Where is Latin America heading?

Mỹ Latinh hướng về đâu

Where is Latin America heading?

The economic stagnation of Latin America and Caribbean is getting/ falling into middle income trap

What is a danger is that this situation has going on / dragging on at least 40 years in almost all countries. The economic policies being inconsistent, incompatible with global and regional economic situation and the foreign trends, that partly accounted for this stagnation.

Powerful/ strong/ influential/ weighty partners

Once regarded as the US “back yard”, Latin America has become/ now is the areas for rivalries among great powers such as China, Russia, Japan, India and so on. Since the successful normalization with Cuba, European Union has continued to promote close economic cooperation with Latin America and Caribbean while deciding to resume/ restart the negotiation on free trade agreements (FTA) with the joint market of South America (MECOSUR). Earlier, at the 2014 BRICS summit in Brazil, Russian President Putin paid a visit to regional countries and concluded a host of bilateral agreements on economy, science and technology and energy.  Japanese Prime Minister Abe also has paid an 11-day visit to the region with focus on economic cooperation/ with economic cooperation being the central point on agenda. However, the powerful partners in this region are still the US and China.

The US is returning/coming back

After glossing over its “back yard”, the US acknowledges its disadvantage facing the attack from other countries, especially from China. When taking the office at the first term, Mr. Barack Obama affirmed that it was high time for the US to/ this was a moment to develop/ build an equal/ fair relationship, recognizing the role of Latin America and promoting economic relations and seeing trade as leverage.

The US enterprises are currently one of the biggest investors in the region. Of a total 20 FTA the US has signed around the world, Latin America counted for 11. Although the transaction between China and this region is increasing significantly and is predicted that China will gradually replace EU position and the US, in the short run, trade turnover between the US and the whole Latin America still account for overwhelming proportion/ a large share.

Regarding the building of influence, the US enjoys a unique advantage/ the advantage unmatched by any rival, the geopolitical position. The participation of Peru and Chile in TPP, the normalization of ties between the US and Cuba and the development of left wing movement in this region will contribute to strengthening the US-Latin American relations. Analysts have predicted that, in the long run, the US would consider accepting Argentina’s membership in the TPP/ may give Argentina the access to TPP. According to some, the possibility of the US establishing/ forging the strategic partnership with Argentina, to make this country, not Brazil, its key partner and the leader of South America is not ruled out.

Previously, the socialist model in Latin America was maintained due to various factors/ the maintenance of the socialist model was based on factors including Venezuela’s financial resources, the public dissatisfaction with the far right dictatorship that relied on the US and partly due to US concern toward other regions. These days, most of these factors have disappeared/ gone.

Latin America – China decade

China’s Foreign Direct Investment (FDI) in Latin America is currently much higher compared with other areas beyond Asia. Over more than a decade, China has penetrated strongly into a series of countries such as Brazil, Venezuela, Argentina, Chile, Peru, Mexico and Cuba. China has elevated the relations with Venezuela and Argentina to comprehensive strategic partnership. In countries such as Brazil, China has overtaken/ overcome/ surfaced the US to become Brazil’s biggest trade partner.

However, the core areas in China-Latin America relations are still trade and economy. China is more pragmatic than the US as this region has necessary things for China. First, China needs oil and natural resources, especially iron and copper ore. Second, China imports many agricultural products from Latin America – a fertilized land and agricultural advantages. Latin America has become a strategic place ensuring energy and food security for China. It provides materials for China and has been an important consuming market. Chinese products have flooded into Latin America as well as in Africa.

Like in Africa, China mainly invested in transport infrastructure, mineral exploitation and agriculture that need importing materials. China also has supplied oil tankers or supported Venezuela to build these tankers. China has been promoting to build railway system in internal Latin America, linking the Eastern bank and the West bank of this continent and sign agreement to build channel connecting Atlantic and Pacific Ocean to Nicaragua which would allow big container ships to pass. Yet, the megaprojects are faced with many challenges.

The investment portfolio of China in Latin America includes Telecommunication, especially the science cooperation with Brazil on space technology, satellite and aircraft manufacturing. Besides, China has also provided loans for exploring Latin America. Not only has it helped China gain economic achievements, it has created a beautiful image in the eyes of Latin American citizens living on the lack of capital and the difficulty in accessing credit. While the West has turned their back to some countries on the brink of bankruptcy, China is still enthusiastically supporting them with financial assistance. The credit loans and investment provided by China were bigger than the combination of the World Bank, Inter-American development bank and US Export-Import Bank (Exim Bank of the US) have offered.

China has certain advantages, particularly when the left wing force has been prevailing. When Latin American countries want to reduce reliance on the US and EU, China has become a reasonable choice to rebalance. This is also the time when the US has many other concerns and thus neglects Latin America. At the forum with the participation of Community of Latin American and Caribbean States (CELAC), Chinese President expressed clearly his desire to reach trade turnover of 550 billion USD with 33 CELAC members/ 33 countries of the bloc in this decade.

However, there have existed certain rifts/ divisions in Latin America about the perception on China. Some people have questioned Chinese role and fear of becoming the second Africa. The concentration on exploiting, exporting low valued materials to China makes economic structure of Latin America outdated, polluted and industrialization process stagnated.

Latin America seems to be still at the cross road.





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