LATIN AMERICA AND ITS ABUNDANCE OF NATURAL RESOURCES
By Robert Valencia via ISN Security
Watch
Apparently CHINA is vying for
greater economic influence in LATIN AMERICA, which includes the possibly
constructing and operating an alternative ‘PANAMA Canal’ through NICARAGUA. One
unanticipated consequence of this burgeoning US-CHINA rivalry is that it might
push LATIN AMERICAN countries closer together.
U.S. President Barack Obama and CHINESE
President Xi Jinping met in California to discuss cyber
espionage and territorial claims in the Pacific Rim. While tension on these
topics has hogged the headlines, the fight for influence in another area could
be even more important—LATIN AMERICA.
Other emerging markets in AFRICA,
where CHINA has an overwhelming influence due to foreign direct investment in
mining and oil, also offer economic opportunities, but LATIN AMERICA has an
abundance of natural resources, greater purchasing power, and geographic
proximity to the UNITED STATES, which has long considered LATIN AMERICA as its
“backyard.”
Background Information: http://geopoliticsrst.blogspot.co.at/2012/12/usa-china-and-africa.html
The key question now is will LATIN
AMERICAN countries lean more toward CHINA or the UNITED STATES, or will it find
a way to balance the two against each other? Right now, LATIN AMERICAN countries
are increasingly confident thanks to burgeoning economic and political
integration by way of trading blocs, and they're demanding to be treated as an
equal player.
CHINA’S ACTIVE INVOLVEMENT IN LATIN AMERICAN GEOPOLITICS
As a sign of its growing importance,
CHINA and the UNITED STATES have courted LATIN AMERICA more than usual. In May,
the US President visited MEXICO and COSTA RICA while the US Vice President visited
COLOMBIA, BRAZIL, and TRINIDAD and TOBAGO. Shortly after these trips, President
Xi went to MEXICO and COSTA RICA to foster economic cooperation.
CHINA’S active involvement in LATIN
AMERICAN geopolitics can be traced back to 2009. Chinalco, CHINA’S largest
mining company signed a $2.2 billion deal with PERU to build the Toromocho mine
and a $70 million wharf in the Callao port. Since then, PERU has sent 18.3
percent of its exports to CHINA, making CHINA PERU’S largest trading partner. CHINA’S
imports to PERU, however, rank second with 13.7 percent of the market while the
UNITED STATES holds first place with 24.5 percent.
China has the upper hand with the LATIN
AMERICAN leftist countries in terms of infrastructure and technology. In 2009, CHINESE
telephone manufacturer ZTE played an instrumental role in assembling the first
mobile phone in VENEZUELA known as “El Vergatario” (VENEZUELA slang for
optimal). VENEZUELA introduced this new phone to low-income families making it
the world’s cheapest phone ($6.99 for a handset). Additionally, CHINA landed
rail construction projects in ARGENTINA and VENEZUELA and has become a major
buyer of farm products and metal in SOUTH AMERICA.
ARGENTINA’S SOARING SOY EXPORT TO CHINA
Between 2011 and 2012, CHINA purchased
nearly 58.02 million tons of soy from ARGENTINA, up from 52 million in 2011 and
2010.
CHINA has also maintained an active market with BRAZIL.
CHINESE Oil Company Sinopec and CHINA Development Bank offered BRAZILIAN oil
company Petrobras a $10 billion loan in 2009 in return for hundreds of
thousands of barrels per day. In 2011, three CHINESE metal companies purchased BRAZILIAN
mining company Companhia Brasileira de Metalurgia e Mineracao.
Background Information: http://geopoliticsrst.blogspot.co.at/2013/03/latin-american-economics.html
CHINA’S boldest move in the region
is the possible construction of a massive CANAL
IN NICARAGUA. NICARAGUAN President Daniel Ortega pushed the National
Assembly to approve the multi-billion dollar plan in June. The NICARAGUAN canal
would have a larger draft, length, and depth than the PANAMA and SUEZ canals,
and the enactment granted a HONG KONG-based company permission to build and
control the canal for nearly 100 years. The approval of this plan, however,
raised the ire of environmentalists and neighboring COLOMBIA, which recently
lost 70,000 square kilometers of its CARIBBEAN maritime territory to NICARAGUA
before the International Court of Justice (ICJ).
