The United States is Losing Latin America to China

August 15, 2019 Topic: Security Region: Americas Tags: ChinaLatin AmericaXi JinpingDemocracyGreat Power

The United States is Losing Latin America to China

In Latin America, hard power is of limited utility; soft power through economic and diplomatic influence will carry the day in the region.

If anything, some governments might decide to go further. Venezuela, for instance, turned to China to help design a national identity program. Seeing what was possible with the help of Chinese telecoms giant ZTE, Nicolás Maduro’s government took inspiration from China’s social credit system to create the “fatherland card” ID system. This system collects a vast amount of data on any particular individual—including personal information, state benefits received, voting records and more—making it very easy for the Venezuelan government to exert control over the daily lives of citizens.

Latin American rulers holding this sort of sway over their respective domestic populations suits Beijing’s purposes quite well, as it makes it easier for governments to crush political dissent—particularly any that is aimed towards Chinese economic interests. If that isn’t enough, and if certain facilities require more protection than the usual, China may decide to up the ante by stationing its own forces within these countries. China’s own 2015 defense strategy white paper notes that, “in response to the new requirement coming from the country’s growing strategic interests, the armed forces will actively participate in both regional and international security cooperation and effectively secure China’s overseas interests.” 

Indeed, safeguarding “the security of China’s overseas interests” is deliberately listed as a strategic task of China’s armed forces. A more blunt assessment comes from retired People’s Liberation Army (PLA) colonel Yue Gang, who said that “the PLAin the future will need to go abroad to protect China’s overseas interests in countries along the Belt and Road Initiative.” In Latin America, there are a number of possible sites. For example, there is a satellite and space control station in Argentina that was built by the Chinese military and is currently being leased rent-free to China for a period of fifty years. Likewise, any number of the dozens of commercial shipping ports in the region, particularly those that were originally built or expanded by Chinese companies, could be acquired and converted to military bases under the pretext of safeguarding Chinese commercial and economic interests.

WITH CHINA expanding its footprint in Latin America, it is no surprise that U.S. policymakers and defense officials have begun to sound increasingly anxious. Part of it is recognition that China is indeed becoming very much involved in what Washington considers to be its own local sphere of influence. More broadly and more importantly though, part of it is the fact that the U.S. foreign policy establishment has finally awakened from what journalist James Mann back in 2007 called “the China fantasy”—the neoliberal ideal that economic liberalization in China would inevitably also result in political and social liberalization. It is this conceited point of view, so doggedly self-assured of the inevitable triumph of neoliberal economic policies and liberal democratic governance, that prevented U.S. policymakers from acting sooner.

Yet while Washington seems to have woken up to this new challenge on its doorstep, it apparently has no idea how to address it. The Trump administration’s current policy, for instance, reads like something straight out of the Cold War, with an undue focus on the region’s left-wing governments and a not-so-subtle unspoken desire for CIA-backed regime change operations. Even some of the actors are still the same: look no further than the decision to appoint Elliott Abrams, a diplomat known for his involvement in the Iran-Contra scandal, as U.S. Special Representative for Venezuela.

The end of the post-Cold War interregnum of U.S. preeminence implies a return to a multipolar, or at the very least, bipolar, world order. National economic policy can no longer be separate from military and diplomatic policy: all must be coordinated together in order to ward off the strategic and economic consequences of a changing international environment. If the United States intends to retain its leadership in high-tech industries, global finance, and most importantly, international aid/development, it is apparent that it too must develop a long-term economic strategy that addresses both domestic and international concerns.

This is something that America’s allies seem to have already realized: Germany’s federal minister for economic affairs and energy, Peter Altmaier, has declared that the German government should be able to purchase stakes in systemically important companies if it means preserving national security. Separately, Altmaier and his French counterpart, Bruno Le Maire, have put out a joint manifesto proposing “a European industry policy designed to better protect and promote ‘European champions.’” The United States will have to start thinking along similar lines. Presidential, as well as Congressional leadership, will be necessary. The question is, where to begin?

