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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. We intend to take up this study in these directions in the future. Data Availability StatementNot applicable.Declaration of Conflicting InterestsThe authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.FundingThe authors received no financial support for the research, authorship, and/or publication of this article.ReferencesAkhtaruzzaman M., Boubaker S., Lucey B. M., & Sensoy A. (2021). Is gold a hedge or a safe-haven asset in the COVID-19 crisis? Economic Modelling, 102, 105588. Crossref. Web of Science.Al-Nassar N. S. (2024). Can gold hedge against inflation in the UAE? A nonlinear ARDL analysis in the presence of structural breaks. PSU Research Review, 8(1), 151–166. Crossref.Barbu T. C., Boitan I. A., & Cepoi C. O. (2022). Are cryptocurrencies safe havens during the COVID-19 pandemic? A threshold regression perspective with pandemic-related benchmarks. Economics and Business Review, 8(2), 29–49. 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In Latin America, Cuba, Nicaragua, and Venezuela are not alone in their support for Russia and its invasion of Ukraine. In many cases, support has been disguised as an interest in peace or a neutral stance towards the conflict, as seen in the cases of Colombia, Mexico, and Brazil. While we find manifold diplomatic approaches toward Russia and Ukraine in Latin America, the underlying motivations can be understood in terms of support or rejection. While a majority of nations reject the invasion, considering it a threat to territorial sovereignty and self-determination, others have been reluctant to place any blame on Russia. More broadly, there has been less of an ideological bloc and more of an anti-imperialist or anti-colonial sentiment, with a few exceptions, such as Gabrie Boric from Chile who has publicly repudiated Russia’s aggression against Ukraine. His opposition is a departure from other Latin American leftist leaders like Luiz Inácio Lula da Silva and Gustavo Francisco Petro who have been more critical of Volodymyr Zelensky than Vladimir Putin. However, we can still identify three distinctive approaches to the crisis: 1) geopolitical, 2) economic, and 3) historical. The region has a keen interest in keeping its doors open to Russia. BRICS members like Brazil have managed to maintain their alleged neutrality in the pursuit of peace—even as President Lula has explicitly supported  Putin—while simultaneously protecting their economic interests. Others like Colombia and Mexico have shielded their unwillingness to condemn Putin’s invasion of Ukraine in an apparent push for peace. On the economic front, attitudes towards Russia are more tenuous given that Russia’s capability for foreign direct investment has been significantly reduced by the brunt of the war, along with the impact of the economic sanctions that followed their aggression. To be sure, Russia’s investments in the region have been winding down for some time, with a decreasing profile in areas such as energy, oil, and gas, as well as software and IT. However, the economic ties are more significant in the cases of Cuba, Nicaragua, and Venezuela—where they are joined more by their subjection to economic sanctions, and therefore the necessity to evade the consequences of economic isolation. There are specific areas key to this alliance: Russian fertilisers, along with oil and diesel, are critical to bypassing Western sanctions. Meanwhile, historical ties are more consequential than is commonly understood. Misinterpretations of Russia’s Soviet past by leftist-governed Latin American countries and longstanding social and cultural commonalities partially explain the continued support from diverse leaders such as Lula and Jair Bolsonaro in Brazil. These ties, rooted in shared anti-colonial sentiments and cultivated over decades, and regardless of ideological shifts, illustrate Russia’s multifaceted regional influence. This context underscores the fact that Russia’s regional impact transcends ideological lines, with both left and right-wing governments either explicitly supporting Russia or criticising Ukraine’s NATO aspirations to justify Russia’s aggression. The return of Donald Trump to the White House has prominent leaders of the Latin American left aligning with the new administration, resulting in significant consequences for the region. The new US administration’s criticism of Kyiv resonates with positions held by Brazil, Mexico, Colombia, Cuba, and Nicaragua. Despite ideological differences, their alignment emerges from a mix of political affinities, geopolitical strategies, and historical connections. Putin’s explicit defiance of Donald Trump’s negotiation efforts raises questions about Latin America’s influence over the conflict, largely due to its initial reluctance to adopt a decisive stance against Putin. The lonely voice condemning Putin’s war of attrition continues to be Chilean President Gabriel Boric, in stark contrast to Lula DaSilva and Gustavo Petro, who remain in Putin’s corner, making it unlikely they can be viewed as honest brokers in a peace initiative. Trump’s policies have prompted Brazil and Colombia to voice limited concerns about US plans for Ukraine, although still refraining from outright condemnation of Russia. This stance appears less a genuine support for Ukraine and more an opposition to US involvement in peace processes, even blaming Ukraine as partially responsible. Meanwhile, ideology alone has proven insufficient to prompt unified condemnation of Russia or widespread support for Ukraine in Latin America. Previous efforts by the Biden administration to secure regional military assistance for Ukraine were met with firm rejection and reluctance. This distancing, interpreted as tacit support for Russia, contributes to concerns about increasing authoritarian tendencies in the region, reflecting a diminished commitment to emerging democracies in crisis. Effectively abandoned by the international community, Ukraine faces negotiations with nations seeking its valuable earth minerals in exchange for protection, essentially framing it within a debt relief context. The absence of significant Latin American critique of this neocolonial approach underscores a troubling shift where sovereignty and self-determination appear increasingly disposable, contingent upon geopolitical interests and contexts. Maria I. Puerta Riera is a Visiting Professor of Political Science at Valencia College in Orlando, FL., where she teaches U.S. Government and International Politics. She holds a PhD. in Social Sciences, with her research focusing on the crises of democracies in Latin America. She has a special interest in Venezuela, Cuba, and Nicaragua, and is currently working on the effects of the illiberal regimes of China and Russia and their use of sharp power in the region. This article is published under a Creative Commons License and may be republished with attribution.

