A Strategy to Respond to Extra-hemispheric Actors in Latin America and the Caribbean

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This work presents recommendations for a U.S. strategy to respond to the challenges arising from the activities by the People’s Republic of China (PRC), Russia, Iran, and other extra-hemispheric actors of concern in Latin America and the Caribbean, recognizing that their engagement has potentially adverse impacts not only on the region, but on the US, as a function of its strong geographic, commercial, and other connections to it.

The U.S. response to the challenges discussed in this work includes, but must not be limited to the concept of “strategic competition.” For many, particularly outside the US, the term evokes misleading comparisons to the Cold War, while advancing the perception of Latin Americans and others as beneficiaries of a bidding process for their favor.  In reality, engagement by the PRC, Russia, Iran and other extra-hemispheric actors of concern presents a mixture of opportunities and risks which, if managed poorly, threaten not only the prosperity of the hemisphere which the US and Latin America share, but its political stability and values, for which Latin America’s leaders and populations, alongside the US, will bear the consequences.

The appropriate response to the challenges presented by extra-hemispheric actors in the Western Hemisphere, must be rooted in a discourse about values, as well as accurate shared perceptions of both the opportunities and risks.  The US has a key role in that conversation, but must engage with, not simply broadcast its positions to, its neighbors in the region.

It must be guided by a clear, realistic, and comprehensive strategic concept, and be appropriately resourced.

It must go beyond words to include increased resources, leadership attention, and strategic thinking about the region, but not merely be a competition to “bid” for the region’s loyalty or affection.

It must be adaptive and long-term, recognizing that there are no “magic bullet” solutions from single initiatives or spending increases, but rather, a protracted struggle attentive to and acting upon opportunities and risks that arise in particular sectors or country contexts.  Indeed, recognizing that resources are inadequate, and some institutions and processes central to the US response cannot realistically be made sufficiently agile and effective in the short term, the US must be prepared to struggle from a position of disadvantage, at times conducting a campaign of resistance and damage mitigation, although doing so may be anathema to the US approach to challenges.

Principles Behind the Recommended Approach

The strategy recommended by this work reflects the differing motivations and characteristics of engagement in the region by the PRC Russia and Iran, among other extra-hemispheric actors.  It seeks to accommodate the distinct opportunities and threats that arise from both the complementarity and competition between the action of each.  It also considers both the strengths and weaknesses of the U.S. in responding, stemming from its position as a pluralistic, democratic country whose economy is dominated by the private sector.

The recommendations of this work are predominantly focused on the significant and complex problem of PRC engagement, reflecting that Russia and Iran have more limited resources to act in, help or influence Latin American and Caribbean states, as well as a more limited number of states willing to work with them in meaningful ways. 

With respect to the PRC, the strategy recommended by this work reflects that, while the objectives and activities of its government and companies in Latin America and the Caribbean are primarily economic, their actions potentially affect the strategic position of the U.S., as well as the economic health and political dynamics of the region.  The US and the region are further impacted by PRC multilateral and bilateral political engagement, as well as “people-to-people” initiatives focused on the region’s populations and elites, designed to support or complement these economic objectives.  They are also impacted by PRC military activities in the region, and PRC activities in space, telecommunications, surveillance, and other digital domains, as well as commercial activities that present opportunities for the PRC to use against the US and its allies in the undesirable event of a military conflict with it.  Indeed, growing PRC aggressiveness toward Taiwan, including actions of increasing frequency and magnitude by the People’s Liberation Army (PLA), and instructions by China’s leader to the PLA to “prepare for war,” highlight that the U.S. interpretation of, and response to PRC economic, political and other engagement with the region must increasingly be evaluated in terms of the implications of such expanded presence, influence, and military and technical knowledge in a wartime scenario.

Nonetheless, the disposition of Russia, Iran, and other extra-hemispheric actors to behave in a fashion deliberately or inadvertently threatening to the U.S., in conjunction with anti-US partners in the region willing to host such threats, benefits PRC strategic interests, whether or not such actions are directly coordinated with China.   This includes Russian information warfare activities in the region, leveraging traditional propaganda platforms such as Actualidad RT and Sputnik, as well as social media, and often oriented toward expanding polarization and uncertainty and undermining public confidence in Western democracies in the region.  It also includes Iranian terrorist links in the region, including insertion of Qods forces agents in the region, as well as ties with terrorist groups such as Hezbollah.

On the other hand, actions by Russia and Iran may occasionally create liabilities for the PRC in the region by undermining the ability of the later, through support for Russia and Iran, to portray itself as a non-threatening actor.

The U.S. strategy to respond to extra-hemispheric actors in the region seeks to address the ways in which their less directly threatening activities in Latin America also impacts the strategic environment of the region, and thus U.S. equities.  This includes the impact of real or hoped for access to the PRC market, infrastructure projects enabled by PRC loans and companies, and PRC investments and partners, on the receptiveness of partners in the region to U.S. policy objectives, including their adherence to principles of transparency, rule-of-law, democracy, and good governance. 

The strategy recommended here takes into consideration how PRC resources and other support, even when provided in support of the PRC’s pursuit of its own commercial interests, may help anti-democratic actors in the region to consolidate power, change their country, and act in undesirable ways, including economically underwriting their regimes as they move against the private sector and their own legal and constitutional commitments.  Similarly, PRC-based companies seeking business opportunities for their products and technologies in the security domain, often provide undemocratic anti-US regimes with items that help them to maintain themselves in power, including riot control vehicles and systems for monitoring and controlling the population, such as the ECU-911 and BOL-110 national surveillance systems, or Venezuela’s “fatherland identity card” system,  among other types of support.

