Saint Lucia And Taiwan's Path To Stronger Ties

THE STAR Businessweek NOVEMBER 17, 2018

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The Year Ahead: Saint Lucia and Taiwan’s Path to Stronger Ties

By ED Kennedy, STAR Businessweek Correspondent

The relationship between Saint Lucia and the Republic of China (hereafter referred to as Taiwan) is increasingly important to both nations. As 2018 nears its end, the past 11 months have seen closer ties pursued across multiple fronts. At the same time, it appears clear that it’s not the past but the road ahead that will be the most important for the relationship. Especially as 2019 will see both nations shift further into new identities globally.

The UK’s skills squeeze poses another Brexit dilemma There was a particular irony in the recent profit warning from the JD Wetherspoon pub chain, which said it was having to increase wages in the face of a tight labour market Page 3

Continued on page 4

Banks find a use for blockchain: cross -border payments Finally banks may have found a problem that blockchain is able to solve now and at scale: cross-border currency transfers Page 7

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Gearing up for a digital dollar

ECCB Governor updates industry on plans for regional cryptocurrency

The STAR Businessweek

BY Christian Wayne – Editor at Large

Despite the successive inabilities demonstrated by crop after crop of Caribbean leaders who have failed to recognize the geopolitical importance of our region, the hegemons of the world have not.

In 1904, American President Theodore Roosevelt issued what later became known as the Roosevelt Corollary during an address to the United States Congress, effectively stating that the United States had a God-given right to involve itself in any and all affairs in its Caribbean backyard—militarily, economically or otherwise.

In a shining example of Roosevelt’s “Big Stick” foreign policy, the Corollary was issued shortly after the American president deployed naval battleships to the future site of the Panama Canal —after negotiations with the Colombians proved too strenuous— subsequently ushering in the Panamanian revolution from the Republic of Colombia.

Certainly, any student of history would know that by the late 1890s and early1900s, Roosevelt and his Rough Riders were little more than Johnny Come Latelies arriving to the party—and with impeccable timing. The French, the Spanish, the British and the Dutch all had significant interests in the region but, facing their own set of domestic challenges back home, Roosevelt’s big stick and penchant for freedom-fighting won America the Caribbean. For the next few decades, until the beginning of the Cold War, American dominance in the region went unthreatened. In the Caribbean specifically, American hegemony seldom wavered though sideshows like the Cuban Missile Crisis in the 1960s and the invasion of Grenada in 1983 proved to the world that the Caribbean remained a largely uncontested hotbed for influence peddling and diplomatic arbitrage. Today, the significance of the Caribbean’s geopolitical attributes are more palpable than ever, despite the flaccidity of most of its leaders in realizing them.

In terms of political independence, the Lesser Antilles of the Caribbean is one of the youngest regions in the world. Antigua & Barbuda has been independent for 37 years, Barbados 52 years, Dominica 40 years, Grenada 44 years, Saint Kitts & Nevis 35 years, Saint Lucia 39 years, Saint Vincent & the Grenadines 39 years, and Trinidad & Tobago 56 years. On average this region has only enjoyed political suffrage for 43 years. If we only look at independent Caribbean islands within the OECS membership, the figure drops to 39 years of political independence—the same age as Saint Lucia.

Yes, though our nation may be an archetype of the region, it is not an excuse to be average.

Much has changed since the days of the rough riders, the missile crisis and the New Jewel Movement. No longer is the Caribbean hermetically sealed from the rest of the world by big-stick American foreign policy. The guard is changing and, for the first time in centuries, our islands have the sovereign right to decide which global courtships we allow to blossom into lasting alliances.

In an era of asymmetry, we must behave asymmetrically.

It’s Nothing Personal. It’s Business.

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By Catherine Morris, STAR Businessweek Correspondent

T

he Eastern Caribbean Currency Union (ECCU) may soon be trading in digital dollars as the Central Bank moves to reduce its dependence on paper currency.

Speaking at the Caribbean Association of Banks’ 45th conference last week, Governor of the Eastern Caribbean Central Bank (ECCB) Timothy Antoine said around 80 per cent of all purchases in the region are paid for with cash or cheque and he wants to see that reduced by half in the next five years.

