Collateral Damage from Trump’s Actions Destabilize Caribbean Countries
Ambassador Curtis A. Ward
In just under 16 months of President Donald Trump’s administration, actions taken by the American president are sending shock waves across the Caribbean and the world. Unintended consequences – collateral damage – from U.S. actions threaten to destabilize the fragile economies and security of Caribbean countries. The Trump storm is creating new dynamics in geopolitical realities for Caribbean governments which are seemingly unprepared for the shocks. With each emerging threat, governments scramble to take remedial action without a clear strategy for the future. The elation over former Secretary of State Rex Tillerson’s visit to Jamaica and the region was short-lived. Any assurance given by Tillerson to the Caribbean region became meaningless soon after he boarded his aircraft.
Tillerson’s replacement as America’s top diplomat by Mike Pompeo, who has never shown much kinship with hemispheric issues, heralded Trump’s hard line approach to U.S. geopolitical relations. Along with Trump’s new national security adviser, hardliner John Bolton, Caribbean governments should be on alert for enforcement of Trump’s stated policy of stand with the U.S. or else. The ‘or else,’ as clearly stated, is to exact consequences for non-support of U.S. positions in regional and international organizations. The warning to small Caribbean countries with vulnerable economies and security and law enforcement challenges is that the only sovereignty that counts is that of the United States. Having a principled and moral position in the Trump era, unless in sync with Trump’s policies, will not be tolerated.
So far, I have identified more than a dozen issues on which the choices for Caribbean governments are extremely limited, and for which alternate courses are basically non-existent, or potentially pose even more serious challenges. In other words, the countries of the Caribbean will have to sink or swim. Thus, it is imperative that governments of the region are transparent with the people they serve. Instead of hiding behind diplomatic niceties and obfuscations, a wiser course is to explain clearly the likely effects of Trump’s actions on their countries and what realistic options are open to them. The people will understand.
A brief look at a few of these issues will suffice, as I cannot use this medium to fully expound on all of them. Neither will my discussion be all-inclusive of all of the challenges posed by the Trump administration on these particular issues. Those I have selected are based on my perspectives of the gravity and potential harm in the short- to medium-term to Caribbean countries. These issues are not taken in order of the urgency or possible effects on the region of the decisions taken in Washington. Regional governments should realize by now that standing on promises by the Trump administration is like standing on drifting sands in the middle of a category five hurricane.
Trump’s abrogation of the Iran nuclear deal (JCPOA) poses significant challenges for countries which rely heavily on imported energy supplies. Most countries in the region do. Leading up to Trump’s announcement the oil market began to react and prices began a steady rise. As Trump-imposed sanctions on Iran begin to take effect on Iran’s global oil sales, oil prices will rise significantly. The prices of alternate energy supplies, including natural gas prices, are likely to follow suit. That would be a further setback for Caribbean countries converting to LNG.
In addition, the extra-territorial reach of U.S. financial sanctions on foreign banks faced with the choice of doing business with U.S. banks or facilitating Iran’s oil sales will threaten correspondent banking relationships and payable through accounts globally. The idea that European parties to the JCPOA will be able to keep the agreement, or a renegotiated version, in effect may not be practical. Major European banks have branches in the U.S. and depend on U.S. financial clearinghouses for US$ transactions. Caribbean banks will have to be careful not to do business with any bank subject to U.S. secondary financial sanctions. International commerce, for the most part, is conducted in U.S. currency. Will the Iran sanctions force a shift to the Euro, or, maybe, the Chinese remnibi or yuan? It is yet to be determined how practical that might be.
Trump’s trade war with China triggered by imposing tariffs on Chinese aluminum exports to the U.S., as well as the export to the U.S. of aluminum from a number of countries will in the long-run affect the bauxite-alumina industries of Caribbean countries where China has invested, or plan increased investments in the industry. China’s economic penetration of Latin America and the Caribbean has already been disparaged by the Trump administration. Governments of the region were warned by Tillerson about relying on Chinese “predatory” investment practices. Pompeo and Bolton are far more anti-China than Tillerson ever was.
Recent reports reveal that China’s largest manufacture of cell phones was forced to cease operations due to the U.S.-imposed prohibition on supply of parts critical to maintaining the company’s manufacturing operations. Trump needs China if he hopes to eke out any success from his upcoming summit with North Korean leader Kim Jong-un. Hence, early reports suggest Trump may be reversing himself and is seeking ways to accommodate parts supplies to China. On the other hand, the uncertainty of Trump’s future actions and possible effects on China’s economy may cause China to suspend further economic expansion in the LAC region, in order to reduce any potential destabilizing effect of Trump’s policies directly on China or indirectly from actions against Iran.
A number of other issues with grave implications for the region, include: U.S.-imposed financial sanctions on Venezuela and the resulting impediments to Venezuela’s global oil sales; Trump’s determination to isolate Venezuelan leader Nicolas Maduro, including proposed expulsion of Venezuela from the O.A.S. and the implications for regional cohesiveness and potential political division of CARICOM; sanctions targeting Russian companies and individuals with Caribbean and regional investments affect their seem less operation and relationships with Caribbean suppliers and financial institutions; significant cuts in USAID budgets leaving programs in the Caribbean unfunded or in a state of reduced funding; and erosion of commitment to Caribbean security and law enforcement capacity building.
This is not an exhaustive list, but they are destabilizing issues hovering over Caribbean economies, security and citizen safety. The Ward Post will deal with these and other issues in the future.
© 2018 Curtis A. Ward/The Ward Post