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New Africa Scramble: China Has Economic Leverage But Lacks Brazil's "Soft Power"

To read the article, click here.

To read a rejoinder appearing in Forbes magazine, click here.

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WikiLeaks: Chinese “Locusts” Spreading into Latin America

If Wikileaks documents are any indication, Chinese investors might have a big surprise in store as they continue their push into Latin America. In their effort to extract raw resources, the Chinese have fared relatively well in such areas of the globe as Africa. However, recently disclosed U.S. cables hint that Latin America may not prove as pliable for the Chinese. Indeed, during private discussions with U.S. diplomats in Shanghai, Chinese experts candidly admitted they faced a “public relations challenge” in Latin America, and that local residents viewed Chinese businessmen as “locusts” intent on “extracting minerals and natural resources and leaving very little of lasting value behind.”

China is a relative newcomer in Latin America, yet the Asian powerhouse has made a big splash. In its drive to dominate Latin American markets, China is primarily motivated by economic and not political considerations. In recent years, the Chinese authorities have understood that native industry must be provided with adequate supplies of energy, minerals, and other basic raw materials if the Asian powerhouse is to sustain continued economic growth. In tandem with such desires, China has moved aggressively to become Latin America’s second largest commercial partner after the United States.

For their part, the Latin Americans have been content to export their raw materials to China, though many countries have uncomfortable memories of U.S. economic enclaves and may wonder whether the Asian powerhouse will encourage sustainable development and social equity. While China is willing to help construct ports and railroads, such infrastructure projects will be linked to the transport of raw materials and in this sense the Asian tiger is little different from the United States, which historically sought to promote the type of “development” which would merely facilitate the extraction of South America’s resources.

Latin America is Not Africa

In Africa, China found that it could import its own labor, ignore environmental standards and essentially adopt a colonialist approach toward local peoples and resources. Compliant political elites, who displayed scant regard for human rights, made life easy for Chinese investors. But Latin America, having recently witnessed a tectonic shift to the left, is less willing to embrace untrammeled economic development if this comes at a high social and environmental cost.

In contrast to Africa, Latin America has a much more dynamic political culture characterized by combative political parties, labor unions and non-governmental organizations. Though many within Latin American civil society may have looked upon China as the champion of “Third World-ism” at a certain point, some will be less than impressed by the Asian tiger’s shedding of any ideological pretensions in the name of promoting a more politically neutral “multi-polar” world.

WikiLeaks documents shed fascinating light on the many difficulties and contradictions in the incipient Chinese-Latin American relationship. Speaking with officials at the U.S. consulate in Shanghai, Chinese experts said their nation’s leaders were interested in paying more attention to large emerging countries like Brazil and Mexico “amid the changing global economic balance of power.” Chinese companies, however, had difficulty understanding the Latin business milieu, and complained about “strong labor unions and cultural conflicts.”

Fundamentally, experts noted, “Chinese investors think Latin America and Africa are the same…but it is easier for them to do business in Africa since Africa's institutions and regulatory environment are less well-developed than Latin America’s.” Chinese workers, meanwhile, had a “different work ethic” from their Latin American counterparts, and as a result many companies had chosen to import their own laborers which had in turn fed “local resentment.” Conscious of the need to improve its public image, China encouraged its companies to take on more local employees, and the Asian tiger had become a substantial donor to the Inter-American Development Bank.

Differing Views on China

Despite these many problems, it is also clear from WikiLeaks cables that Latin America’s view of China depends very much on the individual country. Indeed, while China is viewed as a friend in some nations, in others it is viewed as a threat. In recent years, China has signed free trade agreements with Peru and Chile, two countries which don’t have competitive industries to defend. China has failed to negotiate accords with some of the other larger countries, however, because certain Chinese exports are viewed as more direct threats.

One country which has been particularly wary of the Asian tiger is Mexico. In early 2009, U.S. diplomats at the American embassy in Mexico City wrote Washington that “Mexico’s trade deficit with China and concerns over China’s approach to investment continue to color Mexico’s perception of China as a true partner.” While Chinese Vice President Xi Jinping was well received in Mexico, officials were “reluctant to push too strongly for increased Chinese presence.” One top Mexican businessman confided to the Americans, “We don’t want to be China’s next Africa.”

