China is now a preferred lender across Latin America and the Caribbean. It hosts two international development banks — the Beijing-led Asian Infrastructure Development Bank (AIIB) and the New Development Bank (NDB) in Shanghai —that are both expanding their footprint across the region, TIME Magazine reported.
“Infrastructure development has shrunk the distance between Asia and Latin America,” AIIB president Jin Liqun told TIME fromhis Beijing headquarters in February 2021.
However, while Chinese loans often have fewer conditions attached, dependence on them can push economically unstable countries such as Venezuela into what critics call “debt traps” that could result in default, the Council on Foreign Relations(CFR) think tank, which specializes in U.S. foreign policy and international relations,said in an April report. “Critics also say that Chinese companies bring lower environmental and labor standards, and they warn that China’s growing control over critical infrastructure such as energy grids poses national security risks. There are also fears of economic dependency in countries such as Chile, which sent nearly 39 percent of its total exports to China in 2020,” the CFR said.
Countries regret
According to the TIME, plenty of recent Chinese-backed infrastructure projects have left host countries in Latin America and the Caribbean with regrets. In Costa Rica, a $1.5 billion project to modernize and expand an oil refinery in Moín was canceled in 2016 after local officials highlighted that environmental-impact and feasibility studies had been performed by a subsidiary of the Chinese partner, a clear conflict of interest that led to several arrests. “In Ecuador, a hydroelectric dam built by China’s Sinohydro Corp., with help from a $1.7 billion loan from China’s Export-Import Bank, turned into an environmental disaster after it opened in 2016 as upstream erosion from the dam’s basin contributed to oil spills from shifting pipelines,” reported the magazine.
During the July 13-14 Security in the Western Hemisphere 2022 Concordia Americas Summit, held at the University of Miami, U.S. Army General Laura J. Richardson, commander of U.S. Southern Command (SOUTHCOM) said that “of the 31 countries covered by SOUTHCOM, 21 have already signed the Chinese Belt and Road Initiative, and this is very worrying.”
But, focusing predominantly on China’s economic and trade relationship to the region misses an alarming trend observed elsewhere in the world, which may well repeat itself in Latin America and the Caribbean: China often leverages seemingly innocuous commercial interests for military purposes, said special assistant and speech writer to Gen. Richardson, Leland Lazarus, in a March article co-authored with Ryan C. Berg, a senior fellow in the Americas Program at the Center for Strategic and International Studies, for the Foreign Policymagazine.
Military-to-military relations
The authors reported that the People’s Liberation Army (PLA) has been strengthening its military-to-military relations within Latin America and the Caribbean in recent decades. “Since the early 2000s, senior PLA leaders have conducted more than 200 visits to the region to meet their counterparts. As its influence in the region grows, China could use its military ties as bargaining chips to pressure the United States and its allies, perhaps threatening to send troops or increase personnel and equipment in countries close to the U.S. border.”
This has raised several red flags in Washington, D.C., and according to CFR, the U.S. Congress is considering several bills that focus on competition with China. “These include the United States Innovation and Competition Act and the America COMPETES Act of 2022, both of which aim to challenge China’s dominance in Latin America’s science and technology sectors by increasing U.S. investment in research and development. Among other proposals is bipartisan legislation sponsored by Senators Bob Menendez (D-NJ) and Marco Rubio (R-FL) that seeks to counter China’s ‘malign influence’ in the region by strengthening multilateral security cooperation and counternarcotics efforts,” the CFR said.