Red Dragon spreads its wings


America’s “neglect” of Latin America in foreign policy over the last decade comes with a price in the emerging geopolitical tussle with China, argues Shane Murphy

Ten years ago, China’s presence in Latin America was nominal at best. Its economic and political influence was minimal, it had no foothold in the Americas, and its prospects of gaining sway in the region looked bleak. The US, at the height of its power after the fall of communism and successful NATO operations in the Balkans, was master of all it surveyed. Through a mix of soft power and the threat of hard, it was able to bring most to heel – especially in its traditional sphere of orbit.
Washington could never have envisaged the situation currently unfolding. A decade on, it is a peripheral actor in many areas in Latin America. Leftist regimes in Venezuela, Ecuador, Bolivia, Nicaragua, and (to a lesser extent) Peru continually lambast American imperialism, and have poignantly turned to China. With a near insatiable appetite for raw materials and energy, Beijing has zealously capitalised on American intransigence.
A decade is a long time in politics. The matter of how the US could move from a position of such unilateral strength to one of weakness in a matter of years, invariably lies in the policies of the Bush presidency. A crass approach to foreign policy, especially in its own backyard, ensued – in which resources and efforts were dispatched to contest wars in the Middle East, while Latin America and its many problems were neglected.
Bush’s gung-ho approach to Afghanistan and his even more cavalier approach to Iraq generated much alienation. The rhetoric emanating from the administration also drew consternation from Latin American leaders. They began to look at less ideologically suited partners in an attempt to wean themselves of America.
While the US was preoccupied fighting its War on Terror in Afghanistan, and leading a merry-go-round in Iraq, China quietly increased its presence on the continent. Trade between China and Latin America soared eightfold, from $12.6 billion in 2000 to $102.6 billion in 2007. China’s newfound influence can be seen in almost every sphere of economic activity such as oil and gas production, mining, infrastructural projects and defence contracts.
The election of a string of leftist populist leaders in opposition to American hegemony has strengthened China’s hand in economic but also political spheres. Hugo Chavez, Daniel Ortega, Rafael Correa and Evo Morales have lambasted American influence in the region, and pointedly turned toward China.
It is not just leftist regimes that China is currying favour with. Trade with countries such as Argentina, Chile and Uruguay has also increased dramatically. In a bold move, China has agreed to replace the dollar in trade with Argentina, a $10 billion arrangement that will allow Argentina access to Chinese Yuan to pay for Chinese imports. This deal has been touted as an alternative to the prevailing system of world trade in which the dollar is dominant, much to the benefit of America. The symbolism has not gone unnoticed in Washington.
Most worryingly, however, have been relations between China and Brazil. In the first six months of this year, China became Brazil’s single biggest export market. This is augmented by the fact that the Chinese Development Bank and the emerging oil giant Sinopec have lent Petrobras, Brazil’s state-controlled oil company, some $10 billion in return for 200,000 barrels of oil a day.
This recently led US Secretary of State, Hillary Clinton, to declare: “If you look at the gains particularly in Latin America, that China is making it’s quite disturbing”.
Coupled with their substantial stakes in Venezuelan and Ecuadorian oilfields, China’s newfound prowess is a strategic nightmare for Washington. With traditional oil sources dwindling, and few signs of replacements on the horizon, the US has been out-manoeuvred in front of its own eyes. The importance of energy resources will become ever more apparent in the coming years as supplies dwindle in tandem with increasing Chinese acquisition of existing reserves in the region.
America’s traditional hegemony over Latin America evolved out of the “Monroe Doctrine”, the recognition in the early 19th century that any interference from outside powers would inevitably clash with their interests. The “neglect” of South America by US policymakers under the Bush Presidency has cost Washington many of these important interests. As the first salvo of a long-term geopolitical tussle with China begins in earnest, this loss will prove much more costly in the years to come than either of the wars in Afghanistan or Iraq.
The election of Barack Obama signalled a shift in US relations with many Latin countries, most notably Cuba. The question now is whether Obama will be able to act swiftly and decisively to contain the dragon from flexing its wings even further into America’s back yard.