The strategy recommended here takes into consideration risk that, with 8 of the 14 Taiwan-recognizing countries in Latin America and the Caribbean, that diplomatic “flips” by those countries to the PRC will significantly expand PRC influence in the region.  Paths for that rapidly expanding influence include signing of non-transparent MOUs, compromising local politically connected elites with interests in doing business with China, and opening up local markets.  Of even greater concern, seven of these nations, for which a diplomatic flip would risk a rapid expansion of PRC presence and influence, are in Central America and the Caribbean, in close proximity to the continental United States. 

Beyond the impacts on the region and the US, such changes in recognition from Taiwan to the PRC would be, in significant numbers, strategically destabilizing.  Such changes would move Taiwan precipitously closer to international isolation, tempting the PRC to take advantage of its growing, enormous military superiority to act to forcibly incorporate the island into the PRC, potentially unleashing a war of global proportions.

The strategy recommended here also seeks to take into consideration the risks that arise from the position and opportunities that arise from the PRC commercial presence in the region, especially in the domain of port and airport operations, access to information through its presence in space, telecommunication, surveillance and eCommerce architectures, as well as its working relationships with Latin American and Caribbean militaries.  Each of these create opportunities for the PRC to potentially insert intelligence personnel, special operations teams and others into the region during wartime to put the U.S. homeland at risk, monitor or disrupt US deployment and sustainment flows, and possibly access ports and airfields in the region for operations and resupply, even without formal current day military cooperation agreements. 

In a similar fashion, the strategy presented here seeks to respond to the risk that other actors such as Russia and Iran could support the PRC through their own operations against the US from the region, particularly with the assistance of anti-US regimes such as Venezuela, Nicaragua and Cuba willing to host such military activities.

The strategy takes into consideration and seeks to leverage points of weakness of the PRC in the region.  These include difficulties in cultural understanding that inhibit the effectiveness of their diplomats, military, and commercial agents, illustrated by a higher-than-average propensity by PRC-based companies to operate and interact in ways that generate difficulties with local labor forces, contractors, and communities.  It also includes the disposition of PRC agents to focus on personalistic relations with local government and other representatives in ways that breed resentment among those excluded and put the transactions at risk when local governments or leadership changes.

In a similar fashion, the strategy considers and seeks to leverage Russia and Iran’s weaknesses, including a lack of resources to influence and help their counterparts in the region, the limited number of countries, sectors, and individuals with whom they work in Latin America and the Caribbean, as well as negative perceptions toward them by many, which limits their access and creates opportunities for collaboration by others to resist their advance.

Finally, the strategy seeks to accommodate U.S. shortcomings.  This include US limitations on resources, as well as a lack of bureaucratic and legislative agility to offer benefits or implement projects to compete with extra-hemispheric actors in the region.  Shortcomings also include difficulties of the US government to motivate the private sector to invest in areas where there may not be a clear, attractive business case.  The US must further accommodate difficulties in engaging that come from divisions in its political system, a legal and bureaucratic culture that hampers the functionality of some of its key tools for engaging with the region including USAID, the Development Finance Corporation, and the Interamerican Development Bank.

Strategic Concept

The US strategic concept for responding to extra-hemispheric actors in Latin America and the Caribbean should be built on values, effective evidence-supported communication, shaping the strategic playing field, and selective strategic actions as part of a protracted struggle, realized in coordination with like-minded democratic partners both within and outside the region. 

That approach must include the application of increased resources, leadership attention, and strategic thinking, but must go beyond attempting to “outbid” the PRC in the region.  The nature of the US political and economic system puts it at a disadvantage in a “bidding war” for the region’s loyalties.   In the agility of its response, the actions it can take, and the resources it can bring to bear, the US government is rightfully constrained by its laws, a decentralized economy dominated by the private sector, and the political imperatives of its citizens.  By contrast, the PRC can leverage the instruments of State and Party control throughout Chinese society to channel the resources of its government, as well as state owned enterprises (SOEs) and other entities in support of strategic objectives.

On the other hand, the US has its own relative advantages which it must leverage.  These include the size, diverse capabilities and innovation of its private sector, its familiarity with the complexity of desires and discourse in open pluralistic societies, and the appeal for many of the perceived US lifestyle and associated freedoms and the protection of rights.

The strategy advanced here seeks dynamic balance between two complimentary types of activities: (1) those oriented toward preventing, addressing the effects of, or otherwise dealing with the specific harmful activities of extra-hemispheric actors, and (2) shaping the strategic “playing field” in the region, and globally, within which that engagement occurs. 

Its guiding principles include:

Don’t Attempt to Block Engagement with Extra-Hemispheric Actors.  With respect to addressing partner nation engagements with extra-hemispheric actors of concern, the US cannot effectively prevent the sovereign countries of the region from economically and politically interacting with the PRC or other malign actors and should not attempt to do so.  Indeed, being perceived as doing so generates resentment among partners and other counterproductive results. 

Place the Values Issue at the Core.  At its heart, the US response to the challenges from extra-hemispheric actors of concern must be built around the elevation of the importance of values, including democracy, rule of law, and the protection of rights, and the consequences of choices regarding those values.  Efforts by China, Russia, and Iran to take “values” off-the table by arguing a moral equivalence between systems and choices put the West at a grave strategic disadvantage from the start, and thus cannot be permitted.

While acknowledging that transparent engagement with extra-hemispheric actors may promise economic benefits and short-term political convenience, the US must effectively articulate and demonstrate two key concepts to the region: (1)  that the combination of procedural democracy, rule-of-law, and market economies in which private ownership predominates, is the most credible way to achieve well-being and protect fundamental rights and freedoms, and that (2) engaging with illiberal regimes may  without the protections of transparency, strong institutions, the rule of law and a level playing field not only expose partners to the risk of being taken advantage of, but indirectly undermine their freedoms, values and de facto sovereignty.

