[Senate Hearing 117-417]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 117-417

                     CHINA'S ROLE IN LATIN AMERICA 
                           AND THE CARIBBEAN

=======================================================================

                                HEARING


                               BEFORE THE

                        SUBCOMMITTEE ON WESTERN
                       HEMISPHERE, TRANSNATIONAL
                       CRIME, CIVILIAN SECURITY,
                        DEMOCRACY, HUMAN RIGHTS,
                       AND GLOBAL WOMEN'S ISSUES


                                 OF THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                    ONE HUNDRED SEVENTEENTH CONGRESS


                             SECOND SESSION
                               __________

                             MARCH 31, 2022
                               __________


       Printed for the use of the Committee on Foreign Relations
       
       
                  [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]       
       

                  Available via http://www.govinfo.gov
                  
                              ___________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
48-968 PDF                 WASHINGTON : 2022                     



                 COMMITTEE ON FOREIGN RELATIONS        

             ROBERT MENENDEZ, New Jersey, Chairman        
BENJAMIN L. CARDIN, Maryland         JAMES E. RISCH, Idaho
JEANNE SHAHEEN, New Hampshire        MARCO RUBIO, Florida
CHRISTOPHER A. COONS, Delaware       RON JOHNSON, Wisconsin
CHRISTOPHER MURPHY, Connecticut      MITT ROMNEY, Utah
TIM KAINE, Virginia                  ROB PORTMAN, Ohio
EDWARD J. MARKEY, Massachusetts      RAND PAUL, Kentucky
JEFF MERKLEY, Oregon                 TODD YOUNG, Indiana
CORY A. BOOKER, New Jersey           JOHN BARRASSO, Wyoming
BRIAN SCHATZ, Hawaii                 TED CRUZ, Texas
CHRIS VAN HOLLEN, Maryland           MIKE ROUNDS, South Dakota
                                     BILL HAGERTY, Tennessee
                 Damian Murphy, Staff Director        
        Christopher M. Socha, Republican Staff Director        
                    John Dutton, Chief Clerk        



              SUBCOMMITTEE ON WESTERN HEMISPHERE,        
       TRANSNATIONAL CRIME, CIVILIAN SECURITY, DEMOCRACY,        
            HUMAN RIGHTS, AND GLOBAL WOMEN'S ISSUES        

                 TIM KAINE, Virginia, Chairman        
JEFF MERKLEY, Oregon                 MARCO RUBIO, Florida
BENJAMIN L. CARDIN, Maryland         ROB PORTMAN, Ohio
JEANNE SHAHEEN, New Hampshire        JOHN BARRASSO, Wyoming
EDWARD J. MARKEY, Massachusetts      BILL HAGERTY, Tennessee
                                     TED CRUZ, Texas





                              (ii)        

  


                         C  O  N  T  E  N  T  S

                              ----------                              
                                                                   Page

Kaine, Hon. Tim, U.S. Senator From Virginia......................     1

Rubio, Hon. Marco, U.S. Senator From Florida.....................     3

Hannan, Kerri, Deputy Assistant Secretary for Public Diplomacy, 
  Policy, Planning, and Coordination, Bureau of Western 
  Hemisphere Affairs, U.S. Department of State...................     5
    Prepared Statement...........................................     7

Natiello, Peter, Senior Deputy Assistant Administrator, Latin 
  America and Caribbean Bureau, U.S. Agency for International 
  Development, Washington, DC....................................     8
    Prepared Statement...........................................    10

Herscowitz, Andrew M., Chief Development Officer, U.S. 
  International Development Finance Corporation, Washington, DC..    12
    Prepared Statement...........................................    13

Myers, Margaret, Director of the Asia & Latin America Program, 
  Inter-American Dialogue, Washington, DC........................    35
    Prepared Statement...........................................    36

Ellis, Dr. Evan, Senior Associate, Center for Strategic and 
  International Studies, Washington, DC..........................    42
    Prepared Statement...........................................    44

              Additional Material Submitted for the Record

Responses of Ms. Kerri Hannan to Questions Submitted by Senator 
  James E. Risch.................................................    69

Responses of Mr. Peter Natiello to Questions Submitted by Senator 
  James E. Risch.................................................    71

Responses of Mr. Andrew Herscowitz to Questions Submitted by 
  Senator James E. Risch.........................................    71

Responses of Ms. Kerri Hannan to Questions Submitted by Senator 
  Marco Rubio....................................................    72

Responses of Mr. Andrew Herscowitz to Questions Submitted by 
  Senator Marco Rubio............................................    74

Responses of Ms. Kerri Hannan to Questions Submitted by Senator 
  Bill Hagerty...................................................    75

Responses of Mr. Andrew Herscowitz to Questions Submitted by 
  Senator Bill Hagerty...........................................    76

                                 (iii)

  

 
                     CHINA'S ROLE IN LATIN AMERICA 
                           AND THE CARIBBEAN

                              ----------                              


                        THURSDAY, MARCH 31, 2022

                           U.S. Senate,    
        Subcommittee on Western Hemisphere,
            Transnational Crime, Civilian Security,
                       Democracy, Human Rights, and
                             Global Women's Issues;
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:06 a.m., in 
Room SD-106, Dirksen Senate Office Building, Hon. Tim Kaine 
presiding.
    Present: Senators Kaine [presiding], Menendez, Cardin, 
Shaheen, Markey, Schatz, Risch, Rubio, and Hagerty.

             OPENING STATEMENT OF HON. TIM KAINE, 
                   U.S. SENATOR FROM VIRGINIA

    Senator Kaine. I would like to open this hearing of the 
Senate committee with the longest name in the Senate, the 
Senate Foreign Relations Subcommittee on Western Hemisphere, 
Transnational Crime, Civilian Security, Democracy, Human 
Rights, and Global Women's Issues.
    Even if we did an acronym it would be long, but it is a 
really important committee and we have got a great hearing 
today, and I think it is going to be well attended.
    I welcome two distinguished panels of witnesses for this 
hearing on China's role in Latin America and the Caribbean, and 
the importance of U.S. engagement in the region.
    I want to thank my ranking member, Senator Rubio, for his 
help in crafting this hearing, for his dedication to advancing 
American interests and values in the Western Hemisphere. We 
have worked together on these issues during my entire time in 
the Senate and I really value his focus and his partnership.
    We are pleased to convene this hearing on the important 
topic. East-West issues receive outsized attention in the media 
and in our own foreign policy work, and that is understandable, 
but North-South ties are every bit as important because of the 
inextricable political, cultural, and economic bonds we share 
with our neighbors throughout the Americas.
    Last year, I had the privilege of traveling to Mexico, 
Ecuador, Colombia, and Guatemala. Senator Portman and others 
were with me. It was a bipartisan CODEL in July. We saw a 
region devastated by the pandemic and eager not just for 
American vaccines, but for deeper American engagement and 
leadership.
    We also saw how China has increased its own engagement 
throughout the region, accompanied by an aggressive public 
diplomacy campaign promoting Chinese propaganda.
    China pushes the narrative that it is a benevolent patron 
or that it is a template for economic development while 
achieving what it terms long-term social stability.
    China's genocide against the Uighur people in Xinjiang and 
the harassment of Uighurs abroad, clearly, shows the Western 
Hemisphere and the rest of the world just what China's vision 
of development and social stability really looks like.
    I am thinking of Virginia's large and vibrant Uighur-
American community, many of whom have family members targeted 
by the Chinese government or face harassment and threats right 
here in the United States.
    Beijing's genocide against the Uighurs shows that China's 
vision of stability is not truly for all of its people, and 
China's engagement in the Americas has some cautionary tales 
that we need to understand.
    Ecuador, for example--nearly 20 years ago, former 
president, Rafael Correa, promised modernization for Ecuador, 
embracing Chinese loans and infrastructure projects in exchange 
for its oil.
    Fast forward to today, Ecuador now lives with the Chinese 
financed and built dam that is not fully operational despite 
being opened in 2016. The Coca Codo Sinclair Dam required over 
7,000 repairs. It sits right next to an active volcano, and 
erosion continues to damage the dam.
    The dam also caused an oil spill in 2020 that has impacted 
indigenous communities living downstream, and all that is on 
top of the billions of dollars that Ecuador still owes China.
    The Ecuador case is just one example, but as China 
continues its quest for natural resources and raw materials 
throughout the region, including lithium in places like 
Argentina, Bolivia, and Chile or copper in Peru, these 
countries have to take the Ecuador example very, very 
seriously.
    Beyond its economic engagement, we know China also wants to 
increase diplomatic and security engagement accompanied by a 
concerted effort to protect soft power through its public 
messaging and influence activities. As we discussed at our last 
hearing on vaccine diplomacy, China quickly exerted its 
influence in Latin America and the Caribbean following the 
outbreak of the pandemic, despite the fact that China sold--did 
not donate, but sold most of its vaccines to the region. It 
successfully created the impression that the vaccines were, in 
fact, donated.
    I am interested in hearing from our witnesses from the 
Department of State, USAID, the Development Finance Corp., and 
our second panel of private expert witnesses about how the U.S. 
is responding to Chinese engagement in the region and how we 
are deploying the elements of our toolkit.
    I have been critical of China in these opening comments, 
but one area I have to praise them they are deeply, deeply 
engaged in the region, and we often hear from regional leaders, 
we would much rather deal with you than with China, but they 
tend to be at the table in a more aggressive way, and so we 
need to talk about the threat, but also the opportunities for 
U.S. to have deeper engagement.
    Let me now turn it over to Ranking Member Rubio for his 
remarks before I introduce the panel.

                STATEMENT OF HON. MARCO RUBIO, 
                   U.S. SENATOR FROM FLORIDA

    Senator Rubio. Thank you, Mr. Chairman, and thanks for 
your--to your staff for working closely with mine to make sure 
that this came about, and I want at the outset to recognize six 
students from Florida International University who are here 
from Miami. I am also an adjunct professor there.
    Everybody--I try to make sure--I do not grade the papers, 
but they used to all get A's because they are all voters. They 
do not let me grade anymore, but it is a great university and I 
am happy they are here and able to watch this today.
    The Western Hemisphere is in a period of extraordinary 
upheaval. It has got a host of economic problems. Obviously, 
they have been exacerbated by COVID-19 and it has put a 
tremendous burden on many of these countries in the region. 
Without urgent action, this economic downturn could last for a 
decade.
    Voters in the region know this, by the way, and so that is 
why you have seen them more willing than ever to turn to the 
promises--hollow promises--of change in places like Argentina 
and Peru and Chile and Honduras and, increasingly, in Mexico as 
well.
    Unfortunately, many of these newer leaders in the region 
have expressed admiration for the Communist Party and China's 
model, even as they turn a blind eye and, in many cases, are 
supportive of the regimes that are creating tremendous 
suffering in Cuba and Venezuela and in Nicaragua.
    Beijing sees this and they are seizing the opportunity to 
grow both their influence and their power in the Western 
Hemisphere. As an example, their Belt and Road Initiative uses 
massive infrastructure loans and projects to lure nations into 
economic and political dependency debt traps. That has now 
spread to Argentina, Brazil, Barbados, and Panama.
    In their annual report last year, the bipartisan U.S.-China 
Security and Economic Review Commission found that the 
Communist Party of China is taking advantage of its economic 
importance and political relationships to encourage governments 
across the region to make domestic and foreign policy decisions 
that favor the CCP and undermine democracy and free markets in 
the region.
    According to that same report, by the way, the Chinese 
Communist Party's armed wing, the People's Liberation Army, is 
seeking to deepen its engagement in the region by funding the 
construction of ports and space programs and other dual-use 
infrastructure that, frankly, is pretty clear it appears to 
have no economic purpose, but--or to have a limited economic 
purpose, but could serve as future operating bases, even a 
rotational basis, for a hostile navy close to our nation's 
shores.
    Moreover, the Chinese Communist Party is actively exporting 
its governance model across the hemisphere. It has conducted 
party-to-party engagements with political parties in places 
such as Chile, Argentina, Cuba, Venezuela, Mexico.
    These engagements' express purpose is to teach foreign 
political parties the superiority of China's authoritarian 
system. Their intentions in the region is not to be active 
because they want to make life better for people living in the 
Western Hemisphere. They care only about power and influence. 
They do not care about stability or economic development.
    So even as increasing exports to China boost the economies 
of some of the nations in these regions, the Communist Party of 
China is pushing countries to remain dependent on mining and 
other--and the export of other natural resources instead of 
partnering with them to develop and industrialize their 
economies.
    It is encouraging them to weaken or even break their own 
environmental, social, and governance regulations by promising 
them increased investment from China in return, and they do 
this because they know that chaos in Latin America and the 
Caribbean would severely hurt us, destabilize us, who they view 
as their primary and central rival.
    If cartels have greater operating freedom to send drugs and 
violence across our border, it worsens the opioid and fentanyl 
epidemic and gang violence in our communities. If more 
countries go the way of Venezuela, Nicaragua, and Cuba, you 
will see massive new waves of illegal immigration and human 
trafficking that is associated with it.
    We simply cannot afford to let the Chinese Communist Party 
expand its influence and absorb Latin America and the Caribbean 
into its private political economic bloc. That would leave our 
country worse off and ensnare the people of Latin America and 
the Caribbean into a generation of suffering and repression.
    I am hopeful that our nation will begin to address this 
threat head on and seriously to revitalize our engagement in 
the region with that in mind.
    In February, I introduced the Western Hemisphere Security 
Strategy Act with Chairman Menendez. It is the beginning of 
doing just that. It would enable the U.S. to more effectively 
resist drug traffickers and authoritarian governments, 
including those of China and Russia, through arrangements with 
other regional governments.
    I hope others on this committee co-sponsor this critical 
step in pushing back against the Communist Party of China and 
their influence efforts in the region, and I hope to learn from 
our witnesses today on what else Congress can do and pursue to 
further address the challenge posed to us by the Chinese 
Communist Party in Latin America and the Caribbean.
    Thank you, Mr. Chairman. Thank you to our witnesses for 
being here.
    Senator Kaine. Let me now introduce the witnesses and then 
we will hear from each of you an opening statement and proceed 
with questions.
    First, Kerri Hannan. Kerri is a career member of the Senior 
Foreign Service, is the Deputy Assistant Secretary for Public 
Diplomacy, Policy, Planning, and Coordination.
    She covers issues related to the People's Republic of China 
for the Bureau of Western Hemisphere Affairs. Her prior 
overseas assignments include Bolivia, Argentina, and India as 
well as spokesperson at the U.S. Embassy in Kabul.
    Ms. Hannan has an undergraduate degree in zoology and a 
master's degree in Latin American studies with a concentration 
in tropical conservation, all from the University of Florida.
    Peter Natiello. Peter currently serves as the Senior Deputy 
Assistant Administrator in the U.S. Agency for International 
Development Bureau for Latin America and the Caribbean.
    Before that, he served as USAID's mission director in 
Kabul, Afghanistan. He has extensive experience in Latin 
America with USAID as the mission director in El Salvador, 
Colombia, and Bolivia. He also managed USAID's democracy and 
conflict mitigation portfolio in Ecuador.
    Finally, Andrew Herscowitz is the Chief Development Officer 
at the U.S. International Development Finance Corp., the DFC.
    He is a career minister in the Senior Foreign Service and 
served overseas as mission director--deputy mission director 
and regional legal adviser for USAID in multiple countries in 
Latin America and the Caribbean from 2002 to 2013.
    It is great to have you all before us to discuss this 
important issue, and I would like to ask you to make your 
opening statements in the order that I introduced you.
    Ms. Hannan.

   STATEMENT OF KERRI HANNAN, DEPUTY ASSISTANT SECRETARY FOR 
PUBLIC DIPLOMACY, POLICY, PLANNING, AND COORDINATION, BUREAU OF 
      WESTERN HEMISPHERE AFFAIRS, U.S. DEPARTMENT OF STATE

    Ms. Hannan. Chairman Kaine, Ranking Member Rubio, 
distinguished members of the committee, thank you for the 
opportunity to testify on the department's efforts related to 
the PRC's engagement in the Western Hemisphere.
    The issue remains one of our most pressing challenges and 
one that requires close coordination with our interagency 
colleagues, international organizations, and allies and 
partners around the world.
    Just as important, it requires strong cooperation between 
the Administration and Congress, so I welcome continued 
engagement on these issues with the committee and the chance to 
be with you today.
    Our strategic goal remains promoting a more democratic, 
inclusive, secure, prosperous, and climate resilient Western 
Hemisphere aligned with U.S. values and interests.
    The pandemic has exacerbated the hemisphere's long-standing 
challenges of inequality, corruption, and weak democratic 
institutions, rendering the region more vulnerable to the PRC's 
aggressive and coercive tactics.
    We do not respond to this challenge by trying to force 
countries to choose between the United States and China, but, 
rather, by proving that we are better partners committed to 
advancing shared interests and values.
    We work with our allies and partners to help their 
democracies deliver for their people. We insist the PRC respect 
our hemisphere's democratic values and international labor, 
social, environmental standards as it engages in the region.
    As the Secretary laid out in his speech in Quito last 
October, we are helping the region's democracy deliver across 
all fronts. Our efforts seek to deliver mutual benefits for our 
partners, not one-sided deals.
    The Summit of the Americas in June, whose theme is building 
a sustainable, resilient, and equitable future, will provide a 
critical opportunity for the President to gather the region's 
democratic leaders in the agreed outcomes to promote a 
prosperous and democratic hemisphere.
    The Summit will provide concrete solutions to challenges 
that our partners face on issues like recovering from the 
pandemic, creating good-paying jobs, and transitioning to a 
green future.
    We also work with like-minded democratic allies and 
partners from outside the hemisphere. The European Union, 
Japan, the Republic of Korea, and Taiwan all help promote 
stability and growth in the region.
    With 8 of Taiwan's 14 official diplomatic partners in our 
hemisphere, one of our top goals remains countering the PRC's 
aggressive campaign to induce countries to switch recognition 
to Beijing.
    On the economic front, we focus on ensuring competitive and 
transparent investment environments that help level the playing 
field for U.S. companies.
    We sent more than two dozen U.S. technical delegations to 
the region since 2018 to share best practices on procurement 
reform, foreign investment screening, and other initiatives 
that make countries attractive, competitive business 
environments.
    These trainings help our partners ensure their engagements 
with the PRC meet high standards on transparency. We need to 
work with partners to help ensure regional investment remains 
transparent, competitive, and private sector driven while 
upholding environmental and social safeguards.
    On security, the proliferation of PRC-linked telecom and 
surveillance equipment in the region highlights risks to human 
rights, national security, and privacy. Many of our technical 
delegation engagements have focused on ICT, including 5G and 
cybersecurity.
    While the PRC's military presence in the region remains 
limited, we must maintain our position as the region's 
principal security partner, including in military cooperation 
from training to equipment sales.
    We must also counter the PRC's propaganda and 
disinformation campaigns in the region. We saw and countered 
PRC-affiliated social media accounts attempting to redirect 
concerns about COVID-19 toward bogus claims that it originated 
in the United States. We are doing the same as we see PRC 
efforts to spread disinformation about Russia's further 
invasion of Ukraine.
    The Global Engagement Center works with us and our field-
based officers to address propaganda and disinformation and we 
build resilience through targeted support to independent civil 
society organizations and journalists.
    We are also laying a foundation so that rising generations 
in the hemisphere know PRC disinformation when they see it and 
reject it. The Young Leaders of the Americas Initiatives 
expands ties between emerging entrepreneurs and U.S. 
counterparts to support job creation and economic growth.
    The Department's academic--Academy for Women Entrepreneurs 
provides women the tools they need to turn their ideas into 
successful businesses, and the 100,000 Strong in the Americas 
Innovation Fund supports educational exchanges that strengthen 
the link between education, workforce development, and social 
inclusion to address opportunity gaps.
    The Western Hemisphere's commitment to democracy has never 
appeared more urgent as Russia tramples on Ukraine's democracy 
and threatens to export the Ukraine crisis to the Americas by 
expanding its military cooperation with Cuba, Nicaragua, and 
Venezuela.
    Our region has, with a few exceptions, condemned Russia and 
supported our efforts to urge Russia to immediately cease its 
war against Ukraine and seek a diplomatic resolution.
    Our allies and partners have seen the stark contrast 
between our position on Russia's further invasion and the PRC's 
position as PRC diplomats elevate the Kremlin's propaganda and 
seek to protect Russia from condemnation at international 
bodies.
    Thank you for this opportunity and I look forward to your 
questions.
    [The prepared statement of Ms. Hannan follows:]

                 Prepared Statement of Ms. Kerri Hannan

    Chairman Kaine, Ranking Member Rubio, distinguished members of the 
Committee: Thank you for the opportunity to testify on the Department's 
efforts related to the PRC's engagement in the Western Hemisphere. The 
issue remains one of our most pressing challenges and one that requires 
close coordination with our interagency colleagues, international 
organizations, and allies and partners around the world. Just as 
important, it requires strong cooperation between the Administration 
and Congress, so I welcome continued engagement on these issues with 
the Committee and the chance to be with you today.
    Our strategic goal remains promoting a more democratic, inclusive, 
secure, prosperous, and climate-resilient Western Hemisphere, aligned 
with U.S. values and interests. The pandemic has exacerbated the 
hemisphere's longstanding challenges of inequality, corruption, and 
weak democratic institutions, rendering the region more vulnerable to 
the PRC's aggressive and coercive practices. We do not respond to this 
challenge by trying to force countries to choose between the United 
States and China, but rather by proving that we are better partners 
committed to advancing shared interests and values. We work with our 
allies and partners to help their democracies deliver for their people. 
We insist the PRC respect our hemisphere's democratic values and 
international labor, social, and environmental standards as it engages 
in the region.
    As the Secretary laid out in his speech in Quito last October, 
we're helping the region's democracies deliver across all fronts. Our 
efforts seek to deliver mutual benefits for our partners, not one-sided 
deals. The Summit of the Americas in June--whose theme is ``Building a 
Sustainable, Resilient, and Equitable Future''--will provide a critical 
opportunity for the President to gather the region's democratic leaders 
and agree to concrete outcomes to promote a prosperous and democratic 
hemisphere. The Summit will provide concrete solutions to challenges 
that our partners face on issues like recovering from the pandemic, 
creating good paying jobs, and transitioning to green future.
    We also work with likeminded democratic allies and partners from 
outside the hemisphere. The European Union, Japan, the Republic of 
Korea, and Taiwan all help promote stability and growth in the region. 
With 8 of Taiwan's 14 official diplomatic partners in our hemisphere, 
one of our top goals remains countering the PRC's aggressive campaign 
to induce countries to switch recognition to Beijing.
    On the economic front, we focus on ensuring competitive and 
transparent investment environments that help level the playing field 
for U.S. companies. We sent more than two dozen U.S. technical 
delegations to the region since 2018 to share best practices on 
procurement reform, foreign investment screening, and other initiatives 
that make countries attractive, competitive business environments. 
These trainings help our partners ensure their engagements with the PRC 
meet high standards on transparency. We need to work with partners to 
help ensure regional investment remains transparent, competitive, and 
private sector driven, while upholding environmental and social 
safeguards.
    On security, the proliferation of PRC-linked telecommunications and 
surveillance equipment in the region highlights risks to human rights, 
national security, and privacy. Many of our technical delegations and 
engagements have focused on ICT and cybersecurity. While the PRC's 
military presence in the region remains limited, we must maintain our 
position as the region's principal security partner, including in 
military cooperation, from training to equipment sales.
    We must also counter the PRC's propaganda and disinformation 
campaigns in the region. We saw and countered PRC-affiliated social 
media accounts attempting to redirect concerns about COVID-19 toward 
bogus claims of its originating in the United States. We are doing the 
same as we see PRC efforts to spread disinformation about Russia's 
further invasion of Ukraine. The Global Engagement Center (GEC) works 
with us and our field-based officers to address propaganda and 
disinformation. We build resilience through targeted support to 
independent civil society organizations and journalists.
    We are also laying a foundation so that rising generations in the 
hemisphere know PRC disinformation when they see it and can reject it. 
The Young Leaders of the Americas Initiative (YLAI) expands ties 
between emerging entrepreneurs and U.S. counterparts to support job 
creation and economic growth. The Department's Academy for Women 
Entrepreneurs (AWE) provides women the tools they need to turn their 
ideas into successful businesses. And the 100,000 Strong in the 
Americas (100K) Innovation Fund supports educational exchanges that 
strengthen the links between education, workforce development, and 
social inclusion to address opportunity gaps.
    The Western Hemisphere's commitment to democracy has never appeared 
more urgent, as Russia tramples on Ukraine's democracy and threatens to 
export the Ukraine crisis to the Americas by expanding its military 
cooperation with Cuba, Nicaragua, and Venezuela. Our region has, with a 
few exceptions, condemned Russia and supported our efforts to urge 
Russia to immediately cease its war against Ukraine and seek a 
diplomatic resolution. Our allies and partners have seen the stark 
contrast between our position on Russia's further invasion and the 
PRC's position, as PRC diplomats elevate the Kremlin's propaganda and 
seek to protect Russia from condemnation in international bodies.
    Thank you again for this opportunity. I look forward to your 
questions.

    Senator Kaine. Thank you, Ms. Hannan.
    Mr. Natiello.

     STATEMENT OF PETER NATIELLO, SENIOR DEPUTY ASSISTANT 
ADMINISTRATOR, LATIN AMERICA AND CARIBBEAN BUREAU, U.S. AGENCY 
         FOR INTERNATIONAL DEVELOPMENT, WASHINGTON, DC

    Mr. Natiello. Chairman Kaine, Ranking Member Rubio, and 
distinguished members of the committee, thank you so much for 
the opportunity to testify today, and what a nice surprise to 
have this group of FIU students with us today.
    We were together yesterday and our--Samantha Power, our 
administrator, signed an MOU last week at FIU to support our 
mutual cooperation.
    For decades, USAID has been a steadfast and reliable 
partner to the people of Latin America and the Caribbean to 
build a more democratic, prosperous, and secure region.
    As close neighbors, we share interests, values, and goals. 
While the United States' partnership with the Latin American 
and Caribbean region remains strong, concerns about the PRC's 
growing footprint are real and warranted.
    We have observed that the PRC's strategy in the Western 
Hemisphere is broad and includes economic ties, infrastructure 
investments, security sector support, education and research 
programs, as well as disaster and COVID-19 response assistance.
    While Chinese investment has increased significantly, 
governments and citizens are increasingly aware of the 
downsides of working with the Chinese, while trust in the U.S. 
is growing.
    According to the Americas Barometer Survey, trust in the 
PRC declined by about 18 percent for the period 2012 to 2021 
and currently stands at about 38 percent, while, on the other 
hand, trust in the United States has rebounded significantly in 
recent years by more than 18 percentage points and now stands 
at over 55 percent.
    Rather than assuming a defensive posture vis-a-vis the 
PRC's presence in the region, USAID uses foreign assistance to 
advance an affirmative American agenda that demonstrates the 
clear advantages of democracy, economic freedom, and the rule 
of law as the best foundations to foster the open, just, 
transparent, and sovereign societies we help to bolster in the 
hemisphere and around the world.
    In Ecuador, El Salvador, Guatemala, and Honduras, USAID is 
working with host governments and the private sector to create 
a welcoming environment for private investment. This will level 
the playing field for American and allied investors.
    USAID is also expanding its work in the digital space to 
offer partner nations secure alternatives with respect to 5G 
technology and cybersecurity. For example, in Peru USAID 
provides technical assistance to the Ministry of Transport and 
Communications to help strengthen digital security, data 
governance, digital innovation, and 5G radio spectrum policy 
frameworks.
    We are concerned, too, about the PRC's manipulation of the 
information space, which is why USAID plays a key role in 
providing unbiased and objective information to inform citizens 
about the role of the PRC and other external actors in the 
region.
    USAID assistance supports civil society and independent 
media to promote transparency, encourage investigative 
journalism, and counter mis- and disinformation.
    USAID's long history of providing both urgent humanitarian 
assistance and long-term development assistance to countries 
throughout Latin America and the Caribbean has been a hallmark 
of the United States' close partnership with the region.
    In times of need, such as the COVID-19 pandemic, we have 
stood up high-impact programs to address the terrible health 
and economic effects of the crisis.
    To date, the United States has provided approximately 65 
million COVID vaccine doses to the region with more on the way 
at no charge and with no strings attached. That is more 
vaccines than any other country has delivered in the region. 
USAID's technical assistance has been important for getting 
those vaccines into arms around the region.
    Now, more than ever, the United States must stay on course 
to remain the lead partner in the region's development. While 
the PRC will continue its efforts to gain influence in the 
region, the United States maintains an extraordinarily unique 
and powerful relationship with Latin America and the Caribbean, 
characterized by unparalleled family, historical, cultural, and 
trade ties.
    These serve to bind the fate of the United States with its 
closest neighbors and constitute important assets upon which we 
must continue to build bonds of trust and partnership.
    We are a community with shared democratic values and 
experiences. By working with our allies and partners in 
accordance with our approach to development we can continue to 
strengthen the Western Hemisphere's democracies, its 
prosperity, and its security.
    We are clear eyed about the autocratic alternative, which 
we know is terribly destructive to freedom and well-being.
    Thank you, and I look forward to your questions.
    [The prepared statement of Mr. Natiello follows:]

