Nikolas Kozloff

If Wikileaks documents are any indication, Chinese investors might have a big surprise in store as they continue their push into Latin America. In their effort to extract raw resources, the Chinese have fared relatively well in such areas of the globe as Africa. However, recently disclosed U.S. cables hint that Latin America may not prove as pliable for the Chinese. Indeed, during private discussions with U.S. diplomats in Shanghai, Chinese experts candidly admitted they faced a “public relations challenge” in Latin America, and that local residents viewed Chinese businessmen as “locusts” intent on “extracting minerals and natural resources and leaving very little of lasting value behind.”

China is a relative newcomer in Latin America, yet the Asian powerhouse has made a big splash. In its drive to dominate Latin American markets, China is primarily motivated by economic and not political considerations. In recent years, the Chinese authorities have understood that native industry must be provided with adequate supplies of energy, minerals, and other basic raw materials if the Asian powerhouse is to sustain continued economic growth. In tandem with such desires, China has moved aggressively to become Latin America’s second largest commercial partner after the United States.

For their part, the Latin Americans have been content to export their raw materials to China, though many countries have uncomfortable memories of U.S. economic enclaves and may wonder whether the Asian powerhouse will encourage sustainable development and social equity. While China is willing to help construct ports and railroads, such infrastructure projects will be linked to the transport of raw materials and in this sense the Asian tiger is little different from the United States, which historically sought to promote the type of “development” which would merely facilitate the extraction of South America’s resources.

Latin America is Not Africa

In Africa, China found that it could import its own labor, ignore environmental standards and essentially adopt a colonialist approach toward local peoples and resources. Compliant political elites, who displayed scant regard for human rights, made life easy for Chinese investors. But Latin America, having recently witnessed a tectonic shift to the left, is less willing to embrace untrammeled economic development if this comes at a high social and environmental cost.

In contrast to Africa, Latin America has a much more dynamic political culture characterized by combative political parties, labor unions and non-governmental organizations. Though many within Latin American civil society may have looked upon China as the champion of “Third World-ism” at a certain point, some will be less than impressed by the Asian tiger’s shedding of any ideological pretensions in the name of promoting a more politically neutral “multi-polar” world.

WikiLeaks documents shed fascinating light on the many difficulties and contradictions in the incipient Chinese-Latin American relationship. Speaking with officials at the U.S. consulate in Shanghai, Chinese experts said their nation’s leaders were interested in paying more attention to large emerging countries like Brazil and Mexico “amid the changing global economic balance of power.” Chinese companies, however, had difficulty understanding the Latin business milieu, and complained about “strong labor unions and cultural conflicts.”

Fundamentally, experts noted, “Chinese investors think Latin America and Africa are the same…but it is easier for them to do business in Africa since Africa's institutions and regulatory environment are less well-developed than Latin America’s.” Chinese workers, meanwhile, had a “different work ethic” from their Latin American counterparts, and as a result many companies had chosen to import their own laborers which had in turn fed “local resentment.” Conscious of the need to improve its public image, China encouraged its companies to take on more local employees, and the Asian tiger had become a substantial donor to the Inter-American Development Bank.

Differing Views on China

Despite these many problems, it is also clear from WikiLeaks cables that Latin America’s view of China depends very much on the individual country. Indeed, while China is viewed as a friend in some nations, in others it is viewed as a threat. In recent years, China has signed free trade agreements with Peru and Chile, two countries which don’t have competitive industries to defend. China has failed to negotiate accords with some of the other larger countries, however, because certain Chinese exports are viewed as more direct threats.

One country which has been particularly wary of the Asian tiger is Mexico. In early 2009, U.S. diplomats at the American embassy in Mexico City wrote Washington that “Mexico’s trade deficit with China and concerns over China’s approach to investment continue to color Mexico’s perception of China as a true partner.” While Chinese Vice President Xi Jinping was well received in Mexico, officials were “reluctant to push too strongly for increased Chinese presence.” One top Mexican businessman confided to the Americans, “We don’t want to be China’s next Africa.”

