 80 percent. The gap is further amplified when taking into account the region’s human capital constraints. While the gap for Caribbean countries is smaller than their neighbors in Latin America, the estimated 20 percent difference has an outsized effect on the region’s economic potential. Tens of thousands of new workers in countries with populations below a million can significantly boost economic prospects. Further, since the Caribbean experiences above-average brain drain and many countries such as Guyana, Jamaica, and Barbados have trouble filling skills gaps, it begs the question: What would development in the Caribbean look like if every bit of the population’s potential was realized?

For more women to participate in the workforce, the root causes need to be addressed. First, despite high educational attainment for women—relative to men—this does not always translate into job opportunities. A new Atlantic Council report looks at educational attainment, measured as a percentage of adults who have completed at least primary education. In Belize, Guyana, Jamaica, and Saint Lucia, educational attainment ranges from just under 80 percent to about 86 percent for women, whereas for men it hovers between 74 percent and 81 percent. Yet workforce participation for women remains lower than for men. Second, when women do enter the workforce, there is a significant wage gap. In Jamaica, women earn about 83 percent of their male counterparts and 88 percent in Barbados. Finally, women are often expected to be home and child caretakers—a responsibility that is unpaid but places an inequitable burden on them relative to men. Unpaid work is a significant barrier to entry for women in the workforce, as offloading these responsibilities comes with expenses that can be covered only by women of a higher income bracket.

Fortunately, Caribbean countries have partners—such as outside nations and international institutions—that can support work on gender equality and economic empowerment. To be sure, Caribbean countries have made progress in gender equality, such as facilitating increases in political participation for women. But the structural barriers facing gender equity are partially a result of the region’s economic makeup, and they require more than just national attention to overcome.

Here, Caribbean countries and their partners should consider undertaking two policy initiatives. First, the focus should be on making it easier for women to enter the workforce while also making the workforce more equitable for them. Women aiming to start new businesses need access to finance mechanisms that are tailored to the realities they face. Many women in the Caribbean do not have a credit history, making it difficult for them to take out loans. If they can access loans, they are usually at high interest rates, meaning that businesses that take longer to return profits can put women-owned enterprises in severe debt. To address these issues, development banks should work with governments to create grant-to-loan mechanisms for women-owned start-ups. Metrics and monitoring mechanisms can be put in place where businesses that return medium-to-high profits over a certain period have their grants turned to low-interest loans. But Caribbean governments cannot afford these mechanisms if they themselves cannot access financing, meaning that a pool of resources from, for example, the World Bank and the Canadian government should help subsidize these costs. 

Second, at a regional level, Caribbean governments should work with partners to create an incubator program for women in the workforce. Success in business, particularly in the private sector, takes more than capital. Time and professional networks are important but are hard to come by for women taking most of the household and childcare burden. An incubator program can help women be part of an active peer-to-peer network that understands their realities. Such a program can help provide access to resources and institutions that ease many of the challenges women face. Many countries have existing women’s chambers or networks, but a region-wide effort would allow for members to share best practices and potentially, resources.

With Caribbean countries facing economic headwinds, governments need the active participation of all their citizens. Women and girls should be the first and immediate resource utilized. But doing so requires ensuring that their participation does not come at an adverse socioeconomic cost. Providing them the same opportunities as men and amplifying their empowerment can be the key to a new development tool in the Caribbean.

Wazim Mowla is the associate director & fellow of the Caribbean Initiative at the Atlantic Council’s Adrienne Arsht Latin America Center.

This article is part of the Adrienne Arsht Latin America Center’s partnership with the UN Women Multi-Country Office–Caribbean.

The post Gender equality can drive economic development in the Caribbean appeared first on Atlantic Council.

Watch the event

Public Event Tue, March 19, 2024 • 10:00 am ET

General Laura Richardson on security in the Western Hemisphere

AN #ACFRONTPAGE EVENT—Gen. Laura J. Richardson, Commander of US Southern Command, discusses her vision for US security partnership with Latin America and the Caribbean.

Americas Caribbean Latin America Security & Defense

The United States isn’t ruling out deploying military forces to Haiti in response to the country’s crisis—as long as such a measure is part of an “international solution” that incorporates Haiti’s perspective, said General Laura Richardson, commander of US Southern Command (SOUTHCOM).

“We wouldn’t discount that at any time,” she said at an Atlantic Council Front Page event on Tuesday hosted by the Adrienne Arsht Latin America Center and the Scowcroft Center for Strategy and Security. “We are prepared if called upon by our State Department and by our Department of Defense.”

But while the United States isn’t currently planning to put boots on the ground, Richardson clarified, SOUTHCOM has a wide range of contingency plans that it is responsible for maintaining. For example, to prepare for potential mass migration from Haiti, Richardson said that SOUTHCOM readied its naval station in Guantanamo Bay, Cuba, to process a possible influx of migrants.

“We want to be able to do exactly what’s right and humane and be able to take care of populations that are trying to escape,” she said.

Richardson said that it is important to ready these plans as the situation continues to evolve in Haiti. Meanwhile, she said that the US State Department is working with the fifteen-member Caribbean Community and Haitian leaders to get a transitional presidential council in place—which will pave the way not only for the selection of an interim prime minister but also for the deployment of a Kenya-led international force to restore security.

Below are more highlights from Richardson’s conversation with Politico National Security Reporter Alexander Ward, which touched upon challenges seen in other countries around SOUTHCOM’s area of responsibility and China’s influence in the region.

Causes for concern

• Last month, satellite images showed the Venezuelan military bolstering its presence near the border with Guyana. Richardson reiterated the United States’ support to Guyana, saying that the United States is continuing “all of our activities, our operations, activities, and investments,” with the country and that it is important for its allies to come together and “to show strong support for Guyana in this situation.”
• With Ecuador now in a state of emergency after an escalation of violence between the government and criminal groups, Richardson said the United States has “doubled down” on its operations and activities there and has delivered emergency security equipment—it recently donated a C-130 military transport aircraft that is on the way. “As they wrestle with those hard challenges and security and instability, we have to continue with our economic investment,” she said.

China stepping in

• Richardson touched upon China’s rising influence in the Panama Canal, a Chinese military-run space station in Argentina, and reports last year that China is enhancing its spy capabilities in Cuba. “What’s happening in Latin America and the Caribbean is not new,” Richardson said. “It’s not new to the globe, and it’s not new to [China’s] . . . vision and strategy.”
• She argued that China has noticed the vast resources available in Latin America and the Caribbean—and also the relative vulnerability of the countries there, which are “still digging out” from the economic impact of COVID-19 and the “insecurity and instability” created by organized crime. “There’s not one country that’s being spared from all the challenges from the transnational criminal organizations.”
• Richardson noted that when China makes agreements with countries in Latin America and the Caribbean, such as within the Belt and Road Initiative, they’re often “tit for tat” and accompanied by demands such as not recognizing Taiwan. “There’s always a hook,” she said.

The counteroffer from “Team USA”

• With China increasing its presence in the region, Richardson said that the United States is sharing information with partner countries about China’s aims and activities so that they, in turn, can make their own decisions about working with Beijing.
• “We don’t do things for strings attached; we don’t have the fine print on things,” Richardson said. “We do it because we’re a like-minded democracy . . . and we would like this region to remain free, secure, and prosperous.”
• Richardson also called upon US companies to offer competitive alternatives to China’s critical-infrastructure projects in the region. “We’re not competing as much as we should,” she said. “Strategic competition is alive and well in the hemisphere. But if you’re going to compete, you’ve got to be on the ground. You’ve got to have your jersey on. You’ve got to have your number. You’ve got to be out there competing.”
• The general admitted that the United States “could have done a little bit better” in paying attention to the region in recent years. “Certainly, when there are crises that require our attention in other parts of the world, that’s where the focus is,” she said. But “we can’t just focus on one or two places. We have got to continue to focus on our partners in the hemisphere that we’re part of.”

Katherine Walla is an associate director on the editorial team at the Atlantic Council. 

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The post Gen. Laura Richardson on what an international response to Haiti might look like appeared first on Atlantic Council.

One challenge has remained constant for Haiti, however: It fades from attention just as quickly as it makes headlines. That must be stopped. The historical lack of commitment to putting Haiti on a different political and economic path—combined with the country being battered by natural disasters, in addition to the man-made ones—has meant that carving out a different trajectory for Haitians has eluded both local and international leaders. What is needed is a long-term approach, in which Caribbean leaders are in the driver’s seat along with their Haitian counterparts, while the United States and Canada help to offset the costs given the grave implications of inaction.

A window of opportunity

When Haitian Prime Minister Ariel Henry announced on March 12 that he will resign after a transitional presidential council is created, it opened a window of opportunity for a country battling multiple crises at once. Since Henry assumed power in 2021, following his predecessor’s assassination, Haiti has been taken hostage by fervent gang violence and political instability, plunging the country into a humanitarian crisis. With not enough food or medicine entering the country, Haitians suffer from hunger and disease.

Haiti’s problems are also no longer confined to its own borders. Haitians are emigrating in droves, and gangs that now control the island traffic firearms and drugs in the wider region. With the likelihood of further instability, Haiti’s neighbors must prepare for the repercussions of a failed state, where lawlessness will only invite other transnational criminal organizations to take advantage of the moment.

But amid this bleak outlook, the negotiated transitional presidential council gives a glimmer of hope that Haiti might see some form of stability in the coming years. Bringing the council and other potential solutions to fruition will require a sustained and collective effort from all parties across the hemisphere, including Haitian stakeholders.

The role of Caribbean countries

Caribbean leadership will be essential for coordinating regional and international support to Haiti. Central to this coordination should be the Caribbean Community (CARICOM), a bloc of fourteen independent member states that already has offered an open, two-way channel of communication between regional countries and Haitian stakeholders.

For example, just prior to his trip to Nairobi earlier this month to discuss the Kenyan-led Multinational Security Support mission, the Haitian prime minister was in Guyana for CARICOM’s annual heads of government meeting. It was also the current chair of CARICOM, Guyanese President Irfaan Ali, who led a leaders’ delegation to Jamaica that, alongside US Secretary of State Antony Blinken, announced the plan for a transitional presidential council. These meetings have held a spotlight on Haiti’s crisis, keeping it top of mind for both the region and foreign officials who engage with the Caribbean. In addition, Jamaica, Antigua and Barbuda, The Bahamas, and several other Caribbean countries have been essential in global coordination efforts on Haiti over the past few years.

But for Caribbean countries to continue leading on Haiti in a sustained way, they need resources. Engaging in frequent diplomatic discussions and devoting security personnel are cost-intensive efforts. The region has limited local capacity within its foreign ministries, and tight budgets make frequent travel difficult. Leaders also are grappling with a variety of pressing issues, including climate change, food and energy insecurity, and rising inflation.

The role of the United States and Canada

The United States and Canada must work in tandem with the Caribbean to provide the resources needed to play an active and continued role in Haiti’s future. This includes direct aid to Haiti to help restore law and order and provide the necessary humanitarian resources the country so desperately needs. Toward that end, the United States Agency for International Development on March 15 announced twenty-five million dollars in humanitarian aid, on top of the thirty-three million dollars announced by Blinken four days earlier, further solidifying the United States’ role as Haiti’s largest humanitarian donor. On February 22, Canada announced nearly ninety-one million dollars to support Haiti.

In addition to direct support, the United States and Canada should also help to offset the cost to Caribbean countries of remaining engaged on Haiti, which is essential for the country’s future.

First, traveling to Haiti or to other international convenings is costly, particularly when unplanned. Air connectivity between Caribbean islands is limited, and most governments do not have access to private aircraft. The United States or Canada can find ways to offset these costs, making it easier for leaders to attend convenings. Short-notice meetings, such as the ministerial meeting on the margins of the Group of Twenty (G20) foreign ministers’ meeting in late February or the Jamaica meeting this past week, should be led by CARICOM governments. But the cost of participation will constrain already tight budgets.

Second, deployment of security personnel is costly, particularly over a sustained period. The United States and Canada should consider alleviating the burden of these costs, which would allow leaders to justify to their national budgets and domestic populations why they should send or increase the police and defense personnel deployed to Haiti. Countries such as Jamaica and The Bahamas have committed personnel, but both countries have their own domestic security challenges to consider, meaning sending officers abroad is unlikely to win much support at home over a longer period. 

Finally, attention on Haiti cannot distract from the numerous challenges facing the rest of the region. Over the past few years, the United States and Canada have both launched new flagship Caribbean policies, and high-level diplomatic engagements have started to move the needle on important issues, including climate change and energy security. If Caribbean nations are expected to lead, then they need assurances that their priorities will not be forgotten.

What’s clear is that there is no quick fix to Haiti’s crisis, nor is there one solution over a longer period that will stabilize the country. Haiti’s challenges are complex and deeply rooted in its postcolonial history. Any cadre of solutions will only come after frequent and consistent diplomacy and action to negotiate a way forward for Haiti. All of this requires the resources to stand up the needed attention and engagement Haiti deserves.

Jason Marczak is vice president and senior director of the Atlantic Council’s Adrienne Arsht Latin America Center. 

Wazim Mowla is associate director and fellow of the Caribbean Initiative at the Adrienne Arsht Latin America Center.

The post Addressing Haiti’s turmoil starts with its Caribbean neighbors—and US and Canadian support appeared first on Atlantic Council.

Summary

The Caribbean is one of the most vulnerable regions globally. It harbors economies that are open-faced and import-dependent, making it susceptible to the ravages of climate change, fluctuating commodity prices, and inflationary pressures. While governments and financial institutions grapple with these perpetual stresses, it is the Caribbean citizens, particularly women and girls, who bear the heaviest burden.

Nestled in this uniquely vulnerable region, women and girls face a multitude of challenges, demanding comprehensive support from both governments and financial institutions to enhance their resilience and opportunities throughout society. Their integration across various sectors, including government, business, and local organizations, emphasizes that addressing gender challenges cannot occur in isolation.

The global issues looming over the Caribbean magnify the specific hurdles confronting women and girls. From gender-based violence (GBV) and economic barriers to limited political influence and the disproportionate impacts of climate change, the challenges intertwine, creating a crisis of gender inequality and inequity across the Caribbean.

This publication compiles findings from a yearlong consultative effort, revealing that the challenges faced by women and girls are rooted in societal perceptions of their roles and restricted access to tools and resources. To overcome these barriers, a fundamental reshaping of social norms, alongside political and financial institutions, is imperative. Moreover, integrating women and girls into the development model aligns with the region’s broader ambitions of achieving UN Sustainable Development Goals (SDGs), unlocking untapped human capital and fostering long-term prosperity.

In collaboration with the UN Women Caribbean Multi-Country Office, the Atlantic Council’s Adrienne Arsht Latin America Center and its Caribbean Initiative embarked on a year-long partnership. This initiative aimed to address GBV, economic empowerment challenges, limited political influence, and the disproportionate effects of climate change facing women and girls in the Caribbean. The extensive consultative process involved roundtable discussions, capacity-building sessions, and one-on-one consultations, shedding light on the preconceptions held by both men and women toward women and girls in Jamaica and Guyana during 2023. The partnership has honed in on social norms as a focal point, recognizing their impact on perceptions and discussions about the challenges faced by women and girls.

About the authors

Wazim Mowla is the associate director and fellow of the Caribbean Initiative at the Adrienne Arsht Latin America Center. He leads the development and execution of the initiative’s programming, including the Financial Inclusion Task Force, the US-Caribbean Consultative Group, the PACC 2030 Working Group, and the Caribbean Energy Working Group. Since joining the Council, Mowla has co-authored major publications on the strategic importance of sending US COVID-19 vaccines to the Caribbean, strategies to address financial de-risking, and how the United States can advance new policies to support climate and energy resilience. As part of his work on the Caribbean, Mowla was called to provide Congressional testimony to the US House Financial Services Committee on financial de-risking.

Valentina Sader is a deputy director at the Atlantic Council’s Adrienne Arsht Latin America Center, where she leads the Center’s work on Brazil, gender equality and diversity, and manages the Center’s Advisory Council. During her time at the Council, Valentina has managed the launch of the Center’s Advisory Council, a high-level group of former policy makers, business leaders, and influencers from the United States and the region. She has co-authored publications on the US-Brazil strategic partnership and coordinated events with high-level policymakers, business leaders, and civil society members in both Brazil and the US. She also provides English- and Portuguese-language commentary on political and economic issues in Brazil to major media outlets, such as Al Jazeera and BBC Brasil.

The Adrienne Arsht Latin America Center broadens understanding of regional transformations and delivers constructive, results-oriented solutions to inform how the public and private sectors can advance hemispheric prosperity.

Learn more

The post Not without her: A roadmap for gender equality and Caribbean prosperity appeared first on Atlantic Council.

On October 24, Imran Bayoumi, associate director at the Scowcroft Strategy Initiative in the Scowcroft Center for Strategy and Security, and Wazim Mowla, associate director and fellow of the Caribbean Initiative at the Adrienne Arsht Latin America Center, were published in The Globe and Mail and featured on the Canadian Forces College’s Spotlight on Military News and International Affairs. They discuss the Canada-CARICOM Strategic Partnership (CCSP) announced in October 2023 and argue that, while the partnership is an excellent first step, it requires actionable steps toward implementation on the core priorities of “strengthening regional security, addressing climate challenges, and increasing access to finance.”

Staff

Imran Bayoumi

Associate Director

Scowcroft Center for Strategy and Security Scowcroft Strategy Initiative

Staff

Wazim Mowla

Associate Director & Fellow, Caribbean Initiative

Adrienne Arsht Latin America Center

Caribbean China

The post Bayoumi and Mowla in The Globe and Mail and Canadian Forces College on the Canadian-Caribbean partnership appeared first on Atlantic Council.

Most immigrant traffic to the United States goes through and comes from Latin America. A lack of economic opportunities, climate vulnerabilities, political instability, and the pervasive influence of organized crime are often cited as push factors for these migrants. However, recent migration patterns also reveal a diversification of nationalities at the US southern border, underscoring the global nature of the challenge. In addition to regional events such as the collapse of Venezuela, political instability in Haiti, violence in Ecuador, and the ongoing and unrelenting crackdown in Nicaragua, conflicts such as Russia’s invasion of Ukraine and the war in the Middle East are also fueling the migration crisis. Most migrants at the US southern border in recent years originated in Mexico, El Salvador, Guatemala, and Honduras. However, despite the persistent conception of most migrants coming from Central America, in December, more than half of migrant encounters at the US-Mexico border involved citizens of other countries, such as Russia, India, Brazil, Afghanistan, Romania, Turkey, and others.

As such, Latin American countries and the United States should work together to develop and implement policies and strategies that address the driving causes of migration that are specific to the region and mitigate the region-wide risks of such a large migrant flow—much of which now comes from outside the region.

Specifically, the United States should work with the countries originating high numbers of migrants to improve conditions and thus prevent the need for people to leave their countries—whether from Latin America and the Caribbean or other parts of the world. That starts with a holistic security strategy to address the challenges of human, drug, and arms trafficking. Supporting local economic growth and human capital development, employing climate change mitigation and adaptation programs, and fostering coordinated, multifaceted responses to the drug supply chain would create a more secure hemisphere and decrease the number of people fleeing violence.

Additionally, the United States needs to recognize that its current policies aimed at deterring migration are ineffective and often harmful. The hardline policies that were put in place by the Trump administration and have largely been continued by the Biden administration have done little to nothing to curb migration flows. At the US-Mexico border, migration crossings have hit a record high, with more than three hundred thousand Border Patrol encounters with migrants in December. This context demands a reevaluation of current strategies aimed at deterring migration.

Instead of continuing its failed effort at deterrence, Congress should focus on developing humane, legal pathways to migration, recognizing pull factors in the United States, which will decrease the frequency of irregular migration. A straightforward recommendation is for clear, realistic timelines for US judges to expeditiously deliver decisions on asylum cases.

The United States should not take on all of the burden. There are opportunities to work in the region and support regional partners on integrating displaced migrants in third countries, from the region or from other parts of the world, to help alleviate the migration flow to the US border. A new report by the Atlantic Council also puts forward the idea of the United States supporting a regional task force “with the goal of jointly addressing the factors behind irregular migration and insecurity.” The idea builds on the existing work of countries such as Costa Rica and Panama, which are working hand in hand to establish more streamlined, efficient, and unified border crossings. Last week, these two countries, with the assistance of the Inter-American Development Bank, inaugurated a one-of-a-kind border facility. Building on the Atlantic Council’s recommendation for a regional task force to address these challenges, the United States, Mexico, and Guatemala are already moving in this direction. The three nations have just “committed to establish an operationally focused trilateral working group aimed at enhancing security, law enforcement processes, and infrastructure along their international borders”—a concrete manifestation of a collaborative approach to solving regional challenges.”

Migration and security are inherently interlinked issues, and the urgency for a collaborative, multifaceted approach to both cannot be overstated. The United States must work with and support other countries in the hemisphere to holistically mitigate the root causes of migration and create safer conditions for citizens across the region.

María Eugenia Brizuela de Avila is a nonresident senior fellow with the Atlantic Council’s Adrienne Arsht Latin America Center and a former minister of foreign affairs of El Salvador.

The post Irregular migration starts well before the US southern border. Focus on the driving causes of the problem. appeared first on Atlantic Council.

The strategic interest of the United States and the countries of Latin America and Caribbean (LAC) lies in strengthening their western hemisphere partnership. Shared borders, economic interests, and security alliances bind these nations, along with a common goal for prosperity.

However, the perception of waning US interest and the rise of external influences necessitate the rejuvenation of and renewed focus on this partnership. In May 2023, the Atlantic Council’s Adrienne Arsht Latin America Center and the Scowcroft Center for Strategy and Security established the US-LAC Future Strategy Working Group to redefine the US-LAC partnership.

This strategy promotes mutual and inclusive economic growth, renewed cooperation through enhanced commercial and investment ties, a renewed paradigm on bolstering security and reducing migration flows across the region, and a focus on preparedness in the face of natural disasters and the energy transition. Acting on this strategy could significantly benefit US economic and security interests. The United States should capitalize on immediate opportunities, like promoting nearshoring as a means to growth and prosperity across the Americas, while maintaining a medium-term strategy tailored to each country’s specific needs.

This strategy paper highlights the importance of adaptability and practicality, particularly as the global economic landscape evolves and power shifts foresee new leading economies by mid-century. In addition, the strategy advocates for the significance of the US-LAC relationship amid the recalibration of US worldwide interests.

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The Adrienne Arsht Latin America Center broadens understanding of regional transformations and delivers constructive, results-oriented solutions to inform how the public and private sectors can advance hemispheric prosperity.

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The post Redefining US strategy with Latin America and the Caribbean for a new era appeared first on Atlantic Council.

In the wake of Latin America’s “Lost Decade,” many Latin American countries adopted market-oriented investment laws in hopes of attracting global capital. Perceiving that the lack of public-sector constraint was a catalyst for the 1980s debt crisis, these institutions aimed to “tie the hands” of subsequent governments with procurement provisions. For example, Brazil’s 1993 Procurement Law was adopted in the wake of its Brady Bond restructuring in which Western bankers converted the country’s defaulted bank loans into global bonds. In essence, Brazil gained capital-market access in exchange for establishing market-friendly institutions, including laws that promoted public-sector efficiency through public procurement. Supported by the United States and international financial institutions, such as the International Monetary Fund (IMF) and the World Bank, this pattern was repeated throughout the region with most Latin American states constitutionally adopting such procurement laws.

If we fast forward through time and space to the early twenty-first century, this institutional architecture has successfully infused investment into Latin American markets. For example, over the last three decades, Brazil’s 1993 Procurement Law has helped catalyze a whopping 900 procurement projects totaling more than $338 billion:¹ a boon to the Brazilian business community. Surprisingly, however, in the prelude to the largest public tender in Brazil’s history—a $9 billion auction of its fifth-generation wireless network in 2021—the market-friendly Bolsonaro administration was considering legally barring China’s technology giant Huawei from participating, raising several questions. Politically, why would the Brazilian government interfere with the country’s constitutionally mandated procurement system,² a bedrock of its free-market legacy? Economically, why would the Bolsonaro government threaten to block Huawei, a major technology provider in Brazil for over two decades, from building 5G networks?

The answer reflects geopolitics—mainly US concerns about Chinese technology posing a threat to data protection, intellectual property rights, and national security. For example, the 2022 US National Security Strategy aims to “counter the exploitation of American’s sensitive data and illegitimate use of technology, including commercial spyware and surveillance technology.”³ However, outright technology bans risk unintentionally casting a cloud over the historic US commitment to market institutions and economic freedom, which are important hallmarks of its historic soft power. Trade liberalization has been historically popular in much of Latin America,⁴ notwithstanding recent deteriorating public satisfaction with democracy, which has fallen by about 10 percent since 2004.⁵ The United States should thus concentrate on creating economic opportunities regionally, rather than risk geopolitics undermining longstanding market norms.

Exporting patient capital: Externalizing China’s state-led development model

In the mid-1990s, China struggled to raise global market financing for the construction of the Three Gorges Dam, a massive hydroelectric power plant and the largest water-supply development in human history. Due to its size and international concerns about environmental sustainability, multinational and bilateral lenders including the World Bank and the US Export-Import Bank balked at providing project financing to the state-owned contractor, China Three Gorges Corporation. Against this backdrop, the China Development Bank (CDB) opted to finance the dam, pioneering its new brand of “development finance,”⁶ in which the bank would increasingly occupy the market space between a policy bank and a commercial bank. Over the long run, however, once the dam produced electricity, not only was the project profitable, but China Three Gorges Corporation became a global market player, acquiring financial stakes in other global energy firms.⁷

Similarly, the CDB has catalyzed financial expansions internationally as part of China’s “go global” strategy. Brandishing a balance sheet that was on par with the United States’ Big Four banks, JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo,⁸ the CDB extended credit lines to national governments through joint development funds and other cofinancing initiatives. Whereas
Western commercial banks and even multilateral banks had to ensure individual projects were profitable over the short-to-medium term to appease their shareholders, the CDB had the ability to emphasize the longer term, as a form of “patient capital.”⁹ Its mandate was to meet government objectives with market-oriented instruments, affording the bank more time to both reach profitability and comply with state guidelines. Although Chinese policy bankers also demand a return on their capital, they incorporate a longer payback period in their lending structure to encourage “market maximization.” In other words, they aim to grow China’s total corporate earnings within important markets, rather than boosting the profitability of a single project or firm.¹⁰ Policy banks, such as the CDB and Export-Import Bank of China, are thus aiming to develop long-term markets rather than to maximize short-term profits.

During my field research in China over the past half decade, officials from both policy banks routinely referred to the importance of using “weighted outlooks for respective returns or revenues” from these projects.¹¹ According to one veteran policy bank manager: “It’s not one port or one project; it is bringing the whole picture together. There may be risk or uncertainty in any one element, but in the long run, the whole picture comes together.”¹²

For example, beginning in 2001, the CDB provided about $45 billion in lines of credit to telecommunication equipment makers¹³ such as Huawei and ZTE, helping them become key players in the global technological marketplace in the early twenty-first century. They reached this status in part by taking advantage of “vendor financing,” a key element of China’s patient capital. In Brazil, for instance, Huawei used CDB lines of credit to lend money to local Brazilian companies who then purchased Huawei’s telecommunications equipment.¹⁴ The CDB, and ultimately the Chinese government, did not judge the success of this banking activity on the profitability of one loan, but rather the extent to which they had created new telecommunications markets for Chinese firms overseas. Over the last two decades, China has expanded its web of commercial ties in the Brazilian telecommunications sector, where today the country’s three largest cellphone operators, Vivo, Claro, and Oi, are using Huawei technology in about two-thirds of their 3G and 4G networks.¹⁵

The challenges of competing with China

Cheap financing gives China’s state-backed firms a competitive advantage when breaking into new markets overseas and thus a competitive edge globally. The United States, meanwhile, has aimed to compete with China using diplomatic levers and alliance channels. For example, it convinced such countries as Australia¹⁶ and Canada¹⁷ to ban Huawei and ZTE from building their 5G networks. However, this has proven to be a less effective strategy in the developing world, where alternative providers (e.g., Ericsson and Nokia) have a smaller historic commercial presence, and where many countries must significantly upgrade their digital infrastructures. For example, Huawei has a longstanding commercial relationship in Argentina and Brazil, after constructing 70 percent¹⁸ and 85 percent¹⁹ of their mobile networks, respectively. Aiming to close its technological gap, Colombia—whose mobile connectivity has ranked behind a half dozen regional peers²⁰ — has also had pilot tests of the 5G Huawei network.²¹

Why would Latin American countries risk such important development opportunities to help protect US national security, when the United States no longer has a near-technological monopoly?²² In this regard, the strategic doctrine of Active Non-Alignment,²³ or avoiding aligning with either the United States or China, might appeal to many Latin American governments feeling caught in the middle of US-China competition. Beyond Brazil, the Trump administration reportedly also tied new Ecuadorean bilateral loans intended to help repay its Chinese debts to the US “Clean Network” program, effectively excluding Chinese telecommunications companies from building Ecuador’s 5G network.²⁴ Such initiatives risk obscuring the US commitment to public procurement laws, market openness, economic competition, and transparency in the hemisphere. Why not instead develop investment alternatives, as the United States has done with AT&T Mexico, collaborating with Nokia to support developing 5G innovation and infrastructure throughout the country?

China’s growing investment diversification: A US opportunity

After reaching a peak of $67 billion outstanding, or one-tenth of Latin America’s external debt in 2017, China has been steadily unwinding its Latin American state-to-state financial ties.²⁵ This financial deleveraging has been driven mostly by Ecuador and Venezuela, two countries where Chinese policy banks mispriced investment risk and became financially overextended. As a rising “developing country creditor,” China had hoped to offer a new brand of development financing by offering overseas lending without policy conditionality. Emphasizing South-to-South financial cooperation, China aimed to use its development finance to cultivate a Chinese commercial presence in key strategic sectors in developing economies. Avoiding the stringent macroeconomic conditions that are typically required by Western multilateral institutions, Chinese lending instead emphasized microeconomic incentives. Policy banks employed commercial conditions to hedge China’s bilateral credit risk through loan-for-oil deals, betting that oil proceeds would both help guarantee debt repayment and also expand China’s commercial footprint in the Latin American energy sector.²⁶

China has experienced a creditor learning curve, discovering that sovereign credit risk cannot simply be mitigated by collateralizing policy bank loans with natural resources. Even when loan repayment is tied to national commodity income, loan profitability is dependent on prudent local governance that sustains state-owned enterprises’ resource production. When there is substandard national resource governance, Chinese policy banks have little recourse beyond extending new funds in hopes of recovering natural resource collateral. As one former CDB official explained in a December 2019 interview for my book, Globalizing Patient Capital, “It’s not like lending to one province of China; you cannot order another country to do what you think is right.”²⁷

Chinese policy banks have thus adopted a defensive lending posture with many of their major Latin American borrowers by renegotiating state-to-state loan terms. Ironically, China’s patient investment has also yielded a patient restructuring approach, where China’s main state-backed overseas creditors have extended debt relief to highly indebted countries in hopes of recuperating their bad investments during better times. For example, the China Development Bank and Export-Import Bank of China, tend to avoid recognizing short- or medium-term losses in their banking portfolios, granting payment deferrals rather than outright debt forgiveness. After first approving Venezuelan debt relief in 2016, China extended its debt moratorium through the pandemic, allowing the country to defer its principal payments, reduce its underlying oil collateral, and extend repayment deadlines. In Ecuador, Chinese policy banks extended principal payment deferrals valued at $891 million between 2020 and 2022. More recently, President Guillermo Lasso successfully negotiated with China’s policy banks to extend bilateral debt relief on oil-backed debt servicing though 2025.

China’s mispricing of credit risk and debt difficulties have contributed to a deterioration in its political influence, creating a regional opportunity for the United States. For example, in Ecuador, public perceptions of China have deteriorated in recent years against the backdrop of growing concerns that the former Rafael Correa government had mortgaged as much as four years of Ecuador’s future oil production through its China loan-for-oil deals.²⁸ By 2021, nearly three-fifths of Ecuador’s population deemed China “untrustworthy,” compared to less-than-half of the population mistrusting China in 2014. The region has witnessed a similar pattern, with trustworthiness of the Chinese government falling by about 20 percent over the last decade.²⁹ Scholars have also found that public sentiment regarding China varies by economic sector, with Brazilian politicians representing regions hurt by Chinese import shocks more likely to hold negative views about China.³⁰

In response to such negative optics and mispriced investment, China’s creditors have deleveraged their financial positions, and diversified away from their bilateral debt holdings in the region. Debt spirals and governance crises have threatened to erode China’s regional soft power, after it steadily developed deep trade and investment ties over the past two decades. To mitigate its sovereign risk, China is experimenting with market-based and multilateral solutions. With an eye to diversifying its sovereign risk beyond debt financing, China has created more than $40 billion in state-backed Latin American equity funds. Not only are these state-owned asset managers an important part of China’s 2013 Third Plenum market reforms, they also enable Chinese policy banks to increasingly engage with the private sector internationally by directly investing in Latin American corporate enterprises. Notwithstanding the lofty headline numbers, China’s state-backed equity investors have deployed only $2 billion in Latin America, or about 5 percent of the total funds committed by their shareholders.³¹ China’s gradual shift in investment tools is also timed to take advantage of a changing Latin American context in which governments, including in Argentina and Brazil, have increasingly employed private procurement. In recent years, both countries passed public-private partnership laws to relieve national budgetary pressure by delivering public services outside the public balance sheet.

In the world of finance, shifting from debt-to-equity financing is a common way to mitigate credit exposure. The key question is whether China is moving forward quickly enough with these private-sector initiatives to avoid its mounting state-to-state problems. The growth of foreign direct investment (FDI) flows in recent years, which has surpassed state-to-state lending as the primary channel for new Chinese financial flows to the region,³² suggests China is adjusting fairly swiftly.

Leveraging US competitive advantages

With China employing more market-oriented investments regionally, the country is developing a greater presence in Latin America’s private sector, which is an area of historic competitive advantage for the United States. China initially made its foray into Latin American financing by offering its patient form of capital, characterized by its large financial scale and subsidies. These characteristics amplified policy banks’ risk tolerance, allowing them to more fluidly absorb short-term losses, sustain long-term investments, and avoid using policy conditionality to ensure debt repayment. These features of China’s development finance also helped cultivate a Chinese commercial presence in key strategic sectors within higher-risk economies.³³ To hedge sovereign credit risk from their state-to-state loans, however, policy banks employed commercial conditionality,³⁴ using natural resources as collateral for loans, as a means of repayment or in the event of a default.

However, Chinese policy banks have also shown that they are susceptible to mispricing credit risk when their sovereign borrowers mismanage the economy or natural resource production. They have also used commercial conditionality, linked to these financial contracts, to promote trade by requiring local purchases of Chinese machinery, materials, and technology and by guaranteeing contracts with Chinese firms. Employing these commercial conditions, however, have intensified such historical regional problems as commodity dependency and industrial stagnation.³⁵ The United States can thus exploit Latin America’s frustrations with commercial conditionality, or the fine print of these financing deals, to better compete with China in several ways regionally.

International institutions: Compelling China to be a multilateral stakeholder

In light of China’s development emphasis in its foreign policy, the Chinese government has been careful to participate in multilateral debt relief initiatives, such as the Debt Service Suspension Initiative (DSSI) and the Group of Twenty (G20) Common Framework agreement, since the onset of the pandemic. However, China has simultaneously favored bilateral debt negotiation in countries where the CDB is the lead creditor, arguing that the CDB is a commercial bank, falling out of the scope of official, coordinated debt relief. Given the considerable scale of both Chinese investments and the CDB’s exposure to Latin American debt,³⁶ such bilateral discretion could challenge the global governance standards advocated for by the IMF and the Paris Club, posing a risk to global financial stability.

China creditors often opt for bilateral discretion because they prefer “evergreening” strategies or waiting for an economic recovery to generate new life into their bilateral loans. In other words, they have restructured loan terms, and propped up sovereign borrowers (e.g., Ecuador and Venezuela) without recognizing bad debts or requiring significant economic reform. Why? China is willing to engage in regulatory forbearance to avoid recognizing short-term losses. The United States pursued a similar set of policies during the 1980’s Latin American debt crisis to safeguard its bank balance sheets from regional defaults. The Federal Deposit Insurance Corporation relaxed regulatory conditions, while US banks extended new credit to heavily indebted countries in hopes of facilitating debt repayment that was vital to bank profitability.³⁷ Financial losses and developing country debts escalated by the end of the decade, leaving the region caught in chronic crises. Mired in a period of shrinking growth, runaway inflation, and development stagnation popularly known as the Lost Decade, Latin America’s struggles weighed on the global economy. Western banks were eventually forced to write off their bad loans as part of multilateral-sponsored reform programs that helped stabilize the region, and check inflation.

China’s bankers have similarly balked at debt forgiveness, but over time, they are going to require more policy tools beyond rescheduling bilateral debt terms and waiting for economic growth and financial recovery. Without an alternative framework for debt sustainability, China needs the Common Framework as much as the United States. The IMF provides a pathway to financial stability that is often grounded in tough policy conversations with its borrowers about economic reforms that bilateral creditors—particularly those like China who favor nonintervention—hope to avoid. Beyond the current discord about how to distribute financial burdens under the Common Framework, China is a multilateral stakeholder that ultimately needs financial stability for its national creditors as much as the West. For example, China authorized Argentina to use its central bank currency swap this summer to help enhance its near-term financial means to repay the IMF, a vital step to facilitating new fund disbursements under Argentina’s ongoing IMF program. In light of such aligned financial incentives, the United States should use its influence in international institutions, including the IMF, to more actively encourage greater Chinese participation in multilateral debt relief, an outcome that not only delivers greater financial stability for US creditors, but also Chinese creditors.

Fortify US dollar as Latin America’s reserve currency

The dollar continues to reign supreme as a reserve currency in international finance, accounting for $6.9 trillion, or about two-thirds of the world’s total foreign exchange reserves, while the Chinese renminbi’s accounts for a mere 2 percent of total exchange reserves.³⁸ Renminbi internationalization is one of the key motivations for China’s integration internationally; however, foreign investors have been circumspect about using the currency as a low-risk safe investment given ongoing concerns about the predictability of its political and legal frameworks.³⁹ China is trying to counter this narrative by using global trade and investment as a conduit to promote renminbi-based transactions. Even though the renminbi has less historic visibility in Latin America, the Chinese authorities have raised the currency’s profile through currency swap agreements, completing central bank swap agreements with eight Latin American countries totaling $19 billion.⁴⁰ These agreements not only give central banks direct access to the Chinese currency but they also provide Latin American countries with a potential financing alternative when they face liquidity constraints in US dollar markets – as observed in Argentina this summer.

To reinforce dollar supremacy and improve the financial inclusion, efficiency, and safety of the US dollar payment system, US authorities should research the merits of a central bank digital currency (CDBC) in Latin America. By using trade to promote renminbi internationalization, China is betting that technological development will enhance the direct convertibility of bilateral currencies and reduce the world’s need for the dollar as a reserve currency. Today, the dollar is involved in almost nine-tenths of all currency transactions globally,⁴¹ affording the United States two key important economic and geopolitical advantages. Economically, long-standing demand for US dollars places a premium on its US Treasury assets, which translates to low interest rates for its government and firms that are vital for economic growth. Geopolitically, US dollar dominance allows the US government to use its global financial network to monitor international transactions and apply economic sanctions. To maintain these relative national advantages, the United States should secure the dollar’s place as a global intermediary by leveraging its technological expertise and regulatory infrastructure to build an unrivaled digital dollar hub for the international financial system.

Increase the scale and operations of the US Development Finance Corporation

The US Development Finance Corporation (DFC) has about $4.4 billion outstanding in active projects in the Western Hemisphere, or more than one-third of its total global projects.⁴² This development financing represents about 2 percent of regional FDI flows today. The DFC employs its financial resources—including loans, loan guarantees, equity investments, political risk insurance, and technical assistance—to help spur private investment in developing country markets. Importantly, the DFC’s mandate, which was created under the BUILD Act in 2018,⁴³ has sought to primarily expand development opportunities in low- and middle-income countries.⁴⁴ However, the DFC is also a commercial tool that has helped create market opportunities internationally in sectors where the United States has a competitive advantage, including clean technology, education, finance, healthcare, and information technology.

Given China’s large presence in South America’s high middle-income economies, the DFC should expand its scope and scale in the region’s largest markets, where commercial opportunities often intersect with strong development needs. To date, the DFC has extended 93 percent of its Latin American portfolio to higher middle-income countries, including Colombia, Ecuador, Mexico, and Peru. Beyond the Andes and North America, however, the rest of South America only accounts for one-quarter of the DFC’s Latin American exposure.⁴⁵ There are many remaining fertile opportunities in markets with sizable private sectors, including Argentina, Brazil, and Chile. China’s state-to-state financing has been effective at breaking into these markets, but the United States is brimming with sophisticated market players who would benefit competitively from enhancing the institutional foundations of the region’s marketplace.

To maintain its effectiveness, the DFC should thus focus on its institutional advantage of market development, and avoid any potential political interference. When the United States aims to leverage DFC financing to extract political concessions, or influence national investment governance, it risks undermining its own messaging about market governance and capital development. Much of the region still views China’s telecommunications firms as offering a development opportunity in digital infrastructure.⁴⁶ The US concerns regarding data privacy and national security have merit, but are best channeled into foreign policy by instead presenting the region with competing development opportunities through the DFC. Such developmental efforts are more likely to grow regional support for US goals for twenty-first century globalization and help restore US economic and political leadership.

