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한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском So far in the 21st century, we are witnessing the consolidation of an international division of labor in which the levers of economic, political, and technological power are increasingly decoupled from local capacities for the vast majority of nations and relocated to the international arena. The cooperative competition among oligopolistic forces vying for control of key assets to secure global hegemony—energy, finance, digital technology, logistics, military, and space—is one of the fundamental vectors of this framework. The constant expansion of these forces is rooted in the constitutive interaction between giant corporations in strategic sectors and the core states of the new poly-globalization—namely the United States and China—whose geopolitical rivalry is intrinsically linked to the success of the accumulation regime. The oligopolies and their centers of origin appropriate the market and innovation rents generated by the new productive map, accumulating a structural and relational power (in Susan Strange’s terms) that is quickly and markedly outpacing the rest. In this way, both companies and states outside these core zones are being pushed into increasingly dependent positions regarding the technologies, goods, and basic services produced by the winning oligopolies. They are, we might say, being shifted to the new extended periphery. How does this happen? What role does technology play, and where is Latin America in this story? GEOPOLITICS Today, the United States and China sit at the center, while the rest of the world occupies the periphery. UNCTAD Secretary-General Rebecca Grynspan (2023) describes the novel emergence of “centers within the periphery” as part of a process she calls poly-globalization: both China’s rise to the top ranks of global power and the consolidation of highly productive and commercial hubs in other parts of Asia challenge the sustainability of the post–Cold War unipolar world and the traditional North–South divide. Within this framework, historical peripheral dependency does not disappear, but rather changes in form and geography—especially considering that a growing number of developed countries are becoming productively and technologically dependent on countries like China, more so than the reverse (a case in point is Germany in the automotive industry; Zhang & Lustenberger, 2025). However, the periphery is not a homogeneous entity, and not all regions and countries have the same capacities or room for maneuver within this scheme, where starting points significantly shape long-term trajectories. Developed countries (formerly located at the center) remain better equipped than developing countries to face the challenges of their new condition. We can conceptualize the peripheral configuration as tiers or peripheral rings: there is no “semi-periphery”, but rather tiers or rings within the periphery. From this perspective, we might say that Western Europe constitutes a first peripheral ring (1st tier periphery), and industrialized Asia a second ring (2nd tier periphery). Latin America, in this framework, occupies a third ring: it possesses certain accumulated productive capabilities, but due to being more "distant" from the center in terms of the criticality of its production, it receives fewer benefits from integration into major global value chains in terms of investment and technological learning (as Evolutionary Economics and Latin American Development Theory have long pointed out, producing semiconductors, AI, or green hydrogen technology —as in Taiwan, India, or Germany, respectively— is not the same than assembling automobiles as in Mexico and Argentina). In this scenario, the Latin American region—historically subordinated to a single center (the North-Center)—is now subordinate to two. China has been rapidly tightening its economic ties with the region, primarily through trade and financial assistance (Dussel Peters, 2021; Ugarteche & De León, 2020; Villasenin, 2021). Chinese foreign direct investment (FDI) in Latin America and the Caribbean, for example, rose from less than 1% of the region’s total FDI in 2012 to 10.8% in 2019 (although it still lags behind investment from the US and the European Union) (Dussel Peters, 2022). The Asian giant is already Brazil’s main trading partner, is rapidly deepening its ties with Mexico, and an increasing number of countries across the continent have joined the Belt and Road Initiative, including Argentina since 2022 (the other two major Latin American economies have not joined so far). However, the benefits of these relationships for the region remain ambivalent: on the one hand, they have reduced financial dependence on the US—a significant achievement—but they have not yet translated into higher value-added development such as export diversification or upgrading. On the contrary, they have tended to reinforce the trend toward re-commoditization of local economies (Wainer, 2023; Alami et al., 2025). DIGITAL ECONOMY The current dynamics of the tech industry are particularly illustrative of the broader landscape described above, and for that reason, we take it as a focal point of observation. Google, Apple, Meta, Amazon, Microsoft, Alibaba, Tencent, and Huawei—the flagship tech giants of the US and China, commonly referred to as Big Tech (BT)—operate collectively as a global oligopoly. This formation increasingly relegates Latin America to the role of data provider and accelerates the shift of other industrial powers from technology innovators to adopters—that is, to a position of subsidiarity. To this picture we must add Nvidia, the Musk ecosystem, and DeepSeek, among other firms whose products and executives carry significant weight in the global chain of technological decision-making, beyond even their specific market shares. No country outside of the US and China has leading firms in AI, cloud computing, advanced chip knowledge, or 5G champions (with the exception of Ericsson in the latter sector, which remains Swedish. It’s worth noting that Nokia is not included here, as although its production and brand profile are still centered in Norway, the largest shareholding stake belongs to BlackRock). An example of an interesting yet ultimately failed challenge to Big Tech dominance in large-scale projects is the European federated cloud initiative Gaia-X (European Association for Data and Cloud AISBL, https://gaia-x.eu/about/). Originally promoted by the Ministers of economic affairs of Germany and France, Gaia-X is a non-profit international association that brings together companies, state agencies, and third-sector organizations involved in European industrial and technological development (such as SAP, Siemens, the Fraunhofer-Gesellschaft, or Luxembourg’s National Data Service, alongside hundreds of SMEs). Its aim is to pool capabilities in order to create a large shared cloud infrastructure that allows companies and public bodies to store and develop applications securely—that is, independent of servers located outside the continent that fail to meet European data protection standards. In short, the goal is to enable competition with US tech giants and ultimately establish a “gold standard” in data security that tends to exclude them—driven by European governments’ stated concern over the region’s digital sovereignty. The conceptually appealing strategy of combining the complementary capacities of local companies of different sizes on a single platform and offering joint products, initially acted as a carrot for the industry (over 300 members joined, up from 22 at the beginning). However, over time, even the governments most vocal about sovereignty declined to adopt Gaia-X as a primary provider: Germany, for instance, signed a €3 billion agreement with Oracle Cloud (a strategic partner of AWS, Microsoft, and Nvidia) to provide cloud services in 2024. To this day, US tech giants continue to control 70% of the European cloud market (Gooding, 2024). Gaia-X remains a valuable project with over five years of development, but with frankly limited real-world reach—also, it must be said, due in part to the tech giants’ own offensive, as they increasingly offer services aimed at the “territorialization” of data (e.g., https://www.oracle.com/cloud/sovereign-cloud/what-is-sovereign-cloud/). As things stand, the European industrial powers do not control the supply, circulation, or demand of digital technologies, and major Asian players—such as India or Taiwan—occupy intermediate links in the value chains of either the Western bloc or China, depending on the case. This kind of displacement is not so surprising when we consider the oligopolistic dynamics that currently govern the global economy, involving the leadership of core countries across all strategic sectors. Particularly in the digital economy. Oligopoly is a market structure in which a small number of firms control the supply of certain goods and/or services—that is, a large-scale market dominated by a few major sellers, who are often interconnected. Oligopolies are everywhere (in oil, automotive, telecommunications, and more), but in certain sectors, structural traits such as the hyper-scale at which production is viable and profitable, the pace of innovation required for sectoral expansion, or the relevance of brand reputation drive the formation of so-called natural oligopolies (NOs): markets in which open competition (several smaller actors producing the same and rotating their market shares over time) would tend to hinder efficient production. In these markets, the number of firms capable of minimizing total industry costs is “naturally” low, due to the high entry barriers that are established. Each NO actor holds considerable market power, allowing it to develop productive and technological capacities in a privileged way over long periods. As a result, the minimum threshold for joining the oligopoly becomes increasingly difficult for outsiders to overcome. This is the case in sectors such as the extraction of scarce and critical natural resources (like lithium), energy generation and supply (e.g., wind farms), large physical and cyber-physical infrastructure for logistics (commercial ports and oceanic bridges, 5G, or submarine internet cables), or transversal digital technologies (like AI, big data, or cloud computing). All of these require massive upfront investments, accumulated know-how, strong commercialization capacity, and the ability to retain rents—which includes “artificial” legal barriers such as intellectual property rights, trade secrets, and various mechanisms to capture innovation rents. It’s not the same to have oil reserves in your territory and develop or invite companies to exploit them (which several countries do, with companies of varying sizes) as it is to develop powerful AI models using 20 years of data from the entire public internet (which only OpenAI-Microsoft of the US originally achieved with ChatGPT, even though the data came from millions of people around the world). In fact, comparable AI capabilities have only been reached by Google’s Gemini and the open-source DeepSeek model recently developed in China following US sanctions on Nvidia chip acquisitions. In a technological oligopoly, the ability to invest and innovate at scale grants companies significant prospective power: they can pour enormous sums into R&D and start-up acquisitions to develop innovations that will pay off a decade later—after numerous failed attempts costing millions—thus shaping future markets in the process (Google, for example, has heavily invested in AI development since the 1990s and has, at times, acquired one start-up per week). Additionally, NO actors actively exclude potential competitors outside the oligopoly through more questionable mechanisms such as collusion or lobbying, among others (Borrastero & Juncos, 2024). Today, given the broad productive and geographic scope of global value chains and the extreme concentration of investment capacity typical of financial capitalism, more and more markets are becoming structured as natural oligopolies. Especially in digital technologies. Only Amazon, Microsoft, Alibaba, and Google together dominate 75% of the global cloud computing market (with respective shares of 47.8%, 15.5%, 7.7%, and 4%, according to Gartner, 2024), a sector whose relevance is crucial for the development of technologies such as generative AI. In the years leading up to the COVID-19 pandemic, Google, Facebook, Amazon, and Microsoft also became owners or lessees of more than half of the world’s submarine bandwidth capacity—a market historically controlled by states and large telecommunications companies like NEC, Alcatel, and Fujitsu, which still make up the backbone of global data traffic infrastructure (Business Research Insights, 2025). Huawei is the world’s largest supplier of telecommunications equipment, particularly for 5G networks and smartphones, holding a 28% share of the global market and over 4,000 patents (Merino et al., 2023). This helps explain Donald Trump’s insistence on making it both a material and symbolic target in the US-China trade war. The fact that Big Tech companies share technological and market domains—beyond specializing in particular niches—fuels an intense internal competitive race that, unlike monopolies, drives continuous innovation. This means that, in addition to competing to outdo one another, these firms also cooperate extensively to maintain their global leadership far ahead of the rest of the market: each company develops interoperability features to ensure their apps function properly on others’ platforms, and they share open source projects on GitHub (now owned by Microsoft), for instance. Microsoft has contributed significantly to the development of AI in China through its Microsoft Research Asia lab in Beijing and collaborations with Chinese institutions such as the National University of Defense Technology (Hung, 2025)—efforts that neither the US nor Chinese governments have blocked. Long before the current reloaded geopolitical confrontation emerged, core-country governments had already been promoting initiatives aimed at the expansion and globalization of their tech firms, such as China’s Digital Silk Road (Borrastero, 2024) or Silicon Valley itself in the US (it bears repeating just how much state R&D funding is packed inside an iPhone; Mazzucato, 2013). And what each state has done to strengthen its own technological base has ended up, in some way, benefiting the other. Consider, for example, that what China’s customs agency classifies as “foreign-invested enterprises” are mostly US-based companies, which control three-quarters of the country’s most advanced high-tech products. These include large-scale electronics exports that often involve importing key components from the US, assembling them in China via foreign companies like Foxconn (which builds Apple’s iPhones), and then exporting them. At the same time, private Chinese firms have also expanded their role in these core exports, going from virtually zero in the 1990s to over 20% today (Kenji Starrs, 2025). The offshoring of US tech production has helped the US continue leading by producing more cheaply, and has helped China learn how to lead too. As can be seen, the actors of a Global Technological Oligopoly (GTO) are deeply interdependent. To this picture, we must add the increasingly blatant symbiosis between dominant governments and individual stakeholders, as exemplified by the Trump-Musk case. We are no longer simply talking about "public-private complexes", "revolving doors" or "intimate relations". These notions describe very close ties, but between separate entities. What we are seeing now is a kind of fusion (or confusion) between a