16.12.2021

The New Cold War in the Western Hemisphere: The United States’ China Challenge in Latin America

Thirty years after the end of the Cold War with Soviet Russia, the Biden administration finds itself in a similar competition with China. What are the contours of the “New Cold War” as the two superpowers vie for influence in Latin America?

Dr. Dorian Kantor is a political scientist, author, and professor of International Relations at Pontificia Universidad Javeriana. As a 2021 FES DC Media Fellow, he writes about U.S. foreign and national security policy.

During over four decades of the Cold War, tensions between the United States and the Soviet Union ran high. Although the two superpowers fought together to defeat Nazi Germany in World War II, goodwill between the two countries quickly evaporated, and an era of diplomatic hostility, economic enmity, a seemingly never-ending arms race, and proxy wars - but no direct military confrontation - was ushered in. Thirty years after the end of the Cold War with Soviet Russia, the Biden administration finds itself in a similar competition with China. In this article, I will delineate the contours of the “New Cold War” as the two superpowers vie for influence in Latin America.

The visible hand of China in Latin America

While Donald Trump’s militant anti-Communist rhetoric and malign actions toward Latin America quite literallydrove the countries of the region into China’s arms, it was not the Trump administration alone that allowed China’s pervasive influence to take hold. In fact, the trend of waning U.S. leverage has been around for well over a decade, and, as vice president, Joe Biden did little to slow it down.

Currently, the People’s Republic of China (PRC) is Latin America’s second largest trading partner, only eclipsed by the United States. What is more, the Asian giant is the number one trading partner of some of the region’s biggest economies such as Brazil, Chile, Peru, and Argentina.[1]Indeed, many Latin American nations are completely dependent on commodities export to China. As Brazil’s ambassador to Beijing, Paulo Estivallet, told Time Magazine, “We’d rather not be so dependent on exports to China, but what is the alternative? … It’s just more profitable to sell here than anywhere else.” Latin America, in turn, is the PRC’s second fastest-growing export market, and it is the second most-important destination of Chinese foreign assistance, outstripped only by Africa.

Although of little note at the time, the PRC made its intentions to “sustain the sound, steady and all-around growth of [its] relations with Latin America and the Caribbean” quite clear in a policy paper published over a decade ago. The timing of the paper’s release coincided with the Great Recession and the attendant decline in foreign direct investment (FDI) to the LATAM region from the United States and Europe. The cohort of leftist leaders in power at the time welcomed Beijing’s approach, and it was Chinese purchases of minerals and agricultural commodities that lifted the region out of the economic crisis of the late aughts.

For the past decade, Chinese FDI has averaged roughly $11 billion a year, mostly targeting infrastructure projects such as roads, ports, railroads, solar farms, and dams. Additionally, Beijing has used FDI as a vehicle to dominate Latin America’s technology sector. For example, the Chinese telecommunications giant Huawei – which is blacklisted in the U.S. as a national security risk – has seen exponential growth in the region; in fact, today Huawei is set to monopolize the construction of 5G infrastructure south of the United States. Moreover, using the strong position of Huawei and other Chinese tech companies such as ZTE and Xiaomi, the PRC is poised to set standards in its own favor and to command market developments in Latin America for decades to come.

Since China extended the Belt and Road Initiative (BRI) to Latin America in 2017,[2]nineteen governments in the region[3]have joined the “transcontinental long-term policy and investment program, which aims at infrastructure development and acceleration of the economic integration of countries along the route of the historic Silk Road.”[4]In his remarks delivered in Panama City in 2017, Chinese Foreign Minister Wang Yi emphasized that, “Latin America is the natural extension of the 21stCentury Maritime Silk Road, and the Belt and Road Initiative has become a new opportunity for current China-Latin America cooperation.” Additionally, as another sign of China’s extensive and ambitious penetration of the region, in 2018, Argentina became the site of a secretive People’s Liberation Army-run space station that has raised concerns in the United States about Beijing’s intelligence-gathering capabilities in the Western Hemisphere.

During the coronavirus pandemic, Latin America is relying once more on China’s voracious appetite for the region’s beef, oil, copper, soybeans, and iron to weather the economic crisis. Moreover, by providing high-priority items such as ventilators, testing kits, PPE, and vaccines, COVID-19 has created new diplomatic avenues for the PRC to increase its influence in the bloc and to weaken the United States in the Western Hemisphere.

In sum, as the new Cold War takes shape, Latin America is at the heart of China’s geostrategic plan to offset America’s naval presence in the South China Sea and its military assistance pact with Taiwan. Beijing’s recent recognition by Panama (2017), the Dominican Republic (2018), and El Salvador (2018) as the legitimate government of “One China” also demonstrates the PRC’s growing political weight in the region; to say nothing of the fact that it enhances the mainland’s claim to Taiwan in supranational governing institutions.

 

The Trump years

Ever since President James Monroe announced a new U.S. approach to foreign policy in the Western Hemisphere in 1823 – referred to eponymously as the Monroe Doctrine– the United States has been particularly possessive of its sphere of influence in Latin America. In the 20thcentury during the five decades of the Cold War, Latin America was a major ideological battleground, as the U.S. fought the Soviet Union over the nations of the region attracted to Marxism.