The DFC also can leverage the longstanding US strengths in financial intermediation, transparency, and accountability. Building robust legal frameworks for public finance and procurement has helped enhance private-sector activity, competition, and efficiency in Latin America over the course of the last few decades. Why interfere with such foundational regional market institutions by introducing politics into the public tender process? Alternatively, the United States can use its voice in multilateral and regional institutions including the World Bank and Inter-American Development Bank to further develop local administrative, legal, and financial expertise in procurement governance and public-private partnerships. Through such institutional efforts, the United States can help incentivize more Chinese financing flows through the local private sector, where it’s more likely to behave similarly to traditional market financing. In addition, the DFC can help simultaneously foster synergies between the US private sector’s technical expertise and local firms’ economic knowledge, creating mutual market gains.

China has begun to answer the region’s call for value-added manufacturing investment and technological spillover in such sectors as renewable energy, electric battery production, and clean transportation. However, China is still overcoming some negative optics throughout the region due to the high commercial content of its Latin America financial foray. Against this backdrop, the United States should leverage its private sector to deliver local development opportunities, but without the commercial conditionality of China’s development finance.

About the author

Stephen B. Kaplan is an Associate Professor of Political Science and International Affairs at George Washington University; and a faculty affiliate of the Institute for International Economic Policy.

The Scowcroft Center for Strategy and Security works to develop sustainable, nonpartisan strategies to address the most important security challenges facing the United States and the world.

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The Adrienne Arsht Latin America Center broadens understanding of regional transformations and delivers constructive, results-oriented solutions to inform how the public and private sectors can advance hemispheric prosperity.

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The post Don’t let geopolitics undermine Latin America’s hard-won free markets appeared first on Atlantic Council.

Following global trend lines, significant shifts in Latin America and the Caribbean—including presidential elections in Ecuador, Guatemala, and Argentina, unprecedented agreements with the Venezuelan government, a worsening security situation in many countries, and a pressing focus on climate change—set the stage for even more change to come in 2024.

Join the Adrienne Arsht Latin America Center as we explore top questions that may shape this upcoming year in the hemisphere.

What will the region’s newest presidents accomplish? How might Latin America’s ties with countries such as China and Russia evolve? What might be the role of the United States in an election year? Will the Caribbean see new, international attention to the specific threats faced by major climatic events?

Take our quiz to find out if you agree with what we’re predicting!

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The Americas Partnership for Economic Prosperity (APEP) Leaders’ Summit was held on November 3. It zeroed in on advancing responsible, sustainable investment and accelerating new commercial flows. In advancing the summit’s focus on prosperity, leaders worked on creating a roadmap to foster regional competitiveness, make supply chains more resilient, and mobilize new sustainable investment across the hemisphere. 

The initial partners of APEP are a select group of ten Latin American and Caribbean countries, as well as Canada and the United States. Together, these countries represent about 90 percent of the Western Hemisphere’s gross domestic product. More importantly, the United States has trade agreements with eight of these countries, which gives APEP an underlying institutional framework in which to operate. For the APEP to yield results over time, however, the initiatives announced at the summit must be accompanied by ambitious trade integration efforts, targeted investment goals, and an expansion of the countries included in the partnership. 

The motivation behind the summit

The Biden administration’s push to increase the United States’ economic presence in Latin America and the Caribbean (LAC) comes at a critical time in hemispheric relations, as Chinese influence in the region has dramatically increased over the last decade. Whereas China imported 1 percent of the region’s exports in 2000, it now imports 15 percent. Chinese companies are also major investors in the energy and infrastructure sectors, as China’s Belt and Road Initiative has found many partners in Latin America, including among at least eight APEP member countries. The region’s trade flows have shifted toward Beijing, and China has surpassed the United States to become South America’s largest trading partner. LAC governments, in turn, have criticized the United States for remaining an observer to this trend, unable or unwilling to match Chinese influence with a cohesive economic policy that offers alternatives to regional policymakers. The APEP Leaders’ Summit represented the United States’ effort to rise to the occasion and to further position itself as an attractive partner to LAC countries.

What the summit accomplished

At the APEP Leaders’ Summit, US President Joe Biden announced new initiatives and programs that seek to define the pillars of US economic engagement with the region for years to come. The focus of the new hemispheric economic policy is on development financing and mobilizing new, sustainable investment in the region, with the Inter-American Development Bank (IDB) taking on a central role.

Among the most prominent announcements at the summit, the US International Development Finance Corporation (DFC) and the IDB will launch an investment platform to channel “billions of dollars into building sustainable infrastructure and strengthening critical supply chains.” By mitigating investment risk, the White House aims to unlock barriers to private sector financing in the region. Moreover, Biden announced that the United States will work with the IDB to establish a fund for nature to mobilize more investment in climate-based solutions, such as debt-for-nature swaps, as well as blue and green bonds. Other initiatives to enhance workers’ skills in the region and to benefit migrant-hosting countries were also announced. The announcements are welcome, but what will be most important is ensuring that the new money and financing opportunities actually reach the region and the people whose lives could be most improved by these initiatives.

Assessing the APEP summit

The summit shows the United States’ intention to deepen economic cooperation with the region, even amid geopolitical crises that might otherwise eclipse the US government’s capacity to offer a cohesive economic policy approach.

Mobilizing new development finance and sustainable investment, including the new initiatives announced at the White House, will unlock private sector investment and channel much-needed resources into industry. If done correctly, the United States could marshal its weight—through the IDB—to de-risk private sector investment and reassure investors that are looking to move resources to the LAC region. An inflow of new capital in the form of foreign direct investment or US companies bidding for infrastructure projects would offer Latin American policymakers an alternative to Chinese capital. The United States matching China’s investment dollar for dollar is unlikely, as China’s state-led investment model cannot be replicated by the United States’ private sector-led capitalist economic diplomacy model. However, the United States can leverage its leadership by choosing projects wisely and investing in those areas that ultimately trickle down to citizens of the Americas.

What should come next?

While the DFC-IDB investment platform is a welcome first step, the administration should set investment targets to ensure that the platform results in an increase in US capital flowing to current and potential future APEP members. Furthermore, for the platform to be effective, it will be necessary to lift the DFC’s lending restrictions to middle- and upper-middle-income countries, categories that include most LAC countries.

While the summit focused on development financing and sustainable investment, what was noticeably missing were any agreements on commercial integration through trade policy. US partners clamor for new trade openness, but that is not on the current US agenda. It is unclear how much investment can be mobilized without accompanying updates to broader commercial integration. And the APEP should be static: The inclusion of more countries into the APEP framework should be a priority, with Brazil and Central American countries top of mind. Central America is the primary source of migrants to the United States, but it also holds significant potential to contribute to nearshoring efforts.

One day before the summit, former US Senator Chris Dodd, an instrumental figure in convening it as Biden’s special presidential advisor for the Americas, cautioned leaders that in politics “windows open and windows close.” With the APEP Leaders’ Summit, a window has opened. For the region to benefit from deeper US-LAC cooperation and for the United States to offer LAC policymakers a new vision of what long-term economic partnership could mean, it’s now time to open not just the window, but the door to an economic partnership model that can stand the test of political cycles.

Jason Marczak is vice president and senior director of the Adrienne Arsht Latin America Center at the Atlantic Council.

Martin Cassinelli is a project assistant in the Adrienne Arsht Latin America Center at the Atlantic Council.

The post The APEP Leaders’ Summit opened a window for deeper US economic ties with Latin America and the Caribbean appeared first on Atlantic Council.

Introduction
Drivers of the Energy Transition and System Transformation
What Does the Current Renewable Energy Landscape Look Like?
Challenges to the Energy Transition
How Can We Ensure that the Caribbean Region’s Energy Transition is Realistic?
A Five-Step Roadmap to the Caribbean’s Energy- System Transformation
Strengthening the Caribbean’s Energy Partnerships Around the World
Conclusion

Working Group Members
Acknowledgments
About the Authors

Introduction

Caribbean countries are in desperate need of an energy transition¹¹. Disproportionately high electricity costs impede economic development, stress public finance budgets, and harm the competitiveness of tourism and other industries. Power grids are undercapitalized and vulnerable to climate change and extreme weather events. The region’s small markets and its import-dependent economies are disadvantaged by volatile oil and gas prices, rising inflation, and supply-chain disruptions. And, because most Caribbean countries are categorized as middle- or lower-middle-income economies by the World Bank, access to concessional finance and attracting commercial investment in power generation and transmission are common challenges. Only the Southern Caribbean (e.g., Trinidad and Tobago, Guyana, and Suriname), routinely attracts significant levels of private investment due to rich fossil-fuel resources. All this paints a precarious scenario for the Caribbean. It needs to build competitive and resilient economies, which can only be done with access to affordable and reliable energy.

The Caribbean requires both an energy transition and an energy-system transformation away from its reliance on fossil fuels. Transitioning power generation and transportation from fossil fuels to higher shares of renewable energy and battery storage will address the region’s vulnerability to fossil-fuel price volatility and concerns about energy-system resilience. But regional energy systems must also be transformed. If energy systems (including electrical grids and utility structures) are not upgraded and modernized, most power grids will be unable to integrate significant renewable-energy projects and the region will remain unable to attract large-scale renewable projects. It will be important for the international community to recognize that the region’s dependence on fossil fuels will persist over the next decade as the transition takes place. Affordable access to lower-carbon fossil fuels, such as natural gas, will be needed to provide backup power generation, and to increase resilience to renewables’ variable nature and their vulnerability to climate change.

We propose a five-step roadmap that Caribbean countries, the business community, multilateral development banks (MDBs), regional institutions, and partner nations can undertake to transform the region’s energy systems and accelerate the energy transition. The roadmap includes: conducting energy modeling and analysis; modernizing energy grids; diversifying utility structures; creating “bankable” projects; and scaling project investment to national and subregional levels. The roadmap is expected to be a guide for the Caribbean and its partners, as some countries are further along in the transition than others, and overlap between steps will sometimes exist. For these transformations, we expect the initial cost of energy-sector investments to range from $5 billion to $7 billion². With the twenty-eighth meeting of the Conference of the Parties (COP28) approaching, and the international community recognizing the need to assist countries vulnerable to climate change, the time is ripe for a commitment of international support for the Caribbean’s energy transformation³.

To date, the region’s energy transition has been slow and incremental. The small nature of Caribbean economies and energy grids results in smaller renewable-energy projects. Projects also come with high costs due to several political, regulatory, technical, and financial risks, as is detailed in later sections. Long-standing undercapitalization of utility systems limits Caribbean governments’ ability to meet renewable-energy targets and presents a challenge for leaders who cannot abandon existing structures for new, uncertain ones. The way forward for the energy transition needs to be creative and politically realistic, equitably serving government, private-sector, and citizen interests.

Given the urgency of the moment, in January 2023, the Caribbean Initiative at the Atlantic Council convened a Caribbean Energy Working Group (CEWG) to identify the main energy security challenges and to work with government officials, the private sector, and multilateral organizations to propose new and action-oriented recommendations that would facilitate a responsible and realistic energy transformation. CEWG members emphasize that a meaningful transformation of Caribbean energy systems is a necessary precondition to completing the energy transition. In 2023, members of the CEWG met virtually and in person five times to undertake a careful examination of the energy challenges and the drivers of transformation. In its findings, the CEWG outlines a series of steps that the United States and other global partners should consider, particularly with COP28 convening this year from November 30 to December 12.

This report identifies the main catalysts of the Caribbean’s energy transition and provides a short overview of the current landscape of renewable-energy production and capacity. Then, we detail the impediments to the region’s energy transition and explain how the five-step roadmap can be utilized. To buy time for the region, this report acknowledges the importance of resilience and reliability, including the unavoidable role natural gas can play as a transitional fuel. Finally, we highlight two technical and financing programs the United States—the Caribbean’s main global partner—and other partner nations can use to provide tools to the region to accomplish the roadmap’s steps.

Drivers of the energy transition and system transformation

Two main challenges are driving the need for a regional energy transition, especially for political leaders: the economic costs of climate change and dependence on imported petroleum products. As climate disasters increase in frequency, the prospect of lost power for days, or even weeks, will drive Caribbean political and business leaders to ensure that the region’s access to power generation is reliable. Today, that reliability comes from carbon-intensive fuels, posing a question for leaders about whether generation can alternatively come in the form of renewables, natural gas, or a combination of the two. However, the stronger factors driving the energy transition are the high cost of importing petroleum products and the effects this has on a country’s economic growth.

The climate crisis: Climate change is the existential driver of the energy transition in the Caribbean. Rising temperatures and sea levels are causing stronger tropical storms, drought, changing precipitation patterns, and ocean acidification. These climate-induced effects also pose a risk to the operations of governments and businesses, with blackouts or brownouts leaving people and institutions without electricity and power for days, or possibly weeks. This was most evident in Dominica, where Hurricane Maria destroyed 90 percent of government structures and left people without access to electricity, except for a few portable generators, for weeks⁴.

Effects on economies dependent on energy imports: Businesses and average Caribbean citizens are dependent on energy imports. As detailed in Figure 1, the Caribbean Centre for Renewable Energy and Energy Efficiency (CCREEE) noted that Caribbean Community (CARICOM) countries, on average, import an estimated 87 percent of their oil, compared to a global average of 21 percent. Meeting consistent domestic demand leaves the region vulnerable to global energy-price volatility, which results in high electricity costs for the region (except Trinidad and Tobago). As a result, consumers in some Eastern Caribbean countries, as of 2021, pay almost three times as much for energy as their counterparts in the United States, with citizens in Barbados paying $0.332 per kilowatt hour (kW/h) and those in Antigua and Barbuda paying $0.367 per kW/h, compared to $0.109 per kW/h in the United States⁵.

This affects crucial economic sections in the Caribbean, such as the travel and tourism industry, which is a significant user of energy and is a main source of gross domestic product for many countries. Ten of the top twenty tourism-dependent economies globally are CARICOM members.⁶ Electricity and fuel, on average, make up between 10 percent and 20 percent of a small Caribbean hotel’s operating costs.⁷ These costs and others, such as insurance premiums, increase after climate disasters, ultimately making the region less competitive vis-à-vis other tourism-based economies around the world.

An International Monetary Fund working paper notes that these high electricity costs—along with inefficiency across power sectors and generation—have eroded the region’s economic competitiveness over the past twenty years.⁸ Figure 2 shows varying levels of electricity demand among CARICOM countries. Large portions of demand are for residential usage, meaning that ordinary Caribbean citizens likely carry a significant part of the burden of high electricity costs, which depletes their purchasing power and savings. The result is that citizens are unable to purchase goods, and the owners of micro, small, and medium-sized enterprises are unable to finance new programs to scale their businesses.

What does the current renewable energy landscape look like?

The region’s geographic diversity and breadth, as well as its location, have primed it for an abundance of renewable-energy potential. Caribbean countries range from Guyana and Suriname in South America to Belize in Central America and The Bahamas off the coast of Florida. Being near the equator means there is high potential for solar-power penetration and wind resources. As Figure 3 shows, every country in the region has the potential to use solar photovoltaic (PV) and wind technologies—the two current most cost-effective clean-energy technologies on the market. Countries can also utilize technologies such as biomass gasification and biomass anaerobic digestion, but these options are not yet commercially viable at the scale of production in the region.

Strong ocean currents and volcanic formations in the Eastern Caribbean (Dominica, Grenada, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines) might also bring other smaller-scale renewables into the energy equation. According to the CCREEE, these five countries have an estimated 6,290 megawatts (MW) of “available geothermal resources,” which is well above the region’s needs.⁹ Therefore, power generation from geothermal reserves can be a contender for baseload power to enhance grid stability, along with liquified natural gas (LNG) and battery-storage options. However, as seen in the five-step roadmap below, energy modeling and analysis are needed to determine and evaluate the proven availability and cost-effectiveness of employing these clean-energy technologies.

So far, installed renewable-energy capacities have been limited. Figure 4 shows that, as of 2019, the region’s renewable energy capacity is only at 11 percent of its total installed capacity. Some countries have fared better than others, with Belize at 48 percent and almost 100 MW of installed renewable capacity, and Suriname at 46 percent and 189 MW installed. In short, the CARICOM is falling short of its target of generating 48 percent of its electricity from renewables by 2027. The following section looks at the reasons behind this challenge.¹⁰

Challenges to the energy transition

Several hurdles stand in the way of the Caribbean energy transition, primarily due to existing energy systems that are not equipped to incorporate renewables. They range from small energy grids to limited options for affordable financing to technical-capacity issues. At the same time, even if an abundance of renewable-energy projects entered development today, there is no guarantee
e that each would make it to the financial investment decision (FID)—i.e., the point of determining to proceed or halt a project—or, once a project is built, that it could be connected to the grid. The challenges are summarized below.

Small projects, high costs: Caribbean governments have relied on a project-by-project approach for renewable-energy development. However, the grid size in the region has been an impediment to this approach. Caribbean countries are small and isolated, and have limited viable space for utility-scale solar (large solar PV projects) or onshore wind farms—the size of projects that typically allow for economies of scale. As shown in Figure 4, the total installed energy capacity across the Caribbean varies, ranging from 27 MW in Dominica to more than 2000 MW in Trinidad and Tobago, and most islands’ energy grids with less than 250 MW. The value of scale on renewable-energy projects is a reduction in the cost per unit of energy generated. Project developers usually need projects that are sized at a minimum of 30 MW to secure lower energy costs. This is why the project-by-project approach disadvantages Caribbean countries, as projects are likely to be well below the 30-MW marker.

Further, projects are inherently more expensive in the Caribbean because of the lack of a local supply chain and the inability to procure at scale. The Caribbean is also vulnerable to climate-induced disasters and related damage to renewable-energy infrastructure.¹¹ This creates additional risks and uncertainties for businesses and individuals investing in renewable energy, as well as the need for climate-focused project designs and materials.

Technical capacity: A major obstacle faced by nearly every Caribbean nation is weak administrative capacity. The number of regulators and policymakers available to devise transformation plans and implement them is small. Although some countries, such as Jamaica and Barbados, have adopted frameworks for renewable-energy introduction, existing administrators are inexperienced in tariff setting and procurement. For the investor, this looks like slow decision-making and indecision, with many years’ wait for permits. For governments, technical-capacity limits result in an inability to choose between project proposals, set tariffs, or design auctions. The kind of assistance required varies by country, but many require an initial energy-system modeling and analysis to illustrate to ministries of finance and political leaders that a new system will be fiscally viable—and, therefore, politically acceptable—which comes later in the roadmap.

Project development: While many investors seek to develop renewable-energy projects, there is a traditional valley of death between initial project development and financing. These initial project costs of prefeasibility and feasibility studies, environmental assessments, production of design drawings, and other elements necessary to achieve financing lead to delays, often measured in years, which obstruct creation of a project pipeline. Even if concessional financing and equity support can be delivered, there must be a viable project pipeline to finance. Many governments have assistance in this space, but nearly all of it is tied to domestic content. This creates a complex environment for investors, who must deal with multiple bureaucracies. Better donor coordination—or, better yet, a more flexible project-development mechanism—could dramatically accelerate creation of a project pipeline. This is covered in step four of our roadmap.

Project finance: Most commercial renewable-energy projects have been funded through project finance—
a project loan backed by the cash flow of the specific project. The predictable nature of cash flows from a renewable-energy project means they are highly suited to this type of investment mechanism. The financing of a project requires careful considerations of all its different aspects, as well as the associated legal and commercial arrangements. Before investment, any project-finance lender will want to know if there is any risk that repayment will not be made over the loan term. Mitigating these risks and creating “bankable” projects are discussed in step four of the roadmap.

Existing utility constraints: There is a mix of state and private ownership of Caribbean utilities (see Figure 5). State-controlled utilities are responsible for providing reliable power, and tax revenues generated from fuel importation are often used to fund schools and critical public services. Many utilities signed long-term contracts for electricity supply before renewable-energy alternatives were viable or national targets were set. Therefore, these contracts are binding until the end of their terms and, if the utility does not see any economic benefits to introducing renewables, they present a significant barrier for governments. Even when the capital cost of introducing a new generation of technology can be managed, a utility must finance the cost of the technology while maintaining reliable supply. This means that while there are savings from reducing fuel purchases and incorporating renewables into the grid, they do not outweigh the cost of acquiring new technology generation and the accompanied transmission to allow for the increased power load. Simply put, cleaner energy does not mean cheaper energy for the consumer, and that is a serious political challenge that countries need help in addressing.

Most utilities in the Caribbean also have top-down, vertically integrated structures: i.e., a single company owns and operates all aspects of the electric power system, including generation, transmission, and distribution. This means that the utility company (and, in some cases, the government itself) owns the power plants, the transmission lines, and the distribution network that delivers electricity to consumers. Some of the drawbacks to this model include limited innovation and lack of competition and customer choice, which all drive high costs for consumers.

It is easy to criticize utilities for their reluctance to adopt new technologies or their resistance to competition, but they must fulfill their obligations to provide reliable power while potentially facing resistance from governments regarding the potential loss of tax revenue from customers for higher tariffs, or from stakeholders because of the risk to existing revenue streams. The energy transition requires a new business model for utilities, but the challenges of cost and risk must also be addressed. Step three of the roadmap tackles this challenge.

How can we ensure that the Caribbean region’s energy transition is realistic?

Achieving 100-percent power generation from renewable energy is not reliable or realistic in the short to medium term. Solar and wind power are variable sources, as the sun does not always shine, and wind speeds vary on a day-to-day basis. Most power generation using renewable energy requires a complex and modernized grid system, and one that will heavily rely on battery storage. Right now, a transition to strictly renewables, even if it were financially possible, would only exacerbate the vulnerabilities facing Caribbean governments and consumers. Energy systems, therefore, require a hybrid model: the ability to take on clean energy while also incorporating low-carbon fossil fuels, such as natural gas, to substitute for bunker fuel and diesel as the building blocks for the region’s energy transition.

Utilities that are considering substituting diesel for natural gas can only do so if affordable natural-gas supply is available. Natural gas is priced globally, and the cost of transportation and liquefaction are usually added, making volatile LNG prices historically risky for import-dependent Caribbean countries. However, the region itself has underutilized export capacity that can service power systems during the energy transition. Jamaica currently sources LNG from Trinidad and Tobago and the United States to satisfy its domestic energy demand, meaning this is a potential option for other Caribbean countries. Few Caribbean countries can import and re-gasify natural gas, but modern technology is reducing the cost of entry thanks to power systems that can incorporate floating storage and regasification units with either a pipeline to shore or shipments of small containers.

Over the long term, Guyana and Suriname, along with Trinidad and Tobago, might be able to provide the necessary supply to the region—but, in the short term, the United States can play a vital role. The United States is the largest supplier of LNG to the Caribbean. The National Gas Company of Trinidad and Tobago is currently evaluating the possibility of developing small-scale LNG (ssLNG) infrastructure (i.e., liquefaction and regasification) that can service regional demand, where reexports from the US Gulf Coast can be an option. Natural gas is an important source of energy supply, with lower carbon than kerosene and bunker fuel, and has a role to play in the Caribbean’s energy transition. If this occurs, a hybrid approach that combines natural gas used for baseload and backup power with renewables can be successful, as it has in other parts of the world, notably Mexico and California. To the extent that overtime battery-storage technology improves sufficiently to meet the resilience needs of small islands, ssLNG can be transitional and phased out over time.

In 2021, General Electric deployed four gas turbines in California as part of the state’s plans to provide reliable power to its energy grid to address concerns about extreme weather conditions and renewable sources being unable to meet peak demand.¹² Frequent droughts and seasonal wildfires have limited the hydropower sources California uses to power its grid. The use of the four gas turbines creates greater diversity on the grid, making electricity access more reliable. Further, grid operators’ ability to switch between gas and renewable sources also helps manage consumer costs. Similarly, Mexico is relying on a mix of gas turbines and renewable power to meet its growing electricity demand and to provide power to citizens after natural disasters. In 2017, two gas turbines were installed in Sinaloa, where consumption is expected to skyrocket in the next twenty-five years.¹³ This model provides transitional power that can be phased out over time and can be an ideal resilience solution for many Caribbean countries.

A five-step roadmap to the Caribbean’s energy-system transformation  

An energy transition in the Caribbean is challenging without a transformation of its energy systems. A competitive energy system for these countries needs to provide reliable, affordable, and resilient power to businesses and citizens. Therefore, we propose a five-step approach that, if undertaken, will make the energy transition easier and cost effective without putting financial strain on Caribbean consumers. These steps (detailed below) are not expected to occur in a silo, but together, with some likely overlap across steps. Further, Caribbean countries are in different stages of their energy transition and some, such as Jamaica, Barbados, and Belize, will be further along in the five-step process than others. Steps one, two, and three are the foundation-setting aspects of the roadmap, and steps four and five focus on implementation.

There is an expected initial investment of between $3 billion and $5 billion based on International Monetary Fund (IMF) projections from 2016. Across the region, the estimated breakdown (adjusted for inflation since 2016, making the initial investment $5 billion to $7 billion now) includes $1.7 billion to build and upgrade power plants and $455 million in energy efficiency and conservation initiatives (both covered in step one); $1.8 billion to introduce new natural-gas facilities (covered above); and $1.2 billion in renewable-energy investments (covered in steps four and five).¹⁴

Step 1 (starting from year one): The first step is to conduct national- and regional-level energy modeling and analysis. Using software, Caribbean governments, the CCREEE, MDBs, and partner nations should evaluate each country’s energy system and its various components, including supply, demand, storage, transport, and available technologies. The modeling helps identify a cost-effective and renewable energy-system plan that is best suited to each country. Caribbean nations’ energy systems must be modeled to determine the right options for decarbonization, cost effectiveness, reliability, and resilience. Some countries—such as Jamaica, Saint Lucia, Barbados, Suriname, and Trinidad and Tobago—have already prepared Integrated Resource & Resilience Plans (IRRPs), a form of energy modeling for the electricity sector. However, these IRRPs do not take into account demand-side management, storage options, and other energy usage such as transportation. Hence, a holistic energy model, which can occur from a six- to twelve-month period, should be built to incorporate all energy inputs, which will provide the necessary data to allow for a transition to a modern, low-carbon energy system.

Energy modeling will also help Caribbean countries increase their energy efficiency—a crucial step for decarbonizing their economies. An Inter-American Development Bank (IDB) report shows that Caribbean countries have a higher average energy intensity than their counterparts in Latin America, and investing in their energy efficiency can net $6.1 billion in economic benefits over twenty years.¹⁵ Measures can include using LED lighting, data-center efficiency, and daylighting controls, among others.¹⁶

Step 2 (ranging from years two to five): As step one is completed, step two focuses on the transition to a modernized grid and moving toward distributed generation. This transition is a transformation from a monolithic grid, which is stagnant and has limited flexibility, to one that is modular and agile. Centralized power generation is characterized by decisions driven by affordability and reliability, but this leaves out a variety of factors that lead to more cost-efficient generation, cost externalities, and the preference of local communities. Distributed generation, along with intelligent load control, is driven by cost and environmental sustainability, personalized energy options, and security. In the Caribbean, a modernized grid is one that needs six attributes, including

• resilience after climate-related disasters;
• reliability to decrease power outages;
• security for energy infrastructure;
• affordability to protect against high costs for consumers;
• flexibility to adjust to weather patterns; and
• sustainability to onboard broader clean energy and energy-efficiency methods.

At the same time, given the climate-induced challenges facing the Caribbean, a resilience-based approach is necessary for the region’s energy transformation and transition. The frequency of tropical storms and changes in weather patterns means that decentralized power generation effectively becomes a form of climate adaptation. In centralized grids, strong storms that damage energy infrastructure can cause country-wide blackouts. In the aftermath of climate-induced natural disasters, using micro grids means that power lost on one side of an island does not necessarily affect the other side. Further, battery storage is essential to creating more reliability when using intermittent, renewable sources.

Step 3 (ranging from years two to five): Once energy modeling is complete, along with a transition to a modernized grid, step three requires diversifying state-owned utilities and top-down vertically integrated systems. As already discussed, one challenge facing the Caribbean’s energy transformation and eventual transition is the vertical integration of utility structures in most countries in the region, except for Jamaica and Trinidad and Tobago. These countries have divested some of their generation assets and have contracted capacity from independent power producers (IPPs), which allow for competition in power generation, reducing costs and improving quality of service and reliability. Partner nations and MDBs should work with Caribbean governments, utilities, and regional groups to foster this model, but the varying nature of utility ownership and power-system diversification requires different strategies.

• For vertically integrated utilities, governments need support to incorporate IPPs into the system.
• For those that have IPPs, governments need support moving toward corporate or self-generation power purchase agreements (PPAs).
• For utilities with very small grids, governments require support to implement feed-in tariffs (to encourage investment), net metering, or net billing solutions.

Step 4 (earliest start in year two): De-risking and delivering “bankable” projects is step four in the roadmap. The first three steps are focused on ensuring that developers, governments, and MDBs are creating the right environment for new renewable-energy projects. But, even with the right environment or a strong foundation, if projects are not bankable—meaning that investors and developers see a likely financial return on a project—the energy transition will stall. Many of the risks that deter project finance are discussed in this report, so step four focuses on how to create a bankable project.

Most renewable projects are financed on a project-finance basis (in which lenders absorb the risk of the project itself). Then a special-purpose vehicle (SPV) is created for the project and funds are injected, or a loan is secured based on the fundamentals of the project, meaning whether investors can generate sufficient revenues to service debts and pay requisite returns on equity. When considering a project, lenders prepare a risk-return analysis to assess these traits along with major risks that can negatively impact the project, leading them to determine the project’s bankability. Therefore, for a project to be bankable in the Caribbean, certain protections for lenders are needed. Some of these protections might include:

• Feasibility studies that underpin the success of the project.
• A solid offtaker that is in a comfortable liquidity position and has creditworthiness.
• Adequate insurance coverage over the assets, loss of income, contractor risks, property damage, and business interruptions.
• Long-term PPAs which have components, such as take-or-pay arrangements, competitive prices in markets, and fixed tariff per kWh.
• Environmental social and impact assessments.
• Equity injection from developers and borrowers that is between 20 percent and 40 percent.
• Secure site and site access.

Once a bankable project is created, MDBs would then seek to provide financing to sponsors or developers to build new renewable-energy projects. A combination of project financing, technical assistance, and other donor funding, such as blended finance, can help move projects through the “valley of death” by providing needed financing that help projects reach the financial investment decision. To help projects successfully reach the FID, governments should create an enabling environment that allows projects to flow and reach maturity. In this case, MDBs can issue contingent recoverable grants (CRG) to governments to support project development (such as creating appropriate legal frameworks and designing permitting and auction processes), which can then become a concessional loan once projects reach FID and revenue streams can be forecasted. An example currently in use is the Caribbean Development Bank’s GeoSmart Initiative, which provides grants to governments in the Eastern Caribbean to support early-stage and exploratory drilling to support future geothermal project development.¹⁷ These grants can be expanded and extended from MDBs, such as the Inter-American Development Bank and the World Bank.

Step 5 (ranging from years three to ten, but only after at least step one has been completed): The fifth and final step in the roadmap is scaling from a project-by-project approach to national, and potentially subregion, levels. A series of small projects is neither attractive to developers nor helpful to Caribbean countries in reaching their national renewable-energy targets. This method has proven to be infeasible and cost inefficient for potential developers, especially for sourcing projects across the Eastern Caribbean. Moving beyond a project-by-project approach means scaling investment and regulatory frameworks to a national level, which can further encourage the entry of potential developers. Scaling to national levels has benefits across the region. Changes in regulations that encourage investment in renewables can become best practices for other countries with similar-sized economies and renewable-energy potential. Simply put, it ensures that governments do not need to “reinvent the wheel” when they can instead build on lessons learned from their Caribbean neighbors. Examples of national-level investment models already exist and have been successful in other countries, such as Argentina.

During a severe financial crisis, Argentina created the RenovAr program, which led to more than $7.5 billion in investment in renewable energy between 2016 and 2019.¹⁸ An internationally competitive investment framework that was supported by risk mitigation and technical support produced remarkable and lasting results. The key factor was the political support of the government, which was willing to take on the risk of using a new framework, based on the expectation that it would produce positive results. While not a perfect analogue, the model of comprehensive reform can be adapted for the Caribbean and is slowly taking shape in Jamaica.

Securing national buy-in for renewable energy projects in Jamaica
In April 2023, Greenmap (now called Renewables for All, or RELP) and the Generation Procurement Entity of Jamaica (GPE) agreed to work together to design a procurement program for renewable-energy projects.¹⁹ With Greenmap’s advisement, Jamaica announced an expression of interest (EOI) and is expected to launch a public auction for renewable projects of up to 268 MW of electricity generation from renewable energy; the aim is to help the country attract concessional financing from multilateral development banks. Following the announcement, and as an example of government buy-in, Jamaica amended its Electricity Act of 2015 to signal that it would replace almost 172 MW of power-generating plants with renewable sources.

The RELP-Jamaica example is not exactly similar to the model in Argentina. But it shows that when national governments are brought into the process and there is sufficient political will, accelerating and reaching renewable-energy targets is much easier. This government backing for the initiative should, in turn, help with overhauling policy and regulation to reduce risks and make the introduction of renewables more feasible—adding to project bankability and reinforcing step four.

Strengthening the Caribbean’s energy partnerships around the world

As discussed, a Caribbean energy transition requires a five-step roadmap. Partner nations should utilize the roadmap to support a transformation of Caribbean energy systems so that, in the short term, they are able to provide reliable, affordable, and resilient power to consumers and, in the long term, grids are modernized to incorporate renewable energy. Here, strong partners of the Caribbean—such as the United States, the United Kingdom (UK), Canada, the United Arab Emirates (UAE), and others—can play a role in mobilizing international support. In support of the five-step roadmap, we propose two programs that partner nations can create independently, as a multilateral effort, or in tandem with other donors.

Caribbean program for energy system transformation (CPET): The US government, for example, can leverage the expertise of the US Agency for International Development (USAID), the US Trade and Development Agency (USTDA), and the US Department of Energy (DOE) to work with third-party contractors, primarily those in the Caribbean, to

• conduct energy-system analysis and modeling to identify the type and scale of renewable energy needed per country;
• use modeling outcomes to promote decentralized power generation; and
• provide technical assistance to governments and existing utilities on best practices for introducing IPPs, negotiating corporate power-purchase agreements, and designing distributed generation-compensation mechanisms.

Each objective is fundamental to enabling the region’s energy transition. USAID can provide a mix of grants and financing to institutions, such as the CCREEE and the Organization of Eastern Caribbean States (OECS), to perform energy modeling. The USTDA can provide financing for technical assistance to use the energy modeling to help countries decentralize their grids. The DOE can work with Caribbean governments, the Caribbean Electric Utility Services Corporation (CARILEC), and the private sector to support diversifying vertically integrated utility structures.

Caribbean project financing, equity, and development support program (CFED program): Partner nations should work with Caribbean countries, multilateral development banks, and other donors to create a two-tiered financing and equity support program for potential developers, to help projects move through the development pipeline and then receive affordable financing after FID is reached. One example would be increasing the existing pool of resources of IDB Invest, the private-sector arm of the IDB Group, to provide upfront equity support to get projects started.

As part of the COP28 process, the United States should first make a concerted effort to rally and mobilize donor countries, including Canada, the UK, China, the UAE, and the European Union to provide the needed mix of grants and concessional loans to increase resources across IDB Invest, the Caribbean Development Bank (CDB), and the OECS to help with equity support. Further, as projects reach the FID, the United States should also mobilize donor countries to help create a new concessional-finance facility or help expand the scope of the newly launched Blue Green Investment Corporation to be directed toward energy transformation and the transition to green energy. To increase investor confidence, and to demonstrate that the international community seeks to finance an initial cost of $5 billion to $7 billion in direct costs (which accounts for inflation since 2016) for energy system transformation across the Caribbean, the facility should incorporate the support of the IDB, the Caribbean Development Bank (CDB), and the World Bank. However, to ensure that the facility can meet the needs of specific Caribbean countries, it should be controlled by the CDB, the region’s premier indigenous financial institution.

Conclusion

The Caribbean’s energy transition grows more urgent each day. The high cost of imported petroleum products stresses regional economies and is becoming more and more challenging, particularly as the war in Ukraine and Organization of Petroleum-Exporting Countries (OPEC) oil-production cuts keep energy prices high. As explained, an energy transition in the Caribbean is complex, requiring an overhaul of the energy system before large-scale renewable energies can be connected to energy grids. This paper’s five-step roadmap is designed to ensure that the region’s future energy systems are reliable, affordable, and resilient to the effects of climate change and exogenous economic shocks, and can underpin economic growth across the region. The investments to implement this kind of energy transition are modest by international standards. As the world takes stock of its progress (or lack thereof) on the path to 2050, while prioritizing countries most vulnerable to climate change, now is the moment for the international community to support the Caribbean’s energy transformation. This report provides a potential pathway to do so.

Working Group Members

Acknowledgments

The Atlantic Council thanks board member Melanie Chen, who provided the vision and resources to start the Caribbean Initiative, for her financial support of this publication and the corresponding working group. We also thank the Caribbean Energy Working Group members who joined numerous one-on-one consultations that informed this publication, including members who provided relevant data and supported the drafting process, such as Dale Ramlakhan, Mark Loquan, and Alicia Taylor. A special thank you to Jason Marczak, senior director of the Atlantic Council’s Adrienne Arsht Latin America Center which houses the Caribbean Initiative, for his guidance and comments throughout the working group and during the drafting of this publication. Charlene Aguilera managed the production flow of the issue brief and provided important support in its launch.

About the authors

Staff

Wazim Mowla

Associate Director & Fellow, Caribbean Initiative

Adrienne Arsht Latin America Center

Caribbean China

Fellow

David L. Goldwyn

Nonresident Senior Fellow

Adrienne Arsht Latin America Center Global Energy Center

Caribbean Climate Change & Climate Action

David Goldwyn is president of Goldwyn Global Strategies, LLC (GGS), an international energy advisory consultancy, and chairman of the Atlantic Council Global Energy Center’s Energy Advisory Group. He is a globally recognized thought leader, educator, and policy innovator in energy security and extractive-industry transparency.

Eugene Tiah is a senior business executive with in-depth knowledge and more than forty years of experience in the oil and gas business within the United States and the Caribbean region. He presently provides consultancy services to both public and private sectors.

Wazim Mowla is the associate director of the Caribbean Initiative at the Adrienne Arsht Latin America Center. He leads the development and execution of the initiative’s programming, including the Financial Inclusion Task Force, the US-Caribbean Consultative Group, the PACC 2030 Working Group, and the Caribbean Energy Working Group.

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Surveys on GBV in the Caribbean show that many cases go unreported. Often, the blame is assigned to the victim. To address this severe problem, civil society organizations (CSOs) have been among the most vocal and effective actors on the ground. From building shelters for victims and staging awareness campaigns to working with governments to pass comprehensive legislation, CSOs are at the forefront of the fight against violence against women.

As part of the Adrienne Arsht Latin America Center’s partnership with UN Women, Atlantic Council experts met with local CSO leaders to understand the challenges and opportunities they face on the ground. Below, CSO leaders from Guyana and Jamaica share how they view the crisis and why addressing it requires an approach that includes communities, government officials, and the private sector.

How do you view the problem of gender-based violence in your country?

We are quite concerned about the levels of gender-based violence occurring in the country. A recent prevalence survey indicated that one in two women had experienced some form of violence in Guyana. It can be said that this speaks to the permissiveness of society to accept violence as a response option. We see the problem of gender violence as being rooted in societal attitudes, norms, and power dynamics that perpetuate inequality and discrimination. It is not just a private matter; it has broader social, economic, and health implications.

—Renata Chuck-A-Sang is the chief executive officer of Guyana Women and Gender Equality Commission.

Gender-based violence, femicide, and teenage as well as unintended pregnancies are leading issues facing women and girls in Jamaica. Social and cultural attitudes, such as sexism and misogyny, significantly contribute to the maintenance of entrenched gender roles within society leading to a significantly high level of intimate partner violence faced by women and girls. There is a normalized culture of sexual harassment with which women must contend, and this is compounded by high teenage pregnancy rates, childhood violence, and early cohabitation with male partners.

—Sannia Sutherland is a program coordinator at the Caribbean Vulnerable Communities Coalition, Jamaica.

What are some of the existing policy efforts or interventions that governments and the private sector have implemented to address gender-based violence?

In Guyana, the existence of a Sexual Offenses Act—with a second Domestic Violence Act being reviewed—is commendable. Moreover, under the Spotlight Initiative (a United Nations initiative to eliminate violence against women and girls), the Ministry of Human Services and Social Security has been working to implement several programs to protect women from GBV. The ministry has also conducted training for women in an effort for them to start their own small businesses, a crucial step toward allowing financial independence, which is intimately linked with GBV. Finally, the establishment of a police academy where candidates are required to take courses on how to respond to GBV is a step in the right direction. Nonetheless, these programs need to improve their monitoring and evaluation to register their effectiveness.

—Rosemarie Ramitt is a senior program officer at the Women with Disabilities Network, Guyana Council of Organisations for Persons with Disabilities.

The Jamaican government recently established the first two government-owned shelters for survivors of domestic violence, a necessary program to offer immediate support to women escaping abusive relationships. These shelters were also supported by private companies, showing a case of successful private-public cooperation. On the legislative front, the recent passing of the Sexual Harassment Act—which offers women employees protection in the workplace—is a positive development, although the legislative process was subject to excessive delays.

—Joyce Hewet is executive director of Woman Inc., Jamaica.

What is needed to create sustainable public policy to prevent and eradicate gender violence in your country?

In Guyana, we require more stringent penalties for perpetrators, improved enforcement mechanisms, and streamlined processes for obtaining restraining orders or timely judicial responses. Accessible and sensitive support services for survivors, such as shelters, counseling, and legal aid, continue to be essential for helping individuals escape abusive situations and rebuild their lives. Recognizing that gender violence is not just a women’s issue, more efforts to engage men and boys in discussions about healthy masculinity and the prevention of violence can have a positive impact on reducing gender-based violence, too. Finally, it is crucial to access accurate data on the prevalence and types of gender violence to understand the scope of the problem and to design effective interventions.

