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Third, the US has failed over the past

the Brazilian arm of Spanish Repsol for

line of credit was issued to Venezuela

decade to engage in mutually-beneficial,

$7.1 billion with the hopes of producing

from the Chinese Development Bank. By

active dialogue with Latin America. As

200,000 barrels of oil per day;this is a lofty

giving Latin American countries cheap

the War on Terror and national security

goal for China’s second largest acquisition

access to credit with few strings attached,

concerns largely dominated the agenda

of an oil company to date.In addition,

the Chinese are quickly redirecting focus

of the Bush and Obama administrations,

China

free-trade

from US-led institutions like the IADB.

efforts to engage Latin America were

agreements with many Latin American

With more than $2 trillion dollars in U.S.

forgotten or relegated to the backseat.

countries

currency

Most Latin American countries ignored the

trade with the region. The Chinese and

strength of the dollar, the Chinese see

War on Terror and focused their resources

Peruvians signed a Free-Trade agreement

hard assets, such as the raw materials they

on

in April of 2009, and China has already

are buying in Latin America, as a more

ofclean

displaced the U.S. from its eighty-year

secure investment.

energy practices. Past dialogue between

streak as Brazil’s largest trading partner.

Third, military relations between China

the U.S. and Latin America on economic

In exchange for raw materials from Latin

and Latin America have been growing

policies is another source of tension. Latin

American countries, the Chinese supply a

in the past decade. While the arms sales

Americans find a great hypocrisy in the

wealth of consumer products such as cars,

that China has made to countries such as

the

elimination

alleviation,

and

the

of

poverty,debt

creation

is

rapidly to

forming

facilitate

its

booming

and

uncertainty

about

the

fact that the United States, a country that

The US has failed over the past decade to engage in mutuallybeneÀcial, active dialogue with Latin America.

had lectured them on debt reduction, transparency, and growth, now faces a terrible financial crisis which originated out of its shady banking practices. The above issues might have been forgotten had another world power not exploited this decline in relations. China, the Asian economic giant, has made great

cell phones, and batteries, to a consumer

Venezuela, Brazil, Bolivia, and Cuba have

forays into Latin America in the previous

market of 600 million individuals.

been relatively small (anywhere from ten to a few hundred million dollars), they have

few years, and its influence is rising rapidly

In addition to joint ventures with

throughout the region. More importantly,

Latin American countries, Chinese loans

still made significant inroads in building

Latin American countries are eager to

help secure its influence and help China

military relations. A US Military Review

enter into a partnership with China, one

diversify assets away from US dollars.

in 2008 noted that that over 100 junior

that is based on a different paradigm than

In

economic

or senior officers representing 12 Latin

the region’s centuries-old relationship

assistance

directed

American countries have graduated from

with America.

towards the Inter-American Development

Chinese military academies in the past

China sees Latin America as offering

Bank (IADB), largely headed by the

few years. While this number may seem

three mutually-beneficial opportunities.

United States (with a 30% stake and

small, it represents a growing number

First, China is a rapidly growing power

Washington DC headquarters). In light of

of upcoming Latin American officers

that must meet the material demands of

the Chinese alternative, however, those

who have extraordinarily close ties to

more than 1.3 billion people. To this end,

loans havetoo many strings attached

the Chinese military and would likely

several Chinese state-owned enterprises

and are often too small. For instance,

welcome increaseda Chinese presence in

have moved into Latin America to secure

while the IADB approved a total of $11.2

their country.In addition, Chinese military

raw materials such as copper, oil, and

billion in loans for 2008, most individual

hardware, while limited, still affects U.S.

even soybeans for their use back home.

loans from China are equivalent to this

interests. Chinese “gifts,” such as the 38

In 2007 the Aluminum Corporation of

amount. Last year a $10 billion deal (made

HN5 rocket launchers given to Bolivia, were

China (CHINALCO) bought Peru Copper

in Yuans) with Argentina secured China’s

smuggled into Colombia and used against

for $860 million dollars.In October 2010,

imports to the country, while this year,

American-made

a

corporation

on top of an existing $12 billion dollar

by anti-narcotic Colombian pilots. The

namedSinopec bought a 40% stake in

bilateral investment fund, a $20 billion

Chinese are also willing to spend money to

Chinese

petrochemical

the

past,

requests

and

loans

for were

FA L L 2 0 1 0

111210 hq.indd 35

helicopters

piloted

I N T E R N AT I O N A L B U S I N E S S R E V I E W

35

11/27/2010 3:13:12 PM

Profile for Daniel Hellwig

International Business Review - Fall 2015  

Fall edition of the IBR magazine at the Wharton School.

International Business Review - Fall 2015  

Fall edition of the IBR magazine at the Wharton School.

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