Abstract The so-called Anglophone Caribbean has historically been an area of strategic importance for Cuban foreign policy. With more than half a century of history, Cuba-CARICOM ties constitute a successful example due to their comprehensiveness, strength, dynamism, and concrete results in terms of political coordination and cooperation. However, in a complex and changing international context, various elements constitute threats to the effective execution of Cuban foreign policy toward the subregion, mostly linked to structural difficulties facing Caribbean states and their integration into the international economy, as well as the effects of the blockade and the policy of economic suffocation implemented by the United States against Cuba, which has intensified with Trump's arrival as president. Likewise, there are opportunities that can be seized to preserve the privileged historical relationship that Cuba maintains with this subregional bloc. Introduction The Caribbean has historically been a region of strategic importance for Cuba's foreign policy, primarily because it constitutes its natural environment and setting, to which it belongs not only for geographical reasons but also due to historical and cultural ties. Cuba's connections with the so-called non-Hispanic Caribbean even predate the consolidation of the Cuban nation, considering the constant influence of intra-Caribbean migratory flows during the colonial era. This intensified with the massive arrival of laborers — mainly Haitians and Jamaicans — to the largest of the Antilles during the early decades of the 20th century, a migration flow that continued until the 1950s. Cuba shares with Caribbean nations a historical legacy linked to the tragic scourge of slavery, associated with the plantation economy. This involved, on one hand, the forced migration of a large African population, and on the other, a series of similar characteristics in terms of socio-economic structures — although the differences among the various European colonial powers present in the region should not be overlooked. After the triumph of the Cuban Revolution in 1959, Cuba's ties with the non-Hispanic Caribbean went through various phases, particularly since 1972, when four newly independent Caribbean nations (Barbados, Jamaica, Guyana, and Trinidad and Tobago) collectively decided to reestablish diplomatic relations with Cuba. This decision ignored the OAS agreements of July 1964, which had mandated the political, diplomatic, and economic severance of relations between the governments of the continent and the Island. It was during the 1990s and into the 21st century that the most solid foundations were laid for articulating a coherent, harmonious, and coordinated projection that acknowledges the real importance of the Caribbean subregion for the objectives of Cuban foreign policy. The results achieved thus far in terms of coordination, political dialogue, and cooperation have led several authors to describe Cuba's policy toward the Caribbean as one of the most dynamic and effective aspects of the Island’s foreign outreach in recent years. The aim of this paper is to provide an updated analysis of the Cuban government’s external projection toward the Caribbean, focusing on the threats and opportunities that, in the foreseeable future, may impact the country’s interactions with this subregion under the leadership of President Miguel Díaz-Canel Bermúdez. It is important to clarify that, from a methodological standpoint, this paper focuses primarily on the group of countries that make up the Caribbean Community (CARICOM), most of which are island nations, although three are located on the mainland (Belize, Guyana, and Suriname). As noted by scholar Milagros Martínez Reinosa in her work “Cuba’s Relations with the Caribbean,” this is a “group of nations with marked differences, determined by their respective geographic and population characteristics, by the colonial powers that divided up this part of the world, and by the unique socio-economic development of each. This group, in which the so-called English-speaking insular Caribbean predominates, includes (…) different economic systems and forms of political organization, with varying levels of development, economic potential, and geographic size” (Martínez, 2011, p. 203). Development Historical Analysis of Cuba’s Foreign Projection Toward the Caribbean It is well known that, in the historical period following the triumph of the Cuban Revolution, significant progress was made in the Caribbean’s decolonization processes. Gradually, and with particular characteristics in each case, several countries achieved independence: Jamaica (1962), Trinidad and Tobago (1962), Guyana (1966), Barbados (1966), The Bahamas (1973), Grenada (1974), and Suriname (1975). Later, others followed: Dominica (1978), Saint Vincent and the Grenadines (1979), Saint Lucia (1979), Belize (1981), Antigua and Barbuda (1981), and Saint Kitts and Nevis (1983). At the same time, the first steps were taken toward economic integration in the subregion, marked notably by the signing of the Treaty of Chaguaramas in 1973. This treaty established the Caribbean Community and set the goal of creating the Caribbean Common Market, both known by the acronym CARICOM. These agreements aimed to advance economic cooperation and integration, as well as to establish a degree of coordination in foreign policy among the governments of the member states. All of this laid the groundwork for building a subregional institutional framework, giving these small states greater negotiating power and the ability to act jointly, both within international organizations and within the Inter-American System itself. One of the most representative examples of the emerging political coordination among these countries was the previously mentioned establishment of diplomatic relations with Cuba by the governments of Barbados, Jamaica, Guyana, and Trinidad and Tobago in December 1972. This event marked the beginning of a new era in the foreign policy of the revolutionary Cuba, enabling cooperation and mutual support with the newly independent Caribbean states. However, in 1983, the U.S. invasion of Grenada — which was supported not only by the OAS but also by members of the Organization of Eastern Caribbean States (OECS), along with Barbados and Jamaica — somewhat deteriorated Cuba’s relations with the subregion. Beginning in the early 1990s, a new, more dynamic and productive period began in Cuba’s relations with the Caribbean. In 1993, the Cuba-CARICOM Joint Commission was established, and throughout the decade, Cuba gradually intensified its engagement with CARICOM member states — particularly following the creation, in 1994, of the Association of Caribbean States (ACS). This organization included all Caribbean island states, along with Central America, Mexico, Colombia, and Venezuela. The ACS provided a particularly favorable space for Cuba’s foreign policy outreach in the region, as it was outside the sphere of influence of the United States and offered conditions that allowed the Cuban government to assume a leadership role and promote a regional dynamic focused on cooperation. Cuba’s strategic projection toward the Caribbean reached a high point with the holding — at the initiative of the Cuban government — of the First CARICOM-Cuba Summit, held in Havana in December 2002, marking the 30th anniversary of the establishment of diplomatic relations with Barbados, Guyana, Jamaica, and Trinidad and Tobago. At this historic meeting, attended by all CARICOM heads of government, common goals and guidelines were set to shape relations between Cuba and the subregional bloc. During the summit, a Trade and Economic Cooperation Agreement was signed —previously negotiated two years earlier during the Joint Commission meeting in Santiago de Cuba. The agreement aimed to promote trade in goods and services, establish financial arrangements to facilitate commerce, encourage market access, foster the creation of joint ventures, protect investments, and promote information exchange. This agreement was later updated in 2006 to reflect new economic and commercial realities. From that point on, the Cuban Ministry of Foreign Affairs began implementing the so-called Comprehensive Caribbean Plan (PIC, in Spanish), which integrated all actions directed toward the region with the explicit goal of contributing to the fundamental objectives of Cuba’s foreign policy (Martínez, 2011, p. 217). In the years immediately following, ties were rapidly strengthened at the highest levels, both bilaterally and with CARICOM. Some have described as an “avalanche” the large number of official visits to Cuba by Caribbean heads of government between 2002 