Improbable Place of Confrontation on the World Map: Latin America and the Caribbean

By Ruslan Dubovytskyi

Key Takeaways

• Strategic Battle for Influence: The United States and China are the primary actors vying for strategic dominance in Latin America and the Caribbean, with their actions significantly impacting the geopolitical dynamics of the region.
• China’s Economic and Diplomatic Maneuvers: China is advancing its influence through economic priorities, diplomatic efforts, and infrastructure investments, aiming to position itself as an alternative to traditional Western partnerships and seeking to isolate Taiwan by swaying regional diplomatic ties.
• U.S. Response and Strategy: The U.S. is actively working to counter China’s expanding influence by recalibrating its approaches towards the region, from sanctions and withdrawal from certain trade agreements, to launch of partnership initiatives aimed at reinforcing U.S. leadership and promoting democratic stability and economic resilience.
• Russia’s Complicating Role: Russia’s military aggression and economic interactions add another layer of complexity to the region’s political and economic landscape, influencing the broader geopolitical struggle.
• Implications for Regional Development: The interplay between these major powers raises critical questions about the future of Latin America and the Caribbean, particularly regarding sustainable development, autonomy, and the ability to navigate global pressures.

The countries of Latin America and the Caribbean have always been mouth-watering morsels that the great world powers have fought for throughout history. Suffice it to recall the Big Stick Policy, Theodore Roosevelt’s extended interpretation of the Monroe Doctrine.

Latin American foreign policy vector of the main regional actors, the United States and the People’s Republic of China, has gained momentum since the beginning of the new millennium. Other states are trying to keep pace with these two powers. Russian Federation is among them, though the country’s armed aggression nullifies all its efforts as it causes significant economic shocks.

This article will highlight the place of the countries of Latin America and the Caribbean in the modern system of international relations, which is characterized by a sharp struggle for dominance, and its manifestation is the Russian-Ukrainian war, which has repercussions in this region.

I. Latin America and the Caribbean as a Chessboard: What are the World’s Major Powers Playing?

Since the rollout of the “Exit to the World” (zou chuqu) business policy, China has shown itself to be an alternative partner with which countries in the region can gain advantages in various areas of cooperation instead of opting for already established partnerships with major players in international relations.

China’s diplomatic efforts in Latin America and the Caribbean (LAC)

Beijing’s diplomatic initiatives in LAC have helped advance China’s economic priorities, institutionalize its engagement in the region, and garner support in international fora. The analysts, Mark P. Sullivan, Thomas Lum, Ricardo Barrios, and Karla I. Rios, assess that the PRC’s activities in LAC do not appear to be aimed at challenging the United States directly or militarily, yet reflect a global strategy to counter U.S. influence. China’s diplomatic efforts in the region include being an observer at the Organization of American States, a member of the Inter-American Development Bank and the Caribbean Development Bank, and a participant in the Asia Pacific Economic Cooperation (APEC) forum.

Since 2014, China has sought to engage with the region through the Community of Latin American and Caribbean States (CELAC), a region-wide organization that excludes the United States and Canada. During the Third Ministers’ Meeting of the China-CELAC Forum in December 2021, the parties adopted a China- CELAC Joint Action Plan (2022-2024) to guide cooperation in areas including politics and security, economy, and infrastructure. In his most recent address to the grouping in January 2023, China’s leader Xi Jinping expressed China’s support for LAC regional integration and characterized CELAC as China’s “key partner in enhancing solidarity among developing countries and furthering South-South cooperation.”

One of Beijing’s goals in the region appears to be to isolate Taiwan by incentivizing LAC countries to end formal diplomatic ties with the self-governing democracy over which the PRC claims sovereignty and which officially calls itself the “Republic of China.” Currently, seven governments in LAC (out of 13 governments worldwide) maintain formal diplomatic relations with Taiwan. The remaining 26 maintain formal diplomatic relations with the PRC. Since 2017, five LAC governments have established formal diplomatic relations with the PRC, ending their formal recognition of Taiwan; the country to do this most recently was Honduras in March 2023.