The entrepreneur was referring to “the oft-cited criticism that China has pursued a strategy of seizing the continent’s huge natural resources while dumping cheap industrial manufactured products into Africa’s markets.” “We need to own our country’s development,” the businessman added. Judging from WikiLeaks documents, the Chinese are aware of Mexico’s skittishness. Speaking to U.S. officials in Shanghai, Chinese experts pointed to the “similar industrial structure” between China and Mexico, adding that the Asian powerhouse should “invest more in the Mexican oil industry to counter Mexican concerns about China's growing trade surplus with the country.”

Seeking a South American Gateway

Another nation with mixed feelings toward the Asian tiger is Colombia. In WikiLeaks cables, U.S. diplomats in Beijing remarked that Colombia was actively seeking new economic partners but was still “wary of Chinese motives.” Speaking to the U.S. Chargé d’Affaires in Beijing, Colombian businessmen expressed their concern that China might “walk all over” Colombia and its people much as the Asian powerhouse had done in Africa. In addition, the Colombians were wary of Chinese investment in mining and hydrocarbons given the Asian tiger’s awful track record on environmental and labor practices [such talk is rather ironic in light of Colombia’s own horrible standards on these counts].

Because Colombian exports compete with those from China, the Andean nation is mainly interested in investment as opposed to signing a free trade agreement with the Asian powerhouse. Originally, China had directed its companies to invest in neighboring Venezuela, but the firms had “dragged their feet.” Reportedly, Chinese businessmen regarded Colombia as more stable and economically open than Venezuela, and therefore a “better base for targeting the rest of Latin America.”

In the long-term China may find that Colombia, which has a much more repressive anti-labor climate than Venezuela, is a country more to its political and economic liking. Indeed, recent business deals suggest that China sees Colombia as its preferred South American gateway. Take for example a Chinese plan to build an auto assembly plant in Colombia. The factory will manufacture light vehicles for export to different regional markets. The Chinese chose Colombia over Chile, Brazil and Mexico and the factory will begin production in 2012.

Brazil: “We Don’t Want to Be Colonized Again”

While Colombia and Mexico are certainly economically important within the overall Chinese strategy, it is the South American powerhouse of Brazil which has become the most indispensable linchpin. China has already displaced the U.S. as Brazil’s chief trading partner and experts predict that between now and 2014 the Asian tiger could invest an average of about $40 billion a year in Brazil. As they establish their key beach head in South America, the Chinese will target specific economic sectors such as telecommunications, infrastructure, farming, oil, biofuels, natural gas, mining and steel.

The most visible sign of burgeoning Sino-Brazil ties is the Açu complex, a mega port which is being constructed near Rio de Janeiro. The vast $2.5 billion facility will open in 2012 and its piers will host fleets of cargo ships including the ChinaMax, a huge vessel capable of holding a whopping 400,000 tons of cargo. In the nearby city of São João da Barra, the local town hall is providing free Mandarin lessons to those who wish to work with an anticipated wave of Chinese guests.

Though the new economic relationship has proven beneficial to both China and Brazil, it is rather lopsided. Indeed, China’s needs have begun to alter the Brazilian economy in fundamental ways. Take, for example, the Brazilian footwear industry which has been decimated by Chinese imports. Caught by surprise by China’s economic rise and burgeoning manufacturing sector, Brazilians worry that they haven’t laid the ground work for a sufficiently balanced relationship, one which will result in sustainable growth and not just small enclaves of prosperity.

Información Selectiva, a Mexican company providing financial news from around the region, recently reported on an eye-opening business meeting which brought together Latin and Chinese executives. During the summit, which took place in Chengdu, Brazilian investor Nizan Guanaes remarked “We were already colonized once and we don’t want to be colonized again. We want to be partners.” It’s unclear whether the Chinese have the patience to put up with such insolent independence. Frustrated by everything from Brazilian bureaucracy to strong labor unions to a more vigilant media culture and stringent environmental laws, the Chinese have found that Brazil is no pushover.

