US makes fresh pitch to Latin America in bid to counter China’s influence

Growing tensions between the US and China have prompted clashes at the United Nations, accusations of spying and rumblings of a global trade war.

In Latin America, the rivalry has recently prompted a public relations battle over which superpower could provide ventilators and PPE during the pandemic, outcry over a Chinese deepwater fishing fleet and renewed pressure over the adoption of Huawei technology in 5G networks.

Now, the US seems intent on countering China’s growing commercial influence in the region, with a program challenging Beijing’s involvement in infrastructure developments and energy mega-projects.

On a recent visit to Suriname and Guyana – which have both recently made major offshore oil discoveries – Mike Pompeo made a direct sales pitch on behalf of US companies.

“No state-owned operation can beat the quality of the products and services of American private companies,” said the US secretary of state. “We’ve watched the Chinese communist party invest in countries, and it all seems great at the front end and then it all comes falling down when the political costs connected to that becomes clear.”

Pompeo – the first secretary of state to visit either country – also used the opportunity to sign up both nations to the Growth in the Americas programme, more frequently referred to as America Crece, its Spanish translation, which seeks to “catalyze private-sector investment in Latin America and the Caribbean”.

The project is seen as a direct response to China’s Belt and Road Initiative (BRI), the $1.5tn foreign and economic policy to establish maritime trade and invest in infrastructure projects in dozens of countries.

Nineteen countries in the region have signed up to the BRI, with Chinese firms – many of them partly state-owned – winning major mining, energy and transport projects. Since 2005, China-based firms have invested over $123bn in the region and Chinese banks have loaned $137bn.

“It’s clear that America Crece is a US response to the BRI; Pompeo has consistently criticized what he considers onerous conditions attached to Chinese infrastructure loans,” said Rob Soutar, managing editor of Diálogo Chino, a website specialising in China-Latin America relations.

“Inside China, a number of academics see America Crece as the US attempt to reassert control over Latin America as its unique area of influence – a new version of the Monroe doctrine,” he said.

In September 2018 the US recalled its top diplomats in Panama, El Salvador and the Dominican Republic after the countries each ended diplomatic relations with Taiwan and established ties with China.

But since then, US pressure appears to have increased, the growth of BRI partnerships has slowed, and Chinese investments in strategic countries such as Panama appear to have hit a speed bump.

The America Crece program offers no new budget for regional infrastructure projects, but it does give the US policy a name and a direction.

“The BRI wants to create infrastructure that supports Chinese interests – built by Chinese companies and with Chinese banks making money on the loans. America Crece, by contrast, involves projects with business cases that make sense for the region and support good governance,” said Dr Evan Ellis, a professor of Latin American Studies at the US Army War College’s Strategic Studies Institute.

But the view that Chinese investment relies solely on backroom deals with Beijing is no longer correct, said Soutar. “In recent years there’s been a major shift in the way Chinese firms invest in the region. Increasingly, they invest in equity or form international consortiums to win competitive tenders, such as the Bogota metro system.”