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ABSTRACT  This paper examines de-dollarization as a geopolitical industrial policy within the BRICS framework and its implications for Cuba, Venezuela, and Argentina. De-dollarization, a process aimed at reducing reliance on the US dollar, has gained momentum among BRICS nations as a response to economic sanctions, monetary sovereignty concerns, and external financial shocks, particularly following the 2008 global financial crisis. For Cuba and Venezuela, de-dollarization is necessary due to US sanctions, pushing them toward alternative  financial  mechanisms  through  BRICS  partnerships. Cuba’s  possible  de-dollarization  follows  increased ties with Russia, China, and Iran. Regarding Venezuela, despite its partial dollarization, Caracas seeks  to  strengthen  non-dollar  transactions  through  oil  trade. In  contrast,  under  President  Javier  Milei,  Argentina  has  rejected  BRICS  and  continues  to  debate  dollarization,  reflecting  the  country’s  historical  and economic ties to the US dollar. The study highlights that de-dollarization is a State-led, multilateral process influenced by external economic conditions and geopolitical alignments. While Cuba and Venezuela actively integrate with BRICS to reduce dollar dependence, Argentina’s approach remains uncertain, shaped by ideological and financial considerations. Keywords: De-dollarization, BRICS, Cuba, Venezuela, Argentina INTRODUCTION De-dollarization is almost a synonym of BRICS. The reduction  of  US  dollar  dominance  and  the  consequential dependence on it represent critical stakes for BRICS countries. Nonetheless, there are nuances and differences amongst BRICS members on monetary policies. Since the first summits (2009–2010), BRICS  asserted  the  Global  South’s  need  to  prioritize  trade  in  domestic  currency  and  refrain  from  US  dollar  pegging. For  initial  members  like  China  and  Russia,  as  well  as  newly  associated  countries  such  as  Iran  and  Cuba,  Western  sanctions  are  the  main  driver  for  de-dollarization. Instead,  for  Brazil,  India, and the majority of most recent BRICS partners  (primarily  from  Africa  and  Southeast  Asia),  de-dollarization  means  enhancing  their  monetary sovereignty,  fostering  domestic  currencies’  value,  and  avoiding  depending  on  US  institutions:  Treasury and Federal Reserve. De-dollarization pertains to  monetary  and  public  policies. Therefore,  it  is  a  state-led process. For this reason, it might be considered an industrial policy. It is necessary to outline that this article adopts the term geopolitical industrial  policy  for  a  State-led  economic  strategy  that,  unlike  inward-oriented  monetary  or  financial  policies, is deeply intertwined with the outward-looking dimension of foreign policy. Hence,  this  work  examines  de-dollarization  as  a  geopolitical  industrial  policy  within  the  BRICS  framework  and  its  implications  for  Cuba,  Venezuela,  and  Argentina. De-dollarization,  a  process  aimed  at  reducing  reliance  on  the  US  dollar,  has  gained momentum  among  BRICS  nations  as  a  response  to economic sanctions, monetary sovereignty concerns,  and  external  financial  shocks,  particularly  following the 2008 global financial crisis. For Cuba and  Venezuela,  de-dollarization  is  necessary  due  to  US  sanctions,  pushing  them  toward  alternative  financial  mechanisms  through  BRICS  partnerships. Cuba’s  possible  de-dollarization  follows  increased  ties  with  Russia,  China,  and  Iran. Regarding  Venezuela, despite its partial dollarization, Caracas seeks to  strengthen  non-dollar  transactions  through  oil  trade. In  contrast,  under  President  Javier  Milei,  Argentina has rejected BRICS and continues to debate dollarization, reflecting the country’s historical and economic ties to the US dollar. The study highlights that de-dollarization is a State-led, multilateral process  influenced  by  external  economic  conditions  and geopolitical alignments. While Cuba and Venezuela actively integrate with BRICS to reduce dollar dependence,  Argentina’s  approach  remains  uncertain,  shaped  by  ideological  and  financial  considerations. It is undebatable that there are differences between usual industrial policies and de-dollarization. Indus-trial policies look inward, are fashioned upon domes-tic  matters,  and  contradict, court,  multilateral  efforts. De-dollarization  is  a  geopolitical  industrial  policy that looks outward, focusing on the role of a given country in the world economy. Without multilateralism, a State pursuing de-dollarization would quickly become a pariah. As a geopolitical industrial policy,  de-dollarization  owes  its  rationale  to  external  shocks. It  is  safe  to  define  de-dollarization  as  exogenously  motivated. The  2008  global  financial  crisis (GFC) represented the critical external shock for  BRICS  members  to  escalate  their  de-dollarization objectives: “[E]specially  since  the  2008  global  financial  crisis,  central banks of many countries have been trying to diversify their portfolios to shift away from the US dollar through liquidating holdings of US Treasuries and increasing other assets including the euro, yen, renminbi and gold.” (Li, 2023, p. 9).  The 21st century wrought incentives to de-dollarization that finally sparked because of the GFC. However,  the  mainstream  doubts  surrounding  de-dollarization involve its feasibility. There are no tools to objectively  measure  the  status  of  de-dollarization  or its future outcomes. Notwithstanding limitations, de-dollarization  is  increasingly  attracting  Global  South economies. Specifically looking at Latin America,  this  work  outlines  how  de-dollarization  becomes  an  obligation  for  sanctioned  countries:  Cuba  and  Venezuela. The  two  ALBA  governments  mingled  with  BRICS  for  a  long  time,1  with  Havana  joining the forum in association and Venezuela almost on the same route, stopped by the Brazilian veto in the  Kazan  summit. Cuban  and  Venezuelan  de-dollarization finds in BRICS a multilateral opportunity.  The third country examined is Argentina since the government  of  Javier  Milei  refused  to  enter  BRICS  and  continuously  flirted  with  dollarizing  the  economy. From President Menem’s pegging to the US dollar (uno a uno) to the 2001 Corralito, Argentina’s recent economic history inevitably rests on currency issues (IMF, 2003). Unlike Venezuela, and on the contrary of Cuba (which is not part of the IMF), Argentina’s economic policies intertwine with Bretton Woods  institutions. That  might  be  the  reason  why  neoliberal Argentinian economists found in dollarization  a  solution  for  Buenos  Aires  (Cachanosky  et  al., 2023).  1. Force Majeure De-Dollarization for Cuba and Venezuela  Since  1999,  when  Fidel  Castro  and  Hugo  Chávez  coincided, de-dollarization meant an industrial foreign policy to antagonize US hegemony. In Cuba, de-dollarization  is  a  more  difficult  process  than  usual  assumptions  and  certainly  more  challenging  than  in  Venezuela. 2004  marked  the  year  when  the  US  dollar  was  officially  prohibited  on  the Caribbean Island, to reverse the dual currency  system  implemented  since  the  Special  Period  (Herrera  &  Nakatani,  2004). The  extra-territoriality  of  US  sanctions,  affecting  in  their  secondary effect  Cuba’s  trade,  led  Havana  to  a  de-dollarization fashioned upon the path that Deligöz (2024) identified  for  China  and  Russia. Besides  realpolitik  and  geopolitical  strategies,  Cuba’s  association  with  BRICS,  occurred  in  October  2024,  is  the  la-test  effort  to  de-dollarize. Venezuela’s  economic  crises and COVID-19 pushed Cuba into continuous indebtedness to survive, with US dollars reallowed but  still  at  limited  provision  due  to  Washington’s  restrictions  (Luis,  2020). To  give  account  of  its  urgencies,  in  a  few  months,  Havana  moved  from  apparent dollarization to initiatives for de-dollarization, thanks to BRICS. Over the summer, Primer Minister Manuel Marrero enabled USD payments in the  tourist  sector  (Gámez  Torres,  2024)  to  tackle  the balance of payments deficit with liquidity. For  a  country  obliged  to  rapidly  change  industrial  policies,  the  BRICS  opportunity  could  not  be  mis-sed. Cuba’s  reliance  on  Russia,  China,  and  Iran  may  materialize   a   complete   de-dollarization   that   can   favor  BRICS  projects  and  escape  US  sanctions. Of  course, the evident permanence of the bloqueo, regardless  of  who  runs  the  White  House,  is  the  main  driver for Cuba’s de-dollarization. A similar but quite nuanced situation applies to Venezuela as well. From the Bolivarian era inaugurated by President Chávez, de-dollarization  entangled  foreign  policy  objectives  even before US sanctions. The Sucre digital currency was  created  by  the  governments  of  Venezuela  and  Ecuador  as  the  main  ALBA  initiative  to  de-dollarize  commercial  transactions  among  Bolivarian  nations  (Benzi et al., 2016). ALBA-promoted Sucre was analogous to BRICS’ favoring of blockchains and digital currencies, limiting the USD to a reference value for the  bloc’s  transactions  (Mayer,  2024). US  sanctions  on Venezuela’s oil production, sparked under the first Trump Administration, meant a significant remotion of USD-denominated transactions for Caracas. Considering  ALBA’s  slow  progress  and  the  infeasibility  of fully adopting the Sucre, President Maduro had to look at BRICS for solutions. Despite  not  having  diplomatic  relations  with  Washington,  Venezuela  is  still  an  IMF  member. Ladasic points  out  that  “[a]s  Venezuela  joined  the  pack  of  countries  trading  oil  outside  of  USD  and  has  instead priced it in Chinese yuan, BRICS together with Venezuela  already  have  16%  needed  for  IMF  veto  power to use in a crisis” (2017, p. 100). The rentier characterization of the Venezuelan economy and its dependency  on  oil  exports  make  de-dollarization  a necessity. As per Cuba, unilateral policies are not enough. Venezuela’s  outcry  merged  with  inflation,  the  devaluation  of  the  bolívar,  and  a  paralysis  of  the  Venezuelan  Central  Bank  (BCV)  that  put  total  dollarization on the industrial-public policies’ table (Briceño  et  al.,  2019). Although  the  country  is  still  under  a  sort  of  de  facto  dollarization,  Venezuela’s  economic  resurrection  should  occur  together  with  a  de-dollarization  strategy. Failure  to  enter  BRICS  in the Kazan summit provides a temporary brake to Venezuela’s  de-dollarization,  but  the  prolific  trade  with China, Russia, Iran, and Türkiye will, in all cases, align Venezuela with BRICS policies. 3. Argentina: De-Dollarizing a Passion Economists  were  surely  interested  in  Javier  Milei’s  dollarization  claims. Less  than  a  year  into  his  government,  dollarization  seems  impossible  to  the  libertarian  president. Milei’s  negative  to  BRICS  demonstrates  that  de-dollarization  is  currently  not  considerable  for  Casa  Rosada. Nevertheless,  it  is  relevant to outline that Argentinian academia questioned  the  role  of  the  USD  and  studied  economic  policies  involving  de-dollarization. Corso  and  Sangiácomo (2023), in affiliation with the Central Bank of  Argentina  (BCRA),  argued  that  de-dollarization  might  help  in  relieving  the  extreme  inflation  saw  under  Alberto  Fernández’s  ruling. Other  authors  implied  that  the  Kirchners’  limitations  on  USD  access would lead to a gradual de-dollarization of the economy,  but  with  constraints  particularly  from  a  USD dominated housing market across Latin America  (Luzzi,  2013). If  under  the  Kirchners,  and  with  support of South American left-leaning geopolitics, de-dollarization  could  really  offer  a  pathway  for  the Argentine economy, with Milei that is barely an option. The  Argentine  relation  with  the  USD  does not hold a clear ideological cleavage. Argentinians’ passion for the dollar, as stressed by Bercovich and Rebossio (2013), embraced diverse political figures such as Perón, Aníbal Fernández (a prominent Kirchnerist politician), and Martínez de Hoz. The peso’s continuous  instability  legitimized  the  widespread  informal adoption of the USD, with first insight fore-seeable in the currency devaluation subsequent to the Great Depression (Díaz Alejandro, 1970). There is also a nationalistic meaning behind the peso, whose  national  heroes  imprinted,  from  Belgrano  to  Evita (Moreno Barreneche, 2023), portray a sentimental attachment to the banknotes that Argentinians do not want to erase. In sum, Argentina’s de-dollarization is as difficult as dollarization. Milei’s obsession for US hegemony inserts de-dollarization in a faraway scenario. Moreover,  Donald  Trump’s  victory,  who  promised  high tariffs to countries that unpeg from the USD (Butts,  2024),  constitutes  a  natural  barrier  to  de-dollarization. Its political viability might depend on an eventual Peronist succession to Milei. Argentina’s financial closeness  to  China,  and  a  possible  resume  of  BRICS  talks,  could  indicate  de-dollarization  as  a  future  last  resort. In this sense, de-dollarization within the BRICS framework might help Argentina in solving structural issues: Chronic external debt and dependency on Bretton Woods institutions. CONCLUSIONS De-dollarization is State-led and can be considered a  geopolitical  industrial  policy. Cuba,  Venezuela,  and  Argentina  show  that  de-dollarization  depends  on  geopolitical  calculus  and  economic  considerations. The incentives may be different, ranging from US sanctions to devaluation of the national currency. However,  unlike  dollarization,  de-dollarization  cannot  be  pursued  unilaterally. The  rise  of  BRICS  motivates  Global  South  countries  to  de-dollarize  under its guarantees. For Cuba and Venezuela, the association  with  BRICS  and  the  interdependence  with other sanctioned economies like Russia, China, and Iran, make de-dollarization an opportunity. Argentina’s  relation  with  the  USD  follows  its  turbulent  economic  history. Simultaneously,  there  is  passion  for  dollars and nationalism toward the peso banknotes. In this  context,  even  Milei  showed  that  dollarization  is  in  no way easier that de-dollarization. The currency issues affecting Argentina might not be resolved by neither of the two policies, but a future BRICS collaboration could bring de-dollarization again into the political debate. NOTES1  ALBA  references  the  Alianza  Bolivariana  para  los  Pueblos  de  Nuestra  América,  a  regional  organization  founded  by  Cuba  and  Venezuela,  including Bolivia, Honduras, Nicaragua, and several Caribbean islands. 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Authors  may  enter  into  additional agreements for non-exclusive distribution of the  version  of  the  work  published  in  this  journal  (e.g.,  publication  in  an  institutional  repository,  on  a personal website, publication of a translation or as a book chapter), with the acknowledgment that it was first published in this journal. Regarding copyright, the journal does not charge any fee for the submission, processing, or publication of articles.

Abstract We examine the roles of Gold and Bitcoin as a hedge, a safe haven, and a diversifier against the coronavirus disease 2019 (COVID-19) pandemic and the Ukraine War. Using a rolling window estimation of the dynamic conditional correlation (DCC)-based regression, we present a novel approach to examine the time-varying safe haven, hedge, and diversifier properties of Gold and Bitcoin for equities portfolios. This article uses daily returns of Gold, Bitcoin, S&P500, CAC 40, and NSE 50 from January 3, 2018, to October 15, 2022. Our results show that Gold is a better safe haven than the two, while Bitcoin exhibits weak properties as safe haven. Bitcoin can, however, be used as a diversifier and hedge. This study offers policy suggestions to investors to diversify their holdings during uncertain times. Introduction Financial markets and the diversity of financial products have risen in both volume and value, creating financial risk and establishing the demand for a safe haven for investors. The global financial markets have faced several blows in recent years. From the Global Financial Crisis (GFC) to the outbreak of the pandemic and uncertainty regarding economic policy measures of governments and central banks, the financial markets including equity markets around the world were faced with severe meltdowns. This similar behavior was observed in other markets including equity and commodity markets, resulting in overall uncertainty. In this scenario, the investors normally flock toward the safe-haven assets to protect their investment. In normal situations, investors seek to diversify or hedge their assets to protect their portfolios. However, the financial markets are negatively impacted when there are global uncertainties. Diversification and hedging methods fail to safeguard investors’ portfolios during instability because almost all sectors and assets are negatively affected (Hasan et al., 2021). As a result, investors typically look for safe-haven investments to safeguard their portfolios under extreme conditions (Ceylan, 2022). Baur and Lucey (2010) provide the following definitions of hedge, diversifier, and safe haven: Hedge: An asset that, on average, has no correlation or a negative correlation with another asset or portfolio. On average, a strict hedge has a (strictly) negative correlation with another asset or portfolio.Diversifier: An asset that, on average, has a positive correlation (but not perfect correlation) with another asset or portfolio. Safe haven: This is the asset that in times of market stress or volatility becomes uncorrelated or negatively associated with other assets or a portfolio. As was previously indicated, the significant market turbulence caused by a sharp decline in consumer spending, coupled with insufficient hedging opportunities, was a common feature of all markets during these times (Yousaf et al., 2022). Nakamoto (2008) suggested a remedy by introducing Bitcoin, a “digital currency,” as an alternative to traditional fiduciary currencies (Paule-Vianez et al., 2020). Bitcoin often described as “Digital Gold” has shown greater resilience during periods of crises and has highlighted the potential safe haven and hedging property against