South America – a divided and protected continent

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By JOSÉ LUÍS FIORI*

At the beginning of the 21st century, the United States reduced its level of political involvement in South American affairs. This “attention deficit” lasted until the economic “landing” of the Chinese in South America, and until the beginning of the conflict in Ukraine.

South American history has always been conditioned by an extremely difficult geography, by a fragmented and outward-looking economy, and by an extremely difficult geography, by an economy almost permanently subject to the military tutelage of England in the 19th century and of the United States in the 20th century. And it is possible to say, in some way, that to this day the continent struggles with these original and structural constraints.

A broken geography

The South American continent is situated between the Caribbean Sea to the north; the Atlantic Ocean to the east, northeast and southeast; and the Pacific Ocean to the west. Its surface area, of 17.819.100 km2, occupies 12% of the Earth and is home to 6% of the world's population. It is separated from Central America by the Isthmus of Panama; and from Antarctica by the Drake Passage, and extends for 7.500 km from the Caribbean Sea to Cape Horn in the extreme south. About four-fifths of the continent lies below the Equator, which runs through Peru, Colombia, Brazil and the country that bears the name of Ecuador.

South America has three major river basins: the Orinoco, the Amazon and the Río de la Plata, and their inland rivers have enormous potential for navigation and the use of hydraulic energy. The three systems together drain an area of ​​9.583.000 km2.

However, the most important thing, from a geopolitical point of view, is that it is a geographic space entirely segmented by large natural barriers that make its physical integration extremely difficult, as is the case of the Amazon and the Andes Mountains, which are 8 km long and reach an altitude of 6.700 m, offering only a few natural crossing points. In the Amazon Rainforest region, humid lands predominate; in the central region of the continent, flooded areas, such as the Brazilian Pantanal and the Bolivian Chaco; further south, there are plains and savannas; and on the east coast, the original forest has given way to agriculture, urbanization and industry.

The Atlantic coast is low and has a wide maritime platform, unlike the Pacific coast, which has great depths and where there are no continental platforms. The Pampas of Argentina, Uruguay, Paraguay and southern Brazil are home to the most fertile lands on the continent and some of the best in the world. There are also some small areas with good soils in the Andean valleys and in central Chile, in the Ecuadorian Guayas plain and in the Colombian Cauca valley, as well as the purple lands on the Brazilian side of the Paraná basin.

On the other hand, the lands of the Amazon basin and most of the tropical lowlands are very poor and of low fertility, which explains why the population of the tropical lands of Venezuela, Guyana and Suriname almost all live within a few kilometers of the coast. The combination of mountains and tropical forests also greatly limits the possibilities of economic integration within the arc of countries that stretches from French Guiana to Bolivia.

In the case of Peru, for example, there is a clear economic and social division within its territory, between the coastal areas, where extractive and export activities are concentrated, and an extremely isolated and economically backward interior. Chile, on the other hand, has a temperate climate and productive lands, but is one of the most isolated countries in the world, which hinders its economic integration with the other countries of the “southern cone” – Argentina, Uruguay and Brazil – and necessarily transforms it into an economy open to exporters, focused almost exclusively on the United States and the Asian countries of the Pacific.

The same can be said of other South American countries. Their insertion in the international division of labor, as commodity exporters, reinforced their initial economic and demographic occupation, which was dispersed and focused on the coast, always in search of central markets and with little interest in regional markets. Until the end of the 20th century, the Atlantic was more important than the Pacific for South America's long-distance trade, and the presence of important river basins connected to the Atlantic coast, in addition to the greater proximity to Europe and the United States, disadvantaged the Pacific side of the continent in the first two centuries of its independent history.

This economic panorama has been changing in the 21st century, with the increasing importance of the Pacific basin, thanks to the shift of the most dynamic center of the world economy to East and Southeast Asia, and the transformation of China into the new dynamo of the South American economy. The “turn” to the Pacific, however, represents both a challenge and a threat. A challenge due to the financial dimension of the bioceanic integration project, and a threat because the development of this project will only be viable with the participation of China, which is being defined by the United States, at this geopolitical moment in the world, as its great strategic competitor that must be surrounded and blocked at all points in the world economic system.

A protected history

From a geopolitical point of view, however, South America lived almost all of its independent history under Anglo-Saxon tutelage: first by Great Britain until the end of the 2th century, and then by the United States until the beginning of the 1950st century. Furthermore, during the XNUMXth century, it was an experimental zone for Great Britain's “free trade imperialism”, and in the XNUMXth century in particular, after World War II, it became an unconditional ally of North American foreign policy, which actively promoted the redemocratization and development of the continent in the XNUMXs.