—Renata Chuck-A-Sang

In Jamaica, some concrete first steps to create a sustainable public policy would be to involve GBV survivors and advocates in public policy decision-making processes, as well as accompanying these processes with the necessary financial support. The government should prioritize effective communication campaigns (i.e., highlighting personal stories in multimedia formats) to showcase the wide-ranging impacts of GBV on individuals, families, and society at large. Moreover, any effective policy to address gender-based violence needs to include policy mechanisms that promote independent income generation and enhance women’s economic empowerment.

—Judith Wedderburn is the director of WMW JAMAICA.

Martin Cassinelli is a project assistant at the Atlantic Council’s Adrienne Arsht Latin America Center.

This article is part of the Adrienne Arsht Latin America Center’s partnership with UN Women Multi-Country Office—Caribbean.

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Introduction
What drives financial de-risking in the Caribbean?
Why correspondent banking relationships are a public good
Policy recommendations
Benefits for the Caribbean and its partners
Conclusion
Acknowledgments
About the author

Introduction

Economic development and prosperity in Caribbean countries¹ require a stable and secure financial sector. The ability to access international finance and credit, trade with other countries, and secure foreign investment are all actions that underpin this stability, especially for the small and open markets in the Caribbean. Vital to performing these actions are correspondent banking relationships, which financial institutions, governments, and citizens use to conduct cross-border financial transactions. Correspondent banking relationships are a public good, given how crucial they are to the proper functioning of economies and financial systems, especially for small countries in the Caribbean.

However, over the past decade, Caribbean countries have seen a significant withdrawal of these relationships (also known as financial de-risking), which is when a financial institution severs, rejects, or puts limits on transactions with a particular group and/or individual customer. The Caribbean is frequently cited as the region of the world most affected by this phenomenon.²

Stabilizing correspondent banking relationships in the Caribbean requires imparting on the international financial system an appropriate and equitable understanding of the challenges small markets face from financial de-risking, and the important role they play in the health of the global economy. One way to achieve this is to conceptualize and categorize correspondent banking relationships as a type of critical financial market infrastructure (CFMI), which would help highlight the fact that if the financial sectors of one region (in this case, the Caribbean) are significantly affected by financial de-risking, the economic consequences could be felt globally. Global governments, regulators, and central banks work to ensure CFMIs’ viability and sustainability since financial systems and economies would find it difficult to function without them.³

This issue brief builds on the 2022 Atlantic Council report Financial De-risking in the Caribbean: The US Implications and What Needs to Be Done,⁴ which was produced after a series of roundtables held among members of the Financial Inclusion Task Force (FITF) organized by the Atlantic Council’s Caribbean Initiative. In that first report, the FITF explained that categorizing correspondent banking relationships as CFMI “would provide global recognition to the importance that correspondent banking services provide to the health and ability for growth of Caribbean economies and citizens.”⁵ In 2023, the Caribbean Initiative convened several members of the FITF along with other financial experts to provide a practical and actionable recommendation to US, Caribbean, and multilateral stakeholders on the necessity of categorizing correspondent banking relationships as CFMI.

What drives financial de-risking in the Caribbean?

There are two main drivers of financial de-risking in the Caribbean: 1) limited profitability for correspondent banks due to the relatively small size and volume of transactions; and 2) countries’ classification as “high-risk jurisdictions,” and their perceived weak regulatory frameworks to address money laundering and terrorism financing. Both drivers have contributed to a broad decline in correspondent banking relationships.⁶ The Caribbean Association of Banks survey in 2017 noted that twenty-one of its twenty-three member countries had lost at least one correspondent banking relationship. Further, an analysis of Society for Worldwide Interbank Financial Telecommunication (SWIFT) data (contained in our 2022 report) confirmed these lost correspondent banking relationships, with some countries faring worse than others, such as Belize, Saint Vincent and the Grenadines, Dominica, The Bahamas, and Jamaica, which all saw a more than 40 percent reduction in correspondent banking relationship counterparties between 2011 and 2020.⁷

It is worth noting that while all Caribbean countries analyzed for this report saw a reduction in correspondent banking relationships over the period, not all saw a reduction in transaction volumes or values. However, in all cases, fewer correspondents saw an increase in the concentration of flows through fewer counterparties, which ultimately increases potential risks. Should the consolidation trend continue, this means entire financial systems will become more reliant on fewer institutions, increasing the possible impact on the system should more banks decide to cease doing business in or with the region.

Table 1. Change in correspondent banking relationships, transaction volumes, and transaction values across Caribbean countries, 2011-2020

Profitability limits identified by correspondent banks are based on a risk versus reward calculus. First, correspondent banking is a fee-based service, and given the small populations of Caribbean countries, there are inherently small volumes of transactions occurring between correspondent and respondent banks. As a result, correspondent banks weigh those potential profits against stringent US regulations that threaten heavy fines and sanctions if a Caribbean financial institution that has a relationship with a US correspondent bank is unable to mitigate risks, such as financial crimes. In many cases, the risk of the relationship with the Caribbean counterparty outweighs the potential reward.

Factoring into the perceived risks of engaging with Caribbean jurisdictions are concerns from US banks about the region’s ability to manage and mitigate illicit finance. Correspondent banks perceive that despite increased capacity to adhere to anti-money laundering/countering the financing of terrorism (AML/CFT) standards, Caribbean governments have weak regulatory frameworks that do not sufficiently address concerns over financial crimes. Further, many Caribbean countries that face financial de-risking are continually classified by the US Department of State’s annual International Narcotics Control Strategy Report as jurisdictions with high rates of money laundering and drug trafficking. The report is one of the factors correspondent banks account for when determining whether to maintain or begin a correspondent banking relationship in the Caribbean. During the 2022 financial de-risking roundtable held in Barbados and co-chaired by then-Chair of the House Financial Services Committee Maxine Waters and Prime Minister of Barbados Mia Mottley, several Caribbean heads of government shared that their ministries lack the capacity to provide sufficient responses to the report’s contents. For US correspondent banks, particularly mid-tier ones, this poses a significant challenge as they fear inheriting the reputational risk of Caribbean jurisdictions, which influences their own relationships with correspondent banks at home.

Financial de-risking and its drivers have many possible economic implications for Caribbean countries, impacting a wide range of stakeholders, including governments, financial institutions, and citizens. The potential impact on remittances is one example. In this case, financial de-risking and lost correspondent banking relationships increase costs and risks for money transfer operators (companies moving currencies from one financial institution to the other). Citizens themselves, particularly those most vulnerable and dependent on remittances for subsistence, bear the brunt of this burden. As an example, Jamaica—where remittances are equal to a fifth of overall gross domestic product—has placed limits on the amount of money that can be transferred due to a stricter regulatory regime. Outside of remittances, financial de-risking can limit access to international capital needed to facilitate investment, trade, and access to credit—all critical for commerce and development, especially in the Caribbean.

Why correspondent banking relationships are a public good

The economic and investment activity that correspondent banking relationships support makes them a crucial public good. Essentially, public goods are those that benefit all citizens by providing positive outcomes for individuals and institutions. Most often, governments play an important role in ensuring access to public goods. The same should be true for correspondent banking relationships, and both Caribbean governments and their advanced economy partners have a role to play in protecting them. Of course, this does not obviate the need for appropriately sound and rigorous regulatory frameworks, which must continue to be enforced and bolstered to mitigate money laundering and terrorism financing concerns. These two objectives can certainly reinforce one another.

This is precisely the reason why the SWIFT payments system is deemed a critical financial market infrastructure. SWIFT is an intermediary and executor of financial transactions among banks globally, including sending payment orders that are then settled by correspondent accounts among financial institutions.⁸ As of 2018, half of all high-value cross-border payments used SWIFT payments in more than two hundred countries and territories.⁹ The effects of restricted access to the SWIFT network—and by implication, correspondent banking—was evident in the aftermath of the Russian invasion of Ukraine, where multiple Russian banks’ access was limited. This was a form of economic sanction, which led to significant operating delays and increased financial costs for counterparties across the globe. Although an extreme example, this highlights the importance of correspondent banking flows and related risks that restricted access to correspondent banking flows implies, which are particularly acute for small open economies such as those of the Caribbean.

Policy recommendations

Categorizing correspondent banking relationships as CFMI or a public good can help underscore their importance to long-term economic development for Caribbean economies and catalyze resources and reforms needed to address related challenges. While more work is needed to comprehensively diagnose capacity, institutional deficits, and policy reforms—for both regional and correspondent bank host countries—the following preliminary options would support progress in this effort and are discussed below.

First, the members of the House Financial Services Committee should consider taking action that encourages the US Treasury and MDBs to redouble efforts to provide technical assistance and capacity building aimed at improving regulation, supervision, and reporting requirements for Caribbean financial institutions. As discussed, driving financial de-risking in the Caribbean are the perceived reputational risks for banks due to increasingly strenuous AML/CFT regulations and compliance standards. MDBs and other development partners have provided support to individual countries, but this can be scaled and regionalized to facilitate dialogue and needs assessments, maximize resources and effectiveness, and avoid duplication of efforts. The potential benefits of such an initiative would extend well beyond the issue of financial de-risking and support financial sector stability, development, and inclusion more broadly. Streamlined assistance that is underpinned by legitimate institutions such as MDBs and the US Treasury can help instill confidence in correspondent banks, bringing new relationships to the region or protecting those that already exist.

Second, the House Financial Services Committee could work with the US Treasury and MDBs to create a regional facility with a mandate to provide services to customers and jurisdictions where costs and risks are challenging for conventional financial institutions. Modalities should include bundling smaller transactions to generate greater economies of scale and providing financial incentives that would help address challenges posed by the increasing costs of counterparty risk assessments. The facility could also serve as a bridge of information among governments, regulatory bodies, and MDBs to help fill information gaps and ensure that financial institutions are in the best position to keep up with rapidly evolving international compliance standards.

Benefits for the Caribbean and its partners

US and MDB support for categorizing correspondent banking relationships as CFMI would benefit broader Caribbean economic development goals. Steady access to correspondent banking relationships creates and maintains a strong financial sector. This helps encourage local banks to lend to the local private sector, thus stimulating economic growth among micro, small, and medium-sized enterprises—the backbone of Caribbean economies. This is even more important since the Caribbean is import-dependent on petroleum products, medical services and equipment, food supplies, and foreign investment to build infrastructure projects such as roads and critical facilities. While the region is making strides to reduce import dependence, the nature of its open and small economies ensures that there will always be some reliance on the global financial system. For example, given the accumulating effects of climate change in the region, climate and development finance from MDBs and organizations such as the Green Climate Fund will be essential to adaptation and mitigation efforts. However, these groups are unlikely to lend in local currencies and, even if they do, the goods needed to purchase equipment and services will primarily come from abroad and require payment in the form of international currencies.

But the United States and MDBs also benefit from correspondent banking relationships categorized as CFMI. In recent years, the United States and MDBs have used their global platforms to advocate for Caribbean priorities. Some reform has come of this, such as debt pauses announced by MDBs and new policy frameworks such as PACC 2030, but little has been done in the area of financial de-risking. Addressing this issue through a first step with CFMI categorization would help build additional goodwill and help MDBs support their own development agendas in the Caribbean and other Small Island Developing States. Financial de-risking is not just a Caribbean problem with other countries such as those on the African continent affected as well. Therefore, both the United States and MDBs have an opportunity to address a significant development challenge at a global level.

Conclusion

Correspondent banking relationships are crucial conduits for foreign exchange and finance, which are the lifeblood of Caribbean economies. Given the importance of correspondent banking relationships, they fit the criteria first as a public good, and second as CFMI. This categorization is not just important, but feasible and justifiable. It is in the interest of all actors to maintain a functioning and healthy global system and categorizing correspondent banking relationships as CFMI is the first step to ensuring that all countries and citizens have access to it.

Acknowledgments

At the Atlantic Council, we thank board member and founder of the Caribbean Initiative Melanie Chen for her support of this publication and our previous work on financial de-risking. We would also like to thank the experts and policymakers who joined the private roundtables and one-on-one consultations that informed this publication, including Nigel Baptiste, Henry Mooney, Wendy Delmar, Dawne Spicer, Stephen Thomas, and Deepa Sinha. A special thank you goes to Jason Marczak, senior director of the Atlantic Council’s Adrienne Arsht Latin America Center, for his guidance, leadership, and comments during this publication’s process and to Charlene Aguilera for her help and support in coordinating this publication.

About the author

Staff

Wazim Mowla

Associate Director & Fellow, Caribbean Initiative

Adrienne Arsht Latin America Center

Caribbean China

Wazim Mowla is the associate director of the Caribbean Initiative at the Adrienne Arsht Latin America Center. He leads the development and execution of the initiative’s programming, including the Financial Inclusion Task Force, the US-Caribbean Consultative Group, the PACC 2030 Working Group, and the Caribbean Energy Working Group. Since joining the Atlantic Council, Mowla has co-authored major publications on the strategic importance of sending US COVID-19 vaccines to the Caribbean, strategies to address financial de-risking, and how the United States can advance new policies to support climate and energy resilience. As part of his work on the Caribbean, Mowla was called to provide congressional testimony to the US House Financial Services Committee on financial de-risking. Mowla holds bachelor’s degrees in international relations and history and a master’s degree in public history from Florida International University, and a master’s degree in comparative regional studies from American University.

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The EU-Community of Latin American and Caribbean States (CELAC) Summit was a top priority of the Spanish government, which holds the rotating EU Council presidency. Spain met its objectives with representation from the EU’s twenty-seven member states and the thirty-three CELAC members. But it wasn’t just any representation. LAC countries sent twenty-three presidents and prime ministers to Brussels—the same number of heads of state and government who attended last year’s US-hosted Summit of the Americas, with one big difference: While Cuba, Nicaragua, and Venezuela joined their cohorts in Belgium, none received an invitation to Los Angeles.

The tone of the summit was set at the EU-LAC Business Round Table that took place immediately preceding the leaders’ meeting. Speaking to an overflow audience, European Commission President Ursula von der Leyen opened the gathering in the Berlaymont Building, the Commission’s headquarters, with an emphatic message: “Latin America and the Caribbean and Europe need each other more than ever before.” She then went on to reinforce that “Europe aspires to be a partner of choice for Latin America and the Caribbean,” while announcing more than forty-five billion euros of “high-quality European investment” that will “come with a focus on building local value chains.” Her announcement sparked a round of applause in the room among attendees, who likewise saw the importance of diversifying and deepening Europe’s partnerships. 

On the CELAC side, upon taking the stage, Brazilian President Luiz Inácio Lula da Silva highlighted key areas of mutual interest with the EU, including combating climate change and deforestation, while staying clear of comments regarding Ukraine—on which he has differed from his European counterparts. Lula’s remarks were warmly greeted as well but without the same level of excitement as von der Leyen’s financial announcement.

The takeaways: Europe—reeling from Russia’s full-scale invasion of Ukraine and its effects, along with growing apprehension over increased Chinese assertiveness—realizes that it needs to double down on its global partnerships. Here, CELAC represents thirty-two votes at the United Nations (UN). (Venezuela is unable to vote due to being in arrears in the payment of its UN dues.) CELAC is also a fountain of critical raw materials, which Europe is increasingly focused on securing to fuel its green transition. And although China was not mentioned, the summit’s focus on quality and local investments is certainly a swipe at Chinese financing and a doubling down on the EU’s strategy of diversifying its supply chains. 

For LAC countries, no convincing was needed to get regional dignitaries to show up. Europe is willing to put forward substantial strategic planning and the funding behind it as it aspires to be “a partner of choice” for LAC. Launched alongside the summit, the new EU-LAC Global Gateway Investment Agenda commits the funding announced by von der Leyen for more than 130 projects through 2027. These projects revolve around four pillars of mutual interest: a fair green transition, an inclusive digital transformation, human development, and health resilience and vaccines. These pillars also stand in stark contrast to the top-down Chinese investments in many parts of the region that have less of an eye toward long-term development objectives. 

A distinctly European approach to diplomacy

The summit also reflected the EU’s differing approach to LAC compared with the United States. Start with the invites to Brussels for Cuba, Venezuela, and Nicaragua, with Cuba’s leader, Miguel Díaz-Canel, in attendance. This reflects a softer approach on Europe’s part toward the leaders of countries where the United States has imposed sanctions over abuses of power and human-rights concerns. But it also shows that Europe has less diplomatic leverage in the region than that enjoyed by Washington. The United States was able to cajole countries into attending last year’s Summit of the Americas despite many leaders’ opposition to the snub of Cuba and Venezuela, in particular. CELAC leaders would have been less willing to do so in Brussels. This makes sense. The United States—despite concerns about the growing presence of extra-regional actors in LAC, many of which, unlike Europe, carry nefarious intentions toward US interests—remains the most important strategic partner for the hemisphere.

As well, the Global Gateway—in many respects Europe’s counterproposal to China’s Belt and Road Initiative—shows that Europe recognizes its need to match diplomatic outreach with concrete deliverables and large-scale financing. The billions that are slated to come from Europe far surpass US investment announcements at last year’s Summit of the Americas. So while Europe leaned in on specific projects, the United States used its hemispheric gathering to focus on partnership strategies to jointly tackle issues ranging from inclusive economic development to climate.  

Perhaps the biggest feat for the EU was the joint agreement on a declaration coming out of this week’s meeting. With such a diversity of interests and priorities among CELAC members and within the EU, a final joint declaration did not always seem possible. The EU’s proposed language condemning Russia’s invasion of Ukraine was a non-starter for many CELAC diplomats who tend to view the war as primarily a European problem and are concerned about getting dragged into taking a side. Meanwhile, some EU member diplomats have said they have red lines against removing the language condemning Russia’s invasion. CELAC diplomats also wanted a reference in principle that the EU should give reparations for slavery to its member states. The declaration that emerged was the product of skillful negotiation balancing EU and LAC priorities—and competing positions within each region.

Point fifteen of the declaration was the biggest achievement of the summit:

We express deep concern on the ongoing war against Ukraine, which continues to cause immense human suffering and is exacerbating existing fragilities in the global economy, constraining growth, increasing inflation, disrupting supply chains, heightening energy and food insecurity, and elevating financial stability risks. In this sense, we support the need for a just and sustainable peace. We reiterate equally our support for the Black Sea Grain Initiative and the efforts of the [UN secretary general] to secure its extension.

Although Nicaragua abstained from signing on to the declaration because of this Ukraine war language, the rest of the attendees—including Cuba and Venezuela—agreed to it. This language is a major accomplishment for Europe, while CELAC walks away with a substantial investment pledge from the Global Gateway that others could not match.

Looking ahead to 2025

Europe has clearly unleashed a newfound commitment to the Americas. This summit was a strategic balancing act to shore up European partnerships with a region that is becoming vital to global interests and solutions to world problems. However, the EU’s pledging of billions of euros is one thing; delivering the funds and leveraging them into a new economic partnership will require serious follow-up and sustained engagement. Meanwhile, CELAC countries are increasingly able to take advantage of changing global dynamics to advance regional interests. 

What would be the best course for the future? The United States and Europe should each have a seat at the table at their respective summits with LAC countries. The EU has now agreed to host a summit with CELAC every two years—the next one will be in 2025, with Colombia offering to host. The Dominican Republic will host the next Summit of the Americas that same year. Doesn’t some degree of alignment make sense heading to 2025? As in many other priority global issues, transatlantic collaboration will ultimately help to win the day. 

Jason Marczak is senior director of the Atlantic Council’s Adrienne Arsht Latin America Center. He participated in the EU-CELAC Business Round Table in Brussels preceding the leaders’ meeting. He is on Twitter at @jmarczak.

Jörn Fleck is senior director of the Atlantic Council’s Europe Center.

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“Women and girls in the Caribbean face unique challenges that prevent them from reaching equal footing in society,” said Valentina Sader, AALAC associate director and leader of the center’s gender-related work. “These include lack of access to critical resources to rebuild after natural disasters and barriers to political representation.”

Studies suggest that elected or appointed women represent less than half of all political offices in the Caribbean, and that 46 percent of women in the region experience violence at least once in their lifetime.

“Solutions to the region’s major challenges require the talent, skills, and ideas of the whole population, including women and girls. Curbing gender-based violence, incentivizing financial inclusion, and strengthening women’s political participation are fundamental to the health and well-being of our hemisphere, including the Caribbean, now and for generations to come,” said Jason Marczak, AALAC senior director.

AALAC will leverage its global and regional networks and its uniquely positioned Caribbean Initiative to raise awareness and foster dialogue on the challenges facing women and girls in the Caribbean. Specifically, the project will cover:

1. Peace, security, and gender-based violence
2. Democracy and political representation
3. Economic recovery and empowerment
4. Climate and climate financing

“In the same way that the Atlantic Council has been able to strengthen relationships between civil society organizations and policymakers in the United States and across Latin America, I feel confident that the Caribbean will greatly benefit from this proven capacity,” said UN Women Multi-Country Office – Caribbean Representative Tonni Brodber.

AALAC will work with UN Women to hold discussions and consultations with in-region individuals and organizations, multilateral groups, private sector representatives, and financial institutions. A key objective will be to facilitate a deeper understanding of social norms around gender in the Caribbean, build momentum and secure buy-in from relevant stakeholders across sectors and regions, and generate concrete policy recommendations with a gender-based approach for the Caribbean.

For questions, please contact press@atlanticcouncil.org.

ABOUT THE ADRIENNE ARSHT LATIN AMERICA CENTER
The Atlantic Council’s nonpartisan Adrienne Arsht Latin America Center (AALAC) broadens understanding of regional transformations while demonstrating why Latin America and the Caribbean matter for the world. The center focuses on pressing political, economic, and social issues that will define the region’s trajectory, proposing constructive, results-oriented solutions to inform public sector, business, and multilateral action based on a shared vision for a more prosperous, inclusive, and sustainable future.

Its Caribbean Initiative began programming in February 2021 to raise awareness about key Caribbean Community (CARICOM) priorities with US and global stakeholders while deepening US engagement with the region around shared interests. The Initiative is a platform for US and Caribbean stakeholders to offer new and innovative insights to advance a closer US-Caribbean partnership and the overall prosperity, stability, and well-being of the region.

ABOUT UN WOMEN
UN Women is the UN organization dedicated to gender equality and the empowerment of women. A global champion for women and girls, UN Women was established to accelerate progress on meeting their needs worldwide. For more information visit https://caribbean.unwomen.org/en

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In the past twelve months, Vice President Kamala Harris launched the US-Caribbean Partnership to Address the Climate Crisis 2030, welcomed leaders to Washington, and met in person with leaders in The Bahamas. This has helped build goodwill in the region. But US visits and diplomatic engagement have yet to yield many results. Simply put, if Blinken arrives in the Caribbean with little to announce, frustration is likely to brew. 

Blinken’s visit must start an action-oriented agenda for the region. He should focus on two key areas of cooperation. First, the United States should work with multilateral development banks (MDBs) to provide access to low-cost and low-interest financing to high- and middle-income Caribbean countries. Second, Washington should provide requisite tools to local private sector businesses so they can play a larger role in the region’s own development.  

For the United States, the consequences of insufficient action so far are evident. Given the enormity of the challenges facing the Caribbean, the region’s leaders are seeking solutions to their problems elsewhere. Barbadian Prime Minister Mia Mottley has taken to the global stage to overhaul MDB financing, Guyana is welcoming investment in its oil sector from all corners of the world, and Trinidad and Tobago is increasing engagement with Venezuela over shared gas reserves. Other Caribbean leaders see African countries, India, and China as attractive partners that can provide financing, investment, and aid. 

This does not mean that US presence in the region will evaporate. The Caribbean’s proximity to the United States, strong trade relations, and a large US-based diaspora ties the partners together. But US government officials must realize that the United States will no longer be the only actor with which Caribbean leaders will engage. Therefore, if the United States wants to remain relevant in the region, now is the moment to deliver real solutions to the challenges facing its Caribbean neighbors.

A plan to amplify financial instruments

The first step should be working with MDBs, such as the World Bank and the Inter-American Development Bank, to amplify new financial instruments to support access to concessional financing for Caribbean countries. Most Caribbean countries are classified as high- or middle-income, which means that they are not able to access low-cost and low-interest financing from MDBs to fund needed infrastructure or social programs in times of crisis. Part of this work is ongoing, with the World Bank recently announcing a debt pause on loan repayments for developing countries hit by natural disasters. 

However, the pause only applies to new loans, not existing ones. Given the specific vulnerabilities of Caribbean countries, which extend beyond just the effects of climate change–induced events, the United States should work with MDBs to create a specific carve-out for small island development states such as the CARICOM countries. Hurricanes and other natural disasters pose significant risks to the Caribbean. But due to the small size and openness of their economies, so do other external events, such as pandemics, the volatility of commodity prices, and disruptions in supply chains. These external risks should be accounted for as well, because if another COVID-19 pandemic occurred today, Caribbean countries would still be on the hook for loan repayments. 

Charging up the private sector

The United States should also work closer with local businesses to embolden the Caribbean private sector. Big infrastructure projects in the Caribbean, such as roads, bridges, and new buildings, are mostly led by governments. The private sector is often left out, as local banks provide only limited financing or loans with high interest rates. This creates a vast asymmetry between government and private sector resources, with governments scoring political points from new infrastructure projects, while the skills, expertise, and capital that bring these projects to fruition result in little benefit for local companies. Foreign companies, therefore, reap the benefits, with returns on projects benefitting external actors rather than populations in the Caribbean, including the business community. This creates a dependency on the state to provide jobs, resources, and skills to citizens, meaning that the distribution of these resources is tied to the government of the day. 

To address this, the United States should create a US-Caribbean Public Private Partnership program that incubates small businesses in the region. The objective should be to train small businesses and transfer skills and technologies to local companies so that they can scale to a level where they are competitive in bidding rounds for upcoming projects. This is all the more important in the construction and energy sectors, as new climate-resilient infrastructure and energy systems are needed in the Caribbean now and going forward. The benefits would be twofold. First, a stronger and more robust private sector should strengthen and stabilize the region’s financial sector, making Caribbean countries less susceptible to volatility in global markets. Second, the larger the private sector, the more jobs will be available to citizens. This should stimulate domestic growth and create more diverse job opportunities outside of public service and the tourism industry—two sectors highly vulnerable to climate change and growing debt-to-gross-domestic-product ratios. 

It is a consequential moment for the Caribbean—its challenges grow worse each day. To survive the next few decades, it needs the support of its partners, including the United States. High-level visits alone will not suffice. To capitalize on the goodwill the United States has built in the Caribbean, Blinken’s trip should mark the beginning of an active policy toward the region. Working with MDBs and supporting private sector growth would be a giant step forward.  

Wazim Mowla is the associate director of the Caribbean Initiative at the Atlantic Council’s Adrienne Arsht Latin America Center.

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As the first country to pass a law codifying women’s vital roles in building peace and security worldwide, the United States has the potential to become a leader in advancing the gender-equality fight. However, it has yet to tap into the power of its cities and states—even though mayors and governors are key to implementing the country’s foreign policy goals through partnerships with other local leaders across the Americas. The United States must deepen its commitment to women’s peace and security by taking these principles beyond the national level.

Six years ago, the Women, Peace and Security (WPS) Act created a government-wide WPS strategy. Since then, US agencies have identified four lines of effort to achieve its objectives.

Federal agencies such as the departments of State, Defense, and Homeland Security, and the US Agency for International Development (USAID) have developed implementation plans, outlining their WPS objectives, actions, and goals. But for all lines of effort, cities and states can play a pivotal role that is not sufficiently reflected in US policy.

As the fourth line of effort explains, partnerships are a crucial part of the United States’ WPS strategy. In the realm of city- and state-level diplomacy, mayors and governors are already forming important partnerships with their counterparts across the Americas, which could prove useful in achieving all WPS goals. Those relationships are key because the Western Hemisphere includes the ten most violent cities in the world, and women and girls are disproportionately impacted by such violence. Women and girls across the hemisphere are vulnerable to gang violence, femicide, and sexual harassment in public spaces. A 2022 survey found that 89 percent of women interviewees in Buenos Aires had experienced sexual harassment on public transportation. In Lima, Peru, nine of ten women between the ages of nineteen and twenty-nine have been victims of street harassment. The Mexican municipality of Juárez, Nuevo León registered over twenty femicides and 158 disappeared women and girls in 2022. According to a survey by Stop Street Harassment, 66 percent of women reported experiencing sexual harassment in public spaces across the United States.

The United States has recently made great strides in incorporating local leaders into a whole-of-country foreign-policy strategy, but it has yet to do that with its WPS strategy. The United States already has the structure for doing so; last year, the US State Department launched a new Unit for Subnational Diplomacy led by Special Representative for City and State Diplomacy Nina Hachigian, who was formerly deputy mayor of international affairs for Los Angeles. In her first “dipnote,” she wrote about her office’s aim to create channels for greater connectivity and collaboration between local leaders. That connectivity could provide a channel for achieving the United States’ WPS goals.

Hachigian will be in attendance at the first-ever Cities Summit of the Americas in Denver later this month, which will provide local leaders with an opportunity to share knowledge about the strategies they deploy at home to advance WPS principles. At the convening, the State Department must ensure that conversations about building safer, resilient, and more accessible and sustainable cities include gender-sensitive perspectives that shed light on the experiences of marginalized groups. It should do more than just avoid “manels” to promote gender equity and women’s peace and security: Organizers must also dedicate time to discussing, with all participating mayors, the impacts of migration, climate, and housing specifically on women.

In the near term, the State Department should prioritize gender equality in the new “Cities Forward” initiative, which was announced last year to help cities in the Americas share knowledge about solving various urban issues and will be formally launched this spring. Since this program will direct US government funds to support urban development, it is crucial that the city-level action plans demonstrate a disaggregated impact on women and girls.

In the long term, the United States should embed WPS into its city- and state-level work by ensuring that women meaningfully participate in subnational diplomacy, that women are protected and have freedom in cities, and that cities and states create deep partnerships focused on gender equality:

• Ensuring women’s meaningful participation: The United States should ensure that its city and state diplomacy strategy supports current women leaders and helps them learn from each other’s experiences. Despite the growing numbers of local female elected officials in the Western Hemisphere—including Santiago Mayor Irací Hassler, Bogotá Mayor Claudia López, Los Angeles Mayor Karen Bass, and Intendant of Montevideo Caroline Cosse—the glass ceiling persists. Within the last year, only 11 percent of Latin American large cities and 26 percent of large cities in the United States have had women mayors. On the sidelines of major urban conferences such as the Cities Summit, the C40 World Mayors Summit, and Urban20, the United States could host off-the-record convenings with women mayors to strengthen international partnership opportunities and identify obstacles to reaching political parity.
  
  The United States should also, through its cities and states, engage civil-society groups that are advocating for women’s rights in cities and thus fostering an environment conducive to female political leadership. Women represent roughly 52 percent of the public-sector workforce in Latin America and the Caribbean and play a crucial role in supporting local governments. Civil-society networks such as La Red Mujer y Hábitat are working to advance women’s rights in urban areas. The Subnational Unit should encourage US mayors to work with these civil-society groups and public-sector leaders when forging partnerships with Latin American and Caribbean cities, particularly those led by male mayors, to ensure that discussions include a gender perspective and create space for women’s participation.

• Strengthening women’s protection and freedom in cities: The United States should collaborate with local governments and bolster the capacities of municipal justice systems and security sectors, adopting a gender-sensitive approach, to effectively prevent and respond to gender-based violence. By recognizing the ways in which violence affects female populations, in all their diversity, cities can develop more targeted and effective responses. The United States can learn from other cities’ approaches: Kelowna, Canada, introduced programming between community groups and local police to rebuild trust and accountability after multiple indigenous women were murdered or disappeared. Durango, Mexico, uses real-time data to identify and classify high-risk zones for women, making it possible to deploy awareness and security campaigns tailored to the distinct needs of various populations. The Unit of Subnational Diplomacy should collaborate with the Secretary’s Office of Global Women’s Issues at the US Department of State and the Office of Women, Peace, and Security at the US Department of Defense to analyze these varied city-level approaches and develop blueprints for city-level WPS plans in the United States.

• Deepening partnerships to support gender equality: The United States should scale up and coordinate existing efforts that are already supporting women’s equity in cities. The City Hub and Network for Gender Equity (CHANGE)—formed by leaders in Los Angeles, Buenos Aires, Mexico City, and four other major global cities—aims to tackle gender disparities in access to government services. The State Department’s subnational unit should assist in an expansion of the CHANGE network and other city-led initiatives to reach a more diverse body of cities across the Americas.
  
  The United States should also amplify and collaborate with existing local grassroots networks—such as the Association of Women Council Members and Mayors of Bolivia or the Network of Women Vice Governors of Peru – to foster regional connections between women leaders and support existing initiatives from the bottom up.
  
  Additionally, the recently announced USAID Network for Gender Inclusive Democracy could offer a platform to support women’s political and civic participation and leadership in cities. The new network aims to promote coordination, knowledge-sharing, and policy advocacy to advance gender equality. The special representative for subnational diplomacy should advocate for the participation of state and city leaders in this new program. Including local leaders in this network can help the Subnational Unit enhance its efforts in championing gender-sensitive strategies, while simultaneously providing a local perspective to national-level discussions on gender and democracy.

The United States’ approach to city and state diplomacy is still in development. The Unit for Subnational Diplomacy is barely six months old, and Hachigian’s team has the opportunity to champion a gender-sensitive security strategy across the hemisphere. By 2050, nine in ten people in the United States as well as Latin America and the Caribbean are expected to live in urban areas. The leaders who run these areas must be empowered to make them safer and more equitable environments for all.

Willow Fortunoff is an assistant director at the Atlantic Council’s Adrienne Arsht Latin America Center.

Diana Paz García is a conflict resolution graduate from Georgetown University specializing in gender-based violence and nontraditional security threats.

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On April 11, Scowcroft Strategy Initiative Assistant Director Imran Bayoumi authored an article for Foreign Policy commenting on the ongoing state of unrest and turmoil in Haiti. Bayoumi posits that achieving sustainable peace in the country necessitates a US strategy that prioritizes the promotion and cultivation of democracy over militarized interventions. To underscore his argument, Bayoumi references significant legislative measures such as the 2019 Global Fragility Act (GFA) and 2021 Montana Accord, which highlight the urgent requirement for a democracy-centered approach not only to Haiti but also to other fragile and volatile states worldwide.

Staff

Imran Bayoumi

Associate Director

Scowcroft Center for Strategy and Security Scowcroft Strategy Initiative

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But what should policymakers know about the lingering challenges that women in the region face? And what are the specific measures that can bring about real change? Below, five experts on the region provide their recommendations for strategies that can help promote gender equality and advance women’s rights across Latin America and the Caribbean.

How should Latin American and Caribbean countries begin their renewed efforts to narrow the gender gap?

Latin America and the Caribbean have historically struggled with gender inequality and discrimination, particularly against women.

Economic empowerment is a crucial way to help attain gender equality. However, achieving economic empowerment requires solutions that are designed with more than the near term in mind. It is essential to create opportunities for women in which they can earn a sustainable long-term income, and it is equally essential to design these opportunities in a way that meets the needs of all women and the girls or elderly women in their care. Regrettably, gender biases are rampant not only in the workplace but also in the policymaking sphere, which significantly hinders female candidates from reaching their full potential. According to a report by the World Economic Forum, the global gender gap in politics will take more than a century to close if the current gender biases continue. To overcome this obstacle, policymakers need to introduce targeted policies aimed at reducing gender discrimination.

Closing the digital gender gap is also an important step. According to the US Agency for International Development, 1.1 billion women and girls in middle- and low-income countries do not have access to mobile internet, putting them at a disadvantage and limiting their economic opportunities. By closing the digital gender gap and by ensuring women can gain access to digital skills and literacy, societies—and their economies—will reap significant spillover rewards.

Additionally, the issue of violence against women and girls in the region cannot be ignored. Domestic violence correlates with juvenile violent behavior, meaning that as young people grow up in the presence of domestic violence, they are more likely to replicate the same behavior later in life. Furthermore, women are vulnerable to becoming subject to emerging crimes (like trafficking) due to higher levels of insecurity. According to a United Nations report, 35 percent of women worldwide have experienced physical or sexual violence, and this percentage is even higher in Latin America and the Caribbean. To achieve true gender equality, policymakers must prioritize measures that address violence against women and girls. These measures include providing adequate support to survivors and holding perpetrators accountable for their actions.

—Isabel Chiriboga is a program assistant at the Atlantic Council’s Adrienne Arsht Latin America Center.

What is the relationship between women’s economic empowerment and broader social issues such as poverty, inequality, and gender-based violence? How can these problems be addressed?

Economic empowerment must be understood as a holistic, cyclic process in which multiple social and economic-development dimensions are linked, building upon each other over time. It is necessary to enact immediate solutions for women in vulnerable situations. A first solution could include making cash transfer systems available to women; these systems allow them to not only survive but also thrive, by respecting and guaranteeing their decision-making capacity. A second solution could include creating systems that allow women to ensure they have a steady flow of income for the medium and long term; to accomplish this, those systems could offer them support in entering into the formal labor market or in pursuing a self-employment opportunity in specific cases. It is important that these programs target not only women but also their dependents— both minors and seniors whose care, often provided by women, presents one of the biggest barriers to women’s economic and job stability. A third solution could include economic empowerment policies that particularly address girls, giving them employment skills and protecting them from threats to their independence that loom from childhood, such as teenage pregnancies or forced marriages.

Finally, it is important to note that women’s empowerment processes in some social spaces, especially patriarchal or sexist ones, can generate conflict or violence against women. Mechanisms for preventing violence and protecting women must be provided, including social and institutional support for empowerment projects and the women at the center of them.

—Erika Rodríguez is a nonresident senior fellow at the Atlantic Council’s Adrienne Arsht Latin America Center, a professor and associate researcher at Complutense University, and a special advisor to Josep Borrell, the EU high representative for foreign affairs and security policy and vice president of the European Commission.

What policies can best address institutionalized gender biases and discrimination in Latin America’s political and official leadership structures?

To address women’s underrepresentation in politics and leadership, policymakers should look at some of the factors that contribute to a significantly lower number of women on the ballot and in official leadership structures. In other words, rather than create an expectation of more female candidates, leaders should try to address some of the persistent gender biases that present obstacles for female politicians already on the scene. The data on the various gender biases exists—and the region sees the unfortunate outcome of those gender biases: Mostly men are elected or appointed to key leadership roles.

There is copious data now available on women being more frequent targets of abuse and threats online in comparison to their male counterparts. On March 5 this year, Costa Rica’s Latina University published research that showed there is significant political digital violence toward women, with most of the attacks included in the research focusing on casting doubt on the capacity for women to be in public service, on disparaging women’s appearances, and on issuing physical threats. That kind of consistent harassment becomes a deterrent for women when they decide whether to take a step forward and aspire to political leadership roles. That digital violence should be addressed.

Policies aimed at reducing gender discrimination should not only focus on recruiting and electing, but also on supporting and protecting women in public leadership roles. Those policies can offer an effective strategy to minimize existing gender inequality and create a safer and more democratic environment.

—Erika Mouynes is the chair of the Atlantic Council Adrienne Arsht Latin America Center’s Advisory Council and former Panamanian minister of foreign relations.

How can the development of digital skills and literacy among women in Latin America help promote innovation and gender equality? How can public-private partnerships help foster women’s digital literacy?

In Latin America, women still lag behind men in terms of their access to the internet and mobile broadband, mastery of digital skills, and representation in digital jobs. Leveling this playing field is an economic imperative—it can help grow the pool of qualified talent for local and regional companies, empower women to access good-paying jobs, and close gender gaps in pay and labor-market participation, which are directly correlated with gross domestic product growth. This economic imperative has captured the attention of business leaders across the region who recognize that businesses benefit from employing qualified women and that limited digital parity is a drag on growth.

But while the economic case for closing the digital gender gap is strong, it’s important to look at it as a social imperative too. Empowering women with digital skills and digital literacy allows them to successfully navigate an increasingly digital world. Indeed, digital literacy is now needed to open a bank account, access health care, take full advantage of quality education opportunities, grow a business, and thrive at work. Around the world, women are known to invest more in their families and their communities than men. This means that the benefits of closing the digital gender gap will generate positive spillover effects that will be felt by societies and economies more broadly.

The private sector has a vested interest in closing the digital gender gap. My experience working in the consulting sector and with clients has shown me firsthand that diverse teams think more creatively and operate more dynamically. This, combined with the many other socioeconomic benefits of gender parity, makes it clear that the private sector must play a role in closing the digital gender gap and that the business case for doing so is strong.

The private sector has an important role to play as a partner for governments. Private-sector businesses, as significant employers, can help public officials design better policies that take into consideration the skills gaps in the labor market. And the private sector can provide insights about how policies—related to everything from health to education—impact women every day. Finally, the private sector can lead by example by creating an environment in which women can thrive and learn and using peer pressure across the sector to push all companies to get on board.

—Ana Heeren is a member of the Atlantic Council Adrienne Arsht Latin America Center’s Advisory Council and senior managing director at FTI Consulting.

How do crime and violence affect women and girls in Latin America and the Caribbean? What strategies can governments employ to help prevent, address, and respond more effectively to that violence?

In Latin America and the Caribbean, women and girls are at greater risk of facing violence. According to estimates conducted in 2018, one in four women in the Americas have experienced physical and/or sexual violence by their partner. Recent evidence shows a correlation between juvenile violent behavior and exposure to domestic violence during childhood. Women also report higher levels of insecurity: A study in three cities in the region showed higher levels of concern among women than men regarding their safety while taking public transportation (72 percent versus 58 percent in Buenos Aires, 61 percent versus 59 percent in Quito, and 73 percent versus 59 percent in Santiago). In addition, women and girls are more likely to be affected by emerging crimes. Women and girls constitute the majority of victims of human trafficking. Women environmental or human-rights activists also face attacks (1,698 violent acts in Mexico and Central America from 2016 to 2019), and about nine out of ten women have experienced or witnessed online violence.

