Strengthening U.S. Partnerships and Countering Chinese Influence in Latin America

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The growing influence of the People’s Republic of China (PRC) in Latin America is threatening U.S. security. In the coming decade, Chinese port construction projects in Latin America may grant China access to naval lanes critical to American commerce and military operations, and investments in telecommunication infrastructure may give China insight into the extent of regional military capabilities. Such developments burden the United States with new security concerns in the Americas and could limit possibilities for a vigorous U.S. response elsewhere in the world in a conflict scenario. Although there are many potential economic, diplomatic, and military institutions and resources available to the United States, policymakers have chosen the inadequate Partnership for Global Infrastructure Investment (PGII) as the flagship U.S. response to China’s engagement in Latin America. [1] Many Latin American nations suspect that the increased influence of the United States in the region could facilitate U.S. meddling in their political affairs. [2] To address these reservations, U.S. initiatives with partners in Latin America must ensure – equality, security, and transparency – elements of trust which are lacking in many Chinese projects.

The Biden administration has recognized the need to improve U.S. relationships with Latin America to counter Chinese influence, but its response is impractical. PGII, its flagship program, is a G7 initiative to mobilize “$600 billion over the next five years” to “address the infrastructure gap in the developing world.” PGII aims to pinpoint projects with low environmental, social, and governance risks and attract private investors. [3] Unfortunately, the scope of PGII is too broad regarding geographic location and project type. The G7 nations currently have limited funding for infrastructure projects as they address the war in Ukraine, an energy crisis, and internal divisions surrounding climate change and their economies. PGII is also open to projects in any country, which is too broad of a mandate to counter Chinese influence in Latin America. The United States should quickly take the following economic, security, and diplomatic initiatives that optimize existing institutions.

Responding to China’s Economic Engagement

Since China joined the World Trade Organization in 2001, it has strengthened its economic relationship with Latin America and the Caribbean (LAC) at an impressive pace. As of 2022, China has become the most important export market for South America and the second-largest trading partner (in goods) for Latin America as a whole after the United States. [4] The growth is a product of many factors, including complementary economies, the expanding Chinese market, and the unique approach of Chinese development banks. As Grohs Hannes and Werner Raza observe, “between 2000 and 2020, China-LAC trade grew 26-fold from USD 12 billion to USD 310 billion.” [5] Additionally, since 2005, the China Development Bank and Export-Import Bank of China have provided more than $141 billion in loan commitments to Latin American countries. [6] In about two decades, Chinese loans, foreign direct investment, and trade have skyrocketed across diverse sectors of the Latin American economy including energy, infrastructure, agricultural produce, information and communication technology (ICT), and even space exploration.

China has invited Latin American nations to join its Belt and Road Initiative (BRI) and Digital Silk Road, which focus on transportation and ICT infrastructure. Twenty countries in Latin America have signed onto the BRI, but it has been criticized for its ties to environmental disasters. [7] The hydroelectric Coca Codo Sinclair Dam in Ecuador, built by the Sinohydro Corporation and commissioned in 2016, is just one notorious example. Ecuador accepted Chinese loans to fund the $2.25 billion project and arranged to repay the debt through discounted oil prices. [8] The dam’s water reservoir produced excessive erosion upstream, which is believed to have caused oil spills after pipelines running along the river were ruptured, leading to a catastrophic spill of an estimated “6,000 barrels of crude oil” in February 2022, according to the Ecuadorian energy minister. [9] Despite the BRI’s growing reputation as a source of potentially low-quality infrastructure, Latin American nations are willing to take the risk given the appeal of affordable projects and lax loan standards compared with offers from the International Monetary Fund (IMF) or the World Bank (WB).