The entrepreneur was referring to “the oft-cited criticism that China has pursued a strategy of seizing the continent’s huge natural resources while dumping cheap industrial manufactured products into Africa’s markets.” “We need to own our country’s development,” the businessman added. Judging from WikiLeaks documents, the Chinese are aware of Mexico’s skittishness. Speaking to U.S. officials in Shanghai, Chinese experts pointed to the “similar industrial structure” between China and Mexico, adding that the Asian powerhouse should “invest more in the Mexican oil industry to counter Mexican concerns about China's growing trade surplus with the country.”

Seeking a South American Gateway

Another nation with mixed feelings toward the Asian tiger is Colombia. In WikiLeaks cables, U.S. diplomats in Beijing remarked that Colombia was actively seeking new economic partners but was still “wary of Chinese motives.” Speaking to the U.S. Chargé d’Affaires in Beijing, Colombian businessmen expressed their concern that China might “walk all over” Colombia and its people much as the Asian powerhouse had done in Africa. In addition, the Colombians were wary of Chinese investment in mining and hydrocarbons given the Asian tiger’s awful track record on environmental and labor practices [such talk is rather ironic in light of Colombia’s own horrible standards on these counts].

Because Colombian exports compete with those from China, the Andean nation is mainly interested in investment as opposed to signing a free trade agreement with the Asian powerhouse. Originally, China had directed its companies to invest in neighboring Venezuela, but the firms had “dragged their feet.” Reportedly, Chinese businessmen regarded Colombia as more stable and economically open than Venezuela, and therefore a “better base for targeting the rest of Latin America.”

In the long-term China may find that Colombia, which has a much more repressive anti-labor climate than Venezuela, is a country more to its political and economic liking. Indeed, recent business deals suggest that China sees Colombia as its preferred South American gateway. Take for example a Chinese plan to build an auto assembly plant in Colombia. The factory will manufacture light vehicles for export to different regional markets. The Chinese chose Colombia over Chile, Brazil and Mexico and the factory will begin production in 2012.

Brazil: “We Don’t Want to Be Colonized Again”

While Colombia and Mexico are certainly economically important within the overall Chinese strategy, it is the South American powerhouse of Brazil which has become the most indispensable linchpin. China has already displaced the U.S. as Brazil’s chief trading partner and experts predict that between now and 2014 the Asian tiger could invest an average of about $40 billion a year in Brazil. As they establish their key beach head in South America, the Chinese will target specific economic sectors such as telecommunications, infrastructure, farming, oil, biofuels, natural gas, mining and steel.

The most visible sign of burgeoning Sino-Brazil ties is the Açu complex, a mega port which is being constructed near Rio de Janeiro. The vast $2.5 billion facility will open in 2012 and its piers will host fleets of cargo ships including the ChinaMax, a huge vessel capable of holding a whopping 400,000 tons of cargo. In the nearby city of São João da Barra, the local town hall is providing free Mandarin lessons to those who wish to work with an anticipated wave of Chinese guests.

Though the new economic relationship has proven beneficial to both China and Brazil, it is rather lopsided. Indeed, China’s needs have begun to alter the Brazilian economy in fundamental ways. Take, for example, the Brazilian footwear industry which has been decimated by Chinese imports. Caught by surprise by China’s economic rise and burgeoning manufacturing sector, Brazilians worry that they haven’t laid the ground work for a sufficiently balanced relationship, one which will result in sustainable growth and not just small enclaves of prosperity.

Información Selectiva, a Mexican company providing financial news from around the region, recently reported on an eye-opening business meeting which brought together Latin and Chinese executives. During the summit, which took place in Chengdu, Brazilian investor Nizan Guanaes remarked “We were already colonized once and we don’t want to be colonized again. We want to be partners.” It’s unclear whether the Chinese have the patience to put up with such insolent independence. Frustrated by everything from Brazilian bureaucracy to strong labor unions to a more vigilant media culture and stringent environmental laws, the Chinese have found that Brazil is no pushover.

