Navigating the Trump Presidency in the Caribbean and Central America

How will the new US Administration under President Elect Donald Trump relate to the Caribbean and Central America? No-one really knows at present, and with many of the fundamental tenets of post-Cold war US foreign policy currently being re-opened for discussion it seems likely that the Caribbean and Central America will hardly be a focus of the next administration.

Nevertheless, for investors, international institutions and governments in the region, the current absence of clarity regarding Trump’s agenda for the Caribbean should be seen as an opportunity to engage and put forward new ideas and initiatives, where US engagement would be welcome and positive.

If in his remaining time in office, President Obama signs the newly passed Act of Congress for US Engagement with the Caribbean, the Trump Administration will by law be required to set out its policy toward the region. The region needs to be clear about what it would like to see in terms of new US engagement and support.

To date, The Caribbean Council has identified four key policy areas where change is now likely under a Trump Administration with impacts on the region:

1. Cuba-US Relations
The contours of Cuba-US relations under President Trump have been subject to intense speculation, creating substantial uncertainty for regional governments and investors. Although he promised to roll back the rapprochement during his campaign, a number of factors suggest that President Trump may now moderate his stance. It is debatable whether there is any political capital to be gained from reversing the course set by President Obama. The President-Elect will also come under significant pressure from the business community to uphold the special licenses granted by the Office of Foreign Assets Control (OFAC), and dismantling the embargo.

Nonetheless, domestic politics in both countries is a cause for concern, and could combine to turn both leaders away from rapprochement. While it is unclear where incoming Secretary of State and former Exxon-Mobil CEO Rex Tillerson stands on Cuba; the appointment to the Treasury Transition Team of leading pro-embargo figure Mauricio Claver-Carone, suggests that Trump will be listening closely to pro-embargo voices in the new administration. Meanwhile, as President Castro steps down in 2018 it is expected that a new generation of leadership will reflect continuity with current Cuban policy towards the US in terms of careful and slow step by step negotiation on the basis of mutual respect. President-Elect Trump’s tweets regarding former President Fidel Castro death last month death are hardly in that spirit and indicate a rocky road ahead.

2. Trade and Foreign Policy
Donald Trump’s ‘7 Point Plan’ to reformulate America’s trade policy is principally focussed on China and NAFTA, and will have unpredictable effects on the Caribbean. Stakeholders will be watching closely to see whether President Trump focuses his energies on symbolically significant trade agreements such as NAFTA, thereby leaving other regional trade arrangements such as DR-CAFTA and the Caribbean Basin Trade Partnership Act (CBTA) relatively untouched with potential advantages accruing to them as a result.

Broader trends in the foreign policy agenda are also likely to impact the Caribbean indirectly. The US is likely to be dragged into Venezuela’s ongoing political and economic crisis, which could in turn lead the Trump Administration to engage more widely with the Caribbean region, given the role which Venezuela has played over the past decade as a major source of finance and development support to the region. Deteriorating US- China relations could also see Caribbean influence becoming an important source of leverage at the UN and other international bodies.

3. Climate Change
Trump’s campaign stance on climate change represents a significant threat to the Caribbean’s vulnerable, low-lying small island states. In questioning the legitimacy of the Paris Agreement goals to limit warming to below 2 °C, and to increase financing for climate-resilient development; the Trump administration risks re-opening discussion on the long-negotiated and comprehensive agreement. With the Caribbean suffering from an increased frequency of severe weather events, the region will need to see action on a global scale to address climate change. However, Trump’s appointment of a number of climate change sceptics- including Scott Pruitt as administrator of the Environmental Protection Agency- suggests that badly needed US funding for climate change adaption programmes in the Caribbean are now likely to be put under review.

4. Immigration and Security Policy
The possibility of large scale deportations of undocumented Caribbean immigrants is overstated. A number of Caribbean governments are taking proactive measures to ready themselves for an influx of returnees. However, Trump’s campaign rhetoric overstated the difference between his position and that of President Obama, as all illegal immigrants arrested for criminal acts are subject to deportation as a matter of current policy.

The more serious area of concern for the region is the prospect of significantly tighter security at the Mexican border, leading to increased illicit trafficking through the Caribbean into the US. This is likely to displace significant quantities of drugs, arms and people trafficking towards the Caribbean route; bringing with it the attendant increases in violence, cargo contamination and official corruption that coalesce to undermine the business environment. This will to some extent be mitigated by security assistance programmes such as the Caribbean Basin Security Initiative, launched by President Obama. In the context of Trump’s self-characterisation as ‘the law-and-order candidate’, such security initiatives are likely to secure his continued support.

Following the election of President-Elect Trump, The Caribbean Council has been providing members with advice and consultancy services regarding the implications for the region. Recognised for our leading in-house expertise and unrivalled regional network, our organisation is uniquely positioned to help your business or organisation to get ahead of the curve in understanding, monitoring and navigating the political, regulatory and economic uncertainty facing the Caribbean over the coming four years. If you would like to explore further how we can help, please contact chris.bennett@caribbean-council.org.

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