Update Country Report Curaçao 21 Dec 2020

On December 14th the US Electoral College formally elected Joe Biden as the next US president, ending the controversy resulting from the efforts of the incumbent, Donald Trump, to challenge the results. The election of Mr Biden as the next US president will have significant implications for the Caribbean. Relations with the region have been divided during the presidency of Mr Trump, with some countries favoured and others penalised for not being fully aligned with US foreign policy. The region can expect closer and more targeted engagement, with a greater emphasis placed on aid in return for progress on US-aligned issues such as democratic consolidation, judicial security and respect for human rights.

Although Mr Biden's approach is likely to be more emollient than that of his predecessor, there will be limits on the policy shifts that the Caribbean can expect. Depending on the outcome of two run-off races in the Senate (the upper house of the US Congress) in January 2021, Mr Biden may face a hostile Senate, which would limit his ability to make substantial policy changes, particularly in the contentious area of immigration. As such, more changes may be seen in areas of executive prerogative, as well as in relatively non-contentious funding programmes.

Immediate policy changes

One area where Mr Biden may shift policy relatively quickly is with Temporary Protected Status (TPS, a special status afforded by the US to nationals from some countries affected by armed conflict or natural disaster). Mr Trump had sought to end TPS for Haiti, along with other countries, although TPS currently remains active pending legal challenges to its termination. Haiti has been highly concerned about a potential end to TPS, which could lead to a huge influx of Haitians returning from the US at a time of heightened domestic political tension and economic turmoil.

As such, Mr Biden will move to extend TPS, providing relief for Haiti and sending a signal about his stated commitment to enabling paths to legal immigration to the US. This extension might well be a precursor to his apparent plans to work on the Deferred Action on Childhood Arrivals (DACA) executive order early in his presidency-a programme that grants temporary conditional residency with the right to work to immigrants who entered the US as minors (often referred to as 'Dreamers' in reference to a previous bill called the DREAM Act); if they later satisfy further qualifications, they would attain permanent residency. About 11% of Dreamers are from the Caribbean.

Another area where Mr Biden is likely to alter Trump-era policy is to increase aid and funding to the region, which has largely declined in the past four years. As under previous administrations, such aid is likely to be used to further US soft power in the region, building relations with individual Caribbean governments.

Given the economic shock that the Caribbean has suffered as a result of the coronavirus (Covid-19) pandemic, an increase in US aid would be well received in the region, especially in those economies that are heavily dependent on tourism. Haiti is likely to be a recipient of such aid, especially as the Biden administration would aim to encourage democratic consolidation in the country, likely through the holding of delayed legislative elections and an increased focus on anti-corruption investigations. This approach would hold true in other countries, where targeted US funding is likely to be used to encourage, for example, institutional strengthening in Jamaica, as well as greater tax transparency in countries such as Trinidad and Tobago, Barbados and the Bahamas.

Selective aid increases

Other countries are also set to benefit from an increased focus on aid and investment, both through regional mechanisms such as restoring funding to the Caribbean Basin Security Initiative (CBSI) and bilaterally. However, the Caribbean is unlikely to receive a significant surge in funding in the short term, despite calls by Caribbean governments for a major aid package to assist pandemic response schemes. This is because the US Congress-especially with a Republican-controlled Senate-would be unlikely to sign off a major increase in international funding until the US economic recovery is well established. Expectations that the vice-president-elect, Kamala Harris, who has familial links to Jamaica, will be an advocate for the Caribbean may be overoptimistic; while she is likely to be the face of greater Caribbean engagement, the new Biden administration will have other funding priorities as it takes office.

Instead, funding to the Caribbean beyond restoring budgets for initiatives such as the CBSI is likely to be targeted to specific countries and policy objectives. In this regard, the Biden administration may be keen to re-engage with Caribbean countries that were cold-shouldered by the Trump administration because they did not fully support the US foreign policy agenda. This is particularly the case with countries such as Trinidad and Tobago, and to a lesser extent St Vincent and the Grenadines and other members of Caricom (Caribbean Community) who refused to support the US move to impose a series of sanctions on Venezuela.

Cuba and Caribbean conciliation

A key determinant of the Biden administration's approach to the Caribbean will be its stance towards Cuba. While Mr Biden served as vice-president during the two terms of the US administration of Barack Obama (2008-16) which oversaw the diplomatic and economic rapprochement with Cuba, the new president may not immediately swing back to this approach to Cuba. His administration is likely to take a softer approach towards Cuba and loosen some of the restrictions imposed under Mr Trump, but he has not committed to returning to the Obama-era framework. Nonetheless, a return to constructive engagement with Cuba-even if stopping short of full economic relaxation-would be viewed positively across much of the Caribbean and would facilitate the drive towards greater regional engagement in general.

A return to the internationalist status quo

Given the incoming Biden administration's fiscal and political constraints as it enters office, the immediate benefit to the Caribbean is likely be more through a change in rhetoric and diplomacy than through direct economic assistance. The region can expect closer and more targeted engagement, with a greater emphasis placed on aid in return for progress on US-aligned issues such as democratic consolidation, judicial security and respect for human rights.

One area where the Biden administration's liberalist rhetoric may reap benefits is in encouraging greater openness to trade and private-sector investments into the Caribbean. This is likely to follow increased diplomatic engagement with the region, especially following the approval of the extension of the Caribbean Basin Trade Partnership Act (CBTPA) to 2030. This sort of US engagement with the Caribbean is in line with our existing forecasts and will benefit the larger economies in the region, such as the Dominican Republic, Haiti, Trinidad and Tobago, and Jamaica, while any relaxation of investment restrictions on Cuba is likely to encourage US capital to flow into the country again.