                Prepared Statement of Mr. Peter Natiello

    Chairman Kaine, Ranking Member Rubio, and distinguished members of 
the Committee, thank you for the opportunity to testify on the 
influence of the People's Republic of China (PRC) in the Latin American 
and Caribbean (LAC) region.
    For decades, the U.S. Agency of International Development (USAID) 
has been a steadfast and reliable partner to the people of Latin 
America and the Caribbean (LAC) to build a more democratic, prosperous, 
and secure region. As close neighbors, we share interests, values, and 
goals. USAID is glad to be part of a whole-of-government approach to 
countering PRC influence in the region.
    While the United States' partnership with the LAC region remains 
strong, concerns about the PRC's growing footprint are real and 
warranted. We have observed that the PRC's strategy in the Western 
Hemisphere is broad and includes economic ties, infrastructure 
investments, security sector support, education and research programs, 
as well as disaster and COVID-19 response assistance.
    For example, Chinese companies, which often have close ties to the 
Chinese Communist Party (CCP), invested over $130 billion in the region 
over the past two decades, with significant investments in Brazil and 
Peru in particular. Most PRC investment in the region is in energy, 
extractives, and infrastructure. The China Development Bank and the 
China Export-Import Bank have provided nearly $140 billion in loans 
since 2005.
    We are concerned about the coercive, exploitative, and predatory 
tactics that the PRC often employs. For example, when Ecuador defaulted 
on its debts under the Correa administration, the PRC provided a 
lifeline with loans and financing. Chinese state-owned banks have 
provided Ecuador with an estimated $8 billion or more in non-
transparent loans with undisclosed conditions, while Chinese companies 
have provided other forms of financing. The loans were used to fund a 
number of public works projects, several of which are now under 
investigation due to questionable standards and lax planning. The Coca 
Codo Sinclair Dam in particular was riddled with cracks and caused 
significant erosion. Moreover, the PRC negotiated debt payment plans 
that require Ecuador to hand over the vast majority of its extracted 
petroleum to China--that is up to 80 to 90 percent of its oil 
production by some estimates. This constrains Ecuador's own economic 
development and sovereignty.
    While Chinese investment has increased significantly over the past 
two decades, governments are increasingly aware of the downsides of 
working with the PRC and continue to approach the U.S. as their partner 
of choice. USAID tracks perceptions of the PRC across Latin America and 
the Caribbean through its support of the Americas Barometer public 
opinion survey. According to the survey, trust in the PRC Government 
declined from 58.2 percent in 2012 to 38.2 percent in 2021, while trust 
in the United States Government declined less precipitously from 65 
percent to 56.7 percent over the same period. However, trust in the 
United States Government has rebounded significantly--by more than 18 
percentage points--since its low of 38.6 percent just 2 to 3 years ago.
    To remain the LAC region's partner of choice, USAID, as part of the 
whole U.S. Government approach, does not take a coercive, manipulative 
approach like the one the PRC promulgates. We advance an affirmative 
American agenda that demonstrates the clear advantages of democracy, 
economic freedom, and rule of law as the best foundations to foster the 
open, just, transparent, and sovereign societies we want to see in the 
hemisphere and around the world.
    USAID focuses its assistance on transparent and fair procurement 
reform to attract sustainable private investment; financial and 
transactional assistance for energy and infrastructure investment; 
cybersecurity support; combatting China's illegal fishing practices; 
climate change and disaster resilience; and the democratic rule of law 
and anti-corruption. USAID is notably looking at the Caribbean, where 
PRC interest has been growing, but is not yet as deeply entrenched as 
it is in many other parts of the region, giving us a greater 
opportunity to be effective with our comparatively modest resources.
    We are putting our plan into action. In the Dominican Republic, 
where a reform-minded government has publicly committed to more 
transparent and accountable governance, USAID is working with the U.S. 
Army Corps of Engineers (USACE) to develop a competitive and fair 
tendering process for a major infrastructure improvement project at the 
Port of Manzanillo. This will level the playing field for American and 
allied investors.
    In Ecuador, El Salvador, Guatemala, and Honduras, USAID is working 
with host governments and the private sector to create a welcoming 
environment for private investment by strengthening public procurement 
systems in the infrastructure, energy, or telecommunications sectors, 
with the goal of increasing their transparency, efficacy in the use of 
public funds, and adherence to international best practices. USAID is 
working with all stakeholders in the implementation, monitoring, and 
evaluation of these efforts and raising public awareness of the 
relevance and importance of efficient and transparent business 
transactions.
    USAID is also expanding its work in the digital space to offer 
partner nations secure alternatives with respect to 5G technology and 
cybersecurity. USAID's Innovation, Technology, and Research Hub is 
helping advance cybersecurity and connectivity objectives in the 
region. For example, in Peru, USAID provides technical assistance to 
the Ministry of Transport and Communications to help strengthen digital 
security, data governance, digital innovation, artificial intelligence, 
and 5G radio spectrum policy frameworks. In the Eastern and Southern 
Caribbean, USAID is conducting a Regional Digital Ecosystem Assessment, 
which identifies cybersecurity vulnerabilities, while advancing 
improvements to the broader enabling environment for digital 
development.
    To support democracy, transparency and the free flow of 
information, USAID works closely with civil society and the independent 
media to strengthen their capacity to engage in oversight and promote 
accountability, amplify their voice, sustain operations, and conduct 
their work in safety. We have seen PRC efforts in the region to promote 
a distorted or misleading version of Chinese history and project a 
positive but incomplete picture of the PRC's motives in the region. 
USAID's partners play a key role in providing unbiased and objective 
information to inform citizens about the role of China and other 
external actors in the region. Among other elements, USAID assistance 
involves support to counter laws and policies that seek to restrict 
civil society's ability to operate; support for core activities--such 
as social audits, investigative journalism, countering mis- and 
disinformation--and organizational strengthening; and support for 
digital and physical security. This work is backed by research that 
examines information ecosystems and the influence of external actors to 
inform potential policy and programmatic responses.
    USAID's long history of providing both urgent humanitarian 
assistance and long-term development assistance to countries throughout 
Latin America and the Caribbean have been a hallmark of the United 
States' close partnership with the region. U.S. assistance, embodied in 
the USAID handshake of partnership and the FROM THE AMERICAN PEOPLE 
tagline, is well recognized by the citizens of Latin America and the 
Caribbean for the spirit of generosity and support it represents. For 
decades, USAID has helped the region quickly respond to natural 
disasters--such as hurricanes, earthquakes, volcanic eruptions, and 
disease by providing life-saving relief like food, safe drinking water, 
medicines and shelter. Our development programs have helped build 
sustainable incomes, develop health systems, and expand educational 
opportunities. Citizens of the region know we are a steadfast partner 
who will be there at their time of need. China does not provide this 
kind of assistance.
    In times of major need, such as the COVID-19 pandemic, we have 
stood up cross-cutting programs to address the health and economic 
impacts of the crisis. To date, the United States has provided 
approximately 65 million COVID-19 doses to the region with more on the 
way--with no strings attached. That is more vaccines than any other 
country has delivered in the region. To help get shots in arms, USAID 
has helped prepare countries to receive, distribute, and administer 
COVID-19 vaccines. USAID is helping countries implement national 
vaccination plans, including supporting health ministries with 
distribution plans, training vaccinators, establishing vaccination 
sites, cold chain management, communication strategies, and data 
strengthening.
    Overall, USAID has mobilized $524 million for the COVID-19 response 
across 29 countries in Latin America and the Caribbean to not only 
support vaccine delivery, but also to shore up the broader clinical, 
public health, and humanitarian response to the pandemic's impacts. We 
are mobilizing to address the pandemic's economic and broader secondary 
impacts as well. This includes responding to rising levels of food 
insecurity, and supporting the economic recovery of marginalized 
communities, migrants, and refugees with everything from job training 
and business financing to business development support.
    Now, more than ever, the United States must stay on course to 
remain the global leader in international development. While the PRC 
will continue its efforts to gain influence in the region, the United 
States maintains an extraordinarily unique and powerful relationship 
with Latin America and the Caribbean, characterized by unparalleled 
family, historical, cultural, and trade ties. Those all serve to keep 
the fate of the United States bound with its closest neighbors and 
deepen our relationship beyond just a strategic partnership. We are a 
community with many shared democratic values and experiences.
    USAID works day in and day out to strengthen these relationships. 
By working with our allies and partners, we can continue to make the 
entire Western Hemisphere stronger, more prosperous, and more secure.
    Thank you, and I look forward to your questions.

    Senator Kaine. Thank you very much.
    Mr. Herscowitz.

 STATEMENT OF ANDREW M. HERSCOWITZ, CHIEF DEVELOPMENT OFFICER, 
U.S. INTERNATIONAL DEVELOPMENT FINANCE CORPORATION, WASHINGTON, 
                               DC

    Mr. Herscowitz. Good morning, Chairman Kaine, Ranking 
Member Rubio, and distinguished members of the subcommittee.
    Thank you for inviting the U.S. International Development 
Finance Corporation, known as DFC, to testify today on our 
efforts to catalyze private investment in Latin America and the 
Caribbean.
    DFC brings values-driven, high-quality investment support 
to the region and plays an important role in the whole of 
government approach to countering the People's Republic of 
China.
    DFC partners with private businesses and banks to mobilize 
capital in support of sustainable economic growth, poverty 
reduction, and development that advances U.S. foreign policy 
interests.
    These objectives converge in Latin America and the 
Caribbean, a region with significant infrastructure needs, high 
rates of inequality, and pressing development needs in a region 
where the PRC has devoted increased attention.
    We offer companies transparent and accessible financing 
options that advance development, including equity investments, 
loans, loan guarantees, political risk insurance, and technical 
assistance.
    DFC has more than a $10 billion portfolio in the region and 
just last year we did $2.2 billion more. We are excited to use 
a recent new robust congressional appropriation to ramp up our 
support for projects in energy, transport, ICT, and other 
infrastructure as well as health care, agriculture, and 
financial services.
    We are especially focused on providing credit to micro, 
small, and medium enterprises in the region. These businesses 
are central to the region's recovery from COVID-19 and they are 
central to creating the jobs that create economic and political 
stability and that prevent migration.
    The way DFC deploys capital sends a strong message that the 
U.S. cares about local communities and the environment. Our 
financing tools reinforce good governance, avoid unsustainable 
debt levels, and promote inclusion.
    These are American values, values and practices that set 
DFC apart from others. DFC's model is one of partnership and 
empowerment, unlike other models that involve manipulating, 
taking, polluting, and exploiting.
    While the PRC, largely, finances the work of Chinese 
companies or provides unsustainable debt to governments, DFC 
provides financing directly to the people and the businesses of 
Latin America and the Caribbean, as well as to U.S. companies, 
U.S. companies that also believe in our high standards and who 
also care about the development of the people in the countries 
where they operate.
    DFC prioritizes transactions that improve the lives of the 
poorest and marginalized populations. Doing so advances both 
development and our foreign policy goals. The PRC prioritizes 
only the prosperity of the PRC, often to the detriment of the 
prosperity of the local people.
    That is why the U.S. is the preferred partner. By improving 
the lives of people, DFC transactions foster political and 
economic stability, which helps cement market-oriented reforms 
and rule of law.
    It is important to note that while the BUILD Act asked DFC 
to prioritize low and lower middle income countries, upper 
middle income countries make up the bulk of the countries in 
the region.
    By statute, our work in upper middle income countries must 
be designed to produce significant development outcomes.
    I have included in my written testimony examples of 
projects that illustrate DFC's approach and demonstrate a sharp 
contrast with the PRC. These projects have a strong focus on 
local needs and economic empowerment.
    They advance objectives like reducing migration flows by 
expanding credit access in Central America for businesses, by 
providing alternatives to coca production in the Andes, and 
supporting Venezuelan migrants in the region.
    One example of a development infrastructure project in 
DFC's portfolio was a project in Brazil to modernize public 
lighting, expand internet connectivity, and mitigate flooding 
risk.
    Thank you again for the opportunity to discuss how DFC's 
work represents a positive democratic alternative to state-
directed investments by authoritarian governments. DFC advances 
foreign policy and development goals.
    I also thank my fellow witnesses on the panel for their 
partnership. We work closely with their agencies to identify 
new deal flow, to provide complementary technical assistance 
for DFC-supported transactions, and to create an enabling 
environment for private investment in the region.
    I look forward to your questions.
    [The prepared statement of Mr. Herscowitz follows:]

              Prepared Statement of Mr. Andrew Herscowitz

    Good morning, Chairman Kaine, Ranking Member Rubio, and 
distinguished Members of the Subcommittee. Thank you for inviting U.S. 
International Development Finance Corporation, known as DFC, to testify 
today on our efforts to catalyze private investment in Latin America 
and the Caribbean. DFC brings values-driven and high-quality investment 
support to the region and plays an important role in a whole-of-
government approach to countering People's Republic of China (PRC) 
engagement.
    DFC's mission is to partner with the private sector to mobilize 
capital in support of sustainable, broad-based economic growth, poverty 
reduction, and development that advance U.S. foreign policy interests. 
Congress created DFC with an objective to provide foreign markets a 
robust alternative to state-directed investments by authoritarian 
governments and strategic competitors. These two objectives converge in 
Latin America and the Caribbean: a region with significant 
infrastructure investment gaps, high rates of inequality, and pressing 
development needs, and a region where the PRC has devoted increased 
attention. It is a U.S. Government priority to offer the private sector 
in the region high-quality, transparent, and accessible financing 
options that advance economic development. DFC pursues this objective 
by supporting impactful private-sector projects with equity 
investments, loans, loan guarantees, political risk insurance, and 
technical assistance.
    DFC has more than $10 billion invested across Latin America and the 
Caribbean in key sectors such as financial services, healthcare 
resiliency, and agriculture. And we want to do more. Thanks to the 
robust appropriation that Congress provided to DFC, we aim to ramp up 
our efforts to drive new private project investments. In Fiscal Year 
2020, DFC committed $2.2 billion across 22 transactions in the region. 
DFC continues to seek out eligible projects in energy, transportation, 
healthcare, financial services, and information and communications 
technology sectors. The Corporation has devoted a significant 
proportion of its regional portfolio to providing micro, small, and 
medium enterprises (MSMEs) access to the credit they need to scale up 
operations and hire staff. DFC's MSME finance projects are especially 
critical in a region like Latin America and the Caribbean, where MSMEs 
continue to be the primary drivers of employment, and where the economy 
has contracted by seven percent since the start of the COVID-19 
pandemic in 2020.
    DFC's model is to mobilize private capital in a way that upholds 
the highest social and environmental standards, reinforces good 
governance, avoids unsustainable debt levels, promotes inclusion, and 
contributes to sustainable and broad-based economic growth in the areas 
we work. That is a value proposition our competitors are unable to 
offer, and we believe our values and practices set DFC apart as a much 
better partner for developing countries. Unlike the PRC, DFC's efforts 
seek to empower our partner countries, helping them take advantage of 
and control their own resources. DFC's model is one of partnership and 
empowerment--not one of taking and exploiting. While the PRC largely 
finances the work of PRC-controlled entities or provides unsustainable 
debt to governments, the DFC model allows us to provide financing 
directly to the people and businesses in Latin America and the 
Caribbean.
    DFC supports transactions that improve the lives of the poorest and 
most marginalized. We prioritize these transactions for two reasons. 
First, the PRC is not taking on these critical transactions, choosing 
instead to prioritize its own prosperity. Our work to address the needs 
of local populations first and foremost is what sets us apart as a 
preferred partner. Second, by supporting these populations and 
improving their livelihoods, DFC helps foster political and economic 
stability which helps cement market-oriented reforms and rule of law; 
we can advance both development and foreign policy through these 
transactions. It is important to note that while the BUILD Act asks DFC 
to prioritize low and lower middle-income countries, upper middle-
income countries make up the bulk of the countries in Latin America and 
the Caribbean. By statute, our work in upper middle-income countries 
must be designed to produce significant developmental outcomes.
    Several DFC-supported transactions demonstrate clearly how DFC can 
serve as a robust alternative to PRC investment in the region. For 
example, in Colombia, DFC provided a loan guaranty in support of a 
project that helps Venezuelan migrants and host communities achieve 
greater economic independence through expanded access to banks and 
financial services. DFC provided a guaranty to two Colombian financial 
institutions (Bancamia and Crezcamos) to promote inclusive financing 
for these populations. DFC also is investing in projects that promote 
rural development in Colombia and Peru, helping provide licit economic 
alternatives to the coca cultivation that weakens local governance and 
leads to cross-border narcotics flows.
    In northern Central America, DFC is closely attuned to the 
challenges that drive migration and is supporting transactions that 
address the root causes. Again, the PRC has not shown interest in these 
kinds of transactions that promote economic prosperity. These 
transactions also advance U.S. foreign policy objectives. For example, 
DFC provided a $100 million direct loan to the Central American Bank 
for Economic Integration (CABEI) to fund financial institution 
intermediaries in El Salvador, Guatemala, and Honduras, which will then 
on-lend to MSMEs economically impacted by the COVID-19 pandemic. DFC is 
also supporting transactions that expand access to finance for women in 
northern Central America, and we recently hosted a town hall in the 
region in support of DFC's women's economic empowerment initiative, 
known as the 2X initiative.
    In addition to these highly developmental transactions that reach 
down to individuals most in need, DFC also is pursuing investment in 
infrastructure, recognizing the significant financing gaps and the 
extent to which strategic competitors have prioritized such investment. 
The Inter-American Development Bank (IDB) estimates that $2.2 trillion 
in infrastructure spending is needed by 2030 for Latin American and 
Caribbean countries to meet the UN's Sustainable Development Goals, 
which include access to water and sanitation, reliable sources of 
energy, transportation, and internet connectivity. DFC cannot tackle 
the scale of this challenge alone, which is why partnerships with other 
government agencies, private sector entities, G7 countries, and 
multilateral financial institutions are essential.
    One example of a recent project that typifies DFC's infrastructure 
objectives is Smart Rio, a project to modernize, maintain, and operate 
the public lighting system and install and manage smart city 
infrastructure in the city of Rio de Janeiro, Brazil. DFC is supporting 
this project with a guaranty of up to $267 million. The project will 
lead to energy savings of 60 percent per year compared to the current 
system through the retrofit or addition of 450,000 public lighting 
units with LED technology. The smart city infrastructure will include 
4,000 remote sewage monitors to aid in adaptation to and resilience 
against flooding risks, 6,000 smart traffic lights, and 5,000 public 
Wi-Fi access points. Nearly three-quarters of capital expenditures of 
the project will flow to neighborhoods below the city's median income. 
This project touches on two of priority sectors: climate and digital 
technology. Smart Rio was awarded the concession for the project after 
a competitive tender, beating out two other bids, one of which was 
submitted by a Chinese consortium backed by Huawei Technologies.
    Another example of a high-quality, DFC-supported infrastructure 
transaction is a road project in Colombia that helps farmers and 
businesses access markets. DFC's $350 million local currency guaranty 
in support of Sacyr's social bond issuance mobilized capital for the 
construction and operation of a toll road that promotes linkages 
between poorer regions in northern Colombia and economic centers, while 
encouraging local financial participation and investment. These types 
of DFC investments have the potential to crowd in additional investment 
in other private sector projects, including in the agricultural and 
manufacturing sectors, by lowering costs of doing business.
    Under the BUILD Act, DFC prioritizes investments in low and lower-
middle income countries. One result of this work is in Belize, a lower-
middle income country, where DFC provided a political risk insurance 
policy in support of a $364 million Blue Bond for Ocean Conservation. 
The innovative debt conversion, which DFC made possible through $610 
million in political risk insurance (covering loan principal and 
interest), will provide sovereign debt relief and simultaneously fund 
projects in support of Belize's commitment to protect 30 percent of its 
ocean. These projects advance ocean protection, fisheries management, 
and climate adaptation and mitigation. This approach is a major 
contrast from the PRC approach in that DFC is providing sovereign debt 
relief, whereas PRC transactions typically cause sovereign debt stress.
    DFC aims to increase electricity access for at least 10 million 
people by 2025 and increase internet access for 3 million people, among 
other goals. These development goals align with the needs in the Latin 
America and Caribbean region, where more than 20 million people are 
without electricity access and more than 80 million people rely on 
firewood and charcoal for cooking. Thirty-two percent of the Latin 
American and Caribbean population, or 244 million people, have no 
internet access. Stronger health systems are urgently needed in a 
region where, despite constituting only 8 percent of the global 
population, 28 percent of global COVID-19 pandemic deaths have 
occurred.
    It is in our foreign policy interest to address these challenges, 
and it is also in alignment with DFC's development mandate. Countries 
in Latin America and the Caribbean are critical partners in promoting 
prosperity, stability, and development throughout the Western 
Hemisphere, and the impacts of severe weather events, pandemics, and 
economic crises can be felt at our borders. Progress has been achieved 
as emerging economies have adopted market-based reforms that ease the 
cost of doing business and improve the investment climate. But much 
work still remains, and corruption and human rights continue to be 
paramount concerns for DFC and the U.S. Government. The U.S. Government 
is working in a coordinated manner to accelerate progress towards 
prosperity and stability, with the U.S. Department of State and the 
U.S. Agency for International Development as key partners in fostering 
an enabling environment for private investment, and DFC using its 
project support tools to provide additional impetus for investment.
    Thank you again for the opportunity to discuss how DFC's work in 
the region represents a positive, democratic alternative to state-
directed investments by authoritarian governments. I look forward to 
your questions.

    Senator Kaine. Thank you, Mr. Herscowitz, and we will begin 
a round of 5-minute questions and I will begin with you, Ms. 
Hannan.
    A lot of the competition with China in the hemisphere and 
around the world comes down to messaging and information. Talk 
to us about--you testified briefly about this in your opening 
comments--how your agency's public messaging strategy to 
counter China and how do you engage with the Global Engagement 
Center to accomplish that goal.
    Ms. Hannan. Thank you, Chairman, for your question.
    China spends at least five times as the United States does 
on public diplomacy and influence activities, but despite their 
inroads into the region, the U.S. still is the preferred shared 
values in the region. We consistently are the preferred 
partner.
    They bring every tool of the state and private sector to 
spread disinformation and we aim to puncture their narrative by 
offering open research and to build resilience and limit the 
space where the PRC manipulation can thrive.
    They have established media cooperative agreements with 
partners and we have seen journalists self-censor themselves or 
be encouraged by embassy officials not to tell the truth or 
shine a light on PRC malign activities.
    We seek to share credible third party research with 
influencers and journalists. We partner with the GEC to do 
this. We have programs in the region that are strengthening the 
resilience of populations, civil society, investigative 
journalists, as well as empowering governments to recognize and 
push back on disinformation and propaganda. I would also 
recognize Canada as a critical partner in this region 
addressing disinformation. We work with them closely.
    One other thing I will point out is that there are 63 
Confucius Institutes in Latin America, but there are over 120 
American spaces run through our embassies, the binational 
centers. It is a tool where we are able to share our values.
    We have Fulbright exchanges. I already mentioned Academy of 
Women Entrepreneurs and our Young Leaders, all of which allow 
us to build strong relationships and share the values that we 
have outlined before.
    Thank you.
    Senator Kaine. Thank you.
    Mr. Natiello, one of the issues that comes up a lot in 
Latin America now is the fact that many of our Latin American 
countries have been supportive of Taiwan and then that leads to 
significant pushback from the PRC.
    Can you talk about USAID's work with Taiwan, especially in 
Latin America?
    Mr. Natiello. Thanks for that question, Senator.
    USAID seeks to actively partner with Taiwan around the 
region. We currently have several ongoing activities with 
Taiwan around Latin America and the Caribbean.
    A couple examples to share with you today. We are working 
with Taiwan in Guatemala on youth development, workforce 
training, helping young people to find jobs. Taiwan has been a 
solid and reliable partner in that effort.
    In terms of Honduras, we have also worked with the Taiwan 
embassy in Tegucigalpa and we continue to look for ways to 
collaborate on agricultural development in Honduras.
    Specifically, we are hoping to collaborate via a recently 
launched USAID Feed the Future project and we hope to 
strengthen--work with Taiwan to strengthen agricultural market 
systems to expand economic opportunities and sustainably reduce 
poverty, which is one of the primary drivers of migration and 
food insecurity in Honduras.
    Last, we have worked closely with Taiwan on women's 
economic empowerment in the Caribbean, specifically in St. 
Lucia, Saint Vincent and the Grenadines, St. Kitts and Nevis as 
well.
    We are also negotiating--we are in the process of 
negotiating a memorandum of understanding with the Taiwanese at 
the level of USAID worldwide just to cement this partnership so 
that we can continue to work together on development in Latin 
America and also around the world. Thank you.
    Senator Kaine. Excellent. Thank you.
    Ms. Hannan, finally, for you. In your opening testimony you 
referred briefly to the Summit of the Americas in Los Angeles 
in June, an exciting opportunity, the U.S.' first hosting of 
the Summit in more than 20 years.
    There is so much that we could focus on in that Summit. To 
what degree do you think there will be a focus on countering 
Chinese influence, if not as a direct topic at least addressed 
as we are talking about ways that the U.S. can more deeply 
engage in the Americas?
    Ms. Hannan. Certainly. Thank you for the question.
    The Secretary laid out his vision with his speech in Quito 
that our aim is to support democracies in the region so that 
they can deliver for their people based on our shared values, 
and the agenda we have laid out at the Summit, the five areas 
of focus, all are primarily aimed at that objective.
    I expect disinformation will be a topic we talk about in a 
broader sense as it relates to COVID and more about the 
resilience and ability to address disinformation, in 
particular.
    I think that is relevant to this conversation, as well as 
the need for continued partnership and opportunity for foreign 
direct investment and finding ways so that these countries and 
our partners and allies in the region can access either U.S. or 
private sector-led investment.
    All of that is some of the objectives we hope to come out 
of the Summit that will help.
    Senator Kaine. Great. Thank you very much.
    Senator Rubio.
    Senator Rubio. Thank you.
    Deputy Secretary Hannan, the SOUTHCOM has concerns that the 
PLA and their activities in Latin America and the Caribbean. In 
a 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 this growing military-to-military ties 
between the PLA and regional militaries, and how is the 
department interacting with SOUTHCOM and other executive 
departments in educating countries in the region on the risks 
of increasing ties to the PLA?
    Ms. Hannan. Thank you, Senator Rubio, for the question.
    We remain the preferred partner--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 IMAT and FMF funding to 
allow the U.S. to continue to partner, train, and equip 
military and security forces in the region.
    We are working to help show that--to 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 the 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.
    Senator Rubio. The NDAA, the National Defense Authorization 
Act, for 2022 supported 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 in Latin 
America and the Caribbean.
    Can you tell us what the status of that report is and when 
it will be completed?
    Ms. Hannan. I cannot, but I will check with my team and get 
an answer to you.
    Senator Rubio. Mr. Natiello, let me ask--the National 
Endowment for Democracy report on soft 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?
    Mr. Natiello. Thank you for the question, Senator Rubio.
    USAID absolutely shares this concern about these closing 
democratic spaces in places like Venezuela, Nicaragua, 
certainly, Cuba, and one of the interventions or 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 are in harm's way.
    One example that I could provide is work that we have 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 is 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. Thank you.
    Senator Rubio. Mr. Herscowitz, let me--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?
    Mr. Herscowitz. Thank you for the question, Senator.
    Many of the countries that you have mentioned are high 
income countries and DFC does not 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 is in infrastructure, mining, or other 
strategic investments that will advance U.S. values.
    Senator Rubio. That is why we have an Inter-American 
Development Bank. Is not the fact that they are classified as 
high income an argument for supporting a capital increase to 
the Inter-American Development Bank and its private sector arm, 
IADB Invest, which does not have those restrictions?
    Mr. Herscowitz. In terms--you are asking whether or not we 
should be supporting an increased investment in the Inter-
American Development Bank? Is that your question?
    Senator Rubio. That is right. If those countries do not 
qualify for the programs you are offering because they are 
classified as high income, the alternative would be IADB 
Invest.
    Mr. Herscowitz. I would defer on that question to our 
colleagues at the U.S. Treasury who are making the 
recommendations about our interactions with the regional 
development banks.
    Senator Kaine. Thank you.
    By WebEx, Senator Cardin.
    Senator Cardin. Mr. Chairman, thank you very much, and let 
me thank our panel.
    I want to follow up on Senator Rubio's point, but from a 
slightly different perspective. Yes, we have countries in our 
hemisphere that are problematic as it relates to values and 
democracy, such as Venezuela, Cuba, and Nicaragua, but we pride 
ourselves in our hemisphere of countries that pride on being 
democratic and supporting the same values that we do.
    When we saw the image of President Xi with President Putin 
at the Olympics, that should have had a powerful message about 
China's priorities, where Mr. Putin at that time had already 
planned the invasion into Ukraine.
    Since the invasion in Ukraine, China has been on the wrong 
side of history. We know China uses soft power. We know about 
the Confucius Institutes. We know about people-to-people. 
Senator Rubio was talking about some of that use of soft power.
    My question, I guess, to Secretary Hannan is that are we 
taking advantage of the fact that the countries of our 
hemisphere generally support us in regards to promoting 
democracy and Western values and making it clear that China's 
intentions are well beyond just setting up a nice relationship 
with people to people, but to control through economic issues 
or military issues the future of what country will dictate 
value globally in setting the rules? It seems to me that is a 
powerful tool that we have in our hemisphere. I am curious as 
to whether we have a strategy to utilize that.
    Ms. Hannan. Thank you, Senator.
    I would like to point out that 27 member states joined the 
U.S. and voted for the March 2 U.N. General Assembly resolution 
condemning Russia's actions in Ukraine and those same countries 
joined us in supporting the March 24 U.N. General Assembly 
resolution expressing concern about the humanitarian situation 
in Ukraine.
    China abstained on both those resolutions. China is, 
clearly, out of step with the Western Hemisphere and the great 
majority of our partners who do view--when it comes to the 
views of this invasion.
    We have continued to partner with our allies and partners 
in the region to point that out, to show that we are the 
preferred partner and share the same values. It really is a 
campaign of desperation by the Russians, and the PRC amplifying 
their bio lab or other disinformation is ludicrous and untrue.
    We also continue to stand with the people of Nicaragua, 
Cuba, and Venezuela, where authoritarian governments that have 
Russia's backing have stifled democratic aspirations. This is a 
top priority for us to continue to support democracies in the 
region. Thank you.
    Senator Cardin. I appreciate your statement on that, but I 
was looking to some specific action strategy here as to how we 
are making it clear to our traditional partners in our 
hemisphere that when they set up the Belt and Road Initiative, 
when they do economic ties with China, they are supporting Mr. 
Putin. They are supporting a way of life that is contrary to 
the values we all stand for.
    Yes, we want to have good relations with all countries. 
That is not the issue, but the issue is that they are naive 
about China's ultimate intentions.
    It would seem to me we need a much more aggressive policy 
wrapped in our values to make it clear it is time to make 
decisions on what side of values you are going to stand on. 
Again, we do not want to cut off ties between countries with 
China, but it goes well beyond that with China's strategy in 
our hemisphere.
    It does not seem to me that we have a strategy to really 
counter this moment in history where China is on the wrong side 
of history and is assisting Mr. Putin in the atrocities that 
are taking place in Ukraine.
    Ms. Hannan. Thank you, sir. We do use every diplomatic, 
economic, and public diplomacy as well as foreign assistance 
that we have to counter China's influence in the region, and we 
think that every government--and share this point regularly--
that they need to make good decisions when it comes to 
providing for its citizens and protecting national interest and 
who they choose to partner with when trying to deliver on those 
promises to their populaces.
    Senator Cardin. I appreciate that. I would hope that we 
would have a more definitive response, considering where we are 
at this moment in history with Mr. Putin violating every 
international norm in his campaign in Ukraine, and China on Mr. 
Putin's side.
    It seems to me that presents us a unique opportunity, 
particularly with our closest friends in our hemisphere. I 
recognize that USAID has a role here and so does the financing 
arms, but it seems to me all of us have to recognize that this 
is a moment in history to decide on what side you are going to 
stand on, on good or evil, and China has made that decision and 
we should we should capitalize on that.
    Thank you, Mr. Chairman.
    Senator Kaine. Thank you, Senator Cardin.
    Next up is Senator Schatz.
    Senator Schatz. Thank you, Mr. Chairman. Thanks to all of 
the testifiers.
    China's BRI energy project financing provides the money for 
about 70 percent of the world's coal projects over the next 5 
years. We all know that Xi Jinping announced that China will no 
longer build coal plants abroad.
    Given the propensity of the CCP to go back on its word, Ms. 
Hannan, what do we do about monitoring the fidelity to that 
pledge? Assuming that they will try to go back on their word, 
what tools do we have to provide alternatives in the hemisphere 
to the continued financing of coal and other fossil energy 
projects via China?
    Ms. Hannan. Thank you very much for your question, Senator.
    We have seen recent U.S. investments in critical 
infrastructure, including development of ports and data science 
centers. I cannot really speak today to the specific issues of 
coal. I am happy to go back and get an answer for you and 
provide that to you directly.
    Senator Schatz. Okay. Well, listen, that is one of their 
primary means of economic control and relationships that they 
develop, and so I would like a fulsome response.

