Iran, Russia and China beating a path to Latin America's door

Christian Science MonitorApril 23, 2010 

MEXICO CITY, Mexico and SAO PAULO, Brazil — Latin America suddenly finds itself entertaining many suitors.

In the same week, Chinese President Hu Jintao was in Brazil hammering out investment deals and Russian President Dmitry Medvedev was in Argentina on the first trip there by a Russian head of state before going to Brazil for a meeting of the emerging BRIC (Brazil, Russia, India, China) countries.

If that weren't enough, after signing a major military deal with Brazil, U.S. Secretary of Defense Robert Gates began his own Latin American tour, strengthening ties with allies and noting the budding friendship between Iranian President Mahmoud Ahmadinejad and the region.

Latin America is now one of the most popular belles of the global economic ball, with countries vying for its commodities and friendship. Many say the new attention is a good thing. It's helped buoy several economies during the worst of the global financial crisis.

There are growing questions, however, as to whether China's huge appetite for soy and iron ore, Russia's vigorous sale of weapons or Iran's search for allies in the Western Hemisphere is ultimately good for the region — and whether the United States is missing out.

"One dynamic we are beginning to see is resource competition between China and other external powers in the region, when we are used to the U.S. telling everyone to keep their hands off of Latin America," said Evan Ellis, a professor of national security at the National Defense University in Washington. "There is new engagement in the region, and the emergence of competition between multiple outside players."

Leading the race for commodities is China. On this visit, and on a previous trip to Brazil in 2004, President Hu sought to secure access to raw materials critical to China's growth. (Hu was also supposed to visit Venezuela and Chile, but cut his trip short after a major earthquake in China.)

China became Brazil's No. 1 trading partner in 2009, taking the spot from the U.S., with trade between the two surging from $6.7 billion in 2003 to $36.1 billion last year, according to Brazilian government figures.

Meanwhile, Medvedev's visit to Argentina to discuss deals on nuclear energy, space and transportation, among other things, came as Russia boosts arms sales to Venezuela and others in the region. Earlier this month, Russian Prime Minister Vladimir Putin was in Venezuela to discuss a series of deals that could top $5 billion.

As Russia and China compete for markets, Iran's Ahmadinejad is finding a welcome platform in several Latin American countries. His friendship with Brazilian President Luiz Inacio Lula da Silva, who'll visit Tehran in May, is particularly important to Ahmadinejad because the South American giant supports Iran's nuclear program.

Secretary of Defense Gates sought to play down fears on a trip that included Peru, Colombia and Barbados. Gates said Iran's friendships in the region are only for show.

"There is an element of distracting their own populations from the difficulties that they have by . . . trying to strut around the world stage," he said, according to the Defense Department website.

Even if such alliances in Latin America don't represent a geopolitical threat to the U.S., however, they may highlight lost opportunities for U.S. businesses.

"Domestic politics, historical baggage and sensitivities between Latin America and the U.S. really stand in the way of the U.S. taking advantage of opportunities in the region," said Michael Shifter, the president of the Inter-American Dialogue in Washington. As the U.S. is stuck on issues such as energy, immigration and trade, "China and Russia are completely unburdened by domestic political constraints."

Still, if the U.S. is missing out, is all the attention good for Latin America?

Countries are buying arms to modernize armies at the right price from Russia, but some worry about the destabilizing effect of an "arms race" in Latin America.

In terms of markets, said Christopher Sabatini, the editor in chief of Americas Quarterly in New York, Latin America's partnerships around the globe kept it afloat during the recent economic crisis.

"The attention is good because it provides an engine of economic growth," he said. The region overall is expected to grow by 4 percent this year, he said, and "a large part of that has to do with China's rebound."

However, Sabatini and others say questions are emerging over whether this is simply the economic imperialism — exploiting nations for cheap commodities — that the U.S. was condemned for in the last century.

"China, in the name of being a leader of the third-world movement, is saying, 'Hey, we're helping you out by buying your commodities,' and then they are selling back ever-higher-value manufactured goods," said Ellis. It boosts economies in the short term, but keeps them vulnerable should commodity prices drop.

Rodrigo Maciel, the executive secretary of the Brazil-China Business Council, said that Brazil must wake up to the idea that China has a massive internal market that is, so far, not being tapped.

"We only sell primary goods, but that is because Brazil doesn't have a strategy for China; we don't see it as a consumer market," Maciel said. "We need to learn more."

(Llana is a Christian Science Monitor staff writer and Downie is a Christian Science Monitor correspondent.)

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