In March the ECCB signed an agreement with Barbadosbased fintech group Bitt Inc to develop blockchain technology and create a cryptocurrency to circulate alongside the existing fiat currency. In the months since then the bank has been focused on engagement with financial institutions, fintech firms and consumers to hammer out the details and is now on the cusp of launching the 18-month pilot project. The initiative will be trialled in two countries before being introduced to the entire ECCU. Governor Antoine said the emerging fintech ecosystem in the Caribbean has great potential, but also significant risks. He highlighted the role of regulators in creating a viable framework in which innovation can safely take place, saying: “Regulators need to lean forward rather than lean back in respect of fintech development. A proactive and balanced approach is required for us to be able to support innovation, promote inclusion and, at the same time, ensure customer protection.”

Supporting sandboxes

The ECCB’s cryptocurrency and blockchain initiative will address several key issues including cybersecurity, user experience, operational and cost efficiencies and KYC and AML/CFT concerns. It is expected to improve the risk profile of the ECCU and therefore help mitigate de-risking and the loss of correspondent banks. The scheme will also create a digital payments system to make transfers easier, faster and less expensive.

Given that fintech is a new and evolving space, developing sandbox environments like the Bitt Inc and ECCB team-up, where services can be tested, tweaked and finalised under a regulator’s supervision, is vital. There are a growing number of fintech sandboxes springing up in the Caribbean as the financial community seeks to exploit emerging technology. The Central Bank of Barbados recently joined with that country’s Financial Services Commission to create a sandbox where they can monitor fintech entrepreneurs and their products and services. Earlier this year, the Bank of Jamaica shared its plans to develop a similar sandbox training ground and was greeted with enthusiasm by the

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industry, receiving numerous applications ranging from cryptocurrencies, a digital wallet application, digital currency exchanges, securities blockchain platform and KYC databases.

Governor Antoine praised the sandbox approach and called for further collaborative efforts, saying: “A sandbox allows both fintech operators and regulators to test and learn. We need cross-border sandboxes because the reality is that technology knows no borders.

“Effective partnerships and collaboration are critical between banks and fintech providers, between banks and regulators, and amongst regulators. There is absolutely no way for us to leverage the promise of fintech without coming together. I cannot stress that enough.”

Striking a balance

When it comes to fintech, industry must find that delicate balance between risk and reward. “In this euphoria of high-growth fintech, there is the tendency to see an obsession over opportunities or an obsession over risk. If we are obsessed with opportunities, we go overboard and become reckless. On the other hand, if we become obsessed with risk, we become feckless and that too is not a desirable outcome,” said Antoine.

And yet, he stressed, it’s important to be cognisant of the risk involved. Any emerging technology comes with heightened vulnerability in terms of security, data protection and privacy. “Whether you are a bank or a regulator, ultimately it is about the customer. We are trying to avoid the customer getting hurt.”

The ECCB wants to see a renewed focus on strengthening data protection in the region, with greater consideration of data sovereignty as information becomes more fluid. According to Antoine: “Our framework is inadequate. It does not cover some of the issues with emerging technologies. There will have to be an upgrade or a revamp of the legislation.

“It is important that regulators sharpen their understanding of risk. We have to avoid blindspots. It is very easy in this rapidly-evolving space to miss things.

Data protection issues have to be addressed properly region-wide. Technology knows no boundaries, we have to find a way to manage it.”

Industry-led innovation is transforming the sector but, in the race to be first to market, regulatory concerns can often be brushed aside or overlooked. Antoine cautioned banks and other financial institutions to be wary, to properly evaluate their partners (who may not be subject to the same regulatory provisions) and to clarify their goals when developing fintech applications — first identifying the consumer need and working backwards from that starting point. He said: “One of the things we have learned about fintech [is that] you have to be clear on the problem before you come to what the solution might look like.

“The challenge we have is that countries want to move ahead. There is a danger that people will rush ahead and not appreciate the risk [or consider] the appropriate regulatory environment, and people and economies will get hurt. Transformation is going to be disruptive. It is not some pedestrian cruise in the park. We have to figure it out.”

