CHINA: BEYOND THE GOOD NEWS

Latin American influence being wrestled away from US

Last week our Brazilian neighbours and brothers concluded their own special strategic partnership package deal with China. Predictably, and given the difference in the size of both economies, the numbers involved in the Brazilian deal are larger than those of the deal with Argentina. But the impact on the respective economies is likely to be impressive. And welcome by both governments.

To say that “beggars are not choosers” sounds too harsh as well as unfair at the time of describing the context of these agreements. But it can be safely argued that China’s two South American partners were facing economic difficulties at the time of negotiating the deals. Which is likely to have made their negotiators a bit more concessive. Such is life, and there is nothing intrinsically wrong with that.

It is a truism by now to say that China is making a sustained effort to have a strong presence in the region. How much political power and influence will this mean for China as a world power is still an unknown factor. What is not unknown is that the Chinese advance is causing concern in Washington DC.

It could gallantly be said that, if Washington is concerned, it is its own problem. And that their opinion should not influence the policies in independent South American countries. But it would be wishful (and reckless) thinking. Even if geopolitics in the world are changing and the US — although still the most powerful world player — is not any more as omnipresent as it used to be. Washington still has considerable damage power. And it should not be forgotten that South America is in their area of influence, and not in China’s.

Moreover, many people who have strong reservations about US domestic and foreign policy, have equally strong reservations about Chinese policies. Which brings up the question about how much thought and time has gone into analyzing the unwritten agenda behind these agreements.

José Alfredo Graça Lima, the Brazilian diplomat who coordinated his country’s negotiators. said that there is no ideology behind this deal. This writer begs to disagree and respectfully suggests that the Itamaraty officer might want to take a new look at Hans Morgenthau’s classic “Politics Among Nations.” Expanding a Nation’s power in a region or in the world, is an ideology as comprehensive and all embracing as you can find.

Hopefully, the authorities in Brazil and Argentina have considered what — unwritten — power games might be associated with these agreements. Some signals are worrying.

As mentioned two weeks ago in this column, the mysterious space base being built by China in Neuquén triggers concerns in Washington as well as in some EU governments. True, China is not openly aggressive any more. But some of its moves in this part of the world make people uneasy about motives and objectives.

AntarcticA is another case in point

China’ presence in Antarctica is steadily and quickly increasing. Last year it opened its fourth research station, and a fifth one is already planned. In addition, it is investing in icebreakers and aircraft adequate to operate in the Antarctic environment. Currently, its investment in Antarctica is the highest amongst the Antarctic Treaty’s member states. Peter Jennings — formerly a senior official in the Australian Ministry of Defence — and currently executive director of the Australian Strategic Policy Institute speaks about a “deeper agenda” in China’s Antarctic policy, namely one that is aimed at securing long-term food and energy supplies.

True, the Antarctic Treaty bans any non-scientific extractive activities until 2048. But every commentator adds the caveat that the ban will be in force “as long as the Treaty does not fall apart.” And history teaches that states are willing and able to tear up treaties if they feel that circumstances justify it. Especially if they are powerful enough to do so.

And China can wield that kind of power. Not perhaps in terms of classical military strength, where the US is still ahead. But there are new warfare formats.

Many argue that in addition to air, land and sea, new battlefronts are found in the cyberspace, which is not currently a peaceful virtual territory. And many accuse China to be one of the main aggressors. Battles in the cyberspace are silent. And defeats are often keep silent, something made possible by the fact that there is no body-count to report.

Interestingly enough, neither Antarctica nor the cyberspace are conventional areas of conflict. It is very easy to avoid being pushed by a powerful partner into compromising — and hence unwanted — attitudes on traditional conflicts. It is less easy to get away from — say — a request for some friendly support on Antarctic issues or on cyberspace matters.

Hopefully, there is no small print in the agreements signed by Brazil and Argentina committing cooperation in areas which could become sensitive.

CREDITS: BUENOS AIRES HERALD

MERCOSUR: 30 YEARS ON

Bloc has failed to reach its objectives and change is afoot

The Mercosur trade bloc seems to be facing some hard facts of life and preparing to undergo trade policy changes which will alter the dreams that gave it birth. Sad but, possibly, quite necessary.

Back in the 1980s, the new democracies in the region were being born, offering the promise that — finally — Latin America would have a chance not only to live in freedom, but also to modernize and develop. The world offered new and innovative models of interstate relations but also new tools for modernization and economic growth and development. The European Economic Community, later the European Union, were the living examples. And at the time, there was no shortage of preachers of the new creed wanting to visit this part of the world to share their experience. And there were generous allocations by a number of European Governments and private foundations, who were willing to finance the promotion of the new world.

The Mercosur is the child of those endeavours. Its birth certificate is dated 1985 and it was originally called the the Argentina-Brazil Integration and Economics Cooperation Programme.