In the 1960s, however, after the victory of the Cuban Revolution, the United States supported coups d'état and the formation of military governments throughout most of the South American continent. And after the coup that overthrew President Salvador Allende in Chile in 1973, it encouraged a change in the economic policies of South American governments, which largely abandoned their post-war “developmentalism.”

In the early 1980s, the US government's “strong dollar” policy caused a major imbalance in the balance of payments in Latin America and gave rise to the “foreign debt crisis” that affected the entire region, definitively liquidating the Brazilian development model that had been the most successful in the region.

The crisis lasted throughout the decade, but at the same time it coexisted with the end of military dictatorships and the beginning of redemocratization movements in almost all countries on the continent. Once again, however, the new democratic governments in South America joined the “liberal globalization” project led by the United States and the neoliberal policies of the so-called “Washington Consensus,” which produced successive currency crises—in Mexico in 1994; in Argentina in 1999; and in Brazil in 2001—before being abandoned and replaced by governments that attempted to pursue an experimental anti-neoliberal agenda for a decade, while still aligning themselves with the global geopolitical strategy of combating terrorism led by the United States.

Looking back at history: after the September 11, 2001 attacks in Washington and New York, US foreign policy changed course, relegating economic issues to the background and prioritizing the global fight against terrorism. In this new context, the Republican government of George W. Bush maintained its support for the FTAA project for the economic integration of South America, proposed in the 90s by the Clinton administration, but without the enthusiasm of the Democratic administrations. This was also because South American resistance and, in particular, the opposition of Brazil and Argentina after 2002, weakened and quickly shelved the US proposal in 2005.

The United States then changed its initial plan and began to negotiate bilateral trade agreements with some countries on the continent. Thus, after the failure of the neoliberal policies of the Washington Consensus, the abandonment of the FTAA project and the disastrous US intervention in favor of the military coup in Venezuela in 2003, the United States changed its position regarding continental affairs, increasingly attracted by the new challenges coming from Asia and the Middle East, and by NATO's advance towards Eastern Europe.

This trend was strengthened in the second decade of the 21st century, when the collapse of the “world order” established after the Cold War and the change in the world’s geopolitical focus reduced American attention to South America to almost nothing, which did not prevent them from supporting the coups d’état in Honduras, Paraguay and Brazil during the Democratic government of Barack Obama.

In the third decade of the century, however, after the catastrophe of the Covid-19 pandemic and faced with the challenge of the wars in Ukraine and Gaza, and even more so, faced with the shift in the dynamic axis of the world economy towards Asia and China in particular, South America further reduced its geopolitical and geoeconomic importance in the international system, dividing itself from top to bottom in the face of the conflict between the United States and Venezuela, and disintegrating as a global geopolitical actor.

Sometimes more slowly, sometimes more quickly, some changes have been taking place in the geopolitical and geoeconomic panorama of South America. In some cases, changes have been taking place in the panorama, in some cases reinforcing old paths and “vocations” of the continent; in others, opening up new perspectives and opportunities that may or may not be taken advantage of by the 12 countries that live side by side within this territory cut by so many geographical barriers, and so close to the United States. Below we highlight four changes that should have a decisive impact on the continent’s future.

The increase in South American asymmetry

In 1950, the two richest countries in South America – Brazil and Argentina – had more or less the same GDP, despite the fact that Argentines had an extraordinarily higher per capita income, social homogeneity, educational level and quality of life than Brazilians. Today, seventy years later, the situation has changed radically: if the GDP of the two countries was around US$80 billion in 1950, 70 years later, Brazil's GDP has multiplied 23 times and is now around US$2,17 trillion, while Argentina's GDP has multiplied only eight times in the same period, now standing at US$640 billion.

An asymmetry between the two countries that tends to increase exponentially in the coming years, and even more so between Brazil and the other South American countries. Today, Brazil already has half of the population and product of South America, and is the only country in the region that has any presence on the international geopolitical board.

After the 2016 coup d'état, however, and until 2022, two successive right-wing governments radically changed foreign policy, distancing Brazil from all integrationist initiatives in South America, while aligning itself with the United States and NATO in the face of international conflicts outside the continent. In 2023, however, the country resumed its previous foreign policy course and has been assuming increasingly active positions in the international arena, in the BRICS group, in the rotating presidency of the G20 and in the global leadership of the fight for sustainability and control of climate change.

On its own continent, however, Brazil has been encountering great resistance, which has much to do with the increase in regional asymmetry, in which Brazil appears today as a kind of “elephant in the middle of the room”.

