PRESENTATION at THE LATIN AMERICAN MORNING BY BENEDICE BULL, PROFESSOR AT THE CENTRE FOR DEVELOPMENT AND THE ENVIRONMENT (SUM) AND DIRECTOR OF NORWEGIAN LATIN AMERICA RESEARCH NETWORK (NoLARNet) AT THE UNIVERSITY OF OSLO
Helsinki, 18 April, 2018
I have led the Norwegian Latin America Research Network since 2008. It has been funded by the Norwegian Ministry of Foreign Affairs, as a means to raise the level of knowledge about Latin America in Norway. The situation in Latin America could hardly have been more different now than it was then. It was a time when Latin America reasserted its unity and independence through a number of regional cooperation initiatives. While this unity was never complete it has been replaced by a lack of regional cooperation, mainly due to domestic turmoil, deep regional splits and a lack of regional leadership. It is a situation in which one could desire an increased international engagement, for example on issues of democracy. However, instead I would argue you have a new game of the giants that I would describe as three elephants: They all bring new uncertainty in their own ways.
The elephant in the China store, which is the United States, appear to have no clear strategy and it wrecks more relationships than it is building; the elephant on clay feet, which is Russia, makes moves largely as a response to what it sees as hostile actions by the West, but nobody knows how long it is able to sustain its presence in the region. The elephant in the room is still China. It has a long term strategy, and significant resources, but it is still very uncertain how it will deal with multiple uncertainties occurring due to the uncertainties in the region, principally of course the crisis in Venezuela, but also the consistent inconsistencies in the policies of the United States.
What they unfortunately have in common is that none of them appears as credible international proponents of democracy.
I will argue that we find ourselves in the paradoxical situation wherein US influence – that has weakened and been challenged over the course of many years – could reassert itself, due to a series of political changes in Latin America that has brought to power more US-friendly governments. However, the US has shown itself largely incapable of establishment of a fruitful relationship to any countries.
The United States
We have seen the ineptness of the United States most clearly and recently displayed during last week’s Summit of the Americas in Lima, characterized by uncertainty and harsh rhetoric.
It seems like much more than three years ago that the last Summit of the Americas was celebrated in Panama in 2015, with the presence of Barack Obama. Obama’s presidential period coincided with that of the Pink Tide in Latin America and increased Latin American unity. In spite of strained relations to Venezuela (particularly after the passing of the Venezuela Defense of Human Rights and Civil Society Act of 2014’’ and the Executive Order 13692 of March 8, 2015 that imposed targeted sanctions against the leadership in Venezuela, overall relations between the United States and Latin America were generally good in this period.
In spite of increased regional unity, regional consensus was rather fragile, and at times it boiled down to an agreement about the need to re-incorporate Cuba into the multilateral diplomatic community of the Americas. Thus when Obama shook Raúl Castro’s hand as the first US president since the Cuban revolution, at the Summit of the Americas in Panama in March 2015, it did not only symbolize the end of nearly 60 years of hostilities between the US and Cuba, but also unity of the Americas.
The contrast to what we have witnessed the last weeks could not have been greater. The weeks before the Lima summit were a clear display of both national and regional troubles, starting with the host President Pedro Pablo Kuczynski’s lack of invitation to Venezuela’s president Nicolás Maduro due Venezuela’s obvious violations of democratic principles. This should not come as a surprise as Peru has been the initiator of the Lima-group, the most sustained regional effort so far to support a negotiated political transition in Venezuela. It provoked obvious reactions from Venezuela and its supporters, arguing this was a result of the pressure from the United States. Then Mr. Kuzcynski had to resign to avoid impeachment for corruption involving the Brazilian construction company Odebrecht, making the summit’s title “Democratic governance against corruption” sound almost satiric. The last minute cancelation by President Donald Trump saved the new host from embarrassing moments, but neither that nor the subsequent cancelation by Cuba’s president Raúl Castro and Nicaragua’s Daniel Ortega, saved the summit from aggressive verbal encounters. The fiercest of those being the exchange of insults between Mike Pence, Bolivia’s president Evo Morales and Cuba’s minister of foreign affairs Bruno Rodriguez that used the entire repertoire of US accusations against Latin American authoritarianism, versus Latin American anti-imperialism.
In other words, at a moment where the region really needs constructive solutions to concrete issues, the US decides to continue to create animosity. What the United States seems to misinterpret is that the recent turn to the right in the region is not a sign of increased agreement with the United States. I would dear the claim that even during the “pink tide” most Latin Americans were much less leftist, than anti-imperialist, and initiatives that appear as US aggression will backfire.
We all know that the Trump administration’s relationship with Latin America started out bad. As is well known he came to power promising to put America first, build a wall towards Mexico, and scrap NAFTA He expressed himself in positive terms related to the normalization of the relationship to Cuba, arguing that the isolation was a missed business opportunity, but apart from that appeared as hostile. Just his promise to put “America first” is an offence to most Latin Americans. It implicitly excludes them from their own continent America, as no one believes his intention is to really put America (for example Mexico) first.
