There aren’t many issues that unify Washington right now like the desperate hope its pro football team will return to glory under new ownership.
One issue that does—perhaps the only one—is increasing bipartisan concern about the challenge China poses to U.S. interests both at home and abroad.
It’s not a football game but something more serious: a global chess match with a near-peer authoritarian economy.
Yet as any football fan knows, you first have to compete in your own division if you want to get to the Super Bowl. And so it is with global politics.
If you don’t pay adequate attention to your own backyard, someone else will muscle into the neighborhood.
In the Americas, economies are troubled, insecurity has spiked, and voters are restless.
With the United States focused elsewhere, China has seen opportunity and solidified its position via financial largesse; it is now the top trade partner for most of South America and the largest sovereign debt holder.
Trade between China and the region reached a record $445 billion in 2021, up from just $12 billion in 2000, and foreign investment has charted a similar path with Venezuela, Brazil, and Ecuador the leading recipients.
No wonder Beijing’s political leverage has increased so significantly across Latin America and the Caribbean just as Washington’s has declined.
Chinese leader Xi Jinping welcomed to Beijing Nicolas Maduro, the leader of Venezuela, which is one of the largest recipients of Chinese aid in all of Latin America. Getty Images
Amid a halting recovery from the covid pandemic, Latin America desperately needs foreign investment and China offers markets and financing — along with commitment for the long term.
At the same time, the Western Hemisphere is richly blessed with natural resources — including critical minerals such as copper and lithium — which have become strategic components of global energy transition and climate change mitigation.
Meanwhile, the region suffers from a significant deficit of infrastructure and other investment even as popular expectations are rising — adding pressure to governments to deliver a better quality of life despite limited means.
China has emerged as Latin America’s largest trade partner over the past decade.Alamy Stock Photo
Chinese capital has become ubiquitous region wide, typically arriving without democratic “inconveniences” such as transparency, anti-corruption regulations, and respect for the rule of law.
Chinese money may even undermine regional development priorities including labor and environmental protections, as has happened with the Coca-Codo Sinclair hydroelectric plant in Ecuador.
Nonetheless, markets and capital can be difficult to resist for political and business leaders faced with significant economic and social demands.
A 2018 pic of Jinping with his wife posing with Panamanian Pres. Juan Carlos Varela and First Lady Lorena Castillo at the Panama Canal.REUTERS
Without doubt, China gains economically through its meaningful engagement with Latin America and the Caribbean.
As a new Council of the Americas report makes clear, however, Beijing’s ambitions for the Americas go well beyond the desire for economic altruism.
The goals are wide-ranging, integrated, and open-ended —including the cultivation of political leverage that can be deployed when required. Case in point, China’s use of loan guarantees to convince Honduras to support Beijing over Taiwan this past spring.
But as its Honduras play makes clear, Chinese money usually comes with strings attached — many strings.
A lack of transparency in contracts, for example, helps circumvent international financial regulations, facilitates the transfer of illicit funds, and undermines environmental, social, and labor standards.
Javier Milei, who’s emerged as the leading candidate in Argentina’s October residential election, has said he will heavily reduce trade between his country and China.REUTERS
In such circumstances, at a minimum, corruption can flourish while the rule of law diminishes.
Democracy can deteriorate and sovereignty erode; it’s a high price to pay for lithium extraction in Bolivia, a port in Peru, or a space station in Argentina.
And the cost is even more incalculable when it comes to enabling nations like Venezuela which are already on the path to authoritarianism.
Broad public education is required to address these concerns, while laws and regulations must be adjusted to ensure that China plays by the same rules in emerging markets as investors from North America, Europe and wider Asia.
At the same time, enhanced focus and urgency from Washington would be both strategic and wise, particularly on debt relief, trade expansion and investment promotion.
The key is not to isolate China, if it is even possible — but to demonstrate the value of robust relations with open and liberal societies.
The Coca-Codo hydroelectric project in Ecuador is just one of many massive Chinese-funded initiatives that have ended up making poor nations even poorer.Xinhua/Shutterstock
Emphasis must also be placed on strengthening democratic institutions at the local, national, and international level to dilute the potency of China’s financial muscle.
This is already happening, as evidenced by the recent announcement by front-running Argentine presidential candidate Javier Milei that his nation will no longer do business with Beijing if he’s elected in October.
Ultimately, Washington must begin to compete for regional hearts and minds, not just wallets.
The challenge from China is real, but not at all insurmountable, particularly if, as is widely reported, China is now beginning to show internal political and economic strains.
With a shared vision for democracy and development, the region will be in a much better position to benefit from all investors, from wherever they hail.
On that, most of Washington can readily agree.
As for the Commanders, we’ll have to see where they end up come January.
Eric Farnsworth is the head of the Washington office of the Council of the Americas and the Americas Society
Source link: https://nypost.com/2023/08/19/why-billions-in-chinese-aid-is-bad-for-latin-america/