The United States Can Help Pull Suriname Back from the Brink

The United States Can Help Pull Suriname Back from the Brink

Is Washington doing the right thing in the Caribbean, our third border?  

Suriname, a small country located on the northern coast of South America, is struggling to gain its economic footing under a new, more democratic government, even as it finds itself on the cusp of a future seemingly brightened by its recent offshore oil discoveries. China, our geopolitical adversary, has been a major lender and investor there, gaining influence in an area of great strategic importance to the United States and in a country that could be a significant non-OPEC source of oil.

In the 1980s, Chandrikapersad Santokhi was a police officer in Suriname, a country racked with criminality. Among his other duties, he tracked Ronnie Brunswijk, a former guerilla leader convicted of drug trafficking. Fast forward to 2020, Santokhi is president of Suriname, grudgingly forming a coalition government with Brunswijk as his vice president. As the saying goes, politics makes for strange bedfellows.

Santokhi’s administration could represent a singular opportunity for U.S. regional policy. He ran on an anti-corruption platform. Since taking office, he has sought to revive the law enforcement institutions dismantled by his predecessor, Desi Bouterse, who was president from 2010-2020 and military dictator from 1980-1987 and is a convicted drug trafficker and murderer

Suriname’s criminal threats include widespread corruption and the trafficking of drugs, arms, and humans. Even its security forces were penetrated by organized crime in the Bouterse administration. The Central Bank of Suriname was compromised with the embezzlement of $100 million in 2019-2020. Santokhi made a misstep on the good government front by appointing his wife to Staatsolie, the state oil company, but he rescinded that decision, saying “we are listening to the criticism.” His administration marks an opportunity to break Suriname’s pattern of crime and corruption.

The U.S. government lauds Santokhi’s leadership on combatting corruption and considers Suriname a “great partner” in the region. The State Department’s goal is to “foster a democratic and stable Suriname.” Its Bureau of International Narcotics and Law Enforcement has provided limited training, technical assistance, and equipment. But Suriname needs more. Its army has only three helicopters of limited range. Visiting Washington last year, Santokhi asked Secretary of State Antony Blinken for logistics support and the re-establishment of a U.S. Drug Enforcement Administration liaison office in Suriname. A small ask given that drug trafficking, according to the United Nations, is the greatest threat to Suriname’s transparency and stability.

Economic challenges also loom. The Santokhi administration inherited a disastrous economy that had contracted by 15 percent during 2020 with the currency losing 80 percent of its value. Suriname defaulted on its foreign debt three times since the Covid-19 pandemic. The cost of imports increased, and inflation rose to 74 percent in 2021. 

Suriname sought help from the International Monetary Fund (IMF), but the IMF balked. The Bouterse administration had abandoned a 2016 IMF rescue package after taking the first installment of $81 million. It then turned to China and others to borrow nearly $1.5 billion, a debt now suffocating the economy.

Nonetheless, the IMF devised a new program in 2021 that required Suriname to reduce public spending. The IMF stopped paying out the loan in March 2022, citing Suriname’s failure to take certain actions, but recently resumed payments. IMF-inspired austerity measures by the government had sparked violent riots in February 2023 in the capital city of Paramaribo, including the storming of the legislature.

Suriname has restructured some of its massive foreign debt. It reached agreements with its Paris Club creditors and India. China, however, has refused, free riding on the debt relief extended by others. Its state-affiliated lenders hold $545 million, nearly 17 percent, of Suriname’s public external debt.

Chinese companies own large swaths of Suriname’s timberlands and several gold mines. Telecom company Huawei provided the fiber optic cable connecting Suriname with Guyana and Trinidad and Tobago. Huawei and other Chinese firms are integrating surveillance cameras with facial recognition software in Paramaribo. The United States believes countries using Huawei technology are vulnerable to cyber espionage by China.

Suriname is at a crossroads, contemplating future oil revenues that will transform the country, yet confronting crippling challenges today to its economy and its democracy. What should the United States do to help? More, but what exactly? It should strongly support the Santokhi administration in fighting drug trafficking, but there is a broader issue of U.S. engagement and investment.

China’s reach throughout the region is growing. Since 2005, it has invested an estimated $10 billion in six Caribbean countries. America must meet the challenge. The United States has initiatives to help the Caribbean, such as the Americas Partnership for Economic Prosperity and the Caribbean Basin Initiative. It has relevant agencies too: the U.S. Trade and Development Agency and the U.S. International Development Finance Corporation (DFC). 

Despite this array of resources, the United States has failed to mobilize capital in pursuit of its foreign policy goals as rapidly as China. As an autocracy, China can quickly funnel financing from its state-owned enterprises, export banks, and “private companies” to large infrastructure projects that garner influence in the Caribbean to the detriment of the United States.

Some in Congress believe that if the United States hopes to compete with China in financing infrastructure projects, then DFC must step up to the plate. The DFC makes equity investments and loans to projects in developing countries, but critics argue that it moves slowly, and national security does not play the role it should. Congress recognizes China is the only source of infrastructure financing for many countries, and to counter that impact the United States must offer an effective alternative. To do that, national security policy must be a higher priority for DFC. 

Can America increase its influence in Suriname and the region, while deterring that of China? We Americans eventually may do the right thing, but will it be too late on our third border?

Patrick L. Schmidt is Counsel to Hills, Stern & Morley LLP, a law firm supporting investors in emerging markets. He has been working in Latin America and the Caribbean for over twenty-five years, advising clients on infrastructure projects and other matters. He also teaches comparative politics at American University's School of Public Affairs.

Image: Shutterstock.