and 2005 (the year of the Second CARICOM-Cuba Summit), reflecting the success of Cuba’s political-diplomatic outreach in the region and the high priority the Caribbean had acquired in its foreign policy agenda. This period also saw a sustained increase in Cuban cooperation in areas such as health, education, sports, culture, and more. At the Third Summit, held in 2008, cooperation was reaffirmed as the central and leading element in Cuba’s intergovernmental relations with the Caribbean, with expanded and deepened assistance across a wide range of fields —many of them supported by the Bolivarian Government of Venezuela. At the same time, the emergence of political coordination and cooperation initiatives such as ALBA-TCP and Petrocaribe — and the subsequent inclusion of some CARICOM countries in the former — multiplied opportunities for interaction, political alignment, and regional coordination. Similarly, both sides have maintained close coordination in various international forums, including the UN General Assembly, UNCTAD, WIPO, UNIDO, FAO, WTO, the Non-Aligned Movement (NAM), the G-77+China, and the Alliance of Small Island States (AOSIS). This international collaboration has been strengthened by the clear political will and the ability of both parties to resolve differences constructively. CARICOM’s solidarity with Cuba has been particularly notable in its unanimous stance against the U.S. embargo. To date, eight CARICOM-Cuba Summits have been held, the most recent one taking place in Barbados, attended by Cuban President Miguel Díaz-Canel Bermúdez. On that occasion, he also made an official visit to Barbados and toured two other countries —Saint Vincent and the Grenadines and Grenada. According to recent figures, there are currently more than 850 Caribbean scholarship students in Cuba, with over 6,000 having graduated. Additionally, more than 2,000 Cuban professionals are currently providing services in CARICOM countries. Cuba’s Foreign Projection Toward the Caribbean in the Current Context: Threats and Opportunities For Cuba, maintaining strong relations with CARICOM remains a priority. From a political standpoint, it is strategically important to preserve a close and positive relationship with the countries that make up this subregional organization, as they often achieve high levels of consensus on key international issues. As a relatively large bloc in terms of membership, this often translates into an equal number of votes in international organizations. This is particularly relevant considering the transformations the international system has undergone in the 21st century — marked by the gradual decline of U.S. global leadership, the emergence of an increasingly multipolar world, the shift of economic and commercial dynamism toward the Asia-Pacific region, and the growing influence of new information technologies, among other factors. These changes pose significant challenges to the Cuban government’s foreign outreach and have also influenced the implementation of U.S. foreign policy in the region, on one hand, on curbing the progress of resistance movements to its model of regional domination, and on the other, on trying to counter the growing influence of extra-regional powers in the hemisphere. Currently, all independent Caribbean states maintain diplomatic missions in Havana, and Cuba does the same in each of those countries. This makes Cuba a key and prominent actor in the region and highlights the importance CARICOM member states place on their relationship with Cuba. Within the Caribbean Community there is a strong consensus on condemning the U.S. embargo and recognizing Cuba’s cooperation efforts — reflected in joint declarations across both global and regional multilateral organizations. However, economic relations between Cuba and CARICOM have significantly lagged the levels achieved in the political and cooperation spheres. Despite the existence of a Trade and Economic Cooperation Agreement that includes broad tariff preferences (ALADI, 2011), trade volumes remain very low and are highly concentrated in a few countries —such as Trinidad and Tobago ($57.9 million), Jamaica ($3.2 million), Guyana ($507,000), and Suriname ($84,000). Altogether, total trade amounts to approximately $61 million (National Office of Statistics and Information—ONEI, 2024, pp. 233–236). The underdevelopment of economic ties is not primarily due to a lack of willingness on either side to implement coordinated actions but rather stems from more complex causes related to the economic structures of Caribbean islands and how they are integrated into the global economy. It is also important to consider that both Cuba and most CARICOM members are classified as Small Island Developing States (SIDS), a condition that presents shared development challenges. Factors such as limited economic and geographic size, high levels of openness and dependence on the international economy, low diversification, transportation and connectivity issues, and high exposure to the effects of climate change and extreme weather events, among others, represent significant obstacles to the development of multifaceted ties between Cuba and the Caribbean — particularly in the area of economic and trade relations (Laguardia, 2022, p. 179). Threats The arrival of the Republican administration led by Donald Trump to the U.S. government undoubtedly represents a threat to Cuba’s relations with the Caribbean and, more broadly, to its foreign projection toward the region. The appointment of controversial figures closely linked to the anti-Cuban far-right in the U.S. — such as Marco Rubio and Mauricio Claver-Carone as Secretary of State and Head of Latin American and Caribbean Affairs at the State Department, respectively — forecasts an extremely difficult scenario for Cuba. This will greatly hinder the long-sought development of economic and trade ties with CARICOM, due to the tightening of the blockade, the potential implementation of additional unilateral measures, and Cuba’s reinstatement on the list of State Sponsors of Terrorism. It is undeniable that the blockade — significantly reinforced in recent years and expanded in its extraterritorial reach — currently stands as one of the major obstacles to elevating Cuba-CARICOM economic relations to the same level as their political ties. This remains a clear objective within Cuba’s foreign policy approach to the region. Broadly speaking, the blockade and the aggressive U.S. policy prevent Cuba from operating under normal conditions in the international market by limiting access to credit and financing, disrupting financial operations, reducing export revenues, and creating an intimidating environment for potential foreign investors. All these factors have worsened the Island’s economic crisis and intensified issues such as declining export capacity and foreign currency shortages, directly impacting Cuba’s trade with the rest of the world, including the Caribbean. These challenges are compounded by logistical limitations that hinder intra-Caribbean trade. Furthermore, the lack of mutual understanding of institutional and bureaucratic systems remains a significant barrier to expanding economic ties (Marín, Martínez, & Laguardia, 2024). Nonetheless, even under current complex conditions, there are still possibilities and spaces to develop broader and deeper economic relations, based on the principle of identifying areas of complementarity and leveraging mutual strengths and opportunities. In this regard, the internationally recognized scientific achievements of Cuba’s biotechnology and pharmaceutical sectors, along with a wide catalog of high-quality, advanced technology products, offer a valuable opportunity to increase exports to the region while also strengthening the healthcare systems of CARICOM countries. Additionally, other biotech products developed by Cuban companies and institutions —applicable in agriculture and livestock — could contribute to CARICOM’s efforts to achieve greater levels of food sovereignty. Likewise, the emerging private sector of small and medium-sized enterprises (SMEs) in Cuba has gained increasing importance in the national economy, particularly in foreign trade, and shows strong potential to help boost commercial exchange and business between Cuba and the Caribbean nations. On the other hand, another threat to Cuba’s foreign projection toward the region —particularly regarding the development of its economic relations — comes from the financial limitations caused by the inclusion of several Caribbean states on blacklists of tax havens, as well as their classification as middle-income countries. This classification prevents them from applying for development aid and other preferential financing. All