uncertainties (Mokni, 2021). According to Dyhrberg (2016), the GFC has eased the emergence of Bitcoin thereby strengthening its popularity. Bouri et al. (2017) in their study indicate that Bitcoin has been viewed as a shelter from global uncertainties caused by conventional banking and economic systems. Recent research has found that Bitcoin is a weak safe haven, particularly in periods of market uncertainty like the coronavirus disease 2019 (COVID-19) crisis (Conlon & McGee, 2020; Nagy & Benedek, 2021; Shahzad et al., 2019; Syuhada et al., 2022). In contrast to these findings, a study by Yan et al. (2022) indicates that it can function as a strong safe haven in favorable economic times and with low-risk aversion. Ustaoglu (2022) also supports the strong safe-haven characteristic of Bitcoin against most emerging stock market indices during the COVID-19 period. Umar et al. (2023) assert that Bitcoin and Gold are not reliable safe-havens. Singh et al. (2024) in their study reveal that Bitcoin is an effective hedge for investments in Nifty-50, Sensex, GBP–INR, and JPY–INR, at the same time a good diversifier for Gold. The study suggests that investors can incorporate Bitcoin in their portfolios as a good hedge against market volatility in equities and commodities markets. During the COVID-19 epidemic, Barbu et al. (2022) investigated if Ethereum and Bitcoin could serve as a short-term safe haven or diversifier against stock indices and bonds. The outcomes are consistent with the research conducted by Snene Manzli et al. (2024). Both act as hybrid roles for stock market returns, diversifiers for sustainable stock market indices, and safe havens for bond markets. Notably, Bhuiyan et al. (2023) found that Bitcoin provides relatively better diversification opportunities than Gold during times of crisis. To reduce risks, Bitcoin has demonstrated a strong potential to operate as a buffer against global uncertainty and may be a useful hedging tool in addition to Gold and similar assets (Baur & Lucey, 2010; Bouri et al., 2017; Capie et al., 2005; Dyhrberg, 2015). According to Huang et al. (2021), its independence from monetary policies and minimal association with conventional financial assets allow it to have a safe-haven quality. Bitcoins have a substantial speed advantage over other assets since they are traded at high and constant frequencies with no days when trading is closed (Selmi et al., 2018). Additionally, it has been demonstrated that the average monthly volatility of Bitcoin is higher than that of Gold or a group of international currencies expressed in US dollars; nevertheless, the lowest monthly volatility of Bitcoin is lower than the maximum monthly volatility of Gold and other foreign currencies (Dwyer, 2015). Leverage effects are also evident in Bitcoin returns, which show lower volatilities in high return periods and higher volatilities in low return times (Bouri et al., 2017; Liu et al., 2017). According to recent research, Bitcoins can be used to hedge S&P 500 stocks, which increases the likelihood that institutional and retail investors will build secure portfolios (Okorie, 2020). Bitcoin demonstrates strong hedging capabilities and can complement Gold in minimizing specific market risks (Baur & Lucey, 2010). Its high-frequency and continuous trading further enrich the range of available hedging tools (Dyhrberg, 2016). Moreover, Bitcoin spot and futures markets exhibit similarities to traditional financial markets. In the post-COVID-19 period, Zhang et al. (2021) found that Bitcoin futures outperform Gold futures.Gold, silver, palladium, and platinum were among the most common precious metals utilized as safe-haven investments. Gold is one such asset that is used extensively (Salisu et al., 2021). Their study tested the safe-haven property of Gold against the downside risk of portfolios during the pandemic. Empirical results have also shown that Gold functions as a safe haven for only 15 trading days, meaning that holding Gold for longer than this period would result in losses to investors. This explains why investors buy Gold on days of negative returns and sell it when market prospects turn positive and volatility decreases (Baur & Lucey, 2010). In their study, Kumar et al. (2023) tried to analyse the trends in volume throughout futures contracts and investigate the connection between open interest, volume, and price for bullion and base metal futures in India. Liu et al. (2016) in their study found that there is no negative association between Gold and the US stock market during times of extremely low or high volatility. Because of this, it is not a strong safe haven for the US stock market (Hood & Malik, 2013). Post-COVID-19, studies have provided mixed evidence on the safe-haven properties of Gold (Bouri et al., 2020; Cheema et al., 2022; Ji et al., 2020). According to Kumar and Padakandla (2022), Gold continuously demonstrates safe-haven qualities for all markets, except the NSE, both in the short and long term. During the COVID-19 episode, Gold’s effectiveness as a hedge and safe-haven instrument has been impacted (Akhtaruzzaman et al., 2021). Al-Nassar (2024) conducted a study on the hedge effectiveness of Gold and found that it is a strong hedge in the long run. Bhattacharjee et al. (2023) in their paper examined the symmetrical and asymmetrical linkage between Gold price levels and the Indian stock market returns by employing linear autoregressive distributed lag and nonlinear autoregressive distributed lag models. The results exhibit that the Indian stock market returns and Gold prices are cointegrated. According to the most recent study by Kaczmarek et al. (2022), Gold has no potential as a safe haven, despite some studies on the COVID-19 pandemic showing contradictory results. The co-movements of Bitcoin and the Chinese stock market have also normalized as a result of this epidemic (Belhassine & Karamti, 2021). Widjaja and Havidz (2023) verified that Gold was a safe haven asset during the COVID-19 pandemic, confirming the Gold’s safe-haven characteristic. As previously pointed out, investors value safe-haven investments in times of risk. Investors panic at these times when asset prices fall and move from less liquid (risky) securities to more liquid (safe) ones, such as cash, Gold, and government bonds. An asset must be bought and sold rapidly, at a known price, and for a reasonably modest cost to be considered truly safe (Smales, 2019). Therefore, we need to properly re-examine the safe-haven qualities of Gold and Bitcoin due to the mixed evidences regarding their safe-haven qualities and the impact of COVID-19 and the war in Ukraine on financial markets. This work contributes to and deviates from the body of existing literature in the following ways. We propose a novel approach in this work to evaluate an asset’s time-varying safe haven, hedge, and diversifier characteristics. This research examines the safe haven, hedging, and diversifying qualities of Gold and Bitcoin against the equity indices; S&P 500, CAC 40, and NSE 50. Through the use of rolling window estimation, we extend the methodology of Ratner and Chiu (2013) by estimating the aforementioned properties of the assets. Comparing rolling window estimation to other conventional techniques, the former will provide a more accurate representation of an asset’s time-varying feature. This study explores the conventional asset Gold’s time-varying safe haven, hedging, and diversifying qualities during crises like the COVID-19 pandemic and the conflict in Ukraine. We use Bitcoin, an unconventional safe-haven asset, for comparison. Data and Methodology We use the daily returns of three major equity indices; S&P500, CAC 40, and NSE 50 from January 3, 2018, to October 15, 2022. The equity indices were selected to represent three large and diverse markets namely the United States, France, and India in terms of geography and economic development. We assess safe-haven assets using the daily returns of Gold and Bitcoin over the same time. Equity data was collected from Yahoo Finance, Bitcoin data from coinmarketcap.com, and Gold data from the World Gold Council website. Engle (2002) developed the DCC (Dynamic Conditional Correlation)-GARCH model, which is frequently used to assess contagion amid pandemic uncertainty or crises. Time-varying variations in the conditional correlation of asset pairings can be captured using the DCC-GARCH model. Through employing this model, we can analyse the dynamic behavior of volatility spillovers. Engle’s (2002) DCC-GARCH model contains two phases; 1. Univariate GARCH model estimation2. Estimation of time-varying conditional correlation. For its explanation, mathematical characteristics, and theoretical development, see here [insert the next link in “the word here” https://journals.sagepub.com/doi/10.1177/09711023251322578] Results and Discussion The outcomes of the parameters under the DCC-GARCH model for each of the asset pairs selected for the investigation are shown in Table 1.   