tiny handful of public and private actors who are able to govern strategic global value chains and set the rules of the game for the rest of the world. In China’s case, the country is characterized by what Weber and Qi (2022) describe as a “state-constituted market economy”: a strong state deeply intertwined with a fundamentally marketized economy, resulting in a political-economic balance that differs somewhat from Western models but still yields a global power that is difficult to challenge. In sum, we are witnessing a competition scheme designed for the very few, that generates a spiraling cycle of leveraged success in which core states play a crucial role. LATIN AMERICA A scheme like this reinforces Latin America's historic peripheral condition. GTO companies operate directly within the territory (setting up data centers, having subsidiaries, providing services, among other things), but they also rely on regional actors to amplify the generation of indigenous data, the large-scale paid consumption of BT’s technological infrastructures, and the global dissemination of their business models. The free domestic use of email applications or social networks enables data capture, but not the monetization of digital assets, whose massive volume comes from services provided to businesses and governments (as someone aptly put it, Amazon is famous for its store but rich from its servers; Lacort, 2021). In Latin America, there is a handful of large technology companies – the so-called 'tecnolatinas' – that replicate the e-marketplace, fintech, or cryptocurrency development models characteristic of the BT, managing to stand out as champions in the regional league far ahead of the rest. However, they continue to be dependent users of the fundamental technologies produced by the GTO. Mercado Libre, originally from Argentina, is the largest and most widely used digital platform on the continent, the one with the highest market value, and the first to be listed on Nasdaq. Modeled after Alibaba, it is a marketplace with an integrated online payments and credit system, technology development and service divisions, and an extensive ground-based logistics infrastructure. For its data storage and management, Mercado Libre is a client of Amazon Web Services (AWS): it processes over 40 purchases per second across 18 countries and has migrated more than 5,000 databases to Amazon DynamoDB (AWS, 2021). As of 2024, it was using nearly a dozen services from the tech giant with which it had signed an agreement to reduce its data computing costs by 13% (AWS, 2024). The other two regional champions, both Brazilian in origin, also maintain strong ties with the BTs: the marketplace Magazine Luiza runs on Google Cloud; and the fully digital bank Nubank (of Nu Holdings) is an AWS client, has received investments from Warren Buffett, Tencent Holdings and Sequoia Capital, and many of its executives have worked at Google, Facebook, Amazon, and Alibaba. The following chart illustrates the stark imbalance in market value and profits between the GTO firms, other global tech giants, and two of Latin America's top champions, in descending order: Source: Own elaboration based on data from Forbes Global 2000 (2024).* Originally in Borrastero & Juncos (2024).** Magazine Luiza is not publicly traded.  Regional firms, in turn, capture data from countless Latin American users, acquire local start-ups, participate in scientific research networks, and work with governments to access tax and especially regulatory benefits—mechanisms that enable their gradual “giantization” (Borrastero & Juncos, 2024). In short, they are part of this kind of stratified oligopoly led by Big Tech, which tecnolatinas help sustain while securing their regional slice of the pie. Far from being a marginal arena, despite Latin America’s relatively low share in global cross-border data flows compared to Asia or Europe (UNCTAD, 2021), the region represents a key market to conquer. This includes sectors with crucial resources for Big Tech’s vertical integration strategies, such as lithium. For instance, Tesla is one of the main buyers of Arcadium Lithium, which operates in the salt flats of northern Argentina, and along with other tech moguls like Bill Gates, is planning new direct investments and investments in companies developing technologies related to extraction (such as Lake Resources, which works on reducing freshwater usage in lithium mining) (López King, 2025). Big Tech companies form true global ecosystems for resource capture and the monetization of informational assets, supported by states and firms across the globe. SYSTEMIC RISKS One of the main problems of the dynamics described so far is the deepening of the international division of learning which—already highly unequal—continues to grow at breakneck speed, while technological learning becomes increasingly fundamental to value creation, and peripheral states are less and less equipped to deal with ever-larger corporations. In this context, peripheral countries risk becoming mere providers of informational raw material for platforms developed in the global centers, and end up having to pay for the digital intelligence extracted from them. Meanwhile, industrial hyper-concentration makes it increasingly difficult for the market to address these structural issues on its own. Rent refers to income derived from control over a scarce and strategic asset. The oligopolistic control of such rent-generating assets by central countries drives an endogenous concentration of rent in the central regions, and the result, in terms of income distribution both between and within nations, is a deepening of inequality at all levels (UNCTAD, 2021; Milanovic, 2019; Torres and Ahumada, 2022). Another major issue stemming from the scale reached by dominant actors and the penetration of their digital infrastructures is how difficult it has become to reverse the technological path — in terms of how to generate and provide services in a different way, while maintaining the reach and quality. Just imagine, for example, trying to establish alternative global data traffic routes or to produce world-class AI for diagnosing and treating rare diseases, without at some point relying on the technological resources of the oligopoly. The key question is how societies across the globe can harness these accumulated technological capabilities for collective purposes, without depending so heavily on heteronormative political and market-driven decisions. The list of systemic risks is a long one, and there isn’t space here to delve into the broader political dimensions of the issue. But it is worth highlighting these two particular risks tied to the current techno-economic order, given their impact on the very possibility of building concrete alternatives. LOCAL INITIATIVE Latin America enjoys neither structural power (that is, the ability to shape the rules of the game in terms of production, finance, security, or the global control of knowledge and culture), nor relational power in relation to other regions with accumulated techno-productive capacities (the ability to influence other actors into doing something they otherwise wouldn’t, following Strange’s 1988 classification). This essay may lean more toward pessimism of the intellect than optimism of the will when it comes to the global order within which Latin America must forge a new place.  Yet it is clear that the continent holds bargaining potential, rooted in the fact that it remains a highly coveted region for all the reasons discussed above—and many more (including the fact that it is, for now, a territory free of military wars). In the context of a “divide and conquer” logic typical of today’s intensified inter-core battles, strategies of absolute alignment with any single power are far from the wisest. The global oligopolistic economy will only deepen Latin America’s peripheral status if countries in the region fail to adopt a solidary non-alignment—or poly-alignment—approach, one that allows them to consolidate minimum thresholds of technological sovereignty. From dependent adoption to sovereign adoption (deciding what and how to adopt in order to learn), and from there to emancipation (integrating and developing what is needed for the people’s well-being). In Brazil, multiple state-led projects are underway to develop a sovereign data economy in collaboration with small and medium-sized enterprises and the academic sector (Gonzalo & Borrastero, forthcoming), along with large-scale initiatives to build national tech and energy infrastructures by leveraging the techno-productive capabilities accumulated over decades by Petrobras, BNDES, the national research council, and public venture capital funds (Alami et al., 2025). Mexico and Colombia are currently undergoing political processes inspired by the ideals of a “common home” and the care of virtual lands, advocating for continental unity on the one hand and strict regulation of Big Tech on the other (BBC News Mundo, 2025; Forbes Central America, 2025; Government of Colombia, 2024; Colombian Presidency, 2025; Wired, 2025). Argentina has a range of digital development projects based on policy frameworks designed to autonomously leverage the productive capacity the country has accumulated since the 1940s (Gonzalo & Borrastero, 2023)—though these efforts have been obstructed by the pro-Trump government of Javier Milei. EPILOGUE As these lines are being written, stock markets around the globe are tumbling amid the tariff war unleashed by the United States, forcing everyone else to adjust. Even the “Magnificent Seven” (Google, Apple, Meta, Amazon, Microsoft, Nvidia, and Tesla) have lost billions in just a few days. 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한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском Good morning, everyone. Forty-three years after the beginning of the Malvinas War, we gather once again as a nation to commemorate our veterans and those who fell in combat, under the proud gaze of their families, to whom I also extend this tribute. Today, we remember those Heroes who gave their lives for the Homeland, who are part of the pantheon of those who forged our history through their sacrifice. Today, we honor them by reaffirming, with genuine determination, Argentina’s claim to sovereignty over the Malvinas Islands, South Georgia, and South Sandwich Islands, as well as the surrounding maritime areas. Unfortunately, in recent decades, our sovereign claim over the islands has been directly or indirectly harmed by the economic and diplomatic decisions of the political caste. No one can take seriously the claim of a nation whose leadership is known worldwide for its corruption and incompetence, and for dragging Argentina into the arms of the world’s scum. A country that systematically impoverishes its land and sides with dictators and petty tyrants enters any diplomatic negotiation from a position of weakness. And if we add the disarmament and deliberate demonization of the Armed Forces, we had the perfect recipe for the Malvinas Islands to remain forever in foreign hands. The first step we must take, then, is to rise as a country in every sense — both materially and spiritually — and to reclaim the place in the international community that we should never have lost. And there is no other way to achieve this than by applying the ideas of liberty, both within our borders and beyond, by opening ourselves to international trade and adopting a foreign policy aligned with the free nations of the world. This is the first government in a long time that understands that a sovereign country must, first and foremost, be a prosperous country. Only then can we take the second step: to dignify our Armed Forces through the necessary investments that only a prosperous nation can afford. Growth is in vain if public spending is not reorganized, strengthening those areas in which the State should be involved and eliminating those that are unnecessary, because when the State assumes responsibilities that do not belong to it, it is always to the detriment of essential functions. Despite the political caste’s decades-long effort to convince us otherwise, Argentina needs a strong Armed Forces. They are essential to defend our vast territory from potential threats in a global context of growing uncertainty. They are also indispensable in any diplomatic discussion. In this regard, history is unforgiving: a strong country is a respected country. This does not mean that might makes right, but foreign policy cannot be conducted from a naïve and childish idealism either. For us, the Armed Forces are a source of pride. The time when they were undervalued has come to an end. Proof of this is that, on July 9 of last year, for the first time, more than 2,000 of our veterans led the military parade during the Independence Day celebrations, before a proud and grateful crowd for their actions in defense of the Homeland. That is also why we have just enacted a decree instructing the Ministry of Defense to grant the rank of Reserve Second Lieutenant to those Reserve Officer Candidate Soldiers who are veterans of the Malvinas War. This rank would have been granted to them upon completion of their military service, but it was left unfulfilled as they were discharged directly after the war ended. This is, simply put, about settling a debt with these Heroes — a debt that has been ignored for 43 years by successive governments and that we now intend to correct once and for all. Without all the above, any notion of sovereignty loses its meaning. Sovereignty is not about the State owning many companies, nor about financing the film industry, or second-rate concerts, or similar things. Believing that more State means more sovereignty is an Orwellian concept under which politics has historically tried to conceal its dirty dealings — resulting in a poor people enslaved by an omnipresent State. We, on the other hand, have come to reclaim that word, which until recently had been hijacked, and to restore the meaning it truly deserves. A sovereign people is a flourishing, vigorous, respectable people — and above all, a people proud of its Armed Forces. A nation like the one built by the generation of the 1880s, which, after a century of humiliation, we are rebuilding. As I’ve said on other occasions, we are not here to apply extravagant formulas, but rather to return to those strategies that once made us successful. And when it comes to sovereignty over the Malvinas, we have always made it clear that the most important vote is the one cast with feet. We hope that one day the people of the Malvinas will choose to vote with their feet — for us. That is why we seek to make Argentina such a powerful nation that they will prefer to be Argentine, and persuasion or deterrence won’t even be necessary to achieve it. That is why we have embarked on the path of liberation we are now walking — so that Argentina becomes the freest country in the world, once again has the highest GDP per capita on the planet, and inspires people around the world to dream of the Argentine dream. That is what this government understands by sovereignty. It is the standard by which we measure ourselves, and we will not settle for anything less. To conclude, on this second April 2nd that I experience as President, I want to once again reaffirm our unwavering claim over the Malvinas Islands, reinforcing our commitment to exhaust all diplomatic means within our reach so that they may return to Argentine hands. Finally, to the veterans, to their families, and to all those who wear the uniform in defense of the Homeland, I extend my eternal gratitude on behalf of all Argentines. May God bless the Argentine Republic, may the forces of heaven be with us! Long live freedom, damn it! Thank you very much! Long live the Homeland!

