The beginning of the 21st century has seen substantial geopolitical shifts related to a visible decline of the US role, especially in the southern part of the continent, and to the emergence of new non-regional actors establishing their own spheres of influence over a vast territory formerly dependent on Washington. In fact, the traditional asymmetry of power and influence of two Americas, typical of the last century in the framework of the inter-American system, has become a thing of the past.
One of the main developments in the international life of the region was a political and economic expansion of China. As far back as in the 1990s a typical feature of consolidation of the PRC positions in Latin America was establishing relations (as an observer) with the key regional integration groups. Special reference should be made of the establishment of the BRIC group (first decade of the 21st century) comprising the so-called giant countries on the rise – Brazil, Russia, India and China, later joined by South Africa.
At the beginning of this century China, which had always been renowned for its proper behavior in foreign markets, in contrast to the leading Western states was trying to pursue a very reserved policy in Latin America. The Celestial Empire envoys emphasized in every possible way that China did not have any expansionist ambitions, especially any plans to squeeze out the US from the region.
The situation started to change rapidly in the middle of the last decade. As far back as at the end of 2004 at the APEC summit in Santiago (Chile) the key figure who riveted everybody’s attention was not at all George Bush Jr. but PRC Chairman Hu Jintao. Far from hiding China’s interest in Latin America, he made a startling statement that China intended to invest USD 100 billion over the next ten years.
The Chinese leader’s statement was not at all unsubstantiated. In 2010 only the Chinese investment in the region made 15 billion US dollars, four times the volume of the previous year.
Moreover, what catches the eye is an exceptional pragmatism of the Chinese choice of the most preferential partners. In 2010 59% of invested capital went to Brazil and almost 41% - to Argentina. Primarily, such an uneven distribution can be explained by the fact that both Brazil and Argentina developed powerful agro-industrial complexes, while the problem of food supplies in China has substantially deteriorated over the recent years.
The key suppliers of China do not have a direct access to the Pacific Ocean, which opens up an opportunity to establish large-scale transoceanic services in Latin America. In its turn, it can give a powerful impetus to horizontal integration, keeping in mind that in this case Chile and Peru would become trans-Pacific platforms for two South American giants. In 2010 China has become the principle trade partner of Brazil (17% of exports against 6% in 2005).
Another focus of special PRC interests are oil-producing countries, Venezuela in the first place. In 2010 the volume of trade between the two increased by 42% reaching more than USD 10 billion. By the middle of 2011 the delivery of crude oil from Venezuela to China reached 500 thousand barrels a day. The two countries reached an agreement to increase the volume up to one million barrels over the coming years. The aggregate volume of Chinese credits granted to Venezuela over the last ten years amounted to 24 billion US dollars, which were redeemed by oil deliveries.
However, the diversification of foreign economic ties of the leading regional powers due to the Chinese factor obviously has another side of the ledger. This refers to the structure of foreign trade with the Celestial Empire. Chinese exports to Latin America are basically manufactured goods which often “kill” the production of similar goods of domestic manufacturers.
This is the reason to raise alarm already in Brazil and a number of other countries. Trade with China actually helps to consolidate their standing in the world division of labor as raw materials suppliers, whose role in the present environment is visibly growing. Nevertheless, in all probability during the next decade we shall witness the efforts of the leading nations of the region to level off the current imbalance in foreign trade.
This being said, China also “encroaches” upon the “soft underbelly” of the United States. The “Chinese syndrome”, which ever more creeps over the American establishment, is fanned by the PRC participation in the Panama Canal reconstruction project as well as its plans to invest one billion US dollars into the Caribbean economies announced in September 2011.
On the whole, in the first decade of the 21st century China managed to make a spectacular leap forward in the quest for a stable and beneficial presence in Latin America, having put competitive pressure on the United States in a whole range of aspects, and having become a prominent actor among the non-regional partners of the countries of this region.
