China, Venezuela and the U.S.A — trouble brewing

[ Thanks to Popi and Tom Natsoulas for passing this insightful piece along. –BL ]

26 May – June 01 | Progresso Weekly

by Saul Landau

“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 U.S. 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 U.S. 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 U.S. department stores and on the wings of commercial airplanes, Chinese investors also bought hundreds of billions in U.S. paper. Perhaps, some farsighted Chinese planner back then thought that the United States would be China’s “prize!” Indeed, in early March a U.S. 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 U.S. consumer market, but has invaded the U.S.’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 U.S. whining over Chavez’s “authoritarianism.”

Chavez, who won three free and fair elections in the last six years, gets stuck with the “authoritarian” label while his pro-U.S. 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 Chavez 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 U.S. counterpart, Vice President Dick Cheney, over the past four years.?

While Bush and Cheney asked Congress to increase U.S. 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 U.S. 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 U.S. 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 U.S.-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 — U.S.-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 U.S. 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, U.S. 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 U.S. invasion. But the 1,600 U.S. 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, U.S. 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 U.S. 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.

U.S. 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 [the] 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 U.S. 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 U.S. 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 U.S. leaders promoted without considering that China might avail itself of this opportunity to move into previously sacrosanct U.S. 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 U.S. 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 U.S. 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 (, 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 U.S. 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-Chavez rhetoric and actions might lead Venezuela to retaliate and cut the U.S. 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 U.S.,? 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 U.S. enemies, Chavez and Castro, as U.S. prestige slips in its own ?backyard.? It has used the ?open door? ploy against the United States in Latin America as the U.S. 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.

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