Latin America’s new geopolitical reality

Professor Niall Ferguson visited São Paulo in April to address Itaú’s annual MacroVision conference, and found time to sit down with Euromoney to talk fintech, social media and trade. In particular he focused on China and how it will impact Latin America’s future.

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Experience

Euromoney meets with Ferguson later that day, a little uncertain about Ferguson’s range of knowledge and experience of Latin America. Such concerns were laid quickly to rest with Ferguson’s response to the opening question, which picked up on a point that he had made in his speech about the relative speeds of adoption of mobile payments in Asia (and China in particular) compared with the US. Could emerging markets in Latin America reach Asian levels of near-universal adoption of new payment technologies? 

Latin America: Front Line of Trade War

Caption: Demonstrators during a protest rally against Mexican President Enrique Peña Nieto meeting with President Donald Trump, in Mexico City on September 15, 2016. (ALFREDO ESTRELLA/AFP/Getty Images)

 

America’s new protectionism is forcing Latin America to seek new partners.

America’s influence in Latin America is decreasing, while the influence of other world powers in the region is growing. If it continues, this trend could destroy America.

Dominance of the Caribbean basin is integral to America’s safety and essential to its ability to project power globally. If a rival power were able to establish a significant presence in the Caribbean, it could threaten the American heartland. The Caribbean is also key to United States’ trade. The majority of all U.S. waterborne foreign trade travels to or from U.S. ports on the Gulf of Mexico. When you include goods traveling through the region from other ports, no other part of the world is more essential to America’s trade.

This is why more Americans ought to be concerned that foreign powers are rapidly moving into the Caribbean, as well into South America itself.

Germany Makes Gains in the Scramble Over Latin America’s Resources

 

Latin America’s political shifts are opening doors for Germany’s economy.

Many nations today are casting their gaze upon a land where natural resources are found in abundance, where raw materials are yet to be extracted, and where renewable energy resources haven’t reached their full potential. They are ogling Latin America as a region that could help them secure their economic future.

For a time, China, and to some degree Russia, seemed to gain the upper edge.

But the Trumpet did not expect that arrangement to last. “[B]e assured that Europe will not stand by passively and allow Beijing and Moscow to elbow it off the dance floor,” we wrote last year.

Now, the political landscape in parts of Latin America is changing, which may open the door for greater German involvement.

2016 – Red alert on the dollar, financial crisis, oil, banks… General strategic retreat in the perspective of an imminent “hard landing”

Our team has chosen to place 2016 under the sign of a “general strategic retreat”, affecting all levels of social organization, starting of course with the national levels, but not only.

This retreat (or fallback) will not yet represent in 2016 the end of the global mobility, of the international exchanges or of the internet, and the world will still be a global village this year. Nevertheless, we will see walls getting built, regulations being imposed, flows getting controlled, armies strengthened, markets fragmented … all this not on an international basis, since the failure of the global governance reform is striking, but on the basis of the only available political entities on the market: nation states, religious and ethnic groups, certain supra-national organizations and the local level.

Mercosur Wants to Expand Cooperation With Eurasian Economic Union

Argentine Ambassador to Russia Pablo Anselmo Tettamanti says the Eurasian Economic Union (EEU) is an important partner for Argentina, and Mercosur wants to continue developing cooperation with their Eurasian partners. He also added that Russia is discussing new investment opportunities with Argentina.

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According to the ambassador, Argentina facilitated significant progress in reaching an agreement between Mercosur and the Eurasian Economic Union in the last six months of 2014. A number of meetings held in Moscow and Buenos Aires have led to the creation of a draft cooperation agreement in the economic and trade spheres between the two regional trading blocs.

Eurasian Economic Union to boost ties with South America’s largest trade bloc

BUENOS AIRES, November 26. /TASS/. The Eurasian Economic Union, which is due to go into effect in 2015, and the Southern Common Market (Mercosur) have almost agreed on a memorandum of understanding, a minister for trade of the Eurasian Economic Commission told TASS in an interview on Wednesday.

“We have in fact completed the work on the memorandum of cooperation in the economic sphere between the two integration associations,” said Andrey Slepnev, who leads talks with Argentina, the current chair of the Mercosur trade group.

US and China: The Fight for Latin America

According to Robert Valencia, China is vying for greater economic influence in Latin America, to include possibly constructing and operating an alternative ‘Panama Canal’ through Nicaragua. One unanticipated consequence of this burgeoning US-China rivalry, Valencia observes, is that it might push Latin American countries closer together.

During the first weekend of June, U.S. President Barack Obama and Chinese President Xi Jinping met in California to discuss cyber espionage and territorial claims in the Pacific Rim. While tension on these topics has hogged the headlines, the fight for influence in another area could be even more important—Latin America. Other emerging markets in Africa, where China has an overwhelming influence due to foreign direct investment in mining and oil, also offer economic opportunities, but Latin America has an abundance of natural resources, greater purchasing power, and geographic proximity to the United States, which has long considered Latin America as its “backyard.”

David Cameron must return Falklands to Argentina, Cristina Kirchner demands in open letter

As it becomes politically, economically and socially upheaved, it’s only a matter of time before the “Keys” are taken from the Western world. As it grows stronger, the Mercosur bloc could likely play a key role in ousting British influence throughout the region.

David Cameron must return the Falkland Islands to Argentina, 180 years after the territories were “forcibly stripped” from the South American country, the country’s president has claimed in newspaper adverts.

