In Latin America, it is difficult for a pledge of $250 billion in direct investment to go unperceived, especially when the money is coming from China. At the China–Community of Latin American and Caribbean States (CELAC) forum in Beijing in January, Chinese President Xi Jinping signaled that his country will continue to literally build its way into the region with its investments in Latin American infrastructure projects.
Latin America is in no position to reject China’s capital flows: Chinese economic growth is expected to hover around 7 percent, in stark contrast to the OECD’s forecast of 2.5-3 percent growth for the Latin American region as a whole.
In an effort to promote a more robust South-South cooperation and with the intent of competing with the United States as Latin America’s number one trading partner, Chinese investment in the region increased over 71 percent in the past year. More noteworthy is the fact that in 2010, total Chinese financing to Latin America exceeded that of the World Bank, International Monetary Fund and U.S. Export-Import Bank combined, as the Inter-American Dialogue’s Margaret Myers has noted. For quite some time now, the Chinese dragon has been flying high in Latin America, especially in the Venezuelan, Argentinean, Brazilian, and Ecuadorian skies.
Two questions come to mind: what are the underlying conditions for Chinese investments in the region, and, more specifically, how do these loans differ from those offered by Washington in the early 1990s?
As the two-day CELAC Summit closed in Havana at the end of January, leaders of the 33 Latin American and Caribbean (LAC) nations that compose this body adopted a triumphant pose for the assembled photographers.
Why the celebratory atmosphere? One might be forgiven for thinking it was connected to the various grand ambitions articulated at the summit–the second since CELAC was created in 2011–in the spheres of education, disaster management, combating corruption and similar hot-button regional issues. But as far as the leaders present were concerned, the greatest triumph was in declaring CELAC a "zone of peace."
"Peace," in this case, is understood as "non-interference." In the words of the summit declaration, each CELAC member state has the "inalienable right to choose its political, economic, social and cultural system as an essential condition to guarantee peaceful co-existence among nations." (My emphasis.)
Put another way, if you are running a one-party state, like the Cubans, or a mafia state that fixes elections, like the Venezuelans, you have nothing to fear. It's perverse, but it's true: even leaders of strong democracies, like Costa Rica, have had the temerity to adopt the language of rights in order to rationalize and justify their silence about the denial of rights to the opposition in non-democratic countries!
The thirty-three countries that make up the Latin America and Caribbean Economic Community (CELAC), wrapped up their second summit by declaring the region a “zone of peace,” on Wednesday. Heads of state including Juan Manuel Santos of Colombia, Enrique Peña Nieto of Mexico, Nicolas Maduro of Venezuela, and recently elected Michelle Bachelet of Chile signed an accord vowing to resolve conflicts respectfully and peacefully.
According to the summit declaration, the meeting provides an opportunity for coordination within the region and emphasizes the need for pluralistic and respectful cooperation. This year’s summit highlighted issues of crime, economic hardship and inequality in the region, the potential economic benefit of free trade, and support for Argentina’s claims over the Falkland Islands.
The summit culminated with a commitment to non-intervention, cooperation and respect of "the inalienable right of every state to choose its political, economic, social, and cultural system, as an essential condition to guarantee peaceful co-existence among nations," read Cuban President Raul Castro, outgoing CELAC president.
CELAC was created in 2011 as an alternative to the Organization of American States, which has excluded Cuba since 1962. Costa Rica will assume the CELAC’s rotating presidency at the end of the summit.
Likely top stories this week: the International Court of Justice will rule on the Chile-Peru Maritime border; the CELAC Summit begins on Tuesday in Havana, Cuba; Argentina begins easing restrictions on purchasing US dollars; protesters of the World Cup clash with police in Sao Paulo; Belize and Guatemala sign an agreement at the OAS.
International Court to Rule on Chile-Peru Maritime Dispute: The United Nations’ International Court of Justice in The Hague is due to make a decision today on Peru and Chile’s disputed maritime border. The ruling will decide which country owns 38,000 square kilometers (14,670 square miles) of ocean, which includes one of the world’s richest fishing grounds with an annual catch of $200 million. If Peru wins the dispute, some 2,000 Chilean fishermen fear they could lose their jobs. Presidents of both countries have each said they will adhere to whatever decision the court makes.