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском In the current global disorder, the countries that comprise Latin America are simultaneously emerging as key players in tipping the balance of global power and are courted by major powers seeking influence and access to their natural resources, infrastructure, and services. For a decade, China has been growing in importance in the region, driven by its interest in establishing itself there through the Belt and Road Initiative, loans, investment, and construction, challenging the United States for relevance on the continent as a preferred ally. Currently, another player of the magnitude of India is slowly but surely making inroads in Latin America in trade, financing, and political relations, and is being courted by many Latin American states as an alternative to the risks that staking everything on an alliance with China can entail. Brazil, the undisputed regional leader, maintains privileged relations with both Asian giants, and the three countries cooperate and share interests and forums, such as the BRICS+ and the G20+, where common projects are developed. Introduction: a relationship with historical background The end of the Cold War and the rise of globalization led to growing regional competition in Asia, focused on both political influence and economic dominance. One of the most significant developments in the aftermath of these transformations has been the consolidation of China as a regional and, subsequently, global power. In the current context, China, India, and other nations are seeking to expand their alliances and redefine their strategies, including their relationship with Latin America, a region that has experienced multiple phases of engagement with external actors throughout its history. During the 19th and 20th centuries, interaction was centered on Europe and the United States; however, since the 21st century, the dynamics have diversified and taken on a multipolar character. Today, Latin American countries are the object of interest of various powers, from China and Japan to India and Iran. While China's presence in Latin America is evident and significant, India has traditionally maintained a more distant stance, except for Brazil.1 For decades, the limited interaction between India and Latin America was mainly attributed to factors such as geographical remoteness and lack of strategic opportunities. However, this perception has changed since Prime Minister Narendra Modi came to power in 2014. In recent years, China has considerably expanded its influence in the region through various mechanisms, while India seeks first to integrate into this dynamic and, in the medium, to compete with China in certain areas. China has established itself as one of Latin America's main trading partners, as well as one of its largest global lenders and investors.2 Its influence does not currently compare with that of India, but rivals that of the United States, the only country that surpasses it in terms of exports and imports in the continent, and the European Union in multiple sectors. In the political and diplomatic sphere, China has made significant progress, such as persuading five Latin American countries - Costa Rica, the Dominican Republic, El Salvador, Nicaragua and Panama - to transfer their diplomatic recognition from Taiwan to the People's Republic of China, although Honduras, Guatemala and Paraguay are still doing so. It has also established alliances with countries sanctioned by the US - Cuba, Nicaragua, and Venezuela - which it has supported with loans, military cooperation, and investment. However, in a context of global uncertainty, several Latin American countries are seeking to diversify their strategic alliances and reduce the risks of excessive dependence on a single power. In this scenario, India emerges as a relevant actor, with the potential to balance China's presence in the medium term in key sectors such as trade, infrastructure, supply chains, technology and defence, where India still has ample room for growth in the continent. China in Latin America: economic and strategic expansion China has indisputably been the most influential actor in Latin America between the two Asian powers, especially in the economic sphere, standing out for its participation in infrastructure projects in the Southern Cone as part of the Belt and Road Initiative. Since the beginning of the 21st century, its presence in the region has grown rapidly, with Chinese state-owned companies consolidating themselves as key players in strategic sectors such as energy, infrastructure, and technology, surpassing in some areas even the United States, traditionally dominant in these areas. In addition, China has strengthened its influence through cultural and diplomatic mechanisms. The links between China and Latin America have historical roots dating back to the 16th century, when the Manila Galleon facilitated the exchange of goods such as porcelain, silk and spices between China and the Viceroyalty of New Spain. After the independence of Latin American countries in the 1840s, there was a major Chinese migration, with hundreds of thousands of workers employed on sugar plantations, in mines and as servants in countries such as Cuba and Peru, a phenomenon that persisted throughout the 19th century. Today, Brazil, Cuba, Paraguay, Peru, and Venezuela are home to the largest Chinese communities on the continent. Initially, most Latin American countries did not recognize Mao's government after the founding of the People's Republic in 1949; however, following US President Richard Nixon's visit to China in 1972, most Latin American states established diplomatic relations with Beijing, thus initiating a period of cooperation in the cultural, economic and political spheres. On the economic front, China has established itself as a major player. In 2000, the Chinese market represented less than 2 % of Latin American and Caribbean exports, but its demand, especially for raw materials, has grown exponentially.3 By 2024, China would absorb 17% of these exports, with a value of more than 500 billion dollars.4 The main products exported by the region include soybeans and other vegetables, copper, oil and other raw materials, while imports from China consist mainly of manufactured goods. In countries such as Brazil, Chile and Peru, China has become the main trading partner.5 The strengthening of economic ties has been formalized through comprehensive strategic partnerships with Argentina, Brazil, Chile, Ecuador, Mexico, Peru, and Venezuela. China has also signed free trade agreements with Chile - the first country in the region to do so in 2005 - Costa Rica, Ecuador, Nicaragua, and Peru, while negotiations with Uruguay remain stalled. Within the framework of the Belt and Road Initiative, twenty-two countries in Latin America and the Caribbean have signed agreements with China, which have facilitated investments and loans amounting to more than USD 9 billion, equivalent to 6 % of China's total investment abroad. These investments, managed through the China Development Bank and the Export-Import Bank, have largely gone to energy and infrastructure projects, in many cases in exchange for oil. Venezuela has been the main recipient, doubling the amount received by Brazil, the second largest recipient.6 China's impact in Latin America is manifested in infrastructure development and the energy sector. Chinese investments have financed the construction of refineries and processing plants in countries with coal, copper, natural gas, oil, and uranium deposits. In the case of copper, China is the main buyer of Chilean production, purchasing more than 40 % of the country's exports. China has also taken a special interest in lithium, with significant investments in Argentina, Bolivia and Chile, countries that make up the so-called 'Lithium Triangle' and account for approximately half of global lithium reserves, although the development of these projects has raised environmental concerns.7 At the same time, China has promoted the financing of renewable energies, with outstanding initiatives such as the largest solar plant in Latin America in Jujuy, Argentina, and the Punta Sierra wind farm in Coquimbo, Chile. Since former Chinese President Jiang Zemin's historic thirteen-day tour of Latin America in 2001, high-level political exchanges have intensified. President Xi Jinping has visited the region five times since coming to power in 2013, most recently in November 2024, when he reaffirmed the construction of major projects, including the port of Chancay in Peru.8 China has financed various infrastructure projects in Latin America, including airports, roads, ports and rail networks. Chinese companies control more than a hundred ports around the world, of which at least a dozen are in Latin America and the Caribbean.9 In terms of technology and communications, China has promoted projects in artificial intelligence, smart cities and 5G networks, with the participation of companies such as Huawei. Likewise, cooperation in space has become relevant, with the installation of the largest Chinese space base abroad in Argentine Patagonia and the construction of satellite ground stations in Bolivia, Brazil, Chile, and Venezuela.10 China has also consolidated its presence in Latin America through soft power strategies, strengthening cultural and educational ties through the Confucius Institute, student scholarships and the expansion of Spanish-language media, such as CGTN and Xinhua. Furthermore, it has reinforced its image as a supportive actor at the international level, which was evidenced during the COVID-19 pandemic with the supply of vaccines and medical equipment to governments in the region. In this context, China's influence in Latin America is projected as a long-term phenomenon, with implications that span the economic, political, and cultural spheres, in a scenario in which other powers, such as India, are also seeking a presence in the region. India's arrival and expansion in Latin America Historically, relations between India and Latin America have been limited due to geographical distance, the absence of common strategic interests and the lack of a consolidated bilateral agenda. Latin America occupied a marginal role in India's foreign policy, despite diplomatic visits such as Prime Minister Jawaharlal Nehru's 1961 visit to Mexico and Indira Gandhi's 1968 visit to eight countries in the region. A significant change occurred in the 1990s, when India signed trade agreements with seven Latin American countries and promoted the FOCUS LAC program (1997), designed to strengthen economic relations with the region.The turning point in India's perception of Latin America came in 2014, when the newly appointed prime minister, Narendra Modi, participated in the BRICS Summit in Brazil. The expansion of the India-Mercosur Preferential Trade Agreement, initially signed in 2004, but extended in 2016,11 evidenced India's commitment to strengthening its ties with the region. Bilateral trade between India and Latin America currently stands at USD 43 billion, with Brazil, Mexico, and Colombia as its main trading partners. Like China, India finds in Latin America a key source of mineral resources, such as copper, lithium, and iron ore, essential for its growing industrial demand. An example of this was the strategic partnership agreement signed in 2023 between India's Altmin Private Limited and Bolivia's state-owned lithium company. The region has also become an important partner in the supply of oil: in recent years, Venezuela, Mexico, and Brazil have accounted for 30 % of crude oil exports to India. In return, India exports products from strategic sectors such as information technology and pharmaceuticals to Latin America. India is also involved in infrastructure development in the region, investing in railways, roads, and energy supply systems.12 In 2022, India's foreign policy gave a new signal of rapprochement with Latin America by bringing the Latin American members of the G20 (Argentina, Brazil, and Mexico) under the jurisdiction of the foreign minister, rather than a junior minister. In April 2023, Foreign Minister Subrahmanyam Jaishankar made a historic visit to Guyana, Panama, Colombia, and the Dominican Republic, marking the first time an Indian foreign minister had visited these countries. This tour reflected the growing importance of Latin America on India's diplomatic agenda as the region with the second highest number of projects spearheaded after Asia: India currently has 181 projects in Asia, thirty-two in Latin America and the Caribbean, and three in Central Asia and Oceania. These initiatives have expanded qualitatively in recent years, especially in terms of the size of the credit lines and the complexity of the projects.13 While on 3 August 2023 and on the sidelines of the ninth meeting of the Confederation of India-Latin America and Caribbean Industry in New Delhi, Jaishankar advocated deepening India-Latin America engagements, especially in the areas of agriculture, supply chain diversification and mutual resource sharing partnership. Thus, while China has captured greater political and diplomatic attention in the region, India's presence has raised expectations.14 Unlike China, India is a democracy and faces similar challenges to many Latin American countries, which has facilitated its rapprochement with the region. Its economic growth has sparked interest in Latin America, leading several governments to prioritize relations with India in their foreign policy strategies. Although its expansion in the region responds in part to the intention of countering China's influence, India seeks to consolidate itself as an actor with a vision of strategic autonomy and a stance aligned with non-alignment, promoting relations based on cooperation and the diversification of partners. However, its presence still faces