From Russia, China and Taiwan, with Love

Published by Florida Shipper

By Rick Eyerdam

Rivals increase their courting of Latin America and the Caribbean
China’s president, Hu Jintao, flanked by hundreds of Chinese deal makers, swept through Latin America and the Caribbean at the end of last month one step ahead of President Bush on his last lap, and one step behind the Russians in the race to exert the most influence in the neglected Caribbean Basin and Latin America.

Bush made two promises after his first election. He would not get involved in nation-building but he would become deeply involved in improving the situation of U.S. neighbors in the hemisphere. Neither promise was kept because rebuilding Iraq, fighting terrorism and fueling recession dominated the Bush agenda. Thus, as the U.S. interest in the region evaporated, the Chinese, the Taiwanese and recently the Russians vied with Brazil and Venezuela for influence. Now the hemispheric enthusiasm for Barak Obama raises the possibility that much of the expensive groundwork undertaken by the Chinese, Russians and the others to displace U.S. influence in the region could be undone in a cult of personality. (See “Other views,” Page 12.)

The pageant
Over the past few months while the U.S. media was absorbed by the presidential elections and the economic meltdown, a grand political theater was being enacted on the hemispheric stage.

The Chinese were voted membership in the Inter-American Development Bank in October. China agreed to contribute $350 million to the IDB Group to bolster key programs in the Caribbean and Latin America.

That was followed by a keynote speech from IDB President Luis Alberto Moreno, who called on Latin America and the Caribbean to explore new trade and investment opportunities with Asia to minimize the impact of the current financial crisis.

“We are in the throes of a severe global financial crisis, and the IDB is working to minimize the impact of this crisis on long-term development,” Moreno said. “Exhorting Latin American and Caribbean nations to follow the Japanese lesson, to continue seeking opportunities in overseas markets, is an important part of this effort.”

That was followed by a visit by Hu to Costa Rica to negotiate a free-trade agreement. That was followed by Hu’s state visit to Cuba to promise aid and to strengthen trade negotiations on his way to Peru.

That was followed by a lengthy statement from the Russians asserting their devotion to Latin America and the Caribbean.

That was followed by a commitment from the Taiwanese to send billions of dollars to the Central American Integration System, or SICA. SICA members include Belize, Costa Rica, Guatemala, Honduras, Nicaragua, Panama and El Salvador. Except Costa Rica, all the SICA members have diplomatic ties with Taiwan, which is recognized by only 23 countries in the world.

That was followed by Hu’s meeting with the heads of the 21 countries of the Asia-Pacific Economic Cooperation forum in Peru.

The details
China’s joining IDB was “a win-win choice” for the benefit of all sides involved, said Zhou Xiaochuan, the central bank governor, during his meeting with IDB President Luis Alberto Moreno in Washington, D.C.

Moreno echoed Zhou’s comment, claiming that Latin America and the Caribbean would like to cooperate with China on finance, trade and investment sectors amid the global financial crisis.

Structured as a faux press conference, Russian Minister of Foreign Affairs Sergey Lavrov was interviewed on “Russian Relations with the Countries of Latin America and the Caribbean Basin,” on Nov. 17 and the text was released for study.

To the key question “What is the reason behind the currently observable noticeable reinvigoration of Russian ties with the countries of Latin America and the Caribbean basin?” the Lavrov answer was: “Relations between Russia and the countries of Latin America and the Caribbean Basin have indeed acquired strong positive dynamics in the last several years. The chief reason for that is the objective coincidence of interests. The reinvigoration of political, trade-and-economic, scientific and humanitarian-cultural cooperation with the LACB countries is among the Russian foreign policy priorities. The Foreign Policy Concept of the Russian Federation, approved by President Dmitry Medvedev, orients us toward this.”

Russian slap
He continued, “The Latin American states are natural allies in the creation of a new, safer and fairer world order and in tackling the key problems of today on the basis of a shared commitment to the fundamental norms and principles of international law, to the reinforcement of the multilateral mechanisms governing international relations and to the enhancement of the central U.N. role in world affairs.”

