Latin America Deserves More Attention in New Geopolitical Power Plays

After the Cold War ended, the U.S. lost sight of Latin America’s strategic importance. That is proving to be a mistake.

In the 1980s, Central America was a focal point in the confrontation between the U.S. and the Soviet Union. After the victory of the Sandinista revolution in Nicaragua in 1979, Moscow-supported guerrilla movements threatened to seize power in El Salvador and Guatemala too.

Jeane Kirkpatrick, one of the architects of President Ronald Reagan’s foreign policy and Washington’s ambassador to the United Nations, declared Central America to be the most important region in the global struggle for power. With weapons deliveries, military advisers and significant financial aid, the U.S. did everything it could to prevent regimes loyal to Moscow from taking hold in their southern “backyard.”

But when the Cold War ended in 1989, this principle was forgotten. The U.S. considered itself the dominant power in a peaceful world, unchallenged by other world powers. Just like the Europeans, they thought that they could neglect their military’s defensive capabilities in this new era of peace. Latin America was left to its own devices.

Long Tradition of American Dominance

This situation is all the more remarkable considering that ever since the collapse of the Spanish colonial empire in the early 19th century, the claim of American supremacy over Latin America was an incontrovertible principle of American foreign policy, despite all the geopolitical changes. It was formalized in 1823 with the Monroe Doctrine, which declared Latin America to be in the U.S.’ sphere of influence and a place where no interference from powers on other continents would be tolerated.

In the 19th century, the goal was to fend off European monarchies’ revanchist plans to try to win back control over Latin America. A case in point is Napoleon III’s attempt to install a European empire in Mexico. This project also failed in short order thanks to American assistance against the Europeans.

Then, in the first half of the 20th century, the goal was to secure Latin America’s support for the Allies in both world wars and to prevent the Axis powers and Nazi Germany from gaining a foothold in Latin America. Particularly during World War II, Latin America played a key role for the Allies at war as a provider of important raw materials and agricultural goods. Immediately thereafter, during the Cold War, defense against Soviet influence in Latin America became a maxim of American foreign policy.

Latin America is still an important exporter of raw materials on a global level. It is home to more than two-thirds of known lithium reserves and 40% of known copper sources — both raw materials that are central to the transition to renewable energy sources. Moreover, Latin America’s agricultural sector produces 45% of farm products traded on the world market.

The reignited geopolitical conflict between the West and the alliance of the authoritarian powers of China, Russia and Iran demonstrate that it was a mistake to neglect Latin America after 1989. Since the turn of the millennium, Latin America has by no means been inactive in America’s “backyard.” About 3,000 kilometers (about 1,864 miles) south of Washington, a regime that is openly hostile to the U.S. has been established in Venezuela with support from those three states. From there, the authoritarian alliance could threaten the U.S. with mid-range missiles.

China’s Growing Influence

China, in particular, is gaining more and more ground on the U.S. in Latin America. Aside from Mexico, which has strong economic ties to the U.S., China has already become the most important importer of Latin American goods.

Beijing has also become an important lender to the region. The two national banks, the China Development Bank and the Export-Import Bank of China, alone have a total of $138 billion in outstanding loans in Latin America. That is more than the corresponding loans from the World Bank, the Inter-American Development Bank and the South American Development Bank combined. This economic dependency will give China more opportunities to exercise political influence as well.

Additionally, China is a leader in building a significant number of infrastructure projects in Latin America — ports, dams, highways, rail lines. It has several dozen agreements to create or expand ports alone. It is an open secret that these ports could be used not just for civilian, but also for military, purposes.

There is a real danger that the Middle Kingdom is pulling new countries in the region to its side, establishing a network of military bases, and could undermine the Western democratic order in other countries. It is disseminating its own model of development in the region, which is not compatible with Western values. And it is supporting autocrats like Nicolás Maduro, using technology to repress the opposition.

China’s economic influence is already causing strategic shifts in Latin America, as in the example of Taiwan. The island traditionally enjoyed the support of a series of smaller Latin American countries. But in recent years, Panama, the Dominican Republic, El Salvador and Nicaragua have broken diplomatic ties with Taipei and have instead opened embassies in Beijing.

The Americans must be especially concerned about relations between China and Panama, which have become increasingly close since 2017. What would it mean if Panama were to give Chinese ships privileged access to the canal? Since last year, the canal’s capacity has been limited due to drought, a by-product of climate change. The United States is heavily dependent on the canal for imports and exports. Two-thirds of all maritime traffic to and from the U.S. passes through it.

What Can the West Do?

How could the West push back against China’s growing influence in Latin America? United States policy from the 20th century would no longer be effective. Direct military intervention or toppling authoritarian governments would be counterproductive.

Instead, the West should use its economic power. If Latin Americans got the impression that it could advance their societies through closer economic ties with the West, they would not seek support from China. But that would require the U.S. and Europe to treat them as equals, rather than as junior partners who are just told what to do — just as they were treated in the colonial period.

Free trade agreements would be an appropriate means of strengthening cooperation. They would also address the need for nearshoring, which is especially pronounced in the U.S. as a means of reducing dependency on China with respect to supply chains. With the Americas Act, Republicans and Democrats in both chambers of Congress approved legislation aimed at stimulating trade and investment in Latin America. It is intended to enable Latin American countries that meet certain standards of democracy, trade and the rule of law to join the existing free trade agreement between the U.S., Mexico and Canada.

On the European side, the battle for a free trade agreement between the EU and the Southern Common Market, Mercosur, is a fiasco. Despite years of negotiations and the South Americans making it a priority, no progress is being made under the leadership of Brazilian President Luiz Inácio Lula da Silva.

Responsibility for this lies primarily with the Europeans. A minority of EU countries are blocking it because they perceive the agreement as undesired competition for their own agricultural sectors. But agricultural exports are one of the greatest strengths of the most important economies of South America. If one wants truly free trade, one can’t exempt precisely the sector that is the other side’s strength.

For other countries, the planned environmental standards fall short. But is it reasonable to block an agreement if the practical consequence of doing so is that even more agricultural products are being delivered to China, which has hardly any environmental regulation?

Today, 70% of the world’s population live in autocracies. No other region in what is known as the Global South is as culturally connected to Europe and the U.S. as Latin America, with its three centuries of colonial history and leadership — even today — by elites of European descent. And in no other region in this area of the world is democracy so deeply rooted by now, with regular transfers of power taking place in most countries. In the escalating conflict between the West and the alliance of authoritarian powers, we are dependent on Latin America’s support.