[Editor's note.--The requested information referred to above 
follows:]

    We recognize that the PRC serves as a significant investment 
partner for the region and will continue to raise concerns and 
distinguish ourselves from risky PRC critical infrastructure projects 
and investments that do not adhere to international best practices, 
environment, labor, and safety standards. The United States actively 
supports the region's efforts to diversify away from coal and heavy 
fossil fuels. We also support efforts to adapt to the negative impacts 
of climate change through programs such as the President's Emergency 
Plan for Adaptation and Resilience (PREPARE). The United States 
continues to encourage the adoption of renewable energy resources and 
increased private sector investment in clean energy infrastructure 
projects via fair and transparent tender processes.
    Under the Build Back Better World initiative, we will also focus 
efforts on promoting values-driven, high-quality, transparent, and 
catalytic infrastructure with climate infrastructure among the 
priorities. Under the Caribbean Energy Security Initiative, the State 
Department and the U.S. International Development Finance Corporation 
(DFC) supported the first-ever Caribbean energy sector loan guarantee 
of $25 million for clean energy projects across the region. The 
Department helped Ecuador design and conduct transparent tenders for 
wind and solar projects, which submitted applications to the DFC for 
potential financing.]

    Senator Schatz. Mr. Natiello, it looked like you wanted to 
respond to this.
    Mr. Natiello. I am sorry I gave that impression, Senator.
    I would simply say that USAID's focus, really, here is on 
helping our partner nations in the region modernize their 
energy systems, their energy grids, and their energy mix to 
include much more renewable energy.
    The Caribbean is way too dependent on fossil fuels. That is 
a vulnerability for them. They know that, particularly today 
when the price of oil is so high.
    So USAID has for some time now been focused on helping them 
to just diversify the mix of their energy sources and help them 
shift over to renewables.
    Senator Schatz. I think we have a 2- to 4-year window to 
move into this space in the hemisphere to take advantage of 
President Xi's promise.
    I think after that all bets are going to be off and there 
is a pretty good likelihood that they may go back on their 
word, and so the more that we can move into that space and 
provide economic alternatives and fuel and energy security for 
the region, it will meet our climate objectives, but it also 
aligns very nicely with our national security and diplomatic 
objectives.
    I want to talk about deforestation. China's imports of 
agricultural commodities drive more deforestation globally than 
any other market, including the United States and the EU 
combined. This has enormous implications for Latin America and 
beyond.
    I introduced the FOREST Act, which creates a framework for 
the federal government to deter commodity-driven illegal 
deforestation around the world, but until the bill becomes law, 
what can the State Department do, Ms. Hannan, to reduce demand 
for these commodities and their climate impact?
    Ms. Hannan. The PRC has demonstrated that what it wants is 
access to raw materials worldwide, whether it be wood or 
lithium or any other material that allows them to continue to 
support--and they also are aggressive in looking for food--food 
resources.
    We continue to seek to work with like-minded partners and 
allies to offer higher-quality and transparently procured 
government infrastructure investment that will provide an 
alternative to PRC programs in the region.
    Senator Schatz. Just so we are clear, I am talking about 
commodity-driven deforestation because we have the Lacey Act. 
We have some measure of an international regime. It does not 
work perfectly around forest products themselves, but the 
primary driver of deforestation internationally is that they 
clear cut and then grow commodities as agricultural inputs, 
primarily soy.
    So we need to get a collective strategy around that. First, 
we need to pass my bill. I know every member of every committee 
says we need first to pass my bill, but failing that, the State 
Department has plenty of tools to implement a strategy.
    I will just offer one last question for the record 
regarding CCP influence on press freedom, which I look forward 
to your answer on. Thank you.
    Senator Kaine. Thank you, Senator Schatz.
    Next up is Senator Shaheen.
    Senator Shaheen. Thank you to Senators Kaine and Rubio for 
holding this hearing today, and Senator Rubio, it is great to 
have these students from Florida who are here. Next time bring 
some women with you, will you?
    [Laughter.]
    Senator Shaheen. We want to make sure that women 
participate in foreign policy as well.
    I do not know if everybody can see this. It is kind of low, 
but we will hold--yeah. This is a--picture is worth a thousand 
words.
    This was handed out in the Armed Services Committee about a 
year ago by SOUTHCOM and it shows Chinese influence in Latin 
America, and because you are far away you cannot really see 
what the key says, but this dark area, those countries are all 
members of the Belt and Road Initiative. There are 19 of 31 
countries that have joined that.
    The stars are an indication of where China is involved in 
port projects, and 29 are ongoing and completed that China is 
involved in with port projects. Twenty-five of 31 countries 
host Chinese infrastructure projects and there have been 44 
heads of state meetings with Latin American leaders by China 
since 2015.
    They have a goal of $500 billion in trade by 2025. That 
dwarfs what we are looking at in the United States and I think 
this is important to show the challenge that we face. While I 
appreciate all of your testimony this morning and think it is 
very helpful, I think we have got to be realistic about what we 
are facing and this, clearly, indicates the challenge.
    I wonder if any of you could speak to what you think the 
main reasons are that so many Latin American and Caribbean 
countries have signed on to the Belt and Road Initiative.
    Ms. Hannan.
    Ms. Hannan. Thank you for the question.
    The partners and allies in the region want to deliver to 
their populations. There is a $150 billion infrastructure 
deficit in the region right now and low-cost, state-backed 
loans are very appealing to our partners.
    What we do when the PRC aims to capitalize on these 
potential vulnerabilities that have been aggravated by the 
pandemic, we focus on helping them to deliver an investment 
climate where U.S. and trusted private sector-led investment 
can take place.
    We want to support the recovery of the region from the 
pandemic. We raise concerns about BRI projects, that they do 
not respect international standards or regional standards when 
it comes to labor, environment, and social practices.
    What we do try to do, we have sent over two dozen technical 
delegations to the region to help with procurement and 
investment screening. We do what we can to help our partners be 
able to deliver and create an environment where private-led 
investment and--or U.S. companies have an environment where 
they can offer up alternatives to these governments.
    Senator Shaheen. One area, obviously, that is very 
important for us as we are trying to address American support 
and influence is in ambassadors, and I would point out that my 
understanding is China has ambassadors in every country in 
Latin America.
    Can you tell me how many countries that we currently have 
ambassadors in?
    Ms. Hannan. I believe there are 29 embassies and 23 
consulates where we have either an ambassador or principal 
officer.
    Senator Shaheen. Do we have ambassadors approved for those 
countries?
    Ms. Hannan. We currently have, I believe, eight that are 
pending and we have four slots open, but we have very talented 
charges d'affaires that are working at those embassies and 
still carrying the mission forward that we have.
    Senator Shaheen. You would agree that it is really 
important for us to get those ambassadors appointed, and I 
think that speaks to this committee's work and the need to move 
on those nominations as soon as we can get them.
    Ms. Hannan. Thank you for raising that.
    Senator Shaheen. Let me also raise a concern about COVID 
because one of the things that is pictured on this map is that 
it says that eight countries are producing, using, testing, or 
interested in purchasing Chinese COVID-19 vaccine.
    Mr. Natiello, you talked about the importance of our 
sharing our vaccine and the interests that people have in 
countries with having the vaccines that are being produced in 
the United States because they are more effective.
    It is very disturbing to me that we have a COVID bill 
pending in the Senate. Five billion of that was to go to help 
address vaccine distribution in countries around the world and 
my understanding is that that got dropped out last night in 
terms of the package because of objections from our Republican 
colleagues.
    I wonder if you could talk about how important it is for us 
to continue to share vaccines with countries that need the 
COVID vaccine.
    Mr. Natiello. Thank you for that, Senator. As Administrator 
Power has said many times, it is critical that we help keep our 
neighbors safe because that keeps us safe.
    So we, at USAID, with other parts of the U.S. Government 
have worked hard to get those 65 million donated vaccines into 
arms. The job is not done yet. We continue to work hard on it. 
The Administration's goal is 70 percent of the population in 
the region and around the world having two doses by September.
    So we are not there yet so we continue to need to not only 
donate vaccines--it is one thing to get vaccines on the tarmac 
at the airport. It is a whole another thing, as we all know, to 
get it in somebody's arm.
    So USAID provides significant technical assistance to 
governments around the region to do that, to work on the cold 
chains, to work on the logistics, to work on the planning, et 
cetera. The resources that the U.S. taxpayer and the Congress 
have generously provided us with have been extraordinarily 
helpful to meet this challenge. Thank you.
    Senator Shaheen. Thank you. My time is up.
    I assume you would agree with me that it is a real loss if 
we are not able to provide that additional support to continue 
to distribute those vaccines in countries where they are 
needed.
    Mr. Natiello. Yes. Thank you.
    Senator Shaheen. You do not need to answer that. It was a 
rhetorical question. Thank you.
    Senator Kaine. Thank you, Senator Shaheen.
    Senator Risch is next, and I understand Senator Risch has a 
valuable guest with him.
    Senator Risch. Actually, I do. My grandson is with me 
today. He is on a break. So thank you for that.
    First of all, let me associate myself with the remarks of 
Senator Shaheen. I completely agree that we need ambassadors in 
these countries.
    Look, I was a governor. I understand you cannot govern 
without having your team in place. We spar over that all the 
time on this committee and it is unfortunate it gets caught up 
in the politics that it does.
    I appreciate the remark of the State Department that we 
have very talented charges in these places. That is really 
important, but it is no substitute for having the ambassador. 
We all know, as we deal with these countries, that the head of 
state, particularly, he or she wants to deal with the 
ambassador, not with a charge.
    Anyway, I agree with you, Senator, and we continue to work 
on it. It is cumbersome and it is probably at some point in 
time we are going to have a look at moving these along quicker.
    I mean, I watched in the last Administration and this 
Administration. I suspect we are going to get to the end and 
there is going to be some countries that never did have an 
ambassador during that period of time.
    Thank you to the ranking member and chairman of this 
subcommittee for holding this hearing. I think it is really 
important in that most Americans really have no idea about how 
ubiquitous the Chinese influence has become around the world.
    We have to deal with it all the time. We are not surprised 
every time we cross their track, but I think most Americans are 
fully uninformed with that.
    Even more importantly is the investment and the trade that 
takes place with China, and we are told that in this region the 
United States is the largest investor. When I talk about the 
region, I am talking about the Western Hemisphere and also the 
Caribbean.
    We are told the U.S. is the largest investor in the region, 
yet China has become the largest trade partner in the region, 
and it really, really ought not be that way.
    Mr. Natiello, could you talk for a minute about: a) how 
this has happened; and b) how we reverse it?
    Mr. Natiello. Thank you, Senator.
    What I can say on that is that USAID's focus has been on 
really helping our partner nations in the region to help create 
the enabling environment and a level playing field for greater 
U.S. investment in the region.
    We do that through things like transparent--reforms to 
procurement codes to ensure that procurements are fair, they 
are transparent, that there is a level playing field and we do 
it--again, we do that around the region.
    One example I could share with you is what we recently did 
in Colombia with an energy auction where we helped the 
Colombians understand the best approaches and the best rules 
for approaching the challenge of energy auctions and increasing 
the supply of clean energy in their economies.
    That led to nine firms stepping up. None of those were 
Chinese. Several of those were U.S. firms. They came in with 
bids that were 15 percent below the market price for energy in 
Colombia.
    It was a win in terms of investment. It was a win in terms 
of trade. It was a win in terms of the environment. That is 
just one example of the kind of things that USAID does around 
the region on trying to enhance investment.
    Senator Risch. I appreciate that.
    Mr. Herscowitz, this is more in your wheelhouse. You want 
to take a run at this?
    Mr. Herscowitz. So one of the things that I thought was 
wonderful about the BUILD Act when you created DFC is that you 
lightened up the U.S. nexus requirement where previously we 
were only supporting transactions where there was some strong 
U.S. nexus.
    While it seems counterintuitive that lightening that up 
would actually create opportunities for U.S. businesses, let me 
explain why this is great.
    What we see in a lot of countries is that there are 
sometimes family-owned businesses or businesses that existed 
for a long time that are often bidding on the infrastructure 
projects and other types of projects.
    When we have that connection to that local company that 
then gives us insights into trade and investment leads. I think 
back to a time when I visited a company in Ghana once and it 
was a Power Africa-supported transaction that was not a U.S. 
developer, but they sat down and they put up on the screen 19 
different U.S. companies that were providing services or other 
types of products on that transaction.
    So one of the things we have been doing increasingly at DFC 
is we have been doing town halls and working closely with USAID 
and State Department to identify these types of local companies 
so that we can increase that two-way trade and also identify 
trade and investment leads for U.S. companies.
    Senator Risch. Thank you. I think it is critical we focus 
on this. I mean, this is a situation that is in our own 
backyard and gotten away from us and, obviously, it will be a 
challenge, but we need to focus on it.
    My time is up. Thank you, Mr. Chair.
    Senator Kaine. Thank you, Senator Risch.
    Next up is Senator Markey.
    Senator Markey. Thank you, Mr. Chairman.
    I mean, this is all pretty simple to me. China has a plan. 
We do not have a plan. If we want countries to be grateful to 
us for providing a vaccine that does work, we have to fund it. 
A vision without funding is a hallucination.
    So they are going to go--they are pragmatists in all these 
countries all around the world. Are we going to do it or not? 
Are we going to signal that we are in the game or are we not? 
Very simple.
    We have now got a bill. We call it the COMPETES Act. We 
know it is the China bill. Actually, we do not--not supposed to 
say that word. Why is that? Because our semiconductor industry 
failed us, just totally failed us.
    So the American taxpayer is going to have to bail them out. 
That is sad. That is not a plan. That is not a plan that our 
country had or our companies had.
    We are stalling on passing a bill that could create a clean 
energy revolution in our country. Why is China in these 
countries? They want their natural resources. They want the 
lithium. They want the other sources.
    If Donald Trump says we are not going to increase the fuel 
economy standards of the vehicles which we drive, if he says we 
are not going to have standards for solar and wind, then our 
companies all say, we are not going to have a plan because we 
will not have to have a plan to go to other countries in order 
to get the natural resources that we want.
    Meanwhile, China says what a great economic opportunity for 
us to move into the future. Thank you, American private sector. 
Thank you, American automotive industry, for not wanting to 
improve your fuel economy standards. Thank you to the Trump 
administration for stopping, slowing down dramatically, the 
deployment of wind and solar in our country. Great, but do not 
be surprised that they are going to Chile, that they are going 
to Bolivia, that they are going to Argentina to lock up these 
resources.
    I will just give you some really scary, scary, scary 
numbers. There are 86 million tons of identified lithium 
resources on the planet--on the planet. Forty-nine million of 
the 86 million are in the Golden Triangle. That is Argentina, 
Bolivia, Chile.
    What is our plan? If I asked you to describe what our plan 
is in order to make sure that those resources are directed 
towards American industries and interests and that we are doing 
it in an environmentally sound way, not the way the Chinese do 
it, what is our plan?
    China has a plan. We are better than China, but we cannot 
beat them without a plan and that is where we are right now. 
Then they use that, that economic leverage, as a way to 
influence politics and then the politics says no longer should 
you be supporting Taiwan. Just back off and be with us in the 
U.N. on other issues as well.
    It is a pretty simple formula, but there is just no way 
that this is not in any way tied to what the corporate side of 
our country wants. So in China they put together the plan. Then 
they unleash their private sector.
    Here, we have been let down. Four years of Trump was a 
disaster. These natural resources have been gobbled up all 
around the world. It is a broader story. The semiconductor 
crisis is a story that should have had an American plan. We did 
not have a plan.
    I mean, my God, we are going to vote American taxpayers' 
money in order to subsidize what should have been the 
wealthiest companies in the world. Why? Because we are afraid 
of China and Taiwan and the semiconductor industry in China. 
Where is our plan?
    You are down there. You are trying to do your job, and I 
guess what I would do is just ask one question. I know that 
one-third of the funding from the Development Bank is intended 
to be focused towards our climate-related issues.
    Could you talk a little bit about that, and what is the 
plan for us to be dedicating those resources in the years ahead 
and, hopefully, we will get full funding from all the members 
of the committee.
    Otherwise, we are going to be in total violation of the 
first law of holes, which is when you are in one stop digging, 
because the holes we are in do not find lithium. They do not 
find any other valuable resources.
    We are just absolutely going to have crisis after crisis, 
all related to our lack of planning. If you would, I would love 
to hear what the plan is for the bank.
    Mr. Herscowitz. Thank you, Senator, for the question.
    I think as we have all learned, both from the COVID 
pandemic as well as from the current war in Ukraine, the 
importance of diversifying the global supply chain and bringing 
some either home or closer is something that we all agree on 
and DFC has been very aggressive in that regard.
    Even when we look at the issues of solar supply chain, we 
have taken very seriously the issue of the treatment of the 
Uighurs in Xinjiang, to try to see where we can find 
opportunities to produce solar outside of that area as well.
    Recently, the DFC approved a $500 million transaction to 
produce solar panels that do not rely on polysilicon with First 
Solar, a U.S. company with operations in Ohio and Arizona.
    We continue to look for these opportunities to diversify 
the supply chain, working on critical minerals as well and 
other--the other types of minerals and inputs that are going to 
be important for us to look towards the future and having a 
much more diverse energy and technology supply.
    We are also looking at other technologies as well that will 
allow us to be leaders in the future. A lot of the leading 
technologies in the renewable energy space are coming from the 
United States. We look at things like long duration energy 
storage, hydrogen production.
    So we continue to work closely with U.S. companies and 
international partners to see what we can do to take that long-
term view so that we are not set up for failure in the future.
    Senator Markey. Okay. All I would say in summary is if we 
do not pass this climate package right now, there is going to 
be a lot of crocodile tears that are going to be shed in 
another 3 or 4 years saying, oh, how did we get in this 
situation where China now controls all these additional sources 
as well.
    Of course, that just translates into politics. That is how 
they buy their way in and, by the way, it helps their economic 
security and it helps their national security at the same time 
and it actually helps them to be the leader on climate security 
because they will be the leaders in these critical clean energy 
areas.
    It is a lose-lose-lose-lose, and, ultimately, we lose our 
moral authority as well because we are not at the table saying 
we are actually doing it. You cannot preach temperance from a 
barstool. You got to have a plan and we do not have a plan.
    So we can have the hearings on semiconductors or lithium or 
all-electric vehicles. We can have all--what happened, how did 
it all go wrong. There is no plan and they are capitalizing 
upon it, and a lot of it just comes back to this clean energy 
agenda and the natural resources that are needed.
    Thank you, Mr. Chairman.
    Senator Kaine. Thank you.
    Senator Hagerty.
    Senator Hagerty. Thank you, Senator Kaine.
    Senator Markey, just a follow-up point on your concern on 
semiconductors.
    I share your concern on our strategic posture with 
semiconductors and I want to thank you and all the members of 
this committee for supporting the legislation that I put 
forward, along with Senator Kaine, to shorten the permitting 
process for semiconductor fabrication plants here in America.
    We took the FAST-41 language from the infrastructure 
program, applied it to strategic industries like chip 
fabrication here in America and, essentially, we will take a 5-
year permitting process and compress that down to 18 months.
    We are not going to skip any processes, but we are going to 
make the process better and more efficient. That will make us 
more competitive. It does not require subsidies to do that. So 
if you think about the pace of technology change in 
semiconductor industries this is going to help us a great deal.
    I would like to turn my first question for this panel to 
Deputy Assistant Secretary Hannan and I would like to talk to 
you about something that is a deep concern for me as an 
American, as a parent, what has been happening here.
    According to the Center for Disease Control and Prevention, 
drug overdose deaths in America just over the past year have 
now exceeded 100,000 young Americans. We read about it every 
day.
    Mexico remains the major transit and production point for 
the illegal drugs that are coming into this country and behind 
all of this is the Chinese Communist Party, who are routing 
fentanyl and the precursor chemicals to make fentanyl into 
Mexico.
    Back in the--back at the G-20 that was held in Buenos 
Aires, I was actually dialed into the call as we were preparing 
for a meeting between President Xi and President Trump.
    President Trump told President Xi he wanted to stop the 
flow of fentanyl coming into America. President Xi agreed to 
this, but he never agreed to stop sending the fentanyl and its 
precursors into Mexico, and what we see now with the collapse 
of our southern border is a dramatic increase in the flow.
    As I mentioned, 100,000 deaths from overdose just this past 
year. It is the largest killer of young people in America today 
and I am very, very concerned that this has now become a major 
national security crisis.
    This drug epidemic that is killing tens of thousands of 
Americans is becoming a national security crisis here in 
America and I would like to know, Secretary Hannan, 
specifically, what percent of the drugs coming across the 
border include fentanyl coming from China?
    Ms. Hannan. Sir, I would have to get you that exact number. 
I do not have it in hand.
    Senator Hagerty. Does the State Department have this 
information?
    Ms. Hannan. I would have to check with my colleagues in INL 
and others to confirm that.
    Senator Hagerty. Given the level of the epidemic that we 
have got right here, given the fact that this is a war that is 
being waged by the Chinese Communist Party through Mexico on 
our youth, I think the State Department ought to have this data 
at its fingertips.
    I hope that you will get this to my staff as soon as 
possible because if we cannot know the numbers how do we hold 
China accountable? Do you have a plan to hold China accountable 
for this?
    Ms. Hannan. We work closely with all of our partners in the 
region to address the various issues that we face with the PRC, 
this being one of the most important, as you have indicated.
    We will continue to dialogue with the Mexicans and to 
hold--make every effort we can to hold the Chinese accountable 
for what they are doing in this.
    Senator Hagerty. Could you sort of set aside the State 
Department-ese? Rather than partners and dialogue, can you tell 
me what entities you are partnering with to address the 
fentanyl and the precursors that are coming into Mexico and are 
coming across this border to kill our kids?
    Ms. Hannan. I am going to include that in my answer to you 
when we provide you the numbers, sir.
    Senator Hagerty. I am shocked that you do not have a ready 
answer for this. Given the magnitude of the problem, this 
should be first and foremost in terms of your priorities. It, 
certainly, is in mine.
    Next question, I would like to talk about the DFC.
    Mr. Herscowitz, last week I wrote to the CEO of the DFC, 
Scott Nathan, noting that the year-long increase in energy 
prices makes it clear that America energy's role in the global 
market is critical for both our national security and for the 
health of the economy, and dependence on strategic adversaries 
like China and Russia and their allies like Venezuela--
depending on them for our energy means makes us unacceptably 
vulnerable.
    American energy companies have world-leading expertise in 
all sectors and the DFC should be encouraging their efforts in 
all sectors.
    My first question is what efforts are the DFC undertaking 
to help fund and enable investments that would encourage U.S. 
companies to deliver cheap, reliable, and environmentally 
responsible energy for the world, including fossil fuel, 
nuclear fuels, and the mining industries?
    Mr. Herscowitz. Thank you, Senator, for the question.
    DFC's current development strategy has set a very ambitious 
goal of doing $10 billion of investment in the energy sector. 
We also recognize the importance of not just energy for 
development and for production, but for energy access as well. 
We also have a goal of making sure at least 10 million people 
get access to electricity from the work that we are doing.
    Our approach with respect to energy still remains, largely, 
technology agnostic. We look at a few factors. Number one, we 
have to look at what resources the country has and what makes 
sense for the country itself.
    The transactions have to be commercially viable. We do not 
support any technology for the sake of supporting a technology, 
but we want to make sure that this is something that the 
private sector would support.
    We want to make sure there is a diverse mix of energy 
resources as well. Some countries are blessed with fossil 
fuels. Some countries are blessed with wind and the sun. We 
really look to see what makes sense both domestically, but 
regionally as well. To extent that we can encourage countries 
to trade power so they get greater efficiency that is important 
to us as well.
    We look forward to continuing to working with you and 
engaging with you in this area.
    Senator Hagerty. My great concern is that I do not want us 
to miss opportunities where we could help a country move 
incrementally in the right direction and in that void have 
other nations that perhaps do not have our environment front of 
mind, come in with dirtier solutions when we have an 
opportunity to incrementally help just because we are so 
focused on maybe an end goal that technologically just is not 
appropriate for the nation we are trying to help at that time.
    Mr. Herscowitz. We prioritize development and geopolitical 
significance in the work that we are doing, as laid out in the 
BUILD Act, and this is why we continue to look at all 
technologies.
    Senator Hagerty. Thank you. Thank you, Mr. Chairman.
    Senator Kaine. Thank you, Senator Hagerty.
    Chairman Menendez.
    Senator Menendez. Thank you, Mr. Chairman, and with 
authoritarian regimes threatening freedom, prosperity, and 
democracy in the Western Hemisphere and around the world, this 
hearing could not be more timely. I thank you and the ranking 
member for holding it.
    Across Latin America and the Caribbean, China is using 
everything from finance to fishing to technology, even vaccine 
access, to influence a greater and greater share of its 
abilities within the hemisphere.
    In the face of these challenges, the United States cannot 
stand idly by. We have to do more to compete in the region and 
we have to stop taking our own hemisphere for granted.
    That is why last Congress I introduced the Advancing 
Competitiveness, Transparency and Security in the Americas Act. 
It was the first ever legislation focused on strengthening U.S. 
competition in Latin America and the Caribbean.
    It expanded our financial tools and diplomatic presence. It 
countered corrosive economic practices. It worked to secure the 
region's physical and digital infrastructure and it boosted 
support for civil society across the Americas, and I am pleased 
to see many of its provisions were included in the U.S. 
Innovation and Competition Act, which we are on the verge of 
passing.
    They are important steps as we deal with authoritarian 
threats, but we cannot stop there, and I have a real concern. I 
have heard some of the testimony or questions raised by some of 
my colleagues. I share them.
    China is aggressively all over the hemisphere. I cannot 
tell you how many leaders in the hemisphere I have been talking 
to as they face the challenges of energy and are ill-equipped 
to deal with those challenges.
    We see the challenges we are having ourselves. I understand 
the President just announced a million barrels a day released 
from the SPRO, but they do not have a SPRO. In countries like 
some of these countries--the Dominican Republic, the Caribbean, 
and others--that effect can create civil unrest. If the prices 
spike up, we are going to have a huge problem.
    We have a huge problem coming out of the pandemic with the 
reality that IMF requirements, without being eased and extended 
over time--not relieved, not forgotten, but eased and extended 
over time, these countries not going to be able to meet it.
    Look what we did to spend to try to meet the pandemic in 
our own country. They do not have that ability, and we see the 
consequences of this in civil unrest as we saw in Colombia when 
it was pursuing an IMF-related element.
    It just seems to me that we do not have a strategic 
comprehensive plan. So when China goes and says to one of these 
countries--I will not mention them, but the President told me 
himself--we will give you $400 million--when China says, we 
will finance your energy costs, the reality is that we may not 
be able to go dollar for renminbi, but at the end of the day, 
we are going to have to have a much more robust response.
    I think of the IADB, for example, as an entity that can 
help us meet that response, but for some reason, the 
Administration seems to have a challenge working with the IADB, 
even though the IADB from everything I have seen in their 
agenda so far is doing everything the Administration would want 
to see and finally kicked out China, to a large degree. China 
was using the IADB as their sales agency in the hemisphere. 
Imagine that. Mind boggling. Our directors there, basically, 
allowed it to happen.
    Thankfully, there is new leadership there that is moving in 
a different direction, leadership that includes Taiwan, which I 
am sure China will not be happy about.
    Deputy Assistant Secretary Hannan, do you agree that the 
Inter-American Development Bank plays a critical role in 
sovereign lending? Would not a capital increase expand that 
role?
    Ms. Hannan. I leave that to my colleagues at USTR to 
comment on that, but I do agree that we need to find additional 
financing mechanisms in Latin America to give our partners 
there more ability to partner with other outlets than just the 
PRC.
    Senator Menendez. Unless I am mistaken, your title says you 
are the Deputy Assistant Secretary for Diplomacy, for Policy, 
for Planning and for Coordination of the Western Hemisphere. 
Why can you not speak to that question?
    Ms. Hannan. We have a broad strategy to address China in 
the region that touches on all of the issues that you have 
raised, as well as the remainder of the senators on the--the 
honored senators.
    I am reluctant to comment on another agency's goal, but I 
do think we need to see increased opportunities for U.S.-led 
and other private sector to invest in the region.
    Senator Menendez. It is shocking to me that you cannot 
comment on the Inter-American Development Bank as a tool that 
is very viable because--I do not know. The DFC has some tools, 
but it is limited, depending upon the nature of the country's 
development or not, whether it can participate in it or not.
    What are we going to use? Because if China is doing all of 
this and all of us see it up here, if we can see it--and it is 
not our job to be in the midst of this day in and day out as it 
is your job--then something is wrong. There is a clear 
disconnect.
    Let me ask you, maybe that you can answer this one for me. 
The U.S. Coast Guard has called illegal, unreported, and 
unregulated fishing, otherwise known as IUU fishing, the 
primary global maritime security threat. IUU fishing fuels drug 
trafficking. It perpetuates forced labor practices. It 
threatens biodiversity, sovereignty, economic livelihoods of 
affected countries.
    The People's Republic of China is the largest perpetrator 
of IUU fishing. An expansive report by the Associated Press 
last fall implicated China's distant water fleets and IUU 
fishing in Latin America and the Caribbean.
    Chinese flag vessels in the region increased at least 
thirteen-fold between 2009 and 2020, and the report documented 
them engaging in extensive illegal fishing off the coasts of 
Argentina, Chile, Ecuador, and Peru.
    What concrete steps is the State Department currently 
talking and planning to take in coordination with the 
interagency and alongside our diplomatic partners in the region 
to confront Chinese IUU fishing in Latin America and the 
Caribbean?
    Ms. Hannan. Thank you for the question, Senator.
    In addition to SOUTHCOM, JIATF South, and Coast Guard's 
efforts to enable our partners to address IUU fishing, we are 
doing a lot to draw media attention to this pernicious problem 
as coastal countries in Latin America, including Ecuador, 
Chile, and Argentina all are experiencing unsustainable PRC 
fishing practices as well as the distant water fleet off the 
coast of Argentina.
    We are pressuring the PRC to be transparent, to enforce 
their own zero tolerance policy, and fulfill their state 
responsibilities. It is an environmental threat. It is a threat 
to food security. We worry about forced labor on the fishing 
vessels, and we also are looking forward to a new opportunity 
to partner, to support the CMAR, which is the eastern tropical 
Pacific marine corridor that the countries of Ecuador, Costa 
Rica, Colombia, and Panama announced at the COP26 as an 
interesting regional initiative to help protect a more than 
500,000 square kilometer region that is critical to fisheries 
as well as environmentally important.
    Senator Menendez. They seem to be able to, Mr. Chairman, to 
do it with impunity. Something is not working in terms of our 
engagement in this regard in our own hemisphere, and for these 
countries fishing is a critical element of both sustenance as 
well as national income.
    I will look forward to working--to have a more aggressive 
response and I will save my question for digital 
authoritarianism for the record.
    Thank you, Mr. Chairman.
    Senator Kaine. Thank you, Chairman Menendez, and thank you 
to the first panel of witnesses.
    When the when the hearing ends, I will just remind everyone 
that if members of the committee have questions they can submit 
them by the close of business tomorrow, April 1, and I would 
encourage members of the first panel to respond promptly to 
those questions if asked.
    Thank you for appearing today.
    Let me now ask the witnesses on panel two to come forward. 
As you are coming forward, I am going to introduce you and then 
you can be ready for your opening statements.
    We have a second panel of private witnesses to talk about 
this important topic, and I want to introduce Ms. Margaret 
Myers, who is the director of the Asia and Latin America 
Program at the Inter-American Dialogue, and also Dr. Evan 
Ellis, who is the senior associate at the Americas Program at 
the Center for Strategic and International Studies, and the 
Latin America Research Professor with the U.S. Army War 
College.
    Ms. Myers established the Inter-American Dialogue's China 
and Latin America Working Group in 2011 to examine China's 
growing presence in Latin America and the Caribbean. She has 
published numerous articles on Chinese leadership dynamics, 
international capital flows, Chinese agricultural policy, and 
Asia-Latin American relations.
    She received her bachelor's degree from the University of 
Virginia, conducted graduate work at GW Zhejiang University of 
Technology, and the Johns Hopkins University/Nanjing University 
Center for Chinese-American Studies.
    Dr. Ellis--Evan Ellis--is a senior associate at the Center 
for Strategic and International Studies, a research professor 
of Latin American studies at the U.S. Army War College 
Strategic Studies Institute, and he focuses on the region's 
relationships with China and other non-Western Hemisphere 
actors as well as transnational organized crime and populism in 
the region.
    He has previously served as Secretary of State's policy 
planning staff with responsibility for Latin America and the 
Caribbean, as well as international narcotics and law 
enforcement issues. He recently published a timely book on this 
topic, ``China Engages Latin America: Distorting Development 
and Democracy?''
    I want to thank both of you for joining, and in the order 
that I introduced you please now deliver opening statements. 
Then we will move to questions.

