Caribbean Crises Update: 15 July, 2021

Should the Biden administration decide against US military intervention in Haiti, such a decision runs the risk of setting a dangerous precedent. Moreover, it will serve as a signal to America’s allies and adversaries around the world. For allies such as Taiwan it poses a dangerous question: If the United States is reluctant to use its military power to aid a friendly nation in its own backyard, what does that say about the US commitment to come to Taiwan’s defense in the event of a Chinese attack? The Biden administration has promised to support Taiwan if China turns its sights on the island nation. A reluctance to answer Haiti’s request for military assistance leaves little margin for error when US actions do not measure up to US words and promises.

From the vantage point of an American adversary, the absence of a US intervention in Haiti could serve to entice it to increase its footprint and influence in the Western Hemisphere. Perhaps even to add fuel to the fire and bring about further instability that could be used to its advantage. Venezuela is a convenient base of operations for the usual lineup of suspects- China, Russia and even Iran, to orchestrate moves in the Western Hemisphere. Or Venezuela can initiate action on its own, albeit in limited fashion. Cuba has been a close friend and ally of the Maduro regime. If the situation in Cuba deteriorates, Venezuelan assistance will be fast in coming. Exactly what form the assistance would take is open to debate given Venezuela’s limited resources of course.

China has been moving beneath the radar in the Western Hemisphere for years. Its footprint has not yet been established firmly, yet inroads have been made in Venezuela and other places. Beijing has deepened ties with a number of nations in Latin America and the Caribbean. China is looking to develop and establish a permanent presence in the region. Right now, Panama seems to be the likely target, but in the event of an American slip up elsewhere in the region, the Chinese footprint could end up in the Caribbean.

The United States must weigh its moves in the Caribbean carefully and take into account the intentions and agendas of its global competitors. The Biden administration’s foreign policy team has not had smooth sailing so far this year. From butting heads with China, to the resurgence of the Taliban in the last days of the Afghan drawdown, the White House and State Department have been rocked back on their heels, so to speak. Still, that provides no justification to ignore the importance of the Caribbean to US policy. Friends and enemies alike are watching events in Haiti and Cuba closely.

In this era of strategic competition the Caribbean has regained significance. Washington needs to remember this.

Post-Pandemic Storm Clouds are Gathering Now

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Both at home and abroad the shape of the post-pandemic world is gradually coming into focus. Geopolitically, this translates to a wave of unforeseen change likely to be in the cards for the later months of 2020 and stretching into early 2022 perhaps. How large, and encompassing this wave will be remains to be seen. A host of variables are going to influence the form, and power of what is to come.

China appears to have a difficult road in front of it as global opinion turns against Beijing and its handling of the pandemic. Suspicion, and mistrust of China and its intentions are nothing new. But the fact that China might’ve been complicit in knowingly transmitting COVID-19 to areas beyond its national borders is making the world take notice, and question just what China’s long-term political, economic, and military goals are. It would also appear that a major move is coming soon concerning Hong Kong. I’ll touch on that more either over the weekend or next week.

In Russia, Vladimir Putin is coming to terms with the reality that his rule will not last forever, and the vast majority of foreign adventures that Russia has engaged in over the last fifteen years have ended badly for his country. Ukraine is a shining example of how Russia’s ambitions have collided head-on with reality. Nothing has been gained after six years of low-intensity conflict between Russian-supported proxy groups and the Ukrainian military. It is true that Crimea has been annexed, but the move has not yet produced any strategic advantage for Russia or its plans for the region. In short, Russia is going to have to make a move somewhere in the near future to jumpstart its long term geopolitical plans. How Moscow moves in Libya, and Syria over the summer could tell a lot about what is to come.

For the United States, a potential crisis is brewing close to home. A group of Iranian tankers is currently in the Atlantic and heading west. These ships, carrying gasoline and related products, are on a course for Venezuela where they will be offloaded as part of a cash-for-oil/gas deal currently in place between Tehran and Caracas. Earlier this week, the US announced it is deploying warships, and maritime patrol aircraft to the Caribbean as the ships grown nearer. In response, Venezuela announced its warships will escort the tankers to Venezuelan ports. The US is wary of these recent moves given it has stringent economic sanctions in place against both nations. There’s growing concern in Iran and Venezuela that the US will attempt to interdict the tankers while they are in the Atlantic and by early next week it will be clear if a confrontation is likely or not.