The past four years, by contrast, tell a story of willful disregard. Donald Trump only visited Latin America once; on the occasion of the G-20 summit in Buenos Aires in 2018. Moreover, his  administration slashed the foreign aid budget destined for the region, and it withheld funds from the Northern Triangle to compel those governments to curb the flow of migrants to the United States. Indeed, as Mark Green, Trump’s administrator for the U.S. Agency for International Development (USAID), admits, the administration “simply didn’t believe in [foreign] assistance.”[5]

Whereas Trump instigated an all-out trade war with China, on the Latin American front, he mounted an anemic response to counter the PRC’s rapidly growing influence. One exception is América Crece(Growth in the Americas), launched in 2018 and intended to be a competitor to the BRI. In short, the initiative – which is still in place – promotes de-globalization and reshoring by catalyzing U.S. private sector investment in infrastructure projects in Latin America. Although Trump’s State Department recognized that “[t]he region needs $100-150 billion in new annual infrastructure investment,” there is scant publicly available information about the projects that were funded through the program, and it has had limited concrete effects in the region, especially when compared to Belt and Road.

 

Regaining regional leadership?

As President Biden faces a whole host of daunting domestic and foreign policy challenges, expectations for the administration to have a more constructive relationship with Latin America are also exceptionally high. Fortunately, Biden’s deep knowledge of and extensive experience with the region make him just the right man for the job. During the Obama-Biden administration’s two terms in office, the former Vice President travelled to Latin America a grand total of sixteen times, making him Barack Obama’s chief emissary to the region. He was also the 44thpresident’s point person on a wide range of issues related to Latin America, from economic development and corruption in Central America to drug trafficking in Colombia.

Indeed, Joe Biden has promised greater focus on Latin America, a welcome development from the willful neglect of the past four years. Aside from more attention, however, we can also expect a sea-change in the U.S.’s approach to the region. As the former VP explains in his 2017 autobiographical work, Promise me, Dad, he has long felt as though the United States was a “continental bully dictating policy to smaller countries” in the Western Hemisphere.[6]Instead, he goes on to say, America must be a “true partner in improving those countries.” Accordingly, as president, Biden promises a new modus operandi in the relationship between the United States and Latin America, based on “mutual respect and a sense of shared responsibility.”

While Joe Biden’s presidency brings renewed interest in the battle for influence in Latin America, his administration must do a delicate balancing act to counter China’s “New Monroe Doctrine.” The fact is that many countries of the region would stick with China if their backs were against the wall. Therefore, President Biden will have to steer away from the Trump administration’s demonization of the PRC as an “adversarial countr[y] exerting malign influence;” instead, the United States must focus on competing effectively against the Asian giant in the areas of trade, FDI, and, importantly, foreign aid.

In its 2021 budget proposal, the Trump administration requested $1.4 billion in foreign assistance to Latin American and the Caribbean – an 18% decrease compared to the FY2020. In May 2020, Anthony Blinken, then-candidate Biden’s foreign policy adviser, stressed that, if elected, the Democratic presidential hopeful would “bring aid back to the center of [U.S.] foreign policy – the emphasis would be on diplomacy, democracy, and on development.” So far, the new administration’s actions have borne out the now-Secretary of State’s pledge: Biden’s recently released budget proposal[7]calls for $63.5 billion for diplomatic engagement and foreign assistance, up $6.8 billion or 12% from Trump’s last budget request. The blueprint justifies the increased spending by promising to revitalize collaborative U.S. leadership in Central America; restore America’s global standing and support for human rights; reestablish U.S. moral leadership on refugee and humanitarian issues; reassert American leadership in defending democracy, freedom, and the rule of law; and take a leading role in climate change, among others.

While the administration’s budget proposal only made specific reference to Central America, the centerpiece of Biden’s plan to deal with the root causes of irregular migration, the change in emphasis from Trump’s Cold War-style approach to Latin America is made clear by Biden’s foreign aid request destined for Colombia. The Biden administration is seeking an investment of $453.8 in Colombia in 2022, a 10% increase compared to Trump’s 2021 request. His proposal prioritizes economic and social programs and the implementation of the 2016 Peace Agreements (nearly doubling Trump’s 2021 request), and it sharply veers away from the war on drugs and foreign financing of the military(requesting nearly half compared to Trump’s 2021 budget proposal).