CELAC Summit Begins in Havana: World leaders from around the hemisphere are traveling to Havana, Cuba this week for the two-day Community of Latin American and Caribbean States (CELAC) summit, which begins tomorrow. Thirty-two heads of state will be attending the summit, including presidents Dilma Rousseff of Brazil, Cristina Fernández de Kirchner of Argentina, Evo Morales of Bolivia and Raul Castro of Cuba, among others. Dozens of dissidents have been detained in a new “wave of political repression” ahead of the summit. Activist Guillermo Farinas has been kept under house arrest for three days, and as many as 100 members of the Ladies in White have been arrested to prevent them from attending a forum on human rights on Tuesday.
Argentina Lifts Restrictions on Purchasing U.S. Dollars: Argentina’s Economy Minister Alex Kicollof announced on Friday that it was relaxing restrictions on the purchase of U.S. dollars starting Monday. The decision came amid a 28 percent inflation rate and the sharpest slide in the value of the Argentina peso since the 2002 economic collapse. However, in an interview published by Pagina 12 on Sunday, Kicillof said that the lowering of the tax rate on credit card purchases made in U.S. dollars from 35 percent to 20 percent would not happen on Monday, with no indication of when the change will happen. It’s not clear whether the easing of restrictions will be enough to stabilize the country, given the already high inflation rate and the general lack of confidence in the government—from chronic blackouts, recent looting in the provinces, and President Kirchner’s recent absence—that has grown.
World Cup Protests in São Paulo Turn Violent: Protesters clashed with police this weekend in São Paulo, where thousands had taken to the street to protest the cost of the 2014 World Cup. More than 130 protesters were arrested, and one man is in critical condition after being shot by police for allegedly carrying an explosive in his backpack. The Anonymous Rio protest group organized the demonstrations using social media and called it “Operation Stop the World Cup”. Following the massive protests last year, Brazil has seen “rolezinhos”—flash mobs by young people from the favelas targeting affluent shopping malls —crop up across the country.
Belize and Guatemala Sign Bilateral Agreement: The foreign ministers of Belize and Guatemala met with Organization of American States (OAS) Secretary General José Miguel Insulza over the weekend, and signed on to a “Road Map and Plan of Action” to deepen transnational cooperation. According to Insulza, the agreement will allow the two countries to “develop significant projects in the areas of the environment, security, labor, immigration, health or education, (which) helps people to get to know and value each other.” Through the agreement, both nations also pledged that they will adhere to the International Court of Justice’s ruling on the pending territorial dispute.
The most controversial outcome of last month’s second CELAC (Community of Latin American and Caribbean States) summit in Santiago, following close on the heels of the first EU-CELAC meeting, was the decision in Santiago to appoint Cuban President Raúl Castro to the chairmanship of the 33-member regional body.
Castro, who will be splitting the two-year term with his Costa Rican counterpart, Laura Chinchilla, could not resist several pointed remarks aimed at the United States. He decried the presence of multinational companies in the region and the U.S.’ continued possession of Puerto Rico. The 81-year-old leader’s message was clear, however:
“We are building the ideal of a diverse Latin American and Caribbean region united in a common space of political independence and sovereignty over our enormous natural resources to advance toward sustainable development [and] regional integration,” Castro said.
Colombian President Juan Manuel Santos described Cuba’s leadership of CELAC as a “very significant political development with special symbolism.” Though absent from the summit, Venezuelan President Hugo Chávez wrote in a letter that the act told “the U.S., with a single voice, that all the attempts to isolate Cuba have failed and will fail.”
Top stories this week are likely to include: Cuba takes over the chairmanship of CELAC on Monday as the summit wraps up in Santiago; a bipartisan group of U.S. senators release a plan for comprehensive immigration reform a day before Obama lays out his proposals; violence in Colombia increases following the end to the FARC’s unilateral ceasefire; Argentina and Iran seek approval for an international truth commission to investigate the 1994 AMIA bombing in Buenos Aires; mining protesters blockade a highway in Peru.