To be sure, the Chinese relationship has brought tangible economic benefits for Brazil. Take for example the local soybean industry which has thrived amidst booming exports to China. For the Asian tiger, soya is a versatile product which is utilized from everything from soy flour to tofu to soy sauce. In my recently published book No Rain in the Amazon: How South America’s Climate Affects the Entire Planet (Palgrave-Macmillan, 2010) I discuss the rise of soy boom towns in Brazil and accompanying infrastructure such as highways which are designed to facilitate exports to China. Even here, however, local development has been a mixed bag: while the soybean industry has brought economic gains it has also led to severe environmental downsides and pressures on the Amazon. Meanwhile, paved roads linking Brazil to Pacific ports of call and onward to Asia have cut through the rainforest and exacted a high ecological toll.

Wikileaks cables underscore underlying tensions in the Sino-Brazilian relationship. Speaking with American officials at the U.S. Consulate in Shanghai, Brazilian diplomats expressed some concern about growing imbalances in bilateral trade. Although Brazil exported some small commercial aircraft to China, in general the South American nation was a mere provider of commodities to the Asian tiger and received higher value-added machinery in exchange. Meanwhile, Chinese investors failed to adequately understand the local Brazilian market and regulations.

As history has shown, the Latin American people do not take kindly to outside powers coming in to the region and reaping maximum economic advantage while failing to encourage equitable social development. For years, it was the United States which raised the political ire of many countries throughout the hemisphere as it set up economic enclaves and propped up compliant elites. So far, the Chinese interest in Latin America has been primarily economic though the Asian giant may be obliged to become more involved in local politics as its interests grow. If China expects, however, that it will get its way in Latin America as easily as it did in Africa then the Asian tiger may find that it has another thing coming.

In light of the Salvadoran right's fear-mongering campaign in advance of the Central American nation's Sunday presidential election, which has sought to portray leftist candidate Mauricio Funes of the Farabundo Martí Liberation Front (FMLN) as a kind of dangerous foreign agent of Venezuela's Hugo Chávez, perhaps it's instructive to consider the political history of the past four years.

 

Bolivia, Presidential Election of 2005: Chávez and "Terrorists"

During the country's presidential election, Evo Morales of the Movement Towards Socialism or MAS campaigned on a progressive platform stressing resource nationalism. His opponent, conservative Jorge "Tuto" Quiroga of the PODEMOS or We Can party (no relationship to Barack Obama) claimed that Morales had ties to drug smugglers, terrorism, Hugo Chávez and Cuba's Fidel Castro. Quiroga, who pledged to pursue free trade policies, went down to ignominious defeat and got trounced by Morales, 54% to 28%.

Peru and Presidential Election of June, 2006: "Flagrant and Persistent" Meddling

After meeting with Chávez and Morales, the leftist Ollanta Humala, a former officer in the Peruvian army, declared himself part of "a Latin America with new leaders, in which the perception is that the neo-liberal economic model is exhausted." Adopting a nationalist platform, Humala pledged to nationalize Peru's hydrocarbons industry and said he strongly opposed the free trade agreement that his country had signed with Washington.

When Chávez injected himself into the presidential contest by saying that Humala was the voice of the downtrodden and conservative Lourdes Flores was "the candidate of Peru's oligarchy," the Peruvian government briefly withdrew its ambassador from Venezuela in protest. During a runoff vote Flores was eliminated, thus leaving Humala and Peru's former President Alan García of the APRA Party or American Popular Revolutionary Alliance to face off against one another.

García finished second in that vote trailing Humala. During his first presidency García had espoused some progressive positions but now he referred to Chávez and Morales as spoiled children and "historical losers" when they criticized Peru's free-trade agreement with the United States. Chávez shot back that García, whose previous presidency was marred by hyperinflation, food shortages and guerrilla violence, was a "thief" and a "crook."