As Ronald Reagan famously said, “you [must] surround yourself with the best people you can find, delegate authority, and [not] interfere as long as the policy you’ve decided upon is being carried out.”[8]Although Donald Trump is anything but a Reagan Republican, he appears to have taken the 40thpresident’s advice to heart. Namely, his policy of willful neglect toward Latin America was reflected in the people he selected for cabinet positions. Not only was his cabinet the first since Ronald Reagan’s not to include a Latino, at least initially, but his chief advisers had little experience with the region.[9]One notable exception is John Kelly who had served as commander of the U.S. Southern Command from 2012 to 2016. Kelly, however, saw Latin America primarily as a national security threat due to “the near collapse of societies… with the associated drug and [irregular migration] flow.” Indeed, as Secretary of Homeland Security, Kelly oversaw the implementation of Trump’s campaign promise to build a wall along the nation’s southern border as well as the administration’s brazenly anti-immigration policies. Admittedly, Trump’s cabinet was later joined by Alexander Acosta (Cuban-American) as Secretary of Labor, and Small Business Administrator Jovita Carranza (Mexican-American); nevertheless, the administration’s approach to the region remained unchanged.

By contrast, Biden’s cabinet is joined by four Latinos: Homeland Security Secretary Alejandro Mayorkas (Cuban-American), Education Secretary Miguel Cardona (Puerto Rican-American), Health and Human Services Secretary Xavier Becerra (Mexican-American), and Small Business Administration chief Isabel Guzman (Mexican-American). Significantly, Biden’s special assistant and National Security Council senior director for the Western Hemisphere, Juan Sebastian Gonzalez, is Colombian-American – a Cartagena native.

The number of Latinos who advise Biden in domestic and foreign policy is a welcome departure from the Trump years for two reasons: First, in the domestic realm, the United States’ Latino population has been disproportionately impacted by the pandemic’s economic fallout. To wit, according to the CDC, Latinos are twice more likely than whites to contract coronavirus, three times more likely to be hospitalized, and 2.3 times more likely to die from COVID-19. Therefore, the administration must focus on alleviating the plight of the most vulnerable sectors of the population as the nation embarks on a path toward Biden’s vision to build back better in the post-pandemic world.

Second, as Juan Sebastian Gonzalez wrote in the Americas Quarterly in July 2020, the Biden administration is committed to a project to build back better on a hemispheric scale based on “shared prosperity, a renewed partnership on climate change, a resolve to guarantee the security of our citizens, and a sense of urgency toward realizing a shared vision of a hemisphere that is secure, middle class, and democratic.” Biden’s $4 billion dollar investment plan destined for Central America is a step in the right direction. His administration’s focus on good governance and the implementation of the peace agreement in Colombia is another. Moreover, as I wrote in a previous piece, the Biden administration has delivered nearly 50 million doses of Pfizer, Moderna, J&J, and AztraZeneca vaccines to Latin America and the Caribbean – a substantial effort to alleviate the region’s need for countermeasures against the COVID-19 pandemic.  

Lastly, a promising initiative for Latin America comes from Congress, where Senators Marco Rubio (R-FL) and Bob Mendez (D-NJ) have co-sponsored groundbreaking legislationto dedicate 35% of the US International Development Finance Corporation’s budget to Latin America and the Caribbean for 10 years.  The purpose of the proposed Advancing Competitiveness, Transparency, and Security in the America Act is to enhance U.S. diplomatic and economic efforts in the region and to “ensure China’s imposing presence… does not undermine democratic values and universal human rights.”[10]Key elements of the proposal include (i) enhancing U.S. economic tools to assist the region, (ii) countering malign economic practices, (iii) protecting Latin America’s digital infrastructure, and (vi) supporting civil society. Although the bill died in the 116thCongress that ended on January 2, 2021, its bipartisan nature is a propitious sign that U.S. legislators are willing to invest in reclaiming America’s leadership in the hemisphere.

 

[1]In fact, China has been South America’s top trading partner since 2015.

[2]Panama become the first Latin American nation to endorse the BRI in November of 2017.

[3]More than half of the thirty-three countries that comprise Latin America and the Caribbean.

[4]Belt and Road Initiative (beltroad-initiative.com), the BRI’s aim is to “promote the connectivity of Asian, European, and African [and Latin American] continents and their adjacent seas, establish and strengthen partnerships among the countries along the Belt and Road, and set up all-dimensional, multi-tiered and composite connectivity networks, and realize diversified, independent, balanced and sustainable development in these countries.”

[5]“Oftentimes we saw a process that may have been driven by… those how simply didn’t’ believe in assistance.” See, Disrupt and compete: How Trump changed US foreign aid | Devex

[6]“But I had come to believe we had a really good chance, if we were smart, and had lots of courage and a little bit of luck, to put our relationships in Latin America on an entirely hopeful new trajectory—one that turned the region from its inhabitants’ widely held belief that the United States was the continental bully dictating policy to smaller countries, to the realization that we could be a true partner in improving those countries” (Chapter 6: It Has to Be You).

[7]The 2022 budget has yet to be approved by both houses of Congress. Currently, the U.S. government is being funded through a continuing resolution through February 18, 2022.

[8]Fight House: Rivalries in the White House from Truman to Trump. p. 154

[9]Rex Tillerson had a long history with Venezuela as the former CEO of ExxonMobil, and John Kelly was commander of U.S. Southern Command.

[10]Menendez, Rubio Lead Introduction of Groundbreaking Legislation to Strengthen U.S. Competitiveness and Address China’s Engagement in the Americas | United States Senate Committee on Foreign Relations

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