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Soy Has Its Consequences: Olympic Torch in Buenos Aires

Cristina Fernández de Kirchner, Argentina’s new president, must have heaved a huge sigh of relief. Though politicians feared that protests could mar the arrival of the Olympic torch in Buenos Aires, the day passed uneventfully enough. Athletes ran the torch through the city streets as Chinese guards ran in formation alongside. The torch, which has toured the world ahead of the Olympic Games in Beijing in August, has been a magnet for protests over China policies. The Chinese leadership has fallen under international criticism for cracking down on unrest in Tibet and for propping up Sudan.

As the torch headed to Argentina on its ongoing tour, activists protesting against China’s rule of Tibet pledged to hold peaceful demonstrations. Jorge Carcavallo, a member of Argentina’s Free Tibet group, interrupted a press conference about the torch’s visit to warn of upcoming protests. When the torch arrived in Buenos Aires from San Francisco, authorities quickly hustled the torch off the plane and, in what was now rapidly becoming a comic odyssey, canceled a planned photo opportunity on the tarmac. The Olympic flame, in an ornately decorated lantern, was protected by Chinese guards who jumped onto a bus and rushed away to a secret location. The Chinese guard was escorted by wailing police cars and an ambulance. Local security officials wouldn’t disclose where the vehicle was headed. On the day of the torch’s tour through the streets of Buenos Aires local authorities braced for the worst, deploying some 1,200 police officers and 3,000 traffic cops. Though demonstrations were scattered, the police penned in protesters within fences along the 8_-mile relay route.

Behind the headlines and all the melodrama surrounding the torch, however, there’s a more significant story. For years, Argentina has been courting China diplomatically and has pointedly gone out of its way not to criticize the Asian Tiger in regard to its appalling human rights record. Kirchner is interested in maintaining important economic ties with the Asian Tiger, and in this sense the President could ill afford a public relations nightmare that might put the China relationship in danger.

On the other hand however, China ties could pose a thorny political problem for Kirchner and other South American leaders in the long term. Increasingly, Argentina is becoming entwined with Beijing and this has only served to intensify social tensions in the country.

Argentina Embarks on a New Trajectory

To understand why Argentina invested so much in its China relationship, you have to go back to 2001. In that year, the once prosperous South American nation faced economic ruin after confronting a catastrophic financial collapse. The Argentine political class had followed globalization’s dictates by dismantling protectionist trade and business regulations and embarking on an ambitious wave of privatizations. During the Asian economic crisis, a huge outflow of capital led to a depression and financial panic.

Although Argentina had experienced a number of economic crises over the years, this one was one was without precedent in severity and human consequences: overnight the currency lost two-thirds of its value and banks were closed so that ordinary Argentines could not access their funds. In December 2001, amidst bloody riots, President Fernando de la Rúa was forced to resign after hardly eighteen months in office. Parts of the majestic Congress building in downtown Buenos Aires were torched by angry protesters.

Over the last five years however, Argentina has undergone a remarkable economic recovery, partly due to a drastic devaluation of the currency by two-thirds. The currency devaluation suddenly made Argentina’s exports highly competitive on the world market.

The government’s move coincided with dramatic economic developments half a world away. In China, the government was facing a dilemma: the country’s farm output had reached its limit, and massive rural to urban migration was creating an insatiable demand for more soy. China simply did not have the necessary land or water to produce more of the crop.

Argentina to the Rescue!

As it turns out, Argentina, with its fertile soil and favorable climate, was well situated to produce soy. In conjunction with my new book, Revolution! South America and the Rise of the New Left (Palgrave-Macmillan, 2008), I interviewed Gonzalo Sánchez Paz, a lecturer in international affairs at George Washington University and an expert on South America’s ties to Asia. "You cannot understand the miraculous Argentine recovery after the financial crisis of December 2001 without considering the boom in soy exports to China," he told me.