The FT View

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The UK’s skills squeeze poses another Brexit dilemma Government must balance immigration curbs with companies’ needs

By THE FT Editorial Board

T

here was a particular irony in the recent profit warning from the JD Wetherspoon pub chain, which said it was having to increase wages in the face of a tight labour market. Tim Martin, the Wetherspoons chairman, was a prominent supporter of Britain’s exit from the EU — which is set to make the labour market even tighter.

Mr Martin suggested Wetherspoons would not be further squeezed by Brexit as many of its pubs were in lowimmigration towns or rural areas and 90 per cent of its workers were British-born.

But across the economy, competition will only intensify as the government prepares to curb immigration in response to what it sees as one of the driving forces behind the Leave victory in the 2016 referendum.

The UK is already at its closest to full employment since the early 1970s, with a 4 per cent jobless rate. Companies such as Royal Mail and Ryanair have also warned of wage pressures. A Financial Times report, meanwhile, found the hospitality, IT, construction, healthcare and leisurerelated services sectors were suffering acute shortages of skilled or unskilled workers.

In some ways, rising wages are welcome, after pay increases lagged even the insipid recovery of recent years. Real incomes have still to regain their level before the financial crisis of a decade ago.

But the tight labour market has important implications.

The IT, healthcare and construction sectors are all confronting a shortage of necessary skills. For hospitality and

In the UK the IT, healthcare and construction sectors are all confronting a shortage of necessary skills © Bloomber

industries such as hairdressers and beauticians, where half of staff tend to be under 30, the challenge is different. Thanks to a dip in the birth rate around the millennium, one senior hospitality sector representative says the issue is simply a “shortage of bodies available”. The meat processing industry, with 60 per cent of its staff coming from continental Europe, has raised alarms too.

By unleashing some pent-up corporate investment, a benign Brexit under an agreed deal — though that scenario seems ever more in question— might increase UK

economic output by 1 per cent above current forecasts over, say, three years. But with such meagre growth in productivity over the past decade, higher wages are likely to be passed on quickly to consumers, resulting in inflationary pressures. Interest rate rises from the Bank of England would then be likely to snuff out much of this growth. A tighter jobs market makes growth even more likely to be inflationary.

The government needs, therefore, to strike a careful balance between the urge to staunch immigration, and businesses’ need for staff.

Its Migration Advisory Committee recommended scrapping a 20,700-a-year cap on “Tier 2” visas for high-skilled workers, to ensure companies can attract talent. But it suggested limiting lowskilled migration, except in agriculture.

The Home Office, due to publish an immigration white paper in coming weeks, has indicated it might reject some MAC recommendations. It should consider sector-specific visa schemes allowing critical industries such as food processing to bring in non-UK workers for a defined period.

Over the longer term, the answer must be, in part, investment in education and re-training to match the needs of British employers. Even if it can navigate its way successfully through Brexit, however, the government will face a continuing dilemma. The 2016 vote put it under pressure to close doors to migrants. Yet even a modest Brexit dividend — one that recouped some of the growth lost since the referendum — could be partially dissipated if there are not enough workers to deliver it.

The UK is already at its closest to full employment since the early 1970s, with a 4 per cent jobless rate.

Companies such as Royal Mail and Ryanair have also warned of wage pressures

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The Year Ahead: Saint Lucia and Taiwan’s Path to Stronger Ties Continued from page 1

Deep Links Beyond Economics

Saint Lucia and Taiwan not only share a strong working relationship — having notably partnered on the Banana Black Sigatoka Management Project (BSMP) in recent years — but deep ties beyond economics. It’s easy to dismiss these as incidental if focusing on the balance sheet between Taipei and Castries alone, but ultimately they account for big differences between how Saint Lucia can pursue a relationship with Taiwan in a way it would struggle to do so with Beijing and the People’s Republic of China (hereafter referred to as China).

Saint Lucia at 616 sq km with 179,000 residents and Taiwan at 35,980 sq km with 23 million are both relatively small island nations compared to surrounding states.