To be sure, the Chinese relationship has brought tangible economic benefits for Brazil. Take for example the local soybean industry which has thrived amidst booming exports to China. For the Asian tiger, soya is a versatile product which is utilized from everything from soy flour to tofu to soy sauce. In my recently published book No Rain in the Amazon: How South America’s Climate Affects the Entire Planet (Palgrave-Macmillan, 2010) I discuss the rise of soy boom towns in Brazil and accompanying infrastructure such as highways which are designed to facilitate exports to China. Even here, however, local development has been a mixed bag: while the soybean industry has brought economic gains it has also led to severe environmental downsides and pressures on the Amazon. Meanwhile, paved roads linking Brazil to Pacific ports of call and onward to Asia have cut through the rainforest and exacted a high ecological toll.

Wikileaks cables underscore underlying tensions in the Sino-Brazilian relationship. Speaking with American officials at the U.S. Consulate in Shanghai, Brazilian diplomats expressed some concern about growing imbalances in bilateral trade. Although Brazil exported some small commercial aircraft to China, in general the South American nation was a mere provider of commodities to the Asian tiger and received higher value-added machinery in exchange. Meanwhile, Chinese investors failed to adequately understand the local Brazilian market and regulations.

As history has shown, the Latin American people do not take kindly to outside powers coming in to the region and reaping maximum economic advantage while failing to encourage equitable social development. For years, it was the United States which raised the political ire of many countries throughout the hemisphere as it set up economic enclaves and propped up compliant elites. So far, the Chinese interest in Latin America has been primarily economic though the Asian giant may be obliged to become more involved in local politics as its interests grow. If China expects, however, that it will get its way in Latin America as easily as it did in Africa then the Asian tiger may find that it has another thing coming.

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Hugo Chávez’s Geopolitical Rivalry Reaching Soaring New Heights

Hugo Chávez's geopolitical rivalry with Washington has reached soaring new heights -- literally into space.  After meeting with Russian Prime Minister Vladimir Putin in Caracas recently, the Venezuelan leader remarked that Moscow had offered to assist Venezuela in developing its own space industry including a satellite launch site and a factory.  It was Putin's first visit to Venezuela, and the Russian was received with full military honors upon arrival.  "This is a truly important day for the country and for Latin America," Chávez said.


Back in Washington, officials wasted no time in dismissing the Chávez-Putin tête-à-tête.  "We would note that the government of Venezuela was largely closed this week due to energy shortages," declared State Department spokesman P.J. Crowley.  In a caustic reference to Spielberg's E.T. perhaps, Crowley added, "to the extent that Venezuela is going to expend resources on behalf of its people, perhaps the focus should be more terrestrial than extraterrestrial."


What's behind the Chávez-Putin summit?  At this point, the true scope of the space deal is unclear and hopefully all future initiatives will be wholly peaceful in nature.  Could the discussions have something to do with counteracting U.S. influence?  Chávez himself denies it, proclaiming loudly during Putin's visit that "we aren't making alliances here against Washington."


Such claims don't ring particularly true, however.  For the past few years, Venezuela's leader has been assiduously courting Russian support.  Indeed, just since 2005 he has signed a dozen military agreements with Moscow worth more than $4 billion.  Chávez's buying spree has included helicopters, fighter jets, and 100,000 Kalashnikov rifles.  In addition, Venezuela has received more than $2 billion in credit lines for more Russian arms including T-72 tanks and an advanced anti-aircraft missile system.


To be sure, the Obama administration has stoked Venezuelan fears by proceeding with planned U.S. military bases in Colombia, a nation which borders Venezuela.  Yet, there's something disturbing about Venezuela's turn towards Russia.  In 2008, Chávez conducted joint military exercises with Russian vessels in the Caribbean, including the nuclear-powered guided missile cruiser Peter the Great.  The ship has massive firepower and can deliver conventional or nuclear warheads, as I described in an article at the time.


With Washington warning of a regional arms race, the left has chosen to stay mute about the weapons purchases or alternatively bash U.S imperialism.  Within the increasingly more unsettling geopolitical milieu, Chávez rails about the need to create a "multi-polar" world in which the U.S. would not be the only superpower.  Which nations are to comprise this Axis of Good?  Presumably, those countries which Venezuela is seeking to ally to, including Russia but also others such as China and Iran.