 

"I hope that Ollanta Humala becomes president of Peru," Chávez declared. "To Ollanta Humala, go comrade! Long live Ollanta Humala! Long live Peru!" the Venezuelan leader added. Chávez's comments prompted Peru to recall its ambassador from Venezuela in protest. The Venezuelan leader, Peruvian authorities charged, was persistently and flagrantly intervening in their country's internal affairs.

 

García, who had languished behind Humala by more than ten points in opinion polls, exploited the diplomatic spat by accusing Chávez of political interference. When the APRA man painted Humala as a puppet of Chávez and Morales, Humala was unable to launch an articulate counteroffensive. When the votes were finally counted, García edged out Humala, 53% to 47%. The vote, García remarked, was a blow to Chávez. "Today, the majority of the country has delivered a message in favor of national independence, of national sovereignty," García said. "They have defeated the efforts by Mr Hugo Chávez to integrate us into his militaristic and backwards expansion project he intends to impose over South America. Today, Peru has said no," García added proudly. U.S. Deputy Secretary of State Robert Zoellick was also pleased with the result, proclaiming that "the best response is that of the Peruvian people (who) decided to vote for President Garcia and not for [Hugo] Chávez's candidate."

Mexico and Presidential Election of July, 2006: López Obrador Is a "Danger"

 

Even though Chávez was not a candidate in the Mexican election which followed one month after Peru's contest, he was certainly a political specter. The election pitted leftist Andrés Manuel López Obrador of the PRD or Party of the Democratic Revolution against two conservative candidates, Roberto Madrazo of the PRI or Institutional Revolutionary Party and Felipe Calderón of the PAN or National Action Party. In early polling López Obrador, a populist mayor of Mexico City who had instituted socialist-style handout programs and who had spoken of his desire to renegotiate the North American Free Trade Agreement or NAFTA, had a clear lead over both candidates.

Trailing in public opinion surveys, Madrazo sought to take down his leftist challenger by linking him to Chávez. "There are clear similarities between Chávez and López Obrador," Madrazo said. "I see authoritarianism in them both." The PRI candidate added that López Obrador and Chávez did not respect the rule of law and that foreign investors would avoid Mexico if the PRD candidate ever came to power. Madrazo declared, "I foresee the capital flight that happened in Venezuela with Chávez's government that I don't want to happen here." Going even further, Madrazo accused López Obrador of being in contact with Chávez aides and charged that the Venezuelan leader was trying to influence the election.

Pro-business candidate Calderón joined in the pummeling. In his TV ads, he linked Obrador to Hugo Chávez and claimed that the PRD candidate was "a danger to Mexico." "Hugo Chávez is not running for president of Mexico," remarked the Washington Post. "But some days it's been hard to tell. The Venezuelan president's face has been all over Mexican television at critical stages in this country's bitter mudfest of a presidential race." A little known political activist group put Chávez on TV, surrounded by machine guns and soldiers, and accompanied by an ominous voice-over which intoned: "In Mexico, you don't have to die to define your future -- you only have to vote!"

 

The Federal Electoral Commission ruled that Calderón's ads TV ads violated its rules and ordered him to withdraw them but only after the scare-mongering message had set in and Calderón had shot up in the polls. Encouraged by the successful result of Calderón's dirty campaign, the candidate's aides claimed that the Venezuelan Bolivarian circles -- small community groups supported by the Chávez government – were secretly working on behalf of López Obrador.

The leftist candidate of the PRD was known for his combative political style. Bizarrely however, López Obrador barely responded to the fear mongering campaign against him. Weeks passed until he finally disavowed a relationship with Chávez. Cowed by the right wing attacks, one presidential aide finally remarked "It's absurd. Andrés Manuel López Obrador doesn't know Chávez, nor have they ever spoken."