structural limitations, such as the lack of effective regional integration and its limited participation in key Latin American blocs such as the Central American Integration System (SICA), the Pacific Alliance, Mercosur or the Community of Latin American and Caribbean States (CELAC).15 At the G20 summit+, held in Rio de Janeiro on 18-19 November, Modi took the opportunity to hold bilateral meetings, apart from with Brazilian President Lula, with some of India's most important partners in the Latin American region, including Argentina and Chile, where a bilateral meeting with President Gabriel Boric marked the expansion of the India-Chile Preferential Trade Agreement, described by Chile as a genuine Comprehensive Economic Partnership Agreement on a par with those India has signed with the United Arab Emirates, South Korea or Japan, overcoming with Chile New Delhi's reluctance to corroborate these free trade agreements. India is aware that its influence in Latin America is minor compared to that of China, but it also recognizes its growth potential.16 One of its main resources to strengthen its presence in the region is soft power, especially through its cultural projection. Elements such as the Bollywood film industry, gastronomy, and traditional practices such as yoga have gained popularity in Latin America, facilitating the expansion of India's influence in the region and contributing to its positioning as an emerging global partner. Partners in BRICS+: China and India's influence on Brazil Both China and India have a special relationship with the Latin American giant, Brazil, as the three countries share several international forums, most notably BRICS+, of which Argentina - a candidate country and finally accepted as a member at the BRICS summit in Johannesburg in August 2023 - dropped out in early 2024, after Javier Milei's victory in the presidential elections. Brazil has been a key country in the expansion strategy of China, which has become the main trading partner and one of its main investors, and now of India in Latin America, especially due to the economic size, natural resources and regional leadership capacity of the Brazilian giant.17 All in all, China has a more dominant presence in the Brazilian economy, while India is gaining space in the technology, pharmaceutical and energy trade sectors. If the trend continues, India could strengthen its influence, but it is unlikely to overtake China in the short to medium term. Starting precisely with China, diplomatic relations with Brazil have evolved significantly in recent decades, consolidating into a strategic link in the commercial, investment and technological spheres, except during Jair Bolsonaro's term in office between 2019 and 2023, when even China expressed concern over the hostile statements of the then Brazilian president.18 During the last two years the relationship has been on the right track and even in 2024 the fiftieth anniversary of the establishment of official relations was celebrated. In March 2023, Lula visited China with the aim of strengthening trade and political ties between the two nations, which had deteriorated during Bolsonaro's term in office. During the visit, an agreement was announced to trade in yuan instead of dollars, reducing dependence on the US financial system and strengthening Brazil's financial autonomy in the international arena.19 Apart from politics, and although Brazil has never joined the Belt and Road Initiative, bilateral Sino-Brazilian trade has grown steadily since the mid-2000s, dominated by the export of raw materials, especially oil, and attracting important Chinese state-owned companies such as China National Offshore Oil Corporation, China Petrochemical Corporation (Sinopec in its acronym) and China National Petroleum Corporation. Subsequently, Chinese investment diversified into strategic sectors such as power generation and distribution, with the presence of conglomerates such as State Grid and China Three Gorges, manufacturing, with the arrival of Chinese companies from various sectors, These include BYD, TCL, Gree, Midea and Xuzhou Construction Machinery Group, the mining sector, and the agricultural sector, where Chinese firms such as COFCO and Long-Ping High-Tech have expanded their operations, from product marketing to the manufacture of chemical inputs for agribusiness. In infrastructure, Chinese participation has been significant with projects driven by China Communications Construction Company and China Merchants Port, which in 2018 acquired the Paranaguá Container Terminal. The future seems to point towards increased Chinese investment in new communications infrastructure, energy transition and technology. In 2021, despite Bolsonaro's criticism, Brazilian regulators reversed their decision to ban Huawei from developing the country's 5G networks, which came weeks after China provided Brazil with millions of doses of COVID-19 vaccine20 , while two years later, the two countries announced their participation in joint technological projects such as the China-Brazil Earth Resources Satellite (CBERS) for monitoring the Amazon.21 India has also had a strong influence on Brazil, at least culturally, since Gandhi's time, as his teachings on non-violence gave rise to social movements and partly shaped the two countries' non-aligned foreign policy. Economically, Brazil is one of India's most important partners in Latin America, being the largest importer (over 41 %) and exporter (over 29 %) to India, with significant investments in sectors such as information technology, energy, mining, and automobiles. Already in 2022, India's exports to Brazil exceeded those of Germany, Australia, South Korea, or Indonesia. Brazil is now among the top ten export destinations from India, spurred by a 295% increase in refined oil sales. India's imports from Brazil increased, driven by purchases of soybean oil. Relations between Brazil and India have never been particularly intense, but under Lula's third presidency this has also changed. In the political sphere, they share strategic objectives, such as the reform of the UN Security Council, where they aspire to obtain a permanent seat, as well as their collaboration in global initiatives, such as the IBSA Dialogue Forum, the aforementioned BRICS+ and the G20+ of emerging economies. In 2020, the 'Brazil-India Defence Dialogue' was established for the first time and agreements were signed to expand technological collaboration in the military field. Brazilian companies such as Taurus have entered into partnerships with Indian companies, such as Jindal, for the joint production of armaments. In addition, Brazil is exploring the export of military technology, including cargo and training aircraft, armored vehicles and submarines, to which China, a traditional supplier of aircraft and equipment to several countries on the continent, including Brazil, responded in January 2025 by offering the Brazilian government the acquisition of the fourth-generation Chengdu-10 fighter.22 Finally, both states wish to diversify their external relations. India, concerned about its geopolitical rivalry with China, seeks a pragmatic balance between close relations with the US and other regional actors, such as in the Quadrilateral Dialogue (QUAD), while maintaining its long-standing ties with Russia. Historically, Brazil has sought to mitigate US influence in South America, something that continues under President Lula's government. However, like other Latin American countries, it is also aware of its economic vulnerability stemming from its high dependence on commodity exports to China and its current dearth of foreign investment. Another forum shared by Brazil, China and India is the G20+. The rotating presidency in 2024 was held by Lula da Silva, who focused the organization’s objectives on three priorities, highlighted in the final declaration: social inclusion and the fight against hunger and poverty; sustainable development, with energy transition and the fight against climate change and, thirdly, the reform of global governance institutions, both from China and India not only ratified the declaration, but even Narendra Modi devoted special attention to Brazil's priorities, echoing New Delhi's common interests in renewable energy, the elimination of poverty and hunger, and focusing on nutrition and food security.23 Xi Jinping, also present at the summit and later on an official visit to Brasilia, expressed his support for President Lula's proposal to create the Global Alliance against Hunger and Poverty, underlining China's commitment to inclusive and equitable development, while signing 37 bilateral agreements between Brazil and China in various fields, such as trade, finance, infrastructure and environmental protection.24 Conclusion: Still unequal competition China and India have adopted different strategies in their relations with Latin America, strategies that have been marked by time in terms of their interest in being present in the continent. While China has established itself as a dominant player in recent times and in terms of investment and project financing in the main Latin American countries, India has awakened in the last decade after a historical lack of interest in this area and is beginning to focus an increasing presence on matters such as technological cooperation and trade in strategic sectors, especially the supply of crude oil. In fact, both China and India have realized that the South American region is a key partner for the supply of raw materials to economies in continuous expansion and, in terms of international politics, the consolidation of new alliances in the so-called global south. India is a potential competitor in several economic niches, and in some of them it is even a major player, such as in information technology, the pharmaceutical sector, where Indian companies have maintained a leading position in exporting products to Latin America, and the automotive industry, where sales are fairly balanced. However, they are the exception that proves the rule, since in general terms, China maintains a substantial advantage in trade and investment figures in Latin America, operating on a completely different scale to India and the result of its interest for much longer. Another difference between the two Asian giants in terms of their influence in Latin America is their involvement in treaties, agreements, and deeper bilateral relations with Latin American countries. Indeed, one of the main challenges for India lies in the lack of a stable institutional framework through which to strengthen its relationship with Latin American countries, unlike China, which has long established trade agreements and strategic initiatives with various countries and regional blocs, starting with the Belt and Road Initiative itself. India has not yet developed comprehensive free trade agreements, cooperation mechanisms similar to China's, or bilateral agreements with supranational groupings such as SICA, CELAC, Mercosur or the Pacific Alliance, which constrains the growth of its trade. On the other hand, India has an advantage over China, such as the prestige of its traditional non-alignment and its historical representativeness of developing countries. In a region like Latin America whose countries recurrent structural obstacles, such as inflation, social and political instability and chronic infrastructure deficits, the geopolitical context and the ideological leanings of the different governments make China's presence, its network of trade agreements and its diversified investment strategy stable... until now, as this may change in the future. Diversifying risks and investments with options such as India represents a positive factor for Latin American countries, as well as a significant challenge for India. The relationship between India, China and Latin America is beneficial for Latin American countries, which are expanding their possibilities for bilateral cooperation on issues such as trade, climate change and security, while increasing competitiveness between the two Asian giants in a scenario that has traditionally been geographically and culturally distant, but which is currently of unquestionable interest to them. So far, China's predominance in the region seems to remain unchanged and it has even overtaken the United States as the main trading partner and source of investment in most South American countries. Competing in this division could take India several years, although the Chinese example itself shows that the arrival of agreements, treaties, cooperation, and investment from India could exponentially increase its influence in the continent in a few years' time. In recent times, Latin America has diversified its economic and diplomatic relations, reducing its dependence on a single strategic partner, be it China or the United States, another major player in this game of competition in the region. Although the decline in the role of the United States is notorious, precisely because of the irruption of the Chinese presence,25 especially in the economy, many countries have continued to move towards greater autonomy and diversification of their international ties, a trend that seems to be consolidating, regardless of the changes in US policy with the beginning of Trump's second term in office in the United States and his policy towards Latin America. 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Available at: Mercosur-India talks expected to expand preferential trade agreement - MercoPress https://en.mercopress.com/2016/08/15/mercosur-india-talks-expected-to-expand-preferential-trade-agreement (accessed 13/3/2025).12 SESHASAYEE, Hari. "Latin America's tryst with the other Asian giant, India", Wilson Center. May 2022. Available in: Microsoft Word - LAP PUB Template.docx (accessed 13/3/2025).13 JAISHANKAR, Subrahmanyam. The Indian way. Strategies for an uncertain world. Harper Collins India, 2020, pp. 107-108.14 "Jaishankar bats for deeper India-Latin America engagement', The Hindu. 