Iran Warns US Against Interfering With its Tankers

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Iran is growing concerned about the prospect of potential US actions and measures over an Iranian fuel shipment to Venezuela. Yesterday, Iran’s foreign minister Mohammad Javad Zarif lodged a complaint with the United Nations warning against the movement of US warships to the Caribbean as Iranian tankers carrying gasoline and other products approach the region. The shipment is part of a larger deal struck between Iran and Venezuela, two nations which the US has imposed oil export sanctions on. Iran also transmitted a warning against any US threat against the Iranian ships, sending the message through the Swiss embassy in Tehran which handles US interests in Iran. On Saturday, Iran’s Fars News reported it had received information that US warships are in the Caribbean for a ‘possible confrontation with Iran’s tankers.’

Iran’s shipment comes as Venezuela is struggling with a major gas shortage. Although US sanctions have strangled Venezuela’s economy, the government of Nicolas Maduro has stubbornly refused to make any concessions to Washington which might ease the restrictions somewhat. Iran is dealing with US sanctions itself and Venezuela is one of the few nations willing to accept Iranian shipments. The formula is simple: Venezuela needs the gasoline, and Iran desperately needs money. The fact that Iran is willing to risk a major US response to this attempt to undermine sanctions speaks volumes of the Islamic Republic’s present condition. The combination of US economic sanctions, domestic unrest, and the effects of the COVID-19 pandemic have created a perfect storm of sorts, and the future looks bleak, and uncertain for the Tehran regime.

At present, the tankers carrying Iranian products are presently in the Mediterranean and moving west towards the Strait of Gibraltar. It will be some time before they exit the Med, cross the Atlantic, and are prepared to enter the Caribbean. Iran’s behavior in the coming days should offer some indications about Tehran’s plans regarding the shipment to Venezuela.

Venezuela Rising on the International Agenda

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Over the summer as tensions in the Middle East have dominated the attention of the world, Venezuela fell between the cracks of the international agenda. On Wednesday, President Trump moved to remedy this at the UN General Assembly. In a meeting with Latin American leaders who do not recognize Nicolas Maduro as the rightful leader of Venezuela, Trump reaffirmed the US commitment to Venezuela and pushed back against perceptions that US concern about the political unrest, and economic distress in that country has waned. The US, and nearly sixty other nations around the world support opposition leader Juan Guaido and consider him to be the rightful leader of Venezuela. Unfortunately, Guaido’s international status was hurt somewhat by the abortive coup the opposition launched in the spring, which accomplished nothing. Maduro remains in power, bolstered largely by Cuban, and to a far lesser extent, Russian support.

Meanwhile, as the meeting at the UN played out, Nicolas Maduro was in Moscow for discussions with Russian leader Vladimir Putin. Russia has been a strong supporter of Maduro and his government, providing generous loans, and assistance for Venezuela’s military, and petroleum industry. There’s little chance of the two leaders coming to an agreement on additional loans or material support in this meeting. However, Maduro will return to Russia for another meeting with Putin early next month during the Valdai Club meeting in Sochi.

The Argentine Headache

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Argentina is on the brink of a financial crisis once again. Current leader Mauricio Macri’s loss to  left-wing opponent Alberto Fernandez in the primary election has caused a swarm of financial repercussions. The S&P Merval, Argentina’s main stock market plunged 48% on Monday. It was then second largest drop of any major stock index since 1950. The Argentine peso dropped 15% versus the US dollar on Monday as well. These losses extended on Tuesday. The wide margin of Macri’s loss is what triggered the financial earthquake. Investors were expecting him to be defeated, yet not to the extent that he was.

Now the future appears uncertain. The looming probability of a sovereign default on the country’s IMF loans is sending investors scrambling for cover. The emerging political scenario is causing concern around South America and beyond. Should the Peronists return to power, Argentina will once again be ruled by a leftist government. Brazil’s right-wing President Jair Bolsonaro is publicly warning of a possible Argentine refugee crisis affecting his country in the future. Brazil is already contending with waves of Venezuelan immigrants streaming into the northern region of the country, fleeing the economic and political crises in their homeland. The possibility of a second refugee crisis at Brazil’s southern border is unpalatable to say the least.

After the downturn in global markets yesterday stemming from global recession fears, it would appear that the Argentine headache will add to the increasing concerns among investors about the health of the global economy, as well as the growing influence that the geopolitical climate has on markets and national economies this summer.