Through the elevation of values, highlighting the long-term consequences of associated choices, the US can simultaneously achieve multiple strategic objectives: (1) helping states in the region to avoid destructive choices which will undermine their own democracy and prosperity, increasing the incentives and opportunities to turn to more malign actors as partners; (2) helping states in the region to see the PRC and other illiberal extra-hemispheric actors as potential threats which must be dealt with through caution, and not emulated; and (3) helping all states in the region, including healthy democratic countries, to see the long-term value of working with the US and other liberal Western regimes, versus non-democratic statist partners.

Shape The Strategic Space Through Transparency, Rule-of-Law, and Institution Strengthening.  Rather than broadly attempting to block engagement with extra-hemispheric actors of concern, the  US should focus on shaping the strategic space by using communication and other forms of influence to increase the degree to which the region conducts its interactions with extra-hemispheric actors of concern, and others, through the framework of transparency and the rule of law, and working with the region to strengthen their institutions.  Doing so will not prevent engagement with extra-hemispheric actors of concern, but will limit their advance, and the degree to which they can secure undue advantage and influence through diplomatic and economic interactions.  It will also increase awareness of their initiatives, affording Western governments and companies’ greater ability to present credible alternatives. It will also demonstrate the value of the Western approach and position the US and like-minded democratic allies as valued partners, rather than attempting to restrict the region’s rights as sovereign governments to conduct engagements.

Increase and Improve the Coordinated Application of Private Sector, Government, and Partner Resources while Fixing Engagement Tools.  At the core of shaping the strategic space and providing credible alternatives to extra-hemispheric actors, the US must leverage the private sector in effective and realistic ways, as well as the economic and technological innovation for which it is globally respected.  At the same time, it must increase the application of government resources, leader attention and strategic thinking about the region, and work to coordinate the application of its resources with those of like-minded democratic partners where their interests coincide.  At the same time, the US must address serious problems in the institutions, laws and procedures through which the US currently channels its government and private sector initiatives.  This may include rethinking the vehicles the US government uses for that engagement and associated authorities and coordination between bureaucracies.

Evaluate and Prepare for Risks Through the Lens of Wartime, as well as the Present.  While working for a peaceful and constructive path for engaging the PRC and other extra-hemispheric actors in the region, the U.S. must simultaneously prepare to respond to the consequences of an expanded PRC, Russian and/or Iranian presence in the region, including how those actors could use that otherwise benign commercial presence in the context of a significant military conflict.  Such evaluation permits the identification of otherwise unseen risks, such as military action against the US in the hemisphere by Russia and Iran on behalf of the PRC, possibly collaborating with anti-US partners within the region such as Venezuela, Nicaragua, or Cuba, although those actors would not engage in such activities on their own.  Such scenario analysis also facilitates identification of strategies for working with partners in the region today, to prepare responses to such wartime possibilities.

Engage in a Protracted Struggle with Strategic Interventions.  Even under the best circumstances, the strategy recommended by this work is not likely to produce a rapid containment or reversal of the advance by extra-hemispheric actors in the region.  The US may have to plan for an extended struggle, from a position of disadvantage owing to the previously discussed inherent limitations of its democratic, predominantly market-based economic system.  Before the extra-hemispheric actor challenge, the US may thus have to fundamentally re-orient its psychology for responding to challenges, fighting as the underdog in a protracted struggle, seeking opportunities for small, if important victories, while coordinating with like-minded partners to compensate for inadequate individual capabilities, imperfect knowledge, and to cover strategic vulnerabilities.

Specific Recommendations

The following are the 14 specific recommendations of this work, proceeding from and elaborating on the previously advanced strategic concept:

1. Don’t Seek to Block Engagement by the Region with Extra-hemispheric Actors. In its public diplomacy and actions, the U.S. government and its agencies should avoid attempting to directly prevent countries in the region from the economic and political engagements with the PRC and other extra-hemispheric actors that are within their rights as sovereign states.  It should acknowledge, where appropriate, that engagement with the PRC, like engagement with all countries, when done within the framework of transparency, rule of law, and competent, healthy institutions, can produce value for the country.  Nonetheless, it should also emphasize, through respectful, contextually appropriate, data-supported messaging, that working with the PRC may be accompanied by risks that are less present in engagements with other actors, whose own governments are less disposed to, and have fewer tools to, promote the interests of their companies and citizens at the expense of competitors and locals, and whose companies have a stronger track record of compliance with national laws and respect for the intellectual property of their partners. 

Latin American governments and other actors in the region understand that the advance by the PRC and other extra-hemispheric actors advance may negatively impact the US position.  While the US should thus not attempt to deny its interest limits to the PRC presence, it should emphasize that such interest stems from its economic and geographic connection to the region, and thus its stake in the region’s wellbeing, rather than a more selfish interest in dominating the region as part of “great power competition.” 

The US should also seek to redirect discussions about whether it seeks to keep the PRC and other extra-hemispheric actors “out of the region” in order to emphasize ways in which it provides greater value as a partner, such as the value added of what it purchases from the region, non-reimbursable support by organizations such as USAID and private charities, a relatively positive track record of adherence by U.S.-based companies on average to local laws and good corporate practices, and support by the U.S. government for the strengthening of Latin American and Caribbean institutions for the benefit of the region.

2. More Effectively Articulate, Defend, and Demonstrate the Value of Democracy, a Predominantly Private-Ownership Economic System, and Technology Regulation in individual Rights Protection.  During the Cold War, the poor economic performance and acts of repression and aggression by the Soviet Union helped the West to substantially (albeit not universally) prevail on the questions of the merits of liberal democracy, including a balance of powers and rule-of-law, to protect fundamental rights and freedoms.  Poor USSR performance also helped the West to demonstrate the value of a market-based economic system in which contracts and property rights were protected, to empower human effort and ingenuity.

