China, Venezuela and the USA - Trouble Brewing
By Saul Landau (June 1, 2005)
"So what did you think of China's recent economic foray into Latin America,"
I asked a university student.
"Huh?" she replied.
"I read something about it," said another, "but I don't remember any
details."
"Why not," said a third. "They make everything I buy at Wal-Mart. So why
shouldn't they invest in other places?" He shrugged, indifferent to the
news. Indeed, Washington warns China over any moves on Taiwan, but has
barely responded to its world wide economic initiatives.
A century ago, students might have known as little as today's unscientific
sampling, but US policy planners looked to a then weak and divided China as
the answer to the country's future trade and economic problems. Anxious
exporters implored President William McKinley to act because "the Chinese
market rightfully belongs to us," a member of the Riverside NY Republican
Club told Secretary of State William Hay. This low-wage labor source and
vast potential market to the east would also supposedly solve the periodic
depression problem, which in 1893, shook the country's economic structure
and motivated the elite to think about how expansion eastward would resolve
that issue.
"Under the stimulus of a narrowing marketplace at home and widening market
opportunity of an awakening China," wrote historian Thomas McCormick,
"America's leadership made a conscious, purposeful, integrated effort to
solve the economic crisis at home by promoting the national interest
abroad." It did so "by using America's most potent weapon, economic
supremacy, to begin the open door conquest of the China market" (China
Market, 1967, p.19).
Indeed, in 1898, President William McKinley "took the Philippines" (not just
on God's command) because they made the ideal jumping off base for future
China excursions. The US kept its naval base there for 100 years, when
technology no longer required refueling stops. "East Asia is the prize for
which all nations are grasping," wrote Brooks Adams, John Quincy Adams'
grandson.
In 2005, the weak and vulnerable "prize" that feuding Europeans had carved
up for imperial aspirations at the end of the 19th and early 20th Centuries
now blankets all continents with its goods - and its capital. As the "made
in China" label has become ubiquitous in US department stores and on the
wings of commercial airplanes, Chinese investors also bought hundreds of
billions in US paper. Perhaps, some farsighted Chinese planner back then
thought that the United States would be China's "prize!" Indeed, in early
March a US Embassy official confided to a visiting businessman that he
believed that Chinese leaders viewed the United States as a declining
superpower whose time had passed and will be forced to share world power
with other powerful nations, including China. To demonstrate how China's
strategic position has changed in the last two decades, the Embassy official
explained that China not only captured the US consumer market, but has
invaded the US's traditional Latin American sphere.
He referred to two high level visits. In November 2004, Chinese President Hu
Jintao signed 39 commercial agreements with five Latin American nations.
Chinese investments in Argentina alone totaled some $20 billion. He then
made an investment trip to the Caribbean as well.
In January and February, Chinese Vice President Zeng Qinghong followed his
boss's visit with his own entourage of officials and top business
executives. During these two aggressive trips to pursue investment in
strategic areas, China stepped into potentially contentious turf when they
signed an accord with Venezuela's President Hugo Chávez for future
Venezuelan oil and gas exploration. Zeng also offered Venezuela a $700
million credit line for new housing construction to help reduce Venezuelan
poverty, ignoring US whining over Chávez's "authoritarianism."
Chávez, who won three free and fair elections in the last six years, gets
stuck with the "authoritarian" label while his pro-US opponents who staged a
2002 military coup, merit the "democratic" badge. This labeling mystifies
those who continue to think logically.
But Beijing's real poke in Washington's mostly blind eye came with the
announcement that it would give credits to Cuba. In the globalization era,
Cuba remains the exception to all rules. The Bush Administration's Latin
American policy targets the "containment" of Chávez or the "punishing" of
Fidel Castro, who holds the Guinness World Record for "Most Years of
Disobedience." Inside sources in Cuba insist that despite forty six plus
years of castigation, Fidel has yet to miss a meal or a conjugal
opportunity.
Since China did not officially attach specific political language to its
economic policies, official Washington ignored - or denied - the
significance of China's Latin America strategy. Indeed, as the Miami
Herald's Andres Oppenheimer observed, "President Hu Jintao spent more time
in Latin America last year than President Bush." (February 2, 2005) "And
China's vice president, Zeng Qinghong, spent more time in the region last
month than his US counterpart, Vice President Dick Cheney, over the past
four years."