The expansion of the Chinese presence

The second major transformation in South America in the early decades of the 15st century was the emergence and rapid expansion of China’s role in the continent’s economic development. In just three decades, trade flows between South America and China grew from US$2001 billion in 300 to around US$2019 billion in 10. And the flow of Chinese direct investment in the region grew and remained at around US$2011 billion per year, on average, between 2018 and 2022. Brazil, Peru and Argentina received the largest share of these investments until 22, with Brazil accounting for 5% of this total, including the manufacture of electric vehicles, the acquisition of lithium assets, the expansion of Huawei and other Chinese companies in data centers, cloud computing and XNUMXG technology, and a large amount of electrical infrastructure.

In the first two decades of the 700st century, China also doubled its share of imports from South American countries, whose gross value grew by more than 40%, while Brazilian exports to South America, for example, grew less than 2008% of China's growth in the same period. Even during the economic crisis of 42, Brazil's share of the Argentine market fell from 31,5% to 21,5%, while China's share rose from 30,5% to 4,4%. The same happened in Venezuela, where China's share rose from 2008% in 11,5 to 2009% in the first four months of XNUMX.

Today, China is the largest trading partner of Brazil, Chile and Peru in South America, and is among the three largest trading partners of all countries on the continent. In the case of Brazil alone, 30,6% of its exports in 2023 went to China, which was at the same time the largest supplier of imported goods to Brazil. And eight South American countries are already part of the initiative. Belt and Road Chinese: Argentina, Peru, Bolivia, Chile, Guyana, Suriname, Uruguay and Venezuela.

In classical structuralist language, it can be said that during this period China became the new “main cyclical center” of the South American economy. And today, as in the past, the main interest of the Chinese in South America continues to be its natural and mineral resources, although they are also participating in the region’s major government tenders. And the scenario for the coming years promises an excess supply of Chinese products and capital, which should break down barriers and constitute an immense competitive challenge for North American and Brazilian capital.

The new US strategy of “global polarization”

The third major change occurred in the field of South America's relations with the United States, which never abandoned its Monroe Doctrine, formulated in 1823 with the aim of combating and expelling European influence from the South American continent. The difference is that, in the XNUMXth century, this discourse was contrary to the interests of the European colonial powers and in favor of the independence of their South American colonies.

In the first half of the 20th century, however, the same doctrine legitimized US intervention in Central America and the Caribbean, to change governments and regimes that they considered contrary to their interests. And in the second half of the century, it was once again used to “protect” the countries of South America, but now against the “communist threat,” which justified US support for a succession of coups and military regimes that liquidated democracy on the continent, destroying at the same time its sovereignty and its autonomous projects for the future.

At the beginning of the 2014st century, during its “global war on terror”, the United States reduced its level of political involvement in South American affairs. This “attention deficit” lasted until the economic “landing” of the Chinese in South America in the second decade of the century, and until the beginning of the conflict between the United States and Russia in Ukraine, following the XNUMX coup d’état.

Since then, the United States has been proposing to “repolarize the world” in the style of the Cold War of the 20th century, so that the other countries of the international system, and also of South America, would have to position themselves on one side or the other of the “red line” established by them and their European allies.

The decline of the South American integration project

Most South American countries overcame the impact of the 2008 crisis more quickly than the rest of the world, thanks to the high demand for their export products from Asian economies, China in particular, which kept the quantities and prices of South American commodities at an extremely high level.

But this short-term success had an unexpected effect on the whole of South America, paradoxically deepening the old difficulties that the South American economic integration project has always faced. Suffice it to say that in North America, intraregional trade accounts for around 40% of global trade; in Asia, 58%; and in Europe, 68%; while in South America, it barely reaches 18%.

The paths of the future

Divided into blocs, and with most of the countries separated or distant from Brazil due to the Venezuelan dispute, South America will have to maintain its traditional status as an economic periphery of the international system, even as it diversifies and expands its markets towards Asia. To avoid this, Brazil will have to assume the “material leadership” of the continent, building a productive structure that combines high value-added industries and cutting-edge technologies with the production of food and high-productivity commodities, while maintaining its status as a major producer of traditional energy and “clean energy.”

In this case, Brazil could change the course of the region, becoming its “economic locomotive”, overcoming the political and ideological differences that currently divide and immobilize a continent that – without Brazil – has no geopolitical relevance whatsoever within the World System.

At this point, however, there is no mistaking it: in the coming years, Brazil will face fierce competition and an explicit boycott from the government of Donald Trump, who considers that South America's only relevance is to belong to the “backyard of the United States”.

* Jose Luis Fiori He is professor emeritus at UFRJ. Author, among other books, of A theory of global power (Vozes) [https://amzn.to/3YBLfHb]

Originally published in the Economic Bulletin no. 9 of the International Observatory of the 21st Century – NUBEA/UFRJ.


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