There were ambitious plans. The programme also proposed the Gaucho as a currency for regional trade. And there was more. In December 2004, the leaders of the Mercosur created a Parliament. Or at least plans for one, one that would be called Parlasur.

Three elements contributed to the enthusiasm that surrounded the Mercosur.

One was the fact that Latin American unity has been part of the South American dream since the mid-19th century. For many (some would call them “wishful”) thinkers the lack of regional unity was to be blame for weaknesses and problems. So the Mercosur appeared to be a way of galvanizing such unity.

Second, it should be noted that South America, although a relatively peaceful region (definitely more than Europe at least) was not free from tensions that sometimes led to armed conflict. In the case of the Argentine Armed Forces, for many years of the last century there were permanently reviewed “conflict hypotheses” about potential wars with Chile or Brazil, In fact in 1978, Argentina and Chile were on the verge of an open war.

And then there was the dream of economic growth through a common market.

The European mirror returned a most attractive image.

There were some successes. The rhetoric of Latin American unity provided a political base for active political exchanges and the creation of more organizations in which the four original members of the Mercosur (Paraguay, Uruguay, Brazil and Argentina) joined with other Latin American States. UNASUR is a good case in point. It has turned into an organization which can show off some successes in conflict resolution between its members.

But the Mercosur seems to have failed in its original objective of becoming a regional common market.

Some argue that the reason is the asymmetry between the two big partners and the two small ones. Both Paraguay and Uruguay complain frequently about the unfair treatment meted on them by Brazil ad Argentina. In addition, Mercosur seems to have failed to find mechanisms through which business sectors can negotiate past their differences.

Instead Brazilian, as well as the Argentine, business associations focus all their efforts on lobbying and influencing their own governments. And they expect the politicians to take hard-line positions to the negotiating table with the other side. Successes though seem to have been quite less frequent than failures. And this is showing.

There are now strong rumours that Paraguay, Brazil and Uruguay are going to start exploring trade alternatives outside the block. Not too long ago, this was anathema. But effective needs have shortened the patience of both businesspeople and politicians. Unsurprisingly, neither Venezuela nor Argentina are said to be very happy about this. So watch this space for future developments.

@andresfederman

CREDITS: BUENOS AIRES HERALD

OUR ALLIES

Moscow, Beijing seem to be more friendly — and riskier — partners

It looked to be a return to old times. The Russian government commemorated the defeat of Hitler’s Germany with an impressive military parade staged at Moscow’s Red Square. As a display of military power it was similar to those which used to take place before the Soviet Union ceased to be, back in 1989.

For different reasons, patriotic pride being one of them, many people love military parades. Children also seem to have a weak spot for these displays. However, the main objective of governments staging military parades is not the enjoyment of their citizens.

Military parades send to other governments polite messages about military strength and determination to use it if necessary. And, because of the Ukraine situation, the messages sent by Russia had clearly defined addressees: the EU and the US.

The absence of Russia’s World War II allies from the celebrations made this patently clear, bringing about a sense of déjà vu to the occasion. Which the presence — among others — of China’s President Xi Jinping made even stronger.

However, both Russia and China have abandoned Communism, which does not mean that they are now Western-style democracies. But the two countries have implemented their own — and different — style of capitalism. And they still confront with the US. These confrontations are geopolitical rather than ideological. Ukraine is not about Communism or Capitalism but about regional power, control and influence.

This is the context in which Argentina has decided that the two former communist powers are now the country’s strategic partners of choice. And this triggers concerns in the US and — to a certain extent — in the EU. There seems to be no problem with the most obvious links, namely Chinese and Russian industrial exports to Argentina and food imports from this country. But other links and partnerships continue to raise eyebrows, especially when they have to do with sensitive defence issues.

The mysterious space base being built by China in Neuquén — over which seemingly the Argentine government will have no control — does not make people in the US or the EU happy. The same can be said of Argentina’s recent announcements about military exercises to be shared with Russia.

And the quite loud rhetoric which accompanies anything related to these alliances makes matters worse.

It could be argued that the associations with the Western powers have not delivered much for Argentina. The list of complaints would be quite long and the first places would go to financial issues ranging from Judge Griesa to a quite unhelpful IMF.

There are, however, a number of risks which might outweigh the benefits of the new alliances. First and foremost there is geography. Argentina is part of the Western Hemisphere or — as some say — the US’s backyard. And, quite far away from our new strategic allies. Whether we like it or not geopolitics are a fact of life. Even if Argentina is not powerful enough to disregard this reality, some attractive features of the new alliances might appear to be.

Given the situation of Argentina’s finances, many argue that China is a much friendlier banker than — say — the IMF. And would cite the latest loans to support their case. But such loans have their own — perhaps unwritten — conditions. As many have already pointed out, China is very effective in forcing its exports on partners. Especially when such partners depend on Chinese help.