In the most recent decades, by contrast, the unprecedented growth of the PRC (albeit with significant shortcomings), coupled with apparent successes with its state-led model in developing and applying (often stealing) technology to achieve development and order, has reopened this debate. 

While few in Latin America openly embrace the PRC political system, China’s apparent successes, combined with its increasingly aggressive discourse that no one can define what is or is not democracy and rights, has opened up a space in which politicians and businessmen can take PRC money while remaining silent about its behaviors and dismissing US warnings about the economic and political risks as just “great power competition.”  The “moral equivalence” that the PRC and others assert between different systems and value choices also provides a shield for it to enable undemocratic, anti-US regimes in Latin America through loans, investments, commodity purchases and security systems, undercutting the ability of the West to hold those regimes and their leaders accountable for violations of contracts, their own laws and constitutions, and criminal behavior, and driving a reinforcing spiral in which the region becomes ever less free, more corrupt, and more dependent on and open to the PRC and other malign extra hemispheric actors.

In elevating the question of values, and the long-term consequences of choices on issues such as democracy and the protection of rights, the US should leverage the previously noted appeal of its lifestyle and broad acknowledgement of its focus on protecting individual rights, and the resilience and innovation generated by its economic system.  To do so, it should tie these generally positive attributes, in the mind of the region, to the choices it has made, even if imperfectly and at great cost, on items such as meaningful representation of the population, freedom of expression, checks and balances and other limits on government power, rule-of-law with an independent judiciary, a market-based economic system whose dominant component is meaningfully protected private property, and the regulation of technology, sometimes putting protection of the individual and their privacy over interests of efficiency, security and order. 

As a compliment, the US should leverage the Achilles heel of the Chinese system--increasing examples of abuses and economic contradictions stemming from the PRC prioritization of the state and technology over the individual, in order to highlight in its discourse the long-term and individual costs of favoring government or technology at the expense of the individual in search of more rapid economic growth, efficiency or order.  The US should further relate these concepts more effectively to Latin America, both in official messaging, and in support of independent work by academics, think tanks and others, highlighting to elites in Latin America and elsewhere the costs of making similar poor choices and engaging with extra-hemispheric actors who do, without adequate protections from transparency, strong institutions and rule-of-law.

The US government should elevate the discussion of values and the importance of choices not only through public diplomacy, but also through expanded support for public academic studies and journalistic work on such issues.

To the extent possible, such messaging and other actions should be coordinated with like-minded democratic partners within and beyond the Western Hemisphere.

Beyond messaging, the US government should also expand efforts within multilateral institutions such as the United Nations, the Organization of American States, and those within the Interamerican System, ensuring that they articulate and defend the principles of democracy, rule of law, a transparent, level playing field in commercial interactions, and the democratic regulation of technology, in support of defending privacy, freedom of expression and other individual rights.  As part of such efforts, the US should increase coordination to identify and support positions protecting individual rights within the International Standards Organization (ISO) and other standards setting organizations, particularly those defining digital and other technologies.

3. Provide Better Data and Communication Regarding the Risks of Engaging with Extra-Hemispheric Actors of Concern. The US government should provide better data, available in a timely manner, to US decisionmakers, and a range of other audiences, regarding the activities of the PRC government, its companies and other PRC-affiliated entities, as well as other actors of concern such as Russia and Iran. 

In addition, the US should implement more effective multidimensional, multi-audience strategies for communicating those risks.

Data support should include expanded collection of information, or its funding, regarding the performance of PRC-based companies relative to others, in a range of areas such as accusations of IP theft, adherence to local laws in domains such as labor, environment and community consultations, and incidents of labor protest or social violence affiliated with projects by PRC companies, and the rate of timely, successful completion of projects by those companies vis-à-vis others.

US government organizations such as the State Department should sponsor the expanded and performance collection of such studies by credible academic organizations and think tanks in the aforementioned and related areas.  Doing so will allow the creation of longitudinal datasets on Chinese performance relative to others, with information that can be predictably relied on as a resource for multiple generations of scholars.  As a compliment, the US government should provide resources and other support for the maintenance of and access to such databases by US and foreign scholars, as well as by US government decisionmakers and analysts.  The US government should similarly fund both government and public academic projects analyzing such data, order to ensure awareness of it, as well as its use and dissemination.

The combination of such activities will not only facilitate an objective, credible discussion among decisionmakers and broader publics regarding the relative risks and benefits of engagement with entities from the PRC.  It may also motivate both Chinese and other actors to improve project execution and adherence to local laws, ultimately benefiting the region.

Beyond public studies, the US government should strengthen internal mechanisms for data collection and analysis on PRC activities in the region within the State and Defense Department, other US federal organizations, the Intelligence community.  Where appropriate, such efforts should facilitate greater access of that data not only to US government leaders and analysts, but also to partner nation government personnel, including like-minded democratic allies beyond the region.  Doing so will help US leaders, and those in like-minded democratic nations, to have effective, relevant talking points for public diplomacy, and other useful information about the PRC and its agents, appropriate to the country and domain in which they are engaging.

As a compliment to better data and access to it, the US government should develop more nuanced public and private messaging strategies oriented towards not only general publics and leaders to whom they direct talking points, but also toward particular elites and population groups who may be affected in different ways by decisions regarding engagement with the PRC. 

That more nuanced strategy should focus more extensively on the calculus of those elites, including not only their perception of risk in engaging with the PRC, but on whether those involved in the engagement in specific ways can manage the risks associated with that engagement, and secure the hoped-for benefits.

