New Delhi: Prime Minister Narendra Modi’s visit to Guyana—the first by an Indian leader in 56 years—is part of India’s larger plan to bolster ties to South America and the Caribbean, a region once considered the US’s backyard and now China’s den.
For Modi, Guyana will be the third country in South America, and the first from the Caribbean Community (CARICOM), that he has visited since first assuming power in 2014. It’s the first visit by an Indian prime minister since 1968.
South America is of economic importance given the large reserves of minerals, including lithium, copper, graphite and nickel that are all important for modern technology and the transition to cleaner energy sources. Large reserves of oil in Venezuela and Guyana, along with the riches in timber and agriculture, make the region an important economic engine of the world.
India has been pushing since 2017 for a Free Trade Agreement with Peru—a South American country that is part of the ‘lithium triangle’ that also consists of Bolivia, Argentina and Chile. They are believed to hold around 56 percent of the world’s lithium supply, important for its use in batteries.
While lithium mining has yet to be legalised in Peru, the government has indicated that it is looking at passing relevant legislation to enable the extraction of the metal soon. Indian External Affairs Minister S. Jaishankar has made two tours of the region in 2022 and 2023, visiting Brazil, Paraguay, Argentina, Guyana, Colombia, the Dominican Republic, and Panama.
India has opened two new missions in the region in 2022—Paraguay and the Dominican Republic—as it looks to bolster its diplomatic footprint in South America.
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The challenge from China
During the visit to Guyana, Modi will also be co-chairing the second India-CARICOM Summit. The first summit of the 15-member regional organisation was held in 2019 on the sidelines of the United Nations General Assembly (UNGA) in New York City.
A heartfelt thank you to the Indian community in Guyana for their warm and spirited welcome.
They have shown that distance is never a barrier to staying connected to one’s roots. Glad to see the community making a mark here across different sectors. pic.twitter.com/BED9nxnEuZ
— Narendra Modi (@narendramodi) November 20, 2024
CARICOM members include Antigua and Barbuda, Barbados, Bahamas, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, Saint Lucia, St. Kitts and Nevis, St. Vincent and the Grenadines, Suriname and Trinidad and Tobago.
The big challenge that India faces in this region is China. Extensive economic engagement, high-level political ties, and a growing cultural footprint all mark Beijing’s outreach to CARICOM.
It is one of the largest trade partners with countries in the region and also an important lender for projects in a number of fields such as infrastructure, energy, and mining. Since 2000, China has, either through loans or grants, given nearly $300 billion to the countries in CARICOM and South America, according to AidData, a research lab at William & Mary.
The US has long defended the region from outside interests for two centuries since the Monroe Doctrine was first enunciated in 1823, facing off against European empires, two World Wars, the Cold War and reformist democratic movements to maintain their interests in Latin America and the Caribbean. However, in recent years, a rising China has challenged its economic heft in the region.
Donald Trump’s return to the White House in January might see an evolution of US foreign policy along the lines of the doctrine, given that he famously praised it at the United Nations General Assembly (UNGA) during his first term.
But the US will still have to contend with an entrenched China—a challenge faced by Indian policymakers in the region as well.
China’s engagement with South America
All 12 countries of South America, including private businesses in Paraguay—a country that maintains official ties with Taiwan and not China—have received Chinese funding between 2000 and 2021.
According to AidData, China has lent $261 billion to the countries in South America across 1,368 projects and has given a further $1 billion in grants. Some of the projects documented by AidData include a copper mine in Chile, which received $71 million in 2021; that same year China Development Bank (CDB) gave $44 million as a bridge loan to the Bogotá Metro Line in Colombia; and even a $1.3 billion mega port in Peru that Chinese President Xi Jinping personally inaugurated last week.
The total amount lent by China amounts to roughly 6 percent of the total gross domestic product (GDP) of South America, which according to the International Monetary Fund stood at $4.25 trillion in 2024.
Almost half of South America’s entire GDP is Brazil, which is roughly $2.1 trillion according to the IMF, which is also one of the few countries in the continent to not join Xi’s flagship Belt and Road Initiative (BRI)—a $1 trillion project to finance transport infrastructure across the globe.
A closer look at the other countries paints a different picture of the amount of money owed to China by their governments.
Ecuador, a country of close to 18 million people with a GDP of $121 billion has projects worth $26.57 billion funded by China—roughly 21 percent of its total economy. Venezuela, which has long been protected by China, owes 106 percent of its total GDP to China.
Suriname, another country in South America owes roughly 32 percent of its GDP to China—receiving $1.67 billion in loans and grants with an economic size of $4.9 billion.
A number of these countries are also members of BRI. According to the Green Finance and Development Center at Fudan University, nine out of 12 countries in South America have officially joined the BRI. Almost all of the major economies of the region are a part of Xi’s ‘project of the century’.
Brazil has recently rejected joining China’s infrastructure project, according to media reports, however it is close to China in other facets of economic engagement, including trade. Brazil is currently the president of the G20 and BRICS, along with India and China.
In 2023, trade in goods between China and Brazil touched almost $160 billion, which was double its value of roughly $77 billion a decade earlier in 2012, according to the United Nations Comtrade Database. China was Brazil’s largest trading partner in 2023.
Similarly, China has become a top trading partner for a number of economies in South America, indicating its further importance to the region.
But some of China’s projects in South America have faced controversy. In Ecuador for example, the Coca Codo Sinclair hydroelectric project, which would create close to 1,500 megawatts of power faced a number of issues, including claims by Ecuadorian leaders of being forced to hire Chinese companies, structural issues including cracks and causing environmental damage in its environs.
China & CARICOM
The Caribbean Community has also been another region where China has focused its economic engagement. The total amount that China has lent to the members of CARICOM is $11.91 according to AidData, which is roughly 9 percent of the total GDP of the regional organisation, which stood at $137.6 billion in 2024.
A number of CARICOM countries, including St. Kitts and Nevis, Saint Lucia, St. Vincent and the Grenadines, Haiti and Belize, recognise Taiwan as a sovereign country and therefore are generally ineligible for Chinese funding.
However, among those that diplomatically recognise China, the Bahamas and Jamaica have both borrowed close to $6.6 billion from Beijing in the last two decades.
For the Bahamas, the $3.6 billion in loans is nearly a quarter of its total GDP of $14.8 billion. For Jamaica, the $3 billion in Chinese funding is roughly 14 percent of its total GDP of $20.5 billion, representing the economic leverage Beijing has slowly gained within the CARICOM countries as well.
While India has put in efforts to bolster ties with the members, especially given that a large number of citizens in the region are of Indian origin, Beijing has been involved economically and politically in the region for almost two decades now.
Even in Guyana, for example, where around 40 percent of the population is of Indian origin, China has lent $700 million in loans starting from 2002 and has given a further $193 million in grants for 114 projects across the country, according to AidData.
(Edited by Sanya Mathur)
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