3 August 2023. Available at: Jaishankar bats for deeper India-Latin America engagement - The Hindu https://www.thehindu.com/news/national/jaishankar-bats-for-deeper-india-latin-america-engagement/article67153329.ece (accessed 13/3/2025).15 SESHASAYEE, Hari. "Redrawing India-Latin America Relations in the 21st Century," Observer Research Foundation, Issue Brief no. 634. April 2023. Available at: Redrawing India-Latin America Relations in the 21st Century https://www.orfonline.org/research/redrawing-india-latin-america-relations-in-the-21st-century (accessed 13/3/2025).16 SESHASAYEE, Hari. "The G20 turns New Delhi's eyes on Latin America", Observer Research Foundation. 10 December 2024. Available at: The G20 turns New Delhi's eyes on Latin America https://www.orfonline.org/expert-speak/the-g20-turns-new-delhi-s-eyes-on-latin-america (accessed 13/3/2025).17 BLASCO, Emili J. "Brasil: la persistente ambición de un país que se imagina a sí mismo como continente", Middle Powers: Transitando hacia un orden multipolar. IEEE Strategy Notebook, 225. June 2024. Available at: Ch. 5. Strategy Notebook 225.pdf (accessed 13/3/2025).18 SPRING, Jake. "Bolsonaro's anti-China rants have Beijing nervous about Brazil", Reuters. 26 October 2018. 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"50 years of Brazil-China relations: Solid foundations for a sustainable future", Red China & Latin America. 1 September 2024. Available at: 50 años de relaciones Brasil-China: Bases sólidas para un futuro sostenible / 50 anos de relações Brasil-China: Bases sólidas para um futuro sustentável - Red China y América Latina https://chinayamericalatina.com/50-anios-de-relaciones-brasil-china-bases-solidas-para-un-futuro-sostenible/ (accessed 13/3/2025).22 "China offers Brazil the Chengdu J-10 to fill fighter gap", Galaxia Militar. 9 January 2025. Available in: China offers Brazil Chengdu J-10 to fill fighter gap. - Galaxia Militar, https://galaxiamilitar.es/china-ofrece-a-brasil-el-chengdu-j-10-para-cubrir-la-brecha-de-aviones-de-combate/ (accessed 13/3/2025).23 "Prime Minister's Remarks at the G20 Session on "Social Inclusion and the Fight Against Hunger and Poverty", Prime Minister's Office. 18 November 2024. Available at: Press Release: Press Information Bureau, https://pib.gov.in/PressReleasePage.aspx?PRID=2074413 (accessed 13/3/2025).24 VILELA, Pedro Rafael. "Brazil and China sign 37 bilateral agreements", Agencia Brasil. November 21, 2024. Available at: Brasil y China firman 37 acuerdos bilaterales | Agência Brasil, https://agenciabrasil.ebc.com.br/es/politica/noticia/2024-11/brasil-y-china-firman-37-acuerdos-bilaterales (accessed 13/3/2025).25 RODRÍGUEZ GONZÁLEZ, María. "Iberoamérica ¿prefiere a mamá China o a papá Estados Unidos?", bie3: Boletín IEEE (Spanish Institute for Strategic Studies), 34. April-June, 2024, pp. 542-559. Available at: https://dialnet.unirioja.es/servlet/ejemplar?codigo=672227&info=open_link_ejemplar (accessed 13/3/2025).

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском Latin America has been a long-standing policy focus for the United States, aimed at keeping external influences out and maintaining stability in the region. This commitment began with the Monroe Doctrine and Roosevelt Corollary and continued through the Cold War. Under the current administration, there has been a renewed emphasis on Latin America due to rising Chinese influence, drug cartel activity, and immigration issues. The most recent National Security Strategy (NSS) states that no region impacts the United States more than the Western Hemisphere and emphasizes the need to “protect against external interference or coercion, including from the People’s Republic of China (PRC).” However, the United States has not had a coherent strategy or policy toward Latin America in decades, leading to outcomes contrary to its stated goals. The PRC has been rapidly expanding its influence in the region. Since 2010, China has nearly tripled its trade with Latin America, with several nations signing on to the Belt and Road Initiative (BRI). Additionally, Transnational Criminal Organizations (TCOs) continue to affect the United States through drug, weapon, and human trafficking, while also forcing migrants north due to unsafe living conditions in their home countries. Given this situation, the United States must develop a coherent two-pronged strategy toward Latin America. This strategy should involve expanding economic investments to counteract Chinese influence while also strengthening regional security to address the threats posed by TCOs. Recognizing that the PRC and TCOs are different from the Soviets and Marxist guerrillas, US policy during the Cold War provides valuable lessons on what this two-pronged approach could entail. US Cold War Policy in Latin America In the early days of the Cold War, the United States was concerned about the spread of communism in Latin America but initially failed to take meaningful action. It relied instead on outdated policies from the 1920s. This approach continued until the late 1950s, when significant changes occurred in the hemisphere. By then, ten of thirteen dictators had been replaced, economic challenges had intensified, and the prices of Latin American exports had plummeted. This social and political unrest carried over into the 1960s, as the region became “aflame” with Marxist revolutions. The CIA reported that twelve out of twenty-three nations in the southern hemisphere were at risk of falling to communism. This urgency prompted the United States to act, determined to prevent the region from succumbing to Soviet influence and instability. The Kennedy administration identified economic struggles and monetary insecurity as the principal vulnerabilities that could allow communism to take root. To address these issues, the administration launched the Alliance for Progress, a ten-year initiative where the United States would provide $20 billion in loans, grants, and investments, while Latin American governments aimed to generate $80 billion in funds and implement land reforms, tax systems, and other socio-political changes. In tandem with economic initiatives, the United States employed covert actions, counterinsurgency (COIN) tactics, and military support to suppress Marxist revolutions. For instance, in Guatemala, US-backed military forces fought against Marxist revolutionaries with American military assistance. Similar operations took place in El Salvador, Chile, Paraguay, and Brazil. Although not executed flawlessly, this two-pronged strategy ultimately succeeded in keeping Soviet and communist influences largely at bay in the region. Economic assistance and support helped stabilize democracy in Venezuela, while land redistribution and reforms from the Alliance for Progress undermined financial support for Marxist guerrilla groups in Peru, Bolivia, and Colombia. Despite being conducted with a certain level of negligence, US-backed COIN operations across the region weakened guerrilla movements, leading to factional splits and self-defeating behaviors. Notably, US-supported operations included the capture of Che Guevara by a US-trained Bolivian military unit in 1967. Applying a Cold War-like Policy Today Economic challenges are once again prevalent in Latin America, and China is seizing the opportunity. Through its Belt and Road Initiative (BRI), China has expanded its influence and bolstered regional ties. Twenty Latin American countries have signed onto the BRI, while Chile, Costa Rica, and Peru have established free trade agreements with the PRC. In 2010, trade between China and South America amounted to $180 billion, which surged to $450 billion by 2021. The United States needs to consider a strategy similar to the Alliance for Progress to effectively compete with the PRC and maintain its influence in the region, as it is currently falling short in this area. In 2023, China invested $9 billion in Latin America through its Outward Foreign Direct Investment (OFDI), while the United States contributed only $2 billion for the same year. As the new administration shapes its foreign policy, it is essential to allocate more economic investment to Latin America. This should involve a deliberate economic policy and investment plan that focuses on trade, port infrastructure, and technological development—all areas where the PRC is currently providing support. The bipartisan Americas Act of 2024 is a good starting point, but it is insufficient to counteract the PRC’s advances. While some might argue that boosting economic investment is too expensive, such efforts would enable the United States to compete with China while stabilizing the region and reducing northward immigration. In tandem with economic investment, the United States must advocate for stronger regional security to combat TCOs, thus fostering stability and improving living conditions. Specifically, the United States should collaborate with Latin American countries to enhance security institutions by expanding advisory and assistance operations with regional militaries, similar to COIN operations during the Cold War. In recent years, the United States military has maintained a significant presence in countries like Colombia, Panama, and Honduras to conduct Foreign Internal Defense (FID) operations, aimed at preparing partner forces to effectively combat TCOs. FID and Security Force Assistance (SFA) operations should include US military support for other nations in the region, such as El Salvador, Bolivia, and Mexico. Historically, countries like Mexico have been hesitant or resistant to accepting US military support; however, this trend has recently shifted. In a positive development, the Mexican Senate has approved a small contingent of US Special Operations Forces (SOF) to assist Mexican SOF personnel. In addition to expanding FID operations, the United States might explore granting broader authorities to allow US military forces to assist regional partners in targeting and operational planning against TCOs. While some may oppose this option, expanded authorities should not come as a surprise, given that the new administration has designated several TCOs as terrorist organizations. This designation opens the door for discussions on expanded authorities. Conclusion During the Cold War, Latin America was a primary focus of US policy. The United States worked diligently to maintain regional hegemony and prevent the spread of communist ideology in the Western Hemisphere. Today, Latin America and the southern border have again become focal points for the current US administration. With the rising influence of China in the region and the ongoing impact of TCOs on American life, the United States must develop deliberate policies and strategies to maintain its hegemonic influence while promoting stability. This strategy should consist of a two-pronged approach that emphasizes both economic investment and regional security. Such an approach could disrupt Chinese influence while fostering a safer and more stable region, ultimately reducing migration northward—a key objective for the current administration. Article, originally written by and published in Small Wars Journal under the title "Same But Different: Cold War Strategy in 21st Century Latin America." Consult here: https://smallwarsjournal.com/2025/03/06/same-but-different-cold-war-strategy-in-21st-century-latin-america/. This translation is shared under the same Creative Commons Attribution-Noncommercial-Share Alike 4.0 license.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском Donald Trump seems to be turning tariffs, which can serve as a legitimate tool to achieve the goals of fair trade and the protection of key national security interests, into an illegitimate tool of coercive statecraft. It is likely to undermine the global economic order and US soft-power influence across the world Since re-entering the Oval Office Donald Trump has already threatened dozens of nations with economic tariffs in relation to a vast array of issues, many of which are non-economic in nature. What, if any, is the legal basis for these tariffs in domestic and international law, and how are they different from or similar to the type of economic measures China applies to influence other sovereign nations’ choices in ways that benefit Beijing? In this article we address these questions. Trumps weaponisation of trade tariffs Trump 2.0 seems set on following China’s leadership in the practice of using trade relations for economic coercion against other states, in breach of international and bilateral trade agreements. This practice decouples tariffs from their legitimate World Trade Organization (WTO) purpose of offering protection against unfair trade practices. WTO rules allow protective tariffs in cases of anti-dumping—for instance where foreign firms sell exports below their cost of production—or as countervailing measures against subsidised imports that would otherwise unfairly undercut and thus harm domestic producers. Such tariffs are a lawful tool for economic defence. Furthermore, in a geo-economic world there may be other limited situations where a reasonable argument can be made for using tariffs in a national security context not covered by WTO rules, or against economies that do not play by WTO rules. Moving beyond this delimited use of tariffs inevitably results in the tool becoming an economic cudgel for achieving non-economic political objectives. Where these are based on highly questionable claims regarding the relationship to US national security, and without basis in WTO or bilateral free trade agreement rules, the likelihood that tariffs are naked coercion rather than a legitimate defensive measure grows. Making a wide array of economic and non-economic demands of countries—including Canada, Colombia, Mexico, Denmark, Panama, Taiwan, and the EU—President Trump clearly views tariffs as the medicine for every international ailment, real or imagined, impacting the United States. This is a radical break from the US-led post-war order of rules-based trade, and sends a message that the US is no longer a trusted partner. This shift was most vividly highlighted on 1 February 2025, when Trump’s administration threatened 25 percent tariffs on Canada and Mexico, and imposed a 10 percent tariff on China, citing a national emergency due to illegal migration and drugs, and claiming the target states had failed to assist the US in countering this emergency. While the Canada and Mexico tariffs were suspended after both countries made concessions to Trump, their situation is most indicative of Trump’s radical approach to international relations. Both countries renegotiated the North American free trade agreement directly with Trump during his first term—an agreement Trump lavished with praise, while Canada is also one of America’s closest military allies, and has supported many US military operations since WWII. If Canada can be coerced, it is reasonable to believe any country can be coerced by Trump, including Australia. From a foreign policy perspective, Trump’s radical tariff coercion is likely to be one of the greatest acts of diplomatic self-harm, particularly as friends are forced to start looking at ways to mitigate American dependence. Who pays the price of tariffs?    