Obama Seeks Leverage Against China in Latin America

At the Summit of Americas, U.S. President Barack Obama has been overwhelmingly complimented for his friendly approach toward Latin America countries such as Cuba and Venezuela. However, this kind of action is regarded as seeking leverage against China, a recent article published on the China Press USA had written:

“Ever since he swore in, Obama keeps trying to pursue his dream of ‘world president’.”

The Summit of Americas was held on April 17 in the Port of Spain, capital of Republic of Trinidad and Tobago. Before the inauguration, Obama greeted and shook hands with Venezuelan president Hugo Chavez. During the summit, Obama also claimed that the U.S. is seeking a new relationship with Cuba, as well as creating equivalent partnerships with other Latin American countries. His action of offering an olive branch to two long time enemies is not only to cement relations between the U.S. and Latin America countries, but also try to balance the growing influence of China in Latin America.

The newspaper Chosun Ilbo used an expressive title in its April 17 commentary: “Can Obama defeat China and win South America’s heart back?” Newsweek also expressed that Obama is aiming to restore America’s power in its “backyard”. Moreover, Lorenzo Meyer, a researcher from the think tank El Colegio de México also indicated that in Latin America, there are two facts that can never be ignored.

First, that area has been away from the Washington consensus but growing closer to China. Second, if the U.S. wants to recover its influence in Latin America, cooperation with Brazil is definitely the necessary first step to go because Brazil and China are the booming economic bodies of the new world setting. In a nutshell, Obama’s smart diplomacy on Latin America has generally been considered as a strategy aiming at China.

Ever since the Monroe Doctrine implemented in 1823, Latin America has become the “intangible backyard” of the U.S. During George W. Bush’s administration, while anti-terrorism remained the top priority, the U.S. concentrated its army force and resources on Afghanistan, Iraq, Iran and the nuclear issue of North Korea. Therefore, Latin America was neglected. From the last 1950s to the 1990s, the U.S. implemented market economy and U.S. ideology in that area, treating it as their private material supplier. Furthermore, the U.S. laid their hands on Latin America’s interior affairs. These actions led to the area’s antagonistic attitude toward the U.S. While the meteoric Latin America model fell down, many Latin America countries slumped deep in debt. Finally, the suspect of Washington model turns out to be the power of anti-Americanism.

To a certain extent, the eight years of the Bush administration is the time when the U.S. lost its sway in Latin America. At the same time, China and Latin America further cemented their relations. Along with China’s growth and energy strategy adjustment, the Latin America-China interaction on trade, energy cooperation, political and cultural interchange advanced rapidly. Before the APEC summit in 2004, 2005 and the one held in Lima in 2008, Chinese President Hu Jintao visited Latin America. In October 2008, China successfully became the 48th member of the Inter-American Development Bank, headquartered in the U.S. In China’s policy paper on Latin America and the Caribbean, issued in last November, it established a strategy frame of comprehensive cooperation between the two sides.

The total trade volume of China-Latin America had reached more than $140 billion in 2008. Besides, the Latin America-China trade has achieved a significant surplus in the mean time, which reverses their deficit with European countries and the US, and alleviates the pain of being stuck in a debt trap.

For Latin American countries, China has become their biggest trade partner, only second to the U.S. Under the threat of financial crisis, with the rise of protectionism in the U.S., trade between China and Latin America has reached its new climax. Recently, China offered $12 billion in development funds to Venezuela, injecting $1 billion in Ecuador for the construction of a water power station, signing a $10 billion oil contract with Brazil and a $10 billion currency swap agreement with Argentina.

China not only has steady energy cooperation and thriving trade volume with some important Latin America countries like Brazil and Latin America, but also a mutual goal such as to improve developing countries’ audience right in the World Trade Organization and other international financial systems. More importantly, the status of Chinese Yuan is getting higher in Argentina and Brazil, as both countries recently claimed that they are considering halting use of the American dollar in trade with China. At last year’s Lima summit, Peru even regarded China as Latin America’s remedy to the financial crisis.

Looking from a geopolitical perspective, the U.S. would be not willing to see other countries putting hands on their “backyard”. However, in the time of globalization, the China-Latin America trade and energy diplomacy function flawlessly. The Obama administration, meaning to walk out from the shadow of Bush’s policy, would naturally take a tempering approach: visiting the Middle East, addressing the Islamic world and reaching out to the leaders of Cuba and Venezuela, finally restoring U.S. influence in the area.

Nevertheless, although both leaders gave friendly responses, closing the rift between the U.S. and Latin America cannot happen overnight. Under the current financial crisis, U.S.-Latin America trade seems weak. This is precisely the chance for China to strengthen their ties with Latin America on trade cooperation.

“If this ultimately translated into political influence, then that’s how the long game is played, in which China seems to be a better player,” said Gregory Chin, a professor at York University in Toronto. Based on his comment, the tug of war between China and the U.S. can be concluded as the U.S. losing its advantage of geopolitics in Latin America, which by now has a strong relationship with China.