Each resents the idea of foreign interference in its national life, with Taipei naturally regarding Beijing’s governance of China as the biggest issue in their foreign policy, and each seeks a future that relies on greater engagement with the global economy.

Saint Lucia is an importer of customers and commercial activity, at present chiefly within the tourism and finance sector.

Taiwan is an exporter of machinery and electronics. Each can offer the other expertise in these spheres.

Taiwan is among the world’s global leaders in tech and emerging industry.

Saint Lucia’s has benefitted from this in its drive towards greater digitisation and connectivit; the Government Islandwide Network (GINet) Project rolled out earlier this year was funded, in part, by the Taiwanese government.

Taiwanese technical expertise is also being utilised in the redevelopment of Hewanorra International Airport. For over 20 years the airport has been earmarked for upgrade, with a number of attempted starts stalling along the way. Just as tourism is a cornerstone of Saint Lucia’s economy, the infrastructure upgrade seeks to deliver an airport that would facilitate the national goal of doubling the island’s room stock over the next fifteen years.

In turn, as August also saw Castries and

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elect its own local leaders.

In 2014 the CPC held “time [is] on its side” and that, accordingly, it would ignore Western overtures on the disputed territories of Tibet and Xinjiang. These ongoing territorial disputes, when met with stern resistance from Beijing, give rise to the risk of another outbreak of instability. Despite Xi’s strongman image, the CPC recognises that China’s economy must keep growing lest it risk the Party’s grip on power.

How it manages these territorial disputes, including with Taiwan, will be critical to its relations with Western nations. The outbreak of another Tiananmen Square-style crisis — as horrifying as the idea is to consider — would also deliver a knock-on effect, one that could not only see Beijing isolated, but renewed sympathy for the cause of Taiwanese independence.

The Question of Chequebook Diplomacy

Xi Jinping, President of China.

Considering that the U.S.-Caribbean Strategic Engagement Act of 2016 still has not been implemented, observers of Caribbean geopolitics maintain the perspective that Washington believes the Caribbean is “too democratic and not poor enough” to warrant long-term U.S. engagement. In the backdrop, China’s latest overtures to the Caribbean include the promise that adherents of the One-China policy will be able to access the resource toolkit of the Belt and Road Initiative—a development that will prove attractive to many prime ministers of the region.

Taipei form a sister city agreement on the municipal level, it is hoped the airport’s expected opening in Q3 of 2020 will not only boost tourism but also see an even greater increase in the flow of people and resources between the two capital cities.

Conversely, as 2018 has seen Beijing up the pressure on Taipei internationally, the need for Taiwan to market a strong international brand and generate global interest on the lives and culture of all Taiwanese has never been more crucial.

Success here means that despite Beijing’s

efforts to diminish the difference, the global consciousness of the Taiwanese cause and its distinctive culture will retain a high profile globally.

The Beijing Equation

Taiwan’s relationship with Saint Lucia and the world at large will always be informed by its status alongside Beijing. Since taking office in November 2012, President Xi Jinping’s tenure has not only seen tensions flare with Taipei, but also in Hong Kong surrounding the territory’s right to

Saint Lucian ties with Taiwan are strong, and 2018 has seen them deepen further.

Efforts to grow the relationship have not been one way; while Taiwan has invested heavily in Saint Lucia, so too has Castries’ opening of an embassy in Taiwan in 2015 — Saint Lucia’s first in Asia — shown a mutuality. What’s more, it is not only culturally but politically that Saint Lucia finds far more in common with Taipei than it ever could (in present circumstances) with the CPC’s authoritarian rule in Beijing.

This notwithstanding, the efforts by the CPC to have nations switch recognition of China’s rightful government from Taipei to Beijing have been robust over the past year, with Dominica and El Salvador switching sides earlier in 2018.

For Saint Lucians who wish to see the relationship maintained with Taipei, the reality of Beijing’s economic growth and capacity to provide substantial investment is immense, even if history shows such investment has at times come with big caveats or a failure to deliver.

For those who contend the Taipei-Beijing relationship will always ultimately be one of chequebook diplomacy, 2019 and beyond will place a new pressure on the relationship between Taipei and Castries.