China’s Economic Expansion in Latin America and the Caribbean

China’s economic priorities in LAC include securing access to raw materials and agricultural goods (e.g., petroleum, soybeans, and minerals including lithium); fostering markets for Chinese goods and services, including in the information and communications technologies (ICT) sector; and partnering with LAC firms to access and jointly develop technology. China also has sought opportunities in LAC for PRC infrastructure firms as a way for these firms both to internationalize and offload excess capacity.

Data published by the General Administration of Customs of the PRC estimated the total value of China- LAC trade to be $482.6 billion in 2022. That year, China’s imports from LAC amounted to $231.1 billion, consisting primarily of ores (32%), oil seeds (18%), and mineral fuels and oils (12%). Meanwhile, China’s exports to the region totaled $251.5 billion, with major exports including electrical machinery and equipment (23%), machinery and mechanical appliances (14%), and motor vehicles and parts (8%). China is the largest trading partner of Brazil, Chile, Peru, and Uruguay and the second-largest trading partner for many other countries. China has free-trade agreements with Chile, Costa Rica, Peru, and Ecuador as of May 2023. China’s projected slower economic growth in the near term may result in weaker PRC demand for LAC exports and reduced PRC capital flows to the region.

According to the American Enterprise Institute’s China Global Investment Tracker, Chinese entities invested $148.9 billion in LAC countries between 2005 and 2022, with Brazil accounting for $66 billion (44%) and Peru $25.5 billion (17%). Energy projects accounted for 62% of investments, and metals/mining accounted for 21%. The database also shows that PRC construction projects in LAC were valued at $68.6 billion over the same period, mainly in the energy (50%) and transportation (30%) sectors.

China’s state-owned policy banks (i.e., China Development Bank and the Export-Import Bank of China) have made numerous loan commitments to the region over the past 20 years. According to the Inter- American Dialogue, from 2005 to 2022, LAC countries borrowed a cumulative $136.5 billion, most of which was directed at the energy (66%) and infrastructure (19%) sectors. Among the largest borrowers, whose debts are measured in billions of dollars, are Venezuela ($60), Brazil ($31), Ecuador ($18.2), Argentina ($17), Bolivia ($3.2), Jamaica ($2.1) and Mexico ($1), with the rest of the countries totaling more than $4 billion.

These loans typically lack the policy conditionalities and environmental safeguards associated with major international financial institutions, often contain a mix of concessional and commercial terms, and include strict confidentiality clauses. Nonetheless, lending has decreased in recent years due to factors including lower LAC demand for PRC financing, changes in how the PRC manages its foreign exchange reserves, which the PRC uses to make loans, and greater risk aversion of PRC lenders.

Currently, 22 countries in LAC have signed memoranda related to the Belt and Road Initiative (BRI) – a multifaceted foreign economic policy initiative that aims to expand China’s global economic reach and influence by developing China-centered and –controlled global infrastructure, transportation, trade, and production networks. As an example of Chinese activity, we can mention the construction of a new deep- water port in the city of Chancay, located north of the Peruvian capital, Lima, which will play a strategic role in trade between Asia and LAC.

Washington’s Concerns and Response

President Donald Trump’s administration has taken a harder approach to building relations with the LAC countries than his predecessors by imposing sanctions on several countries and reducing funding to regional organizations. Such steps could bring certain governments closer to Beijing. Trump also stepped back from trade relations with the region, withdrawing from the Trans-Pacific Partnership and renegotiating the North American Free Trade Agreement.

President Biden, who took the lead on Latin America policy during his tenure as vice president to Barack Obama, has long argued that the United States should renew its leadership role in the region to counter a rising China.

The Biden Administration’s National Security Strategy describes China as a strategic competitor but maintains that the Administration will refrain from seeing the world “solely through the prism of strategic competition.” It states that because the Western Hemisphere impacts the United States more than any other region, the Administration will further deepen partnerships in LAC to advance economic resilience, democratic stability, and citizen security. It also vows to help protect LAC from “external interference or coercion, including from the PRC.”