Increased economic engagement between the United States and Latin America should occur multilaterally through the WB, the IMF, and bilaterally through the U.S. International Development and Finance Corporation (DFC) and the U.S. Trade and Development Agency (USTDA). The United States should use its leverage as the largest contributor to the WB and the IMF to prioritize loans for infrastructure projects in Latin America. [10] [11] The DFC and USTDA are significant because they are more malleable to U.S. foreign policy aims and have already built rapport with Latin American partners. The United States should also showcase the environmental sustainability and economic impact of existing infrastruc- ture investments in Latin America in order to promote further cooperation, such as the financing of an oil transshipment terminal in Brazil and the 84-kilometer Rumichaca-Pasto Toll Road in South Eastern Colombia through the DFC. [12] [13] In contrast to the Coca Codo Sinclair project, which was intended to provide hydroelectric energy but ended in disaster, the USTDA has financed an initiative by DC-based nonprofit EarthSpark International to deliver clean energy through microgrids in Haiti and has already succeeded in powering 500 homes and businesses. [14]

Countering China’s Infrastructure Development

China is constructing ICT infrastructure in Latin America through telecommunications companies such as Huawei. [15] Latin American nations seek to revamp their cell service and internet providers with 5G capabilities, and China is taking advantage of the opportunity. Brazil, Mexico, Chile, Colombia, and Argentina – the largest economies in Latin America – are all open to contracts with the company. [16] In Mexico, Huawei has been excluded from operating in regions near the U.S. border but still intends to set up 30,000 hotspots throughout the rest of the country. In Brazil, Huawei is already an integral part of over half of the nation’s wireless networks, although the company is barred from maintaining networks used to conduct government business. Colombia, Chile, and Argentina generally seek to strike a balance between Washington and Huawei by keeping their options open to any provider willing to comply with operational requirements. [17]

Chinese port construction must also be an immediate concern for the United States. China has built dual-use ports intended to function as naval bases before, and could also do so in Latin America. For example, the United Arab Emirates halted Chinese construction of a port near Abu Dhabi after the Emiratis discovered that plans were underway to secretly construct additional facilities. Currently, there are “seven port operations by PRC-based Hutchison Port Holdings in Mexico, three in Panama, three in the Bahamas, and one in Buenos Aires, Argentina.” [18] These are located around strategic sea lines of communication, especially the port surrounding the Panama Canal and a “polar logistics” facility near the Strait of Magellan, off the coast of Argentina. Under the use of China’s navy, such operations could realistically disrupt “U.S. commercial and naval access in the Western Hemisphere.” [19]

The United States should subsidize private investment in Latin America, focusing on transportation and ICT, especially ports and 5G networks. Ports controlled by China directly threaten U.S. maritime dominance in the Americas, and any funds set aside for loans or subsidies should be aimed at outcompeting Chinese companies for port tenders, which are bids by construction contractors for specific projects. Moreover, the United States may encourage American companies such as Qual- comm, Intel, or Cisco to outcompete Huawei for 5G tenders in Latin America. [20] The aim is not for the United States to merely replace China in unethical data gathering but instead to provide genuinely secure net- works through transparent contracts that prevent espionage. The responsible construction and successful integration of such projects into the local economies of Latin America would allow the United States to emphasize its commitment to quality, workers’ rights, and environmental standards.

Containing China’s Security Partnerships

China is building partnerships with the militaries in Latin America by providing training, educational exchanges, and arms sales. As of 2020, China has sold various weapons, including “military aircraft, ground vehicles, air defense radars, assault rifles,” and other security equipment in Latin America. [21] Specifically, from 2006-2019, China transferred a total of $634 million worth of major military hardware to Argentina, Bolivia, Ecuador, Peru, and Venezuela. [22] Colombia and Chile are also of interest to Beijing, and its ambitions directly oppose U.S. influence, as Colombia has a history of strong security cooperation with the United States, and Chile maintains one of the best-equipped militaries on the continent. Both nations have sent their officers to military courses in China, and “Colombia’s armed forces have received from $1 million to $7 million per year in material donations from the PRC, including $3 million in military bridging equipment in 2013.” [23] Chile has also conducted naval combat exercises with China. Whenever China hosts Latin American military officers for visits, training, or professional military education (PME) activities, there is the opportunity “for Chinese intelligence to collect information on and potentially compromise partner nation officials, providing material to support future operations in the region.” [24] Even greater than individual threats, Chinese access to Latin America through joint military exercises, training, PME, and arms sales is a significant security risk in the Western Hemisphere. China’s partnerships grant it insight into the strengths and vulnerabilities of Latin American militaries and the nature of their operating environments.