And he took a slap at U.S. trade policies. “We are brought closer together by our rejection of attempts at imposing unilateral approaches, by our readiness in deeds, not in words, to respect the interests of partners, to strictly observe the principle of noninterference in the internal affairs of sovereign states and by our choice in favor of a collective negotiated settlement to crises and conflicts,” Lavrov said.

On his tour of the region, Hu is attempting to contrast its dealings with Latin American and the Caribbean Basin with that of Russia’s by pointing out, discretely, that the Russians are selling arms and challenging U.S. influence and Beijing’s is only interested in agriculture, raw materials and markets for its exports.

“China’s relations with Latin America and the Caribbean have never been so close,” Hu told Peru’s El Comercio newspaper.

So far, China’s Hu has launched free-trade talks on a visit to Costa Rica, promised to help rebuild Cuba’s ports and the towns destroyed by hurricanes and agreed to billions of dollars worth of purchase sugar and nickel.

Along the way, according to reporters, the Hu delegation swelled to 600 people, including 12 ministers.

Hu in Peru
Hu then flew into Peru for the Pacific Rim summit where he was greeted like a political rock star. While in the region, China hopes to sign a free-trade deal with Peru to obtain better access to its copper and iron deposits. There is already a $2.2 billion deal to extract 7 million tons of copper from a single Peruvian peak.

In Brazil, the Chinese are negotiating to build a $3 billion steel mill with help from the Bank of China, which plans to open a branch in Brazil next year. China has already invested heavily in oil exploration in Ecuador, Colombia and Venezuela.

China’s trade with Latin America has risen tenfold to $102 billion, and China has displaced the U.S. as Chile’s main trading partner since 2000, although the U.S. remains the region’s main economic partner, with $560 billion in trade last year. China’s state-run Xinhua news agency reported last month that exports to Latin America grew 52 percent in the first nine months of 2008 to $111.5 billion.

One of China’s sidebar agendas has been to use its riches to encourage Latin America and Caribbean governments to switch allegiance from the other China: Taiwan. As a reward, Costa Rica is to receive a $300 million soft loan to build a 30,000-seat stadium and to help upgrade an oil refinery. China also deposited $350 million with the IDB for unspecified largess.

In an interview with Peru’s El Comercio newspaper, Hu hailed the growing trade among the Latin American nations and acknowledged “a number of Latin American and Caribbean nations have offered their understanding and support to China regarding Taiwan and Tibet, giving warm backing.”

U.S. disengaged
As China’s economic influence grows, that of the U.S. is reduced. Latin American exports to the U.S. are predicted to slow, and remittances from Latino migrants to the U.S. have already diminished. In some case Latino and Caribbean immigrants to the U.S. are heading home, displacing indigenous workers or contributing to soaring unemployment at home.

“The reality is that to some degree the fate of Latin America has been decoupled from the U.S.,” Daniel Erickson of the Inter-American Dialogue think tank told the Associated Press. “Or at least it’s not as tightly entwined as it used to be,” he said.

The day Hu arrived in Peru, its opposition La Republica newspaper devoted most of the front page to a photo of Hu under the Chinese characters for “welcome.”

At press time, President Bush was on his way to Peru, where he expects to be greeted by protesters who blame Bush policies for causing the world’s economic troubles.

But the criticism of the lame-duck president is not just coming from foreign dissidents. Before his departure, the Council on Hemispheric Affairs in Washington issued a scathing review of Bush’s foreign policy in the hemisphere called “dealing with a bad deal.”

It concluded, “A new administration under Barack Obama, who voted against CAFTA in the Senate, may re-address the stipulations of the accord, as the president-elect has promised to do with NAFTA. However, solving the chronic problems caused by this trade pact would require a vast overhaul of U.S. foreign policy, as well as a fundamental shift in its economic ideology. The United States should promote a foreign policy that values and promotes strong and stable allies through a fair-minded economic program that no longer rewards global exploitation. A major reassessment of CAFTA, and the unbridled capitalistic profiteering which it embodies, could be an important step in this country’s path to progress and positive change in Latin America, and across the globe.”