Last May, COLOMBIAN diplomat Noemi
Sanin claimed that CHINA had influenced ICJ’s decision. According to Sanin, CHINESE
justice Xue Hanqin knew beforehand about NICARAGUA’S intention to grant the
canal construction to CHINA since Xue was a colleague of Carlos Arguello, a
role-player in the maritime case. There is no evidence for this, but it shows COLOMBIA’S
anxiety of CHINA’S growing clout in the region and how it can upset balances of
power.
USA STILL TOP TRADE PARTNER OF LATIN AMERICA
The UNITED STATES hasn’t lost LATIN
AMERICA, and is unlikely to lose it completely. It is still the region’s top
trade partner. The UNITED STATES has recently signed free-trade agreements with
COLOMBIA and PANAMA, and maintains other trade agreements with PERU, CHILE, and
MEXICO. CENTRAL AMERICAN and several CARIBBEAN countries rely upon U.S.
military cooperation in an attempt to curtail drug trade. Nevertheless, the
post 9/11 years severely eroded U.S.-LATIN AMERICAN relations as the Bush
administration focused heavily on the war on terror, often ignoring issues in LATIN
AMERICA.
CHINA AND THE UNITED STATES ARE ALSO ENCOUNTERING A MORE
CONFIDENT AND MORE UNIFIED LATIN AMERICA.
It is a region that has sought
autonomy in its own affairs by way of rising blocs such as the Community of LATIN
AMERICAN and CARIBBEAN STATES, MERCOSUR, and the BOLIVARIAN Alliance for the AMERICAS
(ALBA), among others. BRAZIL, LATIN AMERICA’S largest economy, also seeks a
prominent role the region with large investments in research and development
and the introduction of social programs to revamp the middle class. BRAZIL has
jumped into the global economic debates, calling out CHINA, the UNITED STATES,
and other industrialized countries over the so-called “currency wars." In
2010, BRAZILIAN Finance Minister Guido Mantega criticized these nations for
policies that weakened exchange rates that in turn affected the real currency
value and BRAZILIAN exports. Since then, BRAZIL has pursued a more significant
role among the world’s 20 most advanced countries known as the G-20.
Background Information: POLITICAL
IGNORANCE REGARDING LATAM
LATIN AMERICAS EMERGING PACIFIC ALLIANCE
Both the UNITED STATES and China use
infrastructure investment, diplomacy, and trade as leverage, but LATIN AMERICA wants
to be seen as a socioeconomic partner, not a subordinate. The PACIFIC Alliance,
for example, hopes to become a powerful bloc that can stand up to the world’s
two super powers. Comprised of COLOMBIA, PERU, CHILE, COSTA RICA, MEXICO, and
possibly soon PANAMA, the PACIFIC ALLIANCE is a new economic bloc that seeks
economic integration oriented toward ASIA-PACIFIC markets.
Background Information: http://geopoliticsrst.blogspot.co.at/2013/05/south-america.html
Additionally, the PACIFIC ALLIANCE can
become a springboard for other LATIN AMERICAN nations with a Pacific shore to
join the Trans-Pacific Partnership (TPP), a proposed free-trade agreement among
ASIA-PACIFIC, MEXICO, PERU, CHILE, CANADA, and the UNITED STATES. Being part of
the PACIFIC ALLIANCE is significant, because for countries like COSTA RICA, it
would otherwise be an unlikely candidate for the TPP. Taken together, the PACIFIC
ALLIANCE’S GDP totals $3 trillion, making it easier to integrate itself to the
TPP and for it to fight for better terms. The UNITED STATES will still hold the
lion’s share of the TPP with an economy that hovers around $13 trillion—but an
alliance worth $3 trillion will give it more leverage than it would otherwise
have. The battle for influence in LATIN AMERICA may have the effect of pushing
the countries closer together, allowing them to stand up to both the UNITED
STATES and CHINA.
More articles on CHINA'S foreign
policies:
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