4. Insist on Transparency, Rule-of-Law, and a Level Playing Field. The US government should increase application of and coordination on tools to motivate partner nation elites to conduct their commercial and other dealings with the PRC and other extra-hemispheric actors of concern in a transparent fashion on a level playing field, within the framework of the rule of law.

While acknowledging that there are legitimate opportunities for benefit from engaging with extra-hemispheric actors such as the PRC, the US should work to convince governmental and economic elites  and publics in the region that most probable way to secure benefit for their countries and peoples while preserving the rights and liberties it values, is to engage through a framework of transparency, rule-of-law and a level playing field, complimented by democratic institutions and strong, effective bureaucracies.

As part of this messaging and persuasion strategy, the US should seek to persuade its partners in Latin America that they cannot adequately control the risks and achieve the benefits of engaging with the PRC, Russia, and Iran through less transparent paths, special deals, uneven application of the law, or weak, less than technically competent institutions. 

Tools available to the US for advancing these objectives include, but are not limited to, public and private diplomacy, military and other engagements, State Department Visa policy toward the elites conducting the interactions, their families and associates, and the threat of Treasury Department and other sanctions, or even Justice Department investigations, where appropriate. 

As a compliment to such pressures on elites, the State Department and other US government organs should include content in engagements with partner nation media and civil society organizations, to highlight how non-transparent interactions with the Chinese and others elevate the risks of poor deals, as well as facilitating corrupt arrangements that may benefit the individual parties signing the deal (and their family and associates), but not provide sustainable benefits to the country over the longer term. 

5. Help Partner Nations Strengthen Institutions. The US should expand support to partners through offering capabilities to assist them in planning, conducting analyses of alternatives for, and establishing requirements for projects and other contracts that support their national development.  

Consistent with partner wishes, the US should provide resources for, and facilitate, activities by competent US-based organizations such as the Corps of Engineers to help frame and evaluate projects in ways that maximize the probability that they are technically and commercially viable.  This may include providing services to partners, as they desire, to support the evaluation of contracts, as well as the technically competent, neutral adjudication of competing proposals. 

Where appropriate, the US may also provide other forms of technical support, including evaluation of proposed acquisitions and other investment and banking activities with an eye to anticompetitive or other strategically undesirable effects, similar to that done by the Committee on Foreign Investment in the United States (CFIUS) mechanism.

The US should provide technical and training support and resources, as requested, to help partners combat corruption and increase capabilities in all parts of their legal and administrative processes.  This may include helping to them in enforcing labor, environmental, community consultation and other requirements on PRC-based and other firms participating in public works projects and activities. 

In general, the support described in this section is consistent with that currently performed by USAID and other organizations of US State Department, to support the institutional health of partners, yet needs to be provided at a greater level of resourcing, with greater technical agility, marketing of the benefits provided, and ensuring that the product provided is consistent with partner needs. 

As with US advocacy of transparency, the rule-of-law and a level playing field, US support to partner nation institutions will help limit particularly predatory forms of PRC engagement and asymmetric benefits to PRC-based entities at the expense of partners.  In addition, it will also position the United States on the side of benefit to the partner nation, the reduction of corruption, and other bad practices long resented by residents of the nations involved.

On the other hand, the US must also be prepared for attempts by some partner nation elites to derail US anti-corruption efforts by mobilizing their publics against the US effort in the name of national sovereignty, or other grounds.

As with transparency, US support to partner nation institutions will not prevent technically competent PRC-based companies with competitive bids from winning projects in partner nations.  In addition, if such support by the US is executed effectively and objectively, with good public messaging, it will help to credibly position the US as a constructive and trusted partner, which furthers efforts by countries of the region to advance their own development and best take the advantage of the opportunities that all have to offer, whether based in the PRC or other countries.

6. Provide More Resources, Leadership and Analytical Attention to the Region. As part of, and in addition to the other items advanced herein, the US government must dedicate substantially more resources, leadership attention and strategic thinking to the region.  Doing so should include increasing prioritization for, and resources to the Latin America-facing organizations within the US State Department, Defense Department, intelligence community and other parts of the US government focused on the region.  It also should include increasing the number of visits to the region by the President, Vice-President, senior National Security Council, State Department, Defense Department and other Federal leaders to the region, with agendas that include talking points and projects related to the US response to extra-hemispheric actors.  In addition, such expanded attention should include increasing the content about the region in their talking points while they are in other parts of the world. 

As part of expanding resources and attention to Latin America, the US government needs to provide more funding for projects by think tanks and academic organizations analyzing and advancing alternatives regarding policy toward Latin America.  While studies are not a substitute for government programs and actions generating direct benefits, the US must overcome a longstanding deficit in funds for strategic thinking about Latin America that arguably contributes to the difficulty of generating effective policy responses to the extra-hemisphere actor challenge.

7. Fix and more Adequately Resource Tools for Providing Healthy Alternatives to Extra-hemispheric Actors. The principal government vehicles for providing market-based alternatives to the PRC are under resourced and constrained by administrative and legal impediments.  Key examples include, but are not limited to USAID, the Development Finance Corporation (DFC), and the Interamerican Development Bank (IDB).  Addressing such limitations is fundamental to effectively leveraging these tools to respond to the challenge of the PRC and other extra-hemispheric actors. 

The resources of USAID should be expanded, and consideration given to enhancing and restructuring those programs geared toward helping persons and communities take advantage of opportunities in the private sector.  This expansion and enhancement will leverage USAID’s competitive advantage over PRC “charitable activity,” which is often perceived as more limited and self-serving, although such perceptions could change with the growth of the PRC “Global Development Initiative” (GDI).  Nonetheless, expanding and enhancing USAID will effectively build on its positive reputation as organization that provides benefits without a self-serving economic agenda, in order to help populations both meet near-term needs, and empower them to sustain themselves in the interconnected global economy. 

