As China expands engagement with Latin America and the Caribbean, a process that is barely 10 years old, early 2015 has provided an interesting comparative perspective between Beijing’s approach and the manner in which Washington is engaging the Americas.
In January, President Xi Jinping hosted his Latin American and Caribbean counterparts in Beijing for a China-CELAC (Community of Latin American and Caribbean States) summit, a clear signal both of China’s ongoing interest in Latin America and the Caribbean and also regional interest in building relations with China, particularly on economic terms. The headlines coming out of the meeting focused on China’s commitment to invest some $250 billion in Latin America and the Caribbean over the next 10 years, a figure that both surprised and impressed numerous observers. Leaders easily agreed on a joint five year plan of cooperation, which placed most of the cooperative burden on China and little on Latin America and the Caribbean. China also pledged significant bilateral assistance, notably for Ecuador and Venezuela, two countries hit particularly hard by the dramatic fall in energy prices over the past year.
“Checkbook diplomacy” has made an impact, directly underwriting the political and economic access that Beijing now enjoys across much of Latin America and the Caribbean. Additionally, Chinese commitments to putting significant resources into new development banks, including the BRICS Bank and the Asian Infrastructure Investment Bank along with financial support for its Silk Road Initiative, have caught the attention of many Latin American and Caribbean observers. They recognize that China has substantial money to spend and is willing to do so, even if those initiatives are not explicitly geared toward Latin America and the Caribbean.
The impact goes beyond trade and economics. In some ways, Chinese government-led largesse has altered the basic governance model across the region, because leaders like Ecuador’s Rafael Correa and Venezuela’s Nicholas Maduro know that no matter how badly they mismanage their respective economies or how effectively they dismantle democratic institutions including press freedoms, China will potentially come to their rescue so long as an adequate level of natural resources exists against which to collateralize Beijing’s economic support. And Ecuador, Venezuela, Argentina, and other South American nations have natural resources in abundance, thus providing the economic flexibility they would not otherwise have if they were required to maintain access to international financial markets.
To this point, China has engaged with Latin America and the Caribbean based not on the system of governance that each individual nation maintains, but rather on the basis of natural resources and the ability to engage in meaningful trade and economic relations. This approach, underwritten by billions of dollars of aid and investment commitments, means that the tools that the international community has traditionally used to encourage Latin America and the Caribbean to maintain fiscal orthodoxy have now become less effective. With greater alternatives, Latin American and Caribbean nations are less inhibited from de-emphasizing governance issues like democracy, human rights, corruption, and the rule of law that comes with economic reliance on Washington and international financial institutions.
This growing reality across the region has broad implications. The April Summit of the Americas in Panama, which brought together all the nations of the hemisphere for the first time, including Cuba, was perhaps the best recent showcase of such circumstances.
For comparison purposes, the Seventh Summit of the Americas was essentially a CELEC meeting with the United States and Canada, but the approach was quite different from CELAC’s January meeting in Beijing. In the first instance, there were no pledges of economic support or commitments to invest. There were no five year plans agreed; indeed there was not even agreement on a plan of action coming out of the Summit. There was no discussion about strengthening democracy in the region, the sine qua non of the first Summit of the Americas in 1994. The main item that dominated the news and overlay the entire Summit, which was otherwise limited in both scope and ambition, was the meeting between President Obama and Cuba’s Raul Castro. Without any doubt, this was a history-making event which changed the Summit dynamic. It came about in part as a direct outcome of the 2012 Summit, in Cartagena, Colombia, during which a number of Latin and Caribbean leaders demanded that Cuba be invited to the Panama Summit despite that nation being governed in an anti-democratic manner.
Democracy is no longer a requirement for participation in the inter-American system. U.S. leverage has been reduced and conditionality based on the promotion of shared values has been de-emphasized in favor of a more pragmatic approach. It would be silly to ascribe all of this to China’s growing influence in the region. At the same time, it would be naïve to assume that China’s growing regional influence has had no impact as the region now has meaningful alternatives beyond the United States and is flexing its muscles in support of its own policy priorities.
The question now will be follow up. With both respective Summits in the rearview mirror, China has announced yet another high level visit to the region; Prime Minister Li Keqiang has scheduled travel to Brazil, Colombia, Peru, and Chile in May. For his part, President Obama plans to host Brazil’s President Dilma Rousseff at the White House on June 30.
Competition for the Western Hemisphere is heating up. As we look ahead, it will be fascinating to see whether China’s state-led economic engagement model or the private sector-led engagement model of the United States predominates, or a hybrid of the two. It’s too early to declare the ascendance of the Beijing Consensus in the Americas, but signs are clearly pointing to a significant shift away from the previous model of conditionality and region-wide expectations of governance. It’s a trend that recent Summits in Beijing and Panama will only likely accelerate.
