Op-Ed: Nick Raineri: How the Trump administration can counter China and revitalize Honduras through strategic investment

By focusing on investment, trade, and infrastructure, the Trump administration can offer a compelling alternative to China’s influence, ensuring that Honduras remains aligned with U.S. interests.

Honduras has emerged as a frontline in the geopolitical contest between the United States and China.

President Xiomara Castro’s recent decision to recognize China over Taiwan signals a troubling shift, opening the door for Beijing’s expanding influence in Latin America. Left unchallenged, this development threatens U.S. national security and economic interests in the region.

The incoming Trump administration must respond decisively by prioritizing strategic investments in Honduras that both counter Chinese influence and foster sustainable economic growth. The U.S. can no longer afford to rely on ineffective aid models; it must pivot to catalyzing private sector engagement and supporting national security-critical projects.

The strategic threat of China in Honduras

China’s expanding influence in Honduras reflects a broader strategy aimed at achieving economic and strategic dominance throughout Latin America. By investing heavily in critical infrastructure, energy projects, and telecommunications, Beijing is positioning itself to outmaneuver the United States and solidify its foothold in the region. This trend is exemplified by the construction of a $1.3 billion port in Peru and $1 billion in lithium refineries in Bolivia, underscoring the scale and ambition of China’s efforts.

A particularly concerning development surfaced in July 2023, when reports indicated that the Honduran government was seeking $20 billion in Chinese investment to construct a transoceanic railroad.

The proposed route for this railroad would likely traverse areas near the U.S. military base at Soto Cano, home to Joint Task Force Bravo under Southern Command. This base plays a vital role in regional disaster relief and counter-narcotics operations, highlighting the strategic implications of such a project. Far from being a mere economic competition, this represents a direct challenge to U.S. national security interests.

To counter China’s economic diplomacy, the United States must offer a superior alternative — one that champions free markets, private enterprise, and shared security objectives.

Strategic U.S. investments in national security projects

To maintain influence in Honduras and the broader region, the U.S. should direct funding toward projects vital to U.S. national security interests. Modernizing the country’s ports and transportation networks will enhance regional trade while ensuring that critical infrastructure remains secure. The U.S. government should lead the development of secure energy grid systems in Honduras to reduce dependence on Chinese technology. Likewise, the U.S. government should provide Honduras with alternative funding for its telecommunications sector to safeguard it from Chinese control.

Redefining U.S. aid from ineffective NGO funding to investment-led growth

For decades, U.S. government aid to Honduras has flowed through NGOs with little oversight or measurable impact at the strategic level. This model has failed to address the root causes of instability, leaving the country vulnerable to external influence. Instead, the U.S. should shift its approach, leveraging public resources to de-risk private investment. Public-private partnerships can drive growth in critical industries like agriculture, manufacturing, and technology.

One tool the U.S. has is the Development Finance Corporation (DFC) which, under the former Trump administration, was created with the goal of countering the PRC’s Belt and Road Initiative. In the former Trump administration, the DFC was active in Honduras spending money on grid modernization and hard infrastructure projects. Flash forward to the past 4 years of the Biden administration where the DFC prioritized things like clean energy and minority development; the DFC has spent close to $90 million solely on gender equity and inclusion lending.

The U.S. needs to harness all tools of foreign direct investment to counter the threat by the PRC. We need to work with private capital and private industry to make it more attractive to fill the gaps that the U.S. government can’t fill by itself. By fostering direct collaboration between U.S. and Honduran businesses, the U.S. can help integrate Honduras into American supply chains, promoting mutual economic growth.

This strategy not only counters China’s influence but also provides a sustainable alternative to aid dependency.

Defending economic zones and free enterprise

Honduras’s Special Economic Development Zones (ZEDEs) were once hailed as a groundbreaking model for attracting foreign direct investment and spurring economic growth. These zones offered streamlined regulations, tax incentives, and legal frameworks independent of the country’s often corrupt and inefficient bureaucracy. ZEDEs promised to create thousands of jobs, boost innovation, and establish Honduras as a competitive hub for global business.

However, the Castro administration has launched an aggressive campaign to dismantle them, arguing that they undermine national sovereignty and serve only the interests of foreign investors.

This narrative, while politically expedient, ignores the tangible benefits ZEDEs have already brought to local economies. By revoking their legal status and pushing for their dissolution, Castro is effectively driving away billions of dollars in potential investment, exacerbating unemployment, and forcing Honduras back into economic stagnation. This move not only undermines confidence in Honduras as an investment destination but also strengthens the grip of state-run inefficiency and corruption, leaving the country more vulnerable to economic collapse and external influence, particularly from authoritarian regimes like China.

The U.S. should support similar initiatives that provide secure investment opportunities for American companies, creating jobs and boosting economic resilience in Honduras. Additionally, the U.S. should withhold any government aid until the war on ZEDEs has concluded.

A renewed U.S. commitment to Central America

To counter authoritarian regimes and strengthen regional stability, the U.S. must prioritize economic partnerships in Central America. By focusing on investment, trade, and infrastructure, the Trump administration can offer a compelling alternative to China’s influence, ensuring that Honduras remains aligned with U.S. interests.

The stakes in Honduras are too high for business as usual. The Trump administration will need to work with leaders across Latin America on issues such as immigration, trade, and national security. With a bold strategy that prioritizes investment and security, the U.S. can secure its position in the region and promote a more prosperous future for both nations.

Nicholas Raineri is a Principal at Metis Endeavor. He has served as a senior Congressional aide to Reps. Byron Donalds and Jim Banks, and helped establish the Office of Strategic Capital within the U.S. Department of Defense. He also grew up in Tegucigalpa, Honduras and speaks fluent Spanish.