If the foreign policy results of tariffs are to undermine US soft power, it is also true that tariffs will undermine the US economy. For example, Trump incorrectly believes that exporters will absorb the additional cost of tariffs—for instance, taxes on imports—by dropping their prices. Factors such as price elasticity (are goods necessary or discretionary), pricing power (i.e. brand power), and the size of profit margins influence who pays additional tariff costs. The latter is important when considering globally competitive traded goods. In competitive industries where profit margins are low, at or near the minimum rate of profit at which businesses will invest and operate, then, by definition, all additional costs must be passed on to the consumer to protect the business’s margin. Beyond that, protecting margins is the first choice of all businesses. Hence only where goods are highly discretionary and existing profit margins are high might one expect the exporter to incur the costs of tariffs. All things being equal, the American consumer will pay if Trump levies general tariff taxes on a vast array of goods coming from Mexico, Canada, and China, just as studies show that consumers paid for Trump’s 2018 tariffs. Job losses can also arise as a consequence of tariffs impacting supply chains by increasing the costs of inputs. Economists argue that, while the first Trump administration’s 25 percent steel import tariff created around 1,000 new jobs in steel production, the higher cost of steel hit downstream steel users, resulting in a loss of 75,000 manufacturing jobs. A tariff policy that is targeted and in response to breaches of WTO trade rules has their rightful place in the repertoire of a state’s national economic policies. But there are likely to be few long-term benefits to attacking allies and longstanding rule-abiding trade partners with universal tariffs per Trump’s Make America Great Again agenda. On the contrary Trump’s policies will lead to a Make America Expensive Again outcome, as ABC’s Matt Bevan put it. A Corrosion of US soft power? The weaponisation of everything has in recent times been attributed to China’s unrestricted warfare paradigm. Trump 2.0 seems to follow Beijing’s playbook without further consideration for alliances and partnerships—pivotal to US foreign policy. Working with allies and partners has been a key element of how the Biden administration countered the challenges posed by Russia, China, and Iran in the wider context of great power competition. Donald Trump’s threats of a trade war against Denmark, a NATO ally, over the status of Greenland; threats against Taiwan’s steel, pharmaceutical, and semiconductor industries; tariff threats against more NATO allies in the European Union; and tariff threats against the BRICS bloc resemble the unrestricted weaponising of trade by Beijing and mark a departure from Trump 1.0’s more targeted tariffs. The US is facing the clear and present danger of losing its soft-power acumen, and losing trust from its partners, with tragic consequences for the global rules-based order. In that respect, Trump might be playing directly into the Moscow–Beijing ambition to undermine the US and its allies across the military, economic, and diplomatic domains. The ambiguity of Trump’s “negotiation” strategy, which contains both national security and economic objections as raison d’être, adds to the challenge of maintaining trust and confidence among partners and allies, which would be both tragic and fatal for the US and its alliances.This article was published under a Creative Commons Licence. For proper attribution, please refer to the original source

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском It’s official. On February 1, US President Donald Trump will introduce a sweeping set of new 25% tariffs on imports from Canada and Mexico. China will also face new tariffs of 10%. During the presidential campaign, Trump threatened tariffs against all three countries, claiming they weren’t doing enough to prevent an influx of “drugs, in particular fentanyl” into the US, while also accusing Canada and Mexico of not doing enough to stop “illegal aliens”. There will be some nuance. On Friday, Trump said tariffs on oil and gas would come into effect later, on February 18, and that Canadian oil would likely face a lower tariff of 10%. This may only be the first move against China. Trump has previously threatened the country with 60% tariffs, asserting this will bring jobs back to America. But the US’ move against its neighbours will have an almost immediate impact on the three countries involved and the landscape of North American trade. It marks the beginning of what could be a radical reshaping of international trade and political governance around the world. What Trump wants from Canada and Mexico While border security and drug trade concerns are the official rationale for this move, Trump’s tariffs have broader motivations. The first one is protectionist. In all his presidential campaigning, Trump portrayed himself as a champion of US workers. Back in October, he said tariff was “the most beautiful word in the dictionary”. This reflects the ongoing scepticism toward international trade that Trump – and politicians more generally on both ends of the political spectrum in the US – have held for some time. It’s a significant shift in the close trade links between these neighbours. The US, Mexico and Canada are parties to the successor of the North American Free Trade Agreement (NAFTA): the United States-Mexico-Canada Agreement (USMCA). Trump has not hidden his willingness to use tariffs as a weapon to pressure other countries to achieve unrelated geopolitical goals. This is the epitome of what a research project team I co-lead calls “Weaponised Trade”. This was on full display in late January. When the president of Colombia prohibited US military airplanes carrying Colombian nationals deported from the US to land, Trump successfully used the threat of tariffs to force Colombia to reverse course. The economic stakes The volume of trade between the US, Canada, and Mexico is enormous, encompassing a wide range of goods and services. Some of the biggest sectors are automotive manufacturing, energy, agriculture, and consumer goods. In 2022, the value of all goods and services traded between the US and Canada came to about US$909 billion (A$1.46 trillion). Between the US and Mexico that same year, it came to more than US$855 billion (A$1.37 trillion). One of the hardest hit industries will be the automotive industry, which depends on cross-border trade. A car assembled in Canada, Mexico or the US relies heavily on a supply of parts from throughout North America. Tariffs will raise costs throughout this supply chain, which could lead to higher prices for consumers and make US-based manufacturers less competitive. There could also be ripple effects for agriculture. The US exports billions of dollars in corn, soybeans, and meat to Canada and Mexico, while importing fresh produce such as avocados and tomatoes from Mexico. Tariffs may provoke retaliatory measures, putting farmers and food suppliers in all three countries at risk. Trump’s decision to delay and reduce tariffs on oil was somewhat predictable. US imports of Canadian oil have increased steadily over recent decades, meaning tariffs would immediately bite US consumers at the fuel pump. We’ve been here before This isn’t the first time the world has dealt with Trump’s tariff-heavy approach to trade policy. Looking back to his first term may provide some clues about what we might expect. In 2018, the US levied duties on steel and aluminium. Both Canada and Mexico are major exporters of steel to the US. Canada and Mexico imposed retaliatory tariffs. Ultimately, all countries removed tariffs on steel and aluminium in the process of finalising the United States-Mexico-Canada Agreement. Notably, though, many of Trump’s trade policies remained in place even after President Joe Biden took office. This signalled a bipartisan scepticism of unfettered trade and a shift toward on-shoring or re-shoring in US policy circles. The options for Canada and Mexico This time, Canada and Mexico’s have again responded with threats of retaliatory tariffs. But they’ve also made attempts to mollify Trump – such as Canada launching a “crackdown” on fentanyl trade. Generally speaking, responses to these tariffs could range from measured diplomacy to aggressive retaliation. Canada and Mexico may target politically sensitive industries such as agriculture or gasoline, where Trump’s base could feel the pinch. There are legal options, too. Canada and Mexico could pursue legal action through the United States-Mexico-Canada Agreement’s dispute resolution mechanisms or the World Trade Organization (WTO). Both venues provide pathways for challenging unfair trade practices. But these practices can be slow-moving, uncertain in their outcomes and are susceptible to being ignored. A more long-term option for businesses in Canada and Mexico is to diversify their trade relationships to reduce reliance on the US market. However, the facts of geography, and the large base of consumers in the US mean that’s easier said than done. The looming threat of a global trade war Trump’s latest tariffs underscore a broader trend: the widening of the so-called “Overton window” to achieve unrelated geopolitical goals. The Overton Window refers to the range of policy options politicians have because they are accepted among the general public. Arguments for bringing critical industries back to the US, protecting domestic jobs, and reducing reliance on foreign supply chains gained traction after the ascent of China as a geopolitical and geoeconomic rival. These arguments picked up steam during the COVID-19 pandemic and have increasingly been turned into actual policy. The potential for a broader trade war looms large. Trump’s short-term goal may be to leverage tariffs as a tool to secure concessions from other jurisdictions. Trump’s threats against Denmark – in his quest to obtain control over Greenland – are a prime example. The European Union (EU), a far more potent economic player, has pledged its support for Denmark. A North American trade war – foreshadowed by the Canadian and Mexican governments – might then only be harbinger of things to come: significant economic harm, the erosion of trust among trading partners, and increased volatility in global markets.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском Donald Trump has made clear his intent to supercharge his “America First” approach to foreign policy in his second term – and Mexico looks set to be at the tip of the spear. While many of Trump’s predecessors have also followed a “realist” strategy – that is, one where relative power is at the forefront of international relations, while diplomatic success is viewed through how it benefits one’s own nation – the incoming president has displayed an apparent unwillingness to consider the pain that his plans would inflict on targeted countries or the responses this will engender. Trump’s proposed policies threaten Mexico in three key ways: First, his goal of deporting millions of migrants would put tremendous pressure on Mexico’s economy and society as the country tried to absorb the influx. This would be exacerbated by his second threat, a sharp increase in tariffs, which could devastate the critical export sector of Mexico’s economy. And third, Trump has floated the idea of using U.S. military power to confront narcotraffickers within Mexico, which would directly impinge on Mexico’s sovereignty and could generate more violence on both sides of the border. But as a scholar of Latin American politics and U.S.-Latin American relations, I see several options that Mexico could use to push back on Trump by imposing high costs on U.S. interests. Indeed, Mexican President Claudia Sheinbaum has already signaled how she may counter Trump’s policies. The most obvious tools are ending cooperation on drugs and immigration and imposing tariffs of her own. She could also revoke some of the decades-old tax and labor privileges that have benefited U.S. businesses operating within Mexico. And finally, she could play the “China card” – that is, in the face of worsening U.S.