My team at the Inter-American Development Bank proposed a strategy to respond to this complex problem in a coordinated way. The approach includes initiatives focused on empowering women and preventing violence. It includes recommendations on how to ensure that any actions or initiatives intended to solve this problem are targeted toward the most vulnerable women and girls and are tailored toward the specific social, political, and economic contexts of each community. It also includes guidance on strengthening the capacities of the citizen-security and justice sector to detect, prevent, address, and respond to violence. Moving forward, it is necessary to have better data to generate evidence-based policies.

—Nathalie Alvarado is a technical leader and coordinator of the Citizen Security and Justice Cluster at the Inter-American Development Bank.

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Executive summary 

The US humanitarian assistance and disaster relief (HADR) system—well practiced and extensively developed—could further serve US and partners’ needs in Latin America and the Caribbean (LAC) and beyond through targeted improvements. Based on our experience as HADR practitioners with operational and academic expertise, we share insights from many years of working with partners in the Americas. The task is urgent: fragile governments and organizations further impacted by COVID-19 and climate change have exposed HADR deficiencies that need to be rapidly strengthened. Redoubling the US’s HADR commitment to allies and partners can also have strategic benefits during a period of renewed competition with the People’s Republic of China. 

We believe that the United States can strengthen its HADR work globally, and particularly with LAC countries, through partnership and relationship building as well as education and exercises. By deepening its strengths and address- ing room for improvement, the United States can remain the partner of choice for LAC countries and conserve its positional advantage over China and other strategic competitors. 

How can LAC and partner nations (such as the United States), nongovernmental organizations, and regional and other global organizations strengthen their abilities to respond to natural disasters? What can the United States do to improve its disaster preparedness and response in LAC? And what can Washington learn from Beijing’s approach to disaster assistance in LAC? 

In crafting this report to address these questions, we drew from a roundtable discussion, verbal and written consultations with subject matter experts, and written material. A full description of the methodology is provided in the appendix. 

The findings of the report include eight recommendations grouped under two mutually complementary areas: (1) partnership and relationship building, and (2) education and exercises. Not only are these recommendations timely and relevant for HADR practitioners, but taking these steps would strengthen Western hemispheric security by investing in the region’s infrastructure and human capital. As the United States and its LAC partners consider future room for cooperation and collaboration, HADR work will form an indispensable centerpiece of their strategies. 

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The post Humanitarian aid: Defining new areas of US-LAC collaboration appeared first on Atlantic Council.

​​​​​What you should know

• Nicaragua: On February 9, the Ortega-Murillo regime released and expelled 222 political leaders, priests, students, and other dissidents to the United States.
• US-Brazil relations: Presidents Biden and Lula da Silva met on February 10, during which they underscored the importance of strengthening democracy, promoting respect for human rights, and addressing the climate crisis.
• Ecuador: Ecuadorians rejected all eight items on a constitutional referendum backed by President Lasso, signaling anti-incumbent sentiments and the clout of pro-Correísmo opposition political forces.

Monitoring economic headwinds and tailwinds in the region

• Argentina: Annual inflation reached 98.8 percent, while activities in the construction and manufacturing sectors continued to decline.  
• Brazil: The government met with Mexico, Germany, Colombia, Chile, the World Bank, and the Inter-American Development Bank (IDB) to explore issuing green bonds this year. 
• Belize: The government launched two new projects in cooperation with Taiwan, a business support program focused on women and micro, small, medium-sized enterprises (MSMEs), and a flood warning system for disaster prevention.  
• Colombia: 2022 GDP growth is estimated to be 7.9 percent, down from 2021’s 10.8 percent growth. In 2023, growth is expected to further decline to 1.05 percent. 
• Peru: Continuing protests and supply shortages have led several mines to suspend or reduce operations, threatening copper production.  
• Suriname: President Santokhi expressed willingness to collaborate with neighboring Guyana on oil and gas exploration and development to position the Caribbean as an energy hub. 

In focus: Inflation and infighting

As regional inflation continues, political pressures are leading to criticism of central bank policy in Brazil and Colombia. Recently-elected presidents Lula and Petro have both questioned rate hikes as a method to tackle inflation, suggesting more flexible targets and alternative policies. The governor of Colombia’s Central Bank, Leonardo Villar, expects the region to require continuing tight monetary policy, which critics argue may complicate other policy goals such as growth. Roberto Campos Neto, president of the Central Bank of Brazil, has expressed his willingness to coordinate with the Lula administration to achieve growth and control inflation. 

Despite the public clashes, central bank policy in both countries remains independent. In Brazil, a 2021 law protects central bank autonomy and is unlikely to be repealed. In Colombia, the central bank has maintained a course independent of presidential advice for two decades. 

Health + Innovation

• Colombia: President Petro presented a health reform to Congress that seeks to improve primary care, expand access to treatment, raise healthcare worker salaries, and fight corruption by eliminating private sector management of payments.
• Brazil: Nearly three years since COVID-19 claimed the life of its first victim, the country has for the first time registered zero pandemic-related deaths in a day on February 12.
• Jamaica: The Bureau of Standards launched the Jamaican Standard Specification for Telemedicine, which provides the framework through which telemedicine may be safely practiced while upholding the integrity of the medical profession.

Geopolitics of vaccine donations: US vs. China

• The United States outpaces China in its donations of COVID-19 vaccines to Latin America and the Caribbean, with Colombia and Mexico topping the list. The region has received roughly 52 percent of all US COVID-19 vaccine donations. To learn more, visit our COVID-19 vaccine tracker: Latin America and the Caribbean.

The post Aviso LatAm: February 18, 2023 appeared first on Atlantic Council.

​​​​​What you should know

• PAHO: Dr. Jarbas Barbosa took office on February 1 as the health organization’s new director, pledging to work in partnership with member states to end the pandemic and ensure that the region’s health systems recover stronger than before.
• IMF: The organization raised its global growth forecast to 2.9 percent, up from its original 2.7 percent. The outlook is also better for the region’s two major economies: up 0.2 percent for Brazil, to 1.2 percent, and a half point for Mexico, to 1.7 percent.
• Migration: The 250,000 migrants that irregularly crossed into Panama through the Darien Gap in 2022 represents a record high that is nearly double the 133,000 entries recorded in 2021.

Monitoring economic headwinds and tailwinds in the region

• Mexico: The national statistics agency reported that the economy grew 0.4 percent in Q4 of 2022 compared to the previous quarter.
• Argentina: The government will leverage new gas exports to Chile, and potentially Brazil, to improve its trade balance and pay down debt.  
• Brazil: Alongside Argentina, the government is floating the development of a common currency linking the two countries to facilitate trade. 
• Colombia: The Minister of Mines and Energy Irene Velez announced at Davos that the country will no longer approve new oil and gas exploration contracts.
• Jamaica: Third-quarter GDP grew by 5.9 percent over 2022 due to a resurgent tourism sector, which has boosted hotels, restaurants, and services, among other sectors.  
• Peru: Ongoing protests and road blockades have cost the country $550 million since the ousting of President Pedro Castillo last December. 
• Transatlantic ties: German Chancellor Olaf Scholz visited Argentina, Brazil, and Chile, to discuss the EU-Mercosur trade agreement and support for Ukraine. 

In focus: Energy expansion in Trinidad and Tobago

On January 24, the United States licensed Trinidad and Tobago to develop a natural gas project off the coast of Venezuela in the Dragon field region. The project will support overall Caribbean energy security, with a requirement that some of the produced gas must be exported to Jamaica and the Dominican Republic. To comply with US sanctions, Trinidad will pay for the gas with humanitarian aid. 

Atlantic Council experts reacted immediately, emphasizing the importance of this move towards meeting Caribbean energy demand. You can read more here. 

Health + Innovation

• Haiti: As of January 17, the Ministry of Public Health and Population has reported over 24,400 suspected cholera cases.
• Education: A World Bank study shows that by 2045, nearly 5 million people across LAC would fall into poverty due to pandemic-induced learning losses.
• Brazil: The Health Ministry announced that it will roll out bivalent COVID-19 booster shots as early as February 27.

Geopolitics of vaccine donations: US vs. China

• The United States outpaces China in its donations of COVID-19 vaccines to Latin America and the Caribbean, with Colombia and Mexico topping the list. The region has received roughly 52 percent of all US COVID-19 vaccine donations. To learn more, visit our COVID-19 vaccine tracker: Latin America and the Caribbean.

The post Aviso LatAm: February 6, 2023 appeared first on Atlantic Council.

The post Goldwyn quoted in The Wall Street Journal on Venezuelan oil and gas appeared first on Atlantic Council.

A welcome and necessary act of energy pragmatism

The Caribbean is suffering from the current energy crisis. Still dependent on heavy fuel oil and kerosene, high product prices translate to high electricity prices which undermine the competitiveness of Caribbean tourism and industry. One critical part of decarbonizing Caribbean energy and restoring energy security is enabling better access to natural gas, which helps provide cleaner electricity and cleaner fuels such as methanol and supports food security by producing ammonia for fertilizer. The Biden-Harris administration’s grant of a license to help Trinidad get access to Venezuelan gas, without a dime going to the Maduro regime, is a welcome and necessary act of energy pragmatism. Trinidad needs access to more gas as quickly as possible to produce liquefied natural gas (LNG) and clean fuels. Gas from new exploration could be seven to eight years in the future. The region needs a more secure supply of products now. And with Venezuela reviving the Petrocaribe agreement to again provide cheap loans for the sale of crude oil to its neighborhood, the United States needs to show it cares and can be relevant. Much more needs to be done to provide energy security to the Caribbean, but this license is a deft and critical first step.

—David Goldwyn is a nonresident senior fellow at the Atlantic Council’s Global Energy Center and co-chair of the Caribbean Energy Working Group at the Adrienne Arsht Latin America Center’s Caribbean Initiative. He is the president of Goldwyn Global Strategies, an international energy advisory consultancy.

A win for the Caribbean while continuing to isolate the Maduro regime

The US green light for Trinidad and Tobago (T&T) to begin development of a gas field in Venezuelan waters is a much-welcome step forward for Caribbean energy security. The Caribbean faces enormous short- and long-term energy challenges and needs this gas for its people and its economies. It has again become clear while I’ve been here in T&T this week that the country is well-positioned to process this gas for export to its neighbors and beyond. In an increasingly uncertain world, the stability of the United States’ Caribbean neighbors and a robust US partnership is increasingly critical for US security interests.

Importantly, the US license and the T&T authorities have stipulated that no cash payments will go to the Maduro administration as part of the Dragon gas field development. The Maduro administration must not financially benefit from any transaction while it continues to perpetuate its violations of human rights and its prohibition of personal liberties or of the free and fair democratic will of the Venezuelan people. This new US license is a win for the Caribbean while still keeping Maduro financially isolated.

—Jason Marczak is the senior director of the Adrienne Arsht Latin America Center.

What the agreement means for negotiations between Maduro and the opposition

There is no doubt that the new agreement will enhance the Caribbean’s energy-security policy, both the policy itself and the speed of its implementation, given other geopolitical factors including the recent announcements by the Maduro government to revive the PetroCaribe program with former Venezuelan Ambassador to Colombia Félix Plasencia appointed to lead the revival. However, Venezuelan experts and political representatives have been cautious about this new sanction exception given that crucial details from the negotiation between Trinidad and Tobago and the Biden administration, as well as the negotiations with the Venezuelan government, are still unknown.

Venezuelans are wary in reaction to this news due to the local context and the developments of the negotiation process between the Maduro government and the opposition. The first humanitarian agreement signed between the two parties last November requires a complex process to be implemented. And the Maduro government has used this obstacle as an excuse to try to reconfigure the terrain for the future of the negotiations, which should move to a second phase—but without further sanction relaxation, this is unlikely to happen. Without sanctions relief, the Venezuelan government’s economic adjustment program will be shipwrecked, a result that is already being seen in the return of hyperinflation, innumerable salary protests, and the end of last year’s optimism. Today, the government seems to be aggressively armoring its position ahead of future negotiations by threatening to intervene in the National Electoral Council and proposing a new law to further restrict nongovernmental organizations.

Therefore, the agreement coincides with an unclear political climate, which may influence the public’s perception that the sanctions relief is geared toward US interests rather than a solution that can be contributed to negotiations in Venezuela.

—Colette Capriles is a member of the Adrienne Arsht Latin America Center’s Venezuela Working Group and a professor and researcher in philosophy, politics, and social sciences at Simón Bolívar University.

The US delivers a major win for the Caribbean

US commitment to Caribbean energy security took a significant leap forward on Tuesday. Granting Trinidad and Tobago a license to develop the Dragon gas field is momentous for the country, and it creates endless opportunities across the region. In the short term, perhaps over the next half-decade, a portion of the gas will be used to service the energy needs of Jamaica and the Dominican Republic. Over a longer period, given the considerable oil and gas reserves Guyana and Suriname hold, the Caribbean is poised to become a globally competitive hydrocarbon player, potentially anchoring Caribbean energy security and meeting demand across the world. The license also opens the door to other gas fields bordering Dragon that Trinidad and Tobago can exploit over the next decade, which would provide the country and the region more time to facilitate its energy transition.  

For the United States, the timing is important. Granting the license finally brings a tangible deliverable to Caribbean nations after a year of promises and discussions. With the Caribbean Community (CARICOM) inter-sessional meeting just around the corner—where all Caribbean leaders will convene—the US-Caribbean energy cooperation will be front and center of the Community’s agenda.  

—Wazim Mowla is the associate director of the Caribbean Initiative at the Adrienne Arsht Latin America Center.

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The United States has historically been the Caribbean’s preferred ally, mainly due to proximity. The movement of goods, people, and services to, from, and within the Caribbean often involves the United States. But despite the historical strength of the relationship, there remains a simmering frustration among Caribbean leaders about the United States’ empty and unfulfilled promises and an absence of consistent attention from US officials, which have kept the US-Caribbean relationship from truly deepening. The Caribbean has always seen the potential benefits of its relationship with the United States, but the same cannot be said the other way around.

Last year did see the United States making critical investments in its partnership with the Caribbean. In June, on the sidelines of the Summit of the Americas, US Vice President Kamala Harris announced the US-Caribbean Partnership to Address the Climate Crisis 2030 (PACC 2030)—a new framework created to support climate and energy resilience in the Caribbean. The next day, US President Joe Biden met with Caribbean leaders, and the convening was praised by many across the region. And in a show of the region’s appetite to work with the United States, five Caribbean leaders met with Harris in September to discuss improving future cooperation; at the meeting, the United States announced new commitments to support the region’s energy, food, and financial security.

Last year the United States was in listening mode, and US statements and policies reflected as much. But 2023 promises to be the year in which the United States can finally satisfy some of the Caribbean’s needs and calm its frustrations. Today, there is confidence in the Caribbean that the United States understands the region’s challenges and priorities. Caribbean governments are looking for action, and it will be important that the United States delivers in what is expected to be a pivotal year for the relationship.

With the challenges the region faces, the Caribbean no longer has time to wait on the United States for action—and the United States can’t keep putting it off. Davis, speaking at the Atlantic Council on Tuesday, explained that if the United States fails to pay attention, “someone else will pay the attention.” For example, while China’s influence in the Caribbean has diminished, large projects and new concessional loans are beginning to pop up again, such as a $192 million concessional loan to Guyana to finance a road project and a new agreement with Suriname to expand city surveillance. At the same time, many Caribbean governments have broken from the zero-sum US-China competition narrative that pervades Washington and are building bridges with others including India, the African Union, and the United Arab Emirates.

Furthermore, any further delays mean that potential policy shifts may have a vanishingly short shelf life, as the 2024 presidential election approaches. US policy toward the Caribbean has seen more change than continuity, as each administration brings its own different approach.

What should the United States focus on in 2023?

The United States must understand that showing up is only half the battle. Calls from Caribbean leaders demanding that the United States pay more attention to the region after decades of neglect have translated into more US officials showing up at Caribbean-wide meetings and has resulted in more government and private-sector visits. This should continue but it should not be considered sufficient for the US-Caribbean relationship, which requires policy implementation. Continuing to show up with little to show for it will only create more frustration among Caribbean leaders in the medium to long term.

In 2023, the United States should focus on three key areas:

The United States should fulfill its PACC 2030 promises. PACC 2030 requires a full interagency effort, so the United States should ensure the Treasury, State Department, and vice president’s office are aligned on how to move forward with this massive undertaking. US officials should work with Congress on legislation that enshrines PACC 2030 for the long term. Lawmakers should also allocate funding to each of PACC 2030’s four pillars—development finance, clean-energy projects, local capacity-building, and deepening collaboration.

Second, the United States should let the Caribbean lead in areas for which it has in-house expertise and support the Caribbean’s positions in multilateral organizations. Most Caribbean countries are dependent on imports for energy and food, making the supply squeezes caused by Russia’s war in Ukraine particularly devastating for the region. While US help is needed, regional leaders are pushing forward on their own solutions. CARICOM’s plan to reduce the region’s food-import bill by 25 percent by 2025 is one such example. Here, the United States does not need a food-security policy for the region but instead should provide technical expertise and financing for Caribbean-led solutions.

US advocacy for Caribbean and small-state priorities in multilateral meetings that include other wealthy and powerful actors, such as the Group of Twenty (G20) and international financial institutions, can move the needle on solutions to these countries’ economic challenges. International support is needed in tackling the Caribbean’s struggles with debt relief, financial de-risking (the loss of correspondent banking relations with overseas banks), and poor access to concessional financing. For the United States, there are inherent benefits because slow Caribbean economic growth drives migration; plus, stronger economies can help preserve the strength of the region’s democracies.

Finally, the United States should address the region’s growing security concerns. Rightfully, climate, energy, and financial resilience have all featured prominently in the Biden administration’s Caribbean policies, but this has also meant that security challenges have lost prominence. Crime, violence, and gang activity have skyrocketed across the region over the past year. Trinidad and Tobago’s homicide rate in 2022 reached its highest level in more than a decade, and a rise in gang activity pushed Jamaica to institute a state of emergency. And per capita, Saint Lucia now ranks in the top 5 of highest homicide rates in the hemisphere.

This increase has been fueled in part by small-arms trafficking, with illicit small arms being imported into the Caribbean from the United States. Caribbean islands have limited security forces with numerous unmanned ports of entry, making the region a hotbed for small arms trafficking. Increased US-Caribbean security cooperation is needed. But first, US policies and projects—such as the Caribbean Basin Security Initiative (CBSI)—should be updated to reflect the region’s current security concerns. The CBSI barely touches on illicit small arms, for example; the United States should work this year with Congress and the Department of Defense to refocus its current security efforts.

After the progress of 2022, Caribbean leaders expect action instead of just more promises. The region knows that to survive climate change, rising food inflation, and its vulnerability to global economic shocks, it’ll need to leverage a US partnership that is backed by technical and financial resources. It adds up to a make-or-break year for US-Caribbean relations. As the United States begins to show attention to the Caribbean and regional leaders continue to welcome more US support, the timing has never been better to see real action. Without it, Caribbean nations could seek out more willing partners.

Wazim Mowla is the associate director of the Caribbean Initiative at the Adrienne Arsht Latin America Center.

The post <strong>This is a make-or-break year for US-Caribbean relations</strong> appeared first on Atlantic Council.

​​​​​What you should know

• Brazil: The Supreme Court will investigate whether former President Jair Bolsonaro incited the January 8 attack on Congress and other government buildings in Brasilia.
• Peru: People—mainly from remote Andean regions—descended on the nation’s capital to protest against President Dina Boluarte in support of her predecessor and demand elections and structural change in the country.
• Trade: The value of goods exported from Latin America and the Caribbean (LAC) increased at an estimated rate of 18.8 percent in 2022, a downward trend from 27.8 percent in 2021, due to higher prices and low volumes.

Monitoring economic headwinds and tailwinds in the region

• Argentina: The government will buy back overseas bonds equivalent to over $1 billion to improve its debt profile, looking to send a positive signal to markets despite low reserves levels.
• Brazil: Vice President Alckmin said that Lula’s administration wants to remove a key tax on manufacturing and importing, the IPI, as part of a broader tax reform package. 
• Guyana: The government announced $43.4 billion in funding for a new natural gas power plant, alongside distribution infrastructure improvements, to promote business and development. 
• Multilaterals: During his inauguration, new Inter-American Development Bank (IDB) president Ilan Goldfajn announced three key priorities for the bank: social issues, climate change, and sustainable infrastructure. 
• Mexico: The 2023 North American Leaders Summit concluded with new agreements to promote sustainability, strengthen supply chains, and respond to migration. 
• Peru: The national statistics institute (INEI) said the economy expanded 1.7 percent year-on-year in November, marking a slight slowdown from the rise of 2.0 percent in October.

In focus: LAC in Davos

Latin American and Caribbean public- and private-sector leaders gathered alongside their counterparts from across the world in Davos, Switzerland, for this year’s Global Economic Forum. Colombia’s finance minister Jose Antonio Ocampo used the opportunity to push for a stronger agreement on minimum taxes for multinational companies. Brazil’s finance minister, Fernando Haddad, and environmental minister, Marina Silva, discussed Brazil’s positive economic outlook, environmental stewardship, and desire for regional integration. 

Spanish prime minister Pedro Sánchez also delivered a speech, in which he emphasized Spain’s role in building ties between Europe and Latin America, as Spain prepares to take over the Presidency of the Council of the European Union later this year. 

Health + Innovation

• Vaccines: The Canadian government will donate $33.4 million to the Pan American Health Organization (PAHO) to increase access to COVID-19 immunizations for populations across the region. This donation is in addition to a prior contribution of $40 million in 2021.
• Belize: The country will celebrate 34 years of relations with Taiwan through the construction of a new general hospital in San Pedro.
• Nutrition: A new United Nations report found that 22.5 percent—or 131.3 million people—of the region’s population cannot afford a healthy diet, citing a country’s income level, the incidence of poverty, and level of inequality as contributing factors.

Geopolitics of vaccine donations: US vs. China

• The United States outpaces China in its donations of COVID-19 vaccines to Latin America and the Caribbean, with Colombia and Mexico topping the list. The region has received roughly 52 percent of all US COVID-19 vaccine donations. To learn more, visit our COVID-19 vaccine tracker: Latin America and the Caribbean.

The post Aviso LatAm: January 21, 2023 appeared first on Atlantic Council.

To get there, though, they’ll need other nations to provide more help than they have in the past, said Davis. “We are gratified that the United States has reengaged with us,” remarked Davis, referring to the United States as “kith and kin.”

Speaking on Tuesday at an Atlantic Council Front Page event, Davis was hopeful following a meeting with US Vice President Kamala Harris in Washington, DC.

Still, the Bahamian leader did not mince his words when speaking of the challenges the Caribbean faces, as climate change continues to increase the frequency of deadly hurricanes and global instability continues to drive some of the highest energy and food prices in the Western Hemisphere.

Read on for more highlights from his remarks and conversation with Jason Marczak, senior director of the Adrienne Arsht Latin America Center at the Atlantic Council.

 “Climate change must be more than a buzzword”

• “Small-island and developing states throughout the Caribbean must come to terms with the full extent of our vulnerability,” Davis said in light of the rising threat that climate change poses to the region. He cited the particularly grim challenge facing Dominica, an island nation in the Lesser Antilles, which is still recovering nearly five years after Hurricane Maria hit. Davis said that the hurricane inflicted so much damage that 50 percent of the country’s gross domestic product essentially blew away in a single night—a fate more Caribbean countries could face if climate change continues unabated.
• As hurricanes and rising water levels further threaten Caribbean islands, it is becoming more urgent to fully fund climate initiatives. “What we need is more access to climate-change-specific funding to mitigate the damage being inflicted each day,” Davis said.
• On working toward a switch to renewable energy: “We must first acknowledge that this is not a one size fits all discussion,” Davis said. The issues facing oil-rich countries, such as Trinidad and Tobago, are vastly different from those of his own country, Davis added, where the pivot to solar energy is more immediately necessary as energy costs soar.

More banks, more security

• Since 2015, access to global finance has quickly worsened for many Caribbean countries and businesses as many international banks and financial institutions operating in the region have chosen to de-integrate and de-bank, cutting off their services from the region. Countries whose economic development depends on remittances, such as Jamaica and Haiti, or tourism, such as The Bahamas and those in the Eastern Caribbean, have been hit particularly hard, Davis explained.
• “Sixty percent of unbanked adults in the region cite cost as a barrier to financial services,” Davis said, stressing the need to give Caribbean citizens access to financial services. “In the Bahamas, on less populated islands, people have been left without a single commercial bank.” He highlighted the work of the Atlantic Council Caribbean Initiative’s Financial Inclusion Task Force, calling it “a conduit for solving these persistent issues.”
• Caribbean citizens are feeling the effects of global crises in the form of worsening financial access, high electricity prices, and food insecurity. “CARICOM suggests that as much as 57 percent of the English-speaking Caribbean faces food-security issues,” Davis said. Together, Davis said, CARICOM’s “work can save lives and livelihoods” as “we have an opportunity to make historic advancements in regional energy security, food security, and financial inclusion.”  

A partner to the north

• Davis was happy to be able to meet “one on one, face to face” with Harris, hoping that Washington and Nassau will continue to strengthen relations after a period of relative silence from the White House. “Nature abhors a vacuum,” Davis said, “and if attention is not paid, someone else will pay the attention.”
• The Bahamas can also be a partner to the United States on regional security issues. “We are on the migratory path to the United States, and many don’t get there. They stay in The Bahamas,” Davis said, while referencing a recent wave of Haitian migrants making their way to the United States in the wake of severe political instability in Haiti.

Nick Fouriezos is an Atlanta-based writer with bylines from every US state and six continents. Follow him on Twitter @nick4iezos.

Watch the full event

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The post CBDC Tracker cited in Bloomberg on how the FTX collapse is impacting the rollout of a CBDC by The Bahamas appeared first on Atlantic Council.

​​​​​What you should know

• Brazil: On January 1, Luiz Inácio Lula da Silva was sworn in as president for a third term after defeating incumbent Jair Bolsonaro.
• Outlook: According to the Economic Commission for Latin America and the Caribbean (ECLAC), economic growth will continue to slow in 2023 and reach 1.3 percent.
• Venezuela: The opposition-led legislature dissolved the interim government led by Juan Guaidó. The vote signaled that members of the opposition had lost faith in Guaidó’s ability to oust Maduro. The United States will continue recognizing the 2015 National Assembly as the last remaining democratic institution in Venezuela.

Monitoring economic headwinds and tailwinds in the region

•  Brazil: In 2022, trade surplus reached a record high of $62.3 billion. Total exports also reached a 335 billion high, helped by a boost in prices in the agriculture and livestock sector.
• Argentina: The IMF disbursed a tranche of $6 billion from its $44 billion program with Argentina, citing positive indicators including falling inflation, a better trade balance, and foreign reserves. 
• Colombia: Minimum wage will increase by 16 percent this year, to $242.7 per month. President Petro said the move would boost an economy slowed by inflation. 
• Dominican Republic: The S&P upgraded the country’s credit rating from “BB-“ to “BB,” highlighting its strong recovery from the pandemic and long-term growth potential. 
• El Salvador: The government will receive a $150 million loan from the CAF development bank, designed to strengthen its education system in the wake of the pandemic.  
• Peru: The government launched a $1.6 billion plan to increase welfare and investment in regions gripped by protests following the ouster of former president Pedro Castillo. 

In focus: Nearshoring opportunities in the Americas

With the next North American Leaders Summit (NALS) set for this incoming week (January 9 and 10), nearshoring – the relocation of supply chains closer to the United States – is rising in importance.

Rising costs of and delays during shipping, coupled with the pandemic, have made businesses in the United States wary of relying on supply chains across the Pacific. As a result, some 400 companies explored reshoring to Mexico from Asia in 2022. Mexico’s manufacturing sector is now larger than it was before the pandemic, and Mexican exports to the United States have rapidly increased. Firms such as Walmart have already relocated some business to Mexico, while Tesla is planning a new factory in northern Mexico. NALS will pay particular attention to the electric vehicle production chain in North America.

Health + Innovation

• Chile: In an effort to curb the spread of the BF.7 COVID-19 subvariant, travelers coming from China are now required to show a negative PCR test.
• Haiti: Over 14,700 suspected cholera cases have been reported since December. Nine in every ten cases are from areas hit hard by food insecurity.
• PAHO: Most countries in LAC invest less than the minimum 6 percent of GDP in health and allocate less than 30 percent of the health budget to the first level of care as recommended by the regional health organization.

Geopolitics of vaccine donations: US vs. China

• The United States outpaces China in its donations of COVID-19 vaccines to Latin America and the Caribbean, with Colombia and Mexico topping the list. The region has received roughly 52 percent of all US COVID-19 vaccine donations. To learn more, visit our COVID-19 vaccine tracker: Latin America and the Caribbean.

The post Aviso LatAm: January 7, 2022 appeared first on Atlantic Council.

The post CBDC Tracker was cited by CNBC TV 18 on the Bahamas’ progress in launching its CBDC Project. appeared first on Atlantic Council.

While many countries are still on the rebound from the COVID-19 pandemic, new crises—and their effects—are emerging, and are expected to continue into the next year. From global inflation to a costly energy crisis, and from food insecurity to new political shifts, how can the region meet changing dynamics head-on? And how might risks turn into opportunities as we enter a highly consequential 2023?

Join the Adrienne Arsht Latin America Center as we look at some of the key questions that may shape the year ahead for Latin America and the Caribbean, then take our signature annual poll to see how your opinions shape up against our predictions.

How might new regional collaboration take shape across Latin America and the Caribbean with a wave of new leaders? What decision points might shape government policy? Will Bitcoin continue to see the light of day in El Salvador? Are the harmful economic effects of Russia’s war in Ukraine in the rearview mirror for the region, or is the worse yet to come? Will China’s new foreign policy ambition translate to closer relations with LAC?

Take our ten-question poll in less than five minutes!

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Experts react: As the US eases oil sanctions, is Venezuela coming in from the cold?

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The post What might be ahead for Latin America and the Caribbean in 2023? Take our ten-question poll and see how your answers stack up appeared first on Atlantic Council.

​​​​​What you should know

• Peru: President Castillo was ousted by lawmakers after he sought to dissolve Congress ahead of an impeachment vote.
• Brazil: The Economy Ministry rejected assertions by President-elect Lula’s transition team that Bolsonaro’s outgoing administration was leaving government finances “bankrupt.”
• Social outlook: A recent Economic Commission for Latin America and the Caribbean (ECLAC) report projects that by the end of 2022, LAC will have 201 million people living in poverty – an increase of 15 million compared to the pre-pandemic situation.
• ICYMI: On December 7, the Atlantic Council launched a paper on improving tax policy in LAC. Read it here.

Monitoring economic headwinds and tailwinds in the region

• Argentina: signed a new information-sharing agreement with the US designed to root out tax evasion. It could increase tax revenue for Argentina by $1 billion US.
• Barbados: concluded new funding arrangements with the IMF, $113 million US to continue its fiscal reform package and $189 million US towards its climate change response.
• Brazil: President-elect Lula announced that Fernando Haddad, former minister of education and mayor of São Paulo, would be his finance minister.
• Mexico: announced that additional consultations on the USMCA energy dispute would be held through early January, to ensure continued investment and confidence.
• Peru: was placed under a state of emergency after protests gripped the country. Political upheaval led S&P to lower the country’s economic outlook to “negative.”
• Transatlantic relations: Argentina called for reviewing the potential EU-Mercosur trade agreement, highlighting threats to local auto industry and barriers to agricultural exports.
• Uruguay: criticized Mercosur’s inaction on trade agreements with large economies, drawing criticism for its own independent negotiations with China and to join the TPP.

In focus: Guyana’s carbon credits

Guyana is the first country to issue carbon credits designed to prevent forest loss and the first under the ART’s REDD+ Environmental Excellence Standard to ensure integrity and independent verification. The Hess Corporation, which is a partner in an oil consortium led by ExxonMobil that operates in Guyana, will purchase $750 million US of these credits. This move reflects how resilient growth, balancing between the opportunities in the energy sector and protecting its valuable environment, has become a priority in light of climate change and stresses like the COVID-19 pandemic.

These credits will support Guyana’s Low Carbon Development Strategy, with 15 percent of the revenues set aside for indigenous communities. With some 18 million hectares of forest, Guyana is a major carbon sink, and has previously worked with Norway to protect this resource. The new credits reflect Guyana’s status as a “High Forest, Low Deforestation” country, another first.

Health + Innovation

• Argentina: Transport Ministry officials recommended all passengers travelling on public transportation to return to wearing face-masks amid a spike in COVID-19 cases.
• Universal Health Day: The Pan American Health Organization (PAHO) director called on the region to redouble efforts towards achieving universal health as they begin to rebuild from the pandemic.
• Mexico: The state of Nuevo Leon reintroduced the mandatory use of face masks in closed public spaces as the number of COVID-19 infections and other respiratory diseases rise.

Geopolitics of vaccine donations: US vs. China

• The United States outpaces China in its donations of COVID-19 vaccines to Latin America and the Caribbean, with Colombia and Mexico topping the list. The region has received roughly 52 percent of all US COVID-19 vaccine donations. To learn more, visit our COVID-19 vaccine tracker: Latin America and the Caribbean.

The post Aviso LatAm: December 17, 2022 appeared first on Atlantic Council.

​​​​​What you should know

• Economic outlook: The head of the UN Economic Commission on Latin America and the Caribbean (ECLAC) said that the region’s stagnation is ”worse than the 1980s” due to weak investment, low productivity, and inadequate education.
• Mexico: Remittances sent from workers abroad surpassed $5.35 billion in October, beating economists’ forecast on US job strength.
• #ProactiveLAC: On Wednesday, December 7, the Atlantic Council will host a virtual conversation on LAC’s economic outlook, fiscal policy, and small and medium-sized enterprises in uncertain times. Register here.

Monitoring economic headwinds and tailwinds in the region

• Argentina: Upcoming legislation is set to encourage investment in its liquified natural gas sector, as demand, driven by the war in Ukraine, continues to grow. 
• Bolivia: The country lowered its 2023 growth forecast from 5.1 to 4.8 percent, as an ongoing strike in Santa Cruz has led to over $780 million in losses.  
• Chile: During the recent high-level dialogue with the United States covering migration and sustainable development, both parties agreed to relaunch their bilateral Science, Technology, and Innovation Council. 
• Dominican Republic: The United States will block sugar imports from Central Romana, the Caribbean nation’s largest employer, accusing it of using forced labor. 
• Ecuador: The government is considering a new financing deal with the International Monetary Fund (IMF) for 2023, as its current agreement is set to expire at the end of 2022.  
• Guyana: According to new ECLAC data, the country recorded the highest FDI growth in the Caribbean in 2021, and now accounts for half of all Caribbean FDI, thanks to its booming hydrocarbon sector.  
• Peru: Farmers and truckers set up roadblocks to protest rising gas and fertilizer prices, driven up by the war in Ukraine.  
• FDI: In a 2022 ECLAC report, Foreign Direct Investment (FDI) in Latin America and the Caribbean (LAC) rose by 40.7 percent in 2021 but fell short to achieve pre-pandemic levels.

In focus: Venezuelan thaw

Last weekend, the United States granted Chevron a six-month license to expand operations in Venezuela after the Maduro government agreed to resume talks in Mexico City with the country’s opposition. The two sides signed an agreement to use frozen Venezuelan assets for humanitarian relief as well.  

The United States has framed this policy shift as a “targeted” response to promote “concrete steps” forward by the parties meeting in Mexico City. At the same time, the energy crisis driven by Russia’s war in Ukraine has elevated Maduro’s–-and Venezuela’s –-importance in a time of rising oil demand.  

Health + Innovation

• ICYMI: On November 16, the Atlantic Council launched a report with actionable recommendations for improving immunization program outcomes and financing in the region. Read it here.
• Uruguay: Health authorities issued a recommendation that immunocompromised patients and over 50 year-olds should take their fifth dose of the COVID-19 vaccine.
• Food insecurity: An ECLAC report found that 56.5 million people in LAC are impacted by hunger.

Geopolitics of vaccine donations: US vs. China

• The United States outpaces China in its donations of COVID-19 vaccines to Latin America and the Caribbean, with Colombia and Mexico topping the list. The region has received roughly 52 percent of all US COVID-19 vaccine donations. To learn more, visit our COVID-19 vaccine tracker: Latin America and the Caribbean.

The post Aviso LatAm: December 3, 2022 appeared first on Atlantic Council.

​​​​​What you should know

• Regional recovery: Of the 20 million people in Latin America who fell into pandemic-induced poverty, only 7 million have escaped it during the recovery.
• Nicaragua: The United States announced new sanctions on its mining industry in response to continued repression, targeting its largest export, gold.
• Brazil: Incumbent President Bolsonaro and former President Lula de Silva will face off in a second-round run-off election this Sunday. Join us Monday for post-election analysis.

Monitoring economic headwinds and tailwinds in the region

• Brazil: The government nominated its former central bank director, Ilan Goldfajn, for the presidency of the Inter-American Development Bank. Also nominated is Alicia Bárcena, former head of ECLAC, by Mexico.  
• Cuba: The United States granted $2 million in humanitarian assistance to assist in the country’s  recovery from Hurricane Ian last month. 
• Ecuador: The government secured joint IDB-EU funding for an energy interconnection project with Peru, estimated to save $61 million annually through reduced fossil fuel use. 
• Jamaica: The country welcomed a $300 million investment by Huawei in an effort to double down on its goal of digital transformation.
• Peru: Ongoing political instability prompted a new negative rating for its credit outlook, attributed to cabinet reshuffling and impeachment attempts against President Pedro Castillo. 
• ECLAC: This week, the Economic Commission for Latin America and the Caribbean (ECLAC) redoubled its commitment to transform development models for productive regional transformation during its thirty-ninth session.

In focus: Transatlantic ties

A recent report highlights the potential for strengthening European investment and connections with LAC, focusing on three main pillars: digital connectivity, cybersecurity, and digital rights. Emphasizing the key opportunity of Spanish leadership through Spain’s upcoming presidency of the EU, the report also explores the potential of the EU-LAC Digital Alliance planned for 2023. 

At the same time, the EU High Representative for Foreign Affairs, Josep Borrell, attended the fourth EU Investment Forum in Montevideo this week. He used the opportunity to reaffirm European commitment to a free trade agreement with Mercosur.  

Health + Innovation

• Ecuador: The latest country to drop all travel restrictions and return to pre-pandemic entry policies for foreigners.
• Brazil: Brazilians paid tribute in São Paulo to COVID-19 victims. To date, Brazil has lost 680,000 lives to the pandemic.
• Recovery: The World Bank granted Guatemala a recovery loan for healthcare and social services in the wake of the COVID-19 pandemic.

Geopolitics of vaccine donations: US vs. China

• The United States outpaces China in its donations of COVID-19 vaccines to Latin America and the Caribbean, with Colombia and Mexico topping the list. The region has received roughly 52 percent of all US COVID-19 vaccine donations. To learn more, visit our COVID-19 vaccine tracker: Latin America and the Caribbean.

The post Aviso LatAm: October 30, 2022 appeared first on Atlantic Council.

What was the Queen’s diplomacy?

As the state funeral of Queen Elizabeth II draws to a close, Senior Fellow Ben Judah spoke with Professor Philip Murphy, Director of History and Policy at the Institute for Historical Research, to discuss the legacy she leaves behind.

What role did the Queen play in the end of the British Empire? How did the Queen’s involvement shape the Commonwealth of Nations? What can we expect from King Charles III and his relationship with the Commonwealth?

You can watch #BritainDebrief on YouTube and as a podcast on Apple Podcasts and Spotify.

Former staff

Ben Judah

Former Director

Europe Center Transform Europe Initiative

Economy & Business European Union

The Europe Center promotes leadership, strategies, and analysis to ensure a strong, ambitious, and forward-looking transatlantic relationship.

Learn more

The post #BritainDebrief – What was the Queen’s diplomacy? | A Debrief from Professor Philip Murphy appeared first on Atlantic Council.

Caribbean Community (CARICOM) countries are on the frontlines of the impacts of climate change, the energy crisis, inflation, and food insecurity. Inflation has reached more than 6 percent, electricity costs for Caribbean citizens are double the average for US citizens, and climate change is expected to cost the region almost $22 billion annually by 2050. Many of these issues were top of the agenda when five Caribbean Presidents and Prime Ministers met with Vice President Harris last week and as Caribbean Heads traveled to New York for the UN General Assembly this week.

How should new initiatives such as PACC2030 address energy, climate, and food security in the Caribbean? What are the priorities for Caribbean leaders even following the UN General Assembly? And what specific opportunities exist for US and Caribbean leaders to expand partnership beyond today and into the next decade?

You are invited by the Caribbean Initiative at the Atlantic Council’s Adrienne Arsht Latin America Center to watch a discussion recorded on the sidelines of the United Nations General Assembly (UNGA) with H.E. Chandrikapersad Santokhi, president of the Republic of Suriname and chair of CARICOM.

Speakers

H.E. Chandrikapersad Santokhi
President
Republic of Suriname;
Chair
Caribbean Community

Melanie Chen
Board Member and Founder of the Caribbean Initiative
Atlantic Council

Jason Marczak
Senior Director, Adrienne Arsht Latin America Center
Atlantic Council

The Adrienne Arsht Latin America Center broadens understanding of regional transformations and delivers constructive, results-oriented solutions to inform how the public and private sectors can advance hemispheric prosperity.

Learn more

The post A conversation with H.E. Chandrikapersad Santokhi, president of Suriname, chair of the Caribbean Community appeared first on Atlantic Council.

