Saudi Arabia and the Caribbean

There are no signs that the war in Ukraine will end soon. Instead, after suffering significant battlefield casualties, Russia mobilizes large numbers of its citizens to fight in a conflict most do not wish to take part in. In response, the West has made it clear that its military and other support to defend Ukrainian sovereignty will increase.

To make matters worse, President Putin has threatened the use of nuclear weapons, prompting the US to declare that any such event, even as a tactical demonstration, would be decisively confronted with what Jake Sullivan, the National White House National Security Advisor, described as “catastrophic” consequences for Russia.”

Alarmed, China, India and others including Turkey and Saudi Arabia have distanced themselves from Russia, recognizing the threat to global economic recovery but hope they can play a role in bringing about a negotiated peace when the moment is right.

This does not bode well for the Caribbean’s economic recovery.

It suggests that by the end of the year the region may be managing a possible global recession, high imported inflation rates, weak economic growth, declining visitor numbers from non-US dollar-pegged markets and delays in US and European private sector investment must, unless significant incentives are offered.

If the region’s own entrepreneurs are unwilling to invest intra-regionally in areas other than areas in which they have distinct expertise, it likely means that the region needs to nurture a much wider range of investment partners to stimulate growth.

The implication is that these will be companies, private or sovereign investment funds, or government-affiliated or government-controlled entities from China, Qatar, Saudi Arabia, India, likely Brazil and Venezuela, and possibly some parts of Africa.

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Although some Caribbean nations are now less willing to consider some types of Chinese investment following briefings by the US and others, China remains the region’s key development partner.

For example, it participates in and finances projects as diverse as road construction in Jamaica and Barbados, co-investments in offshore oil exploration and major infrastructure projects in Guyana, debt relief in Suriname, construction of a new airport in Dominica, and undertaking joint vaccine research with Cuba in a special facility in China.

This diverse process will continue. In a recent statement, Qiu Xiaoqi, a Chinese government special envoy for Latin American affairs, wrote that despite profound changes taking place around the world, China’s interest in the region remains undiminished. He said Beijing will continue to work on its economic, development and security initiatives to create, as he put it, a sustainable shared future.

However, in late July, a potentially significant new Caribbean investment partner began to emerge.

For the first time ever, Saudi Arabian ministers, government officials and a truly high-level delegation of 70 from the private sector and institutions attended a regional investment forum in the Dominican Republic before traveling to Jamaica and Guyana to meet government and business leaders to explore concrete opportunities discuss.

Speaking at the forum, during visits to Guyana and Jamaica, and meeting with Caribbean leaders at their July summit, the Kingdom’s Deputy Minister for Public Affairs, Badr Al Badr, pointed out that the Dominican Republic, Jamaica and Guyana These could potentially be the main targets, the Caribbean has been designated as a “primary zone” for the implementation of Saudi Arabia’s national diversified investment strategy up to 2030.

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To achieve this, Dr. Al Badr proposes that the heads of CARICOM create an institutional framework to develop the relationship, starting at the head and ministerial level, and prioritize investments in tourism, agriculture and energy.

In Guyana, he cited his country’s “strong capabilities and assets” in energy and agriculture and his interest in supporting Guyanese and Guyanese companies in areas where the Kingdom has the expertise, potentially funded through Saudi Development Fund and Saudi EXIM Bank. In Jamaica, he showed willingness to drive high-end investments in agriculture and tourism. There was also optimism that the signing of bilateral air services agreements could soon result in flights linking the Gulf with the Caribbean, with either country perhaps becoming a hub for operations to Latin America.

There is also a strong possibility that at least one Caribbean prime minister will visit Riyadh in the coming months, and regardless, a group of CARICOM ministers are expected to do the same in November.

Less obviously, there have been other visits by Saudi ministers and the Saudi Development Fund this year. These were in Barbados, Dominica, the Bahamas, Cuba and Belize, and last week Belize’s Prime Minister John Briceño and the Saudi Crown Prince formally established diplomatic relations on the sidelines of the UN General Assembly. In all cases, investment discussions focused on infrastructure, tourism and agriculture.

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In parallel, and less recognized, the oil and gas rich Gulf state of Qatar is also showing interest in power generation, related facilities, agriculture and upscale investments in hotels and real estate in the Dominican Republic, Guyana and Jamaica.

For many, this diversification will be a welcome demonstration of the region’s now mature sovereignty. For others, it will reflect a pragmatic response to major shifts in international relations, while some who want the region to remain in US sphere of influence are less certain. There will also be those in the Caribbean who, like China, are understandably concerned about Saudi Arabia’s human rights record.

Speaking to the Center for Strategic and International Studies in Washington in July on the need for rapid growth in investment flows, Guyana’s President Ifraan Ali took a pragmatic view. He suggested that investment, whether from the US or China and implicitly elsewhere, had to be based on a country’s ability to drive a partner country’s development path. It cannot “be properly assessed in abstract terms” but must be based on “ensuring respect for fundamental principles and support for common values”.

How strong and how fast Saudi Arabia’s interest in Caribbean investment returns will be remains to be seen, but its expressed interest in the Caribbean represents an interesting potential counterpoint to China’s continued encroachment into the region and Washington’s hopefully sustained rediscovery of the region’s needs .

David Jessop is an advisor to the Caribbean Council
For previous columns see https://www.caribbean-council.org/research-analysis/
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