For centuries, Latin American states have sought to leverage extra-hemispheric powers, Spain, France or the Soviet Union, to gain a modicum of autonomy and power relative to the hegemon to the north, the United States. China today is no different from those other extra-hemispheric crutches, but Beijing’s long-term vision and the global balance are markedly different from the past.
While Latin America has found itself increasingly trapped in a growing drum beat of US concern over China’s global motives, the US’s own power has declined while Latin America has become more politically diverse and diplomatically assertive. More important, unlike those past courtiers, China offers real resources: investment, a large and growing export market and connections and partnerships in multilateral institutions. Because of this, the competition between the US and China over Latin America and its potential for collateral damage to Latin America could get a lot worse.
In an irony that is probably was probably lost on former Secretary of State Rex Tillerson and former National Security Advisor John Bolton who sought to resurrect the Monroe Doctrine as the guiding focus of US-Latin American relations, the original 1823 declaration was more bluff than credible threat. The still-young US democracy lacked the economic power and naval projection to be able to beat back Spain, France, Russia and the UK from re-colonizing or asserting control over the newly independent former Spanish colonies. As with Tillerson and Bolton’s claims, Monroe’s doctrine was American bluster. But it formed the basis of the US view of and policy toward its neighbors south of its border.
Before the escalating war of words and trade sanctions, US diplomats and analysts liked to say that China’s intentions in the region were primarily economic and pragmatic. As the thinking went, Beijing wasn’t about to risk its far more important economic, diplomatic and security relationships with Washington DC over a set of countries that it quietly acknowledged were in the US’s sphere of influence. And that largely remains the case today.
Despite all the alarmist rhetoric coming out of Washington DC, China’s investments in the region remain relatively small, and Beijing is unlikely to provide substantial debt relief to governments that have recently been overextended fiscally as a result of COVID-19 stimulus packages. According to data collected by Boston University’s Global Development Policy Center – of the public debt in Latin America, 60 per cent is to private bond holders; 16 per cent is bilateral aid and China accounts for approximately 10 per cent of this figure – an indication not just of the limits of China’s debt relief potential but also of the exaggerated nature of its role in the region to date. The only exception to this is Venezuela, where China has loaned more than $60 billion to the beleaguered oil producing country but has largely remained out of the domestic political and diplomatic struggles around the government in power there.
Similarly, while China’s trade relations have ramped up, making it the number one export market for Argentina, Brazil, Chile and Peru and fueling massive investments and production upgrades in natural resource extraction and agriculture – often with negative environmental impacts – that relationship has remained, while lopsided in terms of the goods China buys and sells to those partners, focused on commerce. Even Trump acolyte Brazilian President Jair Bolsonaro had to walk back his government’s rhetorical attacks on China and declarations to reduce its trade dependence on the country after the economic reality of Brazil’s relationship on the world’s second largest economy hit.
None of these facts on the ground, though, will prevent Latin America from potentially getting trampled in the broader geopolitical power struggles between the US and China.
First, the escalating tensions between Washington and Beijing are unlikely to cool even with a Democratic administration in the White House. The course has been set for a tougher line towards China on matters of trade fairness, geopolitical designs globally and within its own neighbourhood (especially in Hong Kong and the South China Sea); and that is unlikely to change.
Second, for their part, Latin American states are increasingly deepening their relations with China, irrespective of the US’s warnings. As one ambassador from a pro-US government told me “The US treats us like we’re teenagers [when it comes to China]. But we can manage our own relations responsibly.” While there will be governments such as Evo Morales’ in Bolivia (2006-2019), Cristina Fernández de Kirchner’s in Argentina (2007-2015) or the current government in Venezuela that embrace China and chase Chinese promises of investment – many unfulfilled – there are others like Chile, Colombia, Ecuador, Panama or Peru that will continue to deepen their relations with China not for ideological reasons or as a bulwark to US hegemony but as responsible international actors seeking to integrate globally in ways to diversify their economic and diplomatic relations and expand their power.
The first in a series of likely flash points will be the Huawei 5G debate that is currently raging in Brazil. In that case, the Chinese company is courting the Brazilian government to invest in the upgrade of its telecoms infrastructure, while the US warns that the technology could be used for intelligence collection for US allies. As yet, though, the US has failed to publicly produce an example of when this has been the case. It’s not dissimilar from the US’s efforts to strongarm the United Kingdom into banning Huawei’s 5G in bids to upgrade its internet infrastructure. In the end, the UK government agreed to accept Huawei technology and investment but placed limits on it for government infrastructure. Much to its chagrin, the US had to accept the decision. Would the US be so accommodating to a country that it has historically assumed to be more prostrate to US national interests and demands?
Today the previous conventional wisdom of Chinese interests in Latin America being primarily economic and pragmatic – rather than ideological or geopolitical – seem naïve. Beijing was and still is playing a long-game of extending its economic, political and diplomatic influence, and as the US seeks increasingly to block it those tactics will become sharper. But whether in its own hemisphere or globally, the US’s escalating rhetoric of challenging China and urging countries to beware looks increasingly weak.
Whether in warning countries off accepting Chinese investment or challenging countries to deny Chinese technology, the US alternative to Chinese blandishments appear unclear. Is the US offering infrastructure investment or bilateral assistance or a technology platform that can compete with China’s? For reasons of self-absorption, declining outlays for foreign aid and only passing interest in courting Latin American governments over their issues, the Trump administration has failed to offer an attractive option, only threats. The risk is how the US will follow through on that sabre rattling should its Latin American allies and adversaries alike opt for a more lucrative deal that they believe they are mature enough to manage.