First, we look at the dynamical conditional correlation coefficient, ρ.The rho value is negative and insignificant for NSE 50/Gold, NSE 50 /BTC, S&P500/Gold, and S&P500/BTC indicating a negative and insignificant correlation between these asset pairs, showing Gold and Bitcoin as potential hedges and safe havens. The fact that ρ is negative and significant for CAC 40/Gold suggests that Gold can be a safe haven against CAC 40 swings. The asset pair CAC/BTC, on the other hand, has possible diversifier behavior with ρ being positive but statistically insignificant. Next, we examine the behavior of the DCC-GARCH parameters; α and β. We find that αDCC is statistically insignificant for all the asset pairs, while βDCC is statistically significant for all asset pairs. βDCC quantifies the persistence feature of the correlation and the extent of the impact of volatility spillover in a particular market’s volatility dynamics. A higher βDCC value implies that a major part of the volatility dynamics can be explained by the respective market’s own past volatility. For instance, the NSE 50/Gold’s βDCC value of 0.971 shows that there is a high degree of volatility spillover between these two assets, with about 97% of market volatility being explained by the assets’ own historical values and the remainder coming from spillover. Thus, we see that the volatility spillover is highly persistent (~0.8) for all the asset pairs except NSE 50/BTC. The results above show that the nature of the dynamic correlation between the stock markets, Bitcoin and Gold is largely negative, pointing toward the possibility of Gold and Bitcoin being hedge/safe haven. However, a detailed analysis is needed to confirm the same by employing rolling window analysis, and we present the results in the forthcoming section. We present the rolling window results for S&P500 first. We present the regression results for Gold in Figure 1 and Bitcoin in Figure 2   Figure 1. Rolling Window Regression Results for S&P500 and Gold.Note: Areas shaded under factor 1 represent significant regression coefficients. In Figure 1, we examine the behavior of β0 (intercept term), β1, β2, and β3 (partial correlation coefficients). The intercept term β0 will give an idea about whether the asset is behaving as a diversifier or hedge. Here, the intercept term shows significance most of the time. However, during 2018, the intercept was negative and significant, showing that it could serve as a hedge during geopolitical tensions and volatilities in the global stock market. However, during the early stages of COVID-19, we show that the intercept is negative and showing statistical significance, suggesting that Gold could serve as a hedge during the initial shocks of the pandemic. These findings are contrary to the results in the study by Tarchella et al. (2024) where they found hold as a good diversifier. Later, we find the intercept to be positive and significant, indicating that Gold could act as a potential diversifier. But during the Russia-Ukraine War, Gold exhibited hedge ability again. Looking into the behavior of β1, which is the partial correlation coefficient for the tenth percentile of return distribution shows negative and insignificant during 2018. Later, it was again negative and significant during the initial phases of COVID-19, and then negative in the aftermath, indicating that Gold could act as a weak safe haven during the COVID-19 pandemic. Gold could serve as a strong safe haven for the SP500 against volatility in the markets brought on by the war in Ukraine, as we see the coefficient to be negative and large during this time. From β2 and β3, the partial correlation coefficients of the fifth and first percentile, respectively, show that Gold possesses weak safe haven properties during COVID-19 and strong safe haven behavior during the Ukraine crisis. Next, we examine the characteristics of Bitcoin as a hedge/diversifier/safe haven against the S&P500 returns. We present the results in Figure 2.   Figure 2. Rolling Window Regression Results for S&P500 and Bitcoin.Note: Areas shaded under factor 1 represent significant regression coefficients. Like in the previous case, we begin by analysing the behavior of the intercept coefficient, which is β0. As mentioned earlier the intercept term will give a clear picture of the asset’s hedging and diversifier property. In the period 2018–2019, the intercept term is positive but insignificant. This could be due to the large volatility in Bitcoin price movements during the period. It continues to be minimal (but positive) and insignificant during 2019–2020, indicating toward weak diversification possibility. Post-COVID-19 period, the coefficient shows the significance and positive value, displaying the diversification potential. We see that the coefficient remains positive throughout the analysis, confirming Bitcoin’s potential as a diversifier. Looking into the behavior of β1 (the partial correlation coefficient at tenth percentile), it is positive but insignificant during 2018. The coefficient is having negative sign and showing statistical significance in 2019, suggesting that Bitcoin could be a good safe haven in that year. This year was characterized by a long list of corporate scandals, uncertainties around Brexit, and tensions in global trade. We can observe that throughout the COVID-19 period, the coefficient is showing negative sign and negligible during the March 2020 market meltdown, suggesting inadequate safe-haven qualities. However, Bitcoin will regain its safe-haven property in the coming periods, as the coefficient is negative and significant in the coming months. The coefficient is negative and shows statistical significance during the Ukrainian crisis, suggesting strong safe-haven property. Only during the Ukrainian crisis could Bitcoin serve as a safe haven, according to the behavior of β2, which displays the partial correlation coefficient at the fifth percentile. Bitcoin was a weak safe haven during COVID-19 and the Ukrainian crisis, according to β3, the partial correlation coefficient for the first percentile (coefficient negative and insignificant). According to the overall findings, Gold is a stronger safe haven against the S&P 500’s swings. This result is consistent with the previous studies of Triki and Maatoug (2021), Shakil et al. (2018), Będowska-Sójka and Kliber (2021), Drake (2022), and Ghazali et al. (2020), etc. The same analysis was conducted for the CAC 40 and the NSE 50; the full analysis can be found here [insert the next link in “the word here” https://journals.sagepub.com/doi/10.1177/09711023251322578]. However, it is important to highlight the respective results: In general, we may say that Gold has weak safe-haven properties considering CAC40. We can conclude that Bitcoin’s safe-haven qualities for CAC40 are weak. We can say that Gold showed weak safe-haven characteristics during the Ukraine crisis and good safe-haven characteristics for the NSE50 during COVID-19. We may say that Bitcoin exhibits weak safe haven, but strong hedging abilities to NSE50. Concluding Remarks In this study, we suggested a new method to evaluate an asset’s time-varying hedge, diversifier, and safe-haven characteristics. We propose a rolling window estimation of the DCC-based regression of Ratner and Chiu (2013). Based on this, we estimate the conventional asset’s time-varying safe haven, hedging, and diversifying properties during crises like the COVID-19 pandemic and the conflict in Ukraine. For comparison purposes, we include Bitcoin, a nonconventional safe-haven asset. We evaluate Gold and Bitcoin’s safe haven, hedging, and diversifier properties to the S&P 500, CAC 40, and NSE 50 variations. We use a rolling window of length 60 to estimate the regression. From the results, we find that Gold can be considered as a better safe haven against the fluctuations of the S&P 500. In the case of CAC 40, Gold and Bitcoin have weak safe-haven properties. While Bitcoin demonstrated strong safe-haven characteristics during the Ukraine crisis, Gold exhibited strong safe-haven characteristics during COVID-19 for the NSE 50. Overall, the findings indicate that Gold is the better safe haven. This outcome is consistent with earlier research (Będowska-Sójka & Kliber, 2021; Drake, 2022; Ghazali et al., 2020; Shakil et al., 2018; Triki & Maatoug, 2021). When it comes to Bitcoin, its safe-haven feature is weak. Bitcoin, however, works well as a diversifier and hedge. Therefore, from a policy perspective, investing in safe-haven instruments is crucial to lower the risks associated with asset ownership. Policymakers aiming to enhance the stability of financial portfolios might encourage institutional investors and other market players to incorporate Gold into their asset allocations. Gold’s strong safe-haven qualities, proven across various market conditions, make it a reliable choice. Gold’s performance during crises like COVID-19 highlights its potential to mitigate systemic risks effectively. Further, Bitcoin could also play a complementary role as a hedge and diversifier, especially during periods of significant volatility such as the Ukraine crisis. While Bitcoin’s safe-haven characteristics are relatively weaker, its inclusion in a diversified portfolio offers notable value and hence it should not be overlooked. Further, policymakers may consider how crucial it is to monitor dynamic correlations and periodically rebalance portfolios to account for shifts in the safe haven and hedging characteristics of certain assets. Such measures could help reduce the risks of over-reliance on a single asset type and create more resilient portfolios that can better withstand global economic shocks. For future research, studies can be conducted on the estimation of the rolling window with different widths. This is important to understand how the safe-haven property changes across different holding periods. Further, more equity markets would be included to account for the differences in market capitalization and index constituents. This study can be extended by testing these properties for multi-asset portfolios as well. 