Countries in the Caribbean Community (CARICOM) are highly vulnerable to the effects of climate change and external shocks, such as Russia’s invasion of Ukraine. The newly announced US-Caribbean Partnership to Address the Climate Crisis 2030 (PACC2030) has the potential to bolster the region’s response to climate change by stimulating locally driven economic growth. PACC2030 represents a renewed US commitment to Caribbean Community (CARICOM) members and is expected to be the central driver of US-Caribbean engagement over the next few years. If successfully implemented, PACC2030 can shape and strengthen US-Caribbean relations for the long term, facilitate US-Caribbean public-private partnerships, and give impetus to regional efforts to advance climate and energy agendas.

PACC 2030’s success is crucial for CARICOM countries and the United States. Apart from the socioeconomic and security threats posed by climate change, natural disasters, and energy insecurity, there are geopolitical considerations. Simply, if the United States cannot support the security and prosperity of its so-called Third Border, CARICOM members in need of short-term solutions to energy challenges and climate financing are likely to look to countries like China, Russia, and Venezuela for assistance. The agreement needs to deliver in the short term to generate confidence that the United States is committed to a sustainable partnership.

This report outlines three quick wins the United States and CARICOM should pursue: finding quick access to financing for CARICOM countries to invest in climate and energy resilience, involving and increasing the role of the US private sector in PACC2030’s implementation, and ensuring that the expertise and technologies brought to the region by the framework are taught, and not just given.

The United States has all the tools and expertise—and now, the will—to support climate and energy resilience in CARICOM countries. But timely implementation is needed over the next few months to show the region that US support and promises are not empty gestures, and instead come with action. This report offers clear next steps towards implementing this ambitious partnership and strengthening US-Caribbean relations in years to come.

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Is US-Caribbean diplomacy finally on the right track?

We reached out to our experts from the Adrienne Arsht Latin America Center to break down the White House’s new commitments and how this diplomatic relationship can improve in the future.

Caribbean Climate Change & Climate Action

The post PACC2030: Quick wins for a US-Caribbean partnership on climate and energy resilience appeared first on Atlantic Council.

There were plenty of big promises made regarding the Caribbean at the Summit of the Americas. Is the United States delivering?

One of the important wins of the Summit was the US prioritization of new steps that could be taken to deepen US-Caribbean ties. For too long, US policy toward the Caribbean has ebbed and flowed based on crises rather than forging a long-term strategy for cooperation based on shared interests and priorities. That is now changing, but with much work ahead. 

The US-Caribbean Partnership to Address the Climate Crisis 2030 (PACC 2030)—announced at the Summit—is a tangible US response to the immediate and long-term needs of the Caribbean in terms of climate and energy resilience. And the Biden administration is acting on it. US and Caribbean policymakers have met more in the past few months than they have over the past several years—all with a focus on the technical implementation of PACC 2030. While there is a long way to go, new actions announced today by the vice president to help support access to finance, food production, and energy security show that the United States is on the right track.

—Jason Marczak, senior director of the Adrienne Arsht Latin America Center

After today’s meeting, there’s room for optimism that the United States is in the process of delivering on its commitments. Initially, PACC2030’s framework was vague, but the action items released from today’s meeting are starting to fill in the blanks. Sending a multi-agency delegation to assess the region’s energy potential is an important first step, as is working closely with the World Bank and the Inter-American Development Bank to create more finance mechanisms for Caribbean governments. It also shows that the US approach is becoming comprehensive and holistic, bringing together the US Agency for International Development (USAID), the Commerce Department, the State Department, the Development Finance Corporation, and others to engage with Caribbean partners.

—Wazim Mowla, assistant director of the Caribbean Initiative at the Adrienne Arsht Latin America Center

What’s the significance of this meeting, and how has Harris handled her role as point person for the region?

This meeting is an important follow-up to the commitments to the Caribbean made by the Biden-Harris administration at the Summit of the Americas in Los Angeles in June. The vice president is effectively playing a similar role to that played by then Vice President Joe Biden when the Caribbean Energy Security Initiative was launched in 2009, and her leadership will be critical for meaningful US cooperation in energy security, access to finance, and food security.

—Riyad Insanally, senior fellow at the Caribbean Initiative at the Adrienne Arsht Latin America Center, former ambassador of Guyana to the United States

Today’s meeting is significant when put into a larger context. A longstanding challenge to US policy in the Caribbean is its lack of consistency. The frequent meetings that Harris has had with Caribbean leaders this year seem to remedy this for the moment. Having someone dedicate their time to the region, especially at the vice presidential level, sends a clear message to the Caribbean that these governments and their challenges matter.

—Wazim 

How do the White House’s commitments to energy security align with the region’s own energy goals? 

The White House’s commitment to strengthening regional energy security by providing greater access to financing, clean energy sources, and infrastructure is well-aligned with the Caribbean’s own goals. The focus on renewable energy should, however, be broadened to take into account the region’s dual-energy reality, with Guyana, Suriname, and Trinidad and Tobago seeking to maximize the potential of their oil and gas reserves in order to help offset global price volatility, finance their own transition to renewables and low-carbon development, and anchor energy security in the Caribbean.  

—Riyad

How does the White House commitment to food security build on or complement the region’s own strategy?

Food security is a major issue for the Caribbean and for the larger region as Russia’s war in Ukraine puts pressure on the global food supply. Given the degree to which Caribbean nations rely on food imports, each country is particularly vulnerable to food scarcity as well as price fluctuations. This places an enormous burden on people across the Caribbean. Importantly, earlier this year, the heads of Caribbean countries announced a new plan to decrease the region’s food import bill by 25 percent by 2025. US food-security actions announced today will help in that goal and will also help with the short-term needs of the region. Sending advisors to the region and the quick injection of $28 million in assistance are an important starting point for mitigating the rise in food prices.

—Jason

Is the White House doing enough to address the struggles of the Caribbean finance sector around de-risking?

The White House’s intention to announce a US-Caribbean Public-Private Bank Dialogue is a significant step in trying to address de-risking in the region. The challenge will be ensuring that the most affected Caribbean actors are incorporated into this dialogue. Also, US regulators and US banks need to be brought to the table, as they are often the missing piece in these types of forums. It will also be important that the dialogue is built in coordination with existing US efforts, particularly legislation emanating from the US House Financial Services Committee, which held a hearing on this issue just this week.  

—Wazim

The post Is US-Caribbean diplomacy finally on the right track? appeared first on Atlantic Council.

“WHEN BANKS LEAVE: THE IMPACTS OF DE-RISKING ON THE CARIBBEAN AND STRATEGIES FOR ENSURING FINANCIAL ACCESS”

September 14, 2022

Chairwoman Waters, Ranking Member McHenry, and distinguished members of the Committee, it is my privilege to address you this morning on the impacts of de-risking in the Caribbean and strategies for ensuring financial access. Today, my testimony will focus on (1) why correspondent banking relations matters and how de-risking is an impediment to Caribbean economic development; (2) how de-risking affects U.S. national security and why it matters for U.S.-Caribbean relations; and (3) recommendations that can help address de-risking in the short- and long-term. Today’s testimony draws on the recommendations of the Financial Inclusion Task Force, which was convened by the Caribbean Initiative at the Atlantic Council’s Adrienne Arsht Latin America Center.

First, I congratulate the Committee for prioritizing the withdrawal of correspondent banking relations in the Caribbean. It was an honor to accompany Chairwoman Maxine Waters to Barbados in April 2022 to participate in the Financial Access Roundtable that was co-chaired by the Honourable Mia Mottley, Prime Minister of Barbados in which the issue of de-risking was raised. Given the impacts and challenges facing Caribbean economies, governments, and citizens, urgent action is needed to safeguard the future survival and prosperity of the region. In this vein, addressing de-risking is critical. At the same time, ensuring that the Caribbean remains connected to the global financial system via correspondent banking relations has direct and indirect benefits for U.S. interests and its national security.

Financial development and access are cornerstones of economic growth and development. Critically, correspondent banking and cross-border financial flows are essential for countries, financial institutions, individuals, and businesses to transact and effect payments. These payments are necessary for all countries, particularly for international and domestic trade, foreign investment, portfolio management, and other key cross-border transactions, such as remittances. Simply, correspondent banking is the medium used to access international currencies, including the U.S. dollar. Without access to the global financial system, U.S. interests are adversely affected, as it provides an opening for increased financial crimes, illicit flows, the usage of Chinese currencies, and limits U.S. economic influence abroad.

The need to address de-risking in the Caribbean has never been more urgent. The region’s small and open economies are under threat. Over the past decade, natural disasters and extreme weather events have limited the economic potential in the Caribbean. Over the past two years, the COVID-19 pandemic has taken on this role. Russia’s invasion of Ukraine and the resulting consequences, in the form of rising food and energy prices, has the potential to cripple Caribbean economies and disrupt the livelihoods of the region’s citizens. Correspondent banking is at the core of helping Caribbean countries rebuild after each economic shock. It allows for countries to access development finance from multilateral banks to invest in new, resilient infrastructure and is a medium that allows organizations deliver needed aid to citizens in need.

De-risking and its effect on Caribbean economies

While de-risking occurs globally, the Caribbean is disproportionately affected. A 2015 survey by the World Bank found that the Caribbean, due to its small size and limited financial markets appears to be the world’s most severely affected region. In 2017, a survey from the Caribbean Association of Banks noted that up to twenty-one Caribbean countries lost at least one correspondent banking relationship. And in 2019, a Caribbean Financial Action Task Force survey showed that at least sixteen banks from The Bahamas, Belize, Jamaica, and members of the Organization of Eastern Caribbean States lost access as well.

De-risking in the Caribbean varies from country to country. Of the Caribbean Community (CARICOM) countries, Belize (-51%), Saint Vincent and the Grenadines (-45%), Dominica (-42%), and The Bahamas (-41%) fared the worst by sheer numbers of lost correspondent banking relation counterparties. Specifically, in Belize, over the course of one year, three domestic banks lost 90 percent of their correspondent banking relations. For these countries, the cost of doing business increased across the broader economy, especially for sectors – such as the tourism industry – that are reliant on executing U.S. dollar transactions. Further, since U.S. and European banks were primarily responsible for de-risking banks in Belize, domestic banks had to look elsewhere for correspondent banking relations, specifically turning to services in Turkey and Puerto Rico. One consequence is that this incurred longer processing times for transactions with some operators in key economic sectors unable to receive payments for almost four months.

Importantly, de-risking affects three main drivers of economic growth and recovery in the Caribbean – remittances, travel and tourism, and access to the global financial system. Remittance flows to the Caribbean are critical for supplementing incomes of working-class populations and accessing the U.S. dollar. For Jamaica, remittances contribute a fifth of the country’s overall GDP and for other countries, they account for upwards of at least 5 percent. Correspondent banking relations allow remittance companies, such as money transfer operators, to move currency from one financial institution to another. In the case of the Caribbean, it helps convert the U.S. dollar to localized currencies. De-risking affects this sector by increasing the operational costs of sending and receiving remittances. This becomes a deterrent to send remittances to the region and can provide incentives for relatives to use other, informal means of transferring money abroad.

The tourism industry in the Caribbean is also affected by de-risking. According to the Inter-American Development Bank, ten of the top twenty tourism-dependent economies in the world are CARICOM members. The value of the tourism industry cannot be understated, nor can correspondent banking be for the functioning of the sector. Correspondent banking is essential for credit card settlements. The inability to process transactions via credit or debit cards due to lost banking relations or high costs in accessing to the U.S. dollar can deter tourists. It also means that local hoteliers and restaurants that service tourists are less likely to afford to import products purchased abroad, such as food, pillowcases, bedsheets, among others.

Most importantly, de-risking limits the ability of Caribbean governments, financial institutions, and businesses to access the global financial systems in terms of trade, investment, credit, and financial flows. Most of these economies also run large physical-trade deficits because of their dependence on imported goods, fuel, and food. The result is that these companies are net importers of capital, usually in the form of investment, credit, and remittances. Without correspondent banking, many of the transactions needed to secure these goods and services would not be possible. De-risking leads to high costs to sustain these transactions and can have adverse effects on market functioning. Simply, it would limit banking customers from sending and receiving payments or maintaining relations with foreign suppliers. This can lead to decreases in revenue for businesses, ultimately contributing to defaults on baking loans, which, in turn, weakens the domestic banking system.

Addressing de-risking is critical for U.S. national security and interests

While de-risking has severe impacts in the Caribbean, the United States, its national security, and interests are not spared. Because of the region’s proximity to the U.S. shores and as a logistics hub for the movement of people and goods, what affects Caribbean countries often impacts the United States. There are four main areas where de-risking affects U.S. interests: (1) the U.S. government’s ability to regulate monetary transactions; (2) the effectiveness of U.S. economic influence; (3) the role of the Chinese currency; and (4) the long-term potential rise of political instability and crime.

The U.S. dollar as the world’s most used currency is critical to U.S. influence abroad. For Caribbean countries, it is central to the health and functioning of their economies. And the main mechanism for accessing the U.S. dollar, beyond receiving hard cash during tourist arrivals, are through correspondent banking. De-risking curtails this possibility, and with it, U.S. monetary and regulatory agencies’ ability to monitor transaction activity. Therefore, de-risking is counterproductive to addressing concerns of money laundering in the region if organizations, enterprises, and individuals are forced to use alternative currencies or avenues – a process commonly referred to as shadow banking. These networks can hide criminal and terrorist activities, making it more difficult for U.S. investigative agencies to bring them down. This presents a clear national security risk for the United States due to the Caribbean’s proximity to countries that house illicit actors, such as Venezuela and Cuba. Increased shadow banking via de-risking coupled with limited U.S. regulatory capability due to lost access to the U.S. dollar exposes the Caribbean to becoming a future hub for criminal financing.

Over a 20-year period (1999-2019), the U.S. dollar accounted for an estimated 96 percent of all trade in the Americas, making the currency critical to the U.S.-Caribbean economic relationship. Companies that are seeking to shorten supply chains and nearshore to the Caribbean are likely to face barriers if they cannot pay service and product suppliers in the region. For companies looking to invest in emerging industries, such as the oil and gas markets of Guyana, Trinidad and Tobago, and Suriname, correspondent banking will be vital to ensuring that the U.S. private sector is able to compete for and maintain existing contracts. There are also implications for trade relations. Most owners of micro, small, and medium-sized enterprises purchase goods and services from the United States, specifically Florida. As of 2020, the Caribbean accounts for nearly 40 percent of all of Florida’s trade with Latin America and the Caribbean. An inability to export to the Caribbean can decrease the overall trade balance of the U.S.-Caribbean relationship, forcing countries in the region to source products elsewhere.  

Continued de-risking and loss of access to the U.S. dollar presents an opportunity for Caribbean governments and financial institutions to seek new or strengthen existing relationships abroad, notably with China. While Caribbean governments and people rely on the U.S. dollar, it is not the only internationalized currency. The euro is an alternative, but Caribbean governments face similar de-risking challenges with banks in the European Union. The result is an opportunity for Chinese RMB and its banks to strengthen ties with the Caribbean. Currently, Chinese RMB is not internationally traded to the extent of the U.S. dollar or the euro, nor are Chinese banks as present as U.S. correspondent banks. Chinese RMB also accounts for just 2 percent of global reserves. However, RMB use is increasing globally. From 2009 to 2016, Chinese CBRs globally grew from sixty-five to 2,246. Despite its limited global influence, the RMB still has the potential to be used in smaller markets t, such as the Caribbean. De-risking from U.S. and European banks can push them in this direction. More banking relations offer China new avenues to engage with partners in developing regions that are currently struggling to attract or maintain CBRs, such as Caribbean countries.

The draw of new banks and RMB usage from China is likely to be attractive for most Caribbean countries and can influence Taiwan’s allies in the region. At present, five of Taiwan’s remaining fourteen allies are CARICOM members (Belize, Haiti, Saint Vincent and the Grenadines, Saint Lucia, and St Kitts and Nevis). Except for Haiti, these countries have each lost more than 30 percent of their correspondent banking counterparties since 2011, meaning lost access to the U.S. dollar and potential economic benefits from the United States. China provides an alternative to its allies in the region and if the severity and frequency of de-risking rises in the region, Taiwan’s allies might look to switch diplomatic recognition. These countries, because of their small size, are pragmatic actors, who make decisions in the best interests of the needs of their citizens and their own objectives. Thus, if de-risking continues to threaten Caribbean economic development in Taiwan’s allies, Chinese assistance can be a plug for the holes left by U.S. banks that have de-risked the region.

Since the availability of correspondent banking relations underpins economic growth, the loss of them can drive people into poverty and unemployment as well as limit governments’ ability to respond to the needs of their citizens. This leads to security risks for the Caribbean and broadly for the United States. First, increased poverty and unemployment incentivizes citizens to engage in criminal activity to replace lost household incomes and sustain their livelihoods. Further, it can be a driver for people to join criminal organizations for similar reasons, thus increasing the power of organized crime relative to the state and its own police forces. Second, since de-risking adds another layer of constraint of the fiscal flexibility of Caribbean governments, social unrest and riots might ensue when leaders cannot immediately respond to citizen needs. The likelihood of this increases with frequent disasters and economic shocks – something that is a regular occurrence in the Caribbean. 

Strategies to address de-risking that can strengthen U.S.-Caribbean relations

Never has there been more appetite between the United States and the Caribbean to expand cooperation and strengthen their partnership. This was seen at the Ninth Summit of the Americas, where the United States announced the U.S.-Caribbean Partnership to Address the Climate Crisis 2030, otherwise known as PACC 2030. Further, Vice President Harris, on several occasions, and President Joe Biden at the Summit, has carved out time to meet with Caribbean leaders and listen to their perspectives and viewpoints on matters of shared interests, such as food and energy security and access to development finance. In fact, the Congressional Delegation led by Chairwoman Waters to Barbados in April of this year and this hearing to address de-risking in the Caribbean are added indications that U.S.-Caribbean relations are headed in the right direction.

It is important now to take these words and turn them into legislative action. Addressing de-risking can be a first, tangible step as correspondent banking is the lifeblood of economic activity in the Caribbean. In many ways, it is one of the most important avenues of U.S.-Caribbean relations, enabling U.S. government agencies to provide disaster assistance after natural disasters, allowing the U.S. private sector to invest in the region, and ensuring the trade relations with Caribbean countries remain strong.

Earlier this year, the Caribbean Initiative at the Atlantic Council’s Adrienne Arsht Latin America Center released a report, “Financial De-risking in the Caribbean: U.S. Implications and What Needs to be Done,” of which the foreword was written by Chairwoman Waters. The report was a result of an almost year-long process, where the Initiative’s Financial Inclusion Task Force – a group made up of bankers, regulators, and multilateral representatives from across the United States and the Caribbean – met to provide recommendations on how U.S. policymakers can best curb de-risking.

Based on the findings of the report, there are several actions U.S. legislators can take to support Caribbean economic development and protect U.S. interests by addressing de-risking. Since correspondent banking is integral to a functional and healthy global economy, this Committee should consider putting forward legislation that categorizes it as critical market infrastructure or a public good. Through the U.S. Congress, this determination would provide justification for the U.S. Government and international financial institutions to incorporate access to correspondent banking as part of aid and development packages.

Key to the process of addressing de-risking in the Caribbean is ensuring that the affected actors are part of the overall discussion. Caribbean financial institutions and governments have first-hand accounts of the unique challenges they face to address the causes of de-risking and are therefore in the best position to provide feedback on which strategies are most effective. This Committee should consider, through legislation, working with the U.S. Treasury to consult with affected Caribbean actors when developing solutions that lead to greater financial access for the region.

Working hand-in-hand with the Caribbean financial institutions and governments also means providing them with a platform that shows progress these actors have made to fulfill compliance and regulatory requirements. As such, the Committee should consider adopting and passing “The INCSR Improvement Act,” which will help Caribbean financial actors and government leaders annually underscore actions taken to address money laundering, drug trafficking, and financial crimes. The passage of the Act will help promote healthy dialogue between U.S. and Caribbean actors.

Dialogue is critical to addressing de-risking. Therefore, the Atlantic Council is working alongside and in coordination with several key partners to create an annual U.S.-Caribbean Banking Forum. The intent for the Forum’s creation stems from the Atlantic Council’s report on financial de-risking and was supported by Caribbean government leaders and U.S. legislators during the April 2022 Financial Access Roundtable in Barbados. Since then, an organizing committee that comprises bankers, multilateral representatives from across the Americas, and the Atlantic Council has been formed to carry out the inaugural Forum and will look to include the recommendations and feedback from this hearing into its eventual agenda.

In sum, the health and future of U.S.-Caribbean relations may well depend on correspondent banking relations remaining present in the region. Caribbean countries face an uphill battle to address de-risking. Even some of their solutions to note such as launching a Central Bank Digital Currency (CBDC) to address de-risking comes with its challenges. An Atlantic Council tracker on CBDCs notes that cybersecurity is an increasing concern as well as the ability of countries to house these currencies where there is instability in the financial system – two areas where Caribbean countries are still in need of support.

Decisive action is needed for U.S. interests and national security, yes, but also for the prosperity and livelihoods of the average U.S. and Caribbean citizen. Thank you, once again, for the honor and the opportunity to appear before the Committee today. I look forward to answering your questions.

Staff

Wazim Mowla

Associate Director & Fellow, Caribbean Initiative

Adrienne Arsht Latin America Center

Caribbean China

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The Adrienne Arsht Latin America Center’s Caribbean programming began in February 2021 to raise awareness about key Caribbean Community (CARICOM) priorities with US and global stakeholders while deepening US engagement with the region around shared interests. The programming serves as a platform for US and Caribbean stakeholders to offer new and innovative insights to benefit a closer US-Caribbean partnership and the overall prosperity, stability, and well-being of the region.

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Marczak testifies to the House Committee on Foreign Affairs on the new Alliance for Democratic Development

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Adrienne Arsht Latin America Center Senior Director Jason Marczak testifies to the House Committee on Foreign Affairs regarding the new Alliance for Democratic Development.

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The Adrienne Arsht Latin America Center broadens understanding of regional transformations and delivers constructive, results-oriented solutions to inform how the public and private sectors can advance hemispheric prosperity.

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The post The Atlantic Council’s Wazim Mowla Provides Testimony at US House Financial Services Committee Hearing on Caribbean Financial Inclusion appeared first on Atlantic Council.

Last month’s Summit of the Americas in Los Angeles is now in the rearview and drew ample criticism from US partners in the hemisphere. Despite this, CARICOM governments came away relatively pleased with the attention they received and with a clear sign from the United States that the region matters. Going forward, Caribbean eyes will be on the United States’ follow-up moves and whether engagement will be consistent and sustained—or fall aside.

The momentum for a new diplomatic and economic era is already building following the Summit of the Americas and after a meeting of CARICOM in Suriname, where governments discussed issues including food security, energy resilience, and climate change—and reflected on recent engagements with allies like the United States. CARICOM will meet again in the Bahamas in February 2023; by that time, the United States should put in the work to more deeply solidify its relationship with CARICOM and also make inroads on some of the commitments made at the Summit of the Americas. 

CARICOM is a strategic partner for the United States. Dispersed across the Caribbean Sea, South America, and Central America, CARICOM members’ priority areas overlap with most US interests. This includes migration, relations with Venezuela and Cuba, transnational crime, and Chinese and Taiwanese engagement in the hemisphere. CARICOM—whose members vote in major international organizations—is also vital to the United States’ multilateral goals.

Recognizing CARICOM’s challenges and importance to US interests, Vice President Kamala Harris announced the US-Caribbean Partnership to Address the Climate Crisis 2030 (PACC2030): a new framework focused on supporting climate and energy resilience in the region. The United States and CARICOM also established three new joint committees on food security, energy, and development finance. And while CARICOM countries have frequently spoken with Harris, US President Joe Biden—by holding his first discussion with CARICOM leaders since taking office—reinforced the unique challenges facing the region and underscored their need for immediate relief.

But the momentum from the Summit of the Americas and the CARICOM meeting has a short shelf life. Skepticism will arise about the United States’ commitments to CARICOM in the months to come, including about the effectiveness of the joint committees and whether PACC2030 will actually help the region overcome its climate and energy-resilience challenges. The summit’s success hinges on whether new commitments can move forward or produce tangible results. If not, the summit and PACC2030 will be seen as another broad US policy or framework lacking resources and teeth. And what was considered a bright spot in Los Angeles would be quickly dimmed if weeks and months go by without action.

This is why immediate moves are critical. The United States should use the time leading up to the next CARICOM meeting in February to strengthen the US-CARICOM relationship.  

First, the United States should send a cabinet-level delegation led by Harris to attend February’s meeting. CARICOM meetings often attract senior officials from across the world who believe in the value of holding discussions with the community as a bloc: United Nations Secretary General Antonio Guterres paid a visit to the Suriname meeting. A senior-level visit in February would add continuity to Biden and Harris’ meeting last month at the Summit of the Americas and would save that summit meeting from being written off as an ad-hoc event. With February’s CARICOM meeting seven months after June’s summit, it would also be an opportunity for the United States to assess progress on PACC2030 and the joint committees; participants could also gather insights from policymakers, the private sector, and civil-society leaders in the Caribbean who did not travel to Los Angeles. If this occurs, it would be a profound moment in US-CARICOM relations, especially as the region laments that it is often cast aside to the outskirts of US foreign policy in the Americas. This visit could bring positive visibility to US engagement in the Americas.

Second, the Biden-Harris administration should begin working with Congress to implement aspects of PACC2030 before February. An important measure from PACC2030 calls for exploring ways to increase access to US International Development Finance Corporation (DFC) financing for “underserved” Caribbean countries, including middle- and high-income countries, for climate and clean-energy projects. Most CARICOM countries have limited access to the DFC since the corporation, much like other international financing institutions, prioritizes low-income countries. Except for Haiti, all CARICOM countries are classified as middle- and high-income. As a result, members are unable to access needed concessional financing to build climate and energy resilience—the two focus areas of PACC2030.

However, expanding the scope of DFC requires congressional action. In 2019, Congress made amendments to the BUILD Act that allowed the DFC to work with middle- and high-income European countries that wanted to improve their energy security. Except for a few, Caribbean countries are dependent on fossil-fuel imports for energy needs and that makes them vulnerable to the volatility of global energy markets. Some citizens pay electricity prices that are more than double the average price in the United States. Out of necessity, several countries, such as Antigua and Barbuda and the Bahamas, are turning to Venezuela to offset the high costs of fuel via oil alliance PetroCaribe—raising the stakes for Washington to maintain and increase its presence in the region. Caribbean countries tend to enjoy bipartisan support on Capitol Hill, so it should be within reach for Congress to replicate the success of the DFC carve-out for European energy.

Finally, US state governments have a role in improving the US-CARICOM economic relationship through the Cities Forward Initiative announced at the Summit of the Americas. For example, expanding financial relations between CARICOM countries and local banks in the United States can help address de-risking in the region. De-risking, or the loss of correspondent banking relations, due to the limited profitability of the Caribbean for big US banks isolates the region from global finance. While big US banks have found small Caribbean markets as unprofitable, medium-sized banks might not. The challenge is to build relationships between small- or medium-sized banks and Caribbean financial institutions. Outreach from state governments to the Caribbean can be helpful as local US governments and their institutions can build new relationships between US and Caribbean financial institutions through mechanisms that bring financial actors together such as a US-Caribbean Banking Forum.

In addition, CARICOM offers US states new markets for their imports and exports. Several CARICOM governments—like Jamaica, Guyana, and Trinidad and Tobago—are building or have already established sectors such as call centers, boosting the region’s nearshoring potential. The prevalence of English and the similarity of time zones between Caribbean countries and the eastern United States increase the region’s potential in this sector and can be useful for smaller US companies.

The Cities Forward Initiative can also increase US engagement with the US-based Caribbean diaspora to help inform future US policy toward CARICOM. The Caribbean diaspora hovers close to 4.5 million and is concentrated in Florida and New York, with growing numbers in Texas. Leaders in these states should consider holding community consultations that teach locals about CARICOM markets and consider sending US local-government and private-sector leaders to the region to source new products and services that benefit both CARICOM and US subnational economies. This can also increase flows of people-to-people exchange, potentially improving relationships between institutions such as universities.

With just seven months until the Bahamas meeting, the United States should seize the moment to build goodwill with CARICOM and begin deepening its relationship with the region by connecting US and Caribbean cities and institutions. Talk is cheap but action is worth gold. To make sure that the positive outcomes from June’s summit don’t go to waste, it is time the United States shows how committed it is to its neighbors in CARICOM.

Wazim Mowla is the assistant director of the Caribbean Initiative at the Atlantic Council’s Adrienne Arsht Latin America Center and is a nonresident scholar at Florida International University’s Jack D. Gordon Institute for Public Policy.

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Every country in the Americas is affected in some way—but none more so than the fourteen-member Caribbean Community (CARICOM). These countries have small markets and populations; import food, fuel, and medical services; and are mainly tourism- or commodity-dependent economies. The result is that as regional and global crises worsen, this group of small democratic states is at greater risk of economic decline, domestic instability, and even democratic backsliding without greater support from its partners—beginning with the United States, which will host the event for the first time since 1994.

Why does a group of small Caribbean states matter to the United States and its interests? For one, most CARICOM countries are stable democracies, an increasingly rare commodity in a hemisphere where authoritarian tendencies are growing. Located close to US shores, but also situated in other parts of the hemisphere (Guyana and Suriname in South America and Belize in Central America), any spillover from instability from farther-flung places could directly impact the United States.  

CARICOM countries are also crucial to the US economy and hold key votes in multilateral forums that advance US regional and international interests. In the Organization of American States, for example, CARICOM holds 40 percent of the hemisphere’s votes. The region is seen as a vote multiplier in international organizations when the Community aligns with other regional bodies, such as the African Union. These countries also contribute to a third of Florida’s overall trade with the hemisphere, while small-business owners in the region predominantly purchase goods and services from US companies with a presence in Miami.

Given the important role the Caribbean plays for US interests at the national, regional, and international levels, next week’s summit in Los Angeles is an opportunity to seek solutions to common challenges and implement the regional cooperation required to address them. The leader conversations—during which CARICOM heads of state and government will have an opportunity to engage with US leaders over a couple days—should refocus US policy toward the Caribbean (alongside that of the rest of the hemisphere), with the United States listening to the shared challenges of the CARICOM heads of government and meeting them with action. 

Tangible announcements at the summit will be important—but what happens in the days and months after counts more. With growing geopolitical competition in the region, this will be the rare opportunity for the United States to reassert its long-term interest in a strong partnership with the Caribbean based on joint priorities and tangible results.

Key steps to success

First, US-Caribbean ties need to be more frequent and consistent. Prior to the summit, US attention on the Caribbean has been unusually high, with several officials visiting the region and meeting with country representatives in Washington. But this level of engagement should not be an anomaly; it should be a blueprint. Some Caribbean ambassadors have already called for an annual US-Caribbean Summit. The United States should go further by promoting even more regular diplomatic engagement, from high-level government visits to day-to-day interactions. 

The next CARICOM conference for heads of government in early July is an immediate opportunity for the White House. Another is to use public diplomacy to highlight positive US activity in the region and strengthen cooperation in the areas of health and education. These interactions can help implement US policy by having people on the ground assess progress of current projects and reinforce the long-term cultural affinities shared among US and Caribbean citizens. 

Second, with a new climate and energy partnership with Caribbean countries to be announced, the United States should help build and strengthen the region’s institutional capacity. The small populations and markets of the Caribbean often mean there is a ceiling to how much assistance they can receive from international financial institutions and allies, including the United States. Regional partnerships are effective, but an additional focus should be on developing domestic institutions, which in turn would help US companies and international financial institutions allocate greater financing for projects in the region (and lessen reliance on support from external actors such as China). 

The region can even become a model for future energy security, since many Caribbean countries are exploring renewables to accelerate their energy transitions while also developing hydrocarbon sectors. Working with the Caribbean to balance revenues from fossil fuels and invest in renewables and other cost-efficient energy models can diversify the US government’s own approach to energy policy abroad to be inclusive of all countries’ energy circumstances. 

Third, the United States will need to expand the scope of the economic tools it has used to stimulate development in the Caribbean. Near-shoring is a growing priority, as is boosting the US private sector abroad. But both face significant barriers due to financial de-risking by US correspondent banks, as well as the limits on the US Development Finance Corporation (DFC) working with middle- and high-income economies. De-risking, or the termination of banking relations from Caribbean financial institutions due to concerns about money laundering or low profit margins, limits access to cross-border transactions. As a result, Caribbean consumers cannot pay for goods from the United States while US companies will be unable to pay employees in the region if companies leave China and move into the Western Hemisphere. 

Because it is home to many English speakers, is in a similar time zone to the US east coast, and is looking to create more jobs outside the tourism industry, the Caribbean holds significant near-shoring potential. Curbing de-risking widens the potential areas for smaller and medium-sized US companies to move operations into the Caribbean instead of competing with bigger ones in Latin America.

And although most Caribbean countries are classified as high- or middle-income economies, this is not an accurate representation of the challenges they face. Their small markets and debt-ridden economies leave them disproportionately vulnerable to external economic shocks and render them unprofitable for bigger multinational companies. Expanding the DFC’s scope to allow the institution to work further with the Caribbean can help increase US investment in the region and help finance key infrastructure projects to achieve energy security, widen digital access, or improve resilience for critical structures such as schools, hospitals, and government buildings. 

The lead-up to the Summit of the Americas has focused on the parlor game of who will sit at the table. But the event should not be remembered for its guest list. Instead, it is a real opportunity for the United States to build goodwill and momentum to produce big wins for Caribbean citizens and, more broadly, for US-Caribbean relations in tandem with the rest of the hemisphere. With the world’s challenges growing in intensity, frequency, and complexity, the United States will need a strong next-door neighbor in the Caribbean, while Latin America needs a stronger partnership with Caribbean countries. The road to this next phase needs to start in Los Angeles. 

Jason Marczak is senior director of the Atlantic Council’s Adrienne Arsht Latin America Center.

Wazim Mowla is the assistant director for the Caribbean Initiative at the Adrienne Arsht Latin America Center.

The post The Summit of the Americas should shift US Caribbean policy into overdrive appeared first on Atlantic Council.

Washington DC – April 26, 2022 – The Atlantic Council’s Adrienne Arsht Latin America Center today announced the appointment of three new nonresident senior fellows: Ambassador Kevin Whitaker, former US Ambassador to Colombia; Ambassador Riyad Insanally, Guyana’s former Ambassador to the United States and Permanent Representative to the Organization of American States (OAS); and Sally Yearwood, Counselor of the Government of Barbados at the Inter-American Development Bank.

The three experts join the Atlantic Council’s Adrienne Arsht Latin America Center at a crucial time in the Center’s history following the recent announcement of American philanthropist and businesswoman Adrienne Arsht’s $25-million gift to endow the Adrienne Arsht Latin America Center. Whitaker, Insanally, and Yearwood’s expert advice and analysis will guide the Center’s work amid a rapidly changing international order while highlighting the role Latin America and Caribbean actors will play in shaping it.

“As we continue to seek avenues to accelerate greater prosperity and opportunities across the Western Hemisphere, we could not have asked for better partners and expert voices to join the Council in our mission to shape the global future. Ambassador Insanally and Sally Yearwood bring a profound understanding of the strategic role that the Caribbean plays for the stability and prosperity of the Americas. Ambassador Whitaker brings a nuanced approach to the US-Colombia partnership and is a true champion of US engagement and leadership with the region,” said Jason Marczak, Senior Director of the Atlantic Council’s Adrienne Arsht Latin America Center.

The three new nonresident senior fellows will add new perspectives and thought leadership to the Center at a time when there is an urgent opportunity for greater US-Caribbean partnership, and as the US and Colombia celebrate the 200-year anniversary of their diplomatic ties.

As Guyana’s ambassador to the United States and permanent representative to the OAS, Ambassador Insanally served as chair of the OAS Permanent Council. “I am honored and delighted to join the Adrienne Arsht Latin America Center’s Caribbean Initiative at a time when global and hemispheric events make it all-important that the long-standing ties between the Caribbean and the United States be strengthened through meaningful engagement and action,” said Ambassador Insanally.

Ambassador Kevin Whitaker, a member of the Atlantic Council’s US-Colombia Task Force, served forty-two years in the US Foreign Service, achieving the rank of career minister. He was the longest-serving US ambassador to Colombia in a century (2014-2019). “It’s an enormous honor to be associated with the Council and especially the Adrienne Arsht Latin America Center, which is known not only for the balance and rigor of its analysis, but also for its enduring focus on suggesting practical, well-considered, and implementable policy approaches,” said Ambassador Kevin Whitaker.

Sally Yearwood currently represents the Government of Barbados and the Caribbean Constituency as a counselor on the board of the Inter-American Development Bank. Yearwood has worked with governments and private sector groups in Central American and Caribbean countries for over twenty-five years. “Trade and economic development are central drivers of the US-Caribbean relationship. I believe that the Atlantic Council’s Caribbean initiative is providing an essential forum for public-private dialogue on these issues,” said Sally Yearwood.

Please email inquiries to achavez@atlanticcouncil.org.

Fellow

Riyad Insanally

Senior Fellow

Adrienne Arsht Latin America Center

Americas Caribbean

Fellow

Sally Yearwood

Nonresident Senior Fellow

Adrienne Arsht Latin America Center

Caribbean Economy & Business

Fellow

Kevin Whitaker

Nonresident Senior Fellow

Adrienne Arsht Latin America Center

Americas China

Staff

Jason Marczak

Vice President and Senior Director

Adrienne Arsht Latin America Center

Americas Caribbean

The Adrienne Arsht Latin America Center broadens understanding of regional transformations and delivers constructive, results-oriented solutions to inform how the public and private sectors can advance hemispheric prosperity.

Learn more

The post Ambassador Riyad Insanally, Ambassador Kevin Whitaker, and Sally Yearwood join the Atlantic Council’s Adrienne Arsht Latin America Center as nonresident senior fellows appeared first on Atlantic Council.

Access to the global financial system and development tools is critical for Caribbean economic recovery, growth, and resilience. Key to this access is correspondent banking – a medium that governments and financial institutions use to facilitate trade, investments, remittances, foreign aid, and more. But over the past several years, most Caribbean governments and banks have seen a steady decline in correspondent banking relationships as institutions across the world deem the region as too small to be profitable due to high compliance costs and the perception that the region is a high-risk jurisdiction.

This report identifies how the withdrawal of correspondent banking relations, otherwise known as de-risking, affects Caribbean economies, people, and US-Caribbean relations. It is a product of the Caribbean Initiative at the Adrienne Arsht Latin America Center’s Financial Inclusion Task Force – a collection of representatives from correspondent and respondent bankers, regulators, and members of multilateral institutions from across the United States and the Caribbean.

The report outlines task force recommendations that can strengthen financial inclusion and access across the region by focusing on four key themes:

1. a regional approach to improving the profitability of correspondent banking in the Caribbean;
2. the importance of setting consistent standards for international compliance;
3. why correspondent banking is critical to the global financial system; and
4. how to build relationships between US and Caribbean banks.

Above all, the report explains how de-risking effects more than just the Caribbean, as increased poverty, reduced purchasing power, the growing use of Chinese currencies, and the potential for regional instability have direct implications for the United States. 

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Report Feb 23, 2022

US-China vaccine diplomacy: Lessons from Latin America and the Caribbean

By María Eugenia Brizuela de Ávila, Bosco Marti, Riyad Insanally and Claudia Trevisan

The implications of diverging COVID-19 responses, notably at the onset of the pandemic’s rise in the region, will reverberate beyond the health sector. What might the differing US and China pandemic approaches portend for future influence in the region? 

Caribbean China

The Adrienne Arsht Latin America Center broadens understanding of regional transformations and delivers constructive, results-oriented solutions to inform how the public and private sectors can advance hemispheric prosperity.

Learn more

The post Financial de-risking in the Caribbean: The US implications and what needs to be done appeared first on Atlantic Council.

Introduction 

COVID-19 has laid bare the competing strategies and practices of the United States and China to amass further clout in Latin America and the Caribbean (LAC). In many ways, the pandemic is quickly accelerating a regional trend seen over the last decade: China uses its growing economic and diplomatic muscle to provide an alternative to US activities and interests. The implications of diverging COVID-19 responses, notably at the onset of the pandemic’s rise in the region, will reverberate beyond the health sector. What might the differing US and China pandemic approaches portend for future influence in the region? 

For the United States and China, the pandemic has opened new opportunities to deepen regional ties. Both countries’ assistance eventually centered on vaccine diplomacy, but China was first out of the gates in offering vaccinations beyond its borders. 

For LAC, its interactions with the United States and China during the pandemic are emblematic of broader trends: China provides an alternative to LAC during crisis moments; and regional leaders use US-Chinese competition to their advantage. Both instances are visible in the region, including in the four geographic areas analyzed in the following pages: Central America, Trinidad and Tobago (T&T), Brazil, and Mexico. In each case, distinct US and Chinese engagement at various stages of the pandemic—along with the host countries’ own actions and reactions—have yielded short-term results and some that are likely to persist. 

In Central America, China provided strategic diplomatic messaging alongside vaccine shipments, but the United States donated more vaccines. In T&T, Chinese vaccines were accompanied by a new loan, and the country’s prime minister applied a pragmatic approach to acquire vaccines from both the United States and China. For Brazil, laboratory-to-laboratory agreements highlighted a different version of vaccine diplomacy: one that occurs at the subnational level. In Mexico, numerous diplomatic exchanges occurred alongside substantial vaccine purchases from US and Chinese manufacturers. 

