NASSAU, BAHAMAS- A former Cabinet minister and economist has asserted that maintaining strong ties with the U.S. and China is vital for economic stability, suggesting that concerns over Chinese investment in The Bahamas are overstated, noting relative to the country’s GDP is too small to be considered a source of undue influence.
Zhivargo Laing, Executive Director of the Government and Policy Institute at the University of The Bahamas noted that the US has expressed concerns about the level of Chinese investment in the Bahamas. “I happen to believe that that concern was born of a bit of ignorance, quite frankly, because if you look at Chinese investment in the Bahamas as a percentage of our GDP or total investment in the country, it is not that substantial to impact levels of influence that should be regarded as unseemly.”
Laing, who was speaking at the latest instalment of the Central Banking Series: “Opportunities and Challenges in a Dynamic Economic Landscape” hosted by UB’s Government and Public Policy Institute (GPPI), in collaboration with the Global Interdependence Centre (GIC), emphasized that the country’s long-standing currency parity with the U.S. dollar underpins economic stability. “In this country, every U.S. dollar is equivalent to a Bahamian dollar. Every Bahamian dollar is equivalent to a U.S. dollar. It is a determination of the Government of The Bahamas that it will maintain a parity between the U.S. dollar and the Bahamian dollar,” he said.
This parity, he explained, protects the nation from fluctuations in exchange rates, given that most tourism and financial services earnings are in U.S. dollars while imports require the same currency. “So that parity does make sense for us to protect against the vagaries of exchange dynamics, to provide a level of stability and quality of life that Bahamians have enjoyed now for most of their independent life,” Laing said.
Highlighting the importance of U.S.-Bahamas relations, he noted, “By proximity and economics and social and cultural exchanges, America has been, continues to be, the principal closest friend and ally of the Bahamas. That’s a fact of our existence. And for the most part, that relationship works well. Worked well.”
Laing also discussed a recent experience in international finance, using the Bahamas’ efforts to secure funding for a specialty hospital as an example of the complexities of balancing international relationships. “The Bahamas wanted to build a specialty hospital. It did talk to a number of people about financing that hospital, including the United States of America. As we are told, those talks did not proceed efficiently. Among the people it talked to was China. And China said, sure, through the Ex-Im Bank, we’ll finance your specialty hospital. So, contract signed,” he said.
Despite successfully securing favorable financing, the U.S. expressed disapproval. Laing recounted, “Its friend says, the people you are doing that business with, we don’t like for you. We think you should look at us. But we’ve been looking at you the first time, we asked you.”
He stressed that the Bahamas has a history of mutually beneficial relations with China, dating back to the late 1990s when it became the first Caribbean nation to establish diplomatic ties with mainland China. “China remains grateful to the Bahamas to this day for that. And the relationship has been one of mutual friendship, with disproportionate benefit to the extent of capital access and technological expertise. But it works for us. We do not regard China as an enemy. And we regard the United States as a friend,” Laing said.
While Chinese investment is relatively small, U.S. influence in the Bahamas is significant due to tourism, investment, and geopolitical ties. “If we were gonna have concerns about any country being overly influential in the Bahamas, it would be the United States of America. Why? Eighty-plus percent of our tourism come from where? The United States of America, in particular the Southeastern portion of the United States of America. We have one of the only pre-clearance facilities in all the world from the United States of America. There are substantial American investments in the Bahamas. We have our currency pegged to the United States of America. If we ever needed help in this country, we’d have no doubts in our minds who we would have to turn to,” Laing said.
Laing framed the competitive dynamic between the U.S. and China as an opportunity for the Bahamas to carefully manage its relationships. “My own outlook for this relationship is that it will continue to be very competitive between these two giants. And this is kind of strange too because these two giants are all up in each other’s business but asking us to stay out of each other’s business, their business,” he said.
He concluded with a call for pragmatism and diplomacy. “If I am advising policy makers in the Bahamas, I would simply say keep hugging your friends and shaking the hands of your associates. And talk to them on a regular basis so that they are reaffirmed every day about how much you value them,” Laing said.
According to Laing, the Bahamas’ small, open economy benefits from nurturing relationships with all countries while prioritizing its own national interests. “We are not a war state. We are never gonna be a war state. We ain’t never have a military that threatens anybody. And we simply want to be friendly with everybody because we know that picking fights with people bigger than yourself is not a good idea. And by nature, by nature, we are a friendly, hospitable people.”
