CARICOM’s Fault Line: Between the Eagle and the Dragon - U.S./China Relations and the Battle for Influence

The Caribbean Community (CARICOM) stands at a precarious hinge: small economies with limited margins for error must choose how to leverage external capital, influence, and institutions in a polarised world. The United States, the longstanding hegemon, offers trade, remittances, and institutional legitimacy. China, via the Belt & Road Initiative (BRI) and allied institutions like the New Development Bank (NDB), offers rapid infrastructure capital and alternative leverage. For a microstate like Nevis, the stakes are existential: even a single loan can tilt sovereignty; a drop in U.S. tourism can pull the rug from under livelihoods. By using Nevis to interrogate this dialectic, we are able to magnify the dilemmas facing the region.

The Eagle and the Dragon — a vivid symbol of CARICOM’s struggle between U.S. power and Chinese influence.

The Chinese Thesis: Latent Influence and Potential Ramifications

China’s inroads into CARICOM are accelerating. States from Jamaica to Guyana to Barbados have signed Belt & Road memoranda or received Chinese-financed infrastructure projects. The rationale is compelling: Western development institutions often move slowly, impose strict conditionalities, and shy away from risk among small states. China, by contrast, offers the promise of execution speed, large-scale project finance, and diplomacy that seemingly privileges de facto development over ideological constraints.

Yet in the case of St. Kitts and Nevis, Beijing has yet to participate in any significant capital investment. Their influence has been constrained and attraction diminished by the firm presence of the Republic of China (Taiwan). Which has created a uniquely complex and distinct situation setting Nevis aside from the rest of the Caricom. It means that, for now, the federation has been spared the direct entanglements of Chinese project finance, even as its neighbours increasingly host Beijing-backed infrastructure. However, should China enter the Nevisian space, the ramifications would be profound and multifaceted.

First, the economic implications: a single Chinese loan or infrastructure project in Nevis could dominate the fiscal balance sheet, creating disproportionate debt exposure. Unlike larger economies, Nevis lacks the absorptive capacity to manage overruns or defaults. Second, the political ramifications: Chinese capital is rarely neutral. Financing often arrives bundled with diplomatic expectations, signalling closer alignment with Beijing and potentially eroding the island’s unique diplomatic posture as an ally of Taiwan. Third, the geopolitical consequences: a Chinese-built asset, whether a solar grid or port facility, would be read internationally as a marker of Beijing’s presence in a strategically sensitive microstate. Finally, the sovereignty risks: in a jurisdiction where each project looms large, control over key infrastructure could shift long-term leverage toward the creditor, constraining policy autonomy.

As a Nevisian journalist observed at a public roundtable: “One Chinese loan here is not just a project; it’s the whole economy mortgaged.” That phrase captures the asymmetric leverage: the smaller the state, the more potent each dollar of capital becomes. In larger states, counterweights may exist. In microstates, the entry of Chinese financing could shape not only the economy but the entire political order for decades.

The U.S. Antithesis: Market Anchors, Institutional Ties, and Erosion

Washington’s role in the Caribbean remains dominant. The U.S. absorbs the bulk of CARICOM’s exports, supplies essential imports, and is the main source of diaspora remittances. In one past decade, CARICOM exported over US$12 billion to the U.S. annually, while importing roughly US$11 billion. Trade collapsed under COVID-19 but recovered: by 2021, CARICOM exports to the U.S. grew ~20%, imports ~50%.

For Nevis, U.S. dependence is even more acute. Tourism from the U.S. is a pillar of its service-sector economy. Remittances from Nevisians abroad in cities like Miami or New York sustain households, investment, and consumption. Any shock in U.S. demand, economic downturn, visa restrictions or even airline changes disproportionately impacts Nevis.

Washington also exerts soft control via regulation. Nevis (and the federation) maintain offshore financial services as a revenue base. But compliance with U.S.-imposed “tax haven” scrutiny, beneficial ownership regimes, anti–money laundering rules, and reporting clauses means a heavy regulatory overhang. U.S. Treasury and regulatory institutions can shift rules, impose new standards, or demand disclosures that squeeze Nevis’s financial sector. In effect, U.S. power is not always about direct lending: it is embedded in the rules that the Caribbean must play by.

Aid, and by extension institutions like USAID, in theory help legitimise U.S. presence. In 2023, the U.S. provided ~US$456 million in assistance to CARICOM states, especially in governance, health, and disaster response. But under the current administration, USAID is said to be suffering political hollowing out: leadership politicization, budget instability, shifting priorities away from sustained development. Critics warn that this degrades U.S. credibility, especially in microstates that rely heavily on consistent technical assistance. When USAID’s backing looks erratic, the U.S.’s appeal as a stable development partner wanes.

