By Leo Le Borgne
China’s New Outlook
China has seized the international and political spotlight, gravitating academics and policymakers towards evaluating the short and long term implications of the economic behemoth’s standing. China’s most ambitious enterprise, the Belt and Road Initiative (BRI) in Eurasia and Africa, its volatile diplomatic relations with the US, and the country’s most recent ratification of the Regional Comprehensive Economic Partnership (RCEP) have taken their places as core areas of Chinese studies and policy analysis. However, a novel nexus of diplomatic exchanges is occurring between China and a region that has been considered for a long time by geopolitical analysts to be within the US’s sphere of influence: Latin America.
In 2013, a Chinese infrastructure development company secured concessions with the Nicaraguan government to spearhead the construction of the Nicaragua Canal, which would rival the Panama Canal that was completed by the Americans at the turn of the 20th century. Despite the project’s failure to gain traction, and its eventual downfall towards a logistical limbo due to environmental and political concerns, this project revealed that China’s outlook is increasingly being concentrated towards Latin America.
So what are the core reasons for such drastic political shifts? One of the root causes of this transformation lies within the region’s collective need to reinvigorate its infrastructural developments. Many of these countries require substantial external funds to make these infrastructure projects a reality. A report from the Tsinghua University Latin America Centre explains that, “the region has not been investing enough in its economic infrastructure, constantly falling short of the levels recommended.” Although the region has enjoyed a shared success in closing the energy infrastructure gap to 3%, with hydroelectricity taking up 48% of its energy framework, Latin American nations are lagging behind in transportation, telecommunications (including internet and mobile broadband), and water and sanitation services. These infrastructural deficiencies are only magnified when turning towards rural areas, which often find themselves at the periphery of national priorities.
In recent years China has offered lucrative opportunities to quench these inherent problems through public-private partnerships (PPPs). These PPPs enable private enterprises to fund public undertakings, whilst in some cases giving them the power to dictate logistical and financial components of the project, as opposed to the government. Proponents of PPPs argue that these contractual agreements can, in addition to relieving governments of short-term financial constraints, align investor and private company priorities with public goals (that being infrastructure in the case of Latin America).
China’s gargantuan investment fund of $250 billion is being directed towards future projects such as the Brazil-Peru Trans Amazonian railway, the launching of satellites, and the rejuvenation of road infrastructures in countries across all of Latin America. Scholar Francisco Dominguez explains that, “China’s relations with Latin America have not just been about extracting raw materials, they have involved a relationship that does substantially contribute to the economic development of the countries in the region.”
The sudden surge in Chinese interest over Latin America has challenged the US’s previous ties with the region. With the start of the Monroe Doctrine at the beginning of the 19th century, which sought to expel and prevent further European colonialism in the Americas, the US established itself early on as the principle bulwark against all foreign influence that originated from outside the New World. In the 1930s, the FDR administration employed a ‘good neighbour’ policy, which sought to foster equal ties between the US and Latin America, as opposed to unilateral American intervention in the region. Fast-forward to the Cold War era: the American government replaced the ‘good neighbour’ policy for aggressive interventionism, orchestrating political regime changes, and supporting right-wing paramilitary groups throughout Central and South America in its fight against communism. Following the fall of the USSR and the rise of the liberal international order, the US promoted the breakdown of border tariffs and the expansion of transnational trade, through means of international treaties such as the North American Free Trade Agreement (NAFTA) with Canada and Mexico.
Under the Obama administration the Trans-Pacific Partnership (TPP), which represents Pacific-bordering nations and their collective 40% of the world’s economic output, came into place as a means to mitigate China’s growing influence in the Asia-Pacific region. However, Donald Trump pulled the US out of the agreement during his tenure as president. Come 2021, and China is the largest trading partner of Chile, Brazil, Peru, and Uruguay — a stark contrast to when Latin America was casually referred to by political scientists as ‘America’s backyard’.
The Love Triangle
With America’s foreign policy taking a dramatic turn in many instances under the new Biden administration, the US’s attitude towards Latin America will be sliding into a re-engagement phase. While Trump only visited the region once during the Buenos Aires 2018 G-20 summit, Biden under the Obama administration “visited the region a record 16 times, and he personifies the ‘good neighbour’ approach to the region.” The resuscitation of the ‘good neighbour’ policy will prove to be one of Biden’s most powerful diplomatic tools in the region. Biden may look to expand the América Crece initiative. The project, which started in 2018, “seeks to catalyse private sector investment in infrastructure [in the region].” This approach to foreign policy provides a direct buffer to China’s corresponding infrastructural investments, whilst allowing Latin America to benefit the increased investment from both the US and China.
As opposed to China’s policy which focuses exclusively on developmental and infrastructural investments, US-Latin American relations also exist within parameters regarding transnational security. Drug trafficking is the principle concern that reverberates across the whole of the Americas. With more than 29,000 Americans dead due to cocaine and heroin overdoses in 2017 alone, transnational criminal organisations (TCOs) threaten the authority of a plethora of Latin American states, in some cases corrupting and dominating swathes of local governments in order to smuggle drugs into the US. The devastating impact left by TCOs is chronically excruciating for both the US and Latin America. However, this security shortcoming of continental gravity can reemerge to present itself as an opportunity for multilateral, coordinated, and effective action between the Biden administration and its regional counterparts.
Latin America is finding itself again between two great powers. However, this modern period differs from the era of the Cold War, where these nations were forced to choose between two adversarial political camps. With both suitors offering billions of dollars in investment through development banks and private corporations over the coming decade, Latin American nations have greater political leverage for their foreign policy, and have more financial and logistical resources available to move forward with their infrastructure projects. Despite the appearance of a geopolitical tug-of-war between China and the US in the region, Latin America has the chance to capitalise on its newly reestablished status as a centre of attention to the two largest economies in the world.
The views expressed in this article are the author’s own and may not reflect the opinions of The St Andrews Economist
Image Source: Roberto Huczek on Unsplash