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한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском Abstract The global development initiative proposed by China aims to promote global sustainable development and has received support from many Latin American countries. At present, green cooperation between China and Latin America has achieved positive results in multiple fields such as clean energy, green agriculture, and green transportation. Latin American countries can become important partners for China to promote the Global Development Initiatives. However, in terms of green cooperation, China and Latin America also face some challenges. Both sides must strengthen consensus and achieve coordinated development in various fields. Sustainable Development and the Global Development Initiative The current international situation is turbulent and constantly changing, with a global economy that remains stagnant, while challenges such as geopolitical conflicts, climate change, and the food crisis are becoming increasingly intertwined and exacerbated. In this context, all countries around the world face the important task of promoting sustainable development and maintaining healthy economic and social growth. On September 21, 2021, Chinese President Xi Jinping officially launched the Global Development Initiative at the United Nations, outlining a path toward a new stage of global development that is balanced, coordinated, and inclusive (Ministry of Foreign Affairs of China, 2021). The Global Development Initiative is aligned with the 2030 United Nations Sustainable Development Goals and places climate change and sustainable development as key areas of cooperation, emphasizing the idea of harmonious coexistence between humanity and nature. Its goal is to promote stronger, more sustainable, and healthier global development, and to build a global community for development. The 33 countries of Latin America and the Caribbean are a fundamental part of the Global South and, in general, place great importance on sustainable development, which has allowed them to achieve notable successes in the field of sustainable cooperation. In a context of great power competition and ongoing regional conflicts, the strengthening of sustainable cooperation between China and Latin American countries presents numerous opportunities, creating ample space to jointly advance in sustainable development. The concept of a sustainable economy evolved from the idea of sustainable development, with harmony between humanity and nature at its core and the goal of achieving long-term sustainability. This approach maintains that economic growth is not an unlimited or uncontrolled process but rather must be conditioned by the ecological environment’s capacities and the resource carrying capacity. The concept of a sustainable economy emerged in the late 1980s when British environmental economist David Pearce introduced it in his work “Blueprint for a Green Economy”, published in 1989. However, it was not until the United Nations Conference on Sustainable Development, held in Rio de Janeiro in 2012, that the sustainable economy began to receive greater attention and became a central concept in global development strategies. According to the United Nations Environment Programme (UNEP), a sustainable economy is driven by public and private investments that reduce carbon emissions and pollution, improve energy and resource efficiency, and prevent the loss of biodiversity and ecosystems. A sustainable economy has always promoted development goals that integrate economic, social, and environmental aspects. This respect for the environment and nature is closely linked to traditional Chinese worldviews. Since ancient times, the Chinese have developed ideas about following the laws of nature and protecting the ecological environment. In the classical text “Yi Zhou Shu Ju Pian”, it is recorded: "During the three months of spring, no axes are used in the mountains and forests, to allow plants to grow; during the three months of summer, no nets are placed in rivers and lakes." These ideas have been a fundamental part of the spiritual thought and culture of the Chinese people for over five thousand years, and through them, they have envisioned humanity and nature as an organic and indivisible whole. They represent the basic understanding of the relationship between humans and nature in ancient Chinese agricultural society, where coexistence and mutual promotion between people and the ecological environment reflected a dialectical relationship of unity. These ideas, full of deep wisdom, constitute an essential component of China’s rich cultural tradition. Consensus Base for Green Cooperation In 2021, the Global Development Initiative, aligned with the United Nations Sustainable Development Agenda, established eight key areas of cooperation: poverty reduction, food security, industrialization, connectivity, pandemic response, development financing, climate change, and the digital economy. It also proposed key principles such as “prioritizing development,” “people-centered focus,” “universal inclusion,” “innovation-driven efforts,” “harmony between humanity and nature,” and “action-oriented approaches.” Latin American countries also place great importance on sustainable development and share numerous points of consensus with China on these principles. Currently, several countries in the region, including Peru and Colombia, have joined the “Group of Friends of the Global Development Initiative.” This shared commitment to sustainable development between China and Latin America provides an important foundation for advancing sustainable cooperation. Particularly, China and Latin American countries have broad consensus in the following areas: 1. Prioritizing national development. Both China and many Latin American countries are developing nations and consider the promotion of sustainable development a crucial goal. President Xi Jinping emphasized in the report presented at the 19th National Congress of the Communist Party of China (CPC): “The fundamental fact that our country is still and will long remain in the primary stage of socialism has not changed; our international status as the largest developing country in the world has not changed.” (Xi, 2017) China’s fundamental national situation determines that its main task is to advance along the path of socialism with Chinese characteristics and to focus its efforts on socialist construction. The Global Development Initiative also highlights “prioritizing development” as one of its core pillars. Latin America, for its part, faces the challenge of progressing in development. Although it was one of the regions in the Global South to achieve national independence and begin economic development relatively early, some Latin American countries have experienced stagnation in their economic transformation and have not managed to overcome the so-called “middle-income trap.” Affected by factors such as low global economic growth, fiscal constraints, and limited policy space, Latin America’s economy has shown a weak recovery in recent years, with some countries facing serious inflation and debt problems. Therefore, promoting sustainable development has become a top priority for governments in the region. In 2016, Latin American countries promoted the creation of the Forum of the Countries of Latin America and the Caribbean on Sustainable Development, as a regional mechanism for implementing the 2030 Agenda for Sustainable Development (ECLAC, 2016). By the end of 2023, six successful conferences had been held, and the Latin America and the Caribbean Sustainable Development Report had been published annually to assess the region’s progress in meeting the Sustainable Development Goals (SDGs). 2. Addressing welfare issues as a central task Since the 18th National Congress of the CPC, the Party’s central leadership, led by Xi Jinping, has promoted a people-centered development approach, insisting that everything should be done for the people and depend on the people, always placing them in the highest position. During the centennial celebration of the CPC’s founding, General Secretary Xi emphasized: “To learn from history and forge the future, we must unite and lead the Chinese people in a tireless struggle for a better life.” In contrast, Latin America is one of the most unequal regions in the world. The unequal distribution of wealth, along with gender and racial discrimination, are persistent issues that have been worsened by the COVID-19 pandemic and the global economic slowdown. According to data from the Economic Commission for Latin America and the Caribbean (ECLAC), in 2023 the region’s poverty rate was 29.1%, and extreme poverty was 11.4%, both slightly higher than in 2022 (29% and 11.2%, respectively) (France24, 2023). As a response, many Latin American governments — such as those in Brazil, Mexico, Chile, and Cuba — have incorporated attention to welfare issues and improving their citizens’ quality of life as key pillars in their public policy agendas. 