-Mexico ties, Mexico could turn to Washington’s biggest economic rival at a time when Beijing is seeking to assert more influence across Latin America. From conciliation to confrontration Of course, a worsening relationship is not inevitable. During Trump’s first term, Mexico’s then-president, Andrés Manuel López Obrador, maintained a constructive relationship with the U.S. administration. In fact, Lopez Obrador was surprisingly cooperative given Trump’s at times hostile rhetoric toward Mexico. For example, he helped facilitate the Trump administration’s “Remain in Mexico” program for those seeking asylum in the U.S. and also accepted Trump’s demands to renegotiate NAFTA and give it a title reflecting U.S. leadership: the United States-Mexico-Canada Agreement, or USMCA. Sheinbaum, who took office on Oct. 1, 2024, started with a cautious approach to her relationship with Trump. She congratulated Trump on his victory and urged dialogue with the incoming U.S. president. “There will be good relations with the United States. I’m convinced of that,” she told reporters on Nov. 7, 2024. But Trump hasn’t been conciliatory. In addition to talk about dumping millions of immigrants across the border, he announced on social media on Nov. 24 that he would impose a 25% tariff on Mexican and Canadian goods – a move that would effectively abrogate the USMCA. That post seemingly ended Sheinbaum’s cautious approach. In a strongly worded response, the Mexican president cautioned that she would respond in kind. A trade war, she noted, would harm the economies of both countries; progress on immigration and drug trafficking required cooperation, not threats, she added. The impact of tariffs Sheinbaum has said she wants to avoid a trade war, but Trump’s threats have led her nonetheless to talk about how a trade war would begin. This trade war, plus other costs Sheinbaum could impose on U.S. investors, would also likely foment a coalition of opposition within the U.S. business community – a group that has been a key ally of Trump. Trump’s stated goal of putting high tariffs on goods coming from Mexico is to encourage businesses that currently exploit lower employment costs in Mexico to relocate to the northern side of the border. But that approach ignores the impact that retaliatory tariffs and investment controls would have on U.S.-based companies that rely on the Mexican market. It would have several negative effects. First, a tit-for-tat tariff war would generate inflation for U.S. and Mexican consumers. Second, it would disrupt the integration of markets across North America. As a result of the elimination of tariffs – a key component of both NAFTA and the Trump-era USMCA – markets and the production of goods across North America have become highly interconnected. The trade treaties severely reduced barriers to investment in Mexico, allowing significant American investment in sectors such as agriculture and energy – where U.S. companies were formerly prohibited. Further, manufacturers now rely on processes in which, for example, the average car crosses the border multiple times during production. Similarly, agribusiness has developed symbiotic practices, such that grains, apples and pears are predominantly grown in the United States, while tomatoes, strawberries and avocados are grown in Mexico. Given these processes, the U.S. now exports over US$300 billion of goods and services per year to Mexico, and the stock of U.S. investments in Mexico reached $144 billion in 2023. If Trump abrogates the trade deals and imposes tariffs, he might convince investors to spend their next dollars in the U.S. But if Mexico imposes tariffs, business taxes or investment restrictions, what would happen to investors’ farms and factories already in Mexico? Past experience suggests that any disruption to supply chains or U.S. export markets would awaken strong business opposition, as analysts and business groups have already recognized. Trump is not immune to pressure from U.S. businesses. During his first administration, companies successfully opposed Trump’s attempt to close the border, arguing that slowing the flow of immigrants also meant slowing trucks full of goods. Security and immigration On the issue of the border and immigration, while Trump has issued threats, Sheinbaum has stressed the importance of cooperation. Currently, the Mexican government expends significant resources to patrol its own southern border, not to mention dealing with the many potential migrants who gather in its northern cities. Mexico could demand more support from the U.S. in exchange for this work, plus the costs associated with welcoming back the estimated 4 million Mexicans who are currently in the U.S. without proper documentation. The deportation of undocumented immigrants that Trump has repeatedly promised will require other types of cooperation, such as processing border crossings, and Mexico could slow-walk this process. Mexico has already signaled that it will withhold processing of non-Mexicans. The two countries have a history of collaboration in addressing the illegal drugs trade – but here too there have also been tensions. Toward the end of Trump’s first term, for example, a Mexican general was arrested in the U.S. on drug charges. After a diplomatic uproar, he was returned to Mexico and released. In late November, Sheinbaum noted that she and Trump had discussed security cooperation “within the framework of our sovereignty.” But Trump’s campaign rheotric seemed less concerned with Mexico’s sovereignty, floating the idea of sending troops to the border or even deploying them within Mexico to counter narcotraffickers. That would clearly enrage Mexico, with consequences that would extend far beyond a willingness to cooperate on the issues of drug trafficking. A chance for China? One country that stands to benefit should U.S.-Mexican relations deteriorate is China – an issue that Mexico could exploit. China is now the first or second trading partner with nearly every country in Latin America, including Mexico. The value of U.S.-Mexico trade is over $100 billion a year, but the growth of Chinese imports into Mexico has been limited somewhat by rules-of-origin provisions in NAFTA and the USMCA. A U.S.-Mexican trade war could weaken or end any incentive to keep Chinese goods out. Further, if the doors to the United States are narrowed through tariffs and hostile rhetoric, China’s car parts and financial services would clearly become even more attractive to Mexican businesses. A U.S.-Mexican trade war, in short, would augment Beijing’s access to a market on the U.S. border. A coalition of the concerned? In sum, if Trump goes through with his threats, the result will be costs to consumers and businesses, plus a new opportunity for China. This is likely to foment a coalition of industries, investors, consumers and foreign policy experts concerned with China – many parts of which supported Trump’s campaign.

Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском Ladies and Gentlemen, Today marks a truly historic milestone. Let me begin by thanking the Chief Negotiators for their dedication and determination. They worked tirelessly, over many years, for an ambitious and balanced agreement – and they succeeded. The bond between Europe and the Mercosur countries is truly one of the strongest in the world. It is a bond anchored in trust, enriched by a shared heritage, that spans centuries of mutual learning and growth. In fact, exactly 30 years ago, in 1994, my predecessor Jacques Delors stood here in Montevideo. He met with your father, dear Luis, who was then President of Uruguay. Together they shared a bold vision. A vision of deeper integration, not only within Europe and Mercosur, but also between them. Today, in Montevideo, we are turning that vision into reality. We are strengthening this unique partnership as never before. And in doing so, we are sending a clear and powerful message to the world. First, in an increasingly confrontational world, we demonstrate that democracies can rely on each other. This agreement is not just an economic opportunity, it is a political necessity. We are like-minded partners. We both believe that openness and cooperation are the true engines of progress and prosperity. I know that strong winds are blowing in the opposite direction – towards isolation and fragmentation. But this agreement is our clear response. We stand together on the global stage, as partners. Second, we are sending a message to our people and businesses in our regions: This agreement was designed with your interests at heart. It is made to work for you. It means: more jobs – and good jobs – more choices and better prices. The European Union and Mercosur create one of the largest trade and investment partnerships the world has ever seen. We are taking barriers down and we are allowing investments in. We are forming a market of over 700 million consumers. This partnership will strengthen entire value chains; it will develop strategic industries; it will support innovation; and it will create jobs and values, on both sides of the Atlantic. Third, we are showing the world that trade can – and must – be guided by values. Trade agreements are more than economic frameworks. They are a way to build communities of shared values. The EU-Mercosur agreement reflects our steadfast commitment to the Paris Agreement and to the fight against deforestation. President Lula's efforts to protect the Amazon are welcome and necessary. But preserving the Amazon is a shared responsibility of all humanity. This agreement ensures that investments respect Mercosur's extraordinary yet fragile natural heritage. My fourth message is that, economically, this is a win-win agreement. Europe is already a leading investment and trade partner for Mercosur. So you know how we do business together. We are focused on fairness and mutual respect. EU-Mercosur will bring meaningful benefits to consumers and businesses, on both sides. It will facilitate European investments in strategic industries across all Mercosur countries: like sustainable mining, renewable energy and sustainable forest products, just to name a few. It will also make it easier to invest in sectors that directly impact the people's daily lives. For example, expanding the electricity grid to rural and remote areas and advancing digitalisation across the region. Finally, let me address my fellow Europeans: This agreement is a win for Europe. 60,000 companies are exporting to Mercosur today – 30,000 of them are small and medium-sized enterprises. They benefit from reduced tariffs, simpler customs procedures and preferential access to some critical raw materials. This will create huge business opportunities. To our farmers: We have heard you, listened to your concerns and we are acting on them. This agreement includes robust safeguards to protect your livelihoods. EU-Mercosur is the biggest agreement ever, when it comes to the protection of EU food and drinks products. The agreement protects 350 EU geographical indications. In addition, our European health and food standards remain untouchable. This is the reality – the reality of an agreement that will save EU companies EUR 4 billion worth of export duties per year while expanding our markets and opening new opportunities for growth and jobs on both sides. I want to thank President Lacalle Pou for hosting this Summit and for bringing us together in Montevideo. This is a good day for Mercosur, a good day for Europe and a landmark moment for our shared future. A whole generation dedicated their effort, vision and determination to bring this agreement to life. Now, it is our turn to honour that legacy. Let us ensure that this agreement delivers on its promises and serves the generations to come. Thank you very much.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском The world economy is underperforming as a result of tight monetary policies, weaker global trade, a slowing Chinese economy and uncertainty around the US election. An escalation of conflict in the Middle East could increase uncertainties, harming inflation reduction efforts and hurting growth. It has been over a year since the Hamas-led attack on Israel. Israel’s response in Gaza has resulted in widespread destruction and significant loss of life. The conflict has since expanded beyond Gaza, involving the Houthis in Yemen, Hezbollah in Lebanon and Iranian strikes targeting Israel. In addition to the awful humanitarian cost of the conflicts, the war and the possibility of its further expansion pose significant repercussions for the global economy. This article discusses three potential ways in which the current conflict and a wider conflict in the Middle East could affect the global economy. Increased geopolitical uncertainties First and foremost, an escalation of the Middle East conflict could lead to greater geopolitical uncertainties. Figure 1 shows the evolution of the geopolitical risk (GPR) and geopolitical acts (GPRA) indices (Caldara and Iacoviello, 2022) – these are text-based measures of heightened uncertainties due to adverse geopolitical events such as wars, terrorism and international tensions. (See this article for more discussion about these measures.) Following the Hamas-led attack on 7 October 2023, both the overall GPR index and its ‘war and terror acts’ component spiked strongly, to a level higher than that seen during the ISIS attack in Paris in November 2015. Both indices eased significantly in the months following October 2023 despite the continuation of the conflict. But they jumped again following Israel’s attack on southern Lebanon in September 2024. As of mid-October 2024, the GPR and GPRA remain, respectively, 21% and 35% higher than their historical averages.   