In an effort to curb inflationary pressures, former President Néstor Kirchner placed export caps on beef, thus flooding the local market with meat. Argentines, who are passionate about their beef, consuming 154 pounds of meat per capita per year, and who hold Sunday barbecues with a religious fervor, embraced the new measures as prices were kepT low (incoming President Cristina Kirchner has pledged to maintain a high export tax that makes outbound beef too costly for many foreign buyers).

Simultaneously, many cattle ranchers were tempted to switch over to soy owing to increased market prices and the government’s export caps on meat. Argentina, which was the world’s biggest beef exporter until the 1950s, now went to fourth in U.S. Department of Agriculture rankings, behind Brazil, Australia and India.

Some experts say Argentine soybean farming is currently three times more profitable than cattle ranching. Indeed, the trend against ranching is so powerful that today, remarkably, half of all cultivated farmland in Argentina is dedicated to soy. The explosion in production has been aided by the fact that soybeans need just eight months to reach harvest, far less than the 2-3 years needed to raise a cattle herd.

Clearly, farmers aren’t complaining: they’re making a killing on their new soybean crop.

Soy Has Its Consequences

Argentina, a land of vast, fertile plains, has benefited hugely from high international prices for commodities. But the country is divided over how best to distribute windfall profits from soy. Though China trade has represented an economic boon, Argentina’s relationship to the Asian Tiger has exacerbated social tensions. The soy trade has encouraged the rise of an export elite in Argentina which has become an important political actor in its own right.

Determined to check the growing power of the farmers, and strapped for cash, the regime recently raised export taxes on soybeans from 35% to 45%. The move, Kirchner said, would help to control rising inflation on domestic food goods. What’s more, the policy would serve to redistribute wealth in a country where nearly a quarter of the population lives in poverty.

The soy farmers however went on strike, presenting Cristina with her first political crisis as Argentina’s new President. Blockading roads in protest of the tax increases, the farmers strangled the flow of farm goods to cities and caused acute shortages of meat, milk and fresh produce across the country.

At a political rally attended by 20,000 supporters including trade unionists, Kirchner railed against the soy farmers. "Is it good that highways are cut so that food cannot be transported to market?" she asked. "Don’t do more harm to the people, lift the roadblocks so Argentines can get food," the President said.

Though the farmers recently agreed to end the road blockades, they have stated that they will resume the strike if the government refuses to rescind the tax measures. The current peace between the parties seems tenuous, as both the farmers and government have failed to reach substantive agreement during negotiations.

Historically, the U.S. sponsored local economic elites and multinational business in South America in an effort to secure raw resources. Now that the U.S. has lost some of its former position, China has stepped in to fill this familiar role. In order to keep growing at high rates, China needs access not only to food but to iron, oil, copper, and gas. Usually China is willing to help with infrastructure projects such as ports or railroads but only if this helps to facilitate the transport of raw materials.

Across the region, countries strain to satisfy insatiable Chinese demand.

From Argentina, China imports soybeans, crude oil, leather and steel. In Bolivia, China will invest $1.5 billion in the onshore oil and gas sector. China is also interested in developing the country’s largest tin mine, Huanuni. Meanwhile China has imported millions of tons of oil and iron ore from Brazil and has signed a deal to help construct a major natural gas pipeline. In Chile, China will set up a joint venture with the state copper company, Codelco. In Ecuador, a Chinese-led consortium bought oil and pipeline assets for $1.4 billion. In Venezuela, China has invested millions in the oil sector.

As evidenced by the peaceful and largely uneventful passage of the torch in Buenos Aires, China is not perceived as a major exploitative presence.

This could change with time, however.

China’s economic and development vision for the region, designed to serve its own growing needs, has already exacerbated class tensions in Argentina and could give rise to social conflict in neighboring countries as well.

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In South America, China and the U.S. Battle it Out

Recently, I sat down with Gonzalo Sebastián Paz, a lecturer in international affairs at George Washington University in Washington, D.C. Sebastian Paz is an expert on South America's ties to Asia. He has previously taught graduate courses on the Southern Cone and Latin America at Argentina's La Plata National University and the University of Salvador. At those institutions, he also taught courses on international economics and politics with a heavy emphasis on Asia. He is one of the few Argentines to have lived and worked in South Korea, and was the recipient of a Korea Foundation Fellowship.