of this adds to the challenges Cuba already faces because of the U.S. blockade. Another significant threat is the intensification of the effects of climate change, particularly the increasing occurrence of extreme weather events. These phenomena damage ecosystems and biodiversity, destroy agriculture, reduce tourism revenues, contribute to food insecurity, damage infrastructure, and create a constant need for budgetary spending and public debt, among other harmful impacts. Also, we also consider as a threat, — particularly over the past decade — the decline of Venezuela’s economic capacity to meet the energy demands of CARICOM countries and to support other cooperation projects in the Caribbean, especially under initiatives such as ALBA-TCP and Petrocaribe, in which Cuba played an important role. Additionally, there is the ongoing conflict over the Essequibo region, where there is strong consensus among CARICOM countries in support of Guyana’s position. This places Cuba in a complex position regarding how to approach the issue — an issue also used by the United States to exert pressure on Venezuela. Compounding this is the campaign promoted by the U.S. and its regional allies against the government of President Nicolás Maduro in the context of the Venezuelan elections and his inauguration, which has triggered a wide-ranging political, diplomatic, and propaganda offensive. While some Caribbean states have aligned with U.S. positions, it is worth noting that the majority have remained outside of this campaign. For CARICOM member states, the United States remains the primary “provider” of security. The need for cooperation and coordination in security matters with the U.S. is undeniable, especially given shared challenges such as cross-border criminal flows, the Caribbean’s status as the U.S. “third border,” economic dependency, and the need for aid and financing among CARICOM countries. This power asymmetry means that the U.S. uses security as a tool of pressure, which represents a constant threat to Cuba’s relations with the bloc — particularly under the new U.S. administration, which has prioritized migration and drug trafficking and embraces Monroe Doctrine-style views regarding inter-American relations. Another threat we identify is the weakening of regional mechanisms such as the ACS. Despite Cuba’s consistent efforts, the ACS has largely failed to meet its founding objectives since its establishment in 1994: to create a common economic space, preserve the Caribbean Sea, and promote the sustainable development of its member states – although there have been some positive experiences in cooperation on climate change mitigation and disaster risk prevention. Opportunities One key opportunity lies in the development of close coordination and the building of broad consensus on issues of shared interest and broader relevance on the multilateral agenda. This applies both within United Nations bodies and forums, as well as in platforms like the G77+China and the NAM. These spaces have demonstrated mutual support for various common demands and proposals, including: reparations for slavery; the principle of common but differentiated responsibilities regarding climate change; the reform of financing eligibility criteria; the Bridgetown Initiative as a proposal for reforming the global financial architecture; the lifting of the U.S. blockade on Cuba; recognition of Cuba’s international cooperation — particularly in the health sector; and the removal of Cuba from the U.S. list of State Sponsors of Terrorism, among others. Another ongoing opportunity for Cuba’s foreign policy projection lies in its respectful and diplomatic engagement, which has allowed Cuba to act as a political and diplomatic bridge between the Caribbean and the rest of Latin America. This role facilitates relationships that remain limited due to differing political and communicational frameworks, as well as stark economic asymmetries. This bridging role has been particularly evident in the Community of Latin American and Caribbean States (CELAC), where Cuba’s efforts supported the inclusion of a permanent CARICOM representative in the organization's leadership troika and ensured the incorporation of Caribbean concerns in CELAC’s joint declarations and statements. Another external opportunity is the growing interest of global powers and extra-regional actors in the Caribbean, most notably the People’s Republic of China. China has vast potential in economic and trade relations with the region, especially considering that CARICOM countries offer several attributes attractive to Chinese investors. China’s high demand for Caribbean products has driven its interest not only in production but also in developing transport infrastructure across the region to secure supply chains and reduce costs. In this context, the membership of Cuba and several Caribbean nations in the Belt and Road Initiative presents both an advantage and an opportunity. Cuba maintains a strong, strategic, high-level political and diplomatic relationship with China and can be considered as China’s principal ally in the region. This places Cuba in a unique position to play an important role in expanding China’s political engagement with CARICOM, particularly given that five CARICOM countries — Saint Lucia, Saint Kitts and Nevis, Saint Vincent and the Grenadines, Belize, and Haiti — still maintain diplomatic ties with Taiwan. In other words, Cuba could further leverage its privileged relationships with both parties to continue fostering political rapprochement, help expand economic and trade links with the subregion, and participate in various development projects with Chinese capital through a triangular cooperation. In this framework, Cuba can contribute with its expertise, knowledge, and highly qualified human capital in fields where many Caribbean nations lack capacity. At the same time, Cuba’s admission as an associate member of the BRICS represents an opportunity that opens promising prospects for cooperation, investment, and access to financing — within a framework that promotes a multipolar vision of the world, composed of several of the largest and most dynamic economies on the planet. In addition to its strategic geographic location as the “Key to the Gulf,” which facilitates access to major markets in Latin America and the Caribbean, Cuba can contribute to BRICS with an influential and privileged political relationship with Caribbean countries, built over 50 years. This could help foster a strategic partnership between BRICS and the Caribbean. Likewise, Cuba’s historical cooperation ties and its high-level political and diplomatic dialogue with the African bloc — as well as with other countries of the so-called Global South — also represent an opportunity, as they can help bridge the Caribbean with these extra-regional actors, enabling coordination on common positions in multilateral arenas and fostering economic ties. In the case of Africa, CARICOM has aimed in recent years to strengthen relations with the continent, starting with the first summit between both blocs held virtually in 2021. This goal is clearly reflected in the signing of a Partnership Agreement by 12 of the 15 CARICOM member states with the African Export-Import Bank (Afreximbank), which has approved over $1.5 billion in investments for the Caribbean (Afreximbank, 2024). Moreover, cooperation between Cuba and CARICOM still offers a wide range of untapped opportunities, aligned with the specific needs and advantages of each party. As previously mentioned, Cuba has a highly skilled human workforce that can benefit the region. In this regard, triangular cooperation becomes a key mechanism for accessing funding from governmental and multilateral sources. The growing interest in the Caribbean by various powers — both Western and non-Western — also represents an opportunity to attract resources for key areas such as climate change mitigation, energy transition, and digitalization, where Cuba can participate with its trained professionals and developed capabilities (Marín, Martínez, & Laguardia, 2024, p. 10). Conclusions Cuba–CARICOM relations, with more than half a century of history, stand as a successful example of strategic comprehensiveness, coherence, and tangible achievements in political and cooperation matters. However, they still face the challenge of producing similar results in the economic and trade sphere, where progress has been limited. The main obstacles to achieving this goal are linked to the structural conditions and constraints of Caribbean economies and their integration into the global economy, as well as to the effects of the U.S. blockade and the economic strangulation policies implemented against Cuba. The worsening of Cuba’s economic crisis — driven by the tightening of the blockade, the imposition of new sanctions, and its continued inclusion on the State Sponsors of Terrorism list under a likely more aggressive policy by the new U.S. administration — poses a threat to the achievement of Cuba’s goals in the Caribbean. At the same time, the positive outlook generated by Cuba’s admission as an associate member of the BRICS presents an opportunity to develop a possible strategic alliance between the bloc and the Caribbean — supported by the privileged, trusting, and cooperative relationship that Cuba has built with Caribbean countries over more than 50 years. Cooperation has been the cornerstone of Cuba’s relations with the Caribbean, and despite challenges, it has remained intentional and prioritized. However, more efforts should be made to leverage other areas in which Cuba possesses expertise and highly qualified human capital. 