China, Russia and Latin America

Will geopolitics trump economic might?

BY BEATRICE E RANGEL

The region had barely recovered from the World Cup wake where an outsider (Germany) defeated a local team (Argentina) in Brazil when two quite weighty outsiders  took the center stage. Chinese President  Xi Jinping and Russian president Vladimir Putin toured the region before taking their seats at the business discussions held among BRIC countries in Fortaleza, Brazil last  week.

And while both statesmen covered more or less the same ground, motivations were far apart. For Xi the tour aimed at capping two decades of silent work in the region to secure for China long term procurement of vital natural resources such as fossil based energy and rare earth elements that are the fundamental input to micro electronics.

For Putin the tour was yet another opportunity to throw a challenging glove to the US in what he considers to be the initiation of a new geopolitical balance. This objective was clearly outlined by  Vladimir Davydov,Director of the Institute of Latin America at the Russian Academy of Sciences, in his statement to press agencies: “The fact that Vladimir Putin managed to set aside an entire week for a trip to the region is very revealing. It would seem to be an unaffordable luxury when there is an acute crisis on Russia’s borders. However, this tour is as relevant as ever. At a time when the West is trying to lure Russia into a ‘Ukrainian snare’, it showed that Russia is entirely capable of regaining old allies and of making new ones.”  

Meanwhile President Xi disclosed his country’s interest in the tour  when indicating “Venezuela has become one of the top countries for China’s investment in Latin America. The seventh energy supplier and the fourth trading partner. Argentina is also a country were Chinese investment can make a difference.”  

And to be clearer about the different approaches taken by the world power and the aspiring power routing for the tour began and ended at the antipodes. China’ Xi came straight to Brazil, met his BRIC colleagues, launched a $50 billion  development bank, visited Argentina, proceeded to Venezuela and ended his meeting in Cuba. The message was clear. First comes the attempt to conquer the second-largest market in the region; then my best trading partner, then my energy procurer and finally ideology.

Mr. Putin, on the contrary, gave higher ratings to ideology, as he started his tour in Cuba where comradeship paid-off. Indeed, he successfully restructured an old and outstanding debt of about $31.7 billion . Cuba will have ten years to pay $3.3 billion.   Then he went to Nicaragua where there was little or no business to conduct except a minor sale of Russian wheat. Negotiations in Buenos Aires featured discussions of joint projects in energy, transport, civil aviation, the peaceful use of outer space, and healthcare. In Brazil, besides handing Russia the baton to host the World Cup in 2018 and participating in the two-day BRICS summit, the agenda also included serious economic content. The two countries signed a thick package of agreements covering  energy, aviation, military and technical cooperation, customs operations, and a memorandum on installing Glonass stations.  Bilateral meetings were also held with Nicolas Maduro of Venezuela; Jose Mujica of Uruguay and Evo Morales of Bolivia. These meetings aimed more at raising the US eyebrows than at sealing long term business contracts.

But for Russia it is geopolitical re-accommodation while for China economic power. History will tell who is right.

Beatrice Rangel is CEO of AMLA Consulting Group, a business development advisory firm in Miami. She has also served as Chief Strategist for the Cisneros Group of Companies and as Minister of the Secretariat during the Presidency of Carlos Andrés Pérez (Venezuela).She wrote this column for Latinvex.  

© Copyright Latinvex