NK: Recently we've seen the rise of left leaning regimes throughout South America, many of which have espoused an anti-U.S. discourse. Simultaneously, many South American countries are cultivating greater economic ties to China. What are China's fundamental economic objectives in South America?

SP: I think China's most important focus is economic. In order to keep growing at high rates, 9 or 10% over the past twenty years, China needs a healthy supply of raw resources. I'm not saying there is nothing political, but this is a secondary consideration. The most important goal is to have access to iron, oil, copper, and gas.

NK: What kinds of infrastructure projects has China funded, and what is behind the policy?

SP: Usually China is willing to help with infrastructure projects that are related to sources of raw materials. That is: ports or other facilities or railroads connecting to mines, allowing shipment of the raw materials to China.

China's Growing Energy Profile

NK: What about energy projects: how significant is the Chinese presence here?

SP: The Chinese presence is still not very significant. But, energy is one of China's top priorities and it expects to invest in this area in future. Fundamentally, China does not trust international financial markets, which are dominated by American companies. The biggest oil companies in China are owned by the state. China wants ownership over the sources of energy all over the world, and they want easy access to this energy. So, China has a very different strategy: it seeks the actual ownership of mines and oil fields.

NK: To what extent will China become a player in the Bolivian energy sector?

SP: I think it's an option on the table. I am sure the Bolivians would prefer to have the Venezuelans engaged, or to a lesser extent the Brazilians or Argentines. But, you need to remember that President Evo Morales visited China before taking office. Even before conducting a state visit to Buenos Aires, he traveled to Beijing.

China Not Willing to "Cross the Line"

NK: What about transportation networks, how are they being refashioned to redirect trade towards Asia?

SP: This is a very old idea. The first country to think up this idea was Japan, in the 1950s and 60s. Japan developed a very important relationship with Brazil and Peru, countries that received a lot of Japanese emigration. In the 1960s and 70s the Japanese sought access to raw materials and infrastructure projects were designed around this central objective.

Currently, China is pursuing a very similar strategy but there is a difference between the Japanese and the Chinese. The Japanese were very concerned about the United States. The Chinese are more flexible in this regard, but they will never cross the line. They are operating in the backyard of the United States; they know this and will never risk endangering the relationship. But, they are willing to take more risks than the Japanese.

China is very interested in the expansion of the Panama Canal; the Chinese have said that they would be interested in the creation of an Inter-Oceanic canal in Nicaragua, and in Argentina they are investing heavily in a railway project. The bottom line is that China is not basing its policy around the needs of countries, but wants to extract raw resources for its own benefit.

NK: How large is the Japanese economic presence in South America in comparison to China?

SP: The Japanese presence is older than the Chinese. But recently Japan has been pursuing a new industrialization strategy, relocating many declining industries to other parts of Asia. Fundamentally, Latin America has not been a priority for Japan over the past 25 years. So, China is the new presence in Latin America and its investment in the region is lesser than the United States, Europe or even Japan. However Chinese investment is growing fast.

NK: To what extent has China eclipsed the U.S. in terms of trade, financial investment, and financial assistance?

SP: Fundamentally, China is not buying products from Latin America in order to achieve political influence, or to use this as leverage to pressure countries, or to try to split Latin America off from the United States. The Chinese are buying soy because they need to feed the people. So, the Chinese policy is economically driven though it may have political consequences.

In 2004, the Argentine government asked China for some economic support so as to pay off its debt to the International Monetary Fund. The Chinese refused. I think this is a very important case that proves my point that China doesn't want to make waves in the Americans' back yard. They know they cannot cross certain lines. They do not want to subvert the institutions that are regulating U.S. hegemony in Latin America. But, they are willing to push farther than the Japanese did in the past.

