The way for the next EU-CELAC: any lessons to be taken from the Forum China-CELAC?

Photo: Columbia University

Marcos Troyjo (Photo: Columbia University)

The European Union (EU) and the Community of Latin American and Caribbean States (CELAC) will hold on 10 and 11 June, in Brussels, the second biennial summit between the two blocs. On the 9th and 10th of January, the China-CELAC Forum was held for the first time in Beijing.

In an analysis written for his column in the Brazilian newspaper Folha de São Paulo, diplomat Marcos Troyjo points out that the China-CELAC Forum happened in the context of the increasing influence of China and gradual decrease in the importance of Brazil and the US in Latin America.

Director of the BRICLab at the Columbia University, Troyjo highlights that China emerges as the main geoeconomic reference for countries such as Argentina, Venezuela and Ecuador. He also points out that Argentina, in contrast to what Brazil chooses as its external economic strategy, may close bilateral deals with China without other Mercosur’s members, further ruining the Brazilian dream of regional leadership.

The first EU-CELAC Summit was held in 2013, when the heads of state and government signed a joint 14-page document, highlighting the need for legal certainty and reliability in European investments, a stated goal of EU before the summit, due to the nationalization of many companies in Bolivia and Argentina in recent years. The CELAC is an international body created in 2010 to boost the political and cooperation dialogue between the 33 member countries, as well as develop the dialogue with other blocs and countries.

Latin America, a China’s business

Marcos Troyjo

History and geography have given the impression that Brazil and the US would always enjoy enormous leadership and influence in Latin America.

Brazil remained “uno” after its independency. The Spanish colonial legacy split into many republics. The scale of the Brazilian economy compared to its neighbours’, as well as its huge territory and population, also take to the idea of a “natural” leadership.

In the case of the US, with its dramatic economic growth during the 19th and 20th centuries and its rise as a superpower with the end of the World War II, had in Latin America its “hemisphere”. How often did we hear that the region was Washington’s “backyard”?

However, the China-CELAC (the Community of Latin American and Caribbean States) formalizes this week in Beijing the continuous decrease of the relative importance of Brazil and the US for Latin America.

China emerges as the main geoeconomic reference for countries – such as Argentina, Venezuela and Ecuador – that Brazil and the US believed belong to their predominant business projection scope.

Xi Jinping waves with US$ 250 billion in investments for the region in the next ten years. He suggests that his country’s trade with Latin America will reach a half trillion dollars by 2025.

Nicolás Maduro, amid Venezuela’s lack of money, leaves Beijing with checks totalling US$ 20 billion. Rafael Correa returns to Quito taking in his pocket US$ 7,5 billion in loans and lines of credit.

Furthermore, Ecuador’s president insisted at the Forum, for the joy of the delegates of Celac’s 33 countries and hosts, that the equation Chinese financing X Latin American commodities is of “geostrategic importance”.

Even if the US wanted, today it is unimaginable to compete with the thoughtless fascination that Latin America has for China.

Besides, the current governance in the US prevents a new wave of loans and other government-to-government commitments, common during the exceptional period of Cold War.

However, the greatest symbol of “satellization” of a Latin American country towards China is happening at present with the one that was always considered by Brazil as the main focal point of its foreign policy: Argentina.

In the last hours of 2014 and, according to the Argentinean minister Héctor Timerman, to avoid going empty-handed to the CELAC summit in the Chinese capital, his country’s Senate approved at the last session of the year an ambitious treaty on industrial investments and infrastructure. The agreement offers to Beijing priority access to energy, mining, transport, agriculture and other key sectors in Argentina.

Many of these negotiations will be concluded when Cristina Kirchner makes a state visit to Beijing in March. This will be done without any coordination with Brasília and to the detriment of the interest of Brazilian companies.

In contrast to what Brazil chooses as its external economic strategy – negotiations as Mercosur and tolerance of Argentinean sensitivities – Buenos Aires is taking off solo with the Chinese. In this way, further ruining the Brazilian dream of regional leadership.