Small but effective steps can be taken to improve the relationships between the armed forces of the United States and Latin America. A larger portion of the U.S. defense budget should be set aside to increase institutional exchanges and professional military education for officers, particularly in nations of regional economic and geographic importance, such as Brazil, Mexico, Colombia, Argentina, and Chile. The dialogue promoted through such programs would offer the United States more insight into new potential areas of lucrative partnerships between defense sectors in Latin America.

Outmaneuvering China’s Diplomatic Initiatives

Broad support for China in Latin America is a product of concerted and well-crafted diplomatic efforts as much as it is beneficial commercial partnerships. Delegations from China have joined existing regional forums as observers or acting members, including the Latin American Parliament, the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), and the Organization of American States (OAS). China has also spearheaded the creation of new institutions such as the China-Latin America High-Level Defense Forum, the China-Caribbean Economic and Trade Cooperation Forum, and the Cooperation Forum between China and the Community of Latin American States (China-CELAC). [25] The United States is a founding member of the OAS, but the institution has been neglected and lacks funding. China is highly active in its organizations, by comparison, using them to coordinate meetings with regional leaders and propose joint action plans. The most recent 2022-2024 China-CELAC Joint Action Plan includes cooperation roadmaps or guidelines for partnerships in politics, security, finance, agriculture, and aerospace. [26] 

The United States can learn from Chinese diplomatic engagement with regional organizations in Latin America. It should use the OAS to foster communication about regional concerns and priorities and rescue it from its reputation as an “inefficient, ineffective, unimportant” and underfunded institution. [27] Although it requires reform, the institution is a valuable opportunity for the United States to learn about Latin American priorities. Sustained revitalization may even allow the OAS to serve as a platform for exchanges between regional leaders and proposals for economic cooperation, much like the China-CELAC forum functions for Beijing. The United States must also make a concerted effort to suspend China’s Permanent Observer status in the OAS to prevent unnecessary monitoring or meddling in inter-American discourse. If the United States improves its funding and behavior toward the OAS, Latin American nations seeking to diversify their international partnerships will take advantage of the opportunity to explore options beyond Chinese contracts.

Conclusion

China presents short-term and long-term threats to U.S. security in Latin America which are products of consistent economic, security, and diplomatic initiatives over the past two decades. The United States must begin taking steps to counter China’s engagement in each issue area. To achieve this, it should not rely on the impractical PGII proposal and instead learn from the Chinese by revamping regional forums key to future initiatives with Latin America while strategically increasing loans and investment in infrastructure projects to outcompete the Chinese for port and 5G tenders. It should strengthen military ties by funding more educational exchanges with officers in the armed forces of Latin America as well. The United States must also showcase projects that embody what sets it apart from China, such as its commitment to environmental standards, human rights, and simple quality. Instead of relying on the PGII, the United States should strengthen existing institutions to promote inter-American cooperation and counter China’s influence in the region.

Carolina Amparo ’24 serves as the President of the AHS chapter at Ashland University, where she is majoring in Political Science and International Studies and minoring in Political Economy and Ethics.

Notes:

[1] Conor M. Savoy and Shannon McKeown, “Future Considerations for the Partnership on Global Infrastructure and Investment,” Center for Strategic International Studies, 29 June 2022, https://www.csis.org/analysis/future-considerations-partnership-global-infrastructure-and-investment.

[2] Juan Gabriel Tokatlian, “Latin America Doesn’t Want a New Cold War,” Americas Quarterly, 28 April 2022, https://www.americasquarterly.org/article/latin-america-doesnt-want-a-new-cold-war/.

[3] Savoy and McKeown. 

[4] Sophie Wintgens, “China’s Footprint in Latin America,” European Union Institute for Security Studies (9 September 2022): 1-2, https://www.iss.europa.eu/sites/default/files/EUISSFiles/Brief_9_China%20in%20Latin%20America_web.pdf.

[5] Grohs Hannes and Werner Raza, “Trade Aspects of China’s Presence in Latin America and the Caribbean,” European Parliament (December 2022): 1-2, https://www.europarl.europa.eu/thinktank/en/document/EXPO_BRI(2022)702572.