And after that, it has gotten worse. The NAFTA negotiations have gone through ups and downs. It was not long ago that an agreement seemed possible in spite of unreasonable demands from the US such as a sunset clause and even stricter rules of origin. However, then a false tweet about Honduran migrants slipped from the white house, and troops were sent to the Mexican border after congress had refused Trump sufficient funding for the border wall, that now increasingly looks like it is going to be nothing more than a fence.
Not even Mexico negotiates with a gun to its head. Add to that the threat to return 200 000 El Salvadorians currently having Temporary Protection Status (TPS), the clumsy policy shift towards Cuba that has set back years of delicate and clever diplomatic efforts, with the accusations of sonic attacks on the recently opened US embassy in Havana; and the useless threats of military intervention in Venezuela, that does little more than bolster President Maduro’s dwindling support.
No wonder that the number of Latin Americans that disapprove of the US’ leadership in Latin America has skyrocketed from 27% in 2017, to 58% in 2018 according to the most recent Gallup polls. The percentage that approves of it has correspondingly dropped from 49% in 2016 to 24% in 2018.
Meanwhile two other actors are playing into the lingering Anti-Americanism. The first is Russia, of which only 38% of Latin Americans disapprove of, compared to 58% in the case of the United States. It may seem counterintuitive that Russia would thrive in the current context in Latin America with the ALBA countries – the left-wing countries allied with Venezuela – reduced strongly in importance. But while the US is alienating ever more friends, the Russians enter with new force. Where there US uses threats, Russia uses money and cultural cooperation.
Russia has been present in Latin America over the last decade in search of markets; friends and a theater to show its continued importance in global politics.
The “post- Cold War” Russian engagement begun with Putin’s visit to Cuba 2000 where he started renegotiation of debt and reinitiated trade, as well as expressed Russian participation in Cuban oil exploration.
Its activities in the region increased particularly significant after the 2008 crisis in Georgia and the 2014 annexation of the Crimea, with corresponding sanctions imposed by the US and Western Europe.
Since then and until recently, Russia has been present in Latin America particularly through arms sales, investments in oil and gas and agricultural trade. Among the highlights are development of nuclear plants and shale gas exploration in Argentina; and arms deals with Brazil, Chile and Peru.
However, the strongest relationship developed with Venezuela, to a significant extent fueled by US sanctions towards both countries. The strengthening of relations to Venezuela started immediately after the US imposed sanctions against the sale of military equipment to Venezuela from 2006. Since then, Russia has provided 68% of the arms transfers to Venezuela, mainly through Rosboronexport. . Venezuela owns Russia’s biggest commercial bank (Evrofinance Mosnarbank) and its development fund has a 49% share in Russia’s VTB Grou and Gazprombank. The oil company Rosneft has invested an estimated US$17 billion in exploration rights and oil exploration since 2008; since 2016 six mixed enterprises between PDVSA and Rosneft and Gazprombank have operated in Venezuela and the two countries have signed more than 260 agreements. Through a 2 billion dollar loan Rosneft has ensured 49.9% of CITGO. Houston based subsidiary. Last august it became a lender of last resort when lending PDVSA 2 billion dollars. More recently, it has cooperated on the pseudo cryptocurrency Petro partly as a joint effort to bypass US sanctions.
Russia has also tried to create common ground around traditional values as opposed to those promoted by the United States jointly with the Orthodox Church. The Spanish version of the Kremlin linked channel Russia Today can now be seen in most countries in Latin America. Although it is no match for the massive US cultural influence, it plays into a sentiment of longing back to a society based on clearer and more traditional rules that I think is becoming stronger in many countries (expressed in recent election and election campaigns in Costa Rica, Brazil, Colombia). Russia’s soft-power influence also builds on old ties, for example the massive cooperation that occurred in the academic sector during the cold war.
Not everything is going the way Russia would hope. Recently, deals have been called off in Argentina and Brazil. However, stronger relations have been established to Nicaragua. The recently elected Daniel Ortega, was the first country after Russia to recognize the breakaway states Ossetia and Abkhasia in 2008. Since then, close relations have existed. Recently a monitoring center, which is a part of the global satellite monitoring system Glonass has been established in Nejapa, outside of Managua run by the Russian Federal Space Agency in charge. Also a Russia-Nicaragua Anti-Narcottics center has been established in Las Colinas, and an agreement to allow Russian warships to cross into Nicaraguan territory has been signed.
However, Russia has not succeeded in projecting an idea of a common project that goes beyond joint opposition to the United States. It does not appear to have a clear strategy, but rather seeking allies in undermining or circumventing what it sees as US aggression, e.g. through sanctions.
Moreover, Russia has a major disadvantage in trying to project leadership in Latin America. Russia’s economy is smaller than the Brazilian. There is no big lure of the Russian market, and it is difficult to gauge for how long it can sustain its presence in the region. In this it stands in stark contrast to the elephant in the room, China.
