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Washington, D.C. — U.S. Senator Marco Rubio (R-FL) served as Ranking Member during a Senate Committee on Foreign Relations subcommittee hearing on the threat of the Chinese Communist Party in Latin America and the Caribbean. Video of his exchange with the witnesses is available here and here, and a transcript of his remarks is below. 
 
Rubio is Ranking Member of the Subcommittee On Western Hemisphere, Transnational Crime, Civilian Security, Democracy, Human Rights, and Global Women’s Issues.

Panel 1:
Ms. Kerri Hannan, Deputy Assistant Secretary for Public Diplomacy, Policy, Planning, and Coordination for Bureau of Western Hemisphere Affairs
Mr. Peter Natiello, Senior Deputy Assistant Administrator, Latin America and Caribbean Bureau at U.S. Agency for International Development
Mr. Andrew Herscowitz, Chief Development Officer of U.S. International Development Finance Corporation
 
Rubio: Deputy Secretary Hannan, the SOUTHCOM has concerns [about] the PLA and their activities in Latin America and the Caribbean. In the hearing they had before the Senate Committee on Armed Services, the SOUTHCOM Commander, General Laura Richardson, reported that the PLA donates security equipment and provides training to gain access and win favor with security forces in the region. She also said that the PLA is seeking to establish global logistics and basing infrastructure in our hemisphere in order to project and sustain military power at greater distances. 
 
My question is twofold. First, how is the State Department seeking to counter [the] growing military-to-military ties between the PLA and regional militaries? And how is the department interacting with SOUTHCOM and other executive departments on educating countries in the region on the risks of increasing ties to the PLA?
 
Hannan: Thank you, Senator Rubio, for the question. We remain the preferred security partner in the region over the PRC. We collaborate closely with DOD, SOUTHCOM, and NORTHCOM on security and defense. General Richardson went into greater detail about the value of IMET and FMF funding to allow the US to continue to partner, train, and equip military and security forces in the region. 
 
We are working to help … ensure that the PRC military does not gain a foothold in the region in any kind of way that would undermine sovereignty or security of our partners. We maintain that deep network and aim to point out that the PRC’s ambitions do not stop in the economic space. They are potentially a direct threat to national security. And we continue to work diplomatically with our allies and partners to raise awareness about the PRC’s broader goals and objectives. We are continuing to have those conversations.
 
Rubio: The NDAA, the National Defense Authorization Act for 2022, [included] language that required the State Department to report to Congress by June of this year on efforts by China to expand its presence and influence Latin America and the Caribbean. Can you tell us what the status of that report is and when it will be completed?
 
Hannan: I can’t, but I’ll check with my team and get an answer to you.
 
Rubio: Mr. Natiello, let me ask — the National Endowment for Democracy report on sharp power in Latin America and the Caribbean, they describe the CCP program for reporters and media workers to encourage people-to-people exchanges. These are nothing but communist-driven junkets to expand their ideology throughout the region. What programs are we working with at AID to counter this?
 
Natiello: Thank you for the question, Senator Rubio. So the USAID absolutely shares this concern about these closing democratic spaces in places like Venezuela, Nicaragua, certainly Cuba. And … one of the investments that we fund in that context is just supporting the free flow of uncensored information, fact-based information, to citizens in those countries. We work closely with journalists. We do journalist training. We support them with things like investigative journalism. We do protection of journalists as well, because many journalists in these places work under serious threat, and they’re in harm’s way. 
 
One example that I could provide is work that we’ve done in Ecuador with Ecuadorian journalists to investigate, to analyze, and to report on the issue of illegal and unregulated fishing off Ecuador’s coast. And we do that because we want to ensure that Ecuadorian citizens have fact-based information upon which they can make decisions about China and countries like China and whether they want their country working with them. That’s one example of the kind of things that we do with journalists around the region on the issue of free flow of information and investigative journalism.
 
Rubio: Thank you. Mr. Herscowitz, let me ask — the PRC has made the most inroads in their strategic investments in places like Chile, Uruguay, Panama, the Bahamas. It does it by offering financing for infrastructure projects, through its Belt and Road initiative, that are otherwise unsupported by American or other international investors. Is the DFC ready to finance projects in those countries as an alternative to BRI lending?
 
Herscowitz: Thank you for the question, Senator. Many of the countries that you’ve mentioned are high-income countries, and DFC doesn’t currently have legislative authority to support investments in the high-income countries. But we continue to look for opportunities to support strategic investment, whether it’s in infrastructure, mining, or other strategic investments that will advance US values.
 
Rubio: Well, that’s why we have an Inter-American Development Bank. So isn’t the fact that they’re classified as high income an argument for supporting a capital increase to the Inter-American Development Bank and its private sector arm, IDB Invest, which doesn’t have those restrictions? … If those countries don’t qualify for the programs you’re offering because they’re classified as high income, the alternative would be IDB Invest.
 
Herscowitz: I would defer on that question to our colleagues at the U.S. Treasury, who are making their recommendations about our interactions with the regional development banks.
 
Panel 2:
Ms. Margaret Myers, Director of the Asia & Latin America Program, Inter-American Dialogue 
Dr. Evan Ellis, Senior Associate at Center for Strategic and International Studies
 
Rubio: Ms. Myers, I guess I take from your testimony [that] what you were referring to, and I sort of talked about this yesterday in an interview that I did, is [that] your country, your economy needs to be developed. You have needs, you need roads, you need this, you need that. And here comes a Chinese business subsidized by the state, offering you not just to construct the project, obviously, with their workers, but to finance it, and in some cases, frankly, some cash under the table for some of the decision-makers as well. 
 