Bipartisan Senate Group, Obama Release Plans for Immigration Reform
A bipartisan group of eight U.S. senators will announce at 2:30pm (EST) a plan for comprehensive immigration reform, which includes providing a path to citizenship for undocumented immigrants that is contingent upon first ensuring that new border security measures and an exit system are in place. The agreement comes a day before U.S. President Barack Obama is expected to announce his proposals for comprehensive immigration reform. The bipartisan group includes Senators Charles E. Schumer (D-NY), John McCain (R-AZ), Lindsey Graham (R-SC), Robert Menendez (D-NJ), Richard Durbin (D-IL), Michael Bennet (D-CO), Jeff Flake (R-AZ). Senator Marco Rubio (R-FL) joined the discussions more recently. They met over the weekend to finalize the draft of a principles agreement that also outlines a path to citizenship for undocumented youth, known as DREAMers, and other principles for reforming the immigration system. “Today’s release of bipartisan principles for immigration reform legislation will put down a marker of what will be possible in a potential comprehensive package this spring. This, combined with the president’s speech in Las Vegas tomorrow and the significant weight that is expected to be placed on reform in the State of the Union on February 12, illustrates that if reform is to happen now is the year,” notes AQ Senior Editor Jason Marczak.
Cuba takes over Chairmanship of CELAC as Summit Concludes
The two-day Comunidad de Estados Latinoamericanos y Caribeños (Community of Latin American and Caribbean States—CELAC) summit concludes today in Santiago, as Cuba formally assumes chairmanship of the regional body today. CELAC—which includes 33 Latin American and Caribbean nations and excludes the U.S. and Canada—hosted leaders from the European Union, who pledged to deepen ties with Latin America while meeting with regional trade blocs like Mercosur and the Pacific Alliance for trade discussions. As the summit wraps up today, Venezuelan Vice-President Nicolás Maduro is expected to deliver a message from Venezuelan President Hugo Chávez—still in Cuba recovering from surgery—who was noticeably absent from the summit. Also absent were Paraguayan President Federico Franco (Paraguay was not invited), Ecuadorian President Rafael Correa, and Brazilian President Dilma Rousseff, who left early to deal with the aftermath of the nightclub fire that killed over 230 people in Rio Grande do Sul.
Violent Attacks Increase in Colombia After Ceasefire
In the first week since the Fuerzas Armadas Revolucionarias de Colombia (Revolutionary Armed Forces of Colombia—FARC) ended a unilateral ceasefire it had announced in November, the guerrillas have reportedly carried out 32 violent attacks between January 20 and 26, surpassing the number of attacks before the peace talks were announced. The Colombian government warned that the increased violence, including the FARC’s kidnapping of two policemen last Friday, could undermine the rebels’ peace talks with the government in Havana. The third round of talks concluded last Thursday, with no major progress toward ending the conflict between the rebels and the government.
Argentina and Iran Agree to Create a Commission to Investigate Bombing
The foreign ministers of Argentina and Iran agreed Sunday to create an international truth commission that would investigate the 1994 car bombing of a Jewish center in Buenos Aires that killed 85 people. Argentine prosecutors have said that the attack was orchestrated by Iran’s current defense minister and carried out by Hezbollah. Formation of the truth commission will require legislative approval in both Iran and Argentina to move forward, and would consist of five independent judges from other countries that would analyze documentation investigating the attack. Jewish groups in Argentina have said the agreement will strengthen Argentine-Iranian ties at the expense of the victims of the attack, and expressed doubt that any suspects would be brought to trial.
Hundreds of Protestors Protest Mining Project in Peru
Hundreds of protestors in northern Peru are continuing a week-long highway blockade near Cañaris after 31 people were injured Friday in a confrontation with police over the nearby Cañarico Norte copper project. The protesters say that Canadian mining company Candente Copper Corp. will divert water that locals rely on for farming, but Peru’s vice-minister of energy and mines says that the protesters have been misinformed about the project’s environmental risks. Despite the protests, a roundtable meeting will go forward as scheduled on February 2 to discuss the project. Meanwhile, Peru's Ministry of the Environment will publish a guide to reducing social conflict through "ecological and economical zoning."
On August 7, India’s foreign minister held the country’s first dialogue with a troika representing a recently formed 33-nation Latin American group, the Comunidad de Estados Latinoamericanos y Caribeños (Community of Latin American and Caribbean States—CELAC). The meeting drew little attention, and most media outlets dismissed it as a routine affair, akin to India’s engagements with other multilateral blocs. A more nuanced look, however, indicates a window of opportunity for both India and Latin America.
First, we must explore Latin America’s changing geopolitical priorities over the past few years.