   STATEMENT OF MARGARET MYERS, DIRECTOR OF THE ASIA & LATIN 
    AMERICA PROGRAM, INTER-AMERICAN DIALOGUE, WASHINGTON, DC

    Ms. Myers. Good morning. I would like to thank Senator 
Kaine, Senator Rubio, and the other distinguished subcommittee 
members for the opportunity to be here today.
    The Latin American and Caribbean region has never been a 
top priority region in China's foreign policy. It was the last 
to be included after the Arctic in the Belt and Road 
Initiative.
    Yet, after two decades now of extensive economic and 
political engagement, China has, over time, established a 
degree of influence over aspects of decision-making in many 
parts of the region, as we have established already.
    Most of this influence, I would say, is indirect. It comes 
from strong economic ties and occasional dependence on China's 
export market. With economics in mind, many Latin American 
governments have a vested interest in accommodating China where 
possible.
    As a result, we have seen countries adjust regulations to 
attract more Chinese companies and even effects on democratic 
governance, as some leaders feel at liberty to erode democratic 
institutions, knowing that they will still be able to access 
Chinese capital even if they do so.
    Other influence, as we have noted, is more direct in 
nature, aimed at shaping views of China and of China's 
positions on wide-ranging policy matters.
    We are seeing a major push to grow educational exchanges, 
media outreach, security cooperation, tech policy coordination, 
and outreach to establish and up and coming officials and 
policymakers, all in an effort to increase and enhance China's 
soft power across the region.
    In other cases, China has used the tools at its disposal to 
advance political aims. Vaccines, as we have noted, were used 
to reward or discourage decision-making on Taiwan, for example.
    China's influence is not automatic, of course. Some 
countries have pursued resource governance policies and 
policies of diversification that helped them to avoid 
dependence on any one partner.
    In others, like Mexico, China's economic influence is 
relatively negligible, and even in countries such as Venezuela 
and Cuba, which depend heavily on China's assistance, officials 
in those countries have sometimes resisted some of China's many 
proposals, much to China's disdain.
    On another note, I would suggest that China-U.S. 
competition in Latin America need not be entirely zero sum, 
but, in practice, China's approach to deal making, its courting 
of local officials, and delivery of often heavily subsidized 
goods and services has, in many cases, limited prospects for 
other companies, including regional companies.
    China's growing economic leverage also increasingly limits 
the U.S. ability to promote certain policy priorities in the 
region, including in the area of democratic governance.
    The U.S. Government, many of the esteemed senators here and 
individual companies have worked hard to address what many 
perceive to be an increasingly competitive investment 
environment and to strengthen hemispheric ties.
    There is more that needs to be done. Looking ahead, I 
naturally recommend more engagement with Latin America starting 
with a focus on making the Summit of the Americas a resounding 
success.
    We all know that there are multiple competing commitments 
at play right now, but unless we play even more in the Latin 
American region we have little chance of competing effectively.
    We must also make clear that our Latin America policy is 
focused on enhancing U.S.-Latin America cooperation based on 
shared interests and not just motivated by U.S. competition 
with China.
    I would also say that as China's activity in the region 
evolves, and it is evolving rapidly, U.S. policy and messaging 
must evolve accordingly. There are some important areas of 
continuity in the China-Latin America dynamic. The region 
remains of critical importance to China's food and energy 
security and is a critical market for China's high value added 
goods.
    We are now seeing an important focusing of Chinese 
investment and trade in a specific set of industries, which are 
mostly high-tech and innovation related.
    China's engagement is also localizing. We are seeing more 
connections forged at very local levels in Latin America and by 
wide-ranging actors. This has facilitated Chinese engagement 
during some of the very earliest phases of project development, 
presenting a major challenge for us from the competitiveness 
perspective.
    China financial cooperation is also changing in important 
ways. Then, finally, we must consider Latin American and 
Caribbean views of China when addressing China's engagement 
with the region.
    Regional governments are, in many cases, very aware of the 
challenges associated with China's model of finance and 
investment, but the U.S. must still tread carefully, I would 
argue, when applying pressure on Latin American governments to 
limit economic options and partnerships with China because 
doing so, even when a viable alternative is provided and even 
if it has been successful so far and is important will 
increasingly be interpreted not as helping, but as harming 
regional development prospects.
    What we can do is to work to expand our economic, 
educational, security related, climate specific, media related, 
medical, trade, you name it, cooperation and technical 
activities, and also work to establish cooperation with Latin 
America on areas of shared concern about Chinese engagement, 
whether we are talking about corruption, which is a big one, or 
illegal fishing, which has been noted, or persistently 
imbalanced trade relations with China, among others. Doing this 
in partnership with like-minded nations will only strengthen 
our overall effectiveness.
    Thank you very much for the opportunity.
    [The prepared statement of Ms. Myers follows:]

                Prepared Statement of Ms. Margaret Myers

    I would like to thank Chairman Kaine, Ranking Member Rubio, and the 
other esteemed committee members for the opportunity to testify on the 
current state of China-Latin America and Caribbean (LAC) relations.
    As China's engagement with LAC continues to evolve, this is a 
critical moment to assess the type, scale, and effect of Chinese 
activity in the region, and to formulate a well-reasoned U.S. policy 
response. To aid in this process, I offer a few observations, as 
requested, on the nature and implications of China's engagement and 
influence in LAC at present, views on U.S. and allied nation responses, 
and some thoughts on U.S. policy options.
      gauging china's influence in latin america and the caribbean
China has Sought To Influence Views and Decision-Making in LAC Through 
        Multiple Mechanisms and with Various Objectives in Mind
    To date, China has sought to shape views and decisions among Latin 
American and Caribbean (LAC) audiences through traditional and social 
media campaigns, expansive educational cooperation, targeted 
engagements with the region's established and up-and-coming 
policymakers, officials, and opinion leaders, and through policy 
coordination and military exchanges, among many other forms of public 
diplomacy, security cooperation, and commercial outreach. The following 
are just some of many examples of China's efforts to shape outcomes in 
LAC.
Media Engagement
    China's social and traditional media engagements have featured for 
over a decade in LAC but have expanded in recent years. Media 
engagement was a prominent feature of China's outreach during the 
Covid-19 pandemic, for instance. Much of China's pandemic-era work in 
this area fell to its embassies, which, in addition to coordinating 
donations and sales of PPE and vaccines in the LAC region, labored to 
convey approved messages about China's experience with Covid-19 and its 
pandemic outreach. This was accomplished through a range of 
communications platforms, including embassy communiques, television 
interviews, press conferences, op-eds authored by Chinese ambassadors 
and published in local media outlets, and Twitter posts. In fact, at 
the request of Beijing, Chinese embassies in Argentina, the Bahamas, 
Cuba, and Peru set up new Twitter accounts in the early months of the 
outbreak to communicate key messages directly to local publics. More 
effective, perhaps, in delivering Chinese views and other content to 
LAC audiences are the multiple media sharing arrangements that Chinese 
outlets have negotiated with LAC counterparts in recent years. These 
range from photo sharing agreements to much more extensive multi-media 
sharing arrangements with Xinhua, for instance.
    Recent Chinese messaging in the region has focused on communicating 
positive views of China's initial handling of the pandemic, detailing 
China's pandemic relief efforts, critiques of U.S. domestic and 
international policy, and responses to international criticism of 
China's human rights record in Hong Kong and Xinjiang, among other 
matters. As it turns out, Chinese narratives are sometimes the only 
narratives available in LAC media on certain issues of interest to 
China, including analysis related to Hong Kong and Xinjiang.
    On the issue of human rights, Chinese embassies in Argentina, 
Antigua and Barbuda, Bolivia, Chile, Colombia, Cuba, the Dominican 
Republic, Ecuador, Grenada, Guyana, Peru, Suriname, and Uruguay used 
their websites, social media, and interviews published in media outlets 
to comment on China's rights-related achievements. In July 2020, many 
delivered key points from a Chinese Ministry of Foreign Affairs article 
titled ``What's False and What's True on China-related Human Rights 
Matters.'' In August 2020, another article, ``Fact check: Pompeo's 
fact-twisting China speech versus the truth,'' was circulated by 
Chinese embassies in LAC. Both articles suggested that China's 
successes in containing Covid-19 demonstrated the country's unfailing 
commitment to human rights.
    Despite a growing media presence, China is still very much 
experimenting with the forms and features of its media outreach in LAC. 
Evidence of ``wolf warrior diplomacy''--an aggressive style of 
diplomacy adopted by some Chinese officials--featured prominently in 
the first few months of China's global Covid-19 outreach, but China's 
more aggressive posturing slowed by summer 2020, lending some credence 
to Bates Gill's summer 2020 claim that China's diplomats were reined in 
as Beijing understood it had overreached with many audiences around the 
world. In a June 2021 speech to the Politburo study session, Xi 
signaled a possible throttling of wolf warrior-type outbursts, calling 
on the country's leaders to engender a ``trustworthy, lovable, and 
respectable'' image for China. Xinhua later suggested that the country 
adopt a ``humble'' approach in its relations with the outside world. 
The Party may very well have noted, as a Yale University study did, 
that the aggressive messaging associated with wolf warrior diplomacy 
was not as effective as promotional messaging in moving public opinion 
on China. At present, China's media platforms are focusing far more 
extensively on delivering a message of solidarity, multilateralism, and 
cooperation, referencing China's commitment to Covid-19 collaboration.
Educational Partnerships
    China's expansive partnerships with LAC high education and 
technical institutions, including exchange agreements and jointly 
developed studies and research centers, also potentially shape 
relations with and views of China, although some of these arrangements 
are far more productive than others. Cross-regional educational 
cooperation is of considerable interest to both Chinese and LAC actors, 
but as I indicate in a study co-authored with Brian Fonseca for Florida 
International University, Chinese engagement is largely motivated by a 
government-led interest in developing expertise in Latin American and 
Caribbean studies, and an enduring commitment to building Chinese soft 
power throughout LAC, including through educational exchanges and 
cultural and technical outreach. China's Ministry of Education has 
indicated its commitment to strengthening diplomatic ties and exporting 
elements of China's educational system through exchanges, international 
educational cooperation, and greater participation in educational 
standards-setting institutions.
Policy Coordination
    China's efforts in the area of `policy coordination' are also 
potentially influential. `Policy coordination'--in addition to 
infrastructure development, trade facilitation, and several other forms 
of connectivity-enhancing engagement--is considered a central feature 
of the Belt and Road Initiative (BRI) and encompasses everything from 
climate change and industrial cooperation, for instance, to 
consultations on tech policy, investment policy, and regulatory 
landscapes. In some cases, policy coordination involves little more 
than a memorandum of understanding suggesting continued discussion on 
topics of mutual interest. Some forms, including recently proposed 
China-Ecuador ministerial deliberations on debt restructuring, may lead 
to favorable results for LAC nations. More problematic, perhaps, are 
efforts to coordinate views on internet governance or human rights, for 
example, where China's approaches differ considerably from those in 
much of the LAC region, and among the U.S. and allies outside of the 
region. Also of some concern, especially from an environmental 
perspective, are efforts to encourage regional governments to rethink 
regulations in sectors of long-standing economic interest to China. For 
example, in 2020, Chinese embassy officials in Bolivia reportedly 
suggested that the government rethink its mining sector regulations to 
encourage more Chinese investment. There is evidence of governments 
eroding regulations elsewhere in the region to attract Chinese 
investors.
`Multi-Tiered' Diplomacy
    The cultivation of people-to-people ties--yet another element of 
the BRI--is another prominent area of focus at present. This is carried 
out through what I have termed a ``multi-tiered'' approach to 
diplomacy, wherein numerous Chinese governmental, quasi-governmental, 
commercial, and other actors engage with LAC at the regional, 
bilateral, and, increasingly, local (state/provincial and municipal) 
levels. This is frequently carried out through formal channels, such as 
the China-CELAC Forum or the Sino-Brazilian High-Level Commission 
(COSBAN), among many other platforms. Another considerable portion of 
China's diplomatic outreach is relatively ad hoc, especially at the 
local level, where an extensive array of Chinese actors--commercial and 
public sector, central government-affiliated and provincial--are 
engaging when and where opportunities present themselves. For Chinese 
companies and governmental entities, local-level engagement is a 
promising approach, especially in those countries where and where 
states, provinces, or municipalities have considerable decision-making 
authority, and where government-to-government deal making is not 
possible, whether because of a country's governance structure or 
regulatory environment, or because broader geopolitical considerations 
limit progress at the bilateral level. With Mexico's current policy 
uncertainties in mind, China's Ambassador to Mexico Zhu Qingqiao 
recommended that China's funds and enterprises increase communication 
and interaction with local governments and open new markets through 
local projects.
    In some cases, local-level engagement has been exceedingly 
productive. Just 5 years of interaction between Chinese actors and 
representatives from Jujuy, Argentina resulted in the signing of major 
renewable energy, surveillance technology, lithium exploration, and big 
data projects, for instance. As a result, even when China is not 
particularly influential at the national level in LAC, Chinese actors 
may very well achieve some influence over local politics and 
policymaking, based either on the possibility of investment (or 
personal reward, in some cases) or else by delivering projects of 
interest to LAC localities.
Security Cooperation
    China's increasingly extensive engagement with LAC militaries 
should be understood as a part of a much broader effort in the area of 
`people-to-people diplomacy,' albeit with very different implications 
than connections through educational institutions and cultural forums, 
for example. China's more than 200 military visits to the region, the 
China-CELAC High-Level Defense Forum, educational exchanges between 
military academies, Chinese tech company engagement with military 
institutions, and satellite and other cooperation are nevertheless part 
of a broader proliferation of diplomatic, commercial, and educational 
activity that features across most all economic sectors and in multiple 
areas of policy interest.
Isolating Taiwan
    As evident in recent years, China continues apply pressure in 
various forms on Taiwan allied nations in LAC. In addition to offering 
economic incentives to Taiwan's remaining allies in the region, as it 
has done for many years, China also recently used the prospect of PPE 
and vaccine deliveries to either reward or discourage government 
decision-making on Taiwan and other matters of political interest to 
China. The timing of a vaccine donation to Guyana led some to speculate 
that the Caribbean nation was rewarded with the doses after deciding to 
close a new Taiwanese commercial office. And in Brazil, China 
reportedly halted the shipment of raw materials necessary for the Sao 
Paulo-based Butantan Institute to produce China's CoronaVac vaccine 
after Brazilian President Bolsonaro suggested that China disseminated 
COVID-19 as a tactic of biological warfare.
China's Efforts To Shape Views and Decisions in LAC Have had Varied 
        Effects
    The effects of China's outreach in these many of these areas are 
not always entirely clear. Despite extensive efforts among Chinese and 
LAC actors to boost coordination and cooperation in multiple arenas, 
views of China in the region do not appear to be much better now than 
they were in the recent past. According to Pew Research findings from 
2019, Latin America viewed China more favorably on average than did 
most other regions, with about half of respondents approving of Chinese 
engagement and half disapproving. But as Vanderbilt University's most 
recent LAPOP survey has noted, in 2021 only 38 percent of LAC 
participants suggested that they trusted China's Government (down from 
55 percent in 2016/17), although those who indicated limited trust in 
China's Government also sometimes had positive views of China's 
political influence in the region.
    LAC views of China's Covid-19 assistance are also difficult to 
gauge, given the pandemic's limitations on public opinion polling. 
China's PPE deliveries were met with considerable gratitude by many, 
although some in the region indicated concern about the quality and 
cost of Chinese PPE shipments. China's vaccine sales were also 
initially viewed as critical to regional survival rates and eventual 
economic recovery, though views changed somewhat as evidence surfaced 
about the efficacy rates of various vaccines. China's pandemic-era 
assistance, though allocated according to LAC needs and pandemic 
trends, also effectively achieved some Taiwan-related and possibly also 
commercial objectives. Many dozens of Chinese companies and other 
partners (e.g., sister cities and provinces) worked amid the pandemic 
to underscore their commitment to certain LAC communities. The pandemic 
also presented some opportunities for China's tech and pharmaceutical 
companies to showcase relevant technological and other capabilities.
    The impact of China's media outreach is also probably varied. In an 
Inter-American Dialogue report on China's Covid-19 diplomacy, one 
Caribbean-based interviewee suggested that China's media outreach has 
had little effect on regional views of China. And a Mexican interviewee 
with ties to local media suggested that op-eds by Chinese ambassadors, 
whether about COVID-19 or other topics are barely read at all. In 
addition, most of Chinese embassy Twitter accounts have few followers. 
However, if China is delivering the only messaging in LAC media on 
issues related to Hong Kong and Xinjiang, for example, as has been the 
case in many countries, this bodes poorly for informed debate on these 
topics across much of the region.
    China's educational partnerships in LAC differ considerably in 
scale, scope, and commitment among partner institutions--the likely 
result of varying levels of interest and available resources among 
interested parties. Some amount to little more than a statement of 
intent or broad MOU, which may not result in substantive engagement. 
Among those that engage in productive collaboration, some focus mainly 
on student or faculty exchanges, offering scholarships to some LAC 
students for study in China. Others attempt a more expansive agenda, 
including collaborative research and research center development, 
including in some areas of commercial and strategic interest to China. 
Some Chinese and LAC institutions, such as Jinan University (which had 
signed agreements with at least 10 Latin American universities and 
other educational and cultural institutions by 2016), Fudan University 
in China, and the Universidad Nacional Autonoma de Mexico (UNAM), have 
several or more of these partnerships in place. Others have focused on 
partnerships with just one or two universities or other institutions in 
China or LAC.
    The effects of China's local-level engagement would also appear to 
vary on a case-by-case basis. In some instances, local-level 
partnerships have been exceedingly productive, whether by advancing 
deal-making or positively shaping views of China and Chinese companies. 
However, linkages are also sometimes forged by Chinese and LAC actors 
without clear objectives in mind, and with few overall interactions. 
The long-standing Coquimbo, Chile-Henan, China relationship is one 
example, with regional exchanges having taken place over the course of 
15 years, presumably based on mutual interest in possible mining sector 
cooperation, though without clear evidence of commercial activity. 
These more limited collaborations (including with overseas Chinese 
communities) may still lay the groundwork for eventual deal making, 
however, or else help to cultivate favorable views of China and Chinese 
political interests.
China's Indirect Influence--The Product of Expansive Economic 
        (Especially Trade) Ties With Many LAC Countries--Will Also 
        Likely Shape LAC Decision-Making in the Coming Years
    Despite China's many efforts in the areas mentioned above, most of 
China's influence over decision-making in the region is very likely 
indirect in nature--the result of LAC's strong and sometimes dependent 
economic ties to China, and a related desire to accommodate China's 
interests where possible. According to Boston University, in 2020, 
China accounted for over one-third of the region's extractive exports--
a record level--and one-fifth of the region's agricultural exports. 
With these dynamics in mind, even in Brazil, where ties are relatively 
strained at the moment, there have been many efforts among those 
charged with actually doing business and managing relations with China, 
to maintain a certain positive momentum in the relationship.
    China is also seemingly more influential in those countries that 
have strained relations with the U.S. and its allies, and which have 
limited access to international capital markets. Venezuela and Cuba are 
obvious examples, although China has been frustrated with progress on 
economic reforms in both countries. Argentina and Ecuador have also 
occasionally depended on Chinese capital, leading to some decisions 
favoring Chinese companies and interests. In 2015, Argentina's Ley 27 
approved a decision by the Argentine Government to grant Chinese 
companies no-bid contracts if they brought relevant finance to bear in 
support of project development.
    China also ensures some degree of influence by investing in sectors 
that are deemed of critical importance to the region's development, or 
which align well with leaders' own development agendas. China has been 
treated favorably by Peru's anti-trust authorities based on 
expectations that Chinese companies will invest more extensively in the 
country's electricity generation and distribution industries, at a 
moment when many others are not. China's low-cost AI and 
telecommunications offerings are also viewed favorably by many in the 
region, including cash-strapped local governments.
    In other cases, it's merely the possibility of Chinese investment 
that gives China a seat at the table. The mere prospect of more Chinese 
economic engagement has been enough to convert three Taiwan allies over 
the past 4 years, even though there is wide variation in the sorts of 
benefits that Taiwan allies receive when they establish diplomatic ties 
to China. China's offerings to the Dominican Republic have paled in 
comparison to the range of initial deals struck in Panama, for example.
     ensuring robust u.s.-lac relations in a shifting geopolitical 
                              environment
    China's evolving outreach and direct and indirect influence over 
LAC policymaking have considerable implications for U.S. influence and 
interests and for U.S. and other company competitiveness in the region. 
As a result, the U.S. and its allies have worked both independently and 
collaboratively to allocate resources for projects and initiatives that 
aim to support U.S. and ally interests while also advancing LAC 
development objectives. This includes the development of legislation 
intended to boost U.S. competitiveness and economic engagement with 
LAC, encourage the development of regional supply chains, provide 
financing for infrastructure and other investment in the region, and 
expand institutional capacity building in LAC, as well as other 
initiatives and measures.
    More can nevertheless be done to strengthen U.S.-LAC ties in the 
midst of growing Chinese competition. I offer the following initial 
recommendations.
Stay Abreast of the Ways in Which China's Engagement With LAC Is 
        Changing
    As China's activity in LAC evolves, U.S. policy and messaging on 
China-Latin America relations must evolve accordingly.
    There are some important areas of continuity in the China-LAC 
dynamic. The region remains of critical importance to China's food and 
energy security interests, and regional markets are still vitally 
important to China as it looks to export ever-higher quantities of 
high-value-added goods. As a result, trade continues to underpin the 
relationship, and has even grown in importance as a share of LAC global 
domestic product amid the pandemic.
    However, as China prioritizes domestic and overseas investment in 
`quality' projects and promotes deals in sectors aimed at advancing 
China's own growth priorities, we are seeing an important focusing of 
Chinese investment and trade activity in a specific set of industries 
and products/services, including in renewable energy, electricity 
transmission and smart grids, telecommunications, artificial 
intelligence, cloud computing, lithium mining and processing, and other 
sectors and industries related to technology and innovation. The 
focusing of investment and trade activity in these sectors will impact 
the region different ways than the sorts of multi-billion-dollar, 
trans-continental infrastructure projects that Chinese companies and 
leaders tended to propose with some frequency 5 years ago and more.
    Of importance to U.S. commercial actors is China's growing 
influence not just on government-level decision-making but also on 
local-level engagement, which, as earlier noted, is carried out over 
the course of many years in some cases, and by a a host of Chinese 
actors and institutions. In some instances, these linkages have 
positioned China to engage with LAC actors during the very earliest 
phases of project development--before public tenders have been 
announced, and even when project ideas are first being conceived, in 
some instances. China's efforts in the areas of `multi-tiered' 
diplomacy, and Chinese company access to low-cost Chinese finance, 
subsidies, and other incentives, will continue to affect U.S. firm 
competitiveness in key sectors.
    U.S. policymakers must also note key changes in Chinese financing 
in LAC. Though still active in the region, China's policy banks are no 
longer the main providers of Chinese credit to LAC. Policy bank lending 
has rapidly declined from a peak of $20 billion in 2010 to barely any 
activity at all over the past 3 years. Loans from China are instead 
being supplied by a wider range of Chinese actors--private equity funds 
(sometimes backed by the policy banks), Chinese companies, China's 
sovereign wealth fund, China's commercial banks, the Silk Road Fund, 
and the AIIB, for example. These loans are issued to Chinese and LAC 
companies and are usually smaller than policy banks loans. They are 
often frequently issued with project `bankability' front of mind.
    The various mechanisms that China employs to achieve desired 
commercial and political aims will also evolve in the coming years. It 
will be critical to study these developments, including the extent to 
which they affect views of the U.S., or are otherwise effective in 
shaping outcomes in China-LAC relations.
In LAC, Ensure That Policy is More Focused on Prospects for Enhanced 
        U.S.-LAC Cooperation, Based on Shared Interests, Than on U.S. 
        Competition With China
    A strong showing at the Summit of the Americas will be critical to 
underscoring U.S. commitment to strong relations with the LAC region, 
based on long-established partnerships, enduring economic ties, and 
extensive and shared interests. Much effort should be placed on 
ensuring a successful Summit and countering the notion that the U.S. 
has retreated from the region.
    At this juncture, the U.S. must aim not to replace China, but to 
engage with the region in those areas where the U.S. and LAC can 
effectively support each other aims, whether in the economic realm, on 
skills development and educational exchange, in the area of security 
cooperation, or on climate change mitigation and adaptation, among 
other areas of interest. There are many areas where the U.S. has 
worked, over the course of many decades, to establish strong cultural, 
educational, security-based, economic and other linkages to the region. 
The maintenance and continued development of these linkages must 
continue to be prioritized.
    Considering that the U.S. (and the DFC, USAID, and other relevant 
institutions) have many global commitments, it may be necessary to 
focus resources in LAC on program and project development in specific 
sectors and countries where positive outcomes are most attainable. 
Where possible, the U.S. should aim to develop key economic projects, 
of course, but also to encourage capacity building partnerships with 
regional governments and civil society--whether carried out by U.S. 
experts, U.S. allies, or through triangular cooperation involving 
regional actors--in support of best outcomes in infrastructure project 
management, tech implementation, and to strengthen independent media, 
among other areas.
    The simplification of processes and procedures required to access 
U.S. assistance would also importantly improve U.S. institutional 
agility, in the face of ``China speed,'' but is also critical 
considering that many LAC nations do not have the resources available 
to apply for or navigate the DFC process, for instance.
Consider LAC Views of China When Addressing China's Engagement With the 
        Region
    LAC governments are aware of the challenges associated with China's 
model of finance and investment. The region has taken stock of empty 
promises, projects-gone-wrong, and the problems associated with China's 
model of large-scale, no-strings-attached finance. In Bolivia, for 
example, the China-backed Rosita dam project was formally suspended 
amid protests against the project's lack of prior consultation with 
affected communities. The Coca-Codo Sinclair dam project in Ecuador has 
been the subject of environmental, labor-related, and technical 
scrutiny, and has had lasting effects on views of Chinese construction 
in Ecuador.
    Even so, the U.S. must tread carefully when applying pressure on 
LAC governments to limit economic options and partnerships with China, 
noting that doing so, even when a viable alternative is provided, will 
in many cases be viewed not as helping, but as harming LAC development 
prospects. If don't too frequently, it will also undermine the U.S.-
Latin America trust and prospects for future cooperation.
    LAC will continue to view China as an exceedingly valuable, though 
imperfect, economic partner. This dynamic is unlikely to change in the 
coming years, especially as China proposes projects in sectors--
electrification, renewable energy, digitalization--deemed essential to 
the region's economic recovery. The U.S. should nevertheless identify 
and work to expand cooperation on areas of shared concern about Chinese 
engagement. Some examples include the effect of China's style of deal-
making on already high levels of corruption in certain countries, 
China's involvement in illegal fishing, and the region's persistently 
imbalanced trade relations with China. Regional actors will presumably 
be more open to cooperation with the U.S. to address these and other 
areas of areas of shared concern.