3. Embracing inclusion and shared benefits as a guiding principle Following the end of the Cold War, the world experienced a trend toward multipolarity and continued economic globalization. However, in recent years, there has been a resurgence of protectionism in various forms, accompanied by a rise in unilateralism and hegemonic policies. These “deglobalization” practices not only fail to resolve internal problems, but also disrupt global supply chains, hinder healthy economic development, and harm the interests of countries. In response, developing nations such as China and Latin American countries advocate for multipolar development and oppose unilateralism and power politics. In December 2023, China’s Central Conference on Foreign Affairs Work emphasized the importance of inclusive and mutually beneficial economic globalization. Similarly, Latin America has maintained a diversified foreign policy and has worked toward building a new, fair, and equitable international political and economic order. Amid rising tensions among major powers, most Latin American countries have chosen not to take sides, maintaining a non-aligned policy. Moreover, countries in Latin America are increasingly focused on inclusive development both within their nations and across the region, striving to address internal development imbalances. In 2010, the Andean Development Corporation (predecessor to the Development Bank of Latin America and the Caribbean) released the “Latin America Vision Plan 2040”, which highlighted the need to strengthen economic inclusion in order to achieve truly sustainable growth (CAF, 2010). In January 2023, the Community of Latin American and Caribbean States (CELAC) Summit in Argentina approved the “Buenos Aires Declaration,” which stressed the importance of promoting inclusive development in the region and fostering inclusive dialogue with other regions (CELAC, 2023). 4. Embracing innovation as a key driver Marx pointed out that “science is also part of the productive forces” and that “the development of fixed capital shows the extent to which the general knowledge of society has become a direct productive force.” In 1988, at the National Science Conference, Deng Xiaoping declared, “science and technology are the primary productive forces.” Since the 18th CPC Congress, China has firmly pursued innovation-led development. It launched the National Innovation-Driven Development Strategy, issued the Medium- to Long-Term Science and Technology Development Plan (2021–2035), and rolled out the Technological Innovation Blueprint under the 14th Five-Year Plan. Thanks to this framework, China has made significant progress in accelerating emerging technologies such as artificial intelligence, big data, quantum communication, and blockchain. Latin American countries are also intensifying their focus on technological innovation. In 2023, CELAC’s Buenos Aires Declaration underscored the importance of innovation for enhancing regional competitiveness and job quality, while encouraging scientific exchanges among nations and subregional organizations. Furthermore, the President of Brazil, Luiz Inácio Lula da Silva, committed to increasing investment in technological development. To that end, he announced at the 28th Conference of the Parties to the United Nations Framework Convention on Climate Change an investment of approximately 21 billion reais (around 4.28 billion U.S. dollars) in sustainable economy, innovative technologies, and low-carbon economy. In the 2023 Global Innovation Index, Brazil ranked 49th out of 132 countries, improving by five positions compared to the previous year. The President of Chile, Gabriel Boric, pledged to increase public funding for research and to finance the work of universities and research institutions. In 2019, the Colombian government established the “International Mission of Wise People,” a body composed of 46 national and international academic experts to promote production diversification and automation, with the goal of doubling the share of manufacturing and agriculture in the country’s Gross Domestic Product (GDP) by 2030. The current president of Colombia, Gustavo Petro, has committed to transforming the country into a “knowledge society” and to continuing this initiative. 5. Making harmony between humans and nature a central goal Developing countries — including China and Latin American nations — prioritize climate issues and actively contribute to global climate governance. Since ancient China during the Spring and Autumn and Warring States periods, philosophical schools such as Confucianism and Taoism had already proposed concepts about the “unity between Heaven and humankind.” Similarly, Indigenous cultures in Latin America also share related cultural traditions. The Quechua peoples of Peru, Ecuador, and Bolivia promote the concept of “’Buen Vivir’” (“Good Living”), which emphasizes harmony between human society and nature. The Aymara of Peru and Bolivia, the Guaraní of Brazil, Argentina, Paraguay, and Bolivia, the Shuar of Ecuador, and the Mapuche of Chile all have similar philosophical expressions. So far in the 21st century, China and Latin American countries have intensified their focus on sustainable development. In August 2005, during a visit to Anji in China’s Zhejiang Province, Xi Jinping, then Secretary of the Communist Party of China in Zhejiang, put forward the principle that “lucid waters and lush mountains are as valuable as mountains of gold and silver,” highlighting the idea that economic growth should not be achieved at the expense of the environment. China’s Global Development Initiative includes climate change and sustainable development as key cooperation areas, aiming for stronger, healthier global progress. Simultaneously, Latin American countries value sustainability highly. Ten nations in the region have officially submitted carbon-neutrality timelines and developed emissions-reduction plans. Several governments have taken significant measures to accelerate energy transition, restore ecosystems, and enhance international cooperation. Notably, Brazil, Chile, Costa Rica, and Uruguay have made substantial strides in renewable energy: in Q1 2023, more than 90 % of Brazil’s energy came from renewables — the highest level since 2011. Progress of Green Cooperation between China and Latin America 1. High-level design for sustainable cooperation between China and Latin American countries has been continuously strengthenedAs comprehensive cooperation between China and Latin America progresses, sustainable collaboration has also become integrated into the strategic high-level planning. At the third Ministerial Meeting of the China-CELAC Forum in 2021, the "Joint Action Plan for Cooperation in Key Areas between China and CELAC Member States (2022–2024)" was adopted. This plan emphasizes the continuation of cooperation in areas such as renewable energy, new energy, civil nuclear energy, energy technology equipment, electric vehicles and their components, as well as energy-related geological and mineral resources. It also outlines the expansion of cooperation in emerging industries related to clean energy resources, support for technology transfer between companies, and the respect and protection of the natural environment. Joint declarations between China and countries such as Brazil, Mexico, and Argentina on establishing and deepening comprehensive strategic partnerships mention strengthening cooperation in areas such as climate change and clean energy. During the sixth meeting of the Sino-Brazilian High-Level Commission for Coordination and Cooperation in May 2022, the Chinese Ministry of Commerce and the Brazilian Ministry of Economy agreed to sign a Memorandum of Understanding on Promoting Investment Cooperation for Sustainable Development, aimed at promoting investment in clean and low-carbon technologies in both countries. In April 2023, during Brazilian President Luiz Inácio Lula da Silva's visit to China, the two countries issued the “China-Brazil Joint Declaration on Combating Climate Change” and signed several cooperation agreements related to the sustainable economy. For example, Article 3 mentions “expanding cooperation in new fields such as environmental protection, combating climate change, the low-carbon economy, and the digital economy,” while Article 10 notes the aim to “strengthen cooperation on environmental protection, climate change, and biodiversity loss, promote sustainable development, and accelerate the transition to a low-carbon economy.” In the same month, the “China-Brazil Joint Declaration on Combating Climate Change,” the “Memorandum of Understanding on Research and Innovation Cooperation between the Ministries of Science and Technology of China and Brazil,” and the “Memorandum of Understanding on Promoting Investment and Industrial Cooperation between China and Brazil” identified key areas of future cooperation, including sustainable infrastructure, the development of sustainable industries, renewable energy, electric vehicles, sustainable technological innovation, and green financing. 