Chávez is sounding increasingly defiant.  When asked by reporters how the U.S. might view Venezuela's lavish defense spending, the president remarked, "We don't really care what Washington thinks."  For his part, autocratic Putin sounded cynical when discussing the budding new relationship.  If the U.S. didn't want to sell arms to Venezuela, he said, "Well, for us that's good."


During their meeting in Caracas, Chávez presented Putin with the so-called Order of the Liberator -- Venezuela's highest honor -- and provided the Russian leader a replica of a sword brandished by South American independence hero Simon Bolívar -- the namesake of Venezuela's socialist-inspired "Bolivarian Revolution."  Kissing the replica, Putin remarked, "Russia from the start has supported Latin America's struggle for independence."  The Russian added, unconvincingly, "Our objective is to make the world more democratic, make it balanced and multi-polar."


At the height of the Cold War, the Soviets supported Cuba but it's debatable whether Russia ever took Latin American emancipation very seriously. Today, Russia has no ideological project and its take on Latin America seems even more narrow-minded. The budding geopolitical alliance between Russia and Venezuela, which now looks as if it could reach into space, would seem to be more of a marriage of convenience than anything else.
"Satellite" Diplomacy


The same might be said of Venezuela's courting of China, a relationship which has already yielded collaboration in many realms including military. Reuters reports that Venezuela has purchased a network of radars and jet-training aircraft from the Asian nation. Venezuela says the planes will be used to train local pilots and intercept drug traffickers, though the K-8 planes may also be refitted for combat as well as a missile-defense radar system. Chávez, who says he is simply modernizing his armed forces, adds that "China has become one of the biggest allies of Venezuela, and Venezuela is one of the biggest allies of China in the world."

With the launching of Venezuela's Venesat-1 communications satellite in late 2008, that alliance has resulted in big benefits for Chávez. The satellite, also dubbed "Simon Bolívar," was built with Chinese know-how and was Venezuela's first. Chávez hailed the launch as an "act of liberation," designed to eliminate his country's "satellite illiteracy." Venesat-1 was the product of concerted shuttle diplomacy: Chávez has been a frequent visitor in Beijing. 


Indeed, Venezuela and China have been collaborating on scientific and technological matters for the past eight years. As with Russia, Chávez hopes that growing ties with China will lead to a new multi-polar model in order "to break" U.S. hegemony. In 2005, both countries signed a contract for Venesat-1 in Caracas, and the next year Chávez went to China personally to oversee the construction of the satellite costing more than $200 million.


The satellite, which is designed to provide radio, television, and internet in three band frequencies, and whose signal will extend all the way from Mexico to Tierra del Fuego, will facilitate not only broadcasting but also distance learning and medical services.  In southeastern Venezuela, a financially poor and rugged region where land lines are expensive to build and maintain, Venesat-1 will provide welcome telecommunications coverage.


From an economic and social standpoint, that is certainly a welcome development: for years, satellite-based networks have been concentrated in Venezuela's higher-income, more heavily populated regions. Venesat-1 by contrast will help to facilitate distance education and bring the internet to schools and homes across Venezuela. 


The orb will also lead to great advances in "telemedicine," that is to say the sending of medical tests of patients from remote areas via internet to medical centers for speedy diagnosis. This is particularly helpful for Warao Indians, a tribe residing in an easterly region of the Orinoco River Delta. Through telemedicine, the Warao will be able to consult specialists working in Venezuela's best hospitals.


Venezuela's Houston Mission Control


Let's not kid ourselves however: Venesat-1 also fulfills some valuable political objectives. Chávez himself has remarked that "a satellite at the service of capitalism is launched to make money, but Simón Bolívar will benefit development and the integration of our people." A satellite will help Chávez proceed with his agenda of politically integrating like-minded regimes throughout the region.


Reportedly, the first users of Venesat-1 have included the very vocally pro-Chávez public station Canal 8, as well as Telesur, an interesting pan-Latin American TV channel based in Venezuela [for those interested in exploring the politics surrounding Telesur and the media in Venezuela, see my chapter on the subject in my book Revolution! South America and the Rise of the New Left].  Chávez says Venesat-1 will strengthen Venezuela's sovereignty by overcoming the constant U.S. "media bombardment."


