Countering China's Reach in Latin America

By Alan W. Dowd, ASCF Senior Fellow

Focused on military operations in the Middle East, nuclear threats in Iran and North Korea, and the global threat of terrorism, U.S. policymakers have neglected a growing challenge right here in the Western Hemisphere: the expanding influence and reach of China.

Eyeing energy resources to keep its economy humming, China is engaged in a flurry of investing and spending in Latin America.

In Costa Rica, China is funding a $1.24-billion upgrade of the country’s oil refinery; bankrolling an $83-million soccer stadium; backing infrastructure and telecommunications improvements; and pouring millions into a new police academy.

In Colombia, China is planning a massive “dry canal” to link the country’s Pacific and Atlantic coasts by rail. At either terminus, there will be Chinese ports; in between, there will be Chinese assembly facilities, logistics operations and distribution plants; and on the Pacific side, there will be dedicated berths to ship Colombian coal outbound to China.

In mid-January, a Chinese-built oil rig arrived in Cuba to begin drilling in Cuba’s swath of the Gulf of Mexico. Reuters reports that Spanish, Russian, Malaysian and Norwegian firms will use the rig to extract Cuban oil. For now, China is focusing on onshore oil extraction in Cuba.

New offshore discoveries will soon catapult Brazil into a top-five global oil producer. With some 38 billion barrels of recoverable oil off its coast, Brazil expects to pump 4.9 million barrels per day by 2020, as the Washington Times reports, and China has used generous loans to position itself as the prime beneficiary of Brazilian oil. China’s state-run oil and banking giants have inked technology-transfer, chemical, energy and real-estate deals with Brazil. Plus, as the Times details, China came to the rescue of Brazil’s main oil company when it sought financing for its massive drilling plans, pouring $10 billion into the project. A study in Joint Force Quarterly (JFQ) adds that Beijing plunked down $3.1 billion for a slice of Brazil’s vast offshore oil fields.

The JFQ study reveals just how deep and wide Beijing is spreading its financial influence in Latin America: $28 billion in loans to Venezuela; a $16.3-billion commitment to develop Venezuelan oil reserves; $1 billion for Ecuadoran oil; $4.4 billion to develop Peruvian mines; $10 billion to help Argentina modernize its rail system; $3.1 billion to purchase Argentina’s petroleum company outright. The New York Times adds that Beijing has lent Ecuador $1 billion to build a hydroelectric plant.

There is good and bad to Beijing’s increased interest and investment in the Western Hemisphere. Investment fuels development, and much of Latin America is happily accelerating development in the economic, trade, technology and infrastructure spheres. But China’s riches come with strings.

For instance, in exchange for Chinese development funds and loans, Venezuela agreed to increase oil shipments to China from 380,000 barrels per day to one million barrels per day. It’s worth noting that the Congressional Research Service has reported concerns in Washington that Hugo Chavez might try to supplant his U.S. market with China. Given that Venezuela pumps an average of 1.5 million barrels of oil per day for the U.S.—or about 11 percent of net oil imports—the results would be devastating for the U.S.

That brings us to the security dimension of China’s checkbook diplomacy in the Western Hemisphere.

Officials with the U.S. Southern Command conceded as early as 2006 that Beijing had “approached every country in our area of responsibility” and provided military exchanges, aid or training to Ecuador, Jamaica, Bolivia, Cuba, Chile and Venezuela.

The JFQ study adds that China has “an important and growing presence in the region’s military institutions.” Most Latin American nations, including Mexico, “send officers to professional military education courses in the PRC.” In Ecuador, Venezuela and Bolivia, Beijing has begun to sell “sophisticated hardware…such as radars and K-8 and MA-60 aircraft.” The JFQ report concludes, ominously, that Chinese defense firms “are likely to leverage their experience and a growing track record for their goods to expand their market share in the region, with the secondary consequence being that those purchasers will become more reliant on the associated Chinese logistics, maintenance, and training infrastructures that support those products.”

Put it all together, and the southern flank of the United States is exposed to a range of new security challenges.

To be sure, much of this is a function of China’s desire to secure oil markets. But there’s more at work here than China’s thirst for oil. Like a global chess match, China is probing Latin America and sending a message that just as Washington has trade and military ties in China’s neighborhood, China is developing trade and military ties in America’s neighborhood.

This is a direct challenge to U.S. primacy in the region—a challenge that must be answered.

First, Washington needs to relearn an obvious truth—that China’s rulers do not share America’s values—and needs to shape and conduct its China policy in that context.

Beijing has no respect for human rights. Recall that in China, an estimated 3-5 million people are rotting away in laogai slave-labor camps, many of them “guilty” of political dissent or religious activity; democracy activists are rounded up and imprisoned; freedom of speech and religion and assembly do not exist; and internal security forces are given shoot-to-kill orders in dealing with unarmed citizens. Indeed, Beijing viewed the Arab Spring uprisings not as an impetus for political reform, but as reason “to launch its harshest crackdown on dissent in at least a decade,” according to Director of National Intelligence James Clapper.

In short, the ends always justify the means in Beijing. And that makes all the difference when it comes to foreign and defense policy. As Reagan counseled during the Cold War, “There is no true international security without respect for human rights.”

Second, the U.S. must stop taking the Western Hemisphere for granted, and instead must reengage in its own neighborhood economically, politically and militarily.

That means no more allowing trade deals—and the partners counting on them—to languish. Plans for a hemispheric free trade zone have faltered and foundered. The trade-expansion agreements with Panama and Colombia were left in limbo for years, before President Obama finally signed them into law in 2011.

Reengagement means reviving U.S. diplomacy. The Wall Street Journal reports that due to political wrangling in Washington, the State Department position focused on the Western Hemisphere has been staffed by an interim for nearly a year, while six Western Hemisphere ambassadorial posts (Uruguay, Venezuela, Ecuador, El Salvador, Nicaragua and Barbados) remain empty.

Reengagement means reversing plans to slash defense spending. The Joint Forces Command noted in 2008 that China has “a deep respect for U.S. military power.” We cannot overstate how important this has been to keeping the peace. But with the United States in the midst of massive military retrenchment, one wonders how long that reservoir of respect will last.

Reengagement also means revitalizing security ties. A good model to follow might be what’s happening in China’s backyard. To deter China and prevent an accidental war, the U.S. is reviving its security partnerships all across the Asia-Pacific region. Perhaps it’s time to do the same in Latin America. We should remember that many Latin American countries—from Mexico and Panama to Colombia and Chile—border the Pacific. Given Beijing’s actions, it makes sense to bring these Latin American partners on the Pacific Rim into the alliance of alliances that is already stabilizing the Asia-Pacific region.

Finally, all of this needs to be part of a revived Monroe Doctrine.

Focusing on Chinese encroachment in the Americas, this “Monroe Doctrine 2.0” would make it clear to Beijing that the United States welcomes China’s efforts to conduct trade in the Americas but discourages any claims of control—implied or explicit—by China over territories, properties or facilities in the Americas. In addition, Washington should make it clear to Beijing that the American people would look unfavorably upon the sale of Chinese arms or the basing of Chinese advisors or military assets in the Western Hemisphere.

In short, what it was true in the 19th and 20th centuries must remain true in the 21st: There is room for only one great power in the Western Hemisphere.