Ever since December 2, 1823, the United States has been committed to the independence of Latin America. While the precise interpretation of the Monroe Doctrine and its implications have varied over the past 200 years, the core interests of the United States have not. South and Central America is one of the few areas that could actually threaten the U.S. heartland, and American statesmen have long recognized this fact.
However, this recognition has been lost on recent administrations. A mix of regional populism and sheer American ineptitude allows American adversaries to gain footholds that could quickly turn into regional power.
While much attention has been paid to Wagner mercenaries in Haiti, offering a coherent security force in a nation without a functioning government, the Chinese Communist Party (CCP) has leveraged its economic might to gain valuable influence in the region. China’s use of its credit to entice vulnerable countries into Faustian bargains with the CCP is nothing new. Since launching the Belt and Road Initiative (BRI) 10 years ago, China has used its economic investment capabilities to further its strategic interests across Africa and Asia. This “debt-trap diplomacy” has come at a severe cost for several of China’s partners, with Sri Lanka being the most notable and tragic example. What is new is the extension of these lines of credit to the Western hemisphere and the deafening lack of a serious response from Washington. Historically, any intrusion into the region by any great power would have elicited swift action under the Monroe Doctrine.
Now, it is important to note significant differences between the current moment and the close of World War II, the last time the United States found itself as a power center in a multipolar world. Back then, most third parties were either poor or in ruins. Lines of demarcation were quickly drawn. This time, the emergence of multiple power centers across the globe has been gradual. As such, it is only reasonable for nations to seek a policy of strategic nonalignment to extract as many benefits as possible through cooperation with other powers. Jorge Heine of Boston University’s Active Nonalignment outline is perhaps the most noted example of this in Latin America. At the same time, Modi’s noncommittal stances in India over the past year show the potential value of maintaining strategic autonomy in this new environment.
It is striking that instead of playing all sides off each other for concessions, most Latin American nations are only ever offered deals from one side, and it’s not the democratic West. Latin America is desperate for investment, and many nations prefer alignment with the United States, but their pleas too often fall on deaf ears in Washington. Uruguay has been begging for a free trade deal with the United States for more than a decade. Still, the isolationist and anti-free trade sentiment currently in fashion in both the Democratic and Republican parties means few are enthusiastic about a trade deal with a “low-priority” country in South America. The lack of progress toward an agreement has left Uruguay with no option other than Beijing.
What’s more infuriating is the case of Ecuador. Due to the previous administration's irresponsible spending policies, the country was crippled by its obligations to repay Chinese debt. What’s worse, much of the loans were required to be paid back in long-term oil contracts, preventing the country from benefiting from the global spike in oil prices after Russia’s 2022 invasion of Ukraine and the sanctions that followed. Ecuador sold its oil to China at a discount. With his back against a wall, President Guillermo Lasso reached a deal restructuring the country’s $6.5 billion debt last year. However, as that country's political instability worsens, its economic dependence on China will only increase in the coming years.
Moreover, Chinese investment is often incredibly destabilizing for nations that receive loans. Beijing has a history of offering money without any conditions regarding how it is spent. Such negligence opens the door to elite capture, exacerbating corruption and weakening the rule of law, ultimately rolling back democratic institutions and sliding the region towards autocracy. Additionally, most Latin American nations have little experience with these types of deals, only strengthening Beijing’s hand in negotiations.
Ultimately, the best tool the United States has is trade. Its greatest asset is its economic might, the depth of its capital markets, and its ability to borrow and lend at rates unreachable by other nations. Increased trade between the United States, U.S. allies, and Latin America increases the region’s ties to the United States and reduces its dependence on Chinese credit.
Too often, American politicians and intellectuals, in deriding free trade dogmatism, have retreated to a quasi-mercantilist stance. On one level, post-liberals have an ounce of truth in their grievance. At the same time, the basic math behind Ricardian equivalence remains true, the potentially severe social and political repercussions of such policies require proactive management. The North American Free Trade Agreement (NAFTA) made all parties wealthier and more economically integrated. It also had the unfortunate side-effect of wiping out Mexico’s agriculture industry and U.S. manufacturing in the upper Midwest. The long-term effects of these developments are still felt across North America. What is needed is a proper understanding of the level of trade necessary for our current situation—a level above autarchy and below free trade dogmatism. On a concrete level, that means a large number of narrow trade deals targeting specific industries.
The Development Finance Corporation (DFC) has also found balancing developmental assistance with foreign policy objectives challenging. Additionally, it has a distinct “America First” economic orientation, meaning that its investment in developing nations is intended to benefit American firms. The problem with this approach is that the United States is not the best source of the kind of investment that these countries need most. For instance, the United States hasn’t built a new deep-water port in decades, so the goal of U.S. policymakers needs to be connecting Latin American nations with firms from friendly countries that are not beholden to the CCP and can best meet their development needs.
On a practical level, this means identifying nations that are receptive to U.S. interests and investment and focusing on turning them into regional leaders as well as U.S. allies. The Dominican Republic, Paraguay, Chile, and Guatemala are all potential candidates. Once identified nations show progress towards stability and prosperity, it will entice other countries towards a similar course of action.
What is perhaps most important for American diplomats to do is avoid making our Latin American policy a strictly anti-China strategy. Latin American leaders aren’t stupid, and they don’t enjoy seeing themselves as being used as chess pieces in a “New Great Game.” Instead, America should approach investment deals as primarily profit-seeking enterprises or on humanitarian grounds, not as geopolitical moves. Anti-American fears are an easy specter for populist Latin American leaders to invoke when politically convenient. U.S. policymakers need to be aware of these tendencies so as not to exacerbate them.
Additionally, the potential of sending migrants to the southern U.S. border severely limits American maneuverability in Central America. Any interference in El Salvador, Honduras, and Guatemala, the so-called Northern Triangle, could trigger ever larger exoduses of migrants, something those nations’ leaders have been quick to capitalize on.
The Plan Colombia initiative (2000–2015) was a major triumph of diplomacy, in which American intelligence and coordination successfully broke up the Marxist FARC rebels and increased control of the legitimate government of Bogotá over the countryside. Such a plan should serve as a blueprint for further action in fragile regimes. At a time when major U.S. presidential candidates are calling for military action against the cartels in northern Mexico, such a move would be a much narrower and more prudent alternative. The Merida Initiative (2007–2021) was supposed to act as just that. Still, it was never managed well, and its replacement, the Bicentennial Framework, is too focused on social programs to achieve American strategic objectives. A focused, well-planned initiative with an emphasis on security needs to be a priority of American foreign policy, with a stick-and-carrot approach to bring a reluctant Mexican government on board.
Finally, the United States should look for easy psychological victories demonstrating its commitment to Latin America. “Illegal, Unregulated, and Unrestricted” (IUU) fishing is an excellent place to start. Such practices have devastated the environment, with fishing populations stripped bare and whole ecosystems irreparably harmed. When an armada of Chinese fishing vessels appeared off the Galapagos Islands in 2020, Ecuador begged for international assistance. A show of American force, as little as a few frigates dispatched to the region to disperse the illegal fishing fleet, would have sent a clear message. Better yet, a joint action by the Organization of American States (OAS) spearheaded by the United States and regional navies would have shown solidarity in an area where China was clearly in the wrong.
If the United States does not wish to cede any more ground in a region vital to its interests, it must rethink its regional policies. Washington needs to demonstrate a credible commitment to the area in such ways that increase Western economic interdependence, don’t ferment populist sentiment, and prevent further CCP intrusion. It’s a tall order, but one for which the United States must rise to the occasion.