While Bush and Cheney asked Congress to increase US indebtedness with its
additional $81 billion to maintain forces in Afghanistan and Iraq, China
offered more than $50 billion in investment and credits to countries inside
the traditional Monroe Doctrine's shield. That sum surpasses Kennedy's
highly-publicized $20 billion for a decade of the Alliance for Progress in
the 1960s.
Promoting specific kinds of trade with Latin America will help meet China's
wildly expanding energy demands. In 2007, the CIA estimated, China will
import 50 percent of its oil. China also needs primary resources and food as
it moves into the number two spot in world economy sizing.
When Chinese leaders showed up in capital-hungry Latin America with billions
in their suitcases, it showed that they had thought about their country's
future even as US imperial officials trivialize their crises to justify
drilling for oil in the Alaska wilderness or show their concern for future
human life by force feeding a brain dead woman in Florida.
As US dependency on foreign oil grows and the price of crude hovers in the
mid $50s, the Chinese might maneuver themselves into a position to actually
sell some of that viscous substance to the United States - long before the
Alaska drilling results in a drop of crude prices, China's new investments
have targeted oil, gas and minerals, signs that the Chinese pursue strategic
and market rather than simple profit designs.
China already operates two Venezuelan oil fields and after signing a January
agreement in Caracas, China will also begin developing other fields -
seemingly in decline - in eastern Venezuela. China also agreed to buy
120,000 barrels of oil a month and build an additional fuel producing
facility. Venezuelan officials announced that they expect trade with China
to reach $3 billion in 2005, more than double 2004. And - hold onto your
hats, Castro haters in the Bush Administration - a huge Chinese oil company
will begin searching for potential oil fields off the Cuban coast.
Why did Chinese leaders choose late 2004 and early 2005 to make their
whirlwind spending tour of several Latin American nations? First, they may
well have noticed that Latin American governments no longer race to sign
onto the US-backed Free Trade of the Americas agreement as they did
previously to NAFTA in the 1990s. Because the free-trade-free-market model
failed to perform as predicted - in Argentina it led to bankruptcy -
governments that question Washington's economic model now sit in Uruguay,
Argentina, Brazil, Venezuela and Cuba; Bolivia and Ecuador may be next.
Indeed, if the radical populist Mexico City Mayor Andres Manuel Lopez
Obrador succeeds in winning the 2006 Mexican presidential election - he is
currently the leading contender - US-sponsored trade agreements may all be
doomed.
Second, the petroleum mavens don't expect supply to rise above demand in the
near future. So, given this climate, China's gaining access to oil and gas
sources in the US backyard has flustered the Bushies, who remain preoccupied
with Iraq, Afghanistan, North Korea and Iran and their religious commitment
to change social security, execute underage murderers, stop legal abortion
and rescue the brain dead. Is it hard for the Bushies to see the world
strategic big picture while they mobilize around family values and religious
issues?
For more than a century, US policy planners have produced wonderful schemes
for informal empire. Just as the China star shined in the eyes of late 19th
Century policy intellectuals, a group of late twentieth century, mostly
Jewish neo cons and anti-Semitic Soldiers of God decided to restructure the
Middle East in the name of God, Israel and the free market. One group used
the concept of advancing freedom, the other of advancing Rapture.
This kind of ethereally based transcendent thinking, however, often falls
short of details - as the invasion of Iraq has shown. Neither the neo cons
nor their strange Christian bedfellows have evinced much concern about the
approximately 100,000-plus Iraqi civilians who have died in the post March
2003 US invasion. But the 1,600 US and British soldiers who have also
perished causes serious political fallout. Iraq was destroyed. The Iraqi oil
profits that Deputy Defense Secretary Paul Wolfowitz (now World Bank
president to be) predicted would pay for the whole invasion have not
materialized. No one in the Bush Administration seemed overly upset over the
destruction of a country or over their calculated devastation of
international law and the UN.
Ironically, US planners casually discarded the very order and law they had
imposed on the world sixty years earlier. Bush's invasion of Iraq nullified
both the Nuremberg laws that outlawed aggressive or pre-emptive war and, by
bypassing the United Nations Security Council, the UN's important function:
the exclusive right to make war.