Vaccine-related diplomacy also contributes to an evolving discussion about the different ways China and the United States more broadly engage the region—and vice versa. Starting from a low base, Chinese engagement with LAC has focused on and grown significantly in diplomacy, trade, and investment over the last decade. China is either the first- or second-largest trading partner for many countries in the Americas and a top source of foreign direct investment among its allies. Current US strategy in the region similarly reflects a new sense of deploying diplomatic tools to advance hemispheric prosperity, while doing so as part of a broader vision that reflects partnering to address global challenges—from climate change and the instability that sparks migration to shoring up democracy and addressing corruption. Overall, the region’s proximity, shared peoples, history, and borders with the United States provide greater depth and multidimensionality to the relationship. Consequently, vaccine diplomacy represents a greater marginal opportunity for China to broaden and deepen regional ties.

Central America (Belize to Panama) 

By María Eugenia Brizuela de Ávila

Central America has a deeper and more extensive relationship with the United States than China. Bilaterally and through COVAX (the international cooperative program), the United States donated and supplied more vaccines to Central America than China.¹ Migratory flows through the region to the US-Mexico border and strong economic linkages make Central America a strategic location for US interests. Remittances, the Dominican Republic-Central America Free Trade Agreement (DR-CAFTA), in which the United States enjoyed a goods trade surplus of $7 billion,² migratory flows, and shared tourism demonstrate these multifaceted US-Central American ties. In addition, the effectiveness of US-origin vaccines is positively rooted in people’s minds.  

US-China competitive dynamics in Central America have been on full display since the pandemic. The US government announced $310 million in humanitarian assistance to El Salvador, Guatemala, and Honduras in April 2021.³ China has donated its own vaccines to diplomatic allies in Central America and sold at least 1.5 million Sinovac doses to El Salvador.⁴ China also cut attractive deals to deliver its vaccines at cheaper prices than US vaccines. Moreover, Beijing announced that it would provide $1 billion in financing to LAC countries to help them purchase Chinese vaccines, as discussed in the Trinidad and Tobago case study. Overall, US donations, including through COVAX, to Central America have totaled an estimated 16.8 million doses compared to China’s total donations to Central America of 1.75 million doses.⁵

Vaccine shipments opened a new avenue for China to strengthen diplomatic ties. Chinese officials conflate the number of vaccine doses they donate and sell to other countries. Combining donations with purchased shipments allows China to capitalize on the optics of vaccine deliveries. Take El Salvador as an example. Although China only donated 750,000 vaccine doses to date, subsequent arrivals of El Salvadoran-purchased Chinese doses (totaling 5 million) were greeted with uncommon fanfare. On one occasion, purchased Chinese vaccines were delivered to El Salvador by a leased plane owned by the New England Patriots, a National Football League team.⁶ The plane use drew significant international media attention, accentuating the perception that China was leading vaccine supply in LAC. More broadly, while US deliveries also received media attention, Chinese vaccine shipments (both purchased and donated) made a stronger public impression than most US donations delivered via COVAX.⁷ 

To bridge this perception gap, US vaccine donations to Central America need to be more geo-strategically competitive. Bilaterally, the United States can expand its commitment to regional recovery by helping overcome in-country logistical challenges associated with vaccine administration. Many mRNA vaccines donated by the United States, such as the Pfizer vaccine, require ultracold-storage freezers to house them. Donations that come with the requisite equipment or training could build appropriate capacity for national and local governments to increase vaccination rates and reduce wastage. Additional support could include providing supplementary supplies like needles and alcohol pads and securing customs arrangements.

As the pandemic continues and more COVID-19 assistance is needed, vaccine diplomacy has laid the groundwork for China to broaden engagement with Central America. In December 2021, this played out with Nicaragua switching its diplomatic relations from Taiwan to China, and resulted in a donation of 200,000 vaccines less than a week later.⁸ Taiwan’s three remaining Central American allies (Honduras, Belize, and Guatemala) surely took notice. The swiftness and growing scale of Chinese support in moments of crisis—pandemics, climate events, or economic hardship—is likely to put additional pressure on Taiwan and its allies. When faced with resource constraints, these Central American countries, under stress, might see a pivot to China as advantageous to secure needed assistance for their citizens.⁹

The US response to the region during the pandemic complemented its approach in combatting the root causes of migration flows by improving security conditions and boosting economic prosperity. To advance US interests during future global events, it must be among the first to deliver aid, rethink how it communicates shipments, and identify additional political or economic accompaniments to enhance bilateral relations with Central American countries. 

Trinidad and Tobago 

By Riyad Insanally

In March and April 2021, Dr. Keith Rowley, as both chair of the Caribbean Community (CARICOM) and T&T’s prime minister, wrote to US President Joe Biden, spoke with US Congresswoman Maxine Waters, chair of the House Committee on Financial Services, and engaged with senior White House officials about vaccine access for the Caribbean.¹⁰ He also spoke with Chinese President Xi Jinping and China’s ambassador to T&T in March 2021.¹¹ US discussions eventually resulted in a letter from President Biden acknowledging the Caribbean’s need for vaccines while engagement with China was met with action – a $204 million loan and a total donation of 300,000 Sinopharm vaccines to T&T in May and June 2021.¹²

The loan stipulated that at least 15 percent of the money should be used to purchase “goods and services from China,” which included Sinopharm vaccines, allowing T&T to purchase an additional 800,000 doses.¹³ China’s loan had fewer restrictions than one offered by the International Monetary Fund (IMF), which T&T rejected. The IMF loan had a lower interest rate but required structural readjustments that the T&T government felt it could not afford.  

Distribution of US personal protective equipment (PPE) occurred earlier, but China donated vaccines first. US vaccines arrived on June 14 and August 14. The first donation was a mere 480 doses, which arrived on the same day as 200,000 from China. Unsurprisingly, Chinese and Trinidadian media criticized the US donation.¹⁴ China’s diplomatic coup was only partially reversed when a larger US donation of 305,370 vaccines (from a promised 908,000) arrived on August 12, coinciding with a visit by Admiral Craig Faller, then-commander of US Southern Command.¹⁵ A second US batch (304,200) arrived on December 9, 2021.¹⁶ The US donations to T&T are part of a larger four-million dose promise to CARICOM countries (excluding Haiti), compared to just over a million from China. 

The United States often seems to take its relationship with the Caribbean for granted when it should be paying closer attention. Indeed, especially with China’s vaccine diplomacy, the United States should be wary of losing goodwill and influence in CARICOM to China’s benefit. The Caribbean is regarded as the US’s third border and, in addition to the region’s geostrategic importance, the US enjoys a trade surplus of $6.5 billion with CARICOM. T&T, a longtime US ally, sits in a strategic area in the Caribbean. It shares a maritime border with Venezuela, a key reason why Rowley maintains relations with the Nicolás Maduro regime, and T&T is a frequent destination for Venezuelan refugees.¹⁷ As a larger Caribbean economy, T&T is a valuable trade partner, especially for US goods and services from Florida. 

Yet limited or slow engagement during the pandemic has decreased US standing in T&T and the Caribbean. Rowley maintains a policy of autonomy in T&T’s relations with the United States and China, noting that they are “never a case of one or the other . . . as we look after the interest of the people of T&T.” Small states like T&T cannot afford to depend on one power. In an international system marked by asymmetrical relationships, these states maintain a diversity of relations.¹⁸

Renewed US commitment to T&T and the Caribbean opens the door for the United States to increase its support to help preserve the region’s health and to build back better after the pandemic. To counter Chinese influence, the United States must compete better and smarter. For instance, had US bilateral vaccine donations started sooner, they would have had a significant impact in Caribbean countries, given their smaller population size relative to Latin American neighbors—and that would have been a quick win for the United States and a meaningful first step toward health security and economic recovery. Consistent and sustained US support, via foreign aid and knowledge sharing, would help Caribbean countries better prepare for this and the next pandemic, as well as other sustainable growth challenges aggravated by pandemic-like shocks. 

Brazil 

By Claudia Trevisan

In Brazil, vaccine dynamics centered on cooperation agreements with US, Chinese, and British manufacturers. Domestic production afforded Brazil greater control over the timing and consistency of vaccine supply—a fluctuating variable elsewhere in LAC. US and Chinese vaccine donations to Brazil are minimal relative to the rest of the region. Save for the US donation of three million doses of Johnson & Johnson’s vaccine announced on June 23—barely 1% of the 407 million doses distributed so far—Brazil’s remaining 404 million doses were acquired commercially.¹⁹ While China did not donate vaccines to Brazil, it was the source of the active pharmaceutical ingredient used in several million AstraZeneca and CoronaVac shots.²⁰

The Brazilian experience also illustrates that while geopolitics and domestic politics are ever present, they come second after practicality and medical urgency. 

China played a prominent role early in Brazil’s immunization campaign.²¹ Through laboratory-to-laboratory collaboration, Sinovac and Butantan—a government-owned laboratory in the powerful state of São Paulo—signed an agreement in September 2020.²² As a result, Sinovac-CoronaVac, an inactivated virus vaccine pioneered in China, was the first vaccine administered in Brazil on January 17 (with AstraZeneca’s vaccine arriving a week later). CoronaVac remained the most commonly applied vaccine in Brazil until July 2021, becoming instrumental in the reduction of deaths from a seven-day average of 3,124 on April 4 to 1,565 on July 1.²³ Although President Jair Bolsonaro repeatedly questioned the efficacy of the Chinese vaccine and preferred the AstraZeneca vaccine for the immunization campaign, limited supply at the time forced the inclusion of CoronaVac, purchased through negotiation with China by his political opponent, Joāo Doria (governor of São Paulo).²⁴

In parallel with the CoronaVac arrangement, Brazil successfully applied its “formula” of direct partnership with Chinese manufacturers to other foreign vaccine manufacturers. In mid-2020 the federal government entered its own agreement with AstraZeneca, a British-Swedish company, through a partnership with the state-owned laboratory Fiocruz.²⁵ In August 2021, US-based Pfizer and its German partner BioNTech signed a letter of intent with a Brazilian private laboratory called Eurofarma to produce vaccines in Brazil.²⁶ The Butantan laboratory also is finalizing its own vaccine, ButanVac, developed in part with technology from the American hospital Mount Sinai.²⁷

Furthermore, these laboratory-to-laboratory partnerships built technological and production capacity in Brazil, resulting in a level of COVID-19 vaccine self-sufficiency unseen in most LAC nations. It could enable Brazil to become a “launching pad” for vaccine exports and possibly donations. Sinovac and Butantan’s agreement is a prime example. The president of the Butantan Institute projects that most of the 100 million Sinovac-CoronaVac doses produced yearly will be exported to Latin America and Africa beginning in 2022. Not unlike the United States and China, Brazil’s ability to produce vaccines itself could eventually allow it to advance foreign policy objectives and build goodwill with other countries in need.

Brazil’s unique case illustrates three important points. First, limited US and Chinese vaccine donations yielded less traditional vaccine diplomacy competition. Second, laboratory agreements uncover a different type of vaccine diplomacy: one that occurs at the subnational level (CoronaVac’s initial use). Finally, vaccine dynamics in Brazil involved more international players than the United States and China, as the AstraZeneca agreement demonstrates. 

Mexico

By Bosco Marti

US and Chinese engagement with Mexico has been visible before and throughout the pandemic, including memorable milestones such as the North American Leaders’ Summit. Early on, Mexico sought help from the United States – its most important and reliable ally – to buy needed PPE equipment and N-95 masks. US support did not immediately materialize due to both countries’ similar peaks in caseload. This created pockets of diplomatic opportunities for other countries including China. Since China had an earlier first wave of COVID-19 infections, it had “off-cycle” pandemic peaks that allowed it to provide vaccines and other supplies when Mexico needed them the most. A Mexico – China air bridge was established via Aeromexico to secure the needed PPE materials.²⁸ US support eventually came, as Mexico was the first Latin American country to benefit from vaccine donations.²⁹ By September 2021, the United States had donated 10.9 million vaccine doses; in contrast, China sold vaccines via purchasing agreements.³⁰ In total and to date, Mexico has received (donated and purchased) more than 250 million vaccine doses across all foreign sources.³¹

Accompanying those vaccine purchases were diplomatic exchanges and new agreements between Mexico and China. In April 2021, Chinese legislator Li Zhansu held talks on vaccines and other foreign policy issues with Oscar Eduardo Ramirez Aguilar, the speaker of Mexico’s Senate.³² In September 2021, Mexican Foreign Secretary Marcelo Ebrard spoke with his counterpart in China, Foreign Minister Wang Yi, about vaccines and other foreign policy priorities.³³ Such high-level executive and legislative exchanges reveal the depth of China-Mexico pandemic diplomacy, which has brought about new accords. For example, Mexico and China signed an important medical cooperation agreement in April 2021.³⁴ The agreement is intended to expedite regulatory requirements for vaccines and medical devices shipped between the two countries. 

For its part, the United States supported Mexico’s fight against the pandemic through vaccine donations and broader health collaboration. For instance, at the North American Leaders’ Summit (which also included Canada), a key deliverable was continued cooperation to increase vaccine donations throughout the hemisphere, strengthen medical supply chains, prepare for the next pandemic, promote equitable economic growth, and coordinate on migration issues. On one hand, the interconnectedness of US-Mexico health and prosperity represents a unique edge for the United States over China. On the other, Mexico-China relations arguably benefited from a more singular focus on vaccine arrivals and Mexican media coverage of it.³⁵  

Overall, Mexico skillfully navigated US-China dynamics during the pandemic to its advantage. Before the March 2021 US vaccine donation, President Andrés Manuel López Obrador had asked the Biden administration for help but it was slow in coming (US vaccines came later that month).³⁶ As he had with the PPE request, he turned to China to purchase a batch of twenty-two million doses. This was an important point in the triangular dynamics of relations among the United States, China, and Mexico—indicative of Mexico’s agency and ability to independently negotiate with other countries should it deem US responses insufficient to Mexican needs. Similar power dynamics were observed in 2017, when then-Mexican President Enrique Peña Nieto visited China amid faltering trade negotiations with Washington. 

Looking ahead, vaccine and health collaboration will continue to provide China and the United States with additional pathways to engage LAC. However, unlike many LAC countries where China has made considerable commercial headway, Mexico is unique in the scale and scope of its economic relationship with United States—by far its largest trade and investment partner—as well as shared history, culture, and other interests.³⁷ Thus, the US remains a reliable partner to Mexico despite the initial delayed start in vaccine provision, due to the depth and breadth of interlocking ties and both countries’ incentives in maintaining them. A pivotal element related to the dynamics among these three nations during and after the pandemic is a game of (distant) catch-up: will the United States be more successful in leveraging vaccine diplomacy to cement Mexico ties, or will China be more successful in using it to diversify and upgrade existing relations with Mexico?

Conclusion

The pandemic itself may be an anomaly, but US-Chinese-LAC dynamics during it are not a unique event. US and Chinese COVID-19 assistance and vaccine diplomacy are part of a broader trend in the triangular relationship. LAC proximity means that the United States will always have an interest in the health of the hemisphere. China’s growing global reach means that it will not ignore an entire region that holds considerable resources. Meanwhile, since LAC governments are disproportionately affected by global circumstances—such as climate change, economic swings, and the economic fallout from the pandemic, in particular—these leaders will always seek support from willing partners. 

While the pandemic exemplifies the opportunities created by global trends for US and Chinese engagement in LAC and their different strategies, it also underscores the role of pragmatism (local needs and perceptions) in driving LAC policies and actions. At the early height of the pandemic, the quantity and timing of vaccine shipments and bilateral diplomatic engagements had two likely implications: helping to shape citizens’ perceptions of US and Chinese support;³⁸ and potentially improving perceptions of US and Chinese support during future global events and disasters. Understanding these implications provides more tools to US and LAC policymakers as they aim to better serve the hemisphere’s needs.  

The case studies provide the following broader insights into these dynamics. 

• LAC leaders court the United States and China: LAC governments are using US-Chinese dynamics to their advantage. The impact on the health of LAC citizens and on regional economies created an urgency among leaders to secure resources, vaccines, and assistance. LAC leaders initially sought aid from China and other allies because US vaccines had not arrived. Yet even when US vaccines arrived, LAC governments remained engaged with China. Although US material support was limited or slow in some cases, it eventually grew. The United States continued to engage the region by providing pandemic assistance and cooperation on other issues, such as migration, security, and climate change. Thus, the pandemic highlights an important trait in US-Chinese-LAC relations: regional governments do not view China as a replacement for the United States—or vice versa—but as an additional or alternative source of external support. 
• The number of bilateral vaccine shipments (donations plus purchases) matter: The scale and number of Chinese vaccine shipments to LAC is an important point. The implications are twofold: bilateral vaccine shipments were greeted by regional media headlines and provided more opportunities for Chinese officials to meet with local leaders and government ministers; and the public places greater emphasis on being vaccinated rather than where the vaccine was developed (whether donated or purchased). Many US donations, including several supplied through and co-branded with the multilateral COVAX facility, did not generate similar impact in public perception. In addition, only ten LAC countries are qualified for the COVAX Advance Market Commitment (“AMC”) mechanism, designed to cover the purchase of vaccine doses by qualifying low-income countries. The remaining LAC countries signed self-financing agreements with COVAX. Those that did qualify for COVAX’s AMC mechanism received smaller and delayed quantities relative to larger, quicker Chinese shipments. 
• Timing and consistency are key: While LAC benefited from assistance by both the United States and China early in the pandemic, Chinese vaccines arrived first. Delivering vaccines before the United States allowed China to build goodwill with regional leaders and caused LAC citizens to question the timing of US donations. Second, timely Chinese shipments highlighted sustained and consistent support to LAC—something the region routinely calls for from the United States. Whereas China’s COVID-19 PPE assistance was followed by vaccine shipments, US bilateral vaccine support came after a monthslong gap. 
• Diplomacy is the perfect complement: Chinese assistance to LAC was usually accompanied with media headlines and coincided with high-level and subnational diplomacy. In El Salvador and T&T, for example, China used photos with national ministers and speeches at LAC airports during vaccine arrivals to bring national and international media attention to its actions. The United States used a similar model during its vaccine shipments, though in most cases with less fanfare. However, China also engaged more diligently and directly with LAC leaders. Xi called LAC leaders when they were infected with COVID-19 to promise vaccine donations, and to discuss other accompaniments including new loan agreements. Former President Trump rarely engaged with LAC during the pandemic, and Biden’s interactions were limited mostly to multilateral settings, whereas Xi’s interactions were bilateral. 

Acknowledgments 

We would like to thank the Atlantic Council for the opportunity to share regional perspectives and analyses on US and Chinese support during the COVID-19 pandemic. As regional governments look to the international community for support, we hope this report can shed a light on best practices and strategies to engage with LAC countries. 

At the Atlantic Council, we would like to thank Jason Marczak and Pepe Zhang for their leadership and guidance; Susan Cavan and Beverly Larson for editorial assistance; and Donald Partyka and Nancy Messieh  for design support, particularly in the infographic process. Finally, a special thank you to Isabel Bernhard whose editorial guidance, thought leadership, and valuable analysis underpinned many of the unique ideas in this report. Her contribution was critical to the report’s ideation, development, and completion. 

About the authors

María Eugenia Brizuela de Ávila (“Mayu”) is a Non-resident Senior Fellow at the Adrienne Arsht Latin America Center, as well as a former and first female Minister of Foreign Affairs of El Salvador. She also possesses extensive experience in the private sector as a former president of an insurance company, a former president of a private bank, and an independent director on several bank boards in El Salvador and Honduras. Her expertise across diplomacy and development has been recognized by the Aspen Ministers Forum, Vital Voices, and the Adrienne Arsht Latin America Center. She holds a law degree from the Universidad Dr. Jose Matias Delgado in El Salvador and additional academic titles from the University of Cambridge, the Sorbonne, and INCAE. 

Riyad Insanally is a Non-resident Senior Fellow at the Caribbean Initiative of the Adrienne Arsht Latin America Center. He was Guyana’s Ambassador to the United States and Permanent Representative to the Organization of American States from 2016 to 2021. Ambassador Insanally was a career diplomat for over 31 years and received Guyana’s third highest award, the Cacique’s Crown of Honour, in 2019 for his service to diplomacy and international relations. He studied Modern Languages and Latin American Studies and holds MA and MPhil degrees from the University of Cambridge and a PhD from Harvard University.  

Claudia Trevisan is the executive director of the China-Brazil Business Council (CEBC). As a career journalist with over 30 years of experience, she has worked as a correspondent for leading Brazilian newspapers in the United States, China, and Argentina and authored two books on China. Claudia received her master’s degree from the School of Advanced International Studies/Johns Hopkins University in 2019, followed by one year as a non-resident fellow at SAIS’s Foreign Policy Institute. 

Bosco Martí is a Non-resident Senior Fellow with the Atlantic Council’s Adrienne Arsht Latin America Center and is the global director of institutional affairs and communications for Aleatica, a multinational transportation infrastructure operator. Martí served for six years as executive director for Mexico and the Dominican Republic at the board of directors of the Inter-American Development Bank and the Inter-American Investment Corporation. He has also held senior positions in Mexico’s Ministry of Foreign Affairs and the Office of the President. Martí holds a BS in industrial engineering from Universidad Iberoamericana in Mexico City. 

Wazim Mowla is the assistant director for the Caribbean Initiative at the Adrienne Arsht Latin America Center, where he works on the Caribbean and China portfolios. Mowla holds a bachelor’s degree in international relations and a master’s degree in history from Florida International University, where he is currently a nonresident scholar for the Jack D. Gordon Institute for Public Policy. Mowla provides frequent commentary for US and Caribbean media outlets.  

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The Scowcroft Center for Strategy and Security’s New American Engagement Initiative (NAEI) has a twofold mission: to challenge prevailing assumptions underpinning US foreign policy; and to point to alternative paths, different priorities, and a re-allocation of resources when needed to support new modes of US global engagement with allies and partners to shape the global future.

Our work is premised on the view that the United States—indeed, the world—is at a notably disruptive moment in history. An unprecedented technological revolution has accelerated the redistribution of global wealth and power in a multipolar world. Global institutions have frayed and fragmented, and America’s military and economic preeminence has begun to erode. By questioning underlying assumptions, the NAEI team will stimulate new ways of thinking about US foreign policy and recommend solutions that employ all elements of American power and influence.

NAEI’s Assumptions Testing series of issue briefs delves into major assumptions guiding US policies, including the motivations and behavior of revisionist powers; the US role in sustaining the global order; the effectiveness of coercion and deterrence; and the importance of democracy promotion. These in-depth briefs in turn inform two types of short policy briefs aimed at busy policymakers and opinion leaders:

• The first, NAEI’s Reality Check series, focuses on specific flaws in current policy. The series has covered a range of issues—from the US military posture in the Persian Gulf to the provision of security-sector assistance to foreign partners—and identifies specific needed reforms as well as pitfalls to avoid.
• NAEI’s newest publication series, Engagement Reframed, will suggest new ways to frame and execute America’s global role. As the title implies, the series will reimagine and reframe US engagement in the world beyond traditional, narrow notions of US military dominance to fashion a viable type of leadership in a world of many capable actors.

The Engagement Reframed series will develop new approaches for nonmilitary engagement with allies and partners, including rethinking the institutions of US foreign policy making and implementation, the specific issues and problems the United States faces, and the ways in which the scaffolding of the international system might be renovated or reengineered. These concise policy briefs will address how to employ the full range of tools at the disposal of the United States and its like-minded network. All follow a basic structure:

1. What are the challenges and opportunities? What opportunities for engagement are US policymakers currently missing? How might different modes of engagement—or new methods of interacting with others—alter or improve existing US policy?
2. Why now? The field of debate on US foreign policy is crowded with urgent problems. The Engagement Reframed series will stress important issues, explain the critical need for change, and highlight why a particular opportunity is worthy of policymakers’ attention.
3. How to make it happen. The United States is no longer the world’s sole dominant power; this series is aimed at operationalizing the concept of primus inter pares (first among equals). Learning how to operate in this multipolar world of many capable actors involves making choices. Engagement Reframed will inform these choices by considering when to take the lead or share burdens with others—solving collective-action problems through diplomacy and identifying how to enfranchise other actors to find a stable balance of interests.

The Engagement Reframed briefs planned for 2022 include:

Vaccinate the world by Mathew Burrows and Evan Cooper

The United States remains the best-positioned country to lead a global vaccination drive to counter the spread of COVID-19. With poor countries in serious need of vaccines, and China’s Sinopharm, Russia’s Sputnik, and the Johnson & Johnson vaccines deemed ineffective in initial trials at fighting the Omicron variant, the United States could reap a significant diplomatic, economic, and public health windfall if it contributes to the global vaccination effort more aggressively by donating its effective vaccines, increasing foreign production capacity of such vaccines, and bringing together donor countries to revamp the global health system. In the short-to-medium term, such measures could significantly help stem the financial costs of the pandemic by preventing economies from shutting down. Over the longer term, such an effort would yield diplomatic gains by establishing the United States as a responsible leader in global health and as the premier developer of medical innovations.

Appoint a European SACEUR by Kelly Grieco

Like every American president for six decades, President Joe Biden has called for Europe to shoulder a larger part of the defense burden. US efforts to press Washington’s European allies to do more have largely fixated on one measure: defense spending levels. At the 2014 NATO summit in Wales, NATO members pledged to spend at least two percent of their gross domestic product on defense by 2024. Despite demanding that its European allies contribute more to their own defense, Washington has thus far refused to seriously consider a more equitable distribution of leading positions in NATO’s military organization. Put differently, the United States cannot have it both ways; it cannot demand that Europe do more yet still retain full military leadership of the alliance. This paper explores arguments for the appointment of a European Supreme Allied Commander Europe (SACEUR) and offers recommendations for rebalancing NATO responsibilities and commands.

Engage on Ukraine’s Future by Emma Ashford

In recent years, Ukraine has become a core flashpoint between Russia on the one hand and the United States, as well as Washington’s European allies, on the other. From the George W. Bush administration’s 2008 attempt to bring Ukraine into the NATO membership process, to the 2014 dispute over a European Union (EU) association agreement that prompted the Maidan Revolution, the question of whether Ukraine will move toward the West or retain its traditionally close ties to Russia has been fraught with controversy. The end result has been a war on Ukrainian soil and political and economic limbo for Ukraine, which cannot benefit fully from its ties with either Russia or the West. This paper steps back from security questions to explore novel ideas for economic integration of Ukraine into Western markets—giving the country the access it desires—while reassuring Russia that this will not necessarily entail full EU membership or the cessation of trade with Russia itself.

Move beyond great-power competition in Africa by Aude Darnal and Ambassador Rama Yade

Following two decades of US foreign policy primarily dominated by the global war on terrorism, Washington’s strategic competition with Beijing has motivated a shift in US engagement with the rest of the world. In Africa, the United States retains its military and security approach toward armed conflicts and instability, but the US government has increasingly framed its exchanges with the continent within the concept of great-power competition. Though the Biden administration recently affirmed that it will not ask African countries to choose between China and the United States, it has also warned some of them about their partnerships with the Asian power. Framing US engagement with the continent through the lens of great-power competition is a mistake because it implies that African countries are merely pawns in the international system. This brief explores opportunities for greater US engagement with African countries in such sectors as diplomacy, technological innovation, trade, global health, and climate change—all issues where they are valuable partners.

Bring back America’s diplomatic superstars by Evan Cooper

American culture has tremendous influence around the world, but successfully leveraging that power for diplomatic gain requires that the US government work strategically with American artists and businesses. The Jazz Ambassadors program of the 1950s and 60s—sponsored by the Department of State to promote US values globally—provides a useful model that should be applied to how the department approaches cultural diplomacy today. By partnering with some of the most popular American artists and companies, the State Department could facilitate exhibitions of American freedom of expression and artistic talent, advancing US values while helping to improve damaged perceptions of the United States abroad.

Rethink space governance by Robert A. Manning

We have entered a new era in space that is racing ahead of the world’s ability to govern it. 2021 marked an inflection point, as US and Chinese rovers explored Mars, and a Russian anti-satellite weapons test created 15,000 pieces of space debris. Private sector activities ramped up, too, including Elon Musk’s Space X activities and the Starlink mini-satellites nearly colliding with a Chinese space station. Not least, the National Aeronautics and Space Administration (NASA) launched the spectacular Webb telescope. In short, the already explosive growth of activities in space will only accelerate in this decade. Yet the only universally subscribed law governing space is the 1967 Outer Space Treaty, now outdated by both technology and politics. Meanwhile, nations are passing laws to grant claims on moon real estate and resources, the private sector is gearing up to mine asteroids and the moon, and increasing space debris threatens space assets on which the functioning of civilization increasingly depends—from global positioning systems and military command and control to the Internet and automatic teller machines. NASA has embarked on a noble effort to update rules for operations in space, the Artemis Accords, signed by thirteen US allies and partners, but the agreement omits major space powers: China, France, Germany, India, and Russia. All parties should begin with a recognition of their mutual vulnerability and admit the urgent need to manage and remove space debris. Beyond that, the United States has an opportunity to lead efforts with partners and allies to update global space governance before space becomes a Wild West free-for-all.

Expand US relations with the Caribbean by Aude Darnal and Wazim Mowla

In recent years, the United States’ engagement in the Caribbean has been largely inconsistent and limited to only a handful of countries. From the limited and delayed collaboration during the COVID-19 crisis, to the poor response to migration flows from the Caribbean, Washington has shown the limits of its current strategy to partner with the region. In parallel, increased engagement in the region by rival powers has raised the Caribbean’s profile inside the Beltway. Although the Biden administration should not look at Caribbean countries through the prism of great-power competition, it should seize the opportunity to strengthen and redefine, when necessary, a comprehensive strategy grounded in mutual interests. From climate change to trade, investment, and diplomacy, the Caribbean and the United States share common challenges and opportunities that can only be addressed or transformed into gains through cooperation.

Get creative on European security architecture by Emma Ashford

Six months ago, the Biden administration began the process of re-engaging with Russia on questions of strategic stability, including the core issues of arms control and cyber warfare. Talks have been ongoing, and a number of working groups have been set up on specific topics. Recent events, however, suggest the need for engagement on a broader set of issues rather than exclusively on arms control. Repeated Russian military buildups near Ukraine—and Moscow’s proposed outline of a revised European security architecture—suggest that the time might be ripe for revisiting the conversations from the 1990s about conventional security in Europe. Nonetheless, Moscow’s proposed language for such an agreement is likely to be largely unacceptable to Western states. This paper explores the Russian proposal for a new European security architecture and suggests areas where compromise might be found.

Other topics to be explored in the series include demographics and immigration, a plan for improving global infrastructure, relations with North Korea, governance in space, and US public attitudes toward trade, while working with allies and partners to build leverage to reshape world order.

Assumptions Testing Series

The New American Engagement Initiative’s Assumptions Testing series explores some of the foundational beliefs that guide US foreign policy. By questioning the conventional wisdom, and exposing these assumptions to close scrutiny, the series aims to open a new seam in the policy debate and generate a more lively, fruitful, and effective strategic dialogue – one that is capable of producing a sustainable, nonpartisan strategy for US global engagement.

Reality Check Series

The New American Engagement Initiative’s Reality Checks are short briefs dedicated to exploring a particular policy or set of policies, assessing their efficacy, and, where appropriate, proposing alternatives. Reality Checks are published regularly and tied to the news of the day or derive from NAEI’s Assumptions Testing series. All are succinct and straight-to-the-point. The briefs are designed for busy professionals anxious for pragmatic and timely policy options.

Engagement Reframed Series

The New American Engagement Initiative’s Engagement Reframed policy briefs reimagine and reframe the US approach to the world beyond traditional, narrow notions of US military dominance to fashion an achievable and sustainable form of US leadership in a world of many capable actors.

The post Engagement Reframed: Introduction appeared first on Atlantic Council.

Hearing on

“Costa Rica, the Dominican Republic, and Panama: A new alliance for promoting democracy and prosperity in the Americas”

January 20, 2022

Chairman Sires, Ranking Member Green, and distinguished members of the Subcommittee, it is my privilege to address you this morning on the Alliance for Democratic Development and its larger regional implications. My testimony will focus on the importance of this Alliance, how the United States can support this new effort, and the lessons that can be extrapolated for Latin America and Caribbean.

First, I congratulate the Subcommittee for prioritizing how to further strengthen regional democracy as the topic for this first hearing of 2022. Urgent action is needed to ensure that the democratic gains seen in many parts of the Americas over the last few decades are maintained.

Democracy – and the democratic institutions and norms that underpin many societies – is facing unprecedented threats from a perfect storm of existing and new challenges across Latin America and the Caribbean: inequality, social discontent, corruption, impunity, and disinformation, among them. The pandemic and its disproportionate toll on the region – home to one-third of global COVID deaths – has only exacerbated long-simmering challenges to democracy.

What is needed are new, innovative approaches that reaffirm that democracy does deliver and that it can deliver on the issues that most directly impact everyday lives. With its pragmatic, results-focused orientation, the Alliance for Democratic Development has the opportunity to do just that. The Alliance among Costa Rica, the Dominican Republic, and Panama provides a unique opportunity for three like-minded countries to informally align to fill gaps in pressing policy matters and to offer solutions rooted in the institution of democracy.

The three countries are eagerly looking to the United States as a partner in this effort, with the rest of the region also looking at how the United States will concretely help this Alliance achieve success. If the Alliance achieves its objectives with US help, the potential exists to usher in a new era of US engagement with other regional groupings. The leadership of this subcommittee as well as the work of the full committee will thus be imperative.

Importance of the Alliance for Democratic Development

Finalized on the sidelines of the 2021 UN General Assembly, the Alliance for Democratic Development was formed to address democratic backsliding, to counter the surge in regional migration, and to respond to some of the impacts of the pandemic.

With regional support for democracy having declined by 14 percentage points since 2010 (from 63 percent support to 49 percent in 2020, according to Latinobarómetro) and with the UN Economic Commission for Latin America and the Caribbean estimating that 22 million people moved into poverty in 2020, the formation of this Alliance comes at a decisive moment for the region. Importantly, it brings added legitimacy by being regionally formed but with shared alignment with US priorities and interests.

The Alliance is based on pragmatism and action rather than just vision and talk. The United States can help to advance it and similar efforts by providing additional attention and support for some of the top priorities of the Alliance that are in line with US interests.

Specific Alliance concerns range from the effects of Ortega’s rule in Nicaragua, growing instability in Haiti, and an annual seventeen-fold increase in newly arriving migrants (in the case of Panama) to the growing threats of climate change, corruption, insecurity, and a deterioration in the rule of law observed in parts of the hemisphere. With the idea that the sum is stronger than the parts, the Alliance is positioned to advocate for greater international assistance to resolve these challenges and to build stronger economies better prepared to compete in a fast-changing world.

The success of the Alliance is also a success for the United States. The leaders have extended an invitation for the United States to participate in its next meeting in March 2022, which will come six weeks after the first round of Costa Rica’s presidential election. It will be important for a high-level US official to both attend and to announce new financial and technical steps to support the goals of the Alliance. Doing so will advance a concrete partnership with a grouping that President Biden called an “inspiring commitment” in his closing remarks at the Summit for Democracy in December 2021. The March meeting will be where the rubber hits the road: where the United States shows how it can support three-like minded countries in their efforts to strengthen democracy and the actions that underpin it.

Possible US Actions to Support the Alliance for Democratic Development

The United States can be a partner for this nascent effort – and inspire other countries to either seek to join or to commit to similar principles – by working hand-in-hand with the Alliance and other regional partners to address some of the present-day issues of top concern for the Alliance.

This should begin with two foreign policy issues where forward progress is of top importance to the three countries and where resolution would positively impact US national security interests: Nicaragua and Haiti. In Nicaragua, the continued erosion of basic individual liberties under Daniel Ortega, who recently assumed a fraudulent fourth term as leader, is resulting in growing reverberations for its Central American neighbors. Migration from Nicaragua to the United States also spiked in the months leading to the November election, with over 50,000 attempting unauthorized crossings last year.

I would like to recognize the work of members of this subcommittee including that of the Chairman and Ranking Member in advancing the RENACER Act signed into law in November 2021. The RENACER Act places timely, new pressure on Daniel Ortega and those around him while reaffirming the US commitment to the Nicaraguan people. As well, the continued application of targeted US sanctions shows those abusing Nicaraguans’ rights that their day will come.

Still, the United States can do more. Section 3 of the RENACER calls for the President to review the participation of Nicaragua in the Dominican Republic-Central America FTA. The United States should lay out specific conditions to Daniel Ortega that must be complied with in order to avoid the exclusion of certain sectors of the Nicaraguan economy from DR-CAFTA. Non-compliance should result in immediate sectoral exclusion. The affected sectors should be those with the deepest ties to the Ortega regime and that are most responsible for personally enriching himself and his family and aiding his allies in government and the security forces to systematically repress the Nicaraguan people. Any trade action should not adversely affect the Nicaraguan people. In addition, other new sanctions and adjustments to current sanctions should consider the potential collateral effects to Nicaraguans, one third who already live in poverty.

The United States should also provide additional financial and technical assistance to Costa Rica and Panama as both countries face unprecedented levels of migrants from Nicaragua.

In Haiti, continued unrest, political and social instability, and unprecedented gang activity have resulted in increased threats of a spillover to neighboring Dominican Republic. As well, Haiti is quickly solidifying itself as a hotbed and transit point for illicit regional flows and as a growing source of migrants. Consistent, focused US attention to addressing Haiti’s decades-long challenges – and US leadership in advancing a like-minded international coalition – must revolve around a four-prong strategy: advancing a Haitian-led political solution; providing large-scale technical and financial assistance to quell the uptick in gang violence; investing in Haitian-led rebuilding efforts; and ensuring that corruption does not go unchecked.

Congress should instruct the US Department of State to report on steps taken to address the multi-dimensional nature of Haitian challenges and its coordination with other US departments and agencies. The report should define next steps to work with Haiti and other partner countries to improve security and peacefully carry out presidential elections.

As well, the United States should be a partner in the rebuilding of the broader Caribbean Basin. Tourism-dependent Caribbean economies contracted by nearly 10 percent in 2020. New COVID variants and the continued instability in tourism flows mean that the Caribbean must adapt to a new reality – lower tourist arrivals amid continued shocks to the market. In addition, Caribbean economies are saddled with high debt and high financing costs. The withdrawal of US correspondent banking relations (CBR) with Caribbean banks leaves fewer options to process transactions and has coincided with a global increase in Chinese CBR.

Thus, as detailed in a forthcoming Atlantic Council report, US partnership to alleviate the challenges of CBR withdrawal should begin with instructing the US Department of the Treasury to install a mechanism that standardizes compliance requirements annually, facilitates technical trainings that help respondent banks meet these requirements, and brings in a third party, autonomous institution to evaluate respondent banks’ progress in meeting banking standards.

Finally, the United States should use the various economic and development instruments at its disposal to further support Costa Rica, the Dominican Republic, and Panama in bringing economic opportunities to their people. This Alliance is a prime opportunity to show that democracy can deliver and that peoples’ lives improve when their leaders are committed to the preservation and strengthening of democratic institutions.

Among other things, the United States can support such economic improvement by giving greater flexibility for the Development Finance Corporation to operate in all three countries – and in the greater Latin America and Caribbean region overall. A statutory requirement as part of the establishment of the DFC requires the prioritization of support for low-and-middle-income countries, thus excluding all but five countries in the Americas.

This DFC requirement should be changed so that more countries in the region – and, in particular, all Caribbean countries except for Cuba, as proposed in the 116th Congress – benefit from DFC direct loans and loan guarantees, equity financing, and technical assistance.

Three additional steps should be taken. The US Department of Treasury and US Trade and Development Agency should work with industry-leading firms in the United States to identify barriers that inhibit US players from committing capital or financing projects in Alliance countries and make proposals to the relevant ministries on how to address these barriers. Congress should also consider instructing the US Trade Representative to study opportunities for harmonization between the Dominican Republic-Central America FTA and the US-Panama Trade Promotion Agreement to the benefit of participatory countries and the United States. Finally, Caribbean Basin Security Initiative funding should be increased to deepen US engagement and regional support.

In the Dominican Republic specifically, the United States should further increase its support for President Abinader’s anti-corruption efforts to build on the $7.9 million in new assistance announced by USAID Administrator Power in her October 2021 visit to the Dominican Republic.

Threats to Regional Democracy

The Alliance for Democratic Development is both a hopeful sign of new momentum to revive democracy but its establishment is also a worrisome signal that longstanding sub-regional and regional institutions are ill prepared to counter today’s threats to democracy. Polarization is increasingly threatening democratic norms in the region with disinformation and misinformation affecting how citizens’ view their current state of affairs. At the same time, COVID-19 has laid bare the inability of many governments to take care of their people at this time of great need.

As well, the pandemic has only exacerbated the discontent with government on display when mass protests swept countries such as Colombia and Chile in late 2019. COVID-19 has led to job loss in a region with over 50 percent informality, students falling behind in school, and insufficient health care systems overwhelmed by 1.5 million pandemic-related deaths.

In the early days of vaccine availability, China, as part of its broader push into the Americas and recognizing the diplomatic opportunity at hand, was quick to offer its vaccines to regional partners. In return, China sought to use this moment to further draw countries into its diplomatic and economic orbit, thus further threatening the region’s democratic gains.

A few countries of particular concern must be pointed out for their non-adherence to even the most basic democratic norms. In Venezuela, Nicolás Maduro remains entrenched in Miraflores Palace where he systematically rigs elections and throws opponents in jail. Maduro pulled out from Mexico City-hosted negotiations in September with little retribution. Nicaragua’s Daniel Ortega responded to pressure for a democratic opening by switching relations from Taiwan to China in December. And last week, the Díaz-Canel government in Cuba began mass trials with sentences of up to 30 year for those who protested last summer.

Bright spots of democracy exist. In December, Chile’s presidential vote was a model for the world in its transparency, integrity, and the offer of unity expressed by the losing candidate. Meanwhile, in Honduras, President-elect Xiomara Castro has pledged to reestablish the rule of law and root out corruption, even considering formally inviting UN help to do so. Strong Brazilian and Colombian institutions will oversee elections this year.