El Sombrero is a town lying some 200 miles south of Caracas in Central Venezuela. Recently, rolling farming landscape has been transformed by the arrival of satellite technology. Chávez's version of Houston mission control, El Sombrero houses satellite dishes as well as a radar facility which has employed both Venezuelan and Chinese scientists. Above the entrance of the facility there's a massive sign reading "Patria, Socialismo o Muerte" -- Fatherland, Socialism or Death. Nearby lies an air force base where Russian Sukhoi fighters take off constantly from a landing strip.


Daniel Varnagy, a telecommunications expert from Simon Bolívar University, told the BBC that Venesat-1, which followed the nationalization of Venezuela's telecommunications sector, could give the government the possibility of interfering with communications. "Chávez is trying to protect his political project and his own person. He believes he's being pursued and spied on by other countries," Varnagy said.


Venezuelan authorities, however, insist their intentions are peaceful and rule out any military or espionage uses. Venesat-1, Chávez asserts, is designed to lead toward the "construction of socialism."  The Venezuelan leader adds that Latin countries "spend millions of dollars in satellite services, almost all of them monopolized by big international companies.  It is the domination of space." Hardly amused by such fiery rhetoric, Washington reportedly requested that China suspend the launch of Venesat-1, a plea which Beijing flatly disregarded.


Another Space Race?


Chávez is correct in criticizing the excesses of U.S. foreign policy and his concern about American dominance over the space industry is understandable.  In light of U.S. high handedness in Latin America, it's reasonable that countries like Venezuela would want to build up their own space industry in an attempt to rival the technological edge of their northern neighbor.  To be sure, Venesat-1 will also be put to some beneficial logistical and social uses [though it could also be abused].


The problem is not there, but in the overall geopolitical context in which Venezuela finds itself. In an effort to build up his "multi-polar world," Chávez has allied himself with anti-democratic countries like China and Russia. Chávez's relations with these two have a technological component, but the alliances have taken on an increasingly diplomatic and political hue and it is here where Venezuela gets into ideological contradictions.


In an effort to satisfy China, Chávez has been making bizarre statements backing up Beijing's repression in such far-flung corners of the globe as Tibet [for more on this, readers can go to my website and read this article]. Though the world would be a better place without a sole superpower like the U.S., Chávez's multi-polar vision is problematic and could very well make things worse. What's more, in a political sense Venezuela's alliances are making a mockery of Chávez's calls for "21st century socialism."


Another undesirable result of these alliances has to do with military strains. Tensions on the high seas between Russia and Venezuela on the one hand and the U.S. on the other are bad enough. Could we now see a similar drama in space? The last space race, which pitted the Soviet Union against the United States, exacerbated superpower tensions and made the world a very unsafe place to live.


NASA, beset with fluctuating budgets and the political whims of ever-changing administrations and congresses, has experienced a relative decline in recent years. While such a decline was not such a huge concern following the end of the Cold War, America's once-clear dominance of space is now being challenged by other nations. Russia has been a leader in space launches, but currently China is a key player in human spaceflight. Indeed, China became just the third nation after the United States and Russia to send its own astronauts out on a spacewalk.

Evan Ellis, a consultant with technology firm Booz Allen Hamilton, told the Los Angeles Times that Venesat-1 was an example of "strategic relationships" China had been able to acquire because the United States no longer "closely defends its exclusive presence" in Latin America.

"Traditionally, Chinese diplomacy has been cautious there for fear of provoking us and endangering its U.S. trade relationship," Ellis declared. "But it's become bolder in its affairs, not just with relatively neutral countries, but even with a country like Venezuela, which is openly hostile to the United States."


The new competition has some on Capitol Hill growing concerned. During a hearing of the House's subcommittee on Space and Aeronautics last year, ranking Republican of Texas Pete Olson remarked, "We should never ever cede American leadership." With Russia and now China promoting space ties with many new nations such as Venezuela, there is sure to be much hand wringing in Washington in the not too distant future.


All of a sudden, the space industry has become pretty fluid. It's a situation with unforeseen consequences for the traditional players but also for up and coming countries like Venezuela, a medium-sized nation which has now chosen to insert itself into the wider geopolitical milieu.

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