The very nature of the CELAC grouping is reflective of this shift: it was formed in defiance of the Organization of American States to leave out the United States from its political confabulations. Latin America now looks less to its traditional trade partners—Europe and the U.S.—which are preoccupied with their debt crises and political transitions, and the region also no longer sees them as a model they can emulate.
As a result, China is a dominant player in Latin America, with an annual trade of $240 billion. The Chinese presence there is maintained by two pillars: primarily, by a massive exchange of commodities and natural resources, and secondly, by a large Chinese diaspora totaling upwards of 2 million people. This will continue to sustain China’s relationship with Latin America, though more recently there has been a subtle change of policy positioning toward Beijing. Some perceive the flooding of Chinese goods into their markets as a risk; others simply want to engage with new markets.
This is where India comes in. It presents Latin America with an opportunity to diversify and opens the door to a large and promising market.
Today and tomorrow, Indian External Affairs Minister S.M. Krishna will host the foreign ministers of Chile and Venezuela, Alfredo Moreno Charme and Nicolas Maduro, and Cuban Foreign Affairs Vice Minister, Rogelio Sierra. The meeting marks the first official dialogue between representatives of the 33-member Comunidad de Estados Latinoamericanos y Caribeños (Community of Latin American and Caribbean States—CELAC) and the South Asian country.
According to senior foreign ministry officials, the main objective of the summit is to strength the strategic and economic relationship between India and Latin American and the Caribbean, increasing contact points despite the great geographical and cultural distances. “A meeting with the external affairs minister in this format is indicative of interest (from both sides) in raising engagement between India and the CELAC,” said India foreign ministry spokesman Syed Akbaruddin.
Over the past decade, relations between India and Latin America and the Caribbean have continued to grow, as professor Jorge Heine and ambassador R. Viswanathan showed in their article in the Spring 2011 issue of America Quarterly. Prime Minister Manmohan Singh and former President Pratibha Patil visited several countries in the region over the past four years, and 10 Latin American presidential visits to India were made between 2001 and 2011. India’s trade with CELAC increased from $2 billion in 2000-2001 to $25 billion in 2011-2012. CELAC receives about $16 billion in Indian investment, which mainly revolves around the hydrocarbon sector, information technology, pharmaceuticals, and minerals. Investment in the energy sector totals $8 billion, but further investment is likely given India’s growing energy needs.
CELAC was created on February 23, 2010, at the Rio Group–Caribbean Community Unity Summit and formally established in July 2011 at a summit in Caracas, Venezuela. It includes 33 countries in the Americas, representing roughly 600 million people, with the notable exceptions of Canada and the United States.
Top stories this week are likely to include: India-CELAC dialogue; Jamaica marks its independence; impact of the Antamina spill; Repsol to meet with Venezuela on YPF; and responses to Petrobras’ poor quarterly release.
India-CELAC Dialogue: Tomorrow, Indian Foreign Minister S. M. Krishna will host a troika of high-level diplomats from the Comunidad de Estados Latinoamericanos y Caribeños (Community of Latin American and Caribbean States—CELAC) in New Delhi with the objective being to deepen relations with Latin America. As Chile currently holds the CELAC presidency, Chilean Foreign Minister Alfredo Moreno will lead the delegation that will also include Venezuelan Foreign Minister Nicolas Maduro and Cuban Vice-Foreign Minister Rogelio Sierra. According to India’s foreign ministry, India’s trade in Latin America and the Caribbean (LAC) was over “$25 billion in 2011 and cumulative investments are estimated to be $16 billion mostly in hydrocarbons, minerals, agriculture, pharma and IT;” still, there is “vast untapped potential” for further collaboration. This presents an enormous opportunity for Latin America, notes AQ Senior Editor Jason Marczak: “Greater trade and investment linkages with India will be critical for protecting the region against any decrease in demand caused by a slowing Chinese economy. India represents a growing, untapped middle class.” For more on LAC-India relations, read “The Other BRIC in Latin America: India” from the Spring 2011 AQ. As well, AS/COA notes that diplomatic ties between LAC and India have expanded; between 2002 and 2009 the number of LAC embassies in New Delhi grew from 12 to 18.