Relations between China and Latin America have gone through a major changing since the turn of the millennium as a booming literature shows. Trade increased since around 2000. There was a particular boost after around 2008, but for different reasons than in the case of Russia: It filled many spaces that financial crisis had left open in terms of trade and investment. 2008 was also when the first policy paper on Latin America was published, in the context of the policy of “going out”. It underlines China’s general principles in dealing with other regions in the south: Win-Win, non-domination; non-interference; no-conditionalities and reaffirms its commitment to work with Latin America on a range of topics.
Since then, as is well known, trade has expanded exponentially but differently in different parts of the region. The big commodity exporters in South America have been the winners, Mexico and Central America have been the relative losers.
China has extended loans particularly to Venezuela and Ecuador, to a less extent Argentina and Brazil – linked to commodity purchases or tied to investments. It has invested in commodities and infrastructure, although as opposed to in Africa, the sums have not really been that large. Chinese investment to the region have totaled around US$110 billion until 2016, and many planned giant projects never materialized (as the bi-oceanic railway and the Nicaragua-canal, the latter to which a Hong Kong based Chinese company has bought a 50 years concession, but with little outlook towards ever materializing. (If you compare these US$110 billion from giant China to the whole Latin American region, to the US$25 billion that Norwegian companies have invested only in Brazil, the sum does not appear as particularly impressive). China has also given very little direct aid to Latin America (as opposed to for example Africa).
However, there are noticeable changes in China’s strategy in Latin America since 2016. During President Xi Jinpings visit to Brazil he announced the 1+3+6 strategy: 1 plan; 3 mechanisms (trade, loans, investments); 6 key sectors (energy & natural resources; construction of infrastructure; agriculture; scientific innovation and technology; IT and manufacture).
Since then there has been a clear broadening of sectors of engagement. The Chinese have long been in oil with the purchase of majority and in some case minority shares in oil companies across the region (Ecuador, Peru, Brazil, Venezuela, and Mexico). They have also long been in mining in Peru, Ecuador, Brazil, Argentina, Chile, and Mexico. The more recent engagement is a stronger focus on Agriculture, particularly in Argentina and Brazil, with the aim of improving the protein intake among the Chinese (through investments in soy and cattle). There is also a stronger focus on construction, primarily in ALBA countries, and partly filling the void left after the Brazilian giant Odebrecth has had to pull out due to corruption revelations. We also see Chinese companies in banks, telecommunication, and retail.
There is also a detectable change in the relationship to the country that has received most loans from Russia up until recently, namely Venezuela. The deep economic and political crisis of Venezuela has led the Chinese to be more cautious. No new lines of credit has been opened since 2015, although new loans within existing lines of credit, in spite of President Maduro’s wishes. Yet, while arms sales from Russia have declined over the last two years, China has filled in that void. The new favored country in Latin America seems to be Brazil, where the Chinese engage in energy, logistics and agriculture.
All of this happens in a policy framework that shows continuity as well as changes, expressed in the second Latin America policy paper published in 2016.
Since then we have seen, first, Increased engagement at high political level: In 2015 the plan for Cooperation between China and CELAC (2015-2019) was established, the annual Foro China-CELAC was initiated, and in the context of the 2018 forum, an invitation to become part of the Chinese One Belt One Road was made, with a promise of US$250 billion in new investments.
Second, there is increased concern with obstacles to investment projects, resulting in increased engagement in issues such as the environment and increased openness to include local labor. There is also increased openness to relating not only to government but also opposition groups, seen particularly in Venezuela.
Third, although Mexico has been a strategic partner of China for several years, the relations have in reality been strained, characterized by various conflicts and Mexican resentment over the gigantic trade deficit it has with China. Recently there has been several developments that seem to revert this, including both governmental agreements and business deals.
According to the polls, more people in Latin America now approves of China’s leadership than that of the United States, and much fewer disapproves of it. As a recent indicator of the alignment is that during last week’s crisis in Syria, most Latin American countries were more closely aligned with China’s strategy to not take clear sides, than to either that of the United States (supported by Colombia and Chile) or that of Russia (supported by Venezuela).
I do not have much time to discuss the region that is closest to home, namely Europe, but let me do it briefly and return to where I started: to democracy. We have a clumsy United States which behaves like an elephant in a china store and breaks relations faster than it is able to build them. Through its long history of interventions and feeble reaction to obvious violations of democratic rules among its allies, most clearly and recently in Honduras, it has undermined its own credibility as a supporter of democracy. We have Russia that plays cat and mouse with the United States in Latin America but appears to have no clear project and is inhibited by lack of economic muscles, and a China with a clear long term project and leadership but uncertainties about how to deal with increasing instability in Latin America. And no matter how much leadership China and Russia might project in Latin America, for obvious reasons they are not credible supporters of democracy in the region.
With regional organization in a period of deep distress, Latin America needs external powers that can do that. That leaves a significant responsibility to Europe. Interestingly, the country that most Latin Americans currently approve of as a global leader is Germany. The credibility that Germany has as a global leader, and the experience of Europe as a supporter for democratic institutions should be used actively in the time to come.