By Andrés Serbin and Andrei Serbin Pont, Forbes, April 16, 2015
The most eagerly expected moment of the VII Summit of the Americas in Panama last week was the symbolic handshake between Barack Obama and Raul Castro, leaders of two countries separated by decades of confrontation. While Cuba was on the top of the “to-do” list for the US in Panama, it was actually part of a wider and more ambitious agenda: reestablishing US presence in South America and containing China´s growing influence over the region.
After the 9/11 attacks in 2001, US foreign policy shifted and gave little to no priority to the Americas with the exception of countries like Mexico and Canada, and neighboring sub regions such as Central America and the Caribbean. Since then, South America saw the fast rise of left-leaning governments, anti-American rhetoric and integration initiatives that emphasized the exclusion of the US from regional policymaking. Almost a decade and a half later, we see how US withdrawal from the region allowed for the growing presence of other international actors such as Russia, China, and even Iran.
Russia positioned itself closely with the countries with the most radicalized anti-imperialist discourse, becoming an investor in the energy sector and a military equipment provider. China on the other hand went further: It focused on commercial ties with the region, actively investing in South-American countries, selling manufactured goods of all sorts, purchasing commodities, selling weapons systems, and even becoming the de facto banker of governments with which it developed close relationships such as Venezuela, Argentina, Brazil and Ecuador. Overall, Latin-American countries received $22 billion in Chinese loans in 2014 alone, taking the total since 2005 to $119 billion.
In regards to commerce, Argentina provides a prime example of increasing Chinese influence. In 2014, 16.5% of Argentine imports came from China, in sharp contrast to the 3.4% it bought in 1994. Since 2010, China has been the second largest exporter to Latin America behind the US, but ahead of the European Union. This rising presence and influence of China in what the US has historically considered its own “back-yard” worried the Obama Administration’s decision makers , leading them to seek a new strategy to reengage with countries in South America as part of a broader global strategy that applied “smart power.”
The ideological and symbolic leader of anti-American resistance in the region, Cuba, became the key to accessing a now diplomatically distant region as the embargo on the island had not only taken its toll on bilateral relations, but had become a key issue of dispute between the US and Latin American countries. For years the region has taken a strong stance and demanded Cuba´s reincorporation in the Inter-American system, therefore any initiatives to create ties with Castro´s regime would also be favorable to creating dialogue conditions with the rest of the region, including antagonistic countries like Ecuador, Bolivia and Venezuela.
In Venezuela, Maduro´s government (based on the legacy of the late Hugo Chávez), has continued the policies of the previous administration by strengthening ties with Russia, China, and Iran, in opposition to US influence. An example of this has been Venezuela´s growing oil exports to the Asian giant, going from 50,000 barrels per day in 2006 to roughly 600,000 barrels per day sent to China in 2014. These growing exports have been part of a wider strategy aimed at reducing dependency on exports to the United States, as well as being used to back loans provided by China that now exceed $56 billion. China has also expanded its investments in Venezuela by acquiring and developing a plethora of companies, along with the signing of large military contracts to provide Venezuelan armed forces with aircraft, radars, armored vehicles, and helicopters.
China´s influence has also extended to more moderate governments in the region as in the cases of Ecuador and Argentina. In the case of the latter, Cristina Fernandez de Kirchner´s administration signed a treaty that included the establishing of a “space exploration site” in the Argentine Patagonia with very few public details on the purpose and functioning of these installations, which will be under complete control of Chinese government. Many security experts agree on the fact that not only is the agreement absolutely opaque on the intention of the site, but also that the presence of dual-purpose technologies allow the station to operate as an intelligence gathering platform. Argentina has also become a recipient of Chinese loans, and an important provider of commodities.
Returning to the Panama Summit, it becomes clear it has been successful for Obama´s foreign policy intentions because it achieved not only the “must-have” picture with Castro and the joint press conference, but also because it unveiled a new beginning in US relations with Latin America and the Caribbean. Also because at this juncture of the process it managed to avoid confrontation with Venezuela´s Maduro, just as his Bolivarian government begins to lose regional support.
In a series of events previous to the summit, Venezuelan Chavismo took a hard hit when Brazilian President Dilma Rousseff gave a prime time interview to CNN where she expressed the “absolute interest” of UNASUR (Union of South American Nations) in seeing the liberation of political prisoners in Venezuela. Another blow came from Uruguay, when in the lead up to the Summit, its Foreign Affairs Minister made strong declarations condemning Venezuela for holding political prisoners and allowing for the use of firearms against protestors, as well as differentiating themselves by stating that such actions would be unimaginable in their own country. Ahead of the Summit, leaders presented the Declaration of Panama, which demanded “negotiated solutions” to the “severe democratic crisis” in Venezuela. Since, it’s been signed by 31 former presidents, amounting to even greater pressure on the Venezuelan government. In a much less discussed aspect of Obama´s strategy before his visit to Panama, Thomas Shannon went to Venezuela to hold discussions with the Venezuelan government as well as to host a meeting in the US Embassy in Caracas with opposition leaders.
Overall, “Bolivarian” hard liners in the region where only seen in the background of the main snapshots of the Summit. Presidents Obama and Castro´s conciliatory speeches opened the door to a new phase in hemispheric relations, while Maduro, Morales, Kirchner and Correa transmitted nothing but dated speeches and empty rhetoric. However, and most importantly, the US has taken steps to deal with the biggest underlying protagonist of the Summit, China, which although not formally present has taken a huge role in the hemispheric agenda.
The region now finds itself in an important position when it comes to the US’ new continental strategy, aimed at strengthening alliances that will support the Trans-Atlantic Partnership (TPP) as a counterweight to the Free Trade Area of Asia Pacific (FTAAP) that was launched by China at the APEC Summit in Beijing last November. While the TPP includes only 12 APEC member countries, FTAAP aspires to include 22 APEC countries, after a two-year study that will prepare the technical ground for the agreement. Beijing´s response is uncertain, but Latin-America´s growing strategic value is becoming inarguable, and therefore we are witnessing the initial stages of an escalating competition between the US, China and other superpowers to gain ground in this part of the world.