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The Next Chapter: the 11th annual St. Lucia-Taiwan Partnership TradeShow

The advantage of ongoing relationships is familiarity; that, as time progresses, partners come to better know each other, understand each other and identify common pathways for progress. This is true of the evolving links between Saint Lucia and Taiwan.

Following hot on the heels of a Prime Minister Chastanet-led Saint Lucian delegation’s visit to Taiwan in October, the 11th annual Saint Lucia-Taiwan Partnership Tradeshow, to be held November 23rd to November 25th at the Golden Palm Events Centre in Rodney Heights, is the next great event in this relationship. It will also seek to build upon the groundwork laid earlier this month when a visiting Taiwanese delegation met with local business leaders, including Hubert Emmanuel, Saint Lucia’s ambassador to Taiwan from 2016 to 2018.

Notably, this event will seek to go beyond government relations, placing an emphasis upon the business community, and forging links between small and medium sized businesses between the two nations.

Global headwinds may await this bilateral relationship in 2019, but the building of the relationship between the people of two nations will ultimately grow strongest via enduring links in the private sector. The Saint Lucia-Taiwan Partnership Tradeshow is the next stepping stone in this path.

This notwithstanding, the efforts by the CPC to have nations switch recognition of China’s rightful government from Taipei to Beijing have been robust over the past year, with Dominica and El Salvador switching sides earlier in 2018

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IN COLD WAR ECHO, RUSSIA RETURNS TO U.S.’S BACKYARD Moscow steadily rebuilds ties in Caribbean and Latin America; ‘an attempt to challenge U.S. leadership’

By Brett Forrest, Wall Street Journal National Security & Investigative Reporter

Russian President Vladimir Putin (right) and Grenada’s Ambassador to Russia Oleg Firer engage in a diplomatic ceremony at the Kremlin in October 2017

R

ussia is solidifying its footing close to U.S. shores, in the Caribbean, a region Moscow abandoned after the Cold War and has gradually returned to with investment, diplomacy and military hardware.

In recent months Russia has developed a multidimensional relationship with the tiny nation of Grenada, whose name has resonated with many Americans since President Ronald Reagan invaded in 1983 rather than see another leftist-revolutionary government follow Cuba and mature in the Caribbean.

Russia’s presence in the Caribbean is now “stronger than at any time since the end of the Cold War,” said the Caribbean Council, a London consulting firm.

The stakes in a regional U.S.-Russia rivalry are small compared with the Cold War era, with its Cuban Missile Crisis and fears of nuclear war. But that hasn’t halted a competition for influence in the Caribbean and Latin America.

Gen. John Kelly, who is now White House chief of staff and was then in charge of the U.S. military’s Southern Command, said in 2015 that President Vladimir Putin’s Russia was challenging the U.S. in the region.

Gen. Kelly’s successor, Adm. Kurt W. Tidd, echoed that view last year: Russia, he said, “uses soft power tools in an attempt to challenge U.S. leadership in the Western Hemisphere.”

U.S. Secretary of State Rex Tillerson leaves Thursday for Mexico, Argentina, Peru, Colombia and Jamaica, an opportunity for Washington to nurture regional relationships.

Russia has been pursuing its own avenues.

Grenada opened an embassy in Moscow last summer, installing a Soviet-born dual

U.S.-Grenadian citizen, Oleg Firer, as ambassador. In September, Grenada — population 111,000 — and Russia (140 million) granted each other’s citizens visafree travel.

For Grenada, it is all about investment, trade and tourism.

“Russia is a gateway to Eurasia for us,” said Mr. Firer, who was born in Ukraine and has championed the expanded relationship with Moscow. “We see it as a huge market.”

The two governments are working on deals in agriculture, energy, real estate, and technology. Global Petroleum Group, a subsidiary of the Moscow-based conglomerate Sistema , discovered natural gas in Grenadian waters in the fall.

“We’re not going to start purchasing arms,” said Nickolas Steele, Grenada’s minister of health, social security, and international business. “We went the way, during the last Cold War, in aligning ourselves with one doctrine in particular, one nation in particular, and finding turmoil at our own expense. At this point, our relationships are based purely on economic benefit.”