In a manner similar to its upgrading of USAID, the US should expand the resources Development Finance Corporation (DFC), while re-examining its lending guidance and constraints, in order to better leverage the entity to facilitate the channeling of transparent, market-oriented investment to the region. 

DFC policies and regulations that should be re-examined include constraints on investing in high-income countries, as well as preferences for channeling money to projects favoring women and disadvantaged minority groups.  Such policies, while admirable in their intention, arguably limit the agility of the organization, in attempting to guide private capital into areas where it is otherwise reluctant to go.  This becomes a particular impediment for the DFC to spearhead projects on a scale sufficient to compete with the PRC.

To the extent that such non-market-oriented objectives are also valuable in helping the US to compete with the PRC, and/or support other US strategic objectives, structures and funding to advance them should be relocated into an expanded USAID.

With respect to the Interamerican Development Bank (IDB), the US should leverage its influence within the institution, based in its contribution of 30% of the bank’s capital and its possession of a corresponding percentage of voting shares, to more closely supervise and guide IDB analytical products and the destination of the bank’s lending portfolio, to counter efforts by the PRC to use its own minor presence on the IDB board to influence the Bank’s reports in ways that downplay the risks and negative effects of PRC engagement, and to position PRC-based companies from winning projects funded by Western capital, including through the framing and knowledge of opportunities, or through PRC-IDB “co-financing” funds.

8. Leverage Like-Minded Democratic Partners. Across the range of domains and countries in which the US must respond to the challenges of extra-hemispheric actors, the US does not always have the resources, information, relationships, or economic and technology solutions to “go it alone.”  To this end, the US should continue to strengthen its coordination with like-minded democratic partners, both in the region, and beyond it, to assist.  Such collaboration  may include working with European, Japanese, South Korean and Taiwanese companies and development agencies and lending institutions. 

Such collaboration also includes working in the diplomatic, economic, and other domains to support Taiwan’s relationships in the region, recognizing that the partnership is both beneficial to the US at the working level, and that the health of its diplomatic position in Latin America is one factor helping to delay a PRC move against the island, potentially unleashing a destabilizing conflict of global proportions.

9. Leverage Near-Shoring to Channel Private Investment as an Alternative to the PRC. The move by many companies to reduce dependence on the PRC and distant suppliers, for multiple reasons, creates opportunities that the US government should leverage to channel healthy investment by responsible Western companies to Latin America, while reducing the relative presence and influence of PRC-based companies of concern. 

It is important to distinguish between the desire of companies to reduce dependence on PRC-based companies in supply chains, which those companies may achieve by shifting production to alternative, albeit similarly distant producers in countries like Japan, South Korea and Taiwan.  This imperative contrasts to the desire of a company to develop a base of geographically closer suppliers owing to logistics costs and risks of delays from more distant ones.  The latter imperative more directly favors companies turning to suppliers in Latin America, particularly Mexico, Central America and the Caribbean basin.

Through its public discourse, policies toward the PRC, and Latin America initiatives, the US government should simultaneously encourage the movement toward near-shoring and increase incentives for companies and investors to turn to Latin America for doing so.  At the same time, the US should discourage the inclusion of PRC-based companies in those Latin American near-shoring operations, leveraging companies from like-minded democratic governments, where local or US-owned suppliers are not an option.

To encourage the movement toward near-shoring, the U.S. should maintain and broaden its policies blocking or discouraging the incorporation of PRC-based companies in supply chains for products and services used in the US, particularly those procured by the US government, and especially in sensitive sectors such as communications, surveillance systems and other digital technologies, green energy, and strategic minerals, among others.  In its public diplomacy, security documents, and legislative proposals, the US should clearly signal its intention to continue on this path.  Doing so will help helping to shape the planning decisions of US companies to commit to the expenses of developing nearshoring options.

The US should expand policies to facilitate the choice of Latin America as a near-shoring destination, complimenting the “push to nearshoring” from its policies toward the PRC.  In this regard, the US government should leverage existing trade promotion structures such as the US-Mexico-Canada trade agreement (USMCA), the Central America and Dominican Republic Free Trade Agreement (CAFTA-DR), and bilateral US free trade agreements (FTAs) with countries in the region, in conjunction with targeted efforts by organizations like DFC and the IADB, plus tax and regulatory incentives for investments supporting near-shoring.  It should structure such incentives to stipulate the beneficiaries do not include PRC-owned companies of concern, even if site being invested in involving those companies is physically located in Latin America.  Such stipulations will ensure that US incentives to attract near-shoring does not inadvertently reward or facilitate the expansion of the very PRC presence in the region it seeks to pose an alternative to.

In its Latin America-focused assistance packages through organizations such as the State Department and USAID, the US government should provide increased support for training, infrastructure and security projects that specifically support the viability and attractiveness of near-shoring from the country or area involved.

As noted previously, in the work of entities such as the IADB and DFC, and in the structuring of tax and other incentives, the US government should ensure that the benefits can be secured only if PRC-based companies of concern are not included in the near-shoring supply chain.

In those cases where the PRC-based vendor may have a strong advantage on cost, technical offering or other characteristics and a US or local supplier is not available, the US should actively seek the involvement of companies from like-minded democratic partners such as Japan, South Korea and Taiwan, including working with those governments to involve their development and lending agencies in possible package deals.

Finally, in its public diplomacy, the US government should showcase its near-shoring initiatives as ways in which the US economy, and the natural economic interdependence between the US and the region arising from its proximity and shared democratic values, positions the US as a valuable partner in supporting Latin American development.  To this end, the US should identify and highlight areas in which the nearshoring relationship, or other aspects of US supply chains, provide significant value added in the region (compared to many PRC efforts which seek to maximize the value added for its own companies, often in China itself).

