Is China Winning Latin America?

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2022-07

July 14, 2022

Jul 14, 2022 Ana Palacio

While the West has largely ignored Latin America, or tried to force the region to bend to its
will, China has been offering regional actors huge perks, with none of the conditions (at least
not up front). Unless the US and Europe change tack, they could end up losing a critical
region – and the new cold war.

MADRID – Is the West losing Latin America? During the Cold War, this question was
feverishly discussed in Washington, DC, and beyond. Now, the return of great-power
competition and the potential revival of spheres of influence – together with the recent wave
of left-wing electoral victories in the region – are giving it renewed salience.

For the West, the looming specter of hot conflict with authoritarian regimes, from Russia to
China, has again highlighted Latin America’s importance as a partner. At the same time,
however, the United States and its allies are preoccupied by the war in Ukraine, including,
not least, its implications for energy markets and economic prosperity.

Political upheaval in Latin America will make effective engagement all the more difficult.
Though the region has long been plagued by corruption, inequality, and crises of confidence,
it made significant progress in recent years, with poverty reduction – often achieved through
commodity-export-funded social-policy experiments – buttressing political stability.

But the pandemic disrupted this process and ushered in a period of economic malaise and
political instability. Latin America’s traditional political-party systems have now collapsed,
and the region appears to be firmly gripped by populism and polarization.

Five of the six most populous South American countries are now led by leftist governments,
albeit cut from a very different cloth than the Cuban or Venezuelan regimes. Peru’s leader,
Pedro Castillo, is a self-professed Marxist. In Chile – once the bastion of free-market policies
in the region – the left-wing activist Gabriel Boric is in charge. Colombia, long considered a
bellwether for Latin American politics, recently elected the former guerilla Gustavo Petro as
its president. And Brazil, the region’s most populous country and its largest economy, could
well join their ranks when it holds its next presidential election in October.

In the meantime, evidence of the West’s declining influence in Latin America continues to
mount. At the United Nations General Assembly last March, five Latin American countries
declined to condemn Russia’s invasion of Ukraine (Bolivia, Cuba, El Salvador, and Nicaragua

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abstained, and Venezuela refused to participate in the voting). And many Latin American
governments have refused to join the West in imposing sanctions on Russia. This has fueled
speculation that the region is set to reprise a Cold War-style posture of non-alignment.

Moreover, several Latin American leaders – including Mexican President Andrés Manuel
López Obrador and Bolivian President Luis Arce – vowed to boycott last month’s Summit of
the Americas if their Cuban, Venezuelan, and Nicaraguan counterparts were excluded. A
failed summit – and a major embarrassment for US President Joe Biden’s administration –
was a distinct possibility.

The meeting was ultimately salvaged. But the outcome – a pro forma declaration on
migration and a somewhat toothless Americas Partnership for Economic Prosperity – was
hardly impressive. Moreover, Obrador followed through on his threat not to show up, and
Bolivia, El Salvador, Guatemala, and Honduras sent ministers, rather than heads of state or
government. It might not have been a debacle, but nor will it leave a lasting mark on
hemispheric affairs.

This reflects Western failures as much as Latin American political developments. Though
Biden has not maintained the hostility toward Latin America of his predecessor, Donald
Trump, his administration has failed to deliver an effective policy of regional engagement.
Latin American countries are frustrated with Biden’s apparent indifference to them, and his
willingness to let domestic considerations – including the looming midterm elections and the
politics of states with large Hispanic constituencies, such as Florida – drive policy.

Europe has not done any better. Since agreeing “in principle” to a free-trade deal with the
Mercosur countries – a deal that has yet to be ratified – the European Union’s approach to
Latin America has been lackluster. It failed to pursue effective pandemic diplomacy, and now
its attention is consumed by the war in Ukraine, including the imperatives of bolstering its
security and weaning itself off Russian energy.

Meanwhile, China continues to expand its Latin American footprint. From 2002 to 2021,
China’s total trade with the region skyrocketed, from $18 billion to nearly $449 billion. At
this rate, it will exceed $700 billion by 2035. These gains have been propelled partly by free-
trade agreements with Chile, Costa Rica, and Peru. China is also working toward a deal with
Ecuador, and has engaged 21 Latin American countries in its Belt and Road Initiative.

China has achieved this success by offering all the perks of trade and investment, with none
of the conditions. As one commentator put it, America has a Vatican-style approach to Latin
America, with lots of rules and conditions laid out up front, whereas China offers the easy
welcome of Mormon missionaries. This does not mean that China makes no demands, but
they do not come until later, often in the form of hidden clauses. By the time they come to
light, China has a solid foothold in the region – one that includes a growing military
presence.

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The West cannot afford to lose Latin America today any more than it could during the Cold
War. A key producer of fuel and food, the region can fill important supply-chain gaps. More
fundamentally, revitalizing the rules-based international order will require the West to
achieve a kind of critical mass with partners and allies – including Latin America.

That is why the West must work urgently to rebuild its lost credibility in Latin America. This
will require time, commitment, and diplomatic heft. As a first step, the US and Europe
should seek to build cooperation in areas of mutual interest, such as climate change, public
health, and migration. Spain’s upcoming EU Council presidency provides an important
opportunity to kick-start progress. In any case, steps must be taken within the coming
months.

Reviving relations with Latin America will not be easy in the polarized political climate
prevailing in much of the West. But when the stakes are as high as they are today, we cannot
afford to keep our heads buried in the sand.

Ana Palacio
Writing for PS since 2011
138 Commentaries

Ana Palacio, a former minister of foreign affairs of Spain and former senior vice president
and general counsel of the World Bank Group, is a visiting lecturer at Georgetown University.

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