The U.S. Southern Command (SOUTHCOM) has voiced concerns about China’s activities in LAC in recent years. “We are losing our positional advantage in this hemisphere, and immediate action is needed to reverse this trend,” Adm. Craig S. Faller, former head of U.S. Southern Command, argued in 2021.

Its 2023 posture statement asserted that the PRC has “the capability and intent to eschew international norms, advance its brand of authoritarianism, and amass power and influence at the expense of the existing and emerging democracies in our hemisphere.” According to SOUTHCOM, the PRC is investing in critical infrastructure, including deep-water ports, cyber, and space facilities which “can have a potential dual use for malign commercial and military activities”.

In contrast to such activities of China, the Build Back Better World (B3W) initiative was launched with the Group of Seven (G7). The initiative aimed to counter China’s BRI by developing infrastructure in low- and middle-income countries, including Latin America. However, the Biden administration committed only $6 million to B3W in its first year, and it was later renamed the Partnership for Global Infrastructure and Investment. At the 2022 Summit of the Americas, Biden promised a range of new economic initiatives, but the allocated funds were not enough to compete with China.

The paper’s authors, including Mark P. Sullivan, Thomas Lum, Ricardo Barrios, and Karla I. Rios, note that the U.S. warnings about China have been met with some skepticism in LAC and among regional experts. They cite two prevailing views. The first argues that China’s primary interests and influence in the region remain primarily economic and diplomatic. The probability of the PRC creating a military sphere of influence in LAC remains small. The other argues that China’s appeal is limited due to profound political, social, and cultural differences and language barriers.

Nevertheless, their research reveals concerns about the potential harmful effects of China’s economic engagement on LAC’s development. It claims that Chinese companies do not adhere to international environmental, labor, and safety standards. It is also mentioned that China has exported surveillance technologies that could potentially be used to violate privacy or other rights.

Their paper further suggests that PRC support extends a lifeline to leaders with poor governance records and exacerbates corruption. In some LAC countries, civil society groups, journalists, and activists have drawn attention to corruption, poor labor standards, and environmental damage linked to PRC-backed projects, sparking local opposition. They have also drawn attention to alleged political influence operations.

The Characteristics of Competition in the Region

• China is South America’s top trading partner and a significant source of foreign direct investment and lending in energy and infrastructure, including through its massive Belt and Road Initiative.
• It has invested heavily in Latin America’s space sector and has strengthened its military ties with several countries, notably Venezuela.
• Policymakers in Washington are pursuing new trade and investment avenues to bolster U.S. leadership in the region and push back against Beijing’s influence.

II. The Struggle of the “Red Dragon” for a Place Under the Southern Sun

It is worth considering the Survey of Opinion Leaders: Assessments of China’s Role in Latin America and the Caribbean to compare the influence of global actors in the region.

According to the opinion leaders surveyed, on average, the top priority Latin American and Caribbean countries should have with China is trade, followed by foreign direct investment and financial ties. Last in order of priority would be cooperation in international security, and there is also minimal support for engagement around multilateral cooperation and human rights. Notably, this order of priorities coincides with that expressed regarding relations with the United States. This would indicate that opinion leaders consider that the region’s priorities in its bilateral relations with great powers do not change drasticallywhether we focus on relations with Washington or Beijing. The only statistically significant difference concerns international security: in the case of the United States, international security is, on average, higher than that assigned to relations with China (although it is still the last priority).

Regarding the perceived influence of China in Latin America and the Caribbean, almost 80% of survey respondents consider this influence high, while less than 5% consider it low. Only the United States is seen as having a higher influence than the Asian giant. Washington is said to have the most influence in the region, followed by Beijing, Madrid, and Moscow. However, opinion leaders vary in their assessment of whether the influence exerted in the area by Beijing is positive. Compared to other powers, opinion leaders consider China’s influence to be, on average, the second most negative, behind only Russian influence in the region. German, Japanese, and Spanish influences are considered to have, on average, the most positive influence in the region.

China’s influence appears not to be the result of the country’s media diplomacy. Indeed, respondents consider the Asian giant’s media influence in the region, measured by China Global Television Network’s (CGTN) influence, to be very low. Fewer than 4% consider this influence high or very high, while 41% consider it low and 31% very low. Thus, nearly three-quarters of survey respondents believe the Chinese media to have a low or very low influence in the region.