10. Push Back on Projects by Extra-hemispheric Actors of Concern in Strategically Critical Sectors. In those limited areas in which engagement by the PRC or other extra-hemispheric actors of concern presents a serious direct threat to U.S. strategic equities or partner sovereignty, the US should use available diplomatic and other capabilities, in combination with resources, products and technology solutions of like-minded democratic partners where necessary, to block, and/or provide alternatives to PRC-offered products and initiatives. Candidate strategic areas for such pushback include the space sector, telecommunications backbone and devices (not limited to just 5G), surveillance and related smart and safe cities projects, as well as eCommerce. 

Where the US and US-based companies do not have an offer that can compete with the PRC, the US government should consider the promotion of secure and reliable alternatives by the companies of like-minded democratic partners, including Japan, South Korea, Taiwan or the European Union (EU). 

As a compliment to providing commercially competitive alternatives, the US should use its diplomatic and other levers, including providing offsetting items or services of value in other areas, or alternatively, emphasizing possible ways in which adopting the PRC solution may impede the ability of the US or its allies to provide benefits or work with the partner in valued ways in other areas.  As an example, the US may wish to highlight how inclusion of untrusted PRC-based vendors in its telecommunications and surveillance networks, or financial systems, may inhibit the ability of the US to share sensitive data in the security sector or other domains accessible by those PRC-based networks.

11. Enhance Intelligence Support, Contingency Planning and Partner Cooperation Regarding Activities by Russia and Iran in the Region. In general, the scope and resources involved in the activities of Russia and Iran in Latin America are far less than those of the PRC. Furthermore, the majority of democratic governments in the region are hesitant to maintain significant political, defense or other ties with those countries. 

Reciprocally, those governments which are receptive to host Russian and Iranian threats in the region, such as Venezuela, Nicaragua and Cuba, are generally not amenable to persuasion by the US to change their posture.  Thus, the imperatives of US responses to engagement by Russia and Iran in the region during peacetime is principally covered by expanded resources to the US intelligence community for monitoring them, complimented by enhanced cooperation with like-minded democratic partners for the same purpose.

Other responses to Russian and Iranian activity in the region include the development of contingency plans within the US, and among those partners and the region who are most threatened by actual or potential malign behavior by Russia and Iran in the region.

The most significant two exceptions to the response to Russia and Iran in the region outlined above, are the response to Russian support for information warfare, which often seeks to undermine US-aligned democratic governments in the region, and the response to Iranian support for authoritarian regimes and terrorist groups such as Hezbollah.

Russian information warfare activities are arguably best countered through expanded monitoring, public shaming, and counter-disinformation programs by entities such as the State Department Global Engagement Center (GEC), as well as strategic communication and institutional strengthening efforts addressed elsewhere in this work.

Iranian support for authoritarian regimes and terrorist groups in the region is arguably most effectively addressed through expanded resources for law enforcement cooperation with willing Latin American partners, bolstered by US efforts to shape a region aligned with US values that helps make such cooperation possible.

12. Associate Malign Russian and Iranian Activities with PRC Support and Acquiescence. In its diplomacy with Latin American partners, the US should expand contextually appropriate, data-based efforts to associate malign activities by Russia and Iran, with PRC failure to condemn, profiteering from, and in some cases, supporting those actors.

This discourse should include two components: (1) highlighting malign Russian and Iranian actions, and (2) association of them with the PRC through its continuing economic engagement with these actors, its failure to condemn their actions, and in some cases, its support for them.

On one hand, in its discourse with Latin America, the US should increase attention to, and leverage, Russian aggression and human rights abuses in the Ukraine, the inflationary effects of its Ukraine invasion on the region, the demonstrated defects in its military capabilities and doctrine, and its inability to reliably provide economic, military, or other forms of support to its friends in the region beyond using them in destabilizing ways to project threats against the US in the hemisphere. 

With respect to Iran, the US discourse should emphasize the regime’s support for global terrorism, its constraints in providing economic and other useful, significant forms of support to the region, and its anti-democratic character and other inconsistencies with the values of the region, as reflected in ongoing protests over the regime’s treatment of women, and its brutal repression of those protests.

At the same time, the US should also be attentive to adverse reactions within Latin American audiences to focusing too heavily on such malign Russian and Iranian, lest doing so be counterproductive in its development of relations with its Latin American partners.

With respect to linking Russia and Iran’s bad behavior and negative characteristics to the PRC, the US should increase attention in its messaging to Latin American elites and publics, to the ways in which the PRC both avoids condemning, profits from, and otherwise strategically benefits from the malign activities of Russia and Iran, both in Latin America, and elsewhere in the world, particularly where the linkage is supported by meetings between PRC, Russian and Iran leaders, or sympathetic statement from the PRC leadership toward them, such as the joint declaration of solidarity between Xi Jinping and Vladmir Putin, in Beijing, just before Russia’s invasion of the Ukraine. 

To the extent it resonates with some Latin American publics, the US discourse may oblige the PRC to distance itself to some degree from the activities of Russia and Iran, and silently pressure each to restrain their activities in some ways.

13. Increase Support for and Coordination with Taiwan in the Region. As noted previously, because 8 of 14 countries diplomatically recognizing Taiwan are found in Latin America and the Caribbean, the health of Taiwan’s partnerships in the region are critical to its diplomatic position globally. The diplomatic abandonment of Taiwan by a significant number of its current partners in the region, in combination with growing PRC military superiority over the island, could tempt the PRC to initiate military actions toward the forcible incorporation of Taiwan, that could unleash a war of global proportions, with economically and politically destabilizing global economic effects.  Conversely, US support to Taiwan in the Western Hemisphere increases the credibility of US commitments to defend Taiwan if the PRC attacks it. 

