As a meaningful diplomatic and economic unit, does South America still make sense?

In the possible absence of leadership—political, economic and moral—from the north, will South American nations go their own ways? And will some take the risky strategy of tightening relations with China?  


Last December, the Inter-American Dialogue organized a meeting in Buenos Aires to discuss inter-American relations after Obama leaves office. Former ministers, central bankers, scholars and journalists participated. Their conclusions depict a best-case scenario that can be summarized in two words: instability and turbulence. You don’t want to hear about the worst-case scenario.

The gloomy picture was compounded by national, regional and global uncertainty. The fact that Argentina—a stagnated economy with 40 percent inflation—and Colombia—the country where the peace referendum just failed—were the good news stories says tons about the situation of less fortunate cases. The latter include two categories: the tragic and the farcical. If Venezuela embodies the tragic, most Latin American regional organizations display less harmful, yet more pompous ways of failing.

The Western Hemisphere used to be a U.S.-led region inserted in a bipolar world. These conditions no longer apply: the bipolar order is gone, and the hegemony of the United States is receding. While Mexico, Central America and the Caribbean are strongly linked to the U.S. by trade and migration, South America can afford the luxury of greater autonomy. But will it?

Historically, the three ways of countering or balancing U.S. hegemony have been to: 1) join forces regionally; 2) diversify international partnerships, or 3) recruit an alternative hegemon. The countries that best represented each of these strategies were Brazil (going regional), Chile (going global) and Cuba (going Soviet/alternate hegemon). For analysts, the debate was about which one was preferable. For practitioners, it all boiled down to which one was possible.

If South America was once thought of as a political unit or even as an international actor, recent events have dispelled such illusions. For one thing, the putative leader—remember Brazil?—has been engulfed by domestic crises and lost not only influence but also presence in the region. The Colombian peace process, the Venezuelan turmoil and the Bolivia-Chile-Peru border controversies have all found the South American giant nowhere to be seen. The stagnation of Southern Cone common market, Mercosur, and the inaction of Union of South American Republics (UNASUR) provide additional evidence of Brazil’s regional impotence.

At the same time, the Pacific Alliance, a much-praised grouping of three South American countries with Mexico that excludes Brazil, is little more than a successful branding enterprise, as its members hold very limited economic connections to each other. Indeed, the very label is misleading as “Pacific” conveys much more information than “Alliance;” what this organization actually aims more at global diversification of member economies than regional integration. And yet, despite all the hype, the “alliance’s” results are mixed. Mexico’s vulnerability to U.S. policies continues to be as high as ever, while Colombia has failed to sign the—anyway languishing—Trans-Pacific Partnership (TPP), and Chile and Peru remain unable to translate their external diversification into domestic welfare or popular satisfaction.

In sum, regionalism has receded and diversification is not paying off as expected. The remaining option is to replace U.S. hegemony with a new one. Guess Hu stands first in line? Xi does.

China’s increasing connection with South America is the result of two factors: the geography of natural resource distribution and the U.S’s reduced involvement in the region. China is already the main export destination for Brazil, Chile and Peru, as well as the second leading destination for Argentine and Venezuelan exports. It is also a growing investor throughout the region and has reached currency swap deals with several countries. In spite of the trade agreements that other Asian countries, such as Japan and Korea, have signed with South American partners, no one comes even close to rivaling China.

As Latin American economies export mostly commodities and import manufactured goods from China, any reference to South-South relations is just a cover-up for old wine in new bottles—or rather, Chinese vases. The South America-China link is but the rebuilding of the classic center-periphery connection—only with a non-Western center, which makes the new dependency look like autonomy.

This text does not necessarily reflect the conclusions reached at the Dialogue meeting. However, the participants agreed on the need to strengthen inter-American relations for dealing with a post-Obama world. If “fortress South America” seemed a good idea when globalization thrived and the U.S. appeared friendly, this is no longer the case. Latin America would stand no chance fighting external walls if it were to erect internal ones.

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