What might be the consequences of such elevated levels of risk? Research tells us that higher geopolitical risk raises oil prices (Mignon and Saadaoui, 2024). It also reduces global investment and increases inflation (Caldara et al, 2022). Greater geopolitical risk has a significantly negative impact on business and consumer confidence in several advanced economies (de Wet, 2023). This is because consumers typically cut non-essential spending and businesses postpone investment decisions during turbulent times. This reduces firm-level investment, particularly for businesses with higher initial investment costs and greater market power (Wang et al, 2023). Higher geopolitical risks also reduce global trade and financial flows, causing greater volatility in capital flows in emerging markets (Kaya and Erden, 2023). Oil production cuts and higher energy prices The second way in which the Middle East conflict could affect the global economy is its impact on energy prices, both directly through production cuts and indirectly through greater uncertainties. In response to Israel’s actions against its neighbours, the Organization of the Petroleum Exporting Countries (OPEC) could reduce oil production to penalise countries supporting Israel. A similar action in the 1970s led to a significant jump in oil prices, which contributed to years of stagflation, with higher global inflation and recessions in major economies. Before Israel's attack on Lebanon at the end of September, oil prices had been declining due to falling demand, particularly from China. On the supply side, oil production had increased in Canada and the United States, countering the production cuts by OPEC, and Saudi Arabia was expected to increase oil production from December. But the situation quickly reversed following Israel’s attack on Lebanon. Oil prices jumped by nearly $10 per barrel within a week, before easing by around $5 per barrel. While the immediate oil price impact of Israel’s attack has mostly faded, the potential for higher oil (and other energy) prices still poses a risk to global inflation and economic activity (Liadze et al, 2022). To provide further context for the potential scale of this impact, we can show what would happen if oil and gas prices were to remain $10 higher for two years than the baseline levels projected in the Summer Global Economic Outlook from the National Institute of Economic and Social Research (NIESR), using NIESR’s Global Macroeconometric Model (NiGEM). The results demonstrate that the $10 rise in oil and gas prices increases inflation by around 0.7 percentage points in major economies in the first year (see Figure 2). The impact is higher in China, where the economy relies relatively more on oil imports for its strong manufacturing industries. The inflationary pressures persist for two years despite central banks’ efforts to curb inflation by increasing interest rates.   The effect of higher oil and gas prices on real GDP is shown in Figure 3. In the scenario described above, GDP would fall by 0.1-0.2% in major economies immediately. Partly due to higher interest rates, real GDP would continue to weaken for three years following the shock. After this, economic activity would start to return to base levels as oil and gas prices revert to their levels in the baseline forecast.   Increased shipping costs and supply chain disruptions A wider conflict in the Middle East could also affect the economy through higher shipping costs and supply chain disruptions. Houthi attacks on commercial ships in the Red Sea in late 2023 showed that such disruptions can have a huge impact on global trade through shipping, which comprises 80% of world trade volume. Following the rocket attacks by the Houthi rebels, some commercial shipping re-routed from the Red Sea to the Cape of Good Hope, leading to significant delays in travel times and increased freight costs. As a result, the Shanghai Containerized Freight Index – a measure of sea freight rates – rose by around 260% in the second quarter of 2024 with additional disruptions to supply chains. Our analysis shows that an increase of 10 percentage points in shipping cost inflation can lead to import prices rising by up to around 1% and consumer inflation increasing by around 0.5% in OECD countries. As Figure 4 shows, the impact of shipping costs on inflation shows its full effects over six quarters. This means that inflationary concerns could be with us for the next year and a half as a result of higher shipping costs that may emerge from any possible escalation of the Middle East conflict.   Wider economic implications and policy responses While rising geopolitical risk and increased oil and shipping costs can each individually exert upward pressure on inflation and may slow down economic activity in the global economy, the combined impacts are likely to be greater. Countries with stronger trade and financial ties to the Middle East and those that rely heavily on oil imports as an input for domestic production would be most affected. On the monetary policy front, central banks may have to take a more hawkish stance in response to rising inflationary pressures from the Middle East conflict. This could lead to higher interest rates, which would further dampen economic activity, particularly in an environment where there are already recessionary concerns in some major economies. Beyond its immediate economic implications, an escalation of the Middle East conflict could trigger large-scale displacement of people, which would increase economic and social pressures on neighbouring countries. Many countries may also have to increase their military spending in response to growing regional tensions. Given that public debt levels are already elevated in many countries due to successive shocks to the global economy over the past decade, any additional defence spending could come at the expense of public infrastructure investments that would otherwise boost productivity growth. Overall, the global economy is already underperforming as a result of the lagged effects of tight monetary policies, weaker global trade, a slowing Chinese economy and uncertainties surrounding the upcoming US election and possible changes to US trade policy. A potential escalation of conflict in the Middle East could exacerbate the situation by increasing uncertainties, harming efforts to bring down inflation and reducing global GDP growth. Over the medium and long term, it could further damage the global economy, with the possibility of refugee crises as well as increased defence spending, making the effects more complex and longer lasting. This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском Ushering in a multipolar order requires a streamlined and coherent political agenda – not unfocused expansion.  The 16th BRICS Summit in Kazan, Russia, concluded last week with the usual grand declaration of the group’s commitments, concerns and aspirations.  Many media headlines, particularly in Western countries, focused on how the summit and BRICS generally, symbolised Moscow’s ability to circumvent the fallout of sanctions by turning to the global south. In this way, BRICS is indirectly viewed as a threat to Western efforts to isolate Russia, weaken its power projection capabilities, and end its invasion of Ukraine.  Western governments and analysts often struggle to frame BRICS’s evolution beyond a binary, zero-sum narrative in which the group is a key geopolitical challenge to the Western-dominated international order. This interpretation places the forces of democracy and liberal political values in one camp and authoritarian governments in another, with certain developing countries caught in the middle, trying to play one side off the other for their own benefit.  There is some merit to these kinds of headlines. Russia and China are primarily major status-quo powers. Both have been permanent United Nations Security Council (UNSC) members since its establishment. Moscow was the ‘other pole’ in the international order for most of the 20th century, a position Beijing is working towards. And the foreign policy goals of both place them in confrontation with the United States and its Western allies.  BRICS may be on a path towards unnecessary substantive bloat, and away from its core business.  So, are these two countries in a position to champion the global south’s cause, and why haven’t more representative bodies like the Non-Aligned Movement played a more prominent role?  The preoccupation with Russia and China detracts from BRICS’s broader, underlying geopolitical project – the need for global south countries to reform and shape the international order’s future direction on their own terms.  These include greater representation and agency in global policy- and decision-making bodies and facilitating greater freedom to trade, invest and borrow money outside the Western-dominated financial system. They also include a more just and equitable global power balance that reflects modern realities.  In pursuing these aims, BRICS countries have made steady progress on developing a shared strategic agenda for increased cooperation across various policy domains.  The Kazan summit’s 32-page outcomes declaration covers almost everything from reforming the UNSC and Bretton Woods institutions to climate change, biodiversity and conservation. It also covers challenges from global crises, conflicts and terrorism and a suite of economic development, health, education, science and cultural exchange-related issues.  A group of democracies, autocracies and theocracies speaking with one voice on human rights and democracy is absurd.  The group’s ballooning cooperation agenda may indicate progress. But it could also signify the limits of its diverse members’ ability to agree on ‘hard’ political and security matters central to the core business of reforming the international order.  The expansion of BRICS’ substantive agenda and its membership dilutes its primary purpose and reinforces the binary, zero-sum Western narrative its members constantly try to shed.  Tangible, albeit gradual, progress on establishing intra-BRICS institutions and processes such as the Interbank Cooperation Mechanism, the cross-border payment system and its independent reinsurance capacity suggest that BRICS’ clout and credibility are growing.  These initiatives could enable members to pursue their international economic objectives without the constraints and transactional costs associated with traditional financial bodies like the World Bank and International Monetary Fund. Ideally, this would improve their relative positions of global power and influence, and help deliver a more multipolar international order.  In contrast, deepening cooperation on big cat conservation, while important, doesn’t serve that purpose. Nor does facilitating youth exchanges on sports and healthy lifestyles or championing a BRICS alliance for folk dance. Including these kinds of initiatives in BRICS’ growing agenda detracts from its core objectives.  A streamlined agenda would divert attention from the contradictions and geopolitical manoeuvring of BRICS’ members.  More worryingly, this suggests that BRICS’ diverse constellation of member states is pursuing the path of least resistance – expanding their cooperation in every direction, hoping something eventually sticks.  Instead of doubling down on hard strategic questions about a shared conception of multipolarity, and the steps necessary to reform global governance and security institutions, BRICS seems to be heading for greater expansion and formalisation. And with that come the risks, challenges and institutional dependencies that have led to the stagnation and ineffectiveness plaguing more established international organisations in recent years.  Perhaps the group’s core members recognise that they have very different ideas of what constitutes multipolarity. Russia (and China to an extent) envisage much more than global institutional reforms, focusing instead on reimagining international norms and core principles.  These differences are also reflected in BRICS’ expanding membership. It seems Russian and Chinese enthusiasm has been curbed by other founding members, who prefer a ‘partner country’ model for future growth. This contrasts with the full membership offers to Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and UAE in 2023. (Argentina’s new political administration declined, and the Saudis have remained non-committal.)    Most worrying, however, is BRICS’ preoccupation with promoting democracy, human rights and fundamental freedoms. There is no doubt that these terms are increasingly politicised and rife with double standards – among developing nations with mixed political systems and traditionally liberal, Western democracies. However, for BRICS to meaningfully champion normative values, its members must at least attempt to commit to common political governance systems in their own countries.  Having a group of partner nations composed of progressive constitutional democracies and closed repressive autocracies and theocracies attempting to speak with one voice on promoting human rights, democracy and fundamental freedoms is absurd. It reeks of empty political rhetoric at best, and Orwellian double-speak at worst.  This again dilutes BRICS’ key messages, undermines its important core business, and detracts from the significant progress being made towards a common strategic agenda.  BRICS primary goal moving forward should be to trim the fat.  A streamlined annual working agenda would divert attention away from its individual member states' contradictions and geopolitical manoeuvring. With a focus on addressing the international system’s failures, institutional reform and greater representation for global south countries in policy- and decision-making bodies could be prioritised.  This seems unlikely though, if this year’s summit is anything to go by. By following the path of least resistance, BRICS may be setting itself on a course towards increasing and unnecessary substantive bloat, and away from its core business.  Only time will tell if certain members are willing to be more assertive and correct course before they are too far down a path impossible to pivot away from.