NK: If you could look into your crystal ball, ten years from now how would you foresee the ongoing relationship between China and Latin America?

SP: China is currently growing because it is connected to the U.S. and Europe. To some extent therefore, the relationship between China and Latin America is conditional on relations between China, the United States, and Europe. So, I don't want to be too linear here, but there is an assumption that China will continue to grow as it will have access to American and European markets. If this happens, China would continue to import raw materials from Latin America. But this is merely an assumption and nothing more. If something should happen to the United States-China relationship, we might have an entirely different situation.

China's Military Gambit

NK: What about defense projects? How significant is the Chinese contribution?

SP: Most Latin American countries supported the Rome Treaty for the International Criminal Court. The United States completely rejected this new organization. The U.S. has asked many countries to grant concessions on this treaty [note: when Latin American countries signed on to the treaty, the United States cut military training to some nations as punishment].

This created an opportunity for China to assert itself. China has provided weapons sales to Latin America. There have been hundreds of Chinese military visits to Latin America, and vice-versa. These exchanges have been very important. Meanwhile, Venezuela, Uruguay and Argentina have refused to send any more military personnel to the so-called School of the Americas [a U.S. training facility located in Fort Benning, Georgia, which was recently renamed WHISC or Western Hemisphere Institute for Security Cooperation].

The Chinese have also sent some police officers to Haiti. This is the first ever Chinese military presence in the Western Hemisphere. In that Caribbean country, we have a United Nations peace keeping operation. The United States hasn't been too concerned about this, because the Haiti operation is essentially being run by Mercosur [a South American trade bloc] countries. So, even as the U.S. is getting bogged down in the Middle East, Mercosur is helping the United States by securing Haiti.

Meanwhile, the Chinese have expressed interest in Bejucal and Lourdes, which are former Soviet bases in Cuba. Chinese President Hu Jin Tao visited one of them. There are some reports that China plans to set up a listening station in Cuba so as to spy on U.S. communications. However, I personally am not sure if this is true as the source of the information is the Cuban exiles, who are interested in promoting this view for their own political ends.

NK: To what extent is the growing China role a concern at the State and Defense Departments here in Washington, as well as the White House?

SP: There have been several hearings in Congress, in which representatives of the Defense Department have spoken. The U.S. Southern Command in Miami has been very concerned about this growing Chinese presence. Within the Republican Party, there has also been rising concern about the issue. In testimony, officers at the U.S. Southern Command have remarked that conducting military sanctions against Latin American countries that supported the Treaty of Rome has proven to be a counterproductive strategy. The U.S. policy has allowed China an opportunity to expand its military aid and diplomacy. Because of South Com's testimony, three months ago the U.S. government decided to abandon its sanction policy against many Latin American countries.

China, Latin America, and Human Rights

NK: Do you find it ironic that, even as South American governments proclaim their adherence to social and economic justice, they seek to pursue an alliance with China which has a horrible human rights record?

SP: This is a complex issue. As you probably know, the first country to pursue an Asian strategy was Chile. Under Pinochet, Chile was criticized for its human rights record and the government sought to break out of its diplomatic isolation by pursuing ties to Asian countries that never made a big issue out of human rights.

Pinochet sought diplomatic relations with South Korea, Taiwan, China, and the Philippines under Ferdinand Marcos. Similarly, immediately following the Tiananmen Square massacre, the Chinese sought to break out of their diplomatic encirclement by approaching Latin America. In fact, the first trip by Chinese dignitaries after the massacre was to Latin America.

But most countries, not to say all countries of the world, are far from consistent on human rights and China and they make many exceptions. Within the European Union, even France and Germany have recently debated selling weapons to China.

South American Views of China

NK: If China does become a major political and economic player in South America, what do you think the response from civil society and social movements will be?