But the region is as divided as ever. Common ground and regional consensus on core issues to advance socioeconomic prosperity are critical for advancing democratic resilience. The pandemic has shown the futility of assuming that borders alone will protect a country. Climate change, migration, disease, and insecurity and crime know no borders. Thus, protecting democracy and ensuring popular satisfaction with democracy depends on finding common ground and forming alliances with neighbors to advance core areas of concern in the face of current and new threats.

Potential US Steps to Strengthen Democracy and Regional Democratic Institutions

This year, the United States has its best opportunity in nearly two decades to show US leadership and to put forward concrete, action-oriented proposals that unify countries in the pursuit of improving peoples’ lives. As host of the 2022 Summit of the Americas, the United States must work with partners to put forward bold, consensus-based solutions on how to revive democracy, rebuild economically and socially from the pandemic, strengthen regional health cooperation, and increase the resilience of those areas most affected by climate change. These solutions must be met with decisive actions that bring tangible benefits to households.

Other priorities should include a presidential visit to the region prior to hosting the Summit and additional trips by high-level US officials. Vice President Harris, in particular given her Jamaican heritage, has an opportunity to highlight a new commitment to the Caribbean through a trip that would also address some of the most pressing issues for the Caribbean Community: tourism-related job loss, high debt burdens, and, of course, energy and climate security.

An Atlantic Council report last year – with a foreword by Chairman Sires – proposed a partnership strategy to help the region recover and rebuild stronger from COVID. As the lead author, I wrote that a US regional strategy should seek to accomplish three goals: increase prosperity; improve security; and strengthen democracies. To achieve these goals, a six-point plan was laid out focusing on the following pillars: 1) investing in health; 2) revitalizing economies as a means to also address corruption and build resilience; 3) boosting hemispheric commerce through integration, infrastructure, and technology – and the opportunities of nearshoring; 4) addressing climate action by implementing commitments and integrating policies; 5) improving education as a pillar for growth and social inclusion; and 6) bolstering democracy and governance.

The plan highlighted the potential role of civil society, municipal leaders, the private sector, and national-level governments to work with the United States in each of these pillars. These six pillars continue to provide the framework by which the United States can partner with regional democracies in areas of mutual interest.

Overall, to support regional democracies, the United States must meet countries where there is the greatest need and overlap with US interests. Unlike a decade ago, the United States is no longer the only non-regional partner with significant Latin American and Caribbean interests. China has established itself as the top trade partner of Brazil, Chile, Peru, and Uruguay with total regional trade reaching $315 billion in 2020. Chinese loans and investments do not come with anti-corruption clauses or other mechanisms to strengthen the rule of law fundamental to democracies.

In sum, the Alliance for Democratic Development is a welcome effort at a time of great concern about the future direction of the region. As neighbors, the United States’ own national interests are intertwined with the bolstering of democracy in the Americas. The year 2022 must be one where decisive action is taken to reinforce our hemisphere’s democratic institutions through a partnership-based strategy that aligns regional priorities and US interests.

Thank you, once again, for the opportunity to appear before the Subcommittee today. I look forward to answering your questions.

Staff

Wazim Mowla

Associate Director & Fellow, Caribbean Initiative

Adrienne Arsht Latin America Center

Caribbean China

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Marczak testifies to the House Committee on Foreign Affairs on the new Alliance for Democratic Development

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The post Marczak testifies to the House Committee on Foreign Affairs on the new Alliance for Democratic Development appeared first on Atlantic Council.

On January 18, 2022, Wazim Mowla and Pepe Zhang co-authored an article in the Georgetown Journal of International Affairs, “Latin America and the Caribbean’s Asymmetrical Engagement with China during the COVID-19 Pandemic.”

“Through strategies of problem re-definition and autonomy enhancement, LAC governments used regional and international forums to draw attention to the needs of the developing world and small states—an example of their ability to asymmetrically influence global politics and bilateral relationships,” Mowla and Zhang write.

More about our experts

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Wazim Mowla

Associate Director & Fellow, Caribbean Initiative

Adrienne Arsht Latin America Center

Caribbean China

Staff

Pepe Zhang

Senior Fellow

Adrienne Arsht Latin America Center

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The post Wazim Mowla and Pepe Zhang in the Georgetown Journal of International Affairs: Latin America and the Caribbean’s Asymmetrical Engagement with China during the COVID-19 Pandemic appeared first on Atlantic Council.

On January 6, 2022, Wazim Mowla and Isabel Bernhard co-authored an article in Global Americans, “Why Might Taiwan’s Allies in Latin America and the Caribbean Soon Look to China?”

“Beneath the surface of bilateral meetings and declarations of support, Taiwan’s allies need to weigh natural disasters, electoral pressure, foreign policy considerations, and authoritarian signaling as they chart their next foreign policy moves.” Mowla and Bernhard write.

More about our experts

Staff

Wazim Mowla

Associate Director & Fellow, Caribbean Initiative

Adrienne Arsht Latin America Center

Caribbean China

The post Wazim Mowla and Isabel Bernhard in Global Americans: Why Might Taiwan’s Allies in Latin America and the Caribbean Soon Look to China? appeared first on Atlantic Council.

The year 2022 will be one of change across the Western Hemisphere. From presidential elections in Brazil and Colombia to newly elected presidents taking office in Chile and Honduras, regional leaders will be looking at new ways to rebuild economies from the COVID-19 pandemic while balancing mounting social pressures. So, what might or might not be on the horizon in 2022?

Join the Adrienne Arsht Latin America Center as we look at some of the key questions that may shape the year ahead for Latin America and the Caribbean, then take our signature annual poll and see how your opinions shape up against our predictions.

How might key presidential elections shake out? Will regional economies recover to pre-pandemic growth rates? What might be the outcome of the US-hosted Summit of the Americas, and will Caribbean voices play a larger role than in previous gatherings? Will the region expand its ties with China?

Take our ten-question poll in less than five minutes!

Question #1: Caribbean – Will Vice President Kamala Harris make her first trip to the Caribbean in 2022?

Question #2: Central America – Will the United States have confirmed ambassadors in all three northern Central American countries (currently only Guatemala) by year-end 2022?

Question #3: Chile – Will the new Chilean constitution be approved when put to a referendum?

Question #4: China and Latin America – Considering Nicaragua’s newly established China ties, will the three other Central American countries that currently recognize Taiwan—Belize, Guatemala, and Honduras—also switch recognition to China?

Question #5: Colombia – Will Colombia’s presidential election go to a second round?

Question 6: Economy – Can the region recover pre-pandemic growth rates in 2022?

Question #7: Mexico – Will Mexico remain the United States’ top trading partner throughout the next year?

Question #8: Bitcoin – Following in El Salvador’s footsteps, will support for Bitcoin tender grow in the region?

Question #9: Venezuela – Will Nicolas Maduro return to the negotiating table in Mexico City?

Question #10: Brazil – Will President Jair Bolsonaro win another term this year?

Bonus Question: Will Latin America and the Caribbean be represented in the final of the World Cup?

Our answer to question #1: YES

In 2022, the Biden-Harris administration will look for big wins and opportunities to expand its leadership in the Americas. This is achievable in the Caribbean with a high-profile visit, which would optimally be accompanied by a major policy announcement from Vice President Harris. President Joe Biden was the last vice president to visit the region, where he focused his time discussing the Caribbean Energy Security Initiative.

The stage is set for a similar visit to occur with Vice President Harris. Economic recovery is slow, vaccine hesitancy is increasing, and other actors, such as China, are playing a more active role in the Caribbean. Regional leaders often note that US attention is inconsistent, and that few high-profile US officials travel to the Caribbean. A visit and subsequent policy announcement that aids the Caribbean in its time of need would build on recent conversations between the Vice President and Prime Minister of Trinidad and Tobago Keith Rowley (virtual) and Prime Minister of Barbados Mia Mottley (in person).

Our answer to question #2: NO

Given President Nayib Bukele’s recent personal attacks against President Biden and other US government officials, including Ambassador Jean Manes and current Charge d’Affaires Brendan O’Brien, it is unlikely that the United States will confirm all ambassadors to the Northern Triangle countries. President Bukele’s attacks were a response to the Biden administration’s decision to add Osiris Luna Meza, the chief of the Salvadoran penal system and vice minister of justice and public security, and Carlos Marroquin, chairman of the Social Fabric Reconstruction Unit, to the Specially Designated Citizens and Blocked Persons List. Both Salvadoran officials are accused of having a direct relationship with gangs, including MS-13. In Honduras, however, a new administration under President-elect Xiomara Castro provides a renewed sense of cooperation between the United States and the Central American country.

Our answer to question #3: YES

Once the constitutional draft is finalized by summer 2022, the Constitutional Convention will vote to approve or reject the new legal charter. If the body rejects the new constitution, Chile will keep its current one. However, if it is approved, the group will present the document to the newly elected head of state, who, in turn, will issue a call for a national referendum in which Chileans will vote to approve or reject the new constitution. Voting will be mandatory, and the new constitution will move forward only if an absolute majority is achieved.

While 78.3 percent of voters cast their ballot in favor of a new constitution in 2020, rising polarization and inefficiencies within the Constitutional Convention have left thousands of Chileans disenchanted with the reform process. However, the desire for fundamental changes remains high. If the new legal charter is approved by Chilean voters, it will be put into effect shortly after the vote through a formal ceremony. However, if Chile votes to reject, the 1980 Constitution written under Augusto Pinochet will remain in place. With just one opportunity to get the new constitution approved, the convention will attempt to generate a moderate bill that will stimulate consensus among the political left and right.

Our answer to question #4: NO

It is unlikely that all three of Taiwan’s Central American allies will switch recognition to China in 2022. But, considerations of international benefits, domestic political agency, or both may prompt a change in at least one of the countries. Internationally, US COVID-19 vaccine donations far outstripped those of China, sending a reassuring message to Taiwanese allies in the region.

But, Chinese vaccine diplomacy—including early, well-publicized vaccine sales and shipments—and broader medical, humanitarian, and economic assistance could still prove alluring for countries in need. Despite running with a pro-China message, Honduran President-elect Xiomara Castro recently declined to switch diplomatic recognition from Taiwan to China. Absent any external shocks, Belize, Guatemala, and Honduras will likely attempt to maintain the status quo for as long as possible, favoring Taiwan while leaving the door open for closer ties with China. This delicate balancing act has served to remind larger countries not to take their allegiances for granted and will continue to do so. But, it will be increasingly tested, as seen with Nicaragua, in the critical and uncertain year ahead.

Our answer to question #5: YES

There has yet to be an election in Colombia’s history in which a president is elected in the first round. Senator Gustavo Petro, who served as mayor of Bogotá (2012–2014), leads the left-wing political party Colombia Humana, and was the runner-up in the 2018 presidential election against incumbent President Ivan Duque. With nearly 42 percent of the vote, Petro has positioned himself as the candidate with the greatest support from Colombian voters.

However, Petro currently polls at 25.4 percent, which is not enough for an absolute majority that will grant him the presidency in the first round. Petro will most likely go to a second-round vote against a center-right or center-left candidate, potentially former Mayor of Bucaramanga Rodolfo Hernández or former Governor of Antioquia Sergio Fajardo. To date, Hernández polls at 11 percent and Fajardo at 7 percent. As recommended by the Atlantic Council’s US-Colombia Task Force, co-chaired by Senators Roy Blunt and Ben Cardin, strengthening the alliance between Colombia and the United States ahead of 2022 presidential elections is paramount to safeguard Colombia’s gains in terms of development, rule of law, and democracy. Regardless of election results, the United States should continue to position itself as Colombia’s strongest ally, advancing stability and prosperity at home and abroad.

Our answer to question #6: YES

Led by its five major economies, regional gross domestic product (GDP) is on track to return to pre-pandemic levels in 2022, though per-capita income will likely not recover until 2023. Key uncertainties may alter this outlook: the extent of success in vaccination and pandemic management, stimulus trade-off between continued support and fiscal discipline, labor markets (currently experiencing slower recovery than GDP), inflation, electoral outcomes, and external conditions including evolving investor appetite and commodity prices.

The region as a whole is not expected to return to pre-pandemic growth trajectories in the coming years, signaling permanent output losses due to COVID-19. In a divergent recovery, smaller and vulnerable states, such as those in the tourism-dependent Caribbean, are experiencing an even slower return to normal. Lastly, Latin America and the Caribbean (LAC) should set an ambitious agenda beyond “recovery”—given unimpressive pre-pandemic growth rates and patterns—and, rather, seek ways to accelerate development and build forward in a more inclusive, productive, and sustainable way.

Our answer to question #7: YES

It is likely that Mexico will remain the United States’ top trading partner throughout 2022. Mexico currently holds the top position—overtaking China in February 2021—with Canada in the second spot, lagging behind by $2.9 billion in total trade. COVID-19 significantly hindered US-Mexico trade—which largely relies on land trade via trucks and railcars—due to the pandemic-induced land-border closures to “non-essential” traffic. As of November 8, 2021, however, the United States reopened its borders to non-essential traffic and booming commerce is expected along the border. Moreover, US-Mexico trade topped $545 billion through October 2021 (the most recent data available), an increase of over 24 percent from one year earlier. Given the highly integrated nature of US-Mexico trade in the automotive and energy sectors, coupled with the efforts in border cities and ports to increase capacity and efficiency, trade is likely to continue to grow between the United States and Mexico.

Our answer to question #8: YES

Bitcoin presents an attractive option for countries in Latin America and the Caribbean, yet those countries will not replicate El Salvador’s approach. The government of El Salvador claimed that adopting Bitcoin would reduce financial exclusion and high remittance fees. These issues also affect the entire region. The World Bank predicted that remittances to Latin America and the Caribbean rose 21.6 percent in 2021, costing roughly $6.9 billion in remittance fees. According to the International Monetary Fund (IMF), financial inclusion in the region falls below global averages, and is exacerbated in the Caribbean due to the de-risking of correspondent banks. The worsening effects of climate change will also likely generate support for a decentralized virtual currency, as remittances typically increase following natural disasters, alongside decreased access to financial institutions.

Despite Bitcoin’s allure, its implementation in El Salvador has been marred by technological unreliability, weak financial regulations, and high price volatility. Politicians in Paraguay, Mexico, and Panama have already introduced legislation to regulate Bitcoin’s use as legal tender, and more will follow in 2022. As support for Bitcoin rises, so will debates on its social and environmental risks. Countries across the region will chart their own paths instead of following El Salvador’s playbook.

Our answer to question #9: YES

Although, the latest round of negotiations in Mexico has been suspended since October 2021, a combination of long-term incentives will likely propel Maduro to negotiate with the Venezuelan Unitary Platform—the umbrella organization encompassing the main political opposition parties in the country. Maduro seeks access to capital, legitimacy, guarantees against prosecution, and division within factions of domestic opponents—all of which he can accomplish through negotiations.

However, these factors are not the only ones at play in determining Maduro’s negotiation participation. After the highly visible diverging strategies within the opposition during the recent regional elections—and Julio Borges’ recent resignation and call for the interim government’s dissolution—Maduro might decide to simply wait out further erosion of opposition unity, instead of engaging with it directly. The success of such a strategy, if taken, would enhance the regime’s monopoly on power.

Our answer to question #10: Too early to call.

The odds are not in his favor, but it’s too early to say. Recent polls suggest that President Bolsonaro and former President Luiz Inacio Lula da Silva will face each other in a second round of elections, repeating the 2018 Bolsonaro versus Workers’ Party (PT) duel. However, this time around, former President Lula, as the PT candidate, is leading the way in early polling. Both candidates have a strong support base, but former President Lula’s history with corruption and President Bolsonaro’s mismanagement of the pandemic and current economic hurdles also give them significantly high rejection rates.

Third-way candidates, such as President Bolsonaro’s former minister of justice, Sergio Moro—famous for leading the Car Wash Operation that put President Lula in jail—is running on an anticorruption, center-right platform. Those Brazilians who in 2018 voted for President Bolsonaro as a “vote against corruption” might be more inclined to seek other alternatives. Current high inflation and unemployment rates might also play against President Bolsonaro’s reelection. Having said that, it will likely be a close race, and there is still a long way to go until elections in October 2022.

BONUS QUESTION ANSWER: YES

Brazil and Argentina are the only Latin American counties that have already qualified for the 2022 World Cup. In the Caribbean, Jamaica seems to be the only country with a chance of qualifying. While it is impossible to know who will be in the final (RIP Paul the Octopus), Brazil and Argentina are always strong contenders.

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On December 6, 2021, Microsoft reported that a Chinese hacking group, dubbed NICKEL, has been targeting large swaths the public and private sector across Latin America. Before Microsoft disrupted its operations, NICKEL had gained and maintained access to numerous targets of economic and traditional intelligence value. The cyber-espionage campaign demonstrates how outside powers have significant interests in Latin America and are keen to gain insights to support efforts such as the Belt and Road Initiative. 

While state-linked cyber campaigns are a threat to countries in Latin America, the most frequent and consequential threat to the region remains cybercrime. Financially motivated groups have not only targeted organizations across the continent, primarily with ransomware, but they have also broadened the scope of their operations and have a global reach. Latin American countries are beginning to do more to improve their cyber preparedness, as evidenced by Brazil’s publication of its first national cybersecurity strategy in 2020, but, by and large, their capacity and awareness remain insufficient to counter the panoply of cyber threats to the region.

We asked five experts to provide insights into the current state of cybersecurity in Latin America, how capacity and cooperation could be improved, and what the future holds for the region. 

#1 What targeted investments would go furthest in building cyber capacity across Latin America?

Belisario Contreras, cybersecurity and digital transformation expert; former cybersecurity program manager, Organization of American States (OAS):

“Although fifteen countries have adopted a national cybersecurity strategy, there is still much work pending in terms of cyber capacity. The region should follow the success models from, for example, Israel and South Korea, and further develop their cyber industries. This way, the academic and technical community will get more specialized on cyber issues, local businesses will increase their expertise, and governments will have the opportunity to hire and even export the services of local companies. If Latin America builds its cyber capacity, it could offer expanded skills and personnel capabilities to the United States and other developed countries currently in need of cybersecurity. This could also have a positive impact on social and economic issues.”

Alex Crowther, visiting research professor, Florida International University:

“A 2020 Inter-American Development Bank (IADB) and Organization of American States (OAS) study identified a lack of skilled human capital as a major inhibitor. The most effective investment would be to give people from Latin America and the Caribbean access to American schools and other training institutions to learn cybersecurity practices. Educational institutions in the region cannot keep up with demand, as is common around the world. As one successful example, Florida International University in Miami executes continuing education programs specifically designed for working hemispheric professionals taught by distance and in person in both English and Spanish. The second most effective investment would be for cybersecurity organizations to open branch offices in the region. This would provide public and private sector organizations access to professional cybersecurity capabilities and develop local cyber talent to work in the offices.”

Louise Marie Hurel, PhD researcher, Department of Media and Communications | London School of Economics and Political Science (LSE):

“From a policy standpoint, there is a need for cyber capacity-building efforts that can help bridge the gap between technical security experts, civil society, and policymakers. Our effort at Igarapé Institute has been to focus on multistakeholder risk mapping exercises to leverage existing sectorial knowledge about threats with policy recommendations that are rights-respecting and reflective of multistakeholder inputs. Non-state actors, especially civil society organizations, can and have played an important role in tracking developments in national policies. However, there is also a need for the private sector companies working in this field and governments to be more sensitive about how civil society is an integral part of the threat landscape. Human rights defenders should have the capacity to not only engage in the policy discussion but also to have the tools to better protect themselves – independently of whether they work or not on cybersecurity.”

Safa Shahwan Edwards, deputy director, Cyber Statecraft Initiative:

“Investments in education, training and apprenticeship programs would make the most difference in building capacity, closing the cyber skills gap and getting more folks into the cyber talent pipeline. This could be a gamechanger for the both the skills shortage as well as improving public awareness on cyber threats, as the region has been impacted by cybercrime and fraud during the pandemic.”

Carlos Solar, lecturer, Department of Sociology, University of Essex:

“Undoubtedly, more investments in human capital would go the furthest in building cyber capacity across Latin America. Governments should try to create opportunities that bridge education programs with job prospects, for example, encouraging graduates to launch new cybersecurity initiatives such as joint initiatives with public institutions at all levels of government. That would be ideal given the little interest to revamp decaying but data-heavy public bureaucracies. The region is young, entrepreneurial, and, most notably, it has competitive university courses. These must lead to real-world experiences building and managing cybersecurity capacity.”

#2 How are China and Russia shaping the cybersecurity landscape in Latin America?

Contreras: “China and Russia have an influence not only in Latin America but also around the world. China, for example, has been very active in providing loans, infrastructure, and connectivity. On the other side, we have seen Russia giving advice and training to various countries in Latin America. Nevertheless, countries such as Australia, Canada, New Zealand, the United States, the United Kingdom are involved, or becoming more involved, in the region. From a diplomatic point of view, Latin American countries are getting more involved in the discussions of both the First (Disarmament and International Security) and Third (Social, Humanitarian & Cultural) Committees of the United Nations, where both China and Russia have significant political interests. On the First Committee, these countries have been able to successfully influence the outcomes of the Open-Ended Working Group and the last UN Group of Governmental Experts (GGE). Regarding the Third Committee, there is a strong interest in developing a new cybercrime convention. The votes and positions of the Group of Latin America and Caribbean Countries will be of relevance during the negotiations, including those that have already signed or requested adhesion to the Budapest Convention, such as Brazil.”

Crowther: “China and Russia are operating in both government and private sector networks throughout the hemisphere. Realizing this has forced some countries in the region to update their capabilities. Ironically, Chinese and Russian support for Venezuela has really motivated Colombia to develop a significant capability.”

Hurel: “There is a considerable amount of focus, particularly in the United States, United Kingdom, and Europe, on state-sponsored cyber operations from China and Russia. However, most concerns across the region focus on cybercrime, with recent attacks directed against financial institutions. That was the case of REvil ransomware attacks directed against Mexican and Chilean banks earlier this year. There are some advanced persistent threat (APT) groups that operate in the region, targeting specific non-profit organizations or governments, but they are not necessarily state-sponsored attacks from Russia or China. Some examples of these APTs include Spanish-speaking groups such as El Machete and Careto, as well as APT-C-36, FIN11. However, China is a big trade partner with many countries in Latin America and could use cyber capabilities to pressure negotiations. Threat intelligence companies have already reported signs of that kind of activity.”

Shahwan Edwards: “China has engaged in significant trade with countries in Latin America, as well as invested in regional infrastructure—often focused on ports, roads, energy and more. Russia’s engagement in the region is not new and has historically focused on developing relationships with governments that share a taste for leftist policies and populism—Cuba, Venezuela and Bolivia, just to name a few. Nowadays, one can see Russia developing relationships through arms sales and energy investments to maintain its presence in the Western Hemisphere.”

Solar: “Beijing and Moscow meet different needs in the region. China, on the one hand, has become the largest trading partner to many countries in Latin America. This means that technologies and services “made in China” are taking a larger piece of the information and communications technology (ICT) market, from mobile communications to new 5G networks. Russia, on the other hand, has been shown to collaborate with like-minded countries through military-to-military diplomacy. Both countries present a challenge to Washington’s plans for cybersecurity hegemony in the region.”

#3 What level of involvement should the US government have in cybersecurity and cyber conflict in Latin America? Are there countries to prioritize from a cybersecurity standpoint?

Contreras: “Considering the cultural, social, and economic ties between the United States and Latin America, there is a need for the United States to increase its involvement in cyber issues, particularly at the bilateral level. Institutions such as the Cybersecurity and Infrastructure Security Agency, the State Department, the United States Agency for International Development, the Department of Defense, and the National Security Agency, among others, should expand cooperation both at the policy and technical levels to increase cyber information sharing, provide training, and strengthen their relationships with their counterparts in the region. Although, in theory, cyber is a borderless concern and all countries should have equal importance, the United States could prioritize cooperation with countries with geopolitical and trade interests such as Argentina, Brazil, Chile, Colombia, Mexico, and Panama. In parallel, the United States could continue expanding its regional involvement through multilateral and technical mechanisms. Any new agreement signed with the region should include safeguards intended to increase cyber cooperation.”

Crowther: “The United States can help best by assisting Latin American and Caribbean allies and partners in building their cyber capacity. The Departments of Defense, Homeland Security, and Justice already work with partners in the region. More funding for these efforts will continue to improve their governmental cybersecurity but not private sector cybersecurity. The National Institute of Standards and Technology (NIST) Framework has already helped out and is perhaps the most popular framework at use throughout the hemisphere. Diplomatic outreach could also help, as allies and partners in the region can also support the global coalition of the willing in support of internet freedom. For instance, Costa Rica is a member of the Freedom Online Coalition and participated in the UN GGE meeting designed to achieve international cyber norms.”

Hurel: “There are certainly many lessons that can be shared between the United States and Latin America—especially in terms of institutional cyber capacity building, incident response coordination, and cybersecurity awareness campaigns. The United States has already been pushing for different bilateral agreements with countries across the region on cyber defense. Venezuela is perhaps one of the greatest points of tension in US-Latin America relations when it comes to cybersecurity—having recently attributed more than one attack directed against their critical infrastructure to the United States. While cooperation on cyber capacity building is welcome, countries might also be reluctant to engage if the United States takes a more interventionist approach to combat cyber conflicts.”

Shahwan Edwards: “The United States should be an active partner with Latin American states and focus its attentions on cyber diplomacy—more specifically, capacity building. There is an opportunity to be a good neighbor and continue to support regional partners to navigate cyber challenges and help establish national Computer Emergency Response Teams (CERTs). There is also an opportunity for the United States to share best practices and lessons learned to increase connectivity between private industry and government, especially as governments continue to hone their cyber statecraft.”

Solar: “Washington has already initiated a cybersecurity governance relationship with partners in the Americas. Former Secretary of Defense Jim Mattis travelled to the subcontinent and signed cybersecurity agreements with Argentina, Chile, and Brazil. These agreements have led to ongoing bilateral exchanges at the ministerial level with representatives from defense, foreign relations, telecommunications, and other government areas involved in building micro and macro policies towards cybersecurity. Military-to-military diplomacy for cybersecurity is a trend that Washington wants to expand further and counterbalance Beijing and Moscow. It is highly political and dependent on who is in the White House.”

More from the Cyber Statecraft Initiative:

The 5×5—The state of cybersecurity in the Middle East

Collective cybersecurity for the Three Seas

The 5×5—Cyber capacity and conflict in Africa

#4 What non-state and/or private actor(s)are the most influential on the cybersecurity of Latin America now? Who will befive yearsfrom nowand why?

Contreras: “Companies such as Amazon, Google, Meta, and Microsoft, are investing in policy development efforts, influencing the political dialogue, and ensuring that their interests are taken into consideration. In the upcoming years, other organizations will follow the same approach, particularly those interested in data protection issues. Organized criminal groups and non-state actors, particularly in countries such as Brazil, Colombia, and Mexico, are starting to shift the way they operate and invest in cyber-criminal operations, which is something that I predict will continue to increase over the next five years.”

Crowther: “The most influential non-state and/or private sector cyber actors in the Western Hemisphere are transnational criminal organizations that are expanding horizontally into cybercrime because it works and is lucrative. Large multinational companies and selected indigenous companies have a certain level of cybersecurity capability. Within five years, the situation will probably be about the same. Short of major investment in the area (which will remain depressed due to the ongoing global pandemic), there will not be any gains in cybersecurity that are not matched by transnational criminal organizations or global cyber actors that commit crimes, such as North Korea, which will both have more resources available than most actors in the Western Hemisphere.”

Shahwan Edwards: “Broadly, private industry is the most influential actor in Latin America at this moment. For starters, private industry is where much of the capacity—and vulnerabilities—lie. Additionally, Latin America’s information technology industry has demonstrated significant growth in recent years and there’s an opportunity for the region to become a resource for nearshore talent.”

Solar: “I believe the usual suspects in the private market will hold their lead in providing both ICT and cybersecurity services. Established software and hardware companies such as IBM and Microsoft are very trusted actors across many businesses and government networks. Nonetheless, I would keep an eye on the accelerated entry of Huawei into the ICT market. Governments find in the Chinese conglomerate a partner ready to invest and create new job opportunities. Cybersecurity in the region is largely connected to development initiatives that go beyond safe access to the Internet.”

#5 Which Latin American countries punch above their weight in cybersecurity?

Contreras: “Although there is still much pending to do, countries such as Brazil, Colombia, Chile, and Mexico have taken the lead in developing their institutional capacities, including the development of laws, policies, and regulations. In addition, there is increased expertise in the private sector, primarily in the financial sector. Nevertheless, countries such as Argentina, Dominican Republic, Ecuador, Panama, and Peru, among others, are also making significant efforts to advance their cyber capabilities.”

Crowther: “According to the cyber maturity model used in the IADB/OAS study, Uruguay has the best score, followed by Chile, Colombia and the Dominican Republic. The second tier is comprised of Argentina, Brazil, Costa Rica, and Mexico. Trinidad and Tobago also scored well. In terms of cyber power (not cybersecurity) Brazil, Chile, Colombia, and Mexico are in the top tier. Brazil experienced both a World Cup and an Olympics, Colombia is under regular cyber assault from adversaries, and the Chilean national bank was abused by North Korean hackers, and Mexico deals with sophisticated transnational criminal organizations. They also have larger economies and populations, which allow them to invest more in cyber training and education.”

Hurel: “Countries in Latin America have been continuously working to enhance cybersecurity, even though sometimes through piecemeal or fragmented approaches. Cybercrime usually ranks higher in terms of capacities than other areas given that many organized crime networks and gangs have increasingly sought to professionalize their activities online. This has led to a focus on capacity development in police forces in Brazil, Colombia, Argentina, among others. Despite political and economic instability in recent years, there has been a rise in the elaboration of national cybersecurity strategies with countries like Colombia publishing more than one version. Brazil on the other hand only published its first national cybersecurity strategy in early 2020 but has since followed with the development of specific strategies, such as its latest one on critical infrastructure protection and artificial intelligence.”

Shahwan Edwards: “Mexico. While Mexico has become a popular target for cybercrime and fraud as connectivity increases, the Mexican government is taking note and reevaluating its approach to cybersecurity and the need for increased collaboration amidst digital transformation. In the Global Cybersecurity Index, Mexico is ranked at fifty-two but is fourth within the Americas, trailing the United States, Canada, and Brazil. One can interpret this as an opportunity for improvement in the development of cyber strategy, policies, and national structures.”

Solar: “It is hard to evaluate countries given their different approaches to cybersecurity. Some have decided to leave cybersecurity to private companies. Others have centralized cybersecurity on government agencies and the military. According to the OAS cybersecurity observatory, most Latin American states are in the early stages of cybersecurity development. For example, there is still a lot to do in Central America and the Caribbean. A small list of countries with already set policies, legal frameworks, institutional capacity, and human capital resources includes Brazil, Uruguay, Colombia, and Chile.”

Simon Handler is a fellow at the Atlantic Council’s Cyber Statecraft Initiative within the Scowcroft Center for Strategy and Security. He is also the editor-in-chief of The 5×5, a series on trends and themes in cyber policy. Follow him on Twitter @SimonPHandler.

The Atlantic Council’s Cyber Statecraft Initiative, under the Digital Forensic Research Lab (DFRLab), works at the nexus of geopolitics and cybersecurity to craft strategies to help shape the conduct of statecraft and to better inform and secure users of technology.

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The United States has humanitarian, economic, and national security interests in stabilizing these economies and helping them achieve both energy and climate security. The most effective way to advance these interests would be to revitalize the Obama-era Caribbean Energy Security Initiative (CESI).

CESI was led by then-Vice President Biden beginning in 2014, a priority sustained by the Trump administration which included the Caribbean in its signature America Crece program, which was designed to spur infrastructure investment throughout Latin America. A CESI “2.0” could represent the strongest virtues of these recent efforts, but in a form tailored to address the region’s most pressing challenges today.

A CESI 2.0 would incorporate lessons learned about how to advance the energy transition in developing and emerging economies, insulate island states against commodity price volatility, and leverage the recent COP26 commitments by financial and development institutions to support sustainable development finance, such as those committed by the Glasgow Financial Alliance for Net Zero (GFANZ). We learned from the original CESI that success is achieved by partnering with those nations which have the political will to reform their energy systems, providing them with hands-on capacity to redesign their energy frameworks, encouraging them to adopt modern system designs, and assisting them in securing financing support.

Much progress has taken place in the Caribbean energy governance and capacity building in the past seven years, as the Caribbean Community and Common Market (CARICOM), and many regional governments, have established renewable energy goals. Other established fora like the Caribbean Renewable Energy Forum (CREF) and roadmaps like the Caribbean Sustainable Energy Roadmap and Strategy (C-SERMS) are intended to support transition efforts. The Dominican Republic and Jamaica, for example, have made significant advancement on decarbonizing their power grids by substituting fuel oil with natural gas, as well as adopting new renewable energy systems. Indeed, throughout the region, the business case for renewables remains strong as fuel and power prices remain well above those in the United States.

But many countries in the region are challenged by established incumbents in the energy sector, policymakers’ fear of increasing consumer prices, and a lack of technical capacity to implement broad reforms. Changes to the energy system tend to be driven by individual projects (for example, a utility-scale power generation plant) in a piecemeal fashion, which is not a scalable way to change a singular country’s energy economy, let alone that of a region. The middle-income status of the region has been a serious impediment to securing development finance; all but Haiti are ineligible for US International Development Finance Corporation (DFC) support. Yet China’s Belt and Road Initiative has already reached Jamaica and other nations. A core weakness of the proliferation of governmental, multilateral, and nongovernmental institutions focused on Caribbean development is that there is no single external leader (neither the US nor a Caribbean nation) who can call a meeting, drive change, and muster the diplomacy required to effectively pull all the financial and political players together.

During the global pandemic, the need for reform in this region has only grown. The climate risk is becoming more severe, with hurricanes, extreme weather events, and sea level rise making resilience a top-tier issue. New, decentralized approaches to crafting a sustainable future energy system are required. 

But opportunity has grown as well. The numerous private sector and philanthropic financial sector pledges publicized at COP26 affirm that there is ample climate finance available for projects, even small ones. Declines in the cost of wind and solar, advancements in battery technology, and development of mini grids make renewable energy solutions more viable and resilient for more economies than ever before.

The keys to a refreshed CESI are to produce country-rooted, country-supported and scalable project investment mechanisms that can attract the enormous amounts of capital now earmarked for renewable energy projects. A new style of development assistance is required, with technically capable specialists embedded with governments to rapidly craft investment programs. In the Caribbean, putting available funds to use will require a concerted effort to develop a basic, broadly applicable framework for the region and then identify willing governments. Ideally, these governments would be able and willing to move on a fast-track, energy sector-wide approach to attract the newly available climate investment funds in the next two years. The old system of trying to slowly build capacity, or hand-hold project developers, or persuading governments to reform electricity laws, is too slow and limited.

Once a basic system is developed and viable opportunities are identified, members must graft newer and quicker governmental, intergovernmental, legal, regulatory and investment frameworks onto existing energy governance systems. Such frameworks could take the form of recognized transparent renewable energy auction systems, with provisions (like third country arbitration, guaranteed transmission access, and predictable tariffs) that can quickly attract financing and allow generation to rapidly scale up.

Argentina’s renowned RenovAr program is one recent example of such a strategy succeeding, as it managed to attract around $7 billion in new investment in little more than two years in a country which also had weak credit and high investment risks. According to Greenmap, which helped to design the RenovAr program, success in Argentina was made possible by a uniquely designed risk guarantee program facilitated by the World Bank as well as multi-layered financial de-risking mechanisms. A similar proposal could work, albeit at smaller scales, in the Caribbean; a national auction inviting investors to build a network of electric vehicle charging stations, for example, might benefit from multilateral development bank de-risking or first-loss guarantee mechanisms which could convince a private investor to take a chance on investing in a small island nation long dependent on imported gasoline.

After COP26, the United States needs to show that it is serious about mobilizing support for island states and move from aspiration to implementation. It can demonstrate this leadership by appointing a senior diplomat to lead CESI 2.0, following the model of the Caspian Basin Energy Diplomacy (CBED) Envoys from the 1990s and 2000s to secure country buy-in, work with available capacity partners, and organize country platforms of appropriate private and public financial institutions (such as the Inter-American Development Bank). Such a program would be able to muster all the relevant programs of the US government (such as the US Trade and Development Agency) to deliver on country strategies and rally private sector support for the region. By doing so, a CESI 2.0 can build significantly upon the original CESI by using greater scale and economy-wide approaches that can most readily access the post-COP trove of new climate finance.

David L. Goldwyn served as Special Envoy for International Energy under President Obama and Assistant Secretary of Energy for International Relations under President Clinton. He is chair of the Atlantic Council Energy Advisory Group and a nonresident senior fellow at both the Global Energy Center and the Adrienne Arsht Latin America Center.

David is a co-author of “Uncertain Energy: The Caribbean’s Gamble with Venezuela,” Atlantic Council Adrienne Arsht Latin America Center (2014) and “The Waning of Petrocaribe? Central America and Caribbean Energy in Transition,” Atlantic Council Adrienne Arsht Latin America Center (2016).

EnergySource

EnergySource is the Global Energy Center’s (GEC) online publication providing commentary and analysis on developments in the energy and climate sector from a wide-array of thought leaders, politicians, and experts.

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David L. Goldwyn

Nonresident Senior Fellow

Adrienne Arsht Latin America Center Global Energy Center

Caribbean Climate Change & Climate Action

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Now the Caribbean country faces a one-two punch: political volatility and another human tragedy. This is why sustained US and international support is urgently needed.

History unfortunately has a way of repeating itself in Haiti. In less than twenty-four hours, Saturday’s earthquake, striking just forty-five miles from the epicenter of the 2010 temblor, had already led to five aftershocks registering above 5.0 magnitude. Reports are still coming in on the devastation and lives lost, with the count rising to nearly 1,300 on Sunday. Although the earthquake didn’t appear to cause as much damage as the 2010 quake, it did strike nearly two miles closer to the surface, meaning buildings and other structures were rattled even more severely.

What followed the 2010 earthquake was a quick US reaction with then-Vice President Joe Biden pledging ongoing, long-term US focus on Haiti’s recovery. Then-Secretary of State Hillary Clinton’s prompt visit to assess the devastation was also an important signal. More than $13 billion in donations would flow into Haiti over the ensuing years.

These new earthquakes will likely also require massive US help in the recovery and rebuilding. President Biden has already designated USAID Administrator Samantha Power to coordinate the response. But the world must learn from the mistakes of the past: funding failing to reach Haiti, subpar coordination with the Haitian people, and a relief effort that generated dependence on the international relief community.

The coordination of recovery efforts may prove even more complex today than in 2010. Thanks to the chaos that ensured following the July presidential assassination—the first in Latin America and the Caribbean in sixty years—Haiti has already been on the world’s radar. Prime Minister Ariel Henry, the second leader since Moïse’s killing, is tasked with governing until the country can hold elections. Just days ago, presidential elections were postponed until November 7. Not only will the earthquake likely further delay voting, but it will test the ability of an unelected interim leader to rally the Haitian people and coordinate a massive Haitian response that will require substantial international assistance. 

Prior to the earthquake, and even before Moïse’s assassination, kidnappings and violence were on the rise due to increased gang activity. Given the widespread unemployment and poverty that will likely result from Saturday’s event, gangs will have the opportunity to both increase their membership as well as reach. These groups have established some form of legitimacy among the population in Haiti, which means that a limited or poor response from the government and international actors could sway Haitians toward illicit organizations that are able to fill the vacuum and provide access to public goods and services. 

For others, migration will be their best option. On their own, natural disasters and violence fuel displacement and migration. The combination of the two will amplify this risk, almost ensuring that Haitian migrants will begin to head to the Americas—including to US shores. Following Moïse’s assassination, Haitian migrants were already showing up across the Caribbean and as far away as Mexico and Guatemala.

The United States should seek ways to accommodate such refugees. The Biden administration has extended temporary protected status to 100,000 Haitians, allaying their fears of deportation. This will likely need to be extended as more Haitians migrate to US shores. Providing this and other accommodations as legal avenues could preemptively curb forthcoming unauthorized migration. 

Providing aid packages should also be a priority—but this must look different from the 2010 aftermath. This time around, aid should be focused on recovery and capacity-building that emboldens the Haitian people and their leaders to oversee the process themselves. Although a political vacuum in Haiti still exists, aid and donor backing is likely to further legitimize Henry in the eyes of the international community and potentially with his Haitian constituents. 

For Haitians to lead this process, the international community will need to use the tools at its disposal to put them in positions to implement the changes needed in Haiti. At the moment, Haiti lacks the institutions to handle the country’s complex challenges. Multiple crises require coordination and communication among all relevant international actors and the Haitian people. The United States, the United Nations, and NGOs invested in the country will need to address the on-the-ground situation by providing support to survivors and assisting Haitian security forces in their effort to combat gangs. 

Groups like the Caribbean Community (CARICOM), the Organization of American States, and the Pan-American Health Organization should also work alongside the United States to think in the medium term. This means preparing the country for elections and how to address the ongoing COVID-19 pandemic. CARICOM and the US-based Haitian diaspora are in the best position to advocate for the Haitian people and Haitian-led solutions both in the United States and globally.

The situation in Haiti is complex and will need an all-hands-on-deck approach from its partners across the world. A worst-case scenario may be upon us—but even amid the devastation of the past few months, the Haitian people have proven themselves to be resilient. The long road to recovery begins now, and with it comes renewed opportunity to build back stronger.

Jason Marczak is director of the Atlantic Council’s Adrienne Arsht Latin America Center. Follow him on Twitter at @jmarczak.

Wazim Mowla is assistant director for the Caribbean Initiative at the Adrienne Arsht Latin America Center. Follow him on Twitter at @WMowla.

