How Latin America Can Use China As A Bargaining Chip To Get More From The U.S.

-Analysis-

BUENOS AIRES — Latin America has witnessed over two decades, three great changes on the international stage: China‘s explosive growth and expanding presence in this region, its intensified strategic rivalry with the United States and the superpowers’ increasingly frequent use of economic tools to extend their political influence.

These developments should have long ago prompted Latin American states to revise their foreign policy strategies toward the two powers. New strategies were required to meet the challenges of an international order reminiscent of Cold War bipolarity though coupled with a high level of economic interdependence in a globalized context.

Recommendations in this regard have included strategies of “active non-alignment,” remaining equidistance from the two power poles, or of “keeping the balance,” though none seems to have provided data on the political and economic costs of each option.

Carrots over sticks

We may ask in this respect, how the United States reacts when a Latin American state moves closer to China. How does it use its economic power to influence regional foreign policies? Does it wield the sanctions stick or wave the carrot of trade and investments, to sway countries the desired way?

You’re more likely to be offered developmental deals than threatened with sanctions.

In contrast with common perceptions, our research shows that in the case of democratic states with market economies and broadly aligned with U.S. foreign policy, the predominant response to the Chinese challenge has been to offer economic incentives. This category of states is more likely to be offered developmental deals or offers of cooperation than threatened with sanctions in response to Chinese penetration.

A good example is Panama. After it stopped recognizing Taiwan or the Republic of China in 2017 as the Chinese government and became the first regional country to join China’s Belt and Road initiative, it saw a sharp increase in Washington’s offers of economic incentives: eased access to loans, financing for development, inclusion in economic cooperation and investment promotion initiatives, and more.

Exploiting the context

At the regional level statistical evidence suggests a similar pattern. When democratic states expand ties with China, the United States has increased financial aid and developmental funds for them.

This means that a diversification of foreign relations — specifically with China — ends up improving regional states’ position vis-à-vis the United States. Diversified markets have thus become an escape valve and a buffer against possible U.S. sanctions, furthermore reducing the effectiveness of the threat of sanctions. Sanctions are in any case politically and diplomatically costly if Washington decides to use them to browbeat another democracy.

While the great powers continue their global chess match, regional states must forge strategies to reduce the risks to themselves and even exploit the context. Their crucial first ingredient should be to pay close attention to the United States’ economic diplomacy as its current weapon of choice.

*Zelicovich is a professor of international relations at Argentina’s National University in Rosario, and Yamin, similarly at the Torcuato di Tella university.