And the result is — they understand China is a threat, they may not be big fans of China per se, they may be worried about what it means long-term — but politically, it’s tremendously beneficial to be at the ribbon-cutting of this great new project that’s financed. There may be a debt trap, but that will be somebody else’s problem down the road, not when they’re in office anymore. And in some cases, frankly, maybe you or some of your friends got some added benefits from it. 
 
It’s hard for us to compete against that. We can’t bribe government officials…, and we don’t have a system in which we can go in and create infrastructure projects and finance them if the dollars or the money that it generates doesn’t justify it. In essence, it has to be a justified project. In the case of China, it seems — and that’s really my question — how much of this is, they’re willing to do projects that may not make sense from a market standpoint because it makes sense for them from a geopolitical standpoint?
 
Myers: It’s a fantastic question. And indeed, both Evan and I, and many others who are studying this particular issue, are committed to trying to understand the primary motivations behind a lot of these major infrastructure projects, whether they are commercially viable or not, whether they have a very strong strategic rationale or not. But you’re right…. The La Unión port in El Salvador is a perfect example where it’s not a commercially viable project and would very much seem to be of interest to China for strategic reasons. 
 
So how does one compete with that? Especially when it’s of interest to whatever government [is] in power and there may be kickbacks involved and “China speed” involved and something to announce to an electorate, perhaps in advance of the next presidential election. It’s a very, very challenging thing to do. What can the US do in this particular instance? 
 
We can work — probably not necessarily in El Salvador, but in a lot of countries — on capacity building, on ensuring accountability, on ensuring transparency in procurement processes, on making sure that there is, as we say, a more even playing field. And a lot of this work is being done by State right now. I think it needs to be amplified considerably. 
 
We also need to work with media to absolutely highlight those instances of projects gone wrong, Chinese projects gone wrong, because of corruption. These are not well understood. They sometimes just fall off the radar when they are in a period of protracted stasis or are canceled altogether. And few understand why. And a lot of that is related to corruption or a failure to have a fully transparent procurement process. So that needs to be well understood as well, through media articles and reports that are published in Spanish or Portuguese. 
 
[What also matters is] being there in many cases, not just for unviable — from a commercial perspective — projects, but viable ones. Chinese companies are still the only ones in the room, the only ones submitting bids or submitting bids that are competitive. So it’s a matter of also being at the table. 
 
So there are a number of things ongoing that we can do and perhaps enhance to better our position in this particular respect without copying China’s problematic model.
 
Rubio: Mr. Ellis, let me ask you this, in the brief time I have left. One of the things that’s being talked about a lot these days is supply chains. And I think one of the things that Americans have learned through the pandemic is how dependent we are on things that are made halfway around the world. And if there’s a pandemic over there, they have to close factories. If containers get backed up — frankly, in the future, if they decide to cut us off because we’re in conflict with China — we don’t get some of these essential products that range from things critical to our national security to the commercial products that people grew accustomed to and now are wondering why they can’t find…. 
 
I believe that we want to bring some of that manufacturing capacity to the United States. That’s something that we should prioritize. There are perhaps some functions that will never be cost-effective to do here because of where they are. But it strikes me that given the fact that so many of that much of that is imported into North America, to the extent that those supply chains can’t be in the United States, why can’t they be in Honduras and Guatemala? In other countries — in Haiti, [in the] Dominican Republic — that would certainly benefit from this? 
 
I think [that would deal] with a number of things, including economic opportunity stems, migration flow, the need to migrate, and so forth. What are the impediments standing in the way of supply chain capabilities moving, some of them at least, to this hemisphere? Where theoretically you have young populations that could fill those jobs much the way that Southeast Asia started to do 25, 30 years ago?
 
Ellis: Senator Rubio, you make a very important point…. Such decisions are generally in the hands of the private sector, in terms of where to put their investment and their other options, such as managing inventory to offset some of these great risks that we’ve seen in supply chains from the Pacific. [But] certainly, if you take a look at Mexico, with relatively good infrastructure — at least transportation infrastructure — qualified populations, similar opportunities in Central America and elsewhere, [there] is absolutely every reason, through our trade policy and through encouraging of investment, that we should be able to at least get a portion of that coming [in] the right direction, and in the process help the region. 
 
Part of the difficulties have already come up today. On the one hand, you have what really are two key bodies. [The first is] Development Finance Corporation, which should be, I would argue, far more agile. And I would say that some of the restrictions that we have on DFC have made it difficult [to relocate supply chains], despite the very good progress that it’s already made in increasing its portfolio. On the other hand, as the committee … has already brought up, the issue of what can we do to better increase the capital [of] or support the IADB? And frankly, what can we do in other areas also to better work with our partners? 
 
And it goes beyond just the economics, but it also goes to working with our partners on security collaboration and other issues and also dialoguing more effectively with some of our partners who are shooting themselves in the foot. For example, Mexico should be one of our most important partners for increasing that nearshoring. And yet, at the same time, we have, unfortunately, an administration there — Andrés Manuel Lopez Obrador — who is doing everything possible to make his nation’s electricity, including green electricity, more expensive and less viable, pushing up cost to produce in Mexico as an alternative. 
 
So I would argue that there are a range of things that we need to do to bring about that nearshoring to the benefit of our hemisphere and for Americans. Thank you for the question, Senator.