Trump threatens to “take back” the Panama Canal, China invests in the Port of Chancay and alternative trade routes connect Latin America with destinations like Singapore. What’s next? Photo by Hady Khandani/JOKER/Picture Alliance
The plan to take the Panama Canal, mass deportations and the application of a new geoeconomics of tariffs mark the beginning of Donald Trump’s second administration. With these decisions, the perception that the great geopolitical disputes did not have much influence in Latin America disappears. Far from the Ukraine-Russia and Israel-Gaza conflicts, it was hoped to emerge from the crisis at lower cost and take advantage of a post-hegemonic US period to achieve its own development goals.
New ideological tensions in regional blocs
At the same time, new tensions are emerging in regional blocs such as Mercosur, especially due to the actions of Javier Milei, which underlines the impact of ideological differences between the leaders of the region, an effect that is amplified by the absence of regional leadership from Brazil.
Latin America does not have the capacity to enter into active geopolitical competition with other powers, but these efforts are relegated to individual countries, which reduces the chances of success in this endeavor. Everything points to the region being the object of other powers’ strategies to impose their geopolitical criteria.
Another energy as a key to global geopolitics
The winds have changed with the return of Donald Trump to the White House, especially with regard to energy as a key to regional and global geopolitics. His return to fossil fuels and the rejection of any policy close to the energy transition leave Latin America helpless with regard to its orientation around lithium and hydrogen as the axes of its future development.
The region’s tropical forests, its renewable energy and hydrocarbon resources, and its supplies of critical minerals were destined to become more important. But climate change is once again off Washington’s agenda and major investments in energy transition are slowing down, at least in the US, so that prospect seems frustrated.
This could mean that the expected accelerated technological revolution will be put on hold for the next few years, especially in South America, considered an important source of the necessary inputs for the new energy economy. Although this region contains 40 percent of the world’s copper reserves, between 35 and 40 percent of lithium reserves and significant deposits of nickel, cobalt and other critical minerals, international investment in critical mineral resources could be slowed down.
China, a major geopolitical player
Currently, China is mainly looking for “critical” minerals (iron and copper), hydrocarbons, meat and soybeans in the region. The most recent investment is the Chancay port, located 46 miles north of Lima, Peru, which is due to open in late 2024. Before that, there was the port of Balboa, at the entrance to the Panama Canal, and the modernization of the Brazilian port of Santos.
Twenty-two Latin American countries have joined China’s Belt and Road Initiative (BRI), and countries such as Chile, Costa Rica, Ecuador and Peru have entered into free trade agreements with the country. American companies may not be rushing to set up shop in Mexico, but Chinese companies supplying the American market are. Chinese investments in regional infrastructure projects fill the gap that is currently not being filled by American and European companies.
But beyond the commercial and infrastructure dimension, there is also the financial dimension: credit policy and the internationalization of the renminbi are among the main motivations for China’s international integration, although foreign investors have been cautious about using the currency as a safe, low-risk investment. However, for President Trump, this issue seems to have great priority.
Geopolitical projections on Latin America
But it is not only China and Russia, and ironically Iran, that are competing with the US in overseas regions, which in turn compete with Washington in their common neighborhood. India has also become Bolivia’s most important trading partner. Turkey, for its part, has developed a dynamic relationship with Venezuela. In addition, Russia sells fertilizers to Brazil, which produces soybeans that are sold to China. Alternative trade routes are beginning to connect Latin America with other destinations such as Singapore.
The region’s stance of being a mere spectator of geopolitical turmoil could come to an end with pressures arising from the various globally aspiring actors present in the region, such that “active non-alignment” could prove counterproductive.
As the US enters a new period of geopolitical rivalry, a time has begun in which the idea of Latin America as a theater of silent strategic rivalry could come to an end. But it should not be forgotten that countries such as Argentina, Paraguay and others will seek to take advantage of this new configuration of forces in the hemisphere in the coming years. The new geopoliticization reaches different countries in the region at different times in their economic and political development, such that its advantages and disadvantages will be distributed unequally.
Original article by Gunther Maihold, Die Deutsche Welle, January 27, 2025.
Translated by Schools for Chiapas.