Nevis voices reflect this tension. While Premier Mark Brantley firmly asserts the importance of external partnerships, he is also cautious about overcommitment to any single power. In 2021, he publicly thanked the government of Taiwan for a CCTV command centre in Charlestown, “a significant act of generosity with regard to the safety of the people of Nevis,” he said, adding, “I always say Taiwan is not only a friend; Taiwan is our best friend.” That remark underscores the pragmatic multiplicity of alliances for Nevis, rather than blind loyalty to one hegemon.

Here lies a unique dimension: St. Kitts and Nevis is not only a microstate within CARICOM but one of the few global jurisdictions to maintain full diplomatic recognition of the Republic of China (Taiwan), rather than the People’s Republic of China in Beijing. This has made the federation an investment destination for Taiwanese capital, technology, and aid further differentiating it from its CARICOM peers. While larger Caribbean states have turned to Beijing for infrastructure and finance, Basseterre has leaned on Taipei, entrenching a highly unusual geopolitical identity.

As Foreign Minister (before focusing fully on Nevis), Brantley also emphasised bilateral ties with the U.S. and “key partners” as essential to national interest. “Our bilateral relations with … the United States remain strong,” he declared in late 2021, signalling continuity in external outreach. Yet in 2023, he challenged U.S. diplomacy to support Taiwan’s remaining allies more proactively: “Occasional phone call … is not enough,” he warned, asking the U.S. to match its rhetoric with sustained diplomatic engagement. These remarks reveal his sensitivity to U.S. inconsistency: valuing U.S. support but demanding seriousness, lest smaller states be taken for granted.

A Contradiction in South-South Rhetoric

What complicates St. Kitts and Nevis’s positioning is that, while they often speak the language of Global South solidarity and express interest in extending investment links beyond the North Atlantic world, they maintain restrictions that effectively deter African investment capital. This policy stance is illogical and self-defeating. Africa, arguably the heart of the Global South, is sidelined, even as St. Kitts and Nevis invokes a rhetoric of South-South cooperation. The result is a credibility gap: the rhetoric of diversification and solidarity rings hollow when African partners are proactively confronted with barriers conceived to specifically exclude them from meaningful participation. For CARICOM as a whole, this raises uncomfortable questions about inclusivity, hypocrisy, and whether the bloc’s most vulnerable members are undermining the very multipolarism they claim to embrace.

A Mediating Force: The New Development Bank and Multipolar Finance

Amid these tensions, the prospect of the New Development Bank (NDB) looms as a structural alternative. The NDB, created by BRICS states, pledges development finance with fewer overt conditionalities and more flexible terms. If Caribbean states, including microstates like Nevis, could access it, the dependency on China or Washington might loosen.

For a government like Nevis’s, the NDB could offer a possible middle ground: a lender unaligned with U.S. central banks, less ideologically restrictive than IMF-style programs, yet institutional rather than bilateral. That potential autonomy appeals. In the broader Caribbean, Barbados’s leadership of the “Bridgetown Initiative” seeks to reform global finance in ways that favour vulnerable states; if the NDB becomes a vehicle for that vision, Nevis could benefit.

However, the limitations are real. The NDB’s capital base is modest (circa US$50 billion), far smaller than the World Bank or IMF. Its experience in microstates is untested. And looser oversight might expose small jurisdictions to misgovernance or elite capture. For Nevis, whose administrative capacity is limited, accepting NDB financing without stringent safeguards could replicate dependency in new form.

The Dialectical Dilemma, Amplified

The tension between the Chinese thesis and the U.S. antithesis yields no neat resolution. But in Nevis, the dilemma becomes acute and personal. The Chinese path offers the chance for infrastructure leaps and diversification, but for a microstate, the debt burden and sovereignty erosion are existential. The U.S. path offers market access, institutional legacies, and legitimacy however U.S. aid seems to be weakening, and regulatory leverage is ever-present. The NDB stands as a tempting third route but whether it can scale and safeguard responsibly in microstates remains unproven.

Consider a scenario: Nevis is offered a concessional loan from China to build a solar-powered desalination plant. On paper it promises energy independence, climate resilience, and prestige. But servicing that loan may require dedicating a large share of the island’s limited revenue. A failure or cost overrun would mean renegotiation or default with Beijing holding leverage.

Alternatively, Nevis could ask Washington for a grant or technical assistance for the same project, less debt, more capacity-building but then find that USAID’s funding has been delayed or redirected, making the project brittle. Meanwhile, U.S. oversight of Nevis’s offshore financial laws might bite harder that year, reducing revenue and increasing regulatory compliance costs.

Add a third dimension: if the NDB offered to underwrite part of it under more favourable terms, Nevis would need the capacity to negotiate. But its small government may lack the human resources to secure fair terms. Missteps risk debt dependency under a different label.

To a Nevisian premier, the question is visceral. Which course preserves dignity, security, autonomy and above all, ensures that when the next hurricane comes, the island is not mortgaged? The dialectic refuses to hand a moral certainty; it hands a dilemma. The eagle and the dragon circle, the hawk hovers, and the microstate must choose its path carefully, or be picked off.