2. Clean energy cooperation has deepened The development and use of clean energy are essential means for achieving green development. In recent years, clean energy cooperation between China and Latin America has shown the following main characteristics. The scope of clean energy cooperation is becoming increasingly broad. Currently, cooperation between China and Latin America in the fields of clean energy — such as hydropower, solar energy, wind power, nuclear energy, biomass energy, and lithium batteries — has reached a certain level of breadth and depth. At the same time, both sides have also initiated cooperation efforts in emerging areas such as green hydrogen and smart energy storage. China is constantly diversifying its target countries and modes of investment in clean energy in Latin America. In 2015, China began increasing its investment in the renewable energy sector in the region. Between 2005 and 2020, China’s main investment targets in renewable energy in Latin America included countries such as Brazil, Mexico, Peru, Argentina, and Bolivia. Investments in projects, mergers and acquisitions, and greenfield investments have gone hand in hand. 3. Green cooperation in the transportation sector has yielded outstanding results. Chinese companies continue to cooperate with Latin American countries in the field of public transportation infrastructure and electric vehicles, promoting the low-carbon development of the transport sector in Latin America. First, cooperation in public transportation infrastructure is advancing. In recent years, Chinese companies have actively participated in the construction of public infrastructure such as railways, roads, and bridges in Latin American countries, aiming to promote interconnectivity and green travel across the region. Bogotá Metro Line 1, in the capital of Colombia, currently under construction with Chinese investment, is to date the largest public-private partnership (PPP) project in individual transportation infrastructure in Latin America. Second, trade in electric vehicles is developing rapidly. China’s electric vehicle industry has extensive experience in large-scale production and a relatively complete industrial supply chain, making it a new growth area in China–Latin America trade. Electric buses and cars from independent Chinese brands such as BYD, JAC, and Dongfeng are favored in Latin America due to their good quality and low price. Third, cooperation in battery and tram production is also improving. China and Latin America have also begun bold attempts in green capacity cooperation within the manufacturing sector. Currently, BYD is carrying out a range of production activities in Brazil, including the assembly of bus chassis and the production of photovoltaic modules and batteries. 4. Green agricultural cooperation is on the rise. Latin America has vast and fertile land, and agricultural cooperation is an important component of China–Latin America trade. In recent years, Chinese companies have paid increasing attention to using advanced technologies to strengthen environmental protection and actively promote the green transformation of agricultural cooperation. COFCO (‘China National Cereal, Oil & Foodstuff Corporation’) and its Brazilian partners conducted risk assessments of more than 1,700 soybean suppliers in the Amazon and Cerrado ecological zones, and mapped over 1.1 million hectares of soybean fields using remote sensing satellites, which has raised farmers' awareness of sustainable development. By the end of 2021, COFCO had achieved 100% traceability for all direct soybean purchases in Matopiba, a major soybean-producing region in Brazil. At the same time, China and several Latin American countries are promoting cooperation in green agricultural research and development. The Chinese Academy of Tropical Agricultural Sciences has established cooperative relationships with nine Latin American countries, including Colombia, Panama, Ecuador, and Costa Rica. It has achieved progress in exchange and cooperation in areas such as the innovative use and protection of germplasm resources, efficient transformation and comprehensive utilization of biomass energy, green pest and disease prevention and control technologies, and efficient cultivation techniques. 5. Cooperation on green financing plays an important bridging role. The Global Development and South-South Cooperation Fund and the China-United Nations Peace and Development Fund are key financial platforms through which China supports project cooperation under the Global Development Initiative. In addition to the above-mentioned platforms, current green financial instruments between China and Latin America include the Asian Infrastructure Investment Bank, the China–Latin America Cooperation Fund, the China–Latin America Development Finance Cooperation Mechanism, and subsidies provided by China’s Ministry of Commerce and Ministry of Foreign Affairs. Currently, all three financing projects of the Asian Infrastructure Investment Bank in Brazil are related to the green economy. Challenges facing Sino–Latin American green cooperation Although green cooperation between China and Latin America has gradually achieved results and presents many development opportunities, the risks and challenges of cooperation should not be ignored. Most Latin Americans expect that foreign cooperation will promote social well-being, eliminate poverty, and reduce inequality in their countries. They place great importance on the social benefits of projects and pay close attention to the environmental impact of projects on local ecosystems. Currently, the process of extracting lithium from brine places high demands on water resources and carries the risk of air and water pollution. As a result, lithium mining has also faced opposition from Indigenous communities in some Latin American countries. In 2023, Indigenous peoples from Argentina’s Jujuy Province staged several protests against the exploitation of a lithium mine (Reventós, 2023). To reduce pollution in lithium extraction, further scientific and technological research is needed. The integration of Chinese companies into Latin America also faces many obstacles. The official languages of most Latin American countries are Spanish and Portuguese, which are deeply influenced by European and U.S. cultures. In addition to geographical distance, there is limited mutual understanding between the peoples of China and Latin America, and transportation and logistics costs are high. Most Chinese companies lack personnel fluent in Spanish or Portuguese and familiar with local laws and regulations. Currently, the U.S. government continues to view China as a strategic competitor. Latin America has also become a battleground for strategic competition between China and the United States. The U.S. has increasingly turned its attention to China’s cooperation with Latin American countries. In 2019, the U.S. House Committee on Foreign Affairs published an article stating that “China’s green investment in Latin America cannot offset local environmental damage” (Cote-Muñoz, 2019). In general, green cooperation between China and Latin America will face a more complex environment in the future. Final considerations In recent years, China has put forward the Global Development Initiative to promote international cooperation for sustainable development. Latin America, one of the regions with the most developing countries in the world, actively promotes the implementation of the Sustainable Development Agenda and has a solid green economic foundation. In this sense, the region can be an important partner for China in achieving the goals of the 2030 Agenda and building a shared future for humanity. China must continue to build consensus on development priorities with Latin American countries, plan key areas of cooperation according to their conditions and needs, promote connections between governments, businesses, universities, and media in China and Latin America, and jointly advance the green cooperation to a new level. China and Latin America have achieved multidisciplinary coverage in green cooperation. It is necessary to further improve the quality of cooperation in the future and achieve coordinated development across various sectors. For example, in the long term, the development of renewable energy will require greater energy storage capacity and wider electric grid coverage. Additionally, Chinese companies need to integrate more into local societies and generate greater social benefits while ensuring economic returns. They can strengthen cooperation with Latin American companies in order to quickly become familiar with local laws, regulations, and market conditions. Furthermore, more research — including environmental assessments and social consultations — should be conducted before launching projects. References CAF (2010). "Corporación Andina de Fomento, Visión para América Latina 2040 Hacia una sociedad más incluyente y próspera". https://scioteca.caf.com/bitstream/handle/123456789/496/latinamerica_2040_summary_esp.pdf?sequence=1&isAllowed=yCELAC (2023). "Declaración de Buenos Aires". https://www.cancilleria.gob.ar/userfiles/prensa/declaracion_ de_buenos_aires_-_version_final.pdf CEPAL (2016). "El Foro de los Países de América Latina y el Caribe sobre el Desarrollo Sostenible y el Seguimiento Regional de la Agenda 2030". https://www.cepal.org/es/temas/agenda-2030-desarrollo-sostenible/ foro-paises-america-latina-caribe-desarrollo-sostenible-seguimiento-regional-la-agenda-2030Cote-Muñoz, N. (2019). "China's Green Investments Won't Undo Its Environmental Damage to Latin America". Council on Foreign Relations. https://www.cfr.org/blog/chinas-green-investments-wont-undo-its-environmental-damage-latin-americaFrance24 (2023). "Tasa de pobreza se mantiene en 29 % en América Latina en 2023". https://www.france24.com/es/minuto-a-minuto/20231125-tasa-de-pobreza-se-mantiene-en-29-en-am%C3%A9rica-latina-en-2023-dice-cepalMinistry of Foreign Affairs of China (2021). "Global Development Initiative-Building on 2030 SDGs for Stronger, Greener and Healthier Global Development". https://www.mfa.gov.cn/eng/zy/jj/GDI_140002/wj/202406/ P020240606606193448267.pdfReventós, B. y N. Fabre (2023). "Los grupos indígenas en Argentina que se oponen a la extracción del litio". BBC. https://www.bbc.com/mundo/articles/cevzgv0elp9o Cuadernos de Nuestra América. No. 014 | Nueva Época 2025, Centro de Investigaciones de Política Internacional (CIPI). Under CC BY-NC 4.0