Continued on page 8

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Banks find a use for blockchain: cross-border payments

The JPMorgan-led Interbank Information Network is starting to work at scale

By Laura Noonan, FT Investment Banking Correspondent

F

inally banks may have found a problem that blockchain is able to solve now and at scale: crossborder currency transfers.

The banking sector has seen years of overhype and experimentation surrounding distributed ledger technology, but one project led

by JPMorgan Chase, the Interbank Information Network (IIN), is quietly producing results at scale.

The IIN is essentially a more efficient way for participating banks to transfer US dollars across borders and institutions. Its elevator pitch is that problematic payments, which are currently being held up for as much as two days for compliance issues or to resolve errors, could go through almost instantly under the new system.

The network does not have the wow factor of other fintech innovations like chatbots and robot traders, but its obscurity does not detract from its significance. A success would buoy spirits in an industry that has spent $1.7bn on blockchain projects which have yet to meet banks’ “lofty expectations”,

according to analysts at market intelligence advisory Greenwich Associates.

“Certainly from a size of ecosystem perspective and starting to do something in production, having [so many] banks [participate] and some of the world’s biggest banks is a big deal,” says David Treat, head of Accenture’s capital markets blockchain practice.

Until the end of 2017 “everything was experimental and prototypes, production was something small and safe in the corner,” he says. “What we’ve seen this year is a move to real life production. And now the first of those ecosystems is taking on real life use cases.”

Mr Treat hints that while the IIN is out on its own now as the industry’s only blockchain project of scale, it will not enjoy that status for long. “More and more proof points are coming out that are building confidence among leaders in this industry, that we’re actually at the point where real value is going to happen,” he adds.

There is still an open debate on what “real value” is. Blockchain’s early evangelists saw the technology’s potential for greatly reducing banks’ costs by eliminating manual reconciliation work and other labour

intensive database tasks.

Banks do not expect IIN to generate significant savings, however, either now or in the future.

“Blockchain is frankly a great technology, however, I’m not sure that the initial hypothesis that everyone had about saving significant sums of money is where you’ll see a lot of the new products being developed,” says Umar Farooq, head of blockchain at JPMorgan. “It will be much more about doing things that could not be done without blockchain technology, creating new products . . . When you look at it purely as an expense-saving mechanism that limits the potential of the technology.”

Instead of fixating on costs, JPMorgan has spoken about the potential for IIN to help banks fend off competition from fintech start-ups which have exploited inefficiencies in cross-border payments to offer cheaper and faster solutions.

Whether IIN can become big enough to do that, and to have any sort of real impact in the marketplace, remains to be seen.

JPMorgan estimates that IIN will handle more than 300,000 transactions a day, a relatively small number when compared with the 14.5m cross-border payments

processed through the Swift system daily.

The number of transactions grows exponentially as new banks join IIN. The network is growing fast, and now has more than 100 members. The dynamic between the IIN and fintech is an interesting one. For years, banks have been insisting that fintechs are friends, not foes, and Mr Treat says that spirit still generally holds.

In the case of IIN, however, fintechs had minimal involvement in the network’s development, and the project’s objectives include protecting market share which fintechs, such as Transferwise and Revolut are targeting.

“If a fintech takes an aggressive stance against a bank and it’s not a two-way partnership, sure, there’s massive competition and a very tough road,” says Mr Treat. “There are more (bank/ fintech relationships) that are actually flourishing . . . than where there’s outward competition.”

Mr Farooq says that while fintechs were “not currently involved directly” in the IIN, “we actively participate with fintechs across all parts of the bank”.

Inefficiency in banks’ legacy payment systems is arguably one of the tougher problems for a third party fintech to address, since the solution requires an intimate knowledge of the problems, which most fintech outsiders simply would not have.

The next big blockchain effort might be a more collaborative venture across the banks-to-fintech divide.

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IN COLD WAR ECHO, RUSSIA RETURNS TO U.S.’S BACKYARD Continued from page 6

Russia’s Foreign Minister Sergei Lavrov (left) and Grenada’s Foreign Minister Elvin Nimrod sign an agreement on visa-free travel in September. Photo: Shcherbak Alexander/Tass/Zuma Press

Arms sales wouldn’t be unusual for Russia. In the fall, Moscow said it was preparing to sign a military cooperation agreement with Suriname, on the northeastern Atlantic coast of South America. Russian officials didn’t respond to requests for comment about the agreement.