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Over time, the bilateral relationship between Mexico and the United States has gone through multiple stages and transitions, reflecting both moments of collaboration and episodes of deep antagonism. At certain points, both countries have succeeded in consolidating frameworks of cooperation in specific areas, such as the peaceful resolution of the El Chamizal territorial dispute in 1967 or the promotion of academic exchange through the Fulbright-García Robles Scholarship Program. However, this interaction has also been marked by significant conflicts, most notably the war of 1846–1848. This confrontation, whose outcome was unfavorable for Mexico, culminated in the signing of the Treaty of Guadalupe Hidalgo, through which the country was forced to cede more than half of its territory. This episode left a deep imprint on Mexico's collective memory. The shared history thus reveals a complex and constantly evolving dynamic. The geographical proximity between Mexico and the United States, with a land border exceeding 3,000 kilometers, requires both governments to adjust their priorities to respond to shared challenges in areas such as security, trade, investment, migration, and other strategic issues. This border condition generates a constant bilateral dynamic, in which national priorities must be harmonized with bilateral and regional interests. From a theoretical perspective inspired by Robert Keohane and Joseph Nye, Dr. Rafael Velázquez Flores argues that this relationship is configured as an asymmetric and multifaceted interdependence. Within this framework, Mexico seeks to expand its decision-making capacity in an environment characterized by structural power imbalances. For his part, Dr. Jorge Schiavon contends that the bilateral agenda operates within a logic of complex interdependence, in which the dense network of institutions and the multiple economic, social, and political ties restrict the ability of either country to act unilaterally. One of the most evident manifestations of the interdependence that characterizes the North American region was the signing of NAFTA in 1992, which came into effect two years later and was transformed into the USMCA in 2018 following a deep renegotiation process. This economic integration mechanism, though less ambitious than the European Union’s model, has strengthened trade and production ties in the region, generating reciprocal benefits. On one hand, U.S. companies have consolidated preferential access to inputs from Mexico, which has boosted key sectors such as automotive, electronics, and agribusiness. Through stricter rules of origin, the agreement has encouraged greater domestic production of components within the United States, protecting industries in strategic states such as Michigan, Texas, and Ohio. In this context, Mexico became the United States’ main trading partner in 2023, with imports valued at $475 billion, surpassing both China and Canada. On the other hand, Mexico regards the United States as its main trading partner, which as of April 2025 accounted for over 80% of its exports and more than 40% of its total imports. The preferential access established by the USMCA has enabled the Mexican economy to position itself as a strategic supplier of goods and services to the U.S. economy, with particular significance in sectors such as automotive, electronics, manufacturing, and agribusiness. The stricter provisions on rules of origin in the automotive sector have encouraged deeper regional integration, leading plants located in Mexico to expand their role in component production and assembly processes. Although the automotive sector captures a large share of the benefits, other industries have also experienced significant growth. As a result, Mexico has become the United States’ main agricultural supplier and has strengthened its presence in sectors such as pharmaceuticals, chemicals, and capital goods, including machinery, electrical equipment, and computing devices.     As shown in Table 1, the United States and Canada occupy the top two positions as destinations for Mexican exports. Based on data from April 2025, the U.S. market imported nearly $45 billion worth of goods from Mexico. Regarding Mexican imports during the same period, the United States ranked first as Mexico’s main trading partner, exceeding $21 billion, with China in second place at just over $10 billion. In this context, it is worth noting that, as shown in Table 2, Canada ranked 10th as a source of Mexican imports. This scenario highlights that the economic integration between Mexico and the United States goes beyond the exchange of goods: both countries have built an integrated and highly specialized production network that generates millions of jobs while fostering growth in the North American region.     On the issue of migration, Mexico and the United States maintain a deep interdependence that permeates the bilateral agenda not only in socioeconomic matters but also in security-related issues. In 2023, approximately 10.6 million Mexican-born immigrants were legally residing in the United States, representing 23% of the total foreign-born immigrant population. At the same time, according to the Pew Research Center, around 4 million Mexicans were living without legal status — down from a peak of 6.9 million in 2007. Thus, the Mexican presence in the U.S. continues to have a dual impact: it contributes labor and demographic stability to the American economy while also generating a steady flow of remittances and transnational ties that support regional development in Mexico and strengthen binational relations. In fact, the Bank of Mexico estimated that remittances sent from the United States to Mexico exceeded $62 billion in 2024 — far surpassing Mexican exports of petroleum products, which amounted to approximately $30 billion that same year. In the current scenario of complex interdependence between Mexico and the United States, the re-election of Donald Trump has introduced a climate of tension that has weakened traditional channels of bilateral dialogue and cooperation. The Republican administration has replaced structured diplomacy with a rhetoric characterized by threats, misperceptions, and a widespread atmosphere of uncertainty. Although President Trump’s confrontational strategy is not limited to Mexico — as it stems from the narrative that the international community has excessively and asymmetrically taken advantage of its relationship with Washington — his administration has intensified the portrayal of Mexico as a key factor behind various domestic grievances in the United States. Irregular migration, drug trafficking, and the trade imbalance have become recurring issues through which the White House channels internal demands, reinforcing a narrative of confrontation. This dynamic undermines the institutional mechanisms of bilateral understanding and places at risk the progress made in economic cooperation, security, and cross-border governance. Since the beginning of his second term, President Trump has implemented a series of unilateral actions that intensify his restrictive immigration agenda. On the very day of his inauguration, he declared a national emergency at the southern border and signed multiple executive orders that eliminated access to asylum, suspended the refugee resettlement program, and reinstated the “Remain in Mexico” policy. He also delegated border control functions to the Department of Defense and authorized the deployment of the military and National Guard to perform tasks traditionally carried out by civilian agencies. Through the 1798 Alien Enemies Act, he ordered expedited deportations, including those targeting unaccompanied minors. U.S. Immigration and Customs Enforcement (ICE) has