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. This raises the question of whether we are witnessing the birth of a new international economic order. Whether this is a true turning point or merely another heightened episode in the ongoing geopolitical rivalry remains to be seen. What we can already observe, however, is that global control over strategic assets for development places the GTO and core economies in a structurally advantageous position to lead long-term value chains. At the same time, the polycrisis opens up opportunities for marginalized regions to seize the momentum and assert their own demands. In financial capitalism, not everything is determined in the marketplace, and amid widespread and persistent instability, self-determination remains, without a doubt, one of the most powerful antidotes. References Alami, I., DiCarlo, J., Rolf, S. & Schindler, S. (2025). The New Frontline. The US-China battle for control of global networks. In Transnational Institute, State of Power 2025. 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Recuperado de: https://forbescentroamerica.com/2025/04/09/petro-aboga-por-la-colaboracion-entre-paises-ante-tension-entre-multilateralismo-y-soledad.Gartner (2024). Gartner Says Worldwide IaaS Public Cloud Services Revenue Grew 16.2% in 2023. Retrieved from: https://www.gartner.com/en/newsroom/press-releases/2024-07-22-gartner-says-worldwide-iaas-public-cloud-services-revenue-grew-16-point-2-percent-in-2023Gonzalo, M. y Borrastero, C. (2025). América Latina y la “Economía de datos”: definiciones, temas de agenda e implicancias de política, en Lastres, H. y Cassiolato, J. Economia Política de Dados e Soberania Digital: conceitos, desafios e experiências no mundo, ContraCorrente, en prensa.Gonzalo, M. y Borrastero, C. (2023). Misión 7 “Profundizar el avance de la digitalización escalando la estructura productiva y empresarial nacional”. En Argentina Productiva 2030 - Plan para el Desarrollo Productivo, Industrial y Tecnológico. Ministerio de Economía de la Nación, Argentina.Gooding, M. (2024). Gaia-X: Has Europe's grand digital infrastructure project hit the buffers?. Data Center Dynamics, May 13th 2024. Retrieved from: https://www.datacenterdynamics.com/en/analysis/gaia-x-has-europes-grand-digital-infrastructure-project-hit-the-buffers/Grynspan, R. (2023). Globalización dislocada: Prebisch, desbalances comerciales y el futuro de la economía global. Revista de la CEPAL, 141, 45-56.Gobierno de Colombia (2024). Estrategia Nacional Digital de Colombia 2023-2026. Recuperado de: https://www.mintic.gov.co/portal/715/articles-334120_recurso_1.pdf.Hung, K. (2025). Beyond Big Tech Geopolitics. Moving Towards Local and People-Centred Artificial Intelligence. In Transnational Institute, State of Power 2025. Geopolitics of Capitalism, Ch. 10.Kenji Starrs, S. (2025). Can China Challenge the US Empire?. In Transnational Institute, State of Power 2025. Geopolitics of Capitalism, Ch. 6.Lacort, J. (2021). Así es como gana dinero Amazon: cada vez más nube y un futuro de producciones audiovisuals. Xataka, 3 Febrero 2021. Recuperado de: https://www.xataka.com/empresas-y-economia/asi-como-gana-dinero-amazon-cada-vez-nube-futuro-producciones-audiovisuales-1López King. E. (2025). Litio: Argentina pudo unir a Elon Musk y a Bill Gates en una inversión clave en la que ambos coinciden. Litio.com.ar. Recuperado de: https://litio.com.ar/litio-argentina-pudo-unir-a-elon-musk-y-a-bill-gates-en-una-inversion-clave-en-la-que-ambos-coinciden/Mazzucato, M. (2013). The Entrepreneurial State: Debunking Public vs. Private Sector Myths. London: Anthem Press.Merino, G., Bilmes, J. y Barrenegoa, A. (2023). Economía en el (des)orden mundial: Ascenso de China, estancamiento del norte global y nuevo paradigma tecno-económico en disputa. Instituto Tricontinental de Investigación Social, Cuaderno 5.Milanovic, B. (2019). Capitalism, Alone. The Future of the System That Rules the World. Harvard University Press.Presidencia de Colombia (2025). Intervención del Presidente Gustavo Petro Urrego durante la plenaria IX Cumbre de Jefas y Jefes de Estado y Gobierno de la Comunidad de Estados Latinoamericanos y Caribeños (CELAC), Tegucigalpa, 9 de Abril de 2025. Recuperado de: https://www.facebook.com/watch/live/?ref=watch_permalink&v=1727297164867599Strange, S. (1988). States and Markets. An introduction to International Political Economy. Pinter Publishers, London.Torres, M. y Ahumada, J. M. (2022). Las relaciones centro-periferia en el siglo XXI. El Trimestre Económico, LXXXIX (1), 53, 151-195.Ugarteche, Ó. y De León, C. (2020). El financiamiento de China a América Latina. http://www.obela.org/analisis/el-financiamiento-de-china-a-ame¬rica-latina#:~:text=EnLatinoaméricaexisten4sucursales,en Brasil%2C Chile y PerúUNCTAD (2021). Digital Economy Report 2021. Cross-border data flows and development: For whom the data flow. Recuperado de https://unctad.org/publication/digital-economy-report-2021.Villasenin, L. (2021). Las oportunidades de América Latina en su relación con China en el siglo XXI. Interacción Sino-Iberoamericana / Sino-Iberoamerican Interaction, 1(1).Wainer, A. (2023). ¿Un puente al desarrollo? Cambios en el comercio de América Latina con Estados Unidos y China. Problemas del Desarrollo. Revista Latinoamericana de Economía, 54(213).Weber, I. & Qi, H. (2022). The state-constituted market economy: A conceptual framework for China’s state–market relations. Economics Department Working Paper Series, 319, University of Massachusetts Amherst.Wired (2025). Claudia Sheinbaum propone aumentar los impuestos a plataformas como Google, Netflix y Amazon en México. Wired.es, 17 Febrero 2025. Recuperado de: https://es.wired.com/articulos/claudia-sheinbaum-propone-aumentar-los-impuestos-a-plataformas-como-google-netflix-y-amazon-en-mexico.Zhang, Y. & Lustenberger, U. (2025). Balancing Protectionism and Innovation: The Future of the European Automotive Industry in the Age of Chinese Electric Vehicles. Singularity Academy Frontier Review, #20250219.

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. Both the desire to diversify relations beyond the China option and the possible US disinterest in the region may benefit India's interests, although it is clear that China will continue to be the dominant actor in the region. References 1 GANGOPADHYAY, Aparajita. "India-China Competitions in Latin America: Some Observations", Global & Strategis, Th. 8, No. 1. January-June, 2014. Available at: http://irgu.unigoa.ac.in/drs/bitstream/handle/unigoa/4110/Jurnal_Global_dan_Strategis_8%281%29_2014_1-13.pdf?sequence=1 (accessed 13/3/2025).2 SESHASAYEE, Hari. "India vs. China in Latin America: Competing Actors or in Separate Leagues?", The Diplomat. 19 May 2022. Available at: India vs. China in Latin America: Competing Actors or in Separate Leagues? - The Diplomat https://thediplomat.com/2022/05/india-vs-china-in-latin-america-competing-actors-or-in-separate-leagues/ (accessed 13/3/2025)3 DADUSH, Uri. 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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. Available at: Bolsonaro's anti-China rants have Beijing nervous about Brazil | Reuters https://www.reuters.com/article/world/bolsonaros-anti-china-rants-have-beijing-nervous-about-brazil-idUSKCN1MZ0DR/ (accessed 13/3/2025).19 "Brazil and China agreed to trade in each other's currencies to bypass the dollar", Infobae. 30 March 2023. Available in: Brazil and China agreed to trade in their currencies to bypass the dollar - Infobae https://www.infobae.com/america/mundo/2023/03/29/brasil-y-china-acordaron-comerciar-en-sus-monedas-para-eludir-el-dolar/ (accessed 13/3/2025).20 RIVERA, Jhonnattan. "Brazil approves 5G spectrum auction rules, no ban on Huawei", Techbro. 1 March 2021. Available at: Brazil approves 5G spectrum auction rules, no ban on Huawei - TechBros https://somostechbros.com/2021/03/01/brasil-aprueba-reglas-de-subasta-del-espectro-5g-sin-prohibicion-a-huawei/ (accessed 13/3/2025).21 CARIELLO, Tulio. "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. 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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.