As for Russia, its own financial position is far from brilliant, which leads many to question Putin’s stability despite his current popularity. Even riskier is the fact that Russia seems committed to expand its regional power and recover its past glories. In other words, more Ukraines. If this happens, the reaction from the EU and the US is likely to be quite unfriendly. The current conflict would escalate. And the last thing that Argentina needs is to be caught in the middle of a serious political confrontation between Russia and the Western powers.

One question needs to be asked in the context of the government’s current foreign policy and alliances, and it is about Brazil. Based on geography, history and even the narrative of most Argentine politicians, Brazil should be this country’s first partner in a regional bloc which would then be entering other alliances.

An alliance with Russia or China of a regional bloc containing Argentina and Brazil would be much more effective, let alone safer. In geopolitical terms Argentina would not be a lonely ally of far-away powers but part of a regional bloc entering into alliances with third parties. Moreover, the relative power of the two sides would be more balanced. Even in sensitive issues like defence, such bloc has more choices and options and is less subject to pressure.

However, none of this hinders the legitimacy of the government’s policy or of the new alliances. True, given the relevance of the policy change, reaching a previous consensus with the opposition parties would have been a preferable way of doing things. But then, the world is not perfect.

@andresfederman

CREDITS: BUENOS AIRES HERALD

‘ROUBA MAS FAZ’

When Brazil’s patent-phrase proves untrue

Translated into English, the headline reads “he steals but he gets things done”. The copyright of the phrase actually belongs to Brazil, where it was coined. It originally referred to Ademar Pereira de Barros, a Brazilian politician who was voted twice as Governor of Sao Paulo, first in 1947 and a second time in 1963. His supporters used the line — either candidly or ironically — to rebuke criticisms about his corruption.

Possibly, this tid-bit of information will disappoint many Argentines, as well as citizens from some other Latin American states who were convinced that the phrase had originated in their own countries. In fact, in these countries, there seems to be a feeling that “moderate” levels of corruption can be tolerated if they help to speed things up and do not cause lasting damage. An example of this would be the fact that, having to pay “under the table” to speed up a building permit, is accepted as a fact of life. Moreover, many cynics would argue that the permit will trigger employment opportunities for the workers of all the trades involved in that project.

However, recent information about the impact of the corruption crisis in Brazil’s state-owned Petrobras oil company are turning around the “rouba mas faz” phrase into exactly the opposite proposition.

In this case, corruption seems to be stopping things from happening. There are companies forced to delay or even cancel projects in which evidence of corruption is found. This triggers immediate lay-offs. Moreover, since many of these projects are concentrated in the specific areas where the hydrocarbons resources are located, the new jobless cannot find alternative opportunities.

In a way, what happened with Petrobras is that the corruption bubble burst in a way not dissimilar to the subprime mortgage or the Spanish real estate bubbles. The contagion effect jumped from company to company, from government official to government official. And it became a national problem, as well as a political headache for the government.

So, in fact, Brazil’s Dilma Rouseff is paying a double political cost for the Petrobras scandal. In addition to the rage about corruption, some of the unemployed (and their families) blame her for the consequences in terms of their joblessness.

Those which — with the pretext of realism — accept corruption as a fact of life offer several explanations/excuses. The first — and crudest — is that the whole issue is being magnified by the opposition press and politicians. But there is too much evidence about the Petrobras scandal to even take this idea into consideration.

A more sophisticated narrative will argue that “things got out of hand”. In other words, corruption is acceptable as long as it is “moderate” and “acceptable” and it does not jeopardize the final objective of a government’s project, decision or policy. So rouba mas faz is tolerable, provided it delivers more energy, enhanced economic growth or any other objective linked to the common, and greater good. It suggests that — what happened with Petrobras — is simply that, unfortunately those involved simply got irrationally greedy.

The latter is the really dangerous line of reasoning because — translated into plain words — it means that something should change, if we want things to remain unchanged. Consequently, the excessively greedy culprits of this particular scandal are crucified and allow the “rational and moderate” briberies to remain in place as part of the system.

Unfortunately, illegal payments cannot be monitored or regulated so as to keep them within a “reasonable” price range. Whatever “reasonable” means in terms of bribes. No matter what people have been led to believe, taking bribes -whatever their amount - is a criminal offense. If a petty robber gets away, he is likely to become a serious robber. The same happens with government officials as well as those who bribe them. They will try to get away with as much as they can. Until, of course, something crashes.

If — and perhaps it is a big if — Dilma Rouseff ever regains the political initiative, she will have a great opportunity. She can repeat what happened in other countries and take a tough “clean hands” campaign forward. Public opinion is angry enough to accept that the “rouba mas faz” line, is a short-term self-indulgent lie. And that “zero corruption” is a more than reasonable objective. Corruption will never disappear but it could become the exception rather than the rule.

Furthermore, given Brazil’s role in the region, it might encourage other countries, like Argentina, to follow suit.

@andresfederman

CREDITS: BUENOS AIRES HERALD