carried out mass raids, even in sanctuary cities, schools, and hospitals. This institutional offensive has intensified the criminalization of undocumented individuals, while the use of military forces in urban areas has undermined legal certainty and created an atmosphere of insecurity that fractures social cohesion and amplifies collective fear. In the commercial sphere, President Donald Trump has promoted executive orders imposing tariffs on Mexican exports of steel, aluminum, and automobiles, justifying such measures with arguments related to the trade deficit, irregular migration flows, and efforts to combat fentanyl trafficking. Although his administration has temporarily suspended some duties on products covered by the USMCA, these unilateral decisions have heightened uncertainty in the bilateral relationship by contradicting commitments made under the agreement. Constant threats to expand tariffs to goods not included in the treaty, along with the use of extraordinary powers to impose trade restrictions, have eroded the climate of trust between the productive sectors of both countries. In response, the Mexican government has pursued diplomatic actions and dialogue mechanisms aimed at ensuring the proper implementation of the USMCA and establishing safeguards to reduce the risks posed by protectionist measures that affect the stability and predictability of regional trade. In the current context, President Trump has disregarded the strategic importance of the United States’ historic allies and trade partners by adopting measures that have eroded trust not only with Mexico but also with other key partners such as Canada and the European Union. This situation has confronted the Mexican government with a complex challenge: preserving the stability of its most important economic relationship while also maintaining a strong consular protection policy. To this end, Mexico operates one of the world’s largest consular networks, with 53 consulates distributed throughout U.S. territory. The work of the Mexican Foreign Service is essential in this scenario, as it strengthens diplomatic dialogue and underscores to Washington that Mexico shares democratic and economic values with the United States. Recognizing mutual interdependence is vital: the prosperity and stability of both countries are intertwined, and a strong bilateral relationship is a key component of sustained economic growth in North America as a whole. Although it is uncertain what future decisions President Trump may make, the Mexican government must prioritize dialogue and political coordination as underlying strategies of its foreign policy, avoiding any confrontational maneuvers, as these only undermine the bilateral relationship. President Claudia Sheinbaum’s administration faces the critical task of accurately identifying the priorities of the U.S. government to act proactively with clarity and consistency. Mexico cannot allow its foreign policy to be reduced to merely reacting to unilateral initiatives marked by aggressive rhetoric and uncertainty. In this context, the Mexican Foreign Service must firmly exercise its well-established negotiating capacity to consolidate Mexico’s position as a reliable neighbor and a key actor in the regional economic structure. The bilateral relationship must clearly convey that the prosperity of the United States is closely linked to Mexico’s stability and growth — an interest grounded in a shared logic of structural interdependence.

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.

The BRICS meeting in Rio on July 6th and 7th gives a snapshot of the great power competition between China and the United States in different regions around the world, including Latin America. China has become the largest trading partner for many countries in Latin America, investing heavily in infrastructure and forging political alliances that further its strategic objectives. For its part, the Trump Administration of the United States issued the statement that those participating countries will face increased tariffs. The statement was the continuation of exercise and assertion of its authority for the past and present century. The positioning of various BRICS members and participating countries is particularly telling of what the great power competition means in the region and also globally. Brazil’s Lula hosted the meeting aiming to showcase its foreign policy leadership, not necessarily antagonizing the West. Russia is still going through the war in Ukraine, and Putin attended only online. India’s Modi was present as well as Ramaphosa from South Africa. No show of Xi Jinping was notable, although Premier Li Qiang was attending. Besides the BRICS core, other countries also showed promotion of their interests. Iran, for one, joined the group in 2024 and sent a ministerial level delegation to rebuke recent strikes on Iran. As the United States appears to be pulling back from its traditional leadership role in the world, China is seizing the opportunity to expand its influence and reshape global dynamics. Through a combination of state-driven development policies and active international engagement, Beijing has positioned itself as a major player in the Global South, extending its reach beyond Asia to regions such as Africa and Latin America. China’s increasing presence in the region has been mainly driven by the Belt and Road Initiative (BRI) and a surge in trade volumes, marking a major shift in the region’s economic landscape. Many experts point to China’s use of “infrastructure diplomacy”—financing ambitious, strategic infrastructure projects across the region—as a key factor in this rise. The numbers tell a compelling story. Trade data from the World Bank (Figure 1) shows that in the past ten years, China has overtaken the United States as the leading trading partner for much of the region, upending a dynamic that had held steady since the early 2000s. Beyond trade, China’s influence deepens through the 22 countries in Latin America and the Caribbean that have joined the Belt and Road Initiative. Chinese loans have poured in, funding major energy, infrastructure, and development projects that have reshaped local economies. China’s push isn’t just economic—it’s political too. Beijing has taken steps to strengthen cultural ties, increase academic exchanges and boost tourism in Latin America, including waiving visa requirements for travelers from some countries. This multi-faceted approach highlights China’s pragmatic mix of economic self-interest and strategic diplomacy as it works to secure resources, expand markets, and bolster its global standing. On the other hand, the United States has long been a strategic ally and key trading partner for Latin America. Agencies like USAID have funneled millions of dollars into economic and military initiatives across the region. With the recent changes in the aid policy, immigration policy, and tariff policy, Washington’s recalibration of its foreign policy are transforming the geopolitical balance in Latin America and the Caribbean. As both powers deploy their strategies — from deepening economic ties to defending national interests — the decisions of Latin American states remain critical in shaping their alignments with global powers. The ultimate outcome is still up in the air, but one thing is clear: power in the region is actively being renegotiated. The diverging approaches from China and the US have set the stage for a broader reconfiguration of power in Latin America and the Caribbean. Yet, it’s essential to recognize that each country’s internal decisions and policies also play a critical role in shaping this shifting landscape. Colombia provides a case in point. Historically, it has maintained close diplomatic ties with the United States while keeping China at arm’s length. Unlike countries like Brazil, Argentina, and Peru, Colombia has received relatively little Chinese infrastructure investment. However, with the election of president Gustavo Petro—the first left-wing president in the country’s history—Colombia has taken decisive steps to strengthen its relationship with China, presenting new challenges for the United States to maintain its strategic foothold in the country. We observe – both on political and economic dimensions – that the changes in China’s strategy, coupled with Colombia’s domestic policies, have reduced the country’s dependence on the US while increasing its desire to integrate with China. Politically, Colombia and the United States have long enjoyed a strong diplomatic relationship, as reflected in their shared memberships in international organizations, high-level dialogues, and multiple bilateral agreements. However, diplomatic tensions have emerged in recent