Indian Elephant Advances
In principle, the identical strategy is pursued by India which appeared in Latin America quite unpredictably. This gave grounds to the newsmen to write about the “Indian elephant advancing on Latin America”. Indian oil companies have already invested USD 2.8 billion into oil production in Brazil, Venezuela and Colombia. Over the first decade of this century the trade turnover between India and the countries of the region “leaped” from two to twenty billion US dollars. Besides, India signed preferential trade agreements with Chile and the MERCOSUR group. The mechanism of consultations on political and economic issues was established between India and the Andean Community of Nations.
According to certain experts, one of the practically unrealized opportunities of the leading regional powers to develop a strategic partnership with India is to attract Indian hi-tech companies to Latin America.
Focus on the South Atlantic
As to the African vector, one has to point out the RSA which, after the defeat of apartheid, has begun an active build-up of relations with the countries of the South Atlantic, primarily Brazil.
The first tangible form of such cooperation was interaction in the naval sphere. Since 1990s the national Navies hold joint naval exercises twice a year with the participation of combat units from Brazil, Argentina, Uruguay and South Africa.
Brazil’s attention to the development of ties with South Africa is well explicable. Presence in South Atlantic is one of the key components of the Brazilian military doctrine, more so after the discovery of massive oil deposits in the deep marine shelf of the country. And the most powerful nation on the African continent as an ally on the other side of the Atlantic is highly beneficial to Brazil. In 2003 Brazil came up with the initiative to work out a mechanism of tripartite consultations with South Africa and India – the so-called “group of three”. After the establishment of the BRIC it was Brazil that made substantial diplomatic efforts to invite South Africa to the membership in the club, what actually happened before the third summit of the organization in China in April 2011.
Through the Back Door
An unexpectedly growing presence of Iran in the region acquired an entirely different perspective, a military and political dimension. In general, it can be described by one statement made by Iranian President M.Ahmadinejad: “When Western countries were trying to isolate Iran, we went to the US backyard”.
Indeed, by the beginning of 2011 Iran had established diplomatic relations with eleven countries of the region, augmented the trade turnover to three billion US dollars, and set up links in the military sphere with Venezuela, Bolivia and Ecuador. According to a number of observers, the primary goal of Tehran is to build up an opportunity to undertake retaliatory measures in case the US attacks the infrastructure assets and nuclear facilities in Iran.
In this connection let us quote a controversial and alarmist-sounding view of Professor R.Ortis of the Andean University (Colombia) specializing in the problems of terrorism. He believes that Iran arranged for physical presence of the Islamic Revolutionary Guards fighters, agents of the overseas operations Department of the Ministry of Intelligence and National Security, and Hizbollah members in a number of Latin American countries with the purpose of establishing underground networks over the entire region. The Colombian Professor also pointed out their linkage with the fundamentalist groups of Islamic communities in Latin America ready to resort to terrorism in case of the US attack against Iran. This viewpoint has to be treated with due caution keeping in mind that from time to time the Western press releases information which would further prove to be a pure hogwash. For one, in May 2011 the German Die Welt published a headline story about Iranian plans to construct a launching site for medium-range missiles in Venezuela, 120 kilometers off the Colombian border.
Iran, planning to pursue its nuclear program, focused its attention on the vast deposits of uranium in the state of Bolivar (Venezuela). Iran has already invested more than one billion of US dollars into extraction and processing of the strategic metal of tellurium in Bolivia, where its deposits are the world largest.
The Ugo Chavez regime has turned into the key Iranian partner in Latin America. Anti-Americanism elevated to the degree of political ideology has become the backbone of the actually materialized strategic partnership between the two states.
One has to acknowledge that over the recent years Iran has acquired several footholds in the region, being primarily oriented toward the development of relations with the leftist radical regimes. Its further presence in Latin America would greatly depend on the degree of stability of those regimes, while the latter raises certain doubts.
Summing it all up, one has to point out that with the disintegration of the bipolar world some peculiar vacuum zones have appeared in the Western hemisphere where non-regional states are striving to acquire a foothold in the growing competition environment. The whole picture is further dramatized by an active realignment of forces, the decline of the old and the emergence of the new integration groups (without the US participation). However, even bearing in mind the complexity of the contemporary geopolitical setup in general, the role of the Latin American region in world politics is visibly growing.