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The 212-word letter, copied to Ban Ki-moon, the secretary-general of the United Nations, repeatedly refers to the Falklands as the Malvinas, the Argentine Government’s Spanish name for the islands.

Falkland Islanders have the right to choose their future

While we in the Islands have grown well accustomed to political rhetoric from Buenos Aires over the years, these latest moves have seen everyday life made that bit harder, with the selection of food on the shelves changing, and becoming more expensive, as we have had to find new suppliers for everyday goods. But, we Falkland Islanders are resourceful people and will not be defeated by political and economic bullying. We remain resolute in our desire to maintain neighbourly relations with all our South American neighbours, including Argentina, for mutual benefit. During the 1990s, significant progress had been made in our relationship with Argentina; agreements had been reached on conservation of fish stocks and on oil exploration but Argentina unilaterally withdrew from these, something we deeply regret.

With the eyes of the world on the South Atlantic in recent weeks, one unified message continues to come from those that live in the Islands; that is our right to self-determination. The people of the Falkland Islands remain a British Overseas Territory by choice. It is our constitutional right and a fundamental freedom enshrined in the UN Charter. This right to self-determination is a value that is protected and promoted by democratic powers the world over; the Falkland Islands are no different. We are happy to talk, but our sovereignty remains non-negotiable.

Full article: Falkland Islanders have the right to choose their future (MercoPress)

Obama’s Falklands Failure

Thirty years ago, on April 2, 1982, Argentina invaded the Falkland. British Prime Minister Margaret Thatcher quickly assembled and dispatched a formidable naval task force to retake the islands, which had been a British possession since 1833. On June 14, Argentine forces surrendered to the Royal Marines. The conflict was brief and violent, with both nations losing ships and hundreds of sailors and soldiers. The war was, however, a decisive victory for the United Kingdom.

As the 30^th anniversary of the war approached, in December, Argentinian President Christina Kirchner vowed that her nation would reclaim the Islas Las Malvinas, as the Falklands are called in Argentina. She stated that “[i]n the 21st century [Britain] continues to be a crude colonial power in decline.”  She branded British Prime Minister David Cameron “arrogant” and said his defense in parliament of the right of the people of the Falklands to self-determination was an expression of “mediocrity and stupidity.”

Argentina’s Foreign Minister, Hector Timerman, claims that Cameron’s defense of the Falklands sovereignty “is perhaps the last refuge of a declining power.” Prince William aka Flight Lieutenant Wales, who is currently piloting a Royal Air Force rescue helicopter in the Falklands, has been labeled a “conquistador” by Argentine officials.

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While it seems unlikely that Argentina would risk another humiliating defeat by invading the Falklands in the near term, the temptation of appealing to nationalism to mask an economic or political crisis combined with the desire to control what appear to be significant South Atlantic oil reserves means that another Argentine military adventure cannot be ruled out. There are four key takeaways from the current situation with implications that stretch much further than the issue at hand:

First, military weakness is provocative. Argentina ramped up its aggressive rhetoric and diplomatic efforts to reclaim the Falklands only after P.M. Cameron announced massive cuts to the Royal Navy and British ground forces. The decommissioning last December of the U.K.’s sole remaining aircraft carrier, Ark Royal, well before its service life ended, and the sale of Britain’s 50 G-9 Sea Harrier fighter jets to the U.S. Marine Corps, seems to have emboldened the Argentines. In 1982, the Royal Navy had approximately 90 warships from which it could assemble a task force.  Today it has 30. Indeed, most experts believe that while it would be very difficult for the Argentine military to successfully invade the islands, it would be nearly impossible for the U.K. to retake them without an aircraft carrier in the event that Argentina was successful in overrunning Britain’s key air base at Mount Pleasant.

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Second, the Obama administration has made the United States an unreliable ally for our closest friends. Britain has been a stalwart ally of the U.S. in both Iraq and Afghanistan, notwithstanding the tremendous domestic political pressure on Labour and Conservative governments not to participate in those unpopular wars. However, in 2010, Secretary of State Hillary Clinton called for talks over the dispute and even appeared to side with Argentina during a press conference with President Kirchner in Buenos Aires.  Last month, as the current situation developed, rather than send a clear message to Argentina that the United States supported its longtime ally, a State Department spokesman demurred: “[t]his is a bilateral issue that needs to be worked out directly between the governments of Argentina and the United Kingdom…We recognize de facto United Kingdom administration of the islands, but take no position regarding sovereignty.”  Nile Gardiner, the Telegraph’s Washington correspondent, wrote in response that the “Obama administration knife[d] Britain in the back again over the Falklands.”

The shabby treatment meted out to America’s “special relationship” partner in this instance cannot be seen as a surprise. It is in line with the administration’s treatment of Israel and Prime Minister Benjamin Netanyahu (at least prior to Bob Turner winning Anthony Weiner’s Congressional seat in New York). Poland and the Czech Republic suffered similar slights after the Administration unilaterally cancelled ABM sites in those countries as part of its naïve and, so far, unsuccessful attempt to “reset” relations with Russia.  And, there has been much criticism of the Administration for failing to provide Taiwan with the latest F-16 fighters that it has long requested to defend itself against a potential attack by China. There is no doubt that American allies such as Israel, Colombia, Georgia, Taiwan, the Gulf States and the Baltics, all of which live in dangerous neighborhoods, are watching the United States’ response to the Falklands row with concern.

Full article: Obama’s Falklands Failure (The Diplomat)