    Senator Kaine. Thank you, Ms. Myers.
    Dr. Ellis.

   STATEMENT OF DR. EVAN ELLIS, SENIOR ASSOCIATE, CENTER FOR 
      STRATEGIC AND INTERNATIONAL STUDIES, WASHINGTON, DC

    Dr. Ellis. Thank you, Chairman Kaine, Ranking Member Rubio, 
distinguished committee members.
    In the past two decades, PRC-based companies have invested 
$160 billion in Latin America. Twenty-one of our neighbors 
there have pledged themselves to China's Belt and Road 
Initiative.
    The PRC is attempting to rewire the region to its own 
economic benefit, securing access to commodities and markets, 
capturing the value added for itself, and focusing on 
connectivity.
    In the port sector, PRC-based companies are involved in 40 
major projects. China has multiple wind, solar, and 
hydroelectric facilities, albeit with problems. Indeed, 
Ecuador's Coca Coda Sinclair Dam, as noted previously, had over 
7,600 cracks, plus caused massive erosion, rupturing one of 
that nation's major oil export pipelines.
    In Chile, PRC-based companies control an unprecedented 57 
percent of electricity distribution. Growing PRC presence in 
digital architectures is an intelligence concern, given China's 
history of intellectual property theft and cyber espionage.
    In December 2021, for example, Microsoft exposed hacking by 
PRC-based Nickel, whose targets included companies in 16 Latin 
American countries.
    In telecommunications, Huawei has grown its Latin American 
presence for two decades and is now poised to dominate 5G 
networks. PRC-based companies have a growing role in the 
region's e-commerce including Alibaba and the fintech company 
Nubank. The Chinese rideshare company, DiDi Chuxing, has half 
of the market in Latin America, capturing data on passenger 
movement and finances.
    Chinese surveillance and control systems such as ECU-911 
and BOL-110 capture similar sensitive data, as do the 10 PRC-
built ``smart cities'' currently in the region. PRC-based 
Hikvision has taken over Syscom, Mexico's largest security 
systems company.
    The airport scanners from China's Nutech capture data on 
the devices that pass through them. In Chile, PRC-based Aisino 
almost won the right to manage the company's entire civil 
registry.
    In Argentina, a PLA-operated deep space radar may capture 
communications from passing satellites. The PRC further 
promotes its interest through Latin American institutions. As 
noted previously, IADB President Mauricio Claver-Carone has 
called out the PRC for the use of its bank membership to win 
contracts for Chinese firms.
    In security engagement, the PRC is a significant provider 
of military goods to the region, including fighters, transport 
aircraft, and radars for Venezuela, helicopters and armored 
vehicles for Bolivia, and military trucks for Ecuador.
    Argentina may acquire FC-1 fighters, the most advanced PRC 
aircraft yet sold to the region. Officials within the PLA 
naturally plan for how they would use Latin America in a future 
war, leveraging the knowledge and relationships that they build 
today through their interactions in the region to do so.
    To this end, the PRC has made 20 military deployments to 
the region and PLA leaders have visited 200 times since 2000. 
In people-to-people diplomacy, as noted previously, China's 44 
Confucius Institutes attract those with the interest to learn 
Chinese, bringing the best of Latin Americans to study in the 
PRC on Hanban scholarships, after which they often secure 
China-facing positions in their own governments.
    The 2022-2024 China-CELAC plan promises 5,000 such 
scholarships for Latin America's leading students. The PRC also 
engages the region's academics, journalists, politicians, and 
officials through luxurious paid trips to China.
    In pursuing its interests in the region, China also acts, 
importantly, as noted by this committee, as an incubator of 
authoritarian populism, providing the loans, investments, and 
commodity purchases that give liquidity to anti-democratic 
actors such as Venezuela as they consolidate their power and 
hijack democracy.
    China also provides the mechanisms to help its 
authoritarian friends once in power stay there. In Venezuela, 
China's CEIEC helped the Maduro regime to spy on the 
opposition. In Cuba, Huawei Technologies helped to cut off 
protesters from the outside world during the July 2021 national 
uprisings.
    With respect to Taiwan, 8 of the last 14 countries in the 
world that recognized the ROC are in the Western Hemisphere. 
Every flip facilitates the expansion of Chinese activities in 
that country through the signing of nontransparent MOUs.
    The PRC strategically benefits from Russia's provocative 
actions as well in the region, most recently its threat to 
deploy military forces whether or not China and Russia 
coordinate on these matters.
    My recommendations, five.
    Number one, help our partners to engage the PRC with 
transparency on a level playing field and through strong 
institutions.
    Two, exclude Chinese vendors from sensitive digital 
domains, yet provide viable commercial alternatives to the PRC 
there.
    Three, support better government databases on the 
performance of the PRC and its companies.
    Four, rethink the rules that constrain the agility of 
agencies like Development Finance Corporation to provide 
alternatives.
    Five, fully leverage the June 2022 Summit of the Americas 
to advance a bold and resource-backed approach to partnership 
with the region.
    Thank you. I look forward to the committee's questions.
    [The prepared statement of Dr. Ellis follows:]

                  Prepared Statement of Dr. Evan Ellis

    Chairman Kaine, Ranking Member Rubio, distinguished members of the 
Senate Foreign Relations Subcommittee on Western Hemisphere, 
Transnational Crime, Civilian Security, Democracy, Human Rights, and 
Global Women's Issues, good morning. I am honored to share my views 
with you and the committee on the increased presence in Latin America 
and the Caribbean of the People's Republic of China (PRC), PRC-based 
companies and entities, and the impact on U.S. national security 
interests and those of our partners in the region.
    I appear before the committee in my personal capacity. My views do 
not necessarily represent those of my employer or the U.S. Government.
              overview of prc engagement in latin america
    PRC economic, political, institutional, and security engagement 
with Latin America and the Caribbean has increased substantially in the 
past two decades. PRC-based companies have invested more than $160 
billion in the region.\1\ The PRC's two major policy banks (China 
Development Bank and China Export-Import Bank) have lent $136 billion 
for projects there.\2\ PRC trade with the region in 2020 was $314 
billion, more than 17 times the level when the PRC was accepted into 
the World Trade Organization in 2001.\3\ In terms of such commerce 
alone, the PRC is now the number one partner with every country south 
of Costa Rica, or number two behind Brazil.
    Reflecting the lure of the PRC for our neighbors in Latin America 
and the Caribbean, since 2017, 21 states in the region have pledged 
themselves to the PRC ``Belt-and-road Initiative. The most recent was 
Argentina, which formalized its membership in February 2022 during a 
state visit to the PRC by its President Alberto Fernandez.\4\
    In the almost 20 years I have followed the evolution of Chinese 
engagement with Latin America and the Caribbean, I have become 
increasingly concerned by its complex effects on the region, with which 
we are bound by ties of geography, commerce, and family.
    To avoid misstating the serious challenge before us, I do not 
believe the Chinese Communist Party is pursuing a malevolent plot to 
impose its system of governance on the Western world. Rather, through 
the agency of its companies, and the support and coordination of its 
Communist regime, the PRC is attempting to ``rewire'' the region and 
the world to its own economic benefit.\5\ As part of that process, the 
PRC uses economic and other levers to intimidate and silence its 
critics, and to coopt political and economic institutions in the region 
to serve its ends own ends.
    In support of those efforts, the PRC is employing a range of 
political, institutional and other engagement efforts. One element of 
particular importance for this committee, is that the People's 
Liberation Army (PLA) is working in Latin America and the Caribbean, 
engaging with our partners, in order to give its military increasingly 
global reach, building capabilities, relations and options to operate 
in the Western Hemisphere, in the event that reactions by the U.S. and 
other Western nations to its economic and other ambitions leads to 
military conflict.
                prc interest in latin american resources
    With respect to economic engagement in Latin America, PRC-based 
companies are pursuing sources of supply for commodities in the region, 
from petroleum, iron and copper to strategic materials such as lithium 
and niobium.
    As in other parts of the world, PRC-based companies are expanding 
their physical presence in Latin American supply chains, from 
extractive operations, to processing, storage, to logistics, to 
increase their security of supply, and maximize the degree to which 
Chinese companies, secure the value added from those operations.
    In the lithium sector, strategically important for batteries for 
electric vehicles and other green technologies, PRC-based companies are 
active in each of the four Latin American states with significant 
current or potential lithium reserves.
    In Argentina, currently the most productive country for lithium 
extraction in the region,\6\ the Chinese firm Ganfeng has majority 
ownership of the Cauchari-Olaroz lithium project.\7\ In addition, PRC-
based Zijin mining spent $960 million to acquire Neo lithium, with its 
Tres Quebradas project in Cajamarca province.\8\ Just this month, Zijin 
broke ground on an important new operation there to include a $380 
million lithium carbonate plant.\9\
    In Chile, the Chinese firm Tianqi owns a $4.1 billion, 25 percent 
share of the SQM lithium project in the Atacama Desert.\10\ In January 
2022, the Chinese company BYD won a concession from the Chilean 
Government for a new lithium project.\11\
    In Bolivia, Chinese firms TBEA and Ganfeng are positioned to play a 
role in the exploitation of in major deposits \12\ such as Coipasa and 
Pastos Grandes, if the Bolivian Government of Luis Arce makes 
participation sufficiently lucrative to take viable proposals with 
viable technologies forward.
    In Mexico, the same Chinese company Ganfeng has acquired complete 
control of the Bacanora lithium project in the Sonora desert,\13\ which 
could become Latin America's biggest lithium operation. Ganfeng's newly 
acquired position sets up a conflict with the populist government of 
Andres Manuel Lopez Obrador, who has threatened to nationalize the 
sector.\14\
    The tendency of PRC-based companies to cut corners with respect to 
local labor, environmental and other regulations, and to display a lack 
of sensitivity in their engagement with local communities, governments, 
and vulnerable peoples has made them the focus of protests by a range 
of local groups. Examples include the pushback against Chinese 
operations in the $6 billion Las Bambas mine, forcing the temporary 
shutdown of the facility in December 2021.\15\ Such cases also include 
Rio Blanco, in Piura, where protests against the Chinese-operated mine 
led to killings, and ultimately, the closure of the mine.\16\ They also 
include the Mirador project in Ecuador, where resistance by the local 
community, and national protests forced a similar shutdown.\17\
             prc focus on latin american strategic markets
    Beyond resources, Chinese firms are also pursuing access to Latin 
American markets, particularly in lucrative strategic sectors, 
including digital technologies, manufacturing, construction services, 
``green energy'' technologies and biotechnology among others. Recent 
examples include a commitment by Great Wall Motors to invest $1.8 
billion in Brazil in that country's electric car market.\18\ Similarly, 
PRC-based companies have sold over 410 busses to the Chilean 
transportation system, which now has more such vehicles than any 
country outside of China.\19\
    PRC objectives in both resource and market-oriented pursuits are 
understandable to any Latin American who has read Raul Prebisch,\20\ 
Immanuel Wallerstein,\21\ or Fernando Henrique Cardozo: \22\ the PRC 
desire to ensure that its companies realize, to the extent possible, 
the value added of acquiring and transforming those resources, 
producing those products, and providing those services, for itself. The 
risk for our Latin American and Caribbean neighbors, as often predatory 
Chinese companies, backed by the PRC Government, pursue those 
objectives in a Latin America with great needs, weak institutions, and 
corruptible individuals, is that PRC success leaves the Chinese on top, 
the West out, and Latin Americans serving as mid-level managers, 
technicians, workers, or customer service personnel in Chinese-owned 
operations.
         domination of connectivity as a prc strategic concept
    At the core of the PRC pursuit of its economic objectives in Latin 
America and elsewhere is ``multidimensional connectivity,'' as 
reflected in China's use, since 2013 of the ``Belt and Road 
initiative'' to both shape and explain the nature of its economic 
engagement with the world in terms of mutually beneficial flows of 
goods, money and ideas, and the Chinese construction of infrastructure 
to enable them.\23\
    In Latin America, as elsewhere, the PRC focus on connectivity 
includes the construction and operation of transportation 
infrastructure such as roads, train and metro lines,\24\ ports and 
engineered river connections.\25\
    In the port sector, PRC-based companies are involved in at least 40 
major projects in the region,\26\ including seven operations by 
Hutchinson Port Holdings in Mexico, three in the Bahamas, three in 
Panama, and one in Buenos Aires.\27\ In addition to Hutchinson's 
projects, PRC-based firms are involved in four ports in Brazil,\28\ 
including China Merchants Port 2017 acquisition of TCP 
Participacoes,\29\ as well as a project to expand Sao Luis into a 
megaport.\30\ Other significant PRC port initiatives in the region 
include the new $3 billion Chancay mineral port in Peru,\31\ Posorja in 
Ecuador (where China Harbour is contracted to DP World for the $1.2 
billion port expansion),\32\ China Merchant Port Holdings' April 2020 
acquisition of full ownership of the Port of Kingston, Jamaica,\33\ and 
the role of PRC-based investors in the expansion of the port of 
Berbice, Guyana.\34\ Chinese investors have also expressed interest in 
a multi-billion port, free trade zone and tourism project built around 
La Union, with El Salvador's populist government.\35\
    Beyond transportation infrastructure, PRC projects also include a 
range of other types of connectivity, such as the generation and 
transmission of electricity. The PRC's increasingly dominant role in 
the Latin American electricity sector,\36\ especially in renewable 
energy, is particularly relevant for the U.S. and this committee, 
insofar as such position sets up the PRC and its companies to 
disproportionately benefit from U.S. funding of green energy 
development in the region, if proper care is not taken in how such 
deals are structured.
    Chin's significant and growing role in the region's electricity 
sector includes construction of six hydroelectric facilities in 
Ecuador,\37\ three in Bolivia,\38\ two in Honduras \39\ and ownership 
of the Chaglla hydroelectric facility in Peru.\40\
    Even while the PRC has played an increasingly significant role in 
hydroelectric projects in the region, the record of its companies on 
project quality, performance, community relations and the environment 
has been problematic at best. The $2.2 billion Coca Coda Sinclair dam 
in Ecuador, built by the PRC-based firm Sinohydro in troublesome 
proximity to an active volcano, had hundreds of identified engineering 
defects,\41\ including over 7,600 cracks.\42\ Its construction had an 
impact so severe on the region's hydrology that it caused the re-
routing of the Coca river,\43\ leading to the rupture of one of 
Ecuador's major oil export pipelines, spilling 15,000 gallons of 
petroleum, affecting 150,000 people.\44\ Nor was this the first such 
problem for Chinese hydroelectric facility builders, even in 
Ecuador.\45\ China Water and Electric was fined and removed from the 
Toachi-Pilaton project for poor performance,\46\ while China National 
Electric Engineering Company was similarly fired from the Mazar Dudas 
and Quijos projects.\47\
    In solar and wind energy, PRC-based companies are involved with the 
two largest photovoltaic projects in the region: the Cauchari 
photovoltaic complex in Jujuy Argentina,\48\ with a new phase agreed to 
during Argentine President Alberto Fernandez' visit to China in January 
2022,\49\ as well as a $1 billion, 1.1 Gigawatt solar project being 
expanded by Chinese firms near Acu, Brazil.\50\ Other examples of new 
Chinese wind and solar projects include the Potrero del Clavillo-El 
Naranjal solar and wind farm, and the Cerro Arauco wind/solar park in 
La Rioja, Argentina,\51\ both advanced by Argentine President Fernandez 
January 2022 state visit to China.
    In nuclear energy, Argentina's Government has contracted China 
National Nuclear Corporation (CNNC) for an $8 billion project to build 
a new design Hualong-1 nuclear reactor in the Atucha nuclear 
complex.\52\ Given repeated PRC problems with quality, safety and 
performance on its projects in the hydroelectric and other sectors, it 
is chilling that CNNC's Argentine venture will be the first time it has 
attempted to build this relatively new reactor design outside of the 
PRC.\53\ In addition, PRC-based companies have previously expressed 
interest in building a nuclear reactor in the Angra complex in 
Brazil,\54\ something that could become more realistic if, as expected, 
the Workers Party and its candidate Luiz Ignacio Lula da Silva return 
to power there in this October's national elections.
    With respect to electricity transmission, beginning in 2010,\55\ 
Chinese companies State Grid, China Three Gorges, and State Power 
Industrial Corporation (SPIC) have invested tens of billions of dollars 
in electrical transmission infrastructure in Brazil.\56\ In Peru, 
Chinese companies hold approximately half of power distribution 
capabilities in the greater Lima area, following the $3.6 billion, 2020 
acquisition of Luz del Sur by Yangtze Power.\57\ In Chile, five major 
Chinese acquisitions in recent years, including the purchases of 
Compania General de Electricidad (CGE), Transelec, Atiaia, Pacific 
Hydro, and Chilquinta,\58\ together give PRC-based companies control of 
an unprecedented 57 percent of the country's electricity distribution 
capacity.\59\ Chinese companies are now moving forward with important 
electricity transmission and distribution projects, including a $191 
million high voltage connection from Tacuarembo to Salta, Uruguay,\60\ 
plus $1.1 billion in work for State Grid on the power grid of Buenos 
Aires.\61\
    Beyond electricity, the PRC's increasing and multidimensional role 
in the connectivity of the region further includes telecommunications. 
That advance includes the much-discussed role of Chinese components and 
solutions in 5G architectures currently being rolled out across the 
region,\62\ such as Huawei's pilot ``5G city'' project in Curitiba, 
Brazil.\63\ It also includes more than 20 years of growth and learning 
in the region by Huawei, ZTE, and other PRC-based companies in 
supplying a range of components to the region's telecommunications 
architectures, from phones to servers and routers to fiber optic 
connectivity.\64\
    Beyond telecommunications as a form of digital connectivity, PRC-
based companies also play a significant and growing role in the region 
in a broad range of eCommerce activities. These include Jack Ma's 
Alibaba, Fintech companies with partial Chinese ownership such as 
NuBank,\65\ as well as China-based non-traditional banking firms such 
as Fosun.\66\
    The PRC further has a significant and expanding role in Latin 
America-based space architectures and space cooperation. The PRC has 
built and launched a communication relay satellite and two earth 
observation satellites for Venezuela,\67\ as well as a communications 
relay satellite for Bolivia,\68\ and a microsatellite, Pegasus, for 
Ecuador's prior populist government. PRC-based companies have also 
played a key role in the outfitting ground control facilities for those 
satellites and the training of their space-oriented personnel.
    In Brazil, the PRC has collaborated in building, and has launched, 
five satellites under the China-Brazil Earth Research Satellite 
program.\69\ Indeed, the latest such launch occurred in December 2019 
during the administration of China-skeptic Jair Bolsonaro.\70\
    The PRC has further built a deep-space radar facility in Neuquen, 
operated by personnel of the People's Liberation Army (relatively 
standard for Chinese space operations),\71\ but with only sporadic 
access by Argentine Government personnel.\72\ While the facility 
appears consistent with the needs of PRC lunar and other deep space 
missions to maintain communication with objects under a rotating earth, 
it has the potential to capture communications from other satellites in 
orbits that pass over it.\73\
    Chinese space-sector activities in Latin America also include 
Argentina's participation via ground communication facilities, in its 
Beidou satellite-based global navigation system,\74\ as well as a PRC 
launch of remote sensing satellites, made by the firm Satellogic for 
Argentina.\75\
    In short, PRC-based companies play an increasing role in the 
connectivity that underlies the very fabric of almost every dimension 
of Latin American economies.
    China's expanding presence in such connectivity is a concern for 
two reasons: First, PRC-based companies have consistently shown a 
disposition to leverage participation in one area, to advance the 
interest of Chinese companies in others, often with the facilitation of 
the PRC Government. As a consequence, the strategic dominance of Latin 
America's connectivity by PRC-based companies positions them to advance 
their position across a range of other parts of the region, capturing 
the associated value added for their benefit.
    Second, the increasing presence of PRC-based companies in the 
region's digital infrastructure significantly expands risks of 
intelligence exploitation by the Chinese against both government and 
commercial targets. While PRC-based companies such as Huawei may claim 
that they would never turn over their user's data to the Chinese 
Government,\76\ such claims are contradicted by the PRC laws to which 
they are subject. Specifically, the PRC's 2017 National Security Law 
obligates its companies to hand over information deemed relevant to PRC 
security.\77\ Moreover, the PRC has a long history of intellectual 
property theft against Western companies, and the government has been 
publicly called out by the U.S. Justice Department for turning a blind 
eye to cyberespionage against commercial targets outside the PRC.\78\ 
As an example, in December 2021, Microsoft froze the accounts of the 
Chinese cyber-hacking group Nickel, whose targets included companies in 
16 Latin American countries.\79\
    The opportunity for the PRC to access sensitive government, 
commercial and personal data from Latin American and Caribbean digital 
networks is only increasing. In addition to the previously noted 
ubiquitous Chinese presence in telecommunications and space, other 
vulnerabilities include the expanding footprint in the region of the 
Chinese rideshare company DiDi Chuxing, which currently has 
approximately half of the ride-share market in Latin America, operating 
in Mexico,\80\ Brazil,\81\ Colombia,\82\ Chile,\83\ and the Dominican 
Republic.\84\ The potential risks posed by Didi was publicly expressed 
in a letter by six members of this Congress to senior members of the 
Biden administration,\85\ as well as reflected in an investigation into 
DiDi, publicly acknowledged by the Defense Department.\86\
    Vulnerabilities to potential Chinese Government and commercial 
espionage further include the increasing presence of Chinese 
surveillance and control systems across the region. At the national 
level, these include ECU-911 in Ecuador and BOL-110 in Bolivia, among 
others. In Mexico, in January 2022, the PRC-based Hikvision took over 
Syscom, Mexico's largest telecommunications and security systems 
company.\87\
    Other risks include the increasingly ubiquitous role of Chinese 
scanner technology in airports and other sensitive sites across the 
region, such as that owned by the Chinese firm Nutech. Such technology, 
if accessible to the PRC through backdoors and digital connectivity, 
potentially provides those with access to the objects scanned, 
including computers, smartphones and other electronic devices, the 
potential ability to compromise them.\88\
    In yet another dimension of the challenge, smart cities offerings 
from PRC-based companies are proliferating in the region.\89\ As with 
other digital technologies, if there is the possibility of remote 
access to this data through backdoors, or even processing of the data 
on remote PRC-based servers, such systems potentially provide the PRC-
affiliated operators access to sensitive financial, location, movement 
and other personal data of millions of the region's residents, 
including its government officials and corporate executives. PRC-based 
companies currently have smart cities initiatives in at least seven 
Latin American countries: Mexico, Ecuador, Venezuela, Argentina, 
Uruguay and Brazil.
    Vulnerabilities from the expanding PRC digital footprint in the 
region also include the proliferation of Chinese-run data centers 
across the region. These manage sensitive personal, corporate and even 
government data. Huawei, for example operates data centers in at least 
three Latin American countries: Mexico, Chile and Brazil,\90\ where the 
Chinese firm Tencent also operates a data center since November 
2021.\91\ Indeed, in Chile, the PRC-based company Aisino almost won the 
right to manage the country's entire Civil Registry.\92\
                prc use of institutions in its strategy
    PRC engagement with Latin American and Caribbean institutions is a 
key supporting element of its strategy there. As seen in other parts of 
the world as well, the PRC works with institutions in the region to 
neutralize opposition to its advance, and where possible, coopt those 
institutions to facilitate the advance of PRC interests. This pattern 
can be seen in China's leveraging of the Interamerican Development Bank 
(IADB), since it joined the institution in January 2009. Beyond a 
notable decrease in the critical tone of the IADB's analytical products 
since the PRC became part of the IADB Board, the institution's 
increasingly cozy relationship with the PRC included an attempt by the 
PRC to host a 2019 executive meeting of the bank's directors in 
Chengdu, China. The initiative ultimately fell through when the PRC 
refused to respect the wishes of its Latin American board members, by 
not giving an official visa to attend the meeting to Ricardo Hausmann, 
the representative of the de jure Venezuelan Government of Juan Guaido, 
ultimately leading to board to cancel the meeting in Chengdu.\93\
    The PRC has also worked with the IADB to set up a ``co-financing 
fund'' in parallel with Chinese banks, for projects of interest to 
Chinese companies.\94\ In May 2021, the bank's current President 
Mauricio Claver-Carone spoke out against the PRC's use of its role in 
the IADB to win a disproportionate share of contracts for PRC-based 
firms.\95\
    The PRC's key multilateral tool for engagement with the region has 
been the Community of Latin American and Caribbean States (CELAC). 
Although the PRC has been an active observer member at the Organization 
of American States (OAS) since 2004,\96\ it has arguably chosen CELAC 
to advance its agenda because the body brings together the entirety of 
the region while excluding the United States and Canada. The PRC also 
arguably favors CELAC due to the organization's lack of a permanent 
secretariat or other standing bureaucracy, the absence of which 
facilitates the PRC's ability to advance its own agenda through the 
institution, while minimizing the risk that its Latin American partners 
in the organization will be able to effectively coordinate a collective 
bargaining position toward China to advance their own interests.
    The PRC has used its interactions with CELAC to create a broad 
range of vehicles for interacting with the region, including 22 
official ``China-CELAC forums.'' \97\ Such venues allow the PRC to 
engage with the region on a range of issues from telecommunications to 
biotechnology, to agriculture to infrastructure to space to local 
government, among other areas.
    In December 2022, at the third triannual China-CELAC summit, the 
PRC published the 2022-2024 China-CELAC plan for its engagement in the 
coming years.\98\ Although the intentions behind PRC proclamations in 
such documents are not always clear, and while not all of its 
commitments may produce tangible results, the 2022-2024 China-CELAC 
plan, like the 2015-2019 plan \99\ and 2019-2021 plan \100\ which 
preceded it, provide some indication of PRC priorities for engaging 
with the region. In the most recent plan, for example, the PRC 
expression of interest in working with Latin America in digital 
technologies, space, and renewable energy should be of interest to this 
Committee.
      prc security engagement with latin america and the caribbean
    PRC security engagement with Latin America and the Caribbean is 
openly acknowledged in its 2008 \101\ and 2016 \102\ policy white 
papers toward the region, and more indirectly in its 2015 \103\ and 
2019 Defense Strategy White Papers.
    The PRC is a significant, if not the largest, provider of military 
goods to the region, with authoritarian populist governments such as 
Venezuela, Ecuador under Rafael Correa, Bolivia under Evo Morales, and 
Peronist governments in Argentina being the region's most important 
purchasers of Chinese arms.\104\ Major deals have included the sale of 
K-8 fighter aircraft,\105\ Y-8 and Y-12 military transports,\106\ and 
JYL-1 \107\ and JY-27A radars to Venezuela; \108\ the sale of six H-
425/Z-9 helicopters \109\ and 31 armored vehicles \110\ to the populist 
regime of Evo Morales in Bolivia, and the sale of radars, plus some 709 
military trucks \111\ and 10,000 rifles to the populist regime of 
Rafael Correa in Ecuador.\112\
    The current Peronist government in Argentina has budgeted to 
acquire the Chinese FC-1/JF-17 fighter which, if the transaction 
occurs, would be the most advanced PRC-built aircraft sold to the 
region to date.\113\
    Beyond populist states, PRC-based military goods companies have 
also sold 27 Type-90B truck-based multiple launch rocket system to 
Peru,\114\ as well as an offshore patrol vessel (OPV) to Trinidad and 
Tobago.\115\
    The PRC also regularly sells or gifts less sophisticated equipment 
to militaries and police in the region.\116\ Examples include trucks, 
military construction equipment donated to the Guyana Defense Force in 
2017,\117\ police cars donated to the Guyana Police Service that same 
year,\118\ 200 motorcycles donated to the Trinidad and Tobago Police 
Service in 2019,\119\ and 140 motorcycles and 8 ATVs donated to the 
Dominican Republic military and police that year,\120\ among others.
    Beyond arms sales, the People's Liberation Army has maintained a 
regular, if not continuous, presence in Latin America that is more 
significant than commonly recognized. It includes at least three 
separate multi-port visits by the PLA hospital ship Peace Arc in 2011, 
2015, and 2018-2019,\121\ participation of PLA military police for 8 
years in the MINISTUH peacekeeping operation in Haiti,\122\ PLA 
attendance at elite Latin American military schools such as the 
Lanceros course in Colombia,\123\ the Jungle Warfare Course \124\ and 
the renowned military peacekeeping institute CCOPAB \125\ in Brazil. It 
also includes regular institutional visits by PLA personnel to 
virtually every country in the region that the PRC recognizes.
    In the military portion of the PRC's ``people-to-people'' 
diplomacy, PLA leaders have visited the region at least 200 times in 
the past two decades.\126\ Reciprocally, the PRC also regularly brings 
Latin American defense and police officials to China for training and 
military education activities, not unlike what it does with other Latin 
American government, business, and academic figures, as noted earlier. 
Prominent military examples include bringing Latin American and 
Caribbean armed forces personnel to the 3 to 5-week training courses 
that the PLA conducts in its National Defense University in Changping, 
inviting students to its select year-long Army and Navy Command and 
General Staff programs in the greater Nanjing area,\127\ and bringing 
Latin American cadets into its regular military academy, among other 
activities.
    I do not expect the PRC in the near term to seek a formal military 
alliance agreement or military base, as it did in Djibouti, in 
Africa.\128\ This is not because of PRC benevolence or peaceful intent, 
but rather, because, given the cost and provocative effect of bases and 
military alliances, it has only made such commitment when its growing 
capabilities and global military reach were adequate to defend them. 
The PRC is not yet in such a position to do so in the Western 
Hemisphere.
    Despite likely PRC restraint in pursuing military bases in the 
Western Hemisphere, as in other areas, it is adept in advancing 
incrementally by cautiously ``testing the waters.'' To this end, it was 
significant that the PRC expressed interest in participating in a $300 
million polar logistics base being constructed by the Argentine 
military in the extreme south of that country, in Ushuaia.\129\ The 
Argentine Government currently indicates that the PRC will not be 
involved in its construction or operation of such a base, but it is 
important to keep attention on the matter.
    Whether or not the PRC overtly seeks a military base in the Western 
Hemisphere, it is logical that officials within the PLA plan for how 
they would fight a global conflict with the United States or other 
Western powers if called upon to do so. It is thus not unthinkable that 
the PLA analyzes how they could leverage their commercial and military 
presence and relationships in the Western Hemisphere in such time of 
conflict, and what they could do now, to do so more effectively in the 
future.
    Options for the PLA in operating in the Western Hemisphere in the 
context of a future conflict with the U.S. could include deploying 
intelligence assets or special forces into the region to create 
diversionary crises, or to put U.S. deployment and sustainment flows 
and the U.S. homeland itself at risk.
    If, in the context of a war with the PRC, the United States 
suffered grave losses in the opening phase, such as the sinking of 
multiple aircraft carriers and other capital ships, it is not 
inconceivable that some regimes hostile to the U.S. in the Western 
Hemisphere could conclude that the U.S. might not be willing to incur 
the high costs and nuclear escalation risks to pursue a protracted 
conflict with the PRC to complete victory. From such a conclusion, 
those anti-US regimes might decide that now was the time to set 
themselves up for a future payoff by ``betting on the PRC.'' If, in 
that context, one or more such regime decided (or were obliged to) 
grant the PRC access to their ports, airfields, and other facilities, 
the knowledge of those militaries and relationships with them that the 
PRC has today would play a major role in how rapidly and effectively 
the PLA could make use of those facilities to threaten the U.S. 
homeland.
    the role of prc soft power in advancing its strategic objectives
    PRC influence in Latin America and the Caribbean is significant. A 
February American University survey of Latin American opinion leaders, 
for example, found that 78 percent of those surveyed believed China's 
influence in Latin America to be high, and 86 percent saw its influence 
on the Latin American economies as high.\130\
    Despite such indicators, the nature of PRC influence, is arguably 
often misleadingly compared with the very different bases of U.S. soft 
power in the region. The latter, as discussed by authors such as Joseph 
Nye,\131\ is primarily built on consensus and affinity, the 
identification of our Latin American neighbors with the U.S. or 
principles such as democracy, human rights and free markets. In a 
similar fashion, a non-trivial number of Latin Americans find elements 
of Chinese culture and work ethic worth emulating. Perhaps more 
concerning, some in the region draw lessons from the PRC's 
authoritarianism and state-led predatory economic approach in 
confronting challenges of development, insecurity, or disorder in their 
own societies.\132\
    The PRC's greatest ``soft power'' influence comes from the 
expectation of gain, on the state, company and sometimes personal 
level, from potential access to the PRC market, or being a partner or 
beneficiary in a Chinese project locally.\133\ As an illustration, 
Peru's Attorney General's office is currently investigating 
irregularities in the granting of 15 contracts to Chinese firms under 
the current government of Pedro Castillo.\134\
    Importantly, such benefits-based PRC influence coexists with 
distrust by Latin American elites who understand that the Chinese can 
be predatory partners, yet downplay U.S. warnings, believing that they 
can manage the risk in order to reap the associated rewards. More 
dangerously, some find it convenient to dismiss U.S. concerns as mere 
``great power competition,'' so that they can take the Chinese 
money,\135\ to their gain, although often to the detriment of their 
countries.
    People-to-people diplomacy is an area in which the Chinese arguably 
secure important objectives. The PRC currently has 44 Confucius 
Institutes in the region, including eight in the sparsely populated 
Caribbean.\136\ These Confucius Institutes principally act as 
gatekeepers, for attracting youth of the region oriented toward China, 
identifying those with the talent and perseverance in learning the 
mandarin language and Chinese script. The PRC Government offers the 
most promising of these students full scholarships, through the PRC 
cultural promotion organization Hanban, to study in the PRC. Because of 
the paucity of youth in the region with deep language of the Chinese 
language and country, those who graduate these programs often go on to 
become key technocrats and leaders in the China-facing portions of 
their Foreign Affairs and Commerce ministries, or in the PRC-oriented 
portion of the country's leading companies. As a result, a not 
insignificant portion of PRC-facing technocrats in Latin American 
governments come to owe their prestigious economic and bureaucratic 
positions to the PRC.
    In the most recent 2022-2024 China-CELAC plan, the PRC committed 
some 5,000 scholarships for Latin American students, plus 3,000 ``work 
opportunities,'' \137\ This commitment was the continuation of the 
6,000 scholarships for Latin Americans that the PRC committed to in the 
2015-2019 plan,\138\ and the 6,000 it offered in the 2019-2021 
plan.\139\
    However concerning, such scholarships only touch the surface of the 
insidious challenge of PRC ``people-to-people diplomacy. Beyond 
Confucius Institutes and associated Hanban scholarships, PRC outreach 
includes a significant, if unknown number of engagements in which 
agents of the PRC Government and/or Chinese Communist party bring the 
region's leading China-facing academics, think-tank professionals, 
businesspersons, journalists and even politicians to the country for 
luxurious trips built around the facade of academic exchanges. These 
include both individual events and collective gatherings such as the 
China-Latin America Think Tank Forum. The International Liaison 
Department of the Chinese Communist Party plays a key role in such 
outreach, both in bringing senior Latin American Congresspersons and 
political leaders over to the PRC and working with key Latin American 
elites in their own country as de facto lobbyists, whether trying to 
persuade their governments to flip recognition from Taiwan to the PRC 
or coordinating on other political or economic matters of interest to 
the PRC.\140\
            china as an incubator of authoritarian populism
    With respect to the strategic political effects of PRC engagement 
with the region, the dynamic that most concerns me is the inadvertent, 
sometimes deliberate role of the PRC as an ``incubator of authoritarian 
populism'' as the Chinese Government, Communist Party and PRC-based 
companies pursue their interest in the region.
    To be clear, the populist authoritarian governments that have come 
to power in Latin America to date, including Hugo Chavez in Venezuela, 
Rafael Correa in Ecuador, and Evo Morales in Bolivia, have done so by 
exploiting discontent with the inability of their predecessors to 
effectively address endemic corruption, inequality, insecurity, and 
disappointing economic performance in their societies. Once in power, 
however, as those populist governments followed an often Cuban and 
Chavista-inspired path to hijack democratic institutions, consolidate 
power, and move against the private sector and free press, they have 
been aided in that effort by the ability to leverage PRC resources in 
the form of purchases of their commodities, associated loans, and 
occasional investments, to keep them afloat. In borrowing alone, as 
Chavez in Venezuela, Correa in Ecuador and Morales in Bolivia 
consolidated their power, PRC-based policy banks provided those 
governments $62.2 billion, $18.4 billion, and $3.4 billion 
respectively.\141\
    Skeptics who see populist regimes as naive business ventures for 
PRC-based companies miss the point; in Venezuela, Ecuador, and Bolivia, 
and as documented by an excellent Vanderbilt University study on 100 
Chinese debt contracts with foreign governments, PRC-based companies 
have proven adept at structuring deals in ways that ensure that they 
get paid \142\ even while imposing questionable constraints on the 
sovereign decisions of their partners,\143\ and even as the populists 
have defaulted on everyone else. In the end, dealing with such regimes 
has arguably been difficult for the PRC-based companies involved, 
including problems on a range of issues from contract completion to 
personal security. Nonetheless, such engagements have also been 
beneficial for those companies. They have arguably secured favorable 
deals negotiating terms with politically receptive, isolated regimes, 
in often non-transparent government-to-government interactions in which 
their populist counterparts have brought political loyalists rather 
than knowledgeable technocrats to the table.
    In the ongoing relationship, the Chinese, for their part, have 
reciprocally provided benefits to their populist authoritarian friends 
that help them maintain themselves in power. This includes selling 
Venezuela the armored vehicles used to repress democratic protesters, 
based on the industry using such vehicles to help the PRC repress its 
own population. Examples include the VN-4s and ``Rhino'' armored 
vehicles used in May 2019 to crush democratic protesters,\144\ as well 
as those with unfolding barricade doors, used in January 2020 to wall 
off access to the Venezuelan Congress and shut out Juan Guaido and 
other democratically elected members of Venezuela's Congress.
    PRC-based companies have also provided technologies to help 
authoritarian partners in the region monitor and control their 
populations, just as the PRC controls its own.\145\ Recent examples 
include support to the de facto Maduro regime in Venezuela from the 
Chinese electronics company CEIEC to spy on de jure President Guaido 
and his political supporters,\146\ implementation by Chinese 
telecommunication firm ZTE of the Fatherland Identity Card system,\147\ 
which the government made obligatory not only to vote, but also to 
obtain rations of scarce foodstuffs and other basic goods (the famous 
``CLAP'') boxes,\148\ and to receive scarce Chinese and Russian 
vaccines against Covid-19.\149\
    In Cuba, Chinese telephones and data management systems supplied by 
Huawei to the state telecommunications firm ETECSA, based on the same 
technologies the PRC uses to control its own population,\150\ proved 
instrumental in the Cuban Government's response to unprecedented 
nationwide protests in July 2021,\151\ by digitally isolating the 
protesters from each other, and from the outside world.\152\
    The collective result of such economic, military and technical 
support to the PRC's populist authoritarian friends has arguably been 
the extended survival of their regimes. In the process the PRC has 
contributed to a hemisphere with fewer democratic governments, ever 
less disposed to cooperate with the United States on issues important 
to our security from transnational organized crime to migration, to 
corruption and human rights.
                the prc diplomatic struggle with taiwan
    Since the election of the Democratic Progressive Party (DPP) 
government in Taiwan in January 2016, the PRC has resumed efforts to 
actively persuade governments in the region to switch diplomatic 
recognition from Taiwan to the PRC. It has done so by offering a range 
of financial and other incentives, often working through its Chinese 
Communist Party-sponsored ``United Front'' organizations in the 
targeted countries.\153\
    The abandonment of Taiwan by the Panamanian Government of Juan 
Carlos Varela in June 2017, by the Dominican Republic Government of 
Daniel Medina in May 2018, and by the Salvadoran FMLN Government of 
Salvador Sanchez Ceren in August 2018, was consistent with the pattern 
observed in the prior the flip by the Costa Rican Government of Oscar 
Arias in May 2007. In each case, the change was not only diplomatic, 
but facilitated the significant expansion of PRC activities in the 
country through the signing of (often non-transparent) Memorandums of 
Understanding opening the recognizing country to activities by PRC-
based countries in key sectors such as electricity, telecommunications 
and construction, even by buying-off politically well-connected elites 
by facilitating PRC purchases of limited quantities of the traditional 
exports of that country, such as fruit or coffee, often connected to 
those well-connected elites.
    In the cases of Panama, the Dominican Republic and El Salvador, the 
firm response to the changes by then-U.S. ambassador to El Salvador 
Jean Manes, including the recall of U.S. senior diplomats from the 
three for consultations, arguably led to both the PRC and its partners 
in the region to proceed with greater caution. That caution was 
reinforced by the election of more U.S.-oriented governments in both 
Panama (Nito Cortizo, elected in May 2019) and in the Dominican 
Republic (Luis Abinader, elected in July 2020). In each case, the 
incoming governments, more attentive to U.S. concerns, facilitated 
reviews of some of the more questionable deals with the PRC signed by 
their predecessors. Nonetheless, each ultimately continued to engage 
economically with the PRC and its companies in the areas where it made 
sense. Further delaying the PRC advance in these cases, the Covid-19 
pandemic also impeded the ability of the PRC to proceed with some of 
its promised investments. As the region pushes beyond Covid-19, China 
is positioned to make important economic advances in each. In Panama, 
for example, China Harbour is set to continue previously suspended work 
on the fourth bridge over the Panama Canal this year.\154\
    In the case of Nicaragua's December 2021 recognition of the PRC, 
the PRC has moved with unusual caution in announcing major new projects 
and agreements. Nonetheless, the reappearance of Chinese Nicaragua 
Canal promoter Wang Jing in November 2021, shortly before the 
change,\155\ coupled with Wang's close relationship with the Ortegas' 
son Laureano, who led the delegation to Tianjin China to negotiate 
Nicaragua's flip to the PRC,\156\ makes it likely that Wang Jing's 
reappearance means that some Nicaragua Canal-related Chinese 
investments could be part of the path forward for that country.
    In Paraguay, President Mario Abdo-Benitez helped to publicly expose 
the PRC's unsuccessful attempt to change the country's diplomatic 
recognition to the PRC in exchange for expedited access to China's 
Covid-19 vaccines.\157\
    In Honduras, the campaign commitment of incoming President Xiomara 
Castro to recognize the PRC \158\ makes it likely that its government 
could eventually flip as well, even though the President has committed 
not to do so for now.\159\
    The change in Honduras and/or Guatemala's diplomatic posture would 
then shift the strategic focus of PRC attention to the Caribbean Basin, 
where all remaining states recognizing the PRC with the exception of 
Paraguay would then be located.
    In the Caribbean, Haiti is particularly vulnerable to flip, with 
the mentioned Presidential replacements to the current interim 
government of Ariel Henry expressing interest in relations with the 
PRC. The Government of St. Lucia, whose present Labor Party government 
previously recognized the PRC, is also arguably vulnerable to change if 
it sees a plurality of its neighbors are doing so as well.\160\
    PRC diplomatic advance is important not only because it opens the 
door for an associated expansion of economic and other influence, but 
also because it is destabilizing to the status quo in Asia. As the 
number of states in the world that recognize Taiwan decrease toward 
zero, amidst ever increasing PRC military superiority over its island 
neighbor, the temptation for the PRC to forcibly incorporate Taiwan 
into its territory, and the prospect of an associated conflict that 
could involve the United States, and possibly nuclear weapons, 
grows.\161\
      the prc's special and increasing attention to the caribbean
    The ongoing PRC efforts to reorient the global economy and 
institutions to its benefit, as well as China's struggle to 
diplomatically isolate Taiwan, and PLA preparations for the possibility 
of an eventual conflict with the United States all lead to a particular 
PRC interest in the Caribbean.
    For the PRC, the Caribbean has particular importance, as the 
southeastern maritime approach to the United States which is at the 
same time, a key logistics hub for the U.S. economy, and the location 
of the vast majority of the counties in the hemisphere that continue to 
diplomatically recognize Taiwan.
    The PRC wishes to have a strong economic and political presence in 
the subregion without provoking the United States, for the same reason 
that it wishes to exclude rival powers such as the United States from 
the strikingly similar strategic geography that its own southeastern 
maritime approach, including the straits of Malacca. It is thus not 
surprising that in its 2022-2024 plan for engagement with the region, 
the PRC gave particular, if largely unrecognized, attention to the 
``small island states'' of the region.\162\
    The fact that the PRC has located 8 of its 44 Confucius Institutes 
in the Caribbean is out of proportion to the relative population of the 
region and the size of its economies, as is the number of ports, 
highway projects and tourism investments that it maintains there. 
Operations of note include the previously mentioned three PRC port 
operations in the Bahamas, the China Merchant Port operation in 
Kingston,\163\ port work in Berbice, Guyana,\164\ the $4.2 billion Baha 
Mar tourist resort,\165\ over $1 billion of highway projects in tiny 
Jamaica alone,\166\ the Amaila Falls hydroelectric facility and 
multiple infrastructure projects in Guyana, interest in the Atlantic 
LNG refinery in Trinidad and Tobago,\167\ and plans by China Harbour to 
construct a drydock there,\168\ just to name a few.
    It is also arguably not by coincidence that a significant portion 
of the PLA military engagement detailed previously has occurred in the 
Caribbean, including the PRC's 8-year deployment of military police to 
Haiti under MINUSTAH, its frequent gifts of vehicles and equipment to 
Caribbean defense and police forces, its sponsorship of training and 
institutional visits by their leaders to the PRC, and its inclusion of 
multiple Caribbean port calls in each of the three deployments of its 
military hospital ship to the region.
                 prc coordination with u.s. adversaries
    Due to the PRC's strategic economic interests in access to sources 
of supply, markets, and technologies, it has generally attempted to 
disassociate itself from provocative statements and actions by anti-
U.S. regimes in the region such as those by the Hugo Chavez and 
Nicholas Maduro regimes in Venezuela. Nonetheless, the PRC 
strategically benefits from the survival of such regimes, which both 
distract its rival the U.S.,\169\ and undermines the prevalence of 
region-wide consensus on a Western-style democratic rules-based order 
that would benefit the U.S. Thus, insofar as authoritarian populist 
governments take reasonable steps to protect the interests of PRC-based 
companies and pay off past debts, the PRC has not been in a hurry to 
help the U.S. to bring about more responsible, less criminal forms of 
government in these countries,\170\ even as the PRC simultaneously 
works to maintain the impression that it is cooperating with the U.S.
    With respect to Russia and Iran, there are few overt indications 
that the PRC cooperates overtly with those governments in Latin America 
in the ways that it sometimes does in other parts of the world.\171\ 
Nonetheless, as with in-region U.S. adversaries such as Venezuela, Cuba 
and Nicaragua, the PRC strategically benefits from Russia's provocative 
actions in the region, such as its periodic deployment of nuclear-
capable Tu-160 backfire bombers and other military assets,\172\ and 
most recently, the threat by Deputy Foreign Minister Sergey Ryabkov 
that the deployment of Russian forces to Venezuela or Cuba could not be 
ruled out,\173\ followed by the March 2022 military cooperation 
agreement signed between Deputy Prime Minister Yuri Borisov and his 
Venezuelan counterpart.\174\
    In the current Ukraine conflict, Russia's actions strategically 
benefit the PRC, insofar as they distract the West and force it to 
consume time and resources on matters other than responding to the PRC 
advance in the region (and globally), even while Russia's actions also 
weaken itself, making it more dependent on the PRC, including as a 
purchaser of Russian oil and foodstuffs, even while forcing it to work 
through the PRC for financial transactions as Russian banks loose 
access to the SWIFT system.\175\ Russia's military campaign in the 
Ukraine, as well as western sanctions and other actions against Russia 
further allow the PRC to observe Russian vulnerabilities, in order to 
minimize its own vulnerabilities to a likely similar Western response 
if, as is possible in the coming years, the PRC attempts to incorporate 
Taiwan into its territory.
    Such benefits to the PRC notwithstanding, it is nonetheless hurt to 
some degree by the effects of the international crisis in the prices of 
petroleum and food, both of which the PRC must import in significant 
quantities, as well as the fragility of the global economy and 
financial system in general, upon which demand for Chinese products, 
and other aspects of the PRC economy depends.
    Finally, in Latin America, as elsewhere, the war in the Ukraine 
arguably forces the PRC to proceed more cautiously, due to its desire 
not to be associated with Russian aggression, particularly after having 
made uncharacteristically strong statement with Vladimir Putin in 
Beijing during the Olympics, before the degree of Putin's mismanagement 
of the Ukraine invasion, and the associated brutality of Russian 
actions against civilian populations and associated war crimes,\176\ 
was exposed.
              the u.s. response and areas for improvement
    In my research and writings since the early 2000s on Chinese 
engagement with Latin America and the Caribbean, I have observed the 
U.S. response evolve from concerned observation to stronger actions and 
messaging to our partners. I have seen good and creative initiatives 
under both Republican and Democratic administrations, but believe that 
we have consistently been lacking in four areas:

  1.  An adequate and sustained level of resources for both strategic 
        thinking, and economic, security and other engagement in the 
        Western hemisphere, given its enormous importance to U.S. 
        prosperity and security.

  2.  Adequate data for our leaders in Congress, the President and his 
        or her senior representatives, the State Department, the 
        Defense Department, and other federal agencies to support their 
        engagements with Latin American and Caribbean publics about the 
        relative performance of and behaviors of concern by PRC-based 
        companies, as well as the PRC state and its intelligence 
        services in the region.

  3.  An appropriate combination of flexibility and resources, within 
        specific U.S. Government organizations, such as the Development 
        Finance Corporation, USAID, Commerce, and the Defense 
        Department, to better empower them to provide timely, 
        attractive alternatives to often predatory or risky partner 
        engagements with the PRC; and

  4.  Effective coordination at the Federal agency level, beyond policy 
        documents, in formulating integrated whole-of-government 
        initiatives to respond to the PRC challenge.
              recommendations for u.s. strategy and policy
    Pursuant to my observations in this hearing thus far, in my 
personal capacity as an analyst, I respectfully offer my 
recommendations for increasing the effectiveness of the U.S. response 
to PRC activities in Latin America and the Caribbean:

  1.  Do not seek to block our Latin American and Caribbean partners 
        from routine commercial and political engagement with the PRC 
        so long as they are transparent, conducted in accordance with 
        the rule-of-law and a level playing field, even if the results 
        occasionally make us uncomfortable. Attempting to do so is both 
        not realistic and would likely generate resentment and a 
        counterproductive response from our partners.

  2.  Do more to ensure that the interactions between our partners and 
        the PRC that do occur are indeed conducted with transparency, 
        in a rule-of-law framework on a level playing field, and 
        through strong partner government and regional institutions. 
        Doing so has both a component of persuading our partners, and 
        one of enabling them.

      a.  On the persuasion side, the U.S. should do more with 
            interagency efforts to discourage partners from engaging in 
            the types of back-room, government-to-government deals with 
            the PRC and its companies that may benefit the PRC and 
            partner representatives signing the deal, but not their 
            countries. Tools that the U.S. can use more aggressively to 
            discourage bad partner behavior in this area include State 
            Department public diplomacy and visa policy (and associated 
            sanctions), Treasury OFAC sanctions, and U.S. Justice 
            Department Investigations targeted at individuals engaged 
            in illegal behavior, where merited.

      b.  On the enabling side, the U.S. should expand and resource 
            State Department-led programs to strengthen our partners 
            institutions and processes, including anti-corruption 
            initiatives, project planning support to partner nations, 
            contract evaluation, and enforcement of environmental, 
            labor and other partner laws on the back end. Such 
            initiatives will not ``keep the Chinese out of Latin 
            America,'' but rather, will help channel that engagement in 
            ways that is most healthy for our partners and the region, 
            while better positioning the U.S. as helping our partners 
            succeed, as a reflection of the joint stake that we have in 
            the prosperity of our common neighborhood, the Western 
            Hemisphere.

  3.  In areas of digital technologies, where the presence of untrusted 
        PRC-based vendors could compromise government and leader 
        personal information undermining the ability of our partners to 
        make sovereign decisions, the U.S. should make explicit efforts 
        to keep PRC-based entities out, leveraging whole-of-government 
        tools. Such efforts could include making clear our need to stop 
        sharing certain types of intelligence information if our 
        partners' incorporation of PRC-based vendors such as Huawei 
        cause their networks to become untrustworthy. Similarly, we can 
        explain our inability to promote certain investment programs 
        where such partner incorporation of Chinese vendors into their 
        networks would make the intellectual property of the investing 
        entity vulnerable. In applying such pressures, however, we must 
        both be more effective in communicating to our partner and the 
        broader community ``why'' we are doing such things. Moreover, 
        where possible, the U.S. should also work to ensure the 
        viability of alternative solutions from U.S.-based companies. 
        Where there are not such viable solutions, it should work with 
        like-minded democratic partners to identify alternatives from 
        trusted companies in democratic partner nations, respectful of 
        privacy and intellectual property rights, such as Ericsson or 
        Nokia.

  4.  With respect to information, the U.S. should do more to ensure 
        the creation of both government and other databases on the 
        performance of PRC-based companies relative to their 
        competitors. Such efforts could collect data on associated 
        issues of contract disputes involving PRC-based companies, 
        conflicts with affected communities and workers, and non-
        compliance with labor, environmental and other commitments. The 
        collection of data should also include evidence of 
        dissatisfaction with the managerial practices of PRC-based 
        companies operating in the region, and cases of intellectual 
        property theft by those companies from their competitors. It 
        could also usefully include information about Latin American 
        and Caribbean politicians and other government officials from 
        the region who go to the PRC on trips sponsored by its 
        government. Data collection efforts should also include the 
        identification of senior leaders in the China-facing portions 
        Latin American Foreign and Commerce ministries and PRC-relevant 
        regulatory organizations who have received their education in 
        the PRC, or other significant benefits from the country. Data 
        collection should similarly include PRC military and other 
        security sector activities in countries the region, including 
        specific military and police leaders receiving PRC-funded 
        trips, abusive activities by PRC diplomats in the region, and 
        cyberespionage and cyber-hacking tied to the PRC Government and 
        its companies. Such information should be available to support 
        both interactions by U.S. senior leaders with our partners, as 
        well as U.S. public diplomacy and engagement with our 
        neighboring nations more broadly, so that the U.S. can talk 
        more credibly and empirically with them about the risks of 
        engagement with the PRC.

  5.  With respect to resources, laws and regulations, I respectfully 
        submit that not only does the U.S. need to significantly expand 
        resources dedicated to this hemisphere to effectively compete, 
        but we also must re-think some of the rules which constrain our 
        agility to do so. I applaud the Development Finance Corporation 
        as a powerful potential tool in competing with the PRC yet 
        perceive that it has become excessively constrained by limits 
        regarding the income level of the countries that it can engage 
        with and the types of projects that it can support, at the cost 
        of paralyzing the DFC role as an effective tool for channeling 
        private sector resources to provide healthy, transparent 
        alternatives to PRC funds. In a similar fashion, U.S. military 
        education and training programs (IMET) and other DoD security 
        assistance engagement build invaluable relationships and offer 
        powerful incentives for our partners to not engage with the PRC 
        in ways that undercut their ability to work with us in the 
        security realm. Such programs also help us to help our partners 
        succeed in controlling the corrupting influences of 
        narcotrafficking and other criminal organizations, which is 
        good not only for the U.S., but helps our neighbors show their 
        people that democratic governance works. In the process, their 
        success helps to keep at bay authoritarian populist 
        alternatives to democracy that also serve to open the door to 
        problematic types of engagement with the PRC, among other 
        difficulties. Yet as with DFC, Title X DoD security assistance 
        funding, and in particular, Section 333 activities, are 
        arguably hampered with an excess of requirements that limit DoD 
        agility in adapting our engagements to the needs of our 
        partners.

  6.  With respect to the broad messaging themes of U.S. public 
        diplomacy involving the PRC in Latin America, I believe that 
        Russia's invasion of the Ukraine, including its indefensible 
        tactics and war crimes,\177\ in conjunction with the PRC 
        statement of solidarity with Russia in on the eve of its 
        invasion (a friendship that ``knows no limits'') \178\ creates 
        an opportunity for the United States to remind the world that 
        democracy, human rights, and legal commitments must mean 
        something, if the global institutional order that has brought 
        today's security and prosperity is to remain viable. The war 
        unleashed by Vladimir Putin's ambitions in the Ukraine lays 
        bare the implications of the PRC attempt to assert moral 
        neutrality ``types of democracy,'' and reminds us a world in 
        which nothing can be declared bad, ultimately leads to a 
        violent, insecure, Hobbesian chaos of ``might makes right.'' In 
        the same vein the PRC avoidance of condemning Russian 
        aggression,\179\ including Russia's killing of more than a 
        thousand Ukrainian civilians \180\ (and probably far more), 
        deliberately destroying their cities, and brutally displacing 
        more than 10 million Ukrainians from their homes,\181\ even as 
        the PRC profits commercially from Russia's international 
        isolation, should lead us to remind our Latin American 
        neighbors of past PRC statements of fraternity with the 
        Ukrainian people, which sound remarkably similar to PRC 
        rhetoric in Latin America, and ask, ``Where is the PRC in 
        Ukraine's hour of need today? Where will it be for you, when 
        you are no longer useful to it?''

  7.  Finally, I believe that the upcoming June 2022 Summit of the 
        Americas in Los Angeles is an important opportunity for the 
        U.S. Government to leverage the lessons of Russia's Ukraine 
        invasion, Covid-19, and other aspects of the shifting strategic 
        environment in Latin America to reach out to the region, whose 
        conditions affect all of us, with a renewed spirit of 
        partnership.

    Distinguished members of the Subcommittee, thank you for your time 
and attention, and the opportunity to share my analysis with you today.