The above data contrasts with the perception of the influence of US media diplomacy in the region, where more than 65% of the opinion leaders agree that CNN’s influence is high or very high. Compared with four other extra-regional powers and Venezuela with Telesur, the opinion leaders perceive Chinese media diplomacy as generating the least influence in the region. Thus, CGTN is perceived as having less impact than CNN, BBC, Telesur, RT and FR24.

However, it is important to mention Russia, China’s ally. According to an October 2023 report by the United States Institute of Peace, Actualidad RT (Russia Today in Spanish) and Sputnik Mundo are the region’s key purveyors of Russian state media. Hernandez-Roy, who is deputy director and senior fellow at the CSIS Americas Program, said these two media organizations have about 32 million regular listeners in Latin America, which has 667 million inhabitants.

Nonetheless, the PRC’s soft power is bolstered by substantial investment in people-to-people diplomacy, including not only 39 Confucius Institutes in the region but also Hanban-funded scholarships and lavish paid trips for leading LAC academics, politicians, journalists, and other key personnel whom the PRC seeks to influence in the region.

However, it is important to mention Russia, China’s ally. According to an October 2023 report by the United States Institute of Peace, Actualidad RT (Russia Today in Spanish) and Sputnik Mundo are the region’s key purveyors of Russian state media. Hernandez-Roy, who is deputy director and senior fellow at the CSIS Americas Program, said these two media organizations have about 32 million regular listeners in Latin America, which has 667 million inhabitants.

III. What Economic Changes Does Russia’s Military Aggression Against Ukraine Cause in the Region?

Latin American countries share a distance of thousands of kilometers with Ukraine, a European country that has suffered unprecedented military aggression in the 21st century by Russia. This geographical location contributes to distancing them from the theatre of operations that has developed in Eastern Europe. However, this war has an indirect impact on the Latin American economy, although Ukraine and Russia are not the main trading partners of most countries in the region.

The war in Ukraine significantly expands disruptions to primary production sectors (oil, gas, aluminum, and grains) and industrial sectors that produce inputs widely used in agriculture, such as fertilizers.

The main trade effects that the conflict has had in the region are the increases in the prices of energy (oil and gas), mining (coal, copper, and nickel), food (wheat, corn, and oils), and fertilizers, due to the relevant position of the Russian Federation and Ukraine in the production and world trade of these products.

The current war has, therefore, accentuated the trend towards greater regionalization of trade and production that has been observed for some years now at the global level. The region cannot escape this trend, whereby countries seek greater strategic autonomy in the supply of critical products and inputs. The situation is, therefore, a new opportunity to revitalize the project of regional integration, placing at the center the generation of intra-regional production chains that reduce excessive dependence on suppliers from outside the region.

Conclusion

In Latin America and the Caribbean, there is not as much competition between the United States and China compared to the current situation in the Indo-Pacific.

Today, Chinese diplomacy focuses on advancing Beijing’s interests, particularly the “one China” policy, using regional organizations to establish dialogue to form the image of a reliable partner. The injection of funds into the economies of the countries is the basis of the cooperation, which guaranteed the entry of Communist China among the three largest trading partners in the region. Still, such measures contribute to an increase in dependence and the lack of significant scientific, technological and innovative development, which in turn leads to the reprimarization and deindustrialization of the economies of Latin America and the Caribbean.

In addition, the situation is aggravated by Russia’s armed aggression, which has increased political and socio-economic risks. The question of strengthening regional cooperation to minimize the possible consequences of the emergence of “black swans” on a global scale in the future was raised.

The U.S. will not back down in this region, which is traditionally considered its zone of influence and where there is a major choke point in terms of infrastructure. U.S. government officials perceive the growing Chinese threat. They are launching initiatives to preserve their standing and the entrenched vision of a successful democratic country with a developed economy among LAC residents.

Therefore, the political discourse in this region is influenced by large players such as the United States or China, which compete to increase or protect their influence, so the Ukrainian authorities should consider these circumstances when developing and implementing measures in this region.

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