The neo cons and their Christian counterparts wanted US leaders to take
unqualified command again, as they did in 1945. They dismissed as
inconsequential the massive changes that had occurred during the six
intervening decades. In those heady post war days, the United States
possessed 55% of the world's manufacturing capacity, a wildly growing
economy and a monopoly over atomic weapons. The disastrous war had sapped
the juice from the other imperial nations. The Soviet Union didn't loom as a
threat. Victorious on the battlefield, the Soviets were also deeply
crippled: fifty plus million dead and wounded, 200 cities destroyed, no
food, no boots for the soldiers.
US planners also projected that their corrupt, puppet regime of Chang Kai
Shek could hold out against the encroaching red armies of Mao Tse Tung. By
October 1949, Chiang had lost his ability to attract even the support of
dishonest. So much for planning!
Washington told its cooperating allies - including the newly vanquished
Germany and Japan - that they should prosper as good albeit junior trading
partners and sources and sites of investment, but not to the point of
becoming rivals. For nations emerging from colonial rule, the US had no
realistic plans. But the crippled Soviets kept preaching "revolution," a
word that gained resonance in the countries that came to be known as the
third world. And movements in those emerging nations threatened to disturb
the new order that US leaders had placed upon the world.
The problem with their plans derived from their inability to predict the
dynamism of third world anti colonialism. Instead of supporting
de-colonization, the United States played an ambiguous role, supporting the
idea but not the practice of "free nations." For example, by not recognizing
the Ho Chi Minh-led Republic of Vietnam - which declared independence in
August 1945 - Washington helped France retake its former colony.
The most important revolution, however, occurred in China. In 1949, the
Chinese Communists led their people to overthrow western colonialism,
tossing the United States out of the very place that 19th Century planners
had staked their hopes for the future.
Now, China apparently sees its future in the US market and in its previously
shielded sphere of Latin America. Thirty five years ago, China remained
"unrecognized" by the United States and most of its lackey governments in
Latin America. In 1975, Chinese trade with the region amounted to $200
million; in 2004, over $40 billion. China has become one of the foremost
players in the era of globalization, which US leaders promoted without
considering that China might avail itself of this opportunity to move into
previously sacrosanct US spheres - like Latin America.
While government leaders silently wring their hands in frustration over
China's capital moves into "our backyard," some journalists spoke directly
about the meaning of China's investment invasion of US clients. China is
"nurturing alliances with many developing countries to solidify its position
in the World Trade Organization, flex its muscles on the world stage and act
as a counterbalance to US power," opined Gary Marx (Chicago Tribune December
20, 2004).
Caribbean Council director David Jessop (Week In Europe, February 6) said
the Chinese moves into Latin American "suggest the emergence of a global
order in which the countries of the South begin to forge new alliances based
on a very different perception of the world."
"Beijing is attempting to throw an economic spear into the heart of the
Monroe Doctrine," commented Anthony Gancarski (FrontPageMagazine.com,
January 20, 2005). He warned that "Failure to do something about that will
be interpreted as a sign of America's loss of mettle - and of
vulnerability."
Indeed, China has succeeded in forcing an Open Door policy on the United
States, one similar to that fashioned in 1898 by Secretary of State Hay.
China's leaders now say implicitly to Washington what Acting Secretary of
State Edwin Uhl wrote to the US Minister in China in 1895: "This country
will expect equal and liberal trading advantages..."
Now China expects the United States to offer it "equal and liberal trading
advantages," even with governments that Washington has placed on the
official black hat list. Senator Richard Lugar (R- IN), chair of the Senate
Foreign Relations Committee, worried about the contradictions that arose
from Venezuela's new deals with China. Like other prudent and truly
conservative Republicans, Lugar wonders whether Bush's aggressive
anti-Chávez rhetoric and actions might lead Venezuela to retaliate and cut
the US off from its oil supply. After all, China will pick up the purchase
slack!
"For years and years, the hemisphere has been a low priority for the US,"
said an aide to Lugar, "and the Chinese are taking advantage of it. They're
taking advantage of the fact that we don't care as much as we should about
Latin America." (New York Times, March 1, 2005)
Likewise, China has undercut Washington's policy of starving Cuba from
resources. Chinese leaders pledged large investment credits for Cuban
nickel.
Beijing thus befriends US enemies, Chávez and Castro, as US prestige slips
in its own "backyard." It has used the "open door" ploy against the United
States in Latin America as the US once used it against Europe to get at
Chinese resources and labor. Hey, doesn't globalization mean that all's fair
in the game of trade?
Landau teaches at Cal Poly Pomona University and is a fellow of the
Institute for Policy Studies.