Jamaica Rings in Independence: Today Jamaica celebrates 50 years of independence from the United Kingdom. Queen Elizabeth II remains the island’s monarch, but Jamaican Prime Minister Portia Simpson-Miller pledges to loosen ties with Great Britain and make her country a republic. Doing so would maintain Jamaica’s status as a British commonwealth, but would remove the Queen as Jamaica’s head of state and have the prime minister become president. Reflecting on 50 years of independence, Simpson-Miller told TIME Magazine that “despite our challenges, I think we’ve done very well on balance our first 50 years […] Jamaica is more than just the ‘brand’ the world recognizes so well; it’s a place of pride for the people who live here, its educational institutions, its sports achievements, and its science and technology growth.”
Impact of Peruvian Mine Spill: A toxic copper concentrate spilled at the Antamina mine in the Peruvian region of Ancash on July 25 has made over 100 people ill. Antamina’s environmental director has disputed that the material was toxic, instead referring to it as a “dangerous substance that requires a particular handling but not necessarily toxic.” Still, on Sunday, the company was fined for not activating its response plan to the accident. Copper has been instrumental to Peru’s economic ascent, accounting for 60 percent of export income, but “environmental protection has been relatively lax” in the Andean country according to the Associated Press. As more details emerge this week, will the government take additional action?
Repsol Representatives to Meet with Venezuelan Officials on Thursday: Officials from Spanish firm Repsol S.A. will meet with Venezuelan leaders on Thursday to discuss Repsol’s dispute with Argentine firm YPF after Argentina’s government seized a majority share of YPF, formerly held in a joint venture with Repsol. Venezuela has pledged to invest in Argentina to boost its oil production and desires an amicable resolution to the conflict with Repsol and the Spanish government. Repsol has investments in Venezuelan oil and gas fields, according to Bloomberg.
Fallout from Disappointing Petrobras Report: Petrobras posted its worst quarterly report since 1999, registering a R$1.35 billion ($663 million) loss in the second quarter, versus a R$10.94 billion—then equivalent to $6.86 billion—gain one year earlier. Petrobras President Maria Graça Foster blamed the loss in part to an “excessive depreciation” of the real against the dollar. What steps will be taken in response to this report?
At the conclusion of the Fifth Summit of the Americas in 2009, President Obama called for hemispheric partnership in place of “stale debates and old ideologies.” Three years later, the stalest of all debates is once again dividing the region. Ecuadorian President Rafael Correa leads a threat to protest the absence of Cuba at the Sixth Summit by boycotting the entire event. While the political storm clouds will likely dissipate before April, the episode reveals the magnified symbolic importance of the lone outlier in the inter-American system.
Correa’s proposal immediately met with the avid support of Venezuelan President Hugo Chávez and the other members of the Bolivarian Alternative for the Americas (ALBA) bloc gathered in Caracas last weekend. In response, a spokesman for the U.S. State Department appropriately pointed out that Cuba has not reached the threshold for participation—the essential elements of a representative democracy—as recognized at the Third Summit in Québec in 2001. The Secretary-General of the Organization of the American States (OAS), José Miguel Insulza, hastened to add that the Cuban government has not requested “the process of dialogue” necessary to participate in the OAS, as stipulated by the 2009 resolution that revoked its nearly five-decade-old suspension. Meanwhile, Colombian Foreign Minister María Ángela Holguín has reiterated that an invitation does not depend on her government, which will host the Summit in Cartagena, but rather must result from a consensus decision among the member countries.
The notable lack of consensus is striking for what it says about the incentives and challenges faced by each of the actors involved. Policy toward Cuba has always generated controversy, less for the island itself than for larger principles; Cuba can represent either a litmus test for a government’s commitment to human rights and democracy or, as is so common in Latin America, a measure of a government’s independence from Washington. While this week’s debate does indeed spark a sense of déjà vu, it also demonstrates shifting dynamics in inter-American relations.
For Ecuador’s agent provocateur, Cuba fits neatly into a strategy of discrediting the OAS in favor of hemispheric organizations that exclude the United States, principally the new Community of Latin American and Caribbean States (CELAC). Correa is locked in a fight with the Inter-American Commission on Human Rights, an autonomous branch of the OAS that has documented his abuse of press freedoms. Fellow firebrand Hugo Chávez is facing his own domestic problems, with rising inflation and crime endangering his electoral prospects in the October presidential contest while also contributing to a loss of regional influence for the ALBA bloc. In this context, Caracas and Quito have little to lose in promoting Havana’s participation in the Cartagena Summit, even knowing that the proposal will be a non-starter in Washington.