SP: One needs to look at this on a country by country basis. In some countries China is viewed as a friend whereas in others it is viewed as a threat, economically speaking. Mexico fears China, and the Mexican government has the numbers to prove it. The Mexicans have lost thousands of jobs because of Chinese exports. In the Southern Cone however, China is perceived as a partner. You cannot understand the miraculous Argentine recovery after the financial crisis of December 2001 without considering the boom in soy exports to China.

Industrial workers in Argentina, Brazil and Mexico are quite worried about this new relationship with China because they fear they may lose their jobs. Other sectors may be happy because they see China as an alternative to U.S. imperialism and hegemony. I think right now there is little ideological clarity amongst social movements in South America. There is a big soup of indigenous movements, ecological groups, socialist/former Marxist movements, and not all of them have a consistent set of values.

NK: Has China sought to portray itself differently from the U.S. so as to dispel Latin Americans' concerns about imperialism and outside interference?

SP: China used to be the champion of Third World-ism. Now it's trying to become the champion of a multi polar world, which is something different. I don't think that China is perceived as a force which can challenge the United States. I think many people in Latin America overestimate China's capacity to change the rules of the game at an international level. China has actually been playing by the rules in many respects.

Nevertheless, U.S. policies have created an opening for China in Latin America. I'm not saying that China respects international law, but in the past few years there's been a lot of anger with the U.S. over the war in Iraq. As you remember, Mexico and Chile were members of the Security Council and they refused to authorize the use of force.

This was a very difficult decision, because these two countries were the closest friends of the U.S. in Latin America. Of course there have been some exceptions; the Salvadorans sent some forces to Iraq. But by and large, public opinion in Latin America was opposed to the U.S., which did not respect international law.

NK: What about the Amazon region, which has witnessed a lot of social unrest against development projects? What are Asian countries' plans for the area and do you think there could be social unrest in the area against China or others if development plans continue to mimic what we have seen in the past?

SP: Clearing the forest in the Amazon and exporting soy is an effort to link up to China, and there may be mining projects as well. We need to see to what extent the various governments within the Amazon region are able to control social groups. At this point I don't think any social movements in Venezuela would seriously be able to contest Chavez's power. This may not be the case in other countries such as Bolivia under Evo Morales, where the authorities are not nearly as well established.

From Tango to Tae Kwan Do

NK: In Peru during the 1990s, Alberto Fujimori, who was of Japanese descent, used his racial ancestry to propel himself to the presidency. In that case, Fujimori was able to play off people's perception that Asians were hard working. How deeply rooted is this idea?

SP: Cultural images of Asia in Latin America have been promoted through movies and books from the United States and Europe. But now, through direct experience and direct contact, Asians and Latin Americans are beginning to forge new ideas about one another which are unmediated by external cultural artifacts. This development is really something novel, and it hasn't occurred for decades or even centuries.

The first humans that lived in Latin America came from Asia, so if you want to trace the relationship you can go back pretty far. The second important event was the Manila Galleon. This was the backbone to trade in the Pacific for 250 years, and it was really very important. The third component was Asian immigration to Latin America in the 19th and 20th centuries. Economic growth and the so-called "Asian miracle" shaped Latin Americans' perceptions further and led to envy.

The image of the "Other" is different depending on the country. In Buenos Aires, if you think about Asia your reference point is the Japanese, who have dry cleaning businesses or work in the flower industry. In Peru, the reference point is the chifa [Chinese restaurant].

Cultural awareness of Asia has grown with the rise of Asian food, which is now available throughout Latin America. Martial arts are also popular, including Tae Kwon Do, Karate, and Tai Chi. I was one of the first Latin American experts to live in Asia. I remember there was an excellent professor of Tae Kwon Do from Korea who went to Buenos Aires to teach. Five years later he returned to Seoul and became a tango professor. This was amazing.

Meeting up at Macondo

SP: For Asian leaders, Latin America was a remote area, unstable, and incapable of fostering economic development. However, this view took a big blow with the economic crisis in 1997. The crisis started in Thailand and then spread throughout the region, and as a result Asians were humbled.

