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Consider This | Strategic interests, comparative advantage

“When two elephants fight, the grass suffers.” — African proverb

There is an African proverb that says: “When two elephants fight, the grass suffers.” The saying is used as a metaphor for the suffering that could result for a small country when two superpowers engage in verbal or militaristic warfare.

This week, two superpowers, the United States of America and the Peoples Republic of China, through their official spokesmen, postured about the meeting that was scheduled for Friday, March 22, between United States President Donald Trump and the prime ministers of Jamaica, The Bahamas, The Dominican Republic, The Republic of Haiti and Saint Lucia. The meeting was held at Trump’s Florida ‘White House’, at Mar-a-Lago in West Palm Beach.

Therefore, this week, we will Consider this… Was the torrid exchange between the two rival superpowers akin to two elephants in combat, and how will the grass, personified by the small countries whose leaders were invited to meet with the U.S. president, fare?

The meeting objectives

On the eve of the high-level meeting, the United States stated that the meeting was intended “to reaffirm the United States’ strong friendship with and commitment to these countries and to signal the importance of the Caribbean to the hemisphere.”

The U.S. statement continued: “President Trump will discuss his vision for the U.S.’ diverse relationships in the Caribbean and the potential opportunities for energy investment, with a view to discuss his willingness to work with Caribbean countries to strengthen security cooperation and counter China’s ‘predatory economic practices’ in the region.”

In light of this U.S. statement, there are initially some questions that need to be explored in order to more fully comprehend the motivation behind this particular meeting. If, as the statement says, President Trump wished to discuss his vision for potential opportunities and cooperation with the Caribbean, why did he not engage CARICOM? Why did he choose instead to meet with only five out of the 15 countries in CARICOM? And how did he select those he met with? Were they the ones with the leaders who were newer to their jobs? Are they the nations most engaged with the People’s Republic of China? Or are there other reasons these five men were selected to hear Trump’s plans for the entire region? To understand the full import of this gathering, those answers need to be forthcoming.

China’s retort

Once the White House statement was issued, China immediately responded to the United States spokesman about the meeting. Haigang Yin, the charge d’affaires of the Chinese Embassy in The Bahamas, promptly accused the United States government of attempting “to disintegrate the solidarity and cooperation between China and other developing countries”.

He specifically countered the characterization of China’s “predatory economic practices” in the Caribbean, dismissing it as “completely baseless, unreasonable and contradictory to the facts.”

He added: “China-Caribbean cooperation has created a large number of local jobs and strongly boosted the host country’s development and improved people’s livelihood.”

With respect to The Bahamas, Yin noted, “Our bilateral cooperation has been very fruitful. The Thomas Robinson Stadium is a grant project from China, which is now being used to host international and regional sport events. The airport highway has been built using concessional loans from China. Baha Mar has been completed and created 5,000 jobs for Bahamians and contributed substantially to the economy of The Bahamas.

“Facing the fabricated lies and irresponsible accusation, we have faith in the people, with whom rests the final judgment. We are confident that the Bahamian people and government will not be misled.”

While two elephants fight

It is not lost on informed Bahamians that the United States and China have been engaged in a trade war for the past year. Both countries have imposed substantial tariffs on exports and imports of goods from both countries. This trade war has adversely affected small countries that are caught in the cross-fire of this battle.

Since coming to office, President Trump has also persistently flexed his muscles by cancelling The Paris Agreement (on Climate Change), the Trans-Pacific Partnership (TPP), the Iran Nuclear Deal, the North American Free Trade Agreement (NAFTA) and the 1987 Intermediate-Range Nuclear Forces Treaty with Russia. He has also threatened to withdraw the United States from the World Trade Organization (WTO) and the North Atlantic Treaty Organization (NATO).

Our strategic interests

So where should The Bahamas position itself in the recent U.S.-China kerfuffle, regarding its relationship with these two superpowers? We should always seek to promote our strategic interests and not be drawn into the conflicts of these ‘two elephants’. We should recognize that, for us, our relationship with these two superpowers is not an ‘either/or’ position, but rather a ‘both/and’ proposition. It remains in our strategic interest, while allowing these two superpowers to battle it out among themselves, to remain neutral regarding their conflicting positions. We should recognize that we must foster a strong relationship with both the U.S. and China. There are ample precedents for this position.

We should never forget that, while the United States imposed an embargo against our southern neighbor, Cuba, for many decades, The Bahamas refused to be drawn into that vicious vortex. We remained sympathetic to the unjust, inhumane decades-long sanctions that the United States imposed on that island-nation in the 1960s. It remains in our strategic interest to maintain normal diplomatic relations with Cuba, notwithstanding the U.S. position on that nation.

Similarly, we should be careful not be drawn into the United States’ “attack” on the duly elected government of the Republic of Venezuela and continue to respect the sovereignty of Venezuelans to determine their own future.

By the same token, we should continue to foster healthy relations with our largest trading partner, the United States of America. Many Bahamians have migrated to the United States and many thousands were educated there. Furthermore, our sustained economic welfare is deeply dependent on a continued healthy relationship with the United States.

In like manner, it also remains in our strategic interest to continue to nurture a strong, healthy Bahamian-Chinese relationship. We have benefited much from that relationship already and considerably more will be gained by an ongoing strengthening of our affiliation with China.

We simply cannot allow the political, cultural and business differences of these two ‘elephants’ to cause us to choose one country over the other. We must insist on promoting our strategic interests by fully engaging both countries, despite their differences with each other.

Comparative advantage

The Bahamas has historically experienced a comparative advantage in the area of offshore financial services. For centuries, we have been fortunate to develop our economy without the imposition of income, inheritance, sales, death and capital gains taxes. That landscape is rapidly and radically changing, principally by the neo-colonial exploits of and interventions by the European Union. They are determined to irreversibly and irreparably alter the status quo, ostensibly under the guise of strengthening our anti-money laundering and terrorist financing legislative regimes.

Because we have not sufficiently and strategically been able to persuade our northern neighbor to intervene in this attack on our sovereignty and our comparative advantage, we have lost our advantage as a legitimate offshore financial center.

We must determine whether these recent attacks on our sovereignty by the European Union are yet another reason to foster closer ties with China. We must take whatever steps are necessary to safeguard our advantage in this field by promoting our strategic interests, which include forging closer and deeper political, economic and cultural relationships with countries who will have our backs.

Conclusion

Our political leaders must ultimately appreciate that, for the past two decades, our nation has been assaulted by countries who have sought to promote their own strategic interests at our expense.

In the final analysis, we must fully understand the extent to which we are adversely affected by the collateral damage that results from the geopolitical skirmishes that arise when two elephants fight. We must formulate policies and take steps, in some instances drastic, but always measured and very well-calculated, to preserve the rich green grass of our homeland from the elephantine effects of those who do not now and never will put our interests before their own.

Philip C. Galanis is the managing partner of HLB Galanis and Co., chartered accountants, forensic & litigation support services. He served 15 years in Parliament. Please send your comments to pgalanis@gmail.com.

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