years. Disputes between the two leaders, the change of course of USAID, and a significant drop in new bilateral agreements over the past four years have contributed to a shift in this traditionally stable partnership. Against this backdrop, diplomatic ties between China and Colombia have strengthened. In 2023 alone, both countries signed 12 cooperation agreements in trade, technology, and economic development, upgraded their relationship to a strategic partnership, and Colombia’s entry into the Belt and Road Initiative during recent China – CELAC Forum in May. Colombia also joined the BRICS New Development Bank a few weeks after that Forum. Economically, the US has traditionally been Colombia’s largest trading partner, backed by a free trade agreement and significant investment. Yet, in recent years, the share of US trade has steadily declined, while China’s footprint has grown (see figure 1). Although there’s no formal trade agreement, ties have strengthened during the current administration, including the opening of a Buenaventura-Shanghai trade route in 2025. Additionally, China’s “infrastructural diplomacy” has significantly grown: over 100 Chinese companies now operate in Colombia, and major infrastructure projects like Bogotá’s Metro Line 1 and the Regiotram are underway, along with investments in mobility, technology, and health. Latin America, and Colombia in particular, finds itself at the center of a geopolitical tug-of-war with China’s calculated investments and the US’s shifting policies. While Beijing leverages trade, infrastructure, and cultural diplomacy to expand its influence, Washington’s recalibration of its foreign policy leaves room for new alliances and opportunities. Our analysis shows that power reconfiguration is not merely a product of external rivalry. It is driven by the choices each Latin American nation makes. As Colombia’s case demonstrates, the region’s destiny hinges not just on global superpowers, but on its own internal political decisions and developments. The coming years will test how Latin America navigates these shifting currents. Disclaimer This article was made possible in part by a grant from the Carnegie Corporation of New York (G-PS-24-62004, Small State Statecraft and Realignment). The statements made and views expressed are solely the responsibility of the authors. Figure 1: China vs. US Import and Export TrendsDrawn by the authors using data from the World Bank.  

Abstract This paper analyzes, from Immanuel Wallerstein's Analysis of the World – System, an introduction, the emergence of the modern world – system, the permanence of the colonial logic in the modern capitalist world-system from a decolonial approach. It examines how the center – periphery structure has determined the economic, political and epistemic dynamics at the global level. Through this approach we study how coloniality has influenced the construction of knowledge. It also analyzes the impact of this structure on the recognition of States and the negotiation of international treaties, showing how Western power has conditioned the legitimacy and autonomy of peripheral nations. It also addresses the persistence of the center-periphery logic in local relations, as well as in gender and racial inequality, highlighting the role of anti-systemic movements in the struggle against these structures. It concludes that, although colonial dynamics continue to operate through debt, extractivism and the imposition of political models, decolonial perspectives offer tools to make visible and resist them. Introduction This paper will analyze the dynamics of the current international system based on the work “World-Systems Analysis: An Introduction – The Rise of the Modern World-System” by Immanuel Wallerstein. In it, Wallerstein (2005) argues that the modern capitalist world-system has structured the global order since the 16th century, consolidating a hierarchical division between the center and the periphery. This division has not only shaped economic and political dynamics but has also established patterns of domination and dependency that persist to this day. The colonial expansion of European powers not only guaranteed access to resources and markets but also legitimized a system of exploitation based on racism and the hierarchization of colonized peoples. The decolonial perspective of Walter Mignolo (2013) will be adopted, which posits that this is a political and epistemic project aimed at dismantling the colonial matrix of power that sustains Western modernity. From this framework, the article will analyze how colonial logic continues to operate in the capitalist world-system through the economic and political subordination of the peripheries. It will also examine the impact of the colonial worldview on knowledge production during the 18th and 19th centuries, as well as the reproduction of the center–periphery dynamic in the recognition of states during the 20th century and in the negotiation of international treaties during the 21st century. Likewise, it will address how this dynamic manifests not only internationally but also within local structures, perpetuating inequalities expressed in labor, gender, and racial relations today. This work seeks to provide a critical perspective on the persistence of colonial logic in the modern capitalist world-system, emphasizing the need to rethink power structures from a decolonial perspective that makes visible and vindicates the subaltern voices that have been historically silenced. Development Colonial Logic in the Capitalist World-System In his work “World-Systems Analysis: An Introduction – The Rise of the Modern World-System”, Wallerstein seeks to understand the structure and dynamics of the world-system, taking the 16th century as the starting point —a period when the conquests of the territories we now know as the Americas took place. The colonial period clearly illustrates the core–periphery dynamic (Wallerstein, 2005), as the Spanish, British, and Portuguese empires engaged in the extraction of resources from their colonies, while colonized peoples endured oppression and racism to which they would be condemned for centuries. This oppression brought significant benefits to the modern world-system, as it enabled massive capital accumulation — but exclusively in the core. This was because the colonial process built peripheral economies around the needs of the core, forcing them into subordination to the interests of the global market, generating dependency and underdevelopment. Quijano and Wallerstein (1992) argue that “[…] ethnicity was the inevitable cultural consequence of coloniality. It delineated the social boundaries corresponding to the division of labor” (p. 585). Due to the colonial period, the modern capitalist world-system laid its foundations and strengthened its market-based economic model through racism and hierarchization — circumstances that have legitimized the exploitation and domination of non-European peoples throughout history. Control over the resources of peripheral states by core states has endured to this day, along with the imposition of Western production and consumption models that perpetuate inequality. The colonial period’s greatest legacy remains systemic violence and subalternity. On this basis, it is important to analyze this work from a decolonial perspective. For Walter Mignolo (2013), “decoloniality is not a concept, but a practice and a political, epistemic, and ethical project aimed at disengaging from the colonial matrix of power that sustains Western modernity” (p. 21). This perspective also draws on the notion of epistemic subalternity, which refers to the experiences and knowledge of colonized and subaltern peoples that are rendered invisible, devalued, or reduced to particular cases — without being considered an integral part of the world-system (Mora, 2008). Coloniality in the Construction of Knowledge At the end of the 18th century, the modern university emerged, dividing its studies into two faculties: sciences and humanities. In the 19th century, another division took place within the humanities, opening the space for the study of social sciences, which would later also be split — on one side, those leaning toward scientism, and on the other, toward the humanistic approach. This led to the creation of new disciplines: economics, political science, and sociology (Wallerstein, 2005). These new sciences built their worldview and knowledge construction from a Eurocentric and colonialist perspective, thus assigning labels to peoples different from their own. These new sciences categorized the study of the world’s peoples into three groups. First, civilized peoples — Western nations, considered as such because they believed their