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Prior to the protests, Cuba’s economy was in severe decline. The economy contracted by 11 percent due to the pandemic, as tourism, a main source of revenue, came to a halt. The struggling economy, on top of persistent economic mismanagement by the Cuban authorities, contributed to widespread food and medicine shortages. All this occurred as the Cuban government grappled with addressing COVID-19 infections while simultaneously using its meager resources to develop its own vaccine. The effects of the pandemic exacerbated the already-growing calls by the Cuban people for economic and political reforms on the island. The result was that Cubans—in particular Afro-Cubans, who suffer from structural racism—had almost no access to basic public goods and social services.

Fast-forward to today: A month after the massive demonstrations began, more than five hundred people are still detained for their roles in the protests—with more Cubans under constant threat that they could be next. Although the headline-grabbing activity in the streets has subsided, the people’s demands persist. Cuban President Miguel Díaz-Canel, who became the coveted head of the Communist Party in April, is using the same repressive tactics as his Castro predecessors. Reports from the Miami Herald have indicated that many of the detained protesters are being held in a maximum-security prison, with family members unable to reach them.

The protesters have the backing of many Cubans—both on the island and in South Florida—which has spurred a tough, new resolve from the US government. After the protests, the Biden administration quickly moved to impose sanctions again those responsible for recent crackdowns. In addition, Biden’s team is assessing new ways to extend internet access across the island, aiming to increase staff at the US embassy in Havana, and exploring methods to allow remittances to flow to the country without lining the pockets of the Cuban government. These efforts by the Biden administration appear directed toward increasing pressure on the Cuban government to accelerate long-overdue private-sector reforms and an eventual push for a democratic transition.

US policy toward Cuba has implications beyond the two nations. Countries in the region, where US-Cuba policy has long been a divisive topic, are playing close attention to the American response to the protests. Many Caribbean and Latin American governments regularly criticize the US trade embargo and are supportive of Cuba, while others raise concerns about the island’s approach to human rights. This division plays out in multilateral forums like the United Nations, where in June the United States and Israel were again the only two countries to vote against a resolution calling for an end to the embargo. At a regional level, the chair of the Organization of American States Permanent Council recently had to postpone a meeting about the situation in Cuba after several participating countries objected because Cuba has long refused to join the group so such a meeting “would serve no useful purpose.”

Meanwhile, the United States will increasingly have to contend with Cuba’s problems arriving on its own shores. As conditions on the island deteriorate, with Cuba now the worst COVID-19 hot spot in the Americas, more Cubans are likely to come to US borders. Reports are already pointing to an uptick in Cubans risking their lives on boats to reach Florida or traveling to Central America to make their way to the southwestern US border.

US resolve to stand with the Cuban protesters, which the Biden administration has already demonstrated, must remain strong long after the news cycle moves on; America’s political divisions and attempts to score political points on Cuba policy must not come at the cost of the Cuban people. The protesters will be further emboldened by continued US shows of support—from targeted sanctions to efforts to increase internet access—and Díaz-Canel will slowly run out of options as a result. That, in turn, might move him to loosen economic restrictions, which would empower people when the government cannot satisfy their basic needs—an important step toward greater political freedoms.

The Cuban people are hungry and sick, and violent repression will not fill stomachs. Detentions will not slow the spread of the pandemic. That’s why the frustration and exasperation expressed through these protests should scare the Cuban authorities. It’s one thing to repress calls for liberty and freedom, but it’s another to repress them alongside a call for basic survival.

Change will not happen overnight. But strong US backing for Cuba’s protesters can make a real difference as the country enters a new period of uncertainty—an uncertainty that could force the hands of the Cuban authorities.

Jason Marczak is the director of the Adrienne Arsht Latin America Center. Follow him on Twitter at @jmarczak.

Wazim Mowla is the assistant director for the Caribbean Initiative at the Adrienne Arsht Latin America Center. Follow him on Twitter at @WMowla.

Further reading

Issue briefs and reports May 12, 2021

COVID-19 vaccine tracker: Latin America and the Caribbean

Our interactive maps track the percentage of the population of each Latin American and Caribbean country covered by current vaccine agreements; the total number of doses secured by each country and breakdown by supplier/vaccine; where each vaccine is being used across the region; and how many vaccines flow from each major producing country to regional destinations.

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As the world economy shuts down to try to contain the COVID-19 outbreak, the humanitarian collateral effects of sanctions become more pronounced and potentially deadly. But the argument that the United States should unilaterally roll back sanctions draws a false dichotomy; sanctions do not have to be suspended or rolled back for the United States to better address humanitarian concerns.

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On July 12, 2021, Parsifal D’Sola published an article for the Andrés Bello Foundation, “China makes the best of the pandemic in Latin America and the Caribbean.” The piece analyzes how “China’s proactive approach towards the region amid the pandemic appears to have improved China’s image and how it is perceived in the region.”

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On July 9, Foreign Policy published a biweekly column featuring Scowcroft Center deputy director Matthew Kroenig and New American Engagement Initiative senior fellow Emma Ashford discussing the latest news in international affairs.

In this column, they debated the future of Chinese nuclear posture and utilization, the Sino-Russian relationship, US-China economic decoupling, and prospects for US action in Haiti in the wake of President Jovenel Moïse’s assassination.

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The post Marczak quoted in Foreign Policy on the assassination of Haitian President Jovenel Moïse appeared first on Atlantic Council.

It’s a shock to a reeling nation. Haitian President Jovenel Moïse was killed in his home by a group of assailants early Wednesday, with the first lady also seriously injured. The murder leaves a power vacuum atop a country battling rampant crime and COVID-19—with no obvious succession plan in place. What’s going on in Haiti and how will it reverberate across the region? Our experts break down what we know and don’t know.

• Jason Marczak (@jmarczak): Director of the Adrienne Arsht Latin America Center

• Wazim Mowla (@wmowla): Assistant director of the Caribbean Initiative at the Adrienne Arsht Latin America Center

The Moïse file

• Hours after Moïse’s assassination, the picture of what happened remains “murky,” Jason says. “Reports indicate that the assailants were well-organized and precise with their planning and how they carried out the attack, including the use of sophisticated weaponry.”

• In office since 2017, Moïse has faced persistent criticism over how he’s governed Haiti—including the accusation that his term already expired, though he’s remained in charge. He’s also pushed for constitutional reforms to strengthen the presidency. “Moïse will likely be remembered as part of a long line of Haitian leaders who struggled to bring economic development and democracy to the country,” Wazim says.

• The chronically unstable nation was in a fraught position even before the assassination. In addition to the pandemic fallout—with cases rising and the country unable to procure any vaccines—Jason points out that “in the first four months of the year, kidnappings rose 36 percent and homicides 17 percent.” Plus, hurricane season is just beginning, and Haiti is often in the path of major Caribbean storms.

• Given all these mounting problems, Jason calls this morning’s attack Haiti’s “worst-case scenario.”

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A new refugee crisis?

• Part of the problem is that the country lacks a succession plan: Acting Prime Minister Claude Joseph, who announced Moïse’s death, “has been making statements on behalf of the government today, including declaring a ‘state of siege,’” Jason notes. But “questions remain as to the order of succession given vacant posts currently in the Haitian government.” For example, Moïse selected a new prime minister, Ariel Henry, but Henry has not yet been sworn in. And the head of the country’s highest court just died of COVID-19.

• Many Haitians may respond by attempting to leave the country. Wazim points to reports that 13,000 people have already fled Haiti due to gang violence since June 1. “More instability can have spillover effects throughout the region, including leading to increased migration across the Caribbean and to US shores,” Wazim tells us. “The situation is likely to worsen, so the Biden administration and Caribbean leaders should start today to prepare to welcome refugees.”

Will the world step up?

• Haiti’s crisis requires a broad international response, Wazim says. He notes that the Organization of American States (OAS) “has tried to take the lead in recent months” including a three-day visit to Haiti last month with the aim of fostering free and fair elections.

• But Wazim wants to see more from the Caribbean Community (CARICOM). “The regional body, of which Haiti is a member, can be the most effective and influential actor going forward,” he argues. “Overall, there needs to be a combined and coordinated effort by the OAS, CARICOM, the US, and the UN.”

• What can all these groups provide? “The country still needs vaccines, it needs to rebuild democratic institutions, and it needs a lifeline for its economic growth,” Jason tells us. “If not, lawlessness will continue to fill the vacuum that has been created.”

• But Wazim cautions that international actors need to work closely with people on the ground in order to make a lasting difference: “It will be about guidance rather than giving orders to Haiti.”

The post FAST THINKING: Why the Moïse assassination is Haiti’s worst-case scenario appeared first on Atlantic Council.

While the COVID-19 pandemic has created challenges across the world, it is having a disproportionate impact on countries in our hemisphere. Just over a month ago, the death toll in the Latin America and the Caribbean (LAC) region passed one million—the region, as of that moment, had the highest per capita death rate in the world. In May, although home to just over 8 percent of the world’s population, the LAC region suffered 31 percent of its COVID-19 casualties. US vaccine assistance has prioritized our hemisphere on balance with other parts of the world. But this policy brief makes the case that even greater assistance is needed for the Americas with a laser focus on the particular support required by our Caribbean neighbors.

The challenges facing members of the Caribbean Community (CARICOM) are often underreported even as some, such as Trinidad and Tobago, Guyana, Suriname, and Saint Kitts and Nevis, have had higher COVID-19 infections per 100,000 people than almost anywhere in the world, including other hot spots, like India. At the same time, CARICOM members have struggled to acquire vaccines, instead relying on actors such as China, Russia, India, and the African Union.

As the United States makes more vaccines available, greater CARICOM vaccine assistance would serve both Caribbean and US domestic and geopolitical interests. Vaccine donations to the Caribbean are critical to build on the United States’ historic friendship with its CARICOM partners. Vaccines are integral not just to the health of the Caribbean but also, given the close personal linkages, to US health. And since the Caribbean is intrinsically linked to the United States, to help them is to help ourselves.

This policy brief, which takes into account conversations we had with key stakeholders at a private roundtable in May, highlights the health, economic, and strategic reasons for greater vaccine access for CARICOM members. This brief and the events that preceded it, including our broader work raising awareness of how the United States can support the LAC region at this historic time of great need, goes to the heart of our mission at the Adrienne Arsht Latin America Center: to elevate and advance the importance of the LAC region in the world community and to build even stronger US ties with the region.

It is for this reason that we established the center’s Caribbean Initiative earlier this year. We aim to raise Caribbean priorities across the globe, with a particular focus on strengthening the US-Caribbean partnership. We understand that the challenges of our time are hemispheric and sometimes global in scope. But all too often, when we think about hemispheric solutions, CARICOM member states are the missing, overlooked piece of the puzzle. With this policy brief, we are shining a spotlight on the Caribbean’s vaccine needs and the linkages with US domestic interests. We are elevating this critical issue to save lives and livelihoods. This is why I am pleased that this is the first publication of our new Caribbean Initiative.

Jason Marczak
Director, Adrienne Arsht Latin America Center
Atlantic Council

Even as the United States rebounds from the COVID-19 pandemic, its Caribbean neighbors are at a critical and worsening moment. Rising infections due to new variants of the virus and limited access to vaccines have elongated the already devasting effects of the pandemic.

COVID-19 will continue to claim lives, stifle economic recovery, and lead to greater security challenges in the Caribbean for the foreseeable future. Ties between the United States and Caribbean nations mean that continued pandemic surges in the Caribbean are likely to affect US national security, the health of US citizens, the United States and specifically Florida’s economic recovery, and US foreign policy priorities. What happens in the Caribbean is unlikely to stay in the Caribbean. That is why US strategic interests and broader hemispheric security and prosperity depend on the United States further assisting its Caribbean partners in their efforts to secure COVID-19 vaccines.

While the COVID-19 pandemic has affected much of the world, it has had a disproportionate impact on members of the Caribbean Community (CARICOM)—a fifteen-member regional group that consists of Small Island Developing States (SIDS) who make up more than one-third of the Western Hemisphere’s states.¹ Small size, limited resources, and tourism-dependent economies have resulted in stunted growth and an inability of Caribbean nations to acquire the requisite COVID-19 vaccines. 

The United States and the Caribbean region have historically enjoyed close ties based on shared interests and values, making the two part of a mutually beneficial partnership. The US-Caribbean relationship is tied by a number of factors, including geography, with Caribbean states in close proximity to the United States, leading US officials to describe the region as a “third border.”² When global and regional events, such as the COVID-19 pandemic, economic recessions, or natural disasters reach the United States or the Caribbean, neither is spared from the consequences. 

This overarching relationship is one reason why it is imperative that the Biden administration support the Caribbean region’s states in their efforts to acquire COVID-19 vaccines. Another reason more vaccines should be made available to the Caribbean, while simultaneously accelerating the prioritization of distribution to the broader hemisphere, is the need to protect the livelihoods of the American people.

The Caribbean economies, especially those that are tourism-dependent, are connected to the tourism economies of cities in southeastern United States, such as Miami and Orlando. This means that recovery for these economies in the United States might not reach pre-pandemic levels if a key source of growth—Caribbean nations—are unable to reopen their borders and accelerate economic recovery. In addition, as COVID-19 virus variants materialize and are transmitted throughout the region, US populations can be put at risk since the Caribbean is a popular destination for US tourists.

Beyond domestic considerations, geopolitical and security implications are also at play if the United States does not step up its vaccine support for the Caribbean nations. Since the onset of the pandemic, medical diplomacy has increased globally. Caribbean countries have been beneficiaries of this diplomacy, first with donations of personal protective equipment (PPE) and medical personnel and now with donations and purchasing agreements for COVID-19 vaccines. China, India, Cuba, Russia, and the African Union (AU) have all supplied medical equipment and/or vaccines to the region and have used these donations to build goodwill with Caribbean governments and people.

On the security front, cash-strapped Caribbean governments, unable to provide public goods and access to social services amid rising rates of poverty and unemployment, can present challenges for the Caribbean and, by extension, the United States. For instance, rising poverty and unemployment benefits the membership of gangs and organized crime. Fiscal challenges can also contribute to social unrest and questioning of government legitimacy. Criminal groups that operate in the Caribbean are transnational in scope, particularly due to the porous borders of the states in the region, meaning that illicit activities can impact US national security. The instability that arises from the pandemic’s consequences can also increase legal and illegal flows of migrants to the United States.

The announcement by the Biden administration that it will deliver vaccines to CARICOM nations via the COVID-19 Vaccines Global Access (COVAX) Facility is a welcome initiative,³ but it is one that barely scratches the surface. Although there was an additional announcement of 500 million vaccine donations,⁴ the Caribbean, with interests balanced alongside those of other hemispheric countries, must remain top in line to receive vaccines immediately through bilateral channels. At the same time, the United States should donate equipment that will help with the dissemination of vaccines, such as ultra-cold temperature vaccine freezers and medical equipment. Further, the United States should help Caribbean nations in their efforts to purchase vaccines from US manufacturers and, when vaccines are delivered, organize a media campaign in the region to build and strengthen goodwill among Caribbean citizens. 

The ideas presented in this issue brief are part of the Caribbean Initiative’s Strategy Document Series and a larger effort to inform and publicize the strategic importance for the United States of helping CARICOM members acquire vaccines. Many of the ideas presented here are the result of a private roundtable with US and Caribbean experts (see Acknowledgements section) from the private sector, public sector, academia, government, and regional and multilateral institutions, all of whom came together to discuss why the United States should help the Caribbean region in its efforts to secure vaccines. 

Although the COVID-19 pandemic has affected much of the world, it is having a disproportionate impact on the Caribbean region, in particular, CARICOM member states. Rising infections have forced states to close borders and governments to inject monetary resources to curb the pandemic’s consequences. For CARICOM, the pandemic has been particularly devasting. The open economies in the Caribbean are highly dependent on tourism, vulnerable to global economic shocks, have incurred large amounts of debt, and many do not qualify for concessional financing from international financial institutions. A combination of these vulnerabilities has made the Caribbean one of the most at-risk regions in the world.⁵

A worsening economic crisis

In 2020, most Caribbean countries were forced to close their borders to curb the spread of COVID-19 infections, resulting in a halt in economic activity for key sectors, such as tourism and trade. This led to an economic contraction of an estimated 8.6 percent for the entire region (an estimated 12.6 percent excluding Guyana).⁶ The reduction in tourism resulted in heightened unemployment, further damaging the livelihoods of Caribbean people, especially in states such as Antigua and Barbuda (44.7 percent of employment is tourism dependent in 2019), Barbados (36.4 percent), Saint Kitts and Nevis (60.2 percent), and Jamaica (31.5 percent).⁷

Closed borders and limited air travel have been particularly detrimental for a region in which a majority of states are tourism-dependent economies. According to the Inter-American Development Bank’s Tourism Dependency Index, ten of the fourteen independent members of CARICOM rank in the top twenty of most tourism-dependent states.⁸ This meant that the 67 percent contraction of international arrivals to the Caribbean in 2020 devastated economies, with a particular effect on micro, small and medium-sized enterprises (MSMEs).⁹ These enterprises account for 99 percent of all businesses in the Latin America and Caribbean region.¹⁰ In addition to the pandemic’s current impact on MSMEs, it also has the potential to disrupt the reemergence of these enterprises since they will not have access to requisite finances needed to reopen for business and rehire employees. 

The economic contraction that has resulted from the pandemic is coupled with high levels of debt. Prior to the pandemic, the Caribbean, along with Latin America overall, was considered the most indebted region in the world, with debt expected to rise from 68.9 percent in 2019 to 79.3 percent of GDP in 2020.¹¹ For Caribbean states, which have incurred more debt than their Latin American neighbors, this has placed constraints on their ability to borrow more money while also remaining limited in the ability to service existing debts due to little economic growth. 

The precarious economic situation in the Caribbean is likely to affect the region’s relations with the United States. Prolonged economic contraction and job loss in the region can decrease travel to the United States as well as Caribbean demand for US goods, which can harm US-Caribbean trade relations. Further, high levels of debt for Caribbean countries will mean that they are likely to seek financial support from other countries, such as China, in order to service debts and address citizens’ immediate needs. Finally, if the region cannot reopen its borders to restart tourism industries, Caribbean states will incur additional financial loss over a longer period, meaning that the economic consequences of the pandemic to the US-Caribbean relationship can extend beyond 2021 and 2022. 

Infections continue to rise due to new virus variants

At the onset of the pandemic, Caribbean countries were spared rising rates of infections since they closed their borders as early as March 2020. However, an indefinite lockdown was unrealistic due to the region’s dependence on the international system for its economic health. Caribbean countries were forced to gradually reopen their borders, and with this came multiple waves of infections, particularly as new variants of the coronavirus that causes COVID-19 emerged and were transmitted by migrating populations. 

Trinidad and Tobago, which reported that the virus variant first detected in Brazil had entered the country from Venezuela, saw infections climb from forty-four a day at the beginning of April to 558 on May 20.¹² Trinidad and Tobago entered its third state of emergency on May 15.¹³ In the case of Guyana, which has a porous border with Brazil, the daily infection rate climbed from thirty-one cases a day as of early April to 136 cases by May 20.¹⁴ Since Guyana shares a border with Suriname, where there are frequent occurrences of illegal crossings, it is likely that the Brazil variant will soon reach Suriname, which would explain the rise in infections in Suriname from ten per day on April 4 to 300 on June 2.¹⁵ Lax restrictions coupled with limited testing could result in a rapid increase in infections, similar to the case of Trinidad and Tobago, which is experiencing more cases per capita than other pandemic epicenters, such as India. 

If infections rise, Caribbean countries will be forced to close borders or not reopen them in the near future, which will have an economic and geopolitical impact on the United States. Closed borders result in economic contraction, which disrupts demand for US goods and deters Caribbean citizens from traveling to the United States. 

The economic and health crisis caused by the pandemic is threatening to amplify existing vulnerabilities in the Caribbean, such as growing debt and revenue loss in key economic sectors, even as the region braces for hurricane season. The region is in desperate need of COVID-19 vaccines. Vaccine donations and rapid inoculation is imperative. In comparison to other affected regions, the Caribbean must grapple with both the pandemic as well as an active hurricane season. According to the National Oceanic and Atmospheric Administration, there is a 60 percent chance that there will be an above average hurricane season this year—this could potentially further reduce the number of tourists traveling to the region.¹⁶ The Atlantic hurricane season runs from June 1 through November 30. 

If they cannot quickly vaccinate their populations and reopen borders, Caribbean countries will not have enough time to recover lost growth and resources vital to repair the damage caused by strong tropical storms and/or hurricanes. Although, relative to previous years, the region was spared during the 2020 hurricane season, the combination of rising infections and a natural disaster will delay economic recovery and vaccination efforts. An early sign of this was the recent volcanic eruption in Saint Vincent and the Grenadines, which forced the government to pause its vaccination efforts in order to attend to displaced persons and address damage caused to agriculture and infrastructure.¹⁷

At the moment, the Caribbean region has been unable to secure the requisite number of vaccines which would allow the countries to reopen their borders and accelerate post-pandemic recovery, particularly in larger Caribbean states such as Jamaica and Trinidad and Tobago. Smaller Caribbean islands, like those in the Eastern Caribbean, although with small populations, have been unable to inoculate their populations due to limited vaccines access. While the Caribbean nations have received vaccines via donations and purchasing agreements, as well as through the COVAX Facility, these avenues, thus far, have been inefficient. The COVAX Facility has provided one hundred and ten thousand vaccines to Jamaica,¹⁸ sixty-seven thousand to Barbados,¹⁹ sixty-seven thousand to Trinidad and Tobago,²⁰ sixty-two thousand to Guyana,²¹ forty-five thousand six hundred to Grenada,²² and twenty-four thousand each to Antigua and Barbuda²³ and Saint Vincent and the Grenadines.²⁴ Vaccines from the COVAX Facility do not cover the entire population of each country and are disseminated in batches spread over a longer period. 

Since the COVAX Facility has delivered few vaccines thus far and is expected not to deliver its full quota until 2022 or 2023, even with US donations to the facility, Caribbean governments have sought vaccines from China, India, Russia, and the AU. China has donated a total of three hundred and eighty thousand vaccines to its diplomatic allies in the Caribbean, India promised a total of five hundred and seventy thousand vaccines to the entire region, Russia is supplying two hundred thousand to Guyana through a purchasing agreement, and the AU has set aside 1.5 million vaccines for CARICOM via a brokered agreement between the two regional groups in 2020.²⁵ However, even though some countries, such as India, have promised vaccines to the region and others, like Russia and the AU, have reached purchasing agreements, these agreements do not immediately result in vaccine delivery. The two hundred thousand vaccines Guyana purchased from Russia will reach it in batches, and the 1.5 million vaccines brokered for CARICOM from the AU have yet to be delivered. 

As much as the United States is critical to the financial health of the Caribbean, so is the Caribbean for the United States. It is a mutual relationship, where in addition to the United States benefiting from a significant trade surplus, it is a provider of tourists, is home to a large Caribbean diaspora, and is a space where many Caribbean skilled workers travel in search of jobs. 

Beyond the economic linkages, migration between the Caribbean and the United States is consistent. The US-based Caribbean diaspora attracts visits from family members in the region and the Caribbean is a frequent destination for US tourists. However, in order for travel from Caribbean islands to the United States to occur, Caribbean citizens will first need to be vaccinated. Since many are not, it is unlikely that they will travel to the United States anytime soon, which means that hotels, restaurants, and shopping centers will not benefit from these visitors, thus reducing the growth potential for US local economies. 

As noted, the United States benefits from its trade relationship with Latin America and the Caribbean. In 2018, the State Department said that the United States “is the primary trading partner for the Caribbean” with a $12.3 billion trade surplus.²⁶ The relationship, while presented as one-sided given the large surplus enjoyed by the United States, is mutually beneficial since the Caribbean is almost as important to the United States as the United States is to the region. The Caribbean is the United States’ sixth-largest trading partner. Although the region’s economic impact is not as profound as that of other top US partners, such as Mexico and China, the Caribbean is a significant part of the US economy and vital to its economic growth.²⁷

Low rates of vaccination in the region have a broader impact on US trade with the region. Since the Caribbean consists mainly of MSMEs, where even larger firms are considered small and medium-sized enterprises (SMEs), these enterprises’ ability to produce goods for the US market is likely to have declined. At the same time, since many SMEs are not operational due to the pandemic, there is less chance that they will purchase US goods, especially since imported US goods are used to accommodate the preferences of US tourists in the region. In other words, closed economies and a reduction in key economic sectors have deprived Caribbean governments and citizens of financial resources, which has reduced the supply of exports to the United States and the demand for US goods in the region. 

Florida-Caribbean economic linkages

Decreased US-CARICOM trade has implications for southeastern United States, Florida, in particular, which accounts for about 30.4 percent of total US trade with Latin America and the Caribbean.²⁸ Of this percentage, the Caribbean represents 38.9 percent of total US trade, meaning that for Florida, more than a third of its trade is dependent on its connection to the Caribbean.²⁹ 

For Florida and the companies that operate out of the state, such as cruise lines and other sectors of the tourism industry, it is imperative that the Caribbean and its citizens be vaccinated in order to reopen borders and restart economic activity. If cruise ships, which are an integral link in the Florida-Caribbean economic relationship, do not have destinations for tourists to visit, then these companies will have limited options. Limited options for tourists can deter people from buying cruise tickets and harm additional industries, such as airlines and US-led hotel chains on the Caribbean islands. 

For Florida, which is a home port for many cruise lines, there are direct and indirect consequences for its economy. For instance, Royal Caribbean, which is one of the biggest cruise companies that has home ports in Florida, has seen contractions of its revenue due to lower levels of tourism. This has resulted in a loss of employment for many residents in Miami, where almost 79,000 jobs are attributed to the cruise industry, including those at ports, retail, and manufacturers, among others.³⁰

The reasoning behind cruise lines and Florida’s economic contraction and the corresponding rise in unemployment is that Caribbean borders have had to close each time the number of COVID-19 infections goes up. The numerous waves of infections and constant closing and reopening of borders, as well as Centers for Disease Control and Prevention (CDC) categorization of Caribbean islands as high-risk states, has decreased the confidence of prospective tourists. For instance, the CDC recommends that US citizens not travel to states that are classified at level 4 (high risk), as was the case for Trinidad and Tobago and Jamaica as of June 7.³¹

At the same time, limited tourism due to closed Caribbean borders will prevent Caribbean residents from traveling to the United States for jobs or to visit members of the Caribbean diaspora—both of which are drivers of economic and job growth. When family members visit the United States, they often stay for an extended period of time, which usually includes hotel stays, shopping at local stores, and eating at restaurants, all of which are vital to local economies and particularly small businesses. In 2019, almost two million people from the Caribbean visited the United States.³² Large cities that have high concentrations of the Caribbean diaspora, such as Fort Lauderdale, Orlando, and, outside Florida, New York City, would benefit from reopened Caribbean borders. 

As the United States aims to strengthen partnerships in the Caribbean, extra-hemispheric vaccine diplomacy and potential rises in instability and illicit activity will add to local vulnerabilities and complicate its ability to advance its interests and partnerships with Caribbean allies. Therefore, US President Joseph R. Biden, Jr., and his administration should use vaccine donations to compliment the goodwill they built in the first half of 2021, such as US Secretary of State Antony Blinken’s virtual roundtable with CARICOM foreign ministers on April 21³³ and US National Security Advisor Jake Sullivan’s call with CARICOM Secretary General Irwin LaRocque and leaders from the CARICOM member states on May 7.³⁴

Vaccine diplomacy in the Caribbean

The United States committed COVID-19 vaccines to the Caribbean with the June 3, 2021, announcement that CARICOM will receive a portion of the six million vaccines designated for Latin America and the Caribbean through the COVAX Facility. More vaccines are urgently needed and additional actors have filled the gap. Through either purchasing agreements or donations, CARICOM states have received almost one million two-shot vaccines from China, Russia, and India, with 1.5 million Johnson & Johnson vaccines expected to arrive from the AU. In addition, as Cuban-made vaccines earn approval from the World Health Organization (WHO), the Caribbean is likely to benefit from donations or low-cost purchasing from its neighbor. 

Compared to Latin America, China has not given a substantial number of vaccines to Caribbean governments, but a recent loan from China to Trinidad and Tobago might be a blueprint for future interactions between China and its Caribbean allies. As small states with limited economic resources, Caribbean countries are pragmatic actors whose outreach to richer nations, such as the United States and China, is dependent on the needs of their citizens rather than ideological influences. As a result, many countries’ leaders, including Trinidad and Tobago’s prime minister, Keith Rowley, sought the support of China, as well as the United States, with regard to vaccine acquisition. In this case, China was first to answer the call. 

In early May 2021, Trinidad and Tobago entered a loan agreement with China—the Caribbean nation borrowed €170 million ($204 million).³⁵ As part of the arrangement, China stipulated that 15 percent of the money must be used to purchase Chinese goods and services, which includes the COVID-19 vaccine produced by the Chinese state-owned enterprise Sinopharm. In addition to this agreement, China announced at the end of March 2021 that it would donate up to 100,000 Sinopharm vaccines, all of which arrived in Trinidad and Tobago a few days before the loan agreement was announced.³⁶ As a part of the loan agreement signed between the two countries, Trinidad and Tobago purchased and received 200,000 additional Sinopharm vaccines in June 2021,³⁷ which arrived on the same day that Trinidad and Tobago’s government announced that it received 400 doses of the Pfizer vaccines from the United States.³⁸

Chinese engagement was not an ad hoc event. China’s vaccine diplomacy with the Caribbean has entailed more than the arrival of vaccines; it has also included numerous conversations between Chinese President Xi Jinping and the region’s heads of state and government, including the presidents and/or prime ministers of Barbados, Guyana, Suriname, and Dominica. In all cases, excluding Suriname, China donated Sinopharm vaccines, with Barbados receiving thirty thousand,³⁹ Guyana getting twenty thousand,⁴⁰ and Dominica an undisclosed amount.⁴¹ In addition to these CARICOM states, China has committed more than eight million vaccines to the Dominican Republic.⁴²

Beyond China, other actors, such as India and Russia, either through donations or purchasing agreements, have provided vaccines to the Caribbean. India was the first country to donate vaccines to the region. Its Ministry of Foreign Affairs announced in February 2021 a plan (later halted due to India’s own rising infection rate) to supply CARICOM nations, including the Dominican Republic and Cuba, with at least five hundred and seventy thousand of its Indian-made AstraZeneca vaccines.⁴³ Russia has been less influential. Only a few Caribbean states have received Russia’s vaccine, mostly because the Sputnik V vaccine has not been made available for donation to the region and is only available for purchase. Guyana purchased two hundred thousand Sputnik V vaccines.⁴⁴ While neither India nor Russia have pronounced investments or operations in the Caribbean, the donation or selling of vaccines can build goodwill and/or can lead to additional engagements with the region’s governments, in terms of trade and commerce and investments in key economic sectors, such oil, gas, and additional natural resources. This was most recently seen in a treaty signed between the governments of Antigua and Barbuda and Russia,⁴⁵ which was preceded by a donation of the Sputnik V vaccine.⁴⁶

Finally, if Cuba’s vaccine receives approval from the WHO, most CARICOM members, which annually announce their support for their Caribbean ally at multilateral institutions, are likely to receive donations or buy vaccines from Cuba. There is precedent for this during the pandemic, particularly at its onset, when Cuba sent multiple medical brigades to Caribbean countries to help strengthen their public health systems.⁴⁷ Cuba’s support to the Caribbean countries was condemned by some members of the US Congress, who frame this support as future Cuban leverage in the Caribbean.⁴⁸ 

Complicating the image of the United States in the Caribbean

While Caribbean partners, including US allies such as Canada, which has pledged $40 million to Latin America and the Caribbean, have supplied vaccines or support to the region, the United States is often cited for its need for further action.⁴⁹ The May 2021 US donation of two field hospitals to Trinidad and Tobago to aid in the third wave of infections and high-level meetings between US and Caribbean government officials have not gone unnoticed, but they do not receive the same publicity as a Chinese vaccine donation or purchasing agreement. The longer the United States takes to donate substantial, game-changing vaccines to the region, the greater the risk that Caribbean citizens will develop a negative perception of the role it played in their time of need. This perception would have geopolitical implications, in particular as the United States prioritizes addressing climate change, outcompeting China, and re-embracing multilateralism. 

• Climate change: In many ways, the effects of climate change and the methods of addressing it are similar to the pandemic. Both cause economic contraction, particularly for tourism-dependent Caribbean countries, and both require solutions that involve a whole-of-government and multilateral approach. As a result, Caribbean countries will view Biden’s approach to supporting partner nations during the pandemic as an example of how his administration might work to address the climate crisis. 
• Outcompeting China: While the number of vaccines China has sent to the Caribbean is small, the delivery of these vaccines has an impact on the region’s populations. Vaccine arrival is a televised media event that usually makes local and regional news. High-level Caribbean government officials attend the handover ceremony organized by the local Chinese embassy. This means that when it comes to public perception, specifically related to the pandemic, China has gained more ground than the United States. China can use this advantage to further build its domestic political capital.
• Re-embracing multilateralism: Although Caribbean countries are small in size, their regional body, CARICOM, has fourteen votes in multilateral organizations. In organizations such as the United Nations and regional ones, such as the Organization of American States (OAS), CARICOM votes carry significant weight. Other countries are aware of CARICOM’s importance in these organizations. When Ireland and Canada sought seats on the UN Security Council, high-level government officials traveled to the Caribbean in an effort to secure CARICOM votes.  If the United States provides a significant number of vaccines to the region, while it will not guarantee support at these organizations, it will make countries more inclined to listen and potentially compromise with US positions. In the best-case scenario, the United States and CARICOM could work together, as partners, to push key resolutions on climate change and security in smaller organizations such as the OAS. 

Case study: When China donated its Sinopharm vaccines to Dominica and Guyana, each shipment received substantial media coverage and included official handover ceremonies between Caribbean and Chinese government officials. When China’s vaccines arrived in Guyana in March 2021, Guyana’s minister of health, Frank Anthony, and China’s charge d’affaires to Guyana, Chen Xilai, met at the airport to welcome the shipment.⁵⁰ At the airport, both representatives offered brief remarks about the importance of the relationship between their two countries. Similar to Guyana, China’s vaccine donation to Dominica was greeted with publicity, including a handover ceremony. The Chinese charge d’affaires to Dominica, Luo Songtao, posed for photographs with Dominica’s prime minister, Roosevelt Skerrit, as they held a box of the Sinopharm vaccines. Coverage of the event included a photo of a Dominican official receiving the first jab of the vaccine.⁵¹  

Preventing instability and illicit activity  

An additional implication of the COVID-19 pandemic in the Caribbean is the risk of instability and illicit activity that can arise as the region’s economic situation worsens. This is of particular concern for the United States due to its proximity to the region. Increases in instability and the membership of transnational criminal organizations can lead to forced migration as well as upticks in drug and human trafficking. The risk of instability and illicit activity is not a direct cause of the pandemic but instead an indirect cause that results from limited government resources, widening inequality, and increases in crime and unemployment. In essence, the pandemic should be viewed as an amplifier or aggravator of existing stressors, with the potential to create new ones. Limited economic resources mean that governments will have less resources to invest in the public health sector and labor market if more funding is needed to strengthen security forces in a scenario of increased instability, crime, and/or violence. 

Donations: The Biden administration will distribute eighty million vaccines by the end of June 2021, and while the Caribbean is part of this distribution, it will be imperative to look beyond this initial batch of indirect global donations. As the United States shares 500 million vaccines globally by the late 2021 via the COVAX Facility, the Caribbean, in balancing the broader needs of the hemisphere, should be a top priority for bilateral distribution. Due to the small populations of Caribbean states—the population of the English-speaking states hovers just over seven million people—a small donation of vaccines goes a long way. If the United States were to directly donate at least four million two-shot vaccines, it would cover two million people, or more than a fourth of the region’s English-speaking population. Vaccines for countries directly linked to the tourism industry would benefit US businesses as well. 

• US distribution of vaccines to the region should involve continued coordination with the Caribbean Public Health Agency (CARPHA), which could help ensure that the supply is distributed equitably. This would ensure that the United States is not accused of choosing beneficiaries. This strategy is a diplomatic advantage that the United States holds over China since only the United States has diplomatic relations with all CARICOM countries. 
• When sending vaccines to the region, the United States must ensure that CARICOM countries are provided with the appropriate equipment that allows for equitable and efficient vaccine distribution. This means that along with the AstraZeneca vaccines, the United States should bilaterally donate ultra-cold temperature vaccine freezers to CARICOM members to support and strengthen governments’ cold chain systems. 
• Finally, the United States should deploy other forms of medical diplomacy to Caribbean countries that are seeing rising infection rates. This should include more donations of field hospitals, PPE, and rapid testing kits. Such donations will help Caribbean countries that are awaiting vaccines to avoid additional lockdowns, mitigate rising infections, and support hospitals that are close to full capacity. Already, the United States has donated field hospitals, generators, hospital beds, medical teams, and hand-held thermometers.⁵² More should be done. 

Purchasing agreements: The small size of Caribbean populations, and, therefore, small relative orders, has contributed to challenges in purchasing vaccines from manufacturers such as Pfizer-BioNTech, Moderna, and Janssen/J&J. The US government can serve as a key interlocutor for Caribbean countries to find solutions to this problem. In addition, the US government can find opportunities to facilitate agreements with the vaccine manufacturers that allow for Caribbean governments and even US private sector members invested in the Caribbean to purchase vaccines at an affordable rate. 

Diplomacy: To build on recent high-level engagements between US and CARICOM government officials, the Biden administration should work with the public diplomacy officers and US ambassadors in US embassies to ensure that the donation of vaccines is part of a larger media campaign. This would build goodwill among Caribbean citizens by advancing messaging with the public on US involvement to help defeat the virus in the region. This form of diplomacy at the local level would build on existing US-led initiatives such as electoral reform, combatting narco-trafficking, and promoting US investment. At the same time, since Caribbean governments have faced challenges to educate and incentivize their citizens to trust COVID-19 vaccines, US embassies can aid their efforts to encourage their populations to get vaccinated.

The United States has the economic and political resources to provide the Caribbean with the support needed to change its COVID-19 trajectory. Timely bilateral vaccine and medical donations to CARICOM would have an immediate impact on Caribbean economies and livelihoods, would strengthen US-Caribbean relations, and would have positive consequences for US economic and geopolitical interests.  

The United States has an opportunity to cement its position as CARICOM’s most trusted ally. The US commitment of at least 580 million vaccines to the COVAX Facility is a step in the direction, but more emphasis must be placed on bilateral donations. If the United States is seen as contributor to re-opening economies via substantial vaccine donations, the perception of the Biden administration is likely to increase. This can make Caribbean governments more favorable to current and future US initiatives. At a broader level, vaccine and medical donations can assist US geopolitical strategies, as it can reduce the likelihood for instability and will help compete with Chinese and Russian engagement.

Sending US vaccines to the Caribbean is in the best interest of the hemisphere. The Caribbean is at a disadvantage in terms of mitigating the effects of the pandemic and acquiring vaccines. Support from the United States can help the Caribbean level the playing field. Doing so can usher in a renewed sense of optimism within the US-Caribbean dynamic. Simply, helping the Caribbean is helping the United States, as the two, through geography, shared values and interests, and frequent travel, are intrinsically bonded together.

Acknowledgments

This issue brief benefited from the insights and expertise of a Caribbean Initiative private roundtable in May 2021, which consisted of participants from the US and Caribbean policy and business communities, including: Ambassador Riyad Insanally, Marla Dukharan, Gervase Warner, Therese Turner-Jones, Timothy Johnston, and Dr. Ivelaw Griffith. We thank the many participants of that strategy session. 

As well, we would like to thank Adrienne Arsht Latin America Center Director Jason Marczak for his leadership and guidance in the drafting of this issue brief and for his prioritization on how to help accelerate vaccine access. In addition, the Atlantic Council thanks Board Member Melanie Chen for her steadfast focus on accelerating US-Caribbean ties and for her broader support of the Caribbean Initiative. 

About the authors

Ambassador James Brewster is currently a Managing Partner at Patino, Brewster & Partners and the CEO of Insignias Global. Most recently, he served as the United States Ambassador to the Dominican Republic, and his appointment made history when he became the first openly gay Ambassador to serve the United States in the Western Hemisphere alongside his husband, Author Bob J. Satawake. As an expert in Latin America and the Caribbean business and political communities, Ambassador Brewster had a positive and significant impact on trade between the U.S. and countries in the Western Hemisphere. His knowledge of NAFTA, CAFTA, HELP and HOPE in addition to Foreign Corrupt Practices Act and trade policy has made the Ambassador a top resource for international companies and leaders of foreign governments.

Wazim Mowla is the Assistant Director for the Caribbean Initiative at the Adrienne Arsht Latin America Center. Mowla holds an MA in History from Florida International University, where he is currently a Non-Resident Scholar for the Jack D. Gordon Institute for Public Policy. He is also an MA candidate at American University’s School of International Service and is honored to have interned for Ambassador Ronald Sanders of Antigua and Barbuda and Ambassador Riyad Insanally of Guyana.

The Adrienne Arsht Latin America Center (AALAC) broadens understanding of regional transformations through high-impact work that shapes the conversation among policymakers, the business community, civil society, and media. Founded in 2013, the center focuses on Latin America’s strategic role in a global context, with a priority on pressing political, economic, and social issues that will define the trajectory of the region, now and in the years ahead. Select lines of programming include: China in Latin America; Venezuela’s crisis; Mexico’s US and global ties; Colombia’s future; a changing Brazil; Central American prosperity; combatting disinformation; shifting trade patterns and modernization of supply chains; charting a post-COVID future; Caribbean development; and leveraging energy resources. Jason Marczak serves as center director.