 

The election itself was plagued with irregularities. When Calderón claimed victory, López Obrador cried fraud and called for street protests. The Electoral Tribunal ultimately ruled that Calderon had won the election by a very narrow margin and rejected Obrador's allegations.

 

Ecuador Presidential Election of October, 2006: "Colonel Correa"

The next setback for Chávez came in Ecuador, where the Venezuelan leader's would-be protégé, Rafael Correa, came in second against Álvaro Noboa in the first round of the country's presidential election. Correa, a leftist economics professor who criticized U.S.-style free trade, denied that Chávez had funded his campaign and the Venezuelan leader, chastened by his defeats in Mexico and Peru, was uncharacteristically quiet about the Ecuador election. However, it was no secret that the two had a personal rapport. Correa in fact visited Chávez's home state of Barinas, where he met with the Venezuelan leader and spent the night with Chávez's parents.

As the presidential campaign heated up, Noboa, a banana magnate, sought to label Correa as a Chávez puppet. In an allusion to Chávez's former military background, Noboa called his adversary "Colonel Correa." Correa, the Noboa campaign charged, was being financed by Venezuela. In a bombastic tirade Noboa even declared, "the Chávez-Correa duo has played dirty in an effort to conquer Ecuador and submit it to slavery."

If he were elected, Noboa promised, he would break relations with Caracas. Correa denied that his campaign was financed by Chávez and in a biting aside declared that his friendship with the Venezuelan leader was as legitimate as President Bush's friendship with the bin Laden family. "They have pursued the most immoral and dirty campaign against me in an effort to link me with communism, terrorism, and Chavismo," Correa explained. "The only thing left is for them to say that Bin Laden was financing me."

Chávez, perhaps fearing that any statement on his part might tilt the election in favor of Noboa, initially remained silent as regards the Ecuadoran election. But at last the effusive Chávez could no longer constrain himself and broke his silence. The Venezuelan leader accused Noboa of baiting him in an effort to gain the "applause" of the United States. Chávez furthermore expressed doubts about the veracity of the voting result in the first presidential runoff, in which Correa came in second.

 

In his own inflammatory broadside, Chávez accused Noboa of being "an exploiter of child labor" on his banana plantations and a "fundamentalist of the extreme right." In Ecuador, Chávez said, "there are also strange things going on. A gentleman who is the richest man in Ecuador; the king of bananas, who exploits his workers, who exploits children and puts them to work, who doesn't pay them loans, suddenly appears in first place in the first [electoral] round." The Noboa campaign, in an escalating war of words, shot back that the Venezuelan Ambassador should be expelled from Ecuador due to Chávez's meddling.

In the end however, Noba's fulminations came to nothing: the Banana King came in second to Correa, losing 43% to 56% for Correa.

 

Nicaragua Presidential Election of November, 2006: Chávez's "Lieutenant" in Central America

In 2005, when Nicaraguan Sandinista leader traveled to Venezuela for a meeting with Chávez, the friendship between the two began to bear fruit. During the meeting at Miraflores, the presidential palace, Ortega remarked that Latin American unity was necessary to confront globalization. Ortega later alarmed Washington by remarking that if he won the election he would make sure that Nicaragua would join ALBA, Chávez's Bolivarian Alternative for The Americas. Chávez's trading plan, which is designed to sideline traditional corporate interests and Bush's Free Trade Agreement of The Americas (FTAA), is based on barter agreements between Latin American countries. Ortega later added that he opposed U.S.-backed trade deals such as the Central American Free Trade Agreement or CAFTA. "Central America's trading future lies not with the U.S. but with Venezuela, Brazil and Argentina," he said.

Such statements put Ortega at odds with the likes of U.S. trade representative Robert Zoellick. "CAFTA is the opportunity of a lifetime," Zoellick remarked in an address given at the Heritage Foundation. "If we retreat into isolationism, Daniel Ortega, Hugo Chávez and others like them, leftist autocrats will advance."