A good starting point would likely be to do some house cleaning: the U.S. government is currently not capable of putting together a unified geo-economic strategy. All the relevant organizations are spread out across Washington in various offices. The U.S. Trade Representative, for example, is located with the Executive Office of the President, while the International Trade Administration is in the Commerce Department. Meanwhile, the Export-Import Bank, the U.S. Trade and Development Agency, the International Development Finance Corporation (USIDFC) and many more are independent entities. Consolidating these various agencies and offices into a single department (whether new or existing) headed by a cabinet-level official charged with formulating and implementing geo-economic policy would put the United States in equal standing with its peers.

Next, policymakers must embrace the challenge of devising cost-effective yet still-effective international development strategies as an instrument of U.S. power. China, as we have seen, is prepared to spend billions of dollars in building infrastructure, sponsoring educational opportunities and more. By way of comparison, the USIDFC, which is the U.S. agency responsible for financing private development projects, only has $60 billion in funding for the entire world—a mere two-fifths of the amount China has lent to Latin American countries alone. Washington will have to get creative to ensure that it gets the most bang for its buck. 

The best way to achieve this is by supporting efforts that help developing countries help themselves. For instance, the United States can help in infrastructure development by financing the environmental assessments or community consultation stipulations that come with World Bank loans. Alternatively, perhaps it can fund urban planning or engineering departments in Latin American universities, producing better-trained experts that can properly oversee local and regional infrastructure projects. Separately, the United States can tap into its greatest asset—the sheer financial might of its private sector—by encouraging it to buy and refinance Latin American debt to China with longer repayment terms. Akin to the “Brady Bonds” pioneered in the 1980s, this initiative could temper Chinese influence and reduce the payment burdens that these countries face.

Finally, the United States must work to improve its diplomatic relations with Latin American countries. This will be a difficult task, to say the least, given both the current administration’s recent moves and, more broadly, Washington’s rather colorful history with the region, which includes military interventions, multiple coups, economic impositions and more. Critics usually have a favorite grievance they can recite from memory. Overcoming this will require reexamining the Monroe Doctrine in its original context: not as a pretext for imperial domination of the Western Hemisphere, but rather a responsibility to protect our “sister republics” in the New World from the political machinations of the Old. 

One possible avenue for this change is the OAS. Latin American critics of the institution perceive it to be dominated by the United States, while Washington often feels it holds little power over it. In reality, the organization is struggling due to an ill-defined mission, an unclear focus, and an overabundance of programs and projects that have proliferated out of control but lack the necessary budget to work. Reforming the OASto serve as a more reliable platform for regional economic collaboration, educational opportunities and advocacy of democratic norms could yield multiple benefits. More importantly, delegating power and responsibility to Latin American countries would send a signal that the United States is capable and willing to listen to the views and concerns of its peers. All this can be achieved relatively cheaply too: the OAS’ current annual budget is a paltry $84 million. Adding a few more million, not even a fraction of a fraction of what the U.S. government spends elsewhere, would yield enormous diplomatic returns.

IN ROBERT Sobel’s For Want of a Nail, an alternative history book, fictional Mexican politician Pedro Hermión gives a truculent foreign policy address at his party’s national convention. He declares:

In Mexico del Norte the Mexicanos have a game – some call it a sport. The peasants put two scorpions in a large bottle, and then take wagers as to which will win the struggle. Slowly the scorpions circle each other, until one lashes out at the other, and strikes him dead. So it is on our continent.

Though the context is very different, Hermión is certainly right about one thing: the Americas are, in reality, a small place, and having two great powers like China and the United States competing over this landmass is a precarious proposition. In order to uphold and sustain regional stability, Washington must stop using its might like a club (heavy-handed, blunt and dumb), and relearn the art of wielding influence like a rapier (swift, elegant and precise). Above all else, what is intolerable is the casually irresponsible attitude towards power and its use.