APEC (Asia Pacific Economic Cooperation) is the most important and symbolic meeting within the Asia Pacific region. A couple of times APEC meetings have been held in Latin America, which is something pretty new and impossible to imagine say, twenty or thirty years ago.

The 2004 APEC meeting in Chile, in particular, was really important in putting Latin America on the map of the Pacific Rim. It was really very interesting to see Asian leaders asking the Mexicans and Chileans how to deal with the IMF following the 1997 meltdown. So, this changed the idea of the "Other" for Asian elites. Still, very few people in Asia know anything about Latin America.

NK: You spent some time living and working in Asia, what was your experience?

SP: I remember when I was living in Seoul in 1996 there were very few Latin Americans. Most people worked in the various embassies. We used to meet in a small café called Macondo. They used to play salsa music in Macondo, which at that time was totally unknown in South Korea and people didn't know how to dance to it. When I returned in 1999 there were thousands, if not millions of young people dancing salsa much better than me—we Argentines are usually not very good salsa dancers.

Chile and the "Platform" to Asia

NK: Currently there are a lot of different proposals concerning hemispheric integration in South America. There is Mercosur, which Venezuela recently joined. However, Venezuelan President Chavez has even been critical of Mercosur, and has called on countries to further more progressive trading arrangements such as the Bolivarian Alternative for the Americas (known by its Spanish acronym ALBA). Bolivia under Morales seems to favor Chavez's views on ALBA.

Chile, on the other hand, has an entirely different view about integration. The country hopes to act as a "platform" to Asia and a means by which South America could gain access to the Asian market.

Which of these visions do you think will predominate?

SP: In the past, Latin America was not considered to be part of the Pacific Rim, and did not share in the institutions, markets, or organizations. Chile and Mexico were one of the first Latin American countries to gain access to markets and institutions within the area. At first, Chile saw the Pacific Rim as its own area, and did not see itself as a platform for other South American countries. Chileans were not really willing to allow Argentine wheat or corn to be exported through Chilean ports. They weren't interested in this; they wanted the markets for themselves.

But other economic sectors, who did not share the interests of the agricultural sector in the central valley of Chile, began to imagine a different role for their country: as a gateway for Asians to do business in Latin America, and for Latin America to do business in Asia. But this was not initially the attitude during the time of Pinochet and slightly after. So, Chile has changed its attitude in terms of its role as a bridge between the two regions.

Another development was that Asia realized that Chile was a very small market, and a nation of only 15 million people. Asia was interested in the big countries in South America, Brazil and Argentina for example, which did not have any coastline on the Pacific. At the end of the day, China managed to set up direct links with Brazil and Argentina and because of this all the institutional architecture that had been built up within the Pacific Rim during the 1980s and 90s became less relevant.

On the other hand, the end of the Cold War made it possible for a greater convergence of political values, and later the Washington Consensus was pushed as a remedy for much of the region's ills. Unfortunately, by the end of the 1990s this recipe was perceived as a failure in Latin America and this created a crisis. This resulted in the emergence of left wing populist leaders such as Chavez, Morales, and others.

But, the Chileans have created a model that has been successful to an extent. The first free trade agreement ever signed between a Latin American and an Asian country was Chile and South Korea. So, the Chileans are pursuing a strategy which has nothing to do with Chavez's ideas.

Meanwhile the Mexican economy is totally integrated into the U.S., to the extent that some people joke that Mexico no longer belongs to Latin America. Brazil and Argentina have tried to carve out an economically and politically autonomous region of their own in the Southern Cone.

This idea of autonomy has become more complicated now from a political standpoint with the inclusion of Venezuela within Mercosur. There is an expectation that Venezuela could help to supply the energy needs of Mercosur, but we will have to see how this works out.

Gonzalo Sebastián Paz is a lecturer in international affairs at George Washington University in Washington, D.C., and is an expert on South America's ties to Asia. He has previously taught graduate courses on the Southern Cone and Latin America at Argentina's La Plata National University and the University of Salvador.

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