As per Peru, the Nicaraguan right sought to link its Sandinista opposition to Chávez in an effort to instill fear in voters. Presidential candidate Jose Rizo remarked that Chávez and Ortega were "a threat to regional and hemispheric stability," and claimed that the Venezuelan leader was financing Ortega's campaign [both Venezuela and Ortega denied the accusation]. "Ortega will become Chávez's lieutenant in Central America and the Caribbean in the same way that he represented the extinct and failed Soviet Bloc," Rizo added.

In the end however, Rizo's red-baiting was unsuccessful: the veteran Sandinista leader edged out his opponent by 10 points to win the election.

 

El Salvador: Chávez and His "Totalitarian" Projects

To listen to the Salvadoran right in advance of Sunday's presidential election, you'd think Mauricio Funes was leading El Salvador on the march towards Stalinist dictatorship. While campaigning near the Honduran border recently, his opponent Rodrigo Ávila claimed that the Funes campaign was being funded by Venezuela's Hugo Chávez. "There's a saying that 'Whoever pays the mariachi decides what song is going to be played,'" Ávila remarked. "And that's going to happen with them," he added. "No matter what they say, what they do, their campaign is being financed by Venezuela."

Funes himself denies having any political links with the Chávez government and has said that Venezuela will not meddle in Salvadoran internal affairs if he wins the presidential election. Furthermore, the FMLN leader has distanced himself from some of the more enthusiastic pro-Chávez members of his party. Despite Funes's disavowals however, ARENA has continued to press on with its hysterical red baiting even though the rightist party has no proof that Funes has received financial support from Chávez.

Both Funes and Chávez, said outgoing President Antonio Saca, were trying to spread "totalitarian projects" and wanted to "stick their noses" in anti-democratic practices. It was "no secret" Saca added hyperbolically, that the FMLN received "its ideological nourishment from Havana" and its economic nourishment "from some other place." In yet another ridiculous and over the top aside, Saca declared "I am sure that there's some kind of working group in Venezuela which seeks to take over El Salvador."

 

Latin American Right: Running On Empty

From Bolivia to Peru to Mexico to Ecuador to Nicaragua and now El Salvador, a clear pattern has emerged. The Latin American right knows that while it was in power, inequality and poverty increased and people hardly benefited economically from the extraction of natural resources. This put rightist politicians in a bind, since campaigning on U.S. - style economic policies and free trade was never going to be popular amongst electorates throughout the wider region.

 

In this sense, the Latin American right is in a similar dilemma to the Republicans in 2008. Like discredited John McCain, who represented the past and did not have any progressive economic ideas, today's conservatives in Latin America are running on empty and hence their desperate moves to insert Chávez into the political equation. Sometimes, as in Peru and Mexico, the right's strategy has succeeded whereas in other countries the tactic has failed. Arguably, Chávez's inflammatory rhetoric may have backfired in certain cases and wound up hurting progressive candidates.

 

Ironically, despite the right's claims, Chávez is hardly promoting revolution. Like other Latin American populists, Chávez has pushed economic redistribution but only up to a certain point. What's more, Venezuela is probably not in the position right now to advance an ambitious geopolitical agenda due to the fall in world oil prices. That hasn't stopped the right however from going negative and to claim that left candidates are intimately associated with Venezuela. For Latin American conservatives, it's probably the only card they have left.

Composite Review, "The Contentious Battle Over Natural Resources: Water and Power in Highland Peru, The Cultural Politics of Irrigation and Development; Indigenous Struggle at the Heart of Brazil, State Policy, Frontier Expansion, and The Xavante Indians, 1937-1988; Exporting Environmentalism, U.S. Multinational Chemical Corporations in Brazil and Mexico," Latin American Perspectives, November 2004, 112-117. Click here for the article.

This article about Alberto Fujimori and his ties to Japan is unavailable online but you can buy a back copy by clicking here.