----------------
Notes

    \1\ Enrique Dussel-Peters, ``Monitor of Chinese OFDI in Latin 
America and the Caribbean 2021,'' Red China-ALC, March 31, 2021, 
https://www.redalc-china.org/monitor/images/pdfs/menuprincipal/
DusselPeters_MonitorOFDI_2021_Eng.pdf.
    \2\ ``China-Latin America Finance Database,'' Interamerican 
Dialogue, March 28, 2022, https://www.thedialogue.org/map_list/.
    \3\ ``Direction of Trade Statistics,'' International Monetary Fund, 
Accessed March 28, 2022, https://data.imf.org/
regular.aspx?key=61013712.
    \4\ Mark Lanteigne, ``Argentina Joins China's Belt and Road,'' The 
Diplomat, February 22, 2022, https://thediplomat.com/2022/02/argentina-
joins-chinas-belt-and-road/?msclkid=44c488f0ade711ecb014961bf4d6c564.
    \5\ See R. Evan Ellis, ``Why China's Advance in Latin America 
Matters,'' National Defense, January 27, 2021, https://
www.realcleardefense.com/2021/01/27/
why_chinas_advance_in_latin_america_matters_658054.html.
    \6\ ``Latin America's Near-Term Lithium Expansion,'' Business News 
Americas, March 2020.
    \7\ Dalilia Ouerghi, ``China's Ganfeng completes majority stake 
acquisition in Argentina lithium project,'' Metals Bulletin, August 28, 
2020, https://www.metalbulletin.com/Article/3948479/Chinas-Ganfeng-
completes-majority-stake-acquisition-in-Argentina-lithium-project.html.
    \8\ ``Latin America's Near-Term Lithium Expansion,'' Business News 
Americas, March 2020.
    \9\ ``Se puso en marcha Tres Quebradas, el proyecto que apunta a 
producir 20 mil toneladas de litio al ano,'' Perfil, March 28, 2022, 
https://www.perfil.com/noticias/economia/como-es-tres-quebradas-el-
proyecto-en-catamarca-que-apuesta-a-producir-20-mil-toneladas-de-litio-
al-ano.phtml.
    \10\ Ernest Scheyder, ``Tianqi says happy `for now' with stake in 
SQM: president,'' Reuters, June 10, 2019, https://www.reuters.com/
article/us-lithium-electric-tianqi-lithium/tianqi-says-happy-for-now-
with-stake-in-sqm-president-idUSKCN1TB20K.
    \11\ ``BYD Chile among two companies that won lithium concessions 
from the October Auction,'' Business News Americas, January 2022, 
https://app.bnamericas.com/article/section/all/content/xu0da5tav-two-
chilean-companies-awarded-a-160000t-lithium-tender.
    \12\ ``Battling for Bolivia's Lithium That's Vital to Electric 
Cars,'' The New York Times, December 16, 2021, https://www.nytimes.com/
2021/12/16/business/energy-environment/bolivia-lithium-electric-
cars.html.
    \13\ Ann Deslandes, ``Ganfeng announces lithium battery recycling 
plant in Mexico,'' Dialogo Chino, December 2, 2020, https://
dialogochino.net/en/climate-energy/38594-ganfeng-announces-lithium-
battery-recycling-plant-in-mexico/.
    \14\ ``Mexico tendra empresa para explotar litio, anuncia AMLO,'' 
El Financero, February 2, 2022, https://www.elfinanciero.com.mx/
nacional/2022/02/02/mexico-tendra-empresa-para-explotar-litio-anuncia-
amlo/.
    \15\ ``Minera Las Bambas deja de operar desde este sabado tras 
bloqueo de accesos,'' Infobae, December 16, 2021, https://
www.infobae.com/america/peru/2021/12/16/minera-las-bambas-deja-de-
operar-desde-este-sabado-tras-bloqueo-de-accesos/
?msclkid=6126b535ade511ecb5f445609881af28.
    \16\ ``Rio Blanco,'' Observador de Conflictos Socioambientales de 
Ecuador, March 24, 2019, https://www.observatoriosocioambiental.info/
2019/03/24/rio-blanco/.
    \17\ Cintia Quiliconi and Pablo Rodriguez Vasco, ``Chinese Mining 
and Indigenous Resistance in Ecuador,'' Carnegie Endowment for 
International Peace, September 20, 2021, https://carnegieendowment.org/
2021/09/20/chinese-mining-and-indigenous-resistance-in-ecuador-pub-
85382.
    \18\ ``China's Great Wall says will invest $1.8 bln in Brazil over 
next decade,'' Reuters, February 1, 2022, https://www.reuters.com/
business/autos-transportation/chinas-great-wall-says-will-invest-19-
bln-brazil-over-next-decade-2022-01-28/.
    \19\ ``Chinese electric buses roll out across Latin America,'' 
China Dialogue, August 10, 2020, https://chinadialogue.net/en/
transport/chinese-electric-buses-latin-america-roll-out/.
    \20\ Raul Prebisch, The Economic Development of Latin America and 
Its Principal Problems, United Nations, 1950, Doc. E/CN.12/89/Rev.l.
    \21\ Immanuel Wallerstein, The Capitalist World Economy, (Cambridge 
University Press; 1979).
    \22\ Fernando Henrique Cardoso and Enzo Faletto, Dependency and 
Development in Latin America, Trans. Marjory Mattingly Urquidi 
(Berkeley: University of California Press, 1979).
    \23\ Andrew Chatzky and James McBride, ``China's Massive Belt and 
Road Initiative,'' Council on Foreign Relations, January 28, 2020, 
https://www.cfr.org/backgrounder/chinas-massive-belt-and-road-
initiative.
    \24\ Andres Bermudez Lievano and Wang Chen, ``Chinese companies win 
bid to build Bogota metro,'' Dialogo Chino, https://dialogochino.net/
en/infrastructure/31002-chinese-companies-win-bid-to-build-bogota-
metro/. October 17, 2019
    \25\ Dan Collyns, ``China-backed project to dredge the Amazon in 
Peru,'' China Dialogue, September 24, 2019, https://chinadialogue.net/
en/business/11532-china-backed-project-to-dredge-the-amazon-in-peru-2/.
    \26\ ``Full Committee Hearing: ``National Security Challenges and 
U.S. Military Activity in North and South America,'' U.S. House Armed 
Services Committee, April 14, 2021, https://armedservices.house.gov/
2021/4/full-committee-hearing-national-security-challenges-and-u-s-
military-activity-in-north-and-south-america.
    \27\ ``Full Committee Hearing: ``National Security Challenges and 
U.S. Military Activity in North and South America,'' U.S. House Armed 
Services Committee, April 14, 2021, https://armedservices.house.gov/
2021/4/full-committee-hearing-national-security-challenges-and-u-s-
military-activity-in-north-and-south-america.
    \28\ R. Evan Ellis, ``The Future of Brazil-China Relations in the 
Context of Covid-19'' Global Americans, September 18, 2020, https://
theglobalamericans.org/2020/09/the-future-of-brazil-china-relations-in-
the-context-of-covid-19/.
    \29\ ``Chinese group buys container terminal management company in 
Brazil,'' Macauhub, September 5, 2017, https://macauhub.com.mo/2017/09/
05/pt-grupo-chines-compra-empresa-gestora-de-terminal-de-contentores-
no-brasil/.
    \30\ Marcela Ayres, ``China to announce billion-dollar investment 
in Brazilian port of Sao Luis: sources,'' Reuters, November 13, 2019, 
https://www.reuters.com/article/us-brazil-brics-china-investment/china-
to-announce-billion-dollar-investment-in-brazilian-port-of-sao-luis-
sources-idUSKBN1XN2NM.
    \31\ ``Cosco sees 2020 construction start for U.S. $3bn Chancay 
port,'' BNAmericas, June 26, 2019, https://www.bnamericas.com/en/news/
cosco-sees-2020-construction-start-for-us3bn-chancay-port.
    \32\ Michele Labrut, ``DP World launches construction of deepwater 
port in Posorja, Ecuador,'' Seatrade Maritime News, September 28, 2017, 
https://www.seatrade-maritime.com/americas/dp-world-launches-
construction-deepwater-port-posorja-ecuador.
    \33\ ``Chinese firm takes over Kingston Freeport management 
company,'' Stabroek News, April 25, 2020, https://www.stabroeknews.com/
2020/04/25/news/regional/jamaica/chinese-firm-takes-over-kingston-
freeport-management-company/.
    \34\ See R. Evan Ellis, ``Guyana: Opportunities and Challenges for 
the United States and the Caribbean Basin,'' Center for Strategic and 
International Studies, October 2, 2020, https://www.csis.org/analysis/
guyana-opportunities-and-challenges-united-states-and-caribbean-basin.
    \35\ Karen Molina, ``Ministra confirma interes de China en el 
Puerto de La Union,'' El Salvador.com, July 9, 2019, https://
historico.elsalvador.com/historico/498682/ministra-confirma-interes-de-
china-en-el-puerto-de-la-union.html. See also R. Evan Ellis, ``Chinese 
Engagement in El Salvador: An Update,'' Center for Strategic and 
International Studies, March 22, 2021, https://csis-website-
prod.s3.amazonaws.com/s3fs-public/publication/
210322_Ellis_China_El_Salvador.pdf?ydyD0XuUPUIsxKHDFOces1VOU.kQVJ0j.
    \36\ R. Evan Ellis, ``The New Belt and Road--China's Bid to 
Dominate Electrical Connectivity in the Americas,'' China Watch, The 
Jamestown Foundation, May 2021, Forthcoming.
    \37\ Genesis Lozano, ``Ecuador's China-backed hydropower 
revolution,'' Dialogo Chino, July 25, 2019, https://dialogochino.net/
en/climate-energy/29133-ecuadors-china-backed-hydropower-revolution/.
    \38\ R. Evan Ellis, ``Chinese Engagement with Bolivia--Resources, 
Business Opportunities, and Strategic Location,'' Air & Space Power 
Journal en Espanol, 2nd Semester 2016, http://www.airpower.au.af.mil/
apjinternational/apj-s/2016/2016-2/2016_2_03_ellis_s_eng.pdf, pp. 3-19.
    \39\ ``Test operations begun at 104-MW Patuca III hydroelectric in 
Honduras,'' Hydro Review, December 28, 2020, https://
www.hydroreview.com/hydro-industry-news/test-operations-begun-at-104-
mw-patuca-iii-hydroelectric-in-honduras/#gref.
    \40\ Shan Jie, ``Hydropower project in Peru shows Chinese company's 
responsibilities,'' Global Times, December 16, 2016, https://
www.globaltimes.cn/content/1210171.shtml.
    \41\ Nicholas Casey and Clifford Krauss, ``It Doesn't Matter if 
Ecuador Can Afford This Dam. China Still Gets Paid,'' The New York 
Times, December 4, 2018, https://www.nytimes.com/2018/12/24/world/
americas/ecuador-china-dam.html.
    \42\ ``China's BRI in Latin America: Case Study--Hydropower in 
Ecuador,'' Tearline, June 15, 2021, https://www.tearline.mil/
public_page/china-bri-in-ecuador-hydropower/.
    \43\ ``China's BRI in Latin America: Case Study--Hydropower in 
Ecuador,'' Tearline, June 15, 2021, https://www.tearline.mil/
public_page/china-bri-in-ecuador-hydropower/.
    \44\ Statement of General Laura J. Richardson, Commander, United 
States Southern Command, Before The 117th Congress House Armed Services 
Committee,'' U.S. Southern Command, official website, March 8, 2022, 
https://www.southcom.mil/Portals/7/Documents/Posture%20Statements/
SOUTHCOM%20Posture%20Final%202022.pdf?ver=tkjkieaC2RQMhk5L9cM_3Q%3d%3d
    \45\ Leland Lazarus and Evan Ellis, ``Can Latin America and the 
Caribbean Trust China as a Business Partner?'' The Diplomat, December 
29, 2021, https://thediplomat.com/2021/12/can-latin-america-and-the-
caribbean-trust-china-as-a-business-partner/.
    \46\ ``Multa de USD 3,25 millones a CWE de China en el Toachi'' El 
Comercio, February 15, 2015, https://www.elcomercio.com/actualidad/
negocios/multa-cwe-china-toachi-pilaton.html.
    \47\ ``La Corporacion Electrica del Ecuador declaro incumplida a 
empresa china,'' El Comercio, January 17, 2016, https://
www.elcomercio.com/actualidad/negocios/empresa-china-electrica-ecuador-
incumplida.html.
    \48\ Luis Colqui, ``Jujuy. Cauchari: el parque solar mas grande de 
America Latina comenzo a vender energia al pais,'' La Nacion, September 
26, 2020, https://www.lanacion.com.ar/economia/jujuy-cauchari-parque-
solar-mas-grande-america-nid2461924/
    \49\ Nestor Restivo, ``Todos los detalles del viaje de Alberto 
Fernandez a China,'' Pagina 12, January 30, 2022, https://
www.pagina12.com.ar/397995-todos-los-detalles-del-viaje-de-alberto-
fernandez-a-china.
    \50\ ``Chinese consortium of CMEC and CDIL to Invest and Finance 
one of the Largest Solar Power Projects in Latin America,'' PR 
Newswire, April 28, 2021, https://www.prnewswire.com/news-releases/
chinese-consortium-of-cmec-and-cdil-to-invest-and-finance-one-of-the-
largest-solar-power-projects-in-latin-america-301279293.html.
    \51\ Nestor Restivo, ``Todos los detalles del viaje de Alberto 
Fernandez a China,'' Pagina 12, January 30, 2022, https://
www.pagina12.com.ar/397995-todos-los-detalles-del-viaje-de-alberto-
fernandez-a-china.
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    \153\ Linda Zhang and Ryan Berg, ``An overlooked source of Chinese 
influence in Latin America,'' China Brief, Vol. 21, Issue 3, February 
11, 2021, https://jamestown.org/program/an-overlooked-source-of-
chinese-influence-in-latin-america/.
    \154\ ``Government announces intent to resume work on CCCC-CHEC's 
Fourth Bridge this year,'' Business News Americas, January 2022, 
https://app.bnamericas.com/article/section/all/content/x24ppfhpn-
panama-seeks-to-resume-construction-for-us15bn-fourth-bridge-over-
panama-canal.
    \155\ Blake Schmidt, ``Chinese Ex-Billionaire Lauds Ortega After 
Nicaraguan Election,'' Bloomberg, November 12, 2021, https://
www.bloomberg.com/news/articles/2021-11-12/ex-billionaire-canal-
promoter-lauds-ortega-after-retaining-power.
    \156\ ``Nicaragua breaks ties with Taiwan, switches allegiance to 
Beijing,'' NBC News, December 9, 2021, https://www.nbcnews.com/news/
world/nicaragua-breaks-ties-taiwan-switches-allegiance-beijing-
rcna8314.
    \157\ ``Taiwan accuses China of `vaccine diplomacy' in Paraguay,'' 
BBC News, April 7, 2021, https://www.bbc.com/news/world-asia-56661303.
    \158\ ``Taiwan warns Honduras against `flashy, false' China 
promises,'' Hong Kong Free Press, September 7, 2021, https://
hongkongfp.com/2021/09/07/taiwan-warns-honduras-against-flashy-false-
china-promises/.
    \159\ ``New Honduras leader says she hopes to maintain Taiwan 
ties,'' Reuters, January 7, 2022, https://www.reuters.com/world/new-
honduras-leader-says-she-hopes-maintain-taiwan-ties-2022-01-27/.
    \160\ ``SLP Wins Landslide Victory In Saint Lucia Elections,'' 
Saint Lucia Times, July 27, 2021, https://stluciatimes.com/slp-wins-
landslide-victory-in-saint-lucia-elections/.
    \161\ See, for example, R. Evan Ellis, ``The Day After: Planning 
for China Scenarios that Profoundly Alter the Strategic Environment,'' 
IndraStra, February 28, 2022, https://books.google.com/books/
about?id=pn9hEAAAQBAJ&redir_esc=y.
    \162\ Evan Ellis and Leland Lazarus, ``China's New Year Ambitions 
for Latin America and the Caribbean,'' The Diplomat, January 12, 2022, 
https://thediplomat.com/2022/01/chinas-new-year-ambitions-for-latin-
america-and-the-caribbean/.
    \163\ ``Chinese firm now has full control of Kingston Freeport 
management company,'' NY Carib News, April 25, 2020, https://
www.nycaribnews.com/articles/chinese-firm-takes-over-kingston-freeport-
management-company/.
    \164\ ``CGX pushes ahead with Berbice Deep Water Project; set to 
cost US$130M,'' Kaieteur News, February 11, 2021, https://
www.kaieteurnewsonline.com/2021/02/11/cgx-pushes-ahead-with-berbice-
deep-water-project-set-to-cost-us130m/.
    \165\ ``Baha Mar resort acquired by Hong Kong developer,'' Jamaica 
Gleaner, December 14, 2016, https://jamaica-gleaner.com/article/
business/20161214/baha-mar-resort-acquired-hong-kong-
developer?msclkid=75640e83abb611ec883a085b736b9012.
    \166\ Tiffany Foxcroft, ``Jamaica has China to thank for much-
needed infrastructure--but some locals say it has come at a price,'' 
CBC, November 28, 2019, https://www.cbc.ca/news/world/china-power-belt-
and-road-caribbean-jamaica-1.5374967.
    \167\ Eldina Jahic, ``Trinidad Govt Signs Atlantic LNG 
Restructuring Deal With Shell And BP,'' Rigzone, January 27, 2022, 
https://www.rigzone.com/news/
trinidad_govt_signs_atlantic_lng_restructuring_deal_with_shell_and_bp-
27-jan-2022-167713-article/.
    \168\ ``La Brea Dry Docking Facility,'' Ministry of Works and 
Transport, Government of Trinidad and Tobago, official website, 
Accessed March 29, 2022, https://mowt.gov.tt/Divisions/Highways-
Division/Projects/La-Brea-Dry-Docking-Facility.
    \169\ See, for example, R. Evan Ellis, ``Venezuela: Understanding 
Political, External, and Criminal Actors in an Authoritarian State,'' 
Small Wars Journal, January 14, 2022, https://smallwarsjournal.com/
jrnl/art/venezuela-understanding-political-external-and-criminal-
actors-authoritarian-state.
    \170\ See R. Evan Ellis, ``Venezuela: Pandemic and Foreign 
Intervention in a Collapsing Narcostate,'' Center for Strategic and 
International Studies, August 5, 2020, https://www.csis.org/analysis/
venezuela-pandemic-and-foreign-intervention-collapsing-narcostate.
    \171\ See, for example, ``Iran joins China, Russia in Shanghai 
Cooperation Organization,'' AL Monitor, September 2021, https://www.al-
monitor.com/originals/2021/09/iran-joins-china-russia-shanghai-
cooperation-organization#ixzz7OsMFzwvI.
    \172\ R. Evan Ellis, ``Russia's Latest Return to Latin America,'' 
Global Americans, January 19, 2022, https://theglobalamericans.org/
2022/01/russia-return-latin-america/.
    \173\ ``Russia threatens military deployment to Cuba and Venezuela 
as diplomacy stalls,'' The Guardian, January 13, 2022, https://
www.theguardian.com/world/2022/jan/13/russia-says-talks-with-nato-over-
ukraine-are-hitting-a-dead-end.
    \174\ Marcos Ommati, ``Venezuela to Expand Cooperation with Russia 
in the Military Sphere,'' Dialogo, March 4, 2022, https://dialogo-
americas.com/articles/venezuela-to-expand-cooperation-with-russia-in-
the-military-sphere/#.YkJG3y3MKUk.
    \175\ ``Moscow, Beijing working on SWIFT workaround--Russian 
lawmaker,'' Reuters, March 16, 2022, https://www.reuters.com/article/
ukraine-crisis-russia-china-idUKL5N2VJ39Z.
    \176\ Anthony J. Blinken, ``War Crimes by Russia's Forces in 
Ukraine,'' U.S. State Department, official website, March 23, 2022, 
https://www.state.gov/war-crimes-by-russias-forces-in-ukraine/
?msclkid=a6fd3681ade611ec9c1ef2e98876e655.
    \177\ Anthony J. Blinken, ``War Crimes by Russia's Forces in 
Ukraine,'' U.S. State Department, official website, March 23, 2022, 
https://www.state.gov/war-crimes-by-russias-forces-in-ukraine/
?msclkid=a6fd3681ade611ec9c1ef2e98876e655.
    \178\ ``Joint Statement of the Russian Federation and the People's 
Republic of China on the International Relations Entering a New Era and 
the Global Sustainable Development,'' Presidency of Russia, official 
website, February 22, 2022, http://en.kremlin.ru/supplement/
5770?msclkid=9ce6fe85ade111eca4dc1c9d1a4a189a.
    \179\ ``Wang Yi Expounds China's Five-Point Position on the Current 
Ukraine Issue,'' Ministry of Foreign Affairs of the People's Republic 
of China, official website, February 26, 2022, https://
www.fmprc.gov.cn/eng/zxxx_662805/202202/t20220226_10645855.html.
    \180\ ``Ukrainian civilian death toll reaches 1,119, U.N. says,'' 
Reuters, March 27, 2022, https://www.reuters.com/world/europe/
ukrainian-civilian-death-toll-reaches-1119-un-2022-03-27/
?msclkid=e7eda9e2ade111ec8c298f16f7d718c7.
    \181\ ``Almost a Quarter of Ukrainians Now Displaced, UN Agency 
Says,'' Voice of America, March 26, 2022, https://www.voanews.com/a/
almost-a-quarter-of-ukrainians-now-displaced-un-agency-says/
6502875.html?msclkid=36dfbdeaade211ec8ba8ad4b031ead22.

    Senator Kaine. Dr. Ellis, thank you. We will begin a 5-
minute round of questions and let me begin.
    I want to associate myself, first, with comments made by 
Senator Shaheen about vaccine diplomacy. The vaccine diplomacy 
from the United States to the Americas was extremely positive.
    I traveled with six senators--three Democrats and three 
Republicans--to the region last July right as the U.S. vaccines 
were being delivered throughout the Americas, and in four 
countries--Mexico, Ecuador, Colombia, and Guatemala--we heard 
great appreciation for the U.S. vaccines. The fact that they 
were free was really appreciated, the fact that they were high 
quality, the gold standard. They did not feel as confident 
about the vaccines, either the Sinovac or the Sputnik vaccines.
    They were disturbed in their dealings with China and Russia 
over vaccines because vaccines would be promised and then not 
delivered and if somebody said something about Taiwan then 
suddenly a contract would be cancelled.
    That really seemed like a moment where we were very, very 
aggressive and in a way that was really appreciated to offer 
these high-quality vaccines in the Americas, and so the notion 
that we are going to do a COVID bill and stop doing something 
that really was seen in a smart way in the region I am 
disturbed to hear that. I had not heard that, Senator Shaheen, 
before you mentioned it.
    What I want to ask is, what is the awareness of Latin 
American leaders about the dangers of entanglement with China? 
When we were in Ecuador, for example, so Ecuador had gone a 
very pro-China direction 20 years ago, but what they have seen 
was the Chinese investments, often in infrastructure projects, 
were poor quality, that very controversial dam project.
    China's oil drilling in the Amazon led to significant 
environmental challenges. The illegal fishing--I mean, China 
illegal fishing is, basically, just vacuuming up, fishing 
around the Galapagos, which is part of Ecuador, in a way that 
is very disturbing and environmentally damaging.
    So there was an election a year ago in Ecuador and 70 
percent of the national legislature was kicked out and a new 
president was enacted, a president who strongly wants to orient 
toward America and the near complete turnover of the national 
level parliament also reflected sort of after 20 years were 
going the wrong direction and there was a real revulsion at the 
entanglement with China.
    How broadly is that sentiment? Is the Ecuador story well 
understood? Are other nations experiencing the hard realities 
as they get deeper entangled with China? Or is China still kind 
of on the ascendancy in the Americas with more and more nations 
gravitating toward them?
    Ms. Myers. I can start. Thank you very much, Senator, for 
the question.
    My sense is--it is a terrific question and my sense is that 
this really is an evolving thing and really varies on a country 
by country basis.
    Ecuador is, perhaps, the best example here of a country 
that has begun to come to terms with the challenges associated 
with doing business with or interacting from a financial or 
investment perspective with China, and one need only travel the 
road from the airport to Quito where every day there are a lot 
of accidents because of challenges with the actual engineering 
of that road to know why many Ecuadorians feel this way.
    In other cases, there is far less sensitivity to some of 
these challenges, or these challenges are well known, but the 
judgment is that so much needs to be done on the economic 
front, particularly at this juncture when countries are facing 
very, very dire economic challenges coming out of the COVID-19 
crisis.
    Really engaging with all partners who are willing is the 
only viable option and so that has tended to be the judgment, 
regardless of well known and well documented concerns about 
some of China's practices.
    I think a really excellent example here is that of 
Colombia, wherein you have major flows of, obviously, 
Venezuelan migrants coming into the country and some of that 
related to China's continued support for the Maduro regime, and 
yet very, very little interest in relating China at all to that 
problem and, in general, in the media and in discussions about 
China-Colombia relations a very, very positive overall view.
    Dr. Ellis. Senator Kaine, you ask a very important 
question, I think, that goes to the heart of the challenge that 
we have today.
    Number one, in general, our Latin American partners know 
that Chinese activities tend to be predatory. They oftentimes 
distrust the Chinese, but so much of the Chinese soft power 
comes with the informal or formal expectation of benefit, not 
only at the country level, but also oftentimes at the corporate 
or individual level.
    That often leads our partners to say, well, we know we have 
to worry about the Chinese, but we think we can take the risk 
because we want the Chinese money. That problem then leads, 
oftentimes, to undercutting our messaging.
    As you pointed out, in the Ecuadorian case, there are three 
areas in which we need to highlight the vulnerabilities. 
Certainly, number one is with respect to messaging or calling 
out the leaders who would take the oftentimes nontransparent 
and occasionally corrupt deals, to discourage them through 
whole-of-government initiative to do so, also to put more 
information out there by those who are hurt in those countries 
by the deals for that, and also to push for transparency, 
strong institutions in whole-of-government really limit the 
space for doing so.
    As you pointed out, sir, the Ecuadorian case, beginning 
with Lenin Moreno and continuing with Guillermo Lasso, is very 
important in that respect, because of the things that we talked 
about. The Coca Codo Sinclair Dam really shows the cost to the 
Ecuadorian people--but there are also a series of others. I 
think Toachi Pilaton also had problems. Minas-San Francisco had 
problems. Other dams were actually canceled, and the story 
continues across the region.
    So we need to do a better job, actually, at making both 
public databases as well as having good talking points to 
really--talk about the comparative behavior of Chinese 
companies as well as the comparative behavior of Chinese 
personnel to make our messaging more effective to those 
partners in the region and tell those stories.
    Senator Kaine. Thank you both.
    Senator Rubio.
    Senator Rubio. Ms. Myers, I guess--I take from your 
testimony, what you were referring to--and I sort of talked 
about this yesterday in an interview that I did.
    So you are a country. Your economy needs to be developed. 
You have needs. You need roads. You need this. You need that. 
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.
    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 is tremendously 
beneficial to be at the ribbon cutting of this great new 
project that is financed.
    There may be a debt trap, but that will be somebody else's 
problem down the road, not when they are in office anymore and, 
in some cases, frankly, maybe you or some of your friends got 
some added benefits from it.
    It is hard for us to compete against that. We cannot bribe 
government officials in some of these countries and we do not 
have a system in which we can go in and create infrastructure 
projects and finance some of those if the dollars or the money 
that it generates does not justify it. In essence, it has to be 
a justified project.
    In the case of China, it seems--that is really my 
question--how much of this is they are willing to do projects 
that may not make sense from a market standpoint because it 
makes sense for them from a geopolitical standpoint?
    Ms. Myers. It is 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.
    You are right. I mean, in many of these cases, especially, 
for example, the La Union port in El Salvador is a perfect 
example where it is 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 is of 
interest to whatever government in power and there may be 
kickbacks involved and China's speed involved and something to 
announce to an electorate, perhaps, in advance of the next 
presidential election? It is a very, very challenging thing to 
do.
    What can the U.S. do in this particular instance? I mean, 
we can work probably not necessarily in El Salvador, but in a 
lot of countries, too, on capacity building, on ensuring 
accountability, on ensuring transparency and procurement 
processes, on making sure that all--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.
    That needs to be well understood as well through media 
articles and reports that are published in Spanish or 
Portuguese. Also being there, in many cases, not just for 
unviable commercial--from a commercial perspective--projects, 
but viable ones. China is still the only company--Chinese 
companies are the still the only ones in the room, the only 
ones submitting bids or submitting bids that are competitive. 
It is a matter of also being at the table.
    There are a number of things, I think, ongoing that we can 
do and then, perhaps, enhance to better our position in this 
particular respect without copying China's problematic model.
    Senator Rubio. Mr. Ellis, let me ask you this in the brief 
time I have left. One of the things that is 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 is 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 are in conflict with China, we do not get some of 
these essential products that range from things critical to our 
national security to commercial products that people grew 
accustomed to and now are wondering why they cannot find.
    It strikes me that to the extent, obviously, I believe, 
that we want to bring some of that manufacturing capacity to 
the United States that is 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 cannot be in the United States, why can they not be in 
Honduras and Guatemala and other countries, in Haiti, in 
other--Dominican Republic--that would, certainly, benefit from 
this, and I think deals with a number of things, including 
economic opportunity, stems migration flow or 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?
    Dr. Ellis. Senator Rubio, you make a very important point. 
Certainly, such decisions are generally in the hands of the 
private sector in terms of where to put their investment, and 
there are other options such as managing inventory to offset 
some of these great risks that we have seen in supply chains 
from the Pacific. Nonetheless, certainly, if you take a look at 
Mexico, with a relatively good infrastructure or at least 
transportation infrastructure, plus qualified populations for 
work, and you see similar opportunities in Central America and 
elsewhere, there is absolutely every reason to think that, 
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, really, our two key bodies--Development 
Finance Corporation, which should be, I would argue, far more 
agile, and I would say that some of the restrictions that we 
have put on DFC have made it difficult for it, despite the very 
good progress that it has already made in increasing its 
portfolio.
    On the other hand, in my personal judgement, and as the 
committee has already brought up, there is also the issue of 
what can we do to better increase the capital or support the 
IADB, and, frankly, what can we do in other areas also to 
better work with our partners.
    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--Andres 
Manuel Lopez Obrador--who is doing everything possible to make 
his nation's electricity, including green electricity, more 
expensive and less viable, pushing up costs to produce in 
Mexico as an alternative.
    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.
    Senator Kaine. Thank you.
    Senator Hagerty.
    Senator Hagerty. Thank you, Senator Kaine.
    I would like to thank Senator Rubio for raising that 
important strategic issue on supply chain nearshoring. I have 
traveled to Guatemala. There is a tremendous amount of interest 
there.
    They have hired McKinsey there to help them figure out a 
strategy for this. Our trade agreements, whether they be the 
USMCA that has a lot of potential, or old trade agreements that 
could be updated, present some opportunity, but also our 
development finance entities could do a lot more.
    I would like to turn my attention to something that Senator 
Menendez mentioned in the previous panel because I would like 
to follow up on it.
    I would like to highlight the points that you made, Dr. 
Ellis, because you went through a litany of areas where China 
is, basically, dominating in a region that is in this 
hemisphere, whether it is raw material access, dominating 5G, 
the rideshare market--I did not realize they taken over half of 
that in Latin America--the energy markets, the fact that 
Hikvision is taking over data collection there.
    This is our backyard. This is our hemisphere that we are 
talking about and China is, literally, eating our lunch.
    The thing that concerned me greatly in the last panel--I 
know that the two of you were not here--but we were being 
addressed by the Deputy Assistant Secretary for the Western--
for Western Hemisphere Affairs for Public Diplomacy, Policy, 
Planning, and Coordination.
    Yet, she could not tell me or tell this panel the metrics 
that should be used. She did not even know where the fentanyl 
was coming from that is coming across, the number-one killer of 
youth in our nation. The State Department is not measuring 
this.
    How do you hold somebody accountable? How do you hold a 
nation accountable? How do you hold the Chinese Communist Party 
accountable for killing our youth when you do not know how much 
is coming across this border or why?
    She was unable to articulate a plan or comment on the key 
levers that should be used in this policy planning. I am 
talking about the IADB, the DFC. We have got so many levers 
that should be brought together in the form of policy, 
planning, and coordination to have a comprehensive plan to 
address the very aggressive posture that China is taking in our 
own hemisphere. Yet, we do not have that plan.
    I think we, clearly, need to elevate this as a committee up 
the chain to get a plan from the State Department. They have 
the titles. They have the role on paper, but all we heard today 
was a solution of perhaps raising media awareness of China's 
behavior when it comes to illegal fishing. That is 
unacceptable.
    I appreciate the fact that you are highlighting the 
problem. It has become very clear to all of us, and I think we 
need to get more accountability from our own government 
entities from a coordination standpoint so we can better use 
these tools and where the tools are inadequate that will inform 
us on how to improve those tools.
    Thank you.
    Senator Kaine. Thank you, Senator Hagerty.
    Senator Hagerty, you would have--your comments really would 
have resonated with the Armed Services Committee hearing that 
we had last week with the director of SOUTHCOM, who just 
continually was very candid about being the most under-
resourced and the lowest priority AOR and that even in this 
area of drug trade we know so much more about where drugs are 
coming than we have the capacity to stop because they are under 
resourced when it comes to Coast Guard assets and others.
    I think this issue of--in this area that is so critical in 
the dollars, in where our diplomats go, in the attention that 
we pay in terms of hearings--we have had good attendance at 
this subcommittee hearing. We all have to up our game. I 
completely agree with you on that.
    I want to thank the witnesses for your testimony and for 
the fact that you have really focused on this issue for a very 
long time. We need you.
    If there are more questions for either of the panel of 
witnesses, the record for the hearing will remain open until 
the close of business tomorrow, February 1, 2022. I would ask 
members to direct their questions by that time and I would ask 
the panelists to ensure that questions are answered promptly.
    Thanks again for participating in this hearing.
    To my colleagues, staff, and to our witnesses, the hearing 
is adjourned.
    [Whereupon, at 11:59 a.m., the hearing was adjourned.]
                              ----------                              


              Additional Material Submitted for the Record


              Responses of Ms. Kerri Hannan to Questions 
                  Submitted by Senator James E. Risch

    Question. Eight countries in Latin America and the Caribbean (out 
of 14 countries worldwide, including the Vatican) recognize Taiwan. 
Honduran President Xiomara Castro has pledged to keep relations with 
Taiwan for now, despite an earlier electoral campaign pledge to 
establish relations with the CCP.
    What are the Administration's efforts for the countries in the 
region to maintain their current diplomatic relations with Taiwan?