The US should provide guidance within the State Department to strengthen messaging with partners recognizing Taiwan regarding the value of that relationship, the record of problems and unfulfilled hopes of nations in the region that have changed relations to the PRC, and possible negative impacts on the political, economic, and other relations with the US stemming from changing recognition.  The US should also increase coordination with Taiwan within its embassies in Latin America, and with Latin American government representatives within the American Institute for Taiwan (AIT) in Taipei. 

In the economic realm, the US should strengthen coordination with Taiwan on loans and development projects through entities such as USAID, the DFC and IADB, and trade involving Taiwan and Taiwan-based companies.  Doing so will both strengthen perceptions in the region regarding the economic benefits of maintaining relations with Taiwan, while increasing the effectiveness of those institutions and other US government tools as an alternative to the PRC.

Beyond supporting Taiwan’s position in the region, the US government should seek opportunities to increase cooperation in the domains of information and intelligence sharing.  In some countries of the region, the closeness and longevity of Taiwan’s relationship may allow it to provide insights for the US, or advance US policy goals with the partner that are not inconsistent with Taiwan’s interests, particularly in countries recognizing Taiwan where the relationship with the US may be strained such as in Guatemala.

14. Prepare for Global Warfight Scenarios Involving Activities by China, Russia and Iran in the Region. US military, intelligence, and other strategic planners should expand preparations for scenarios involving a warfight with the PRC of global scope, including the generation and analysis of such scenarios, and appropriate US government responses, including between different US geographically focused combatant commands, the intelligence community, other US government organizations, partners in the region, and like-minded democratic allies beyond it.

In analyzing and addressing such scenarios, US decisionmakers and other strategic planners should analyze how the PRC could use its diplomatic and economic leverage, the possible compromise of select Latin American leaders, and other instruments, to induce Latin American states to refrain from supporting a US-led coalition opposing PRC aggression in Asia.  Such broad US scenario generation and analysis should include an examination of where, and under what conditions Latin American and Caribbean partners might succumb to PRC pressures, or other motivations, to limit US access to their ports, waters, airspace, and other facilities in the run-up to, or conduct of a war. 

US scenario planning should similarly consider inclusion of Latin America content in Asia-focused such scenarios in Asia-focused wargames and more extended analyses.

The contemplation of PRC wartime scenarios should also consider the possibility of the PRC making use its commercial presence to insert and sustain intelligence teams and other operatives in the region, allowing them to gather information on US and partner nation activities, as well as mounting operations against US deployment and sustainment flows, as well as the US homeland. 

Similarly, scenario analysis should explore the possibility of the PRC acting against economic and other targets in Latin America in order to impact the US.  Such actions might include disrupting the Mexico component supply chains for defense and other goods, or similarly disrupting US supply chains for obtaining and processing strategic metals such as lithium or niobium. 

Other scenarios to consider include the possibility of the PRC engineering biological attacks against crops and livestock in the region to impact US food supplies, as well as other actions against the populations, economic health, or political stability of US partners in the region to intimidate or destabilize them, or to push waves of migrants toward the US border, forcing the diversion of US resources and attention from the conflict with Asia, and creating opportunities for operatives from the PRC or affiliated anti-US states to infiltrate into the US for homeland attacks under the cover of such large numbers of migrants.

US planners should examine scenarios and associated risks associated not only with a single “wartime” scenario or the run-up to and early phases of a conflict with the PRC, but also possibilities that could arise during a later stage of a more extended crisis with the US, particularly one in which initial combat with the PLA in Asia goes badly. 

Such scenarios should include the PRC leveraging its political and economic position to secure military access to ports, airports and other facilities in the region, such as those currently operated by Hutchison Port Holdings in the Bahamas, Mexico and Panama, the megaport of Chancay currently under construction in Peru, or future ports such as Argentina’s polar logistics base in Ushuaia, the port of La Union in El Salvador or the expansion of the port of Manzanillo, on the north side of the Dominican Republic.

Such scenario analysis should consider how the PLA could use current access to and knowledge of such facilities obtained from current commercial management or use of them, or their construction (such as the case China Harbour’s work on the port of Posorja in Ecuador).  The analysis should examine how it might employ this access and knowledge in conjunction with prior PLA visits and training interactions with militaries of the region, to rapidly transition into those facilities and make effective military use of them, even in the absence of formal military basing agreements.

In all of these scenarios, US planners should consider how PRC successes with diplomatic and military pressures, intelligence and military operations might put US support for allied operations in the Pacific theater at risk. 

As suggested by such scenario analysis, the US should consider not only how to “compete against the PLA” in the military sphere during peacetime, but how insights regarding the risks arising from PRC military activities in the region in wartime could guide how the US structures its preparations for such risks in the near-term.  Such preparations include analysis of how the US can interact with Latin American militaries and other security counterparts today, to block, fight subvert, or minimize the harm arising from such PRC actions during wartime.

In working through each of these wartime scenarios, risks, and possibilities to address them, the US should leverage not only its Latin America-facing defense and intelligence community experts, but also the security cooperation and foreign service officers from the region with direct knowledge of those relationships with partner nations. 

Conclusion

The connection of Latin America and the Caribbean to the US through the bonds of geography, commerce and family makes the conditions of the region, and the activities of US rivals such as China, Russia, and Iran in it, a fundamental consideration for US security. 

To date, the US allocation of resources and leadership attention has not reflected what is at stake.  While the limitations of US resources, internal US political divisions, and the demands of crises in other parts of the world such as the Ukraine help to explain this lack of prioritization, the continuing failure to give this challenge the resources and attention it deserves creates a fundamental risk for the security of the nation and the hemisphere to which we are connected.

This work provides one point of departure for thinking about the appropriate response.