[6] Wintgens, 3. 

[7] Christoph Nedopil, “Countries of the Belt and Road Initiative,” Green Finance and Development Center at Fudan University, March 2022, https://greenfdc.org/countries-of-the-belt-and-road-initiative-bri/?cookie-state-change=1678105716452.

[8] “Ecuador,” International Hydropower Association, May 2017, https://www.hydropower.org/country-profiles/ecuador.

[9] Erik Hoffner, “Massive Erosion Likely Due to Hydropower Dam Causes Oil Spill on Ecuador’s Coca River,” Mongabay Environmental News, 6 May 2020, https://news.mongabay.com/2020/05/massive-erosion-likely-due-to-hydropower-dam-causes-oil-spill-on-ecuadors-coca-river/.

[10] “Overview,” World Bank, https://www.worldbank.org/en/country/unitedstates/overview.

[11] “International Monetary Annual Report 2016,” International Monetary Fund, 2016, https://www.imf.org/external/pubs/ft/ar/2016/eng/quota.htm#.

[12] “Developing a Modern Port in Brazil,” Development Finance Corporation, https://www.dfc.gov/investment-story/developing-modern-port-brazil.

[13] “Expanding a Key Corridor in Colombia,” Development Finance Corporation, https://www.dfc.gov/investment-story/expanding-key-corridor-colombia.

[14] “Expanding Rural Electricity Access in Haiti” U.S. Trade and Development Agency, 5 March 2021, https://www.ustda.gov/success_story/expanding-rural-electricity-access-in-haiti/.

[15] Luiza Duarte, “Latin America: China’s Huawei Maintains Its Foothold,” AULA Blog, 19 November 2021, https://aulablog.net/2021/11/19/latin-america-chinas-huawei-maintains-its-foothold/.

[16] Teresa Romero, “Latin America & Caribbean: GDP by Country 2021,” Statista, 17 October 2022, https://www.statista.com/statistics/802640/gross-domestic-product-gdp-latin-america-caribbean-country/.

[17] Duarte. 

[18] Julian Borger, “Work on ‘Chinese Military Base’ in UAE Abandoned after US Intervenes – Report,” The Guardian, 19 November 2021, https://www.theguardian.com/world/2021/nov/19/chinese-military-base-uae-construction-abandoned-us-intelligence-report.

[19] Evan Ellis, “Chinese Security Engagement in Latin America,” Center for Strategic and International Studies, 19 November 2020, https://www.csis.org/analysis/chinese-security-engagement-latin-america.

[20] Vasanthi Vara, “Leading Telecom Infrastructure Companies in the 5G Theme,” Verdict, 20 January 2023, https://www.verdict.co.uk/top-ranked-telecom-infrastructure-companies-in-5g/.

[21] Diana Roy, “China’s Growing Influence in Latin America,” Council on Foreign Relations, 6 April 2022, https://www.cfr.org/backgrounder/china-influence-latin-america-argentina-brazil-venezuela-security-energy-bri.

[22] “China Regional Snapshot: South America – Committee on Foreign Affairs,” House Committee on Foreign Affairs, 9 July 2020, https://foreignaffairs.house.gov/china-regional-snapshot-south-america/.

[23] Ellis.

[24] Ellis.

[25] Wintgens, 4-5.

[26] “China  Celac Joint Action Plan or Cooperation in Key Areas (2022-2024),” Ministry of Foreign Affairs of the People’s Republic of China, 7 December 2021, https://www.fmprc.gov.cn/mfa_eng/wjbxw/202112/t20211207_10463459.html.

[27] Ben Raderstorf and Michael Shifter, “Rebuilding Hemispheric Consensus: A Reform Agenda for the Organization of American States,” The Inter-American Dialogue, (February 2018): 4, https://www.thedialogue.org/wp-content/uploads/2018/02/OAS-Report-FINAL-ENG.pdf. 

Image: “A Proclamação da Independência,” by François-René Moreaux, retrieved from https://commons.wikimedia.org/wiki/File:Independencia_brasil_001.jpg. This work is in the public domain in its country of origin and other countries and areas where the copyright term is the author’s life plus 100 years or fewer.

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