A project in El Salvador shows how China is exerting growing power in America’s backyard

WASHINGTON – Two years ago, the US government began loudly to question a Chinese move to buy an island off the coast of El Salvador, on which a Chinese company proposed the construction of a deep-water port and production zone.

The American objections seemed to be having an effect as a political backlash in El Salvador blocked the project. But the Chinese were not deterred. After US officials publicly claimed that it was a successful Chinese attempt to bribe El Salvador politicians, the project is now moving forward. NBC News received a power point presentation from a Chinese state-owned company called Shared Opportunities, Shared Future outlining one version of the proposal.

American intelligence and military officials say the port project will give China a significant economic and strategic foothold in a traditionally American sphere of influence. It is one of many examples of China exercising its power and influence in Latin America and the Caribbean in ways that officials say is harmful to US interests and by methods the US cannot use.

“Chinese influence is global, and it is all over this hemisphere and is moving forward in alarming ways,” said Admiral Craig Faller, head of US Southern Command, in an exclusive interview with NBC News.

“China has multiple portals in this hemisphere,” he continued, referring to seaports, airports and other transportation hubs. “Depending on the day, they count as 40 or so. And when I look at where they’re strategically placed – west coast, east coast, southern Panama, the Caribbean – I can absolutely see a future where these ports become a hub for their growing blue water marine, which … far exceeds. “

But it’s not just the military implications that preoccupy American officials. Faller said China was rapidly moving towards economic domination in Central and South America within the next decade. In 2019, the PR China surpassed the USA as the leading trading partner with Brazil, Chile, Peru and Uruguay and is now the region’s second largest trading partner after the USA

From 2002 to 2019, Chinese trade with Latin America rose from $ 17 billion to over $ 315 billion, he said.

With economic influence comes political influence, said Evan Ellis, research professor of Latin American studies at the US Army War College Strategic Studies Institute.

“When you bring in the projects and have the political connections and all the influence that comes with the politicians and leading families,” he said, “then other kinds of influence come naturally.”

El Salvador is about a proposal to expand and develop a Japanese-built deep-water port called La Unión, located in the Gulf of Fonseca at the crossroads of Salvadoran, Honduran and Nicaraguan territories.

China is proposing to expand the port and establish trading zones that would exclude US and European companies, allowing Chinese port operators, Chinese shipping companies, and likely Chinese service providers to dominate the zones, Ellis said.

China plans to use the port and zones to import Chinese products and distribute them to other Central American markets without involving local businesses, Ellis said, adding that Chinese investors have expressed interest in building an airport in La Unión that will serve the Zone would further strengthen it as a multimodal hub.

A Sino-Salvadoran investor, Bo Yang, has tacitly bought land, including half of Perico Island, to expand the port, according to the Foreign Ministry. He offered up to $ 7,000 each for the move to residents of the island, Ellis said, and the purchase was completed in late 2019. US officials say Yang is China’s agent in El Salvador and has been doing business there for 30 years.

In 2018, Yang told the Salvadoran media that he was dealing directly with property owners on the island and not partnering with any government. “It’s just business, for example when you buy a house you see it with the owners,” he said.

The 46-page NBC News presentation said the economic zone would be a $ 3 billion project covering an area of ​​1,700 square miles.

Earlier this year, the State Department released a Congress-mandated list of officials in El Salvador “knowingly involved in acts that undermine democratic processes or institutions, committed significant corruption, or investigations into such acts of corruption in Guatemala, Honduras and El Salvador.” the list included Ezequiel Milla Guerra, former mayor of La Unión, who “was involved in significant corruption by abusing his authority as mayor in selling Perico Island to agents of the People’s Republic of China for personal gain,” the document says in an extremely blunt public assessment by the US government.

State Department officials say China is increasingly adept at using bribes and other corrupt methods to advance its commercial interests, which are illegal for American companies.

Staff members of the President of El Salvador, Nayib Bukele, were also named on the list, including a close associate and a former security minister.

Bukele has expanded its collaboration with China since its predecessor moved the country’s embassy from Taipei to Beijing three years ago. In response to the State Department’s “corrupt” list, it doubled in size.

Bukele praised on Twitter for saying that China’s $ 500 million investment in El Salvador was “unconditional,” interpreted as a blow to the good governance signs that Washington and US-backed lenders often turn to development aid tie.

Dipomatic representatives from China and El Salvador did not respond to requests for comment.

“You have a new generation of governments who, if they want to get involved in corruption and protect themselves from its consequences, are able to turn away from Western investors in the US and turn to China as an alternative,” said Ellis. “China has effectively become an incubator for populist governments.”

The US Southern Command covers Central America, South America and the Caribbean, including responsibility for the defense of the Panama Canal. Faller, who finished his three-year tenure as Southcom commander in October, said he had watched China steadily advance into his area of ​​operations.

“China tries to leverage its vision for the future, its vision of the global world order, and does not seek partnerships based on mutual respect and trust. It seeks and builds on dependency.”

In addition to strategic investments, Faller said, China provides authoritarian governments, including Venezuela and Cuba, with technology that enables them to fight dissent more efficiently.

Venezuelan President Nicholas Maduro “is using Chinese technology, Chinese training, to socially control this population,” he said, adding that the Chinese “are working with Cuba, Russia and increasingly with Iran to ensure that Maduro is involved.” power remains, and the “form of government that is conducive to Chinese economic interests remains.”

The Cuban government can suppress the unrest quickly, he said, because it uses the Chinese providers Huawei and ZTE to operate their cellular and information technology networks. “There is growing Chinese influence in Cuba,” he said.

The Biden government’s response to China’s aggressive engagement has been measured.

“It is not America’s policy to force our partners to choose between the US and China,” said a senior administrative official who was not allowed to be identified. “But what we offer is a partnership that works in the interests of our partners and focuses on our common values, democratic governance, respect for human rights, transparency … inclusive economic growth and entrepreneurship.”

However, the official admitted that China is taking a much more strategic approach than the US to harnessing its economic power.

“They use a geostrategic approach where the government orders it to do so when they feel they need something necessary for their investment purposes,” the official said.

“We do not have a government-directed approach,” added the official. “Of course we are working to encourage US investment, including major projects in Latin America and Central America, be it in the Panama Canal or other large investment projects.”

However, many experts say that China is winning and that the US must give up its rigid adherence to pure market principles when it comes to foreign investments.

“It is likely counterproductive and impractical to try to prevent our partners from making commercial contact with China,” Ellis told NBC News. “However, the United States can shape the way this is done in a way that is less inconsistent with the principles of democracy and human rights and the rule of law and free markets, and less so for both the region and the United States is threatening. “

The US government can do this, he said, by “insisting on using our commercial leverage and other tools of transparency because transparent interactions prevent your Chinese companies and local elites from doing win-win deals that they do essentially delivering the country’s goods ”. to the Chinese, without benefiting the people of these countries. “