Niermala Badrising, Suriname’s ambassador to the U.S., said Suriname is also pursuing engagement with Russia

in trade, technology and tourism. “As a small country, in terms of geopolitical and geostrategic cooperation, I think it makes sense to forge stronger relations in many areas with different countries,” he said.

In January, U.S. Navy officials said they spotted a Russian spy ship in the Caribbean, heading toward the Florida coast. Last year, the U.S. spotted the same ship, the Viktor Leonov, off Connecticut and Georgia.

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Some experts regard Russian maneuvers as a calculated challenge to American leadership in the region, a response to what Russian officials see as an encroachment in Eastern Europe by the U.S. and the North Atlantic Treaty Organization.

“Russia was looking for a way to send a strategic message to the U.S.…‘If you muck around with us, we can muck around in your backyard also,’ ’’ said Evan Ellis, an associate professor of Latin American studies at the U.S. Army War College Strategic Studies Institute.

The U.S. Southern Command, which administers a naval base at Guantanamo Bay, Cuba, oversees approximately 7,000 soldiers in the Caribbean and in Central and South America.

During the Cold War, the Soviet Union provided aid to Cuba, propping up a communist ally in the Western Hemisphere as a counterweight to NATO’s European operations.

Russian interest in Latin America dwindled in the 1990s, but revived following the Russo-Georgian War in 2008, when Daniel Ortega, an erstwhile Soviet ally who had regained the Nicaraguan presidency, recognized the Georgian breakaway republics of Abkhazia and South Ossetia as sovereign states.

Soon, Mr. Ortega was accepting shipment of Russian transport helicopters. Also in 2008, Russia conducted Caribbean maneuvers with the Venezuelan Navy.

For the next six years Russia’s armsexport agency, Rosoboronexport, was cutting weapons deals with a handful of Latin American countries.

Russia sold Latin America $14.5 billion in arms between 2001 and 2013, roughly 40% of arms imports to the region, according to the Stockholm International Peace Research Institute. Most of those deals were with Venezuela.

At the outset of the Ukrainian crisis

of 2013 and 2014, Russia redoubled its efforts to strengthen ties in the Western Hemisphere. Mr. Putin visited Argentina, Brazil, Cuba, and Nicaragua.

Among the Russian projects to emerge since then were a 2015 agreement with Nicaragua to let Russian warships access its ports; natural gas exploration and nuclear research in Bolivia; a hydroelectric facility in Ecuador; and bauxite mines in Jamaica and Guyana operated by United Co. Rusal PLC, the aluminum producer whose CEO, Oleg Deripaska, has been involved in business deals central to Kremlin interests.

Russian companies and state agencies also maintain auto-manufacturing, powergeneration, and oil operations in Cuba, and Russian oil giant Rosneft is closely linked to Venezuela’s state oil company, Petróleos de Venezuela SA. While Russia continues its push, a drop in U.S. import levels could encourage Caribbean countries to seek trade relationships elsewhere. In 2016, U.S. imports from the 17 countries of the Caribbean Basin Economic Recovery Act declined for a fifth consecutive year to $5.3 billion, from $11.9 billion in 2012, according to the Department of Commerce.

Among Caribbean countries that have perceived the potential of building ties with Russia, Jamaica appointed a consul to Russia in 2016. Antigua and Barbuda also has a Moscow-based consul, as does Saint Vincent and the Grenadines.

“We maintain our traditional relationships, but we are seeking new relationships at the same time,” said Mr. Steele, the Grenadian government minister.

“One cannot expect an island nation to develop on its own.”

This article first appeared in the February 1, 2018, print edition of the Wall Street Journal as ‘Russia Returns to America’s Backyard.’

Members of a U.S. congressional delegation to Grenada view captured Soviet ammunition in Grenada in November, 1983. (AP Photo/John Duricka) Photo: John Duricka/Associated Press

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