Thursday, April 25, 2019

China vs U.S. In Central America: Washington Not Happy With China's Advances Into Central America


Washington Not Happy About New China Focus on Central America



As it becomes clear that the Trump Administration support, so far unsuccessful, for regime change in Venezuela is also very much about targeting the huge financial presence of China with the Maduro regime, recent news of a major Chinese oil success in Cuban waters will clearly deepen the geopolitical tensions. And it involves not only Venezuela, Guyana and Brazil.


China’s major state-owned oil company, CNPC, through its subsidiary, Great Wall Drilling, has begun exploring for oil off Cuba’s coast in a joint venture with state-owned oil firm Cuba Petroleum Company (CUPET), according to an April 16 report in the China state news agency, Xinhua. Great Wall has been engaged in oil exploration in Cuba since 2005, but this is the most promising result to date. Advanced drilling technology from CNPC has opened the prospect of major oil off Cuba for the first time.

The news comes as Washington sanctions target Venezuela oil earnings and also its agreements to supply Cuba with low cost oil. While the Maduro government continues to insist it will deliver oil to Cuba despite sanctions, clearly the security of supply is becoming riskier and supply less.

Currently Beijing is Cuba’s largest trading partner and Havana’s largest creditor, with Cuba importing major supplies of Chinese rice, along with thousands of China tourists, a business that brings Cuba an estimated $2 billion annually. Sugar and nickel are the two major Cuban products sent to China amid a trade imbalance in China’s favor.

If China now develops major offshore oil resources in Cuba, their presence will significantly increase and the decline of Venezuelan oil to Cuba as a kind of barter payment for the military and medical and other support, will be eased. Until now Russia’s Rosneft has filled the oil import gap for Cuba.


China is well-established as the major foreign creditor as well to Venezuela with some estimates putting their debt as high as $61 billion. Venezuelan oil is clearly at the heart of the relationship, but there are indications Chinese companies also are looking to exploit untapped gold and coltan resources there. Since the Washington declarations in support of Guaido, China has been unusually outspoken in defense of Maduro, unusual for a state that claims never to involve in local politics.

With details of the extent of Chinese investments in Venezuela not fully clear, China has also made a major presence in neighboring Guyana, since 2018 officially welcoming the small former British colony to join the Belt, Road Initiative, sometimes called China’s New Economic Silk Road.

In Guyana Chinese companies and Chinese money are presently building a highway link from Manaus in Northern Brazil through Guyana, giving Brazil far more efficient access to the Panama Canal, cutting thousands of miles off the shipping route. Talks are reportedly also underway for China to build a deep-water port in Guyana’s northern coast to link to China’s highway to the Brazil Amazon region bordering Venezuela, with its vast untapped mineral riches. People in Guyana say the road-port will benefit China far more than Guyana. In any case, it would enable efficient ship transport from the Amazon through the Panama Canal to China.

And Panama…


If we add to the quiet but growing Chinese economic presence in Cuba, Venezuela and Guyana, the recent actions of Beijing in the strategic Panama Canal it begins to explain part of Washington’s growing alarm over developments in Venezuela and Cuba.
In 2016 China’s Landbridge Group bought Panama’s Margarita Island Port in the Col√≥n Free Trade Zone, the largest port, on the canal’s Atlantic side, giving the Chinese company intimate access to one of the most important goods distribution centers in the world. They have made major expansion since using by state-owned China Communication Construction Corp., today the world’s largest infrastructure and engineering company.

In this strategic setting, it becomes clearer why Washington is beginning to react more strongly in its backyard, Central America, by invoking the 19th Century Monroe Doctrine, a de facto empty shell of rhetoric. What is desperately lacking is a series of positive economic initiatives from Washington to provide the means to help those countries develop critical infrastructure across Central and South America, a stark departure from earlier Gunboat Diplomacy. Were that to begin, the climate in the region could become much more friendly to cooperation with Washington.


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