    Answer. As a fellow democracy, Taiwan serves as an essential 
partner in a region where most countries share our values. We support 
Taiwan's diplomatic and unofficial relationships across the Western 
Hemisphere, including in Honduras. Together, we support good 
governance, transparent investments, and economic growth in the region 
with likeminded countries. The Administration--through our sustained 
commitment to the Western Hemisphere--bolsters the region's coalition 
of resilient democracies that champion our shared values. We work 
closely with our allies and partners to lend expertise and resources 
toward the region's pandemic recovery, including support for greater 
vaccine availability, high-standard infrastructure investment, and 
transparent economic development.

    Question. The CCP appears to be seeking to establish logistics and 
basing infrastructure in the Western Hemisphere in order to project and 
sustain military power at greater distances. What is the Administration 
doing to highlight the negative influence this type of influence has in 
destabilizing the region?

    Answer. The United States and democratic Western Hemispheric 
countries share a close relationship based on shared values and 
interests. The PRC's military engagement with the Western Hemisphere 
remains limited but growing. We must maintain our edge in security and 
defense cooperation and sales to the hemisphere. We collaborate with 
this region in these critical sectors and voice U.S. concerns about the 
national security implications of undertaking sensitive cooperation or 
projects with the PRC.

    Question. Please explain the Western Hemisphere Bureau's assessment 
of the impact on illegal migration flows through Central America as a 
result of ending Title 42 removal authority.

    Answer. In March 2020, the Centers for Disease Control and 
Prevention (CDC) invoked a section of Title 42 of the U.S. Code to 
address public health, not immigration, by requiring the immediate 
expulsion of non-citizen single adults and families to protect 
Americans from the spread of COVID-19. Currently, a substantial 
proportion of all non-citizens encountered at the Southwest Border are 
currently expelled pursuant to the Title 42 public health Order. The 
Department of State (DoS) will work with the Department of Homeland 
Security and other federal agencies to prepare for the potential 
increase in irregular migration should the CDC lift its Title 42 Public 
Health Order. DoS will continue to monitor ongoing migration movements 
throughout the Western Hemisphere by working closely with governments 
in the region on our shared responsibility to enhance collaborative 
efforts to strengthen humane migration management, provide protection 
to those who need it, and reduce irregular migration throughout the 
hemisphere.

    Question. Please explain your Bureau's understanding of the links 
between illegal migration and illicit drug trafficking across Mexico 
and Central America.

    Answer. The Department continues to work with partner governments 
in Mexico and Central America to address the complex flows of illicit 
drugs in the region, including across the U.S. southern border. We work 
with governments in the region to ensure law enforcement and messaging 
tools related to drug trafficking, as well as to human trafficking and 
migrant smuggling, remain relevant and responsive.
    Illicit drug trade and irregular migration are both symptoms of 
endemic corruption; one of the key factors our Root Causes Strategy 
seeks to address. We remain committed to working with partner 
governments throughout the Western Hemisphere to address the root 
causes of irregular migration and forced displacement and to strengthen 
humane migration management systems in collaboration with governments, 
civil society, and international organizations in the region.

    Question. Please explain your Bureau's assessment of the impact 
that ending Title 42 would have on law enforcement efforts to combat 
drug smuggling across the U.S.-Mexico border.

    Answer. The Department works closely through our embassies in the 
Western Hemisphere to strengthen partner governments' efforts to 
detect, intercede, and prosecute efforts to traffic drugs to the United 
States through our shared border with Mexico. U.S. efforts and 
cooperation with Mexican counterparts to combat drug smuggling across 
our shared border will continue to be a top priority. The ending of the 
Title 42 order will not affect our focus on the issue.

    Question. What actions is the Administration taking to meaningfully 
curb the flow of Chinese chemical precursors used to manufacture 
opioids in Mexico?

    Answer. We continue to work with a range of international partners 
and press the People's Republic of China (PRC) at the highest levels to 
enhance oversight of its chemical industry, improve information 
sharing, strengthen customs enforcement, and implement ``know your 
customer'' standards to restrict sales of narcotics-related precursor 
chemicals. In March, members of the United Nations Commission on 
Narcotic Drugs, including the PRC, voted to support a U.S. proposal to 
internationally schedule three fentanyl precursor chemicals and adopted 
a U.S.-sponsored resolution addressing the diversion of uncontrolled 
chemicals and designer precursors. The Department funds the 
International Narcotics Control Board's (INCB) Databank on Precursor 
Chemicals, which supports real-time international law enforcement 
cooperation to prevent diversion and illicit manufacture of precursor 
chemicals and remains an important tool in helping meaningfully disrupt 
narcotics flows.

    Question. IDB President Claver-Carone has called for a capital 
increase as the IDB seeks to promote economic growth and good business 
practices to counter the malign influence of China in the Western 
Hemisphere. Does the Biden administration support a 10th general 
capital increase for the IDB?

    Answer. On March 28, the United States supported a resolution of 
the IDB Board of Governors to ``reaffirm their commitment to the IDB 
Group and its continued critical role in promoting sustainable social 
and economic development and reducing poverty and inequality throughout 
Latin America and the Caribbean.'' The United States expressed support 
for a renewed investment in IDB Invest, accompanied by operational and 
institutional reforms across the IDB Group, and greater ambition on 
climate to create a more effective and impactful IDB Group to assist 
the region in overcoming its challenges and seizing the opportunities 
that the 21st century presents. We look forward to receiving from IDB 
management a proposal for a new vision and business model for IDB 
Invest as mandated by the IDB Board of Governors.
                                 ______
                                 

             Responses of Mr. Peter Natiello to Questions 
                  Submitted by Senator James E. Risch

    Question. Currently 20 out of 33 countries in Latin America and the 
Caribbean have signed on to the CCP's Belt and Road Initiative. What 
specific actions is the Administration taking to highlight the 
consequences of the CCP's non-transparent and coercive economic, 
financial, and lending practices in order to counter its negative 
influence in the region?

    Answer. In Latin America and the Caribbean, USAID is using 
Countering Chinese Influence Fund (CCIF) resources to combat malign 
Chinese influence and promote transparency and accountability in 
projects associated with the People's Republic of China's debt-trap 
diplomacy and the Belt and Road Initiative. For example, the 
``Promoting Security and Freedom of Expression for Media Activity,'' 
implemented by the International Center for Journalists, is being 
implemented in the region to highlight the consequences of the CCP's 
non-transparent and coercive economic, financial, and lending practices 
by providing a safe space for journalists when controls on media 
tighten and governments monopolize information. The ``Promoting 
Security and Freedom of Expression for Media Activity'' intends to 
achieve that by 1) development of online secure platforms for 
investigative journalists in Latin America to promote safe online 
collaboration and cross-border investigation; 2) empowerment of 
investigative journalists with the skills and tools they need to 
improve the quality of investigations, work safely and securely, and be 
more effective in a multimedia environment including by highlighting 
non-transparent and environmentally unsound investments by the PRC; and 
3) creation of a regional clearinghouse for investigative journalism, 
linking national investigative journalism centers into a powerful 
regional voice for journalists.
    Additionally, through regional activities such as the Communities 
Resilient to Disinformation Building Local Engagement (CREDIBLE) 
Activity, USAID is working to increase digital and media literacy among 
youth and other target populations and rebuild the relationship between 
youth and their local communities with local media to strengthen civic 
culture, inform political processes, and build resilience against 
disinformation and misinformation. By building the capacity of 
investigative journalists, a free media, youth, and civil society, 
communities and governments can shed light on the most damaging effects 
of the PRC's actions.
    USAID programs in Ecuador, Mexico, Honduras, and others are working 
with partner governments, civil society organizations and the private 
sector to strengthen public financial management systems and 
procurement practices, as well as put in place effective business 
regulations to ensure that these types of transactions are more fair, 
competitive, and transparent from the outset. Additionally, fair and 
transparent procurements receive a stronger response from U.S. 
companies, enabling greater U.S. private investment in the region.
                                 ______
                                 

            Responses of Mr. Andrew Herscowitz to Questions 
                  Submitted by Senator James E. Risch

    Question. What is the Administration doing in order to bring about 
more near sharing opportunities in the Western Hemisphere region in 
order to counter the effects of supply side issues resulting from 
Chinese production?

    Answer. DFC continues to meet with governments and private 
companies from Latin America and the Caribbean, including from those 
countries involved in the Alliance for Democracy and Development, to 
identify opportunities to support manufacturing and diversification of 
the global supply chain. It should be noted, however, that the BUILD 
Act restricts DFC from providing support to transactions that could 
have a significant adverse effect on U.S. employment. DFC supports 
projects that help make Latin America and the Caribbean a more 
attractive location for U.S. companies to invest, which indirectly 
supports objectives of increasing manufacturing capacity of Western 
Hemisphere counties. For example, DFC is working to expand access to 
critical infrastructure, such as roads that connect goods to markets 
and energy projects that lower costs and increase the competitiveness 
of companies. In addition, DFC is supporting micro-, small-, and 
medium-sized enterprises (MSMEs) growth as they are the primary driver 
of jobs in the region.
                                 ______
                                 

              Responses of Ms. Kerri Hannan to Questions 
                    Submitted by Senator Marco Rubio

    Question. In February, I introduced the Western Hemisphere Security 
Strategy Act with Senators Menendez and Cassidy to address the growing 
frequency of attempts by bad actors, including the Chinese Communist 
Party, to influence the Western Hemisphere. The bill requires the 
Secretaries of State and Defense to develop a multiyear strategy to 
enhance diplomatic engagement, security assistance and military-to-
military cooperation with the countries of Latin America and the 
Caribbean, consistent with SOUTHCOM Commander General Laura 
Richardson's statements pointing out the growing disparity in 
capabilities of SOUTHCOM with adversarial states in the region.
    Is the State Department supportive of this legislation?

    Answer. The Department continues to review this legislation. We 
agree on the important role our military-to-military cooperation with 
the countries of Latin America and the Caribbean plays in supporting 
our shared priorities in combating problematic influence in the region. 
We collaborate closely with the Department of Defense and SOUTHCOM on 
effective responses to these ongoing attempts to influence the Western 
Hemisphere. We look forward to working with Congress on our joint 
priorities.

    Question. Can you tell me what the State Department's plan is for 
ensuring that the United States and our allies are able to address 
growing PLA presence and military capabilities in the region?

    Answer. The United States and democratic Western Hemispheric 
countries share a close relationship based on shared values and 
interests. The PRC's military engagement with the Western Hemisphere 
remains limited but growing. We must maintain our edge in security and 
defense cooperation and sales to the hemisphere. We collaborate with 
this region in these critical sectors and voice U.S. concerns about the 
national security implications of undertaking sensitive cooperation or 
projects with the PRC.

    Question. As I mentioned in the hearing, the National Defense 
Authorization Act for fiscal year 2022 required the State Department to 
report to Congress, by June 2022, on efforts by China to expand its 
presence and influence in Latin America and the Caribbean.
    What is the status of that report and when it will be completed?

    Answer. We continue to work on the report ahead of the June 2022 
requested deadline.

    Question. In your view, how do countries in Latin America and the 
Caribbean view China's economic engagement, specifically though BRI in 
the region?

    Answer. We understand the People's Republic of China (PRC) has 
increased its presence in the region over the last decade and recognize 
countries consider the PRC a significant trade and investment partner. 
The PRC remains the top trade partner for Brazil, Chile, Peru, and 
Uruguay and is second, after the United States, for several other 
countries. PRC-based companies have invested, and development banks 
have provided loans, to help develop energy, mining, and other 
infrastructure sectors in the region. PRC practices show that Belt and 
Road Initiative (BRI) projects may not end up being good deals for host 
countries. PRC firms often conspire with corrupt officials to win 
contracts, and they exploit governments with precarious finances, 
aggravated by the pandemic, by offering lower-cost technology and 
state-backed financing.

    Question. From the Department's outreach, can you describe which 
countries have expressed concerns with their existing BRI agreements 
with the PRC?

    Answer. We engage closely with partners in the region to discuss 
concerns when PRC companies do not adhere to international best 
practices for environmental, labor, and safety standards. However, we 
respect the sovereign right of each nation to make choices about its 
domestic plans and we do not oppose PRC engagement and investment 
throughout the region. We will continue to echo the long-standing calls 
from capitals in the region that PRC actions must respect local laws 
and interests, particularly regarding the human rights of all people, 
including workers, and protections for the environment. We will also 
continue apprising countries of the risks associated with untrusted 
vendor investment in critical infrastructure and sensitive sectors.

    Question. What assistance and support has the Biden administration 
provided to countries that are concerned with their existing Belt and 
Road agreements?

    Answer. The United States seeks to advance our positive economic 
agenda for the Western Hemisphere, including through supporting high-
quality investment in infrastructure that meets international standards 
and economic development that creates jobs essential for regional 
pandemic recovery. The Department continues to work with government 
counterparts and share resources and expertise that support a safe and 
equitable COVID-19 response, entrepreneurship, and sustainable 
infrastructure. With likeminded partners and allies, we offer higher-
standard, transparently procured and governed infrastructure investment 
alternatives that uphold labor, environmental, and social safeguards 
and foster inclusive growth in line with international best practices, 
including through initiatives like Build Back Better World and the Deal 
Teams Initiative. We raise concerns and distinguish ourselves from 
risky PRC critical infrastructure projects and investments. We advocate 
for a level playing field for all investors. As part of this 
undertaking, we consistently advocate for our partners to conduct due 
diligence on public projects and advise our partners about the risks of 
opaque PRC investment. We also advise countries on a range of issues 
related to building sustainable and secure digital ecosystems, 
including 5G spectrum allocation/auction approaches, procurement 
policies incorporating lifecycle cost and trust considerations, and 
investment screening mechanisms ensuring new technologies do not 
jeopardize security.

    Question. Could a capital increase for the IDB help support 
infrastructure development in the region and support strategic 
competition with China?

    Answer. The IDB is a vital source of development finance, and we 
support its role as a high-quality alternative to unsustainable 
borrowing from the PRC and other creditors.

    Question. What is the Administration's current position on an IDB 
capital increase?

    Answer. On March 28, the United States supported a resolution of 
the IDB Board of Governors to ``reaffirm their commitment to the IDB 
Group and its continued critical role in promoting sustainable social 
and economic development and reducing poverty and inequality throughout 
Latin America and the Caribbean.'' The United States expressed support 
for a renewed investment in IDB Invest. We look forward to receiving 
from IDB management a proposal for a new vision and business model for 
IDB Invest as mandated by the IDB Board of Governors.

    Question. The People's Republic of China has passed several laws 
that explicitly require Chinese companies to hand over any data they 
have to the Chinese Communist Party and its security services on 
demand. There's no limit to the data that is shared and can include 
personal information, spending habits, even genetic information. 
Earlier this week, Senator Young and I sent a letter to Secretary 
Blinken raising concerns about these laws and their implications for 
American diplomats and service members that may use Didi Chuxing, a 
Chinese ride-hailing service. Didi plans to expand to countries in the 
Western Hemisphere.
    Has the State Department warned staff that detailed information 
about their commutes, trips and location could be shared real time with 
PRC intelligence services should they use Didi or other digital 
services provided by Chinese companies?

    Answer. Mandatory pre-deployment training provides State Department 
staff with awareness of the PRC's overwhelming and pervasive electronic 
and physical surveillance of residents, both PRC nationals and 
foreigners. We ensure State Department staff are warned that the PRC 
captures vast troves of personal information and spending habits via 
the application processes for mandatory bank and cell phone accounts, 
as well its extensive visa application process, for example. Mission 
China staff receive in-depth personal security briefings on arrival to 
China.

    Question. Is the State Department prohibiting staff from using 
these services given the danger they pose to their security?

    Answer. The State Department does not prohibit staff from using the 
Didi app, or other apps like WeChat, which are similarly intrusive and 
pervasive. The Health Code app, for example, enables the PRC Government 
to identify users who have been potentially exposed to COVID-19 and 
issues QR codes that enable a user to travel to and within China. 
Because Health Code is mandatory and embedded within WeChat, 
prohibiting U.S. diplomats from using certain apps, would, in some 
cases, make it impossible for them to serve in China. Other apps 
requiring extensive registration information are used for school-
related programs, ordering goods, and food delivery, for example. The 
Department continuously assesses all potential actions to mitigate 
against threats to the safety of U.S. diplomats and disruptions to U.S. 
diplomatic operations in the PRC and around the world.

    Question. Has the State Department incorporated information about 
this danger into travel information it provides to American citizens 
traveling to countries where Didi operates?

    Answer. The State Department's April 11, 2022 Travel Advisory for 
China cautions that PRC security personnel carefully watch foreign 
visitors and may place U.S. citizens under surveillance, including in 
cars and taxis, which ``may be monitored onsite or remotely.'' Travel 
advisories for other countries, including those where Didi operates, do 
not provide information on digital services provided by PRC companies.
                                 ______
                                 

            Responses of Mr. Andrew Herscowitz to Questions 
                    Submitted by Senator Marco Rubio

    Question. How much funding did the DFC invest in Latin American and 
Caribbean countries throughout 2021?

    Answer. DFC committed $2 billion across 31 transactions in Fiscal 
Year (FY) 2021. DFC committed $2.2 billion across 22 transactions so 
far in FY 2022.

    Question. In which countries did the DFC make those investments

    Answer. In FY 2021, DFC committed support to transactions in 
Brazil, Belize, Ecuador, El Salvador, Paraguay, Guatemala, Colombia, 
Argentina, Mexico, Costa Rica, Peru, Jamaica, and Suriname. In 
addition, DFC committed support to two regional transactions whose 
scope was not limited to one country.

    Question. How much is the DFC planning to invest in Latin America 
and the Caribbean in 2022 and for 2023?

    Answer. DFC has a pipeline of 36 projects that have either a high 
or medium probability of execution in FY 2022. High or medium 
probability is defined as greater than 50 percent. The potential value 
of DFC support for such transactions in FY 2022 exceeds $1 billion.

    Question. Can you provide examples of which countries you are 
projecting to invest in 2022 and 2023?

    Answer. DFC's pipeline of projects with high or medium probability 
of execution in FY 2022 are located in El Salvador, Honduras, Brazil, 
Colombia, Dominican Republic, Ecuador, Guatemala, Guyana, Mexico, 
Paraguay, and Peru.

    Question. Do these projections take into account the need to 
provide countries with alternatives to BRI financing?

    Answer. Yes. Providing alternatives to financing provided by the 
People's Republic of China is an important consideration for DFC as it 
develops its pipeline of transactions in the region.

    Question. As I said in the hearing, the People's Republic of China 
is prioritizing strategic investments in national infrastructure 
projects in countries that are barred for DFC investment by the high 
and upper-middle-income restrictions in the 2018 BUILD Act.
    If DFC is not able to finance projects in those countries as an 
alternative to BRI lending, should the U.S. should aim to provide 
alternative financing through the Inter-American Development Bank 
(IDB), which does not have these same restrictions?

    Answer. The Inter-American Development Bank (IDB) Group is a DFC 
partner. In 2019, DFC signed a memorandum of understanding (MOU) with 
the Group's private sector arm to enhance collaboration in Latin 
America and the Caribbean with a goal of jointly catalyzing up to $10 
billion of investment in the region's development. We will continue 
working with the IDB Group to identify developmental transactions in 
the region. Questions regarding U.S. participation in international 
financial institutions like the IDB are best answered by the U.S. 
Department of the Treasury. As an example, we worked jointly with the 
IDB Invest and FinDev Canada on structuring a DFC transaction to 
provide subordinated loans in the amount of $390 million to Banco 
Davivienda S.A. (Davivienda). The operation, with a tenor of up to 10 
years, will strengthen Davivienda's equity position and support its 
growth, including in their SME portfolio which is one of their priority 
segments. These loans funding will be used to provide new working 
capital, investment capital and fixed assets to Davivienda's customers 
in the small and medium enterprises (SME) and women's SME portfolios, 
which have been affected by the current health and economic crisis due 
to the global pandemic. DFC's provided $250 million out of the $390 
million.

    Question. Would another capital increase for the IDB complement 
DFC's programs to support investment in development projects across the 
Western Hemisphere?

    Answer. Questions regarding U.S. participation in international 
financial institutions like the IDB are best answered by the U.S. 
Department of the Treasury.

    Question. What efforts has DFC made to refer and recommend to the 
IDB potential investment projects in places where the DFC cannot 
invest?

    Answer. DFC is implementing the 2019 MOU with IDB Invest to enhance 
collaboration in Latin America and the Caribbean with a goal of jointly 
catalyzing up to $10 billion of investment in the region's development. 
DFC teams are in regular contact with the U.S. Executive Director and 
U.S. counselors at the IDB.

    Question. Is there recurring interaction on this front, or would 
you describe it as more ad hoc?

    Answer. DFC's work with IDB is regular and recurring. DFC and IDB 
teams meet quarterly to discuss pipeline and opportunities to 
collaborate.

    Question. Yesterday, reporting indicated that President Biden is 
seeking to invoke the Defense Production Act to encourage domestic 
production of critical minerals for electric-vehicles and batteries 
needed for the renewable energy industry. While I am a firm advocate of 
making more products in the United States and revitalizing our domestic 
industry, Latin America also has a part to play in this field. The 
majority of lithium used in American battery manufacturing comes from 
Chile, Argentina and other countries in the region. We can benefit both 
our economy and strengthen economic ties with Latin America by 
encouraging more mining projects in these countries.
    What can you tell me of DFC's efforts to date to support the 
development of the mining of critical minerals in Latin America?

    Answer. DFC shares your goal of supporting diverse supply chains 
for critical minerals and is sourcing transactions in the mining sector 
that advance this objective. One example of a project that DFC 
supported is a $25 million investment in TechMet Limited, a technology 
metals company, to increase its investment in Brazilian Nickel, PLC 
(Brazil Nickel) which owns a cobalt and nickel project in Northeastern 
Brazil. Brazilian Nickel produces critical minerals specifically for 
lithium-ion batteries. DFC's $25 million investment is being utilized 
for the development of the first phase of commercial production, 
creating jobs in one of the country's most underdeveloped regions. This 
project will play a role in securing supply chains for minerals that 
are critical for clean energy technologies. It will comply with DFC's 
high Environmental, Social and Governance (ESG) standards, and the 
production process used will require lower upfront capital expenditures 
than traditional processes. DFC will explore opportunities to support 
transactions that similarly support the mining of critical minerals in 
Latin America.

    Question. How is the DFC supporting other nearshoring initiatives 
in the Western Hemisphere?

    Answer. DFC continues to meet with governments and private 
companies from Latin America and the Caribbean, including from those 
countries involved in the Alliance for Democracy and Development, to 
identify opportunities to support manufacturing and diversification of 
global supply chains. It should be noted, however, that the BUILD Act 
restricts DFC from providing support to transactions that could have a 
significant adverse effect on U.S. employment. DFC supports projects 
that help make Latin America and the Caribbean a more attractive 
location for U.S. companies to invest, which indirectly supports 
objectives of increasing manufacturing capacity of Western Hemisphere 
counties. For example, DFC is working to expand access to critical 
infrastructure, such as roads that connect goods to markets and energy 
projects that lower costs and increase the competitiveness of 
companies. In addition, DFC is supporting micro-, small-, and medium-
sized enterprises (MSMEs) growth as they are the primary driver of jobs 
in the region.
                                 ______
                                 

              Responses of Ms. Kerri Hannan to Questions 
                   Submitted by Senator Bill Hagerty

    Question. Deputy Assistant Secretary Hannan, what percentage of 
drugs entering the United States from Mexico include fentanyl 
ultimately originating in China, including consideration of the 
precursors and components used to make it? What is the strategy to hold 
China accountable for the flow of fentanyl coming into the United 
States through Mexico? What entities is State Department partnering 
with to address fentanyl and its precursors in Mexico that ultimately 
flow into the United States?

    Answer. It remains difficult to accurately pinpoint the sources of 
all precursor chemicals used to manufacture synthetic drugs trafficked 
into the United States. Some chemicals are not scheduled and thus, 
legal to sell and ship. Illicit actors hide their activity by routing 
chemicals through other countries and companies and fraudulently 
mislabeling shipments to hide chemical identities. Further complicating 
this situation is the ease with which illicit drug manufacturers can 
utilize multiple synthetic pathways and alternative unscheduled 
chemicals to avoid regulations. We refer you to the Drug Enforcement 
Administration and Customs and Border Protection for the most 
authoritative seizure and trafficking data.
    The Department of State continues to press the People's Republic of 
China (PRC) at the highest levels to enhance oversight of its chemical 
industry and to expand information sharing, strengthen customs 
enforcement, and implement ``know your customer'' standards to restrict 
sales of narcotics-related precursor chemicals. We are actively working 
with international partners such as Mexico, Canada, India, the 
Netherlands, Australia, the Republic of Korea, and others in Europe to 
improve international cooperation. We have successfully worked at the 
United Nations Commission on Narcotic Drugs, with support from the PRC, 
to internationally control fentanyl precursor chemicals.
    In Mexico, we partner through the U.S.-Mexico Bicentennial 
Framework for Security, Public Health, and Safe Communities to reduce 
diversion of precursor chemicals and curb production of synthetic 
drugs, including with the Mexican Navy, Army, Customs Agency, Federal 
Attorney General's Office, Foreign Ministry, Secretariat for Public 
Security and Citizen Protection, the Federal Commission for Protection 
against Sanitary Risks, the National Commission Against Addictions, the 
Financial Intelligence Unit, and state-level law enforcement and 
justice institutions.
                                 ______
                                 

            Responses of Mr. Andrew Herscowitz to Questions 
                   Submitted by Senator Bill Hagerty

    Question. How is DFC specifically enabling opportunity for American 
fossil fuel, nuclear, and mining industries and preventing projects in 
countries in Latin America and the Caribbean from falling into the arms 
of adversaries, with far more negative environmental impact?

    Answer. Gas-fired and nuclear electric generation have the 
potential to increase access to healthcare, markets, and other basic 
services. In the Latin America and Caribbean region, more than 20 
million people are without electricity access and more than 80 million 
people rely on firewood and charcoal for cooking.
    DFC will consider highly strategic or highly developmental energy 
projects that would greatly support economic growth in the poorest 
countries and advance U.S. national security interests.
    In line with the Biden administration's energy and climate 
policies, DFC is open to supporting nuclear energy technology projects. 
We recognize that nuclear power provides the promise of zero emission 
baseload generation at scale. Because of the extremely high costs of 
conventional nuclear power, however, DFC's financing tools are limited 
in this area. We are particularly interested in pursuing opportunities 
to support innovation in the nuclear space, such as small modular 
reactor (SMR) technology, or other small and modular installations that 
can be completed in lower-cost and more expeditious staging.
    DFC shares your goal of supporting diverse supply chains for 
critical minerals and is sourcing transactions in the mining sector 
that advance this objective. One example of a project that DFC 
supported is a $25 million investment in TechMet Limited for its 
downstream investment in Brazilian Nickel, PLC (Brazil Nickel) that 
will support the expansion of Brazil Nickel's cobalt and nickel mine in 
Northeastern Brazil to produce products specifically for lithium-ion 
batteries. This project will play a role in securing supply chains for 
minerals that are critical for clean energy technologies. DFC will 
explore opportunities to support transactions that similarly support 
the mining of critical minerals in Latin America.

    Question. What are some of DFC's key efforts to help bring supply 
chains back to this hemisphere and away from China?

    Answer. DFC continues to meet with governments and private 
companies from Latin America and the Caribbean, including from those 
countries involved in the Alliance for Democracy and Development, to 
identify opportunities to support manufacturing and diversification of 
the global supply chain. It should be noted, however, that the BUILD 
Act restricts DFC from providing support to transactions that could 
adversely affect U.S. employment. DFC supports projects that help make 
Latin America and the Caribbean a more attractive location for U.S. 
companies to invest, which indirectly supports objectives of increasing 
manufacturing capacity of Western Hemisphere counties. For example, DFC 
is working to expand access to critical infrastructure, such as roads 
that connect goods to markets and energy projects that lower costs and 
increase the competitiveness of companies. In addition, DFC is 
supporting micro-, small-, and medium-sized enterprises (MSMEs) growth 
as they are the primary driver of jobs in the region.

    Question. What more can Congress do to help DFC boost American 
enterprise in this hemisphere and simultaneously in our competition 
with China?

    Answer. We are greatly appreciative of the work that Congress has 
already done to allow DFC to provide a values-driven and high-quality 
alternative to investment by the People's Republic of China. Thanks to 
the robust appropriation that Congress provided to DFC in FY 2022, we 
are ramping up our efforts to drive new private project investments. We 
would appreciate Congress' careful consideration of the President's FY 
2023 Budget Request, which would provide sufficient appropriations to 
DFC to allow it to further develop its portfolio, place staff overseas 
in the Latin America and Caribbean region, and make impactful 
investments across the region.

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