US starting to respond to China's growing economic and financial influence over Latin America.

Throughout the last two decades, Latin America has been caught in the middle of the US-China tensions. The US has historically been the region’s traditional superpower, but China has drastically increased influence in Latin America through its commercial endeavours.

A Chilean academic observed, “The hegemonic battle between the US and China over Latin America is acquiring new dimensions. The pandemic has not changed these trends in the international system but it has accelerated them.”

“The hegemonic battle between the US and China over Latin America is acquiring new dimensions.”

Political academic, Chile

“The impact of the increased tensions between the US and China is already being felt in Latin America,” commented the CFO of an Argentine technology company, “as a recent example, look at Biden’s democracy summit. All countries in the region were invited to the summit, except those openly attacking democracy – Nicaragua, Venezuela and Bolivia. The Chinese responded immediately with a strong communication campaign, supported by Russia, to discredit the summit. Shortly afterwards, Nicaragua announced that it is breaking relations with Taiwan. Nothing is a coincidence!”

China’s strategy prioritises the strengthening of trade and increasing the economic and financial dependency of Latin American countries on Beijing. In this context, Brazil’s trade dependence with China is growing due to raising grain and meat exports and Argentina is become more financially dependent on China due to the continuous flows of credit lines.

The US strategy has sought to counter this economic aggression by building closer ties between the US, local governments and regional private sectors, supporting development and investment opportunities. The Build Back Better World international economic initiative, sponsored by the G7, is a direct alternative to China’s Belt and Road Initiative to assist Latin America which has underspent on infrastructure and is struggling to meet aggressive Chinese loan conditions.

Latin American governments will likely continue to face difficult decisions as a result of the US-China tensions. But will they need to choose between the US and China?

Some observers believe it is inevitable, the academic pointed out, “Two years ago, Chile tendered a submarine fibre optic cable to Chinese companies and received a serious threat from the US. This year, Chile signed a contract for the provision of ID and passports with China’s Aisino but the when the US threatened to pull visa exemptions, Chile backed down. This is just the beginning, Chinese tech companies have been making good progress in Latin America but the US are keen to cut that off. I believe Latin American countries will be forced to choose, eventually.”

“This is just the beginning, […] I believe Latin American countries will be forced to choose, eventually.”

Political academic, Chile

Some public officials in the region favour an active non-alignment policy towards the two main global powers. Unlike the 1960 and 1970s movement, this position would focus on trying to advance the region’s interests by strengthening regional organisations and deepening its multilateral agenda. Common climate change policies, national security agendas and human rights regulations would allow the region to benefit from the interest that both US and China have in the region.

“The problem with a non-alignment strategy,” explained the Argentine CFO, “is that the internal instability of most countries in Latin America makes them vulnerable and restricts their room for manoeuvre.” The academic agreed, “The non-alignment strategy is predicated on a union of the southern countries but there is so much disunity and quarrel that it is impossible to think this is feasible.”

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