social and political organization systems were the most advanced. Second, the high civilizations — India, China, Persia, and the Arab world — classified in this way because they possessed writing, religion, language, and customs. They were regarded as civilized peoples but not modern, under the previously mentioned concept. This category gave rise to orientalist scholars, with a Eurocentric and exoticizing view. Finally, the so-called primitive peoples — those who, from the colonial perspective, lacked writing, religion, language, and customs. This perception of the “uncivilized other” was used to justify colonial processes in the periphery, which even today enable the reproduction of exploitative and racist practices. Segregation in the construction of knowledge, imbued with colonial and Eurocentric thought, is based on criticizing the behavior of these peoples and on what should be changed about them (Zapata, 2008). The Eurocentric conception asserts categorically that the modus vivendi of these peoples is not appropriate according to Western standards. Although this way of thinking has evolved over time, its essence remains the same and has led Western countries to grant themselves the power to change the way of life of these peoples through invasions, neocolonial processes, and violent interventions via military force or economic interference. The Center and the Periphery in the Recognition of States As previously mentioned, Europe established a correspondence between modernity and the West; this includes the institution of the nation-state as its derived product (Zapata, 2008). From the Eurocentric perspective, for civilizations to be considered nation-states, they must possess four characteristics: territory, population, government, and sovereignty. In Public International Law, sovereign states are the main subjects of international relations, and for a state to be recognized as such, it must be acknowledged by the majority of states that are part of the international system. The center–periphery concept operates both economically and politically, which can be observed when a new state seeks recognition from members of the international system. The recognition granted by a state from the center carries more weight than that from the periphery, since states in the center, with greater political and economic capacity, influence the decisions of their allies — both within the center and the periphery. This need for state recognition has been extremely beneficial for the modern capitalist world-system, as political and economic interdependence, along with the perpetuation of power in the countries of the center — particularly those belonging to the West — ensures that they act, whether in matters of state recognition, political agendas, or economic issues, entirely to their own advantage, disregarding the interests of “the other.” From a decolonial perspective, state recognition is a Western construct designed to maintain control over who meets the imposed criteria to belong to the Eurocentric international system. These criteria clearly do not align with the social organization of all non-Western civilizations but were conceived in such a way as to subordinate them to the needs of the world-system, which inevitably serves the interests of Western core states. This can be exemplified by the case of Taiwan. In 1971, the Kuomintang lost recognition from the government of mainland China, and starting in 1985, Taiwan’s government sought to strengthen diplomatic relations with states that already recognized it and to develop relations with those that did not, with the aim of obtaining their approval (Connelly, 2014). Despite the passage of time, recognition of Taiwan as a state by core countries seems inconvenient for them, likely due to the ongoing political dispute between Taiwan and China. As a result, only 14 peripheral states recognize it as such. Despite this, the Northeast Asian country maintains unofficial relations with 47 states and the European Union, for purely economic reasons. The Modern Capitalist World-System in International Treaties It is worth mentioning that the idea of the center–periphery permeates the negotiation of international agreements. As mentioned earlier, the so-called “primitive peoples” were civilizations that, from the Eurocentric perspective of knowledge, lacked writing, religion, languages, or customs. This idea persisted into the 20th century, as reflected in the Statute of the International Court of Justice, which in Chapter II, Article 38, states that “the Court, whose function is to decide in accordance with international law such disputes as are submitted to it, shall apply: […] the general principles of law recognized by civilized nations” (UN, 1945). The Eurocentric conception of a civilized nation in the postwar period was based on the type of government existing in each state. Thus, countries without a democratic political system were not considered civilized nations. This conception forced nations not to determine their own system of government, but rather to adhere to the one imposed by the Western international system in order to be accepted, disregarding their customs and traditions. A more current example of the imposition of Eurocentric ideas on systems of government is the signing of the Free Trade Agreement between the European Union and Mexico in 2000. Ratification of the trade agreement was conditioned on what they called the “democratic clause.” The agreement was not ratified by the Italian government until July 3 of that year, when the presidential elections resulted in the victory of Vicente Fox (Villegas, 2001). On the same day, the European Commission’s spokesperson, Gunnar Wiegand, said in his press release: “A historic vote has taken place in Mexico. The Commission congratulates the Mexican people for exercising their democratic rights in such a mature and exemplary manner” (Caracol Radio, 2000). The spokesperson’s mention of the Mexican people’s maturity refers to the notion that, in the past, the exercise of democracy had not possessed this quality — an observation made from a paternalistic and Eurocentric perspective. Had the election results been different, Mexico could have faced the possibility of the European Union “imposing sanctions as a reaction to the verification of interruptions in democratic processes, which, in addition to affecting development, constitute a threat to international peace and security” (Cordero Galdós, 2002, p. 128). The criticism of the imposition of the “democratic clause” centers on the recurring practice of requiring peripheral states to adapt to the political ideologies and economic needs of the core. The Reproduction of the Center–Periphery Dynamic at the Local Level As mentioned in the development of this work, the effects of colonialism persist across all systems and subsystems through the coloniality of power, knowledge, and being, the latter of which will be addressed later. This is manifested in global inequalities, the exploitation of natural resources in peripheral countries, and the persistence of racist and Eurocentric power structures. From Wallerstein’s perspective, the world-system is a historical structure which, although in constant transformation, reproduces power relations and inequalities over time through the domination of the core and the exploitation of the peripheries (Wallerstein, 2005). Thus, the world-system has evolved in several ways; one of these is the introduction of the term semi-periphery into the analysis. During the colonial period, there were only core and peripheral nations. Over the centuries, however, semi-peripheral states have emerged — nations that not only extract raw materials or engage in manufacturing but also have the capacity to produce cutting-edge technology (Wallerstein, 2005). This positions them in a more privileged place than peripheral countries in the international system. Yet, despite appearing to have overcome the systemic oppression that once kept them in the periphery, the colonial mindset within their institutions perpetuates their subordination to the core. Good examples of semi-peripheral states in Latin America are Mexico and Brazil. Both countries were victims of the exploitation and systemic violence of colonialism. This shaped the development of their societies and economies for centuries. Even after achieving independence and building productive and economic systems that placed them in the semi-periphery, their economic progress was built on a legacy of oppression and racism that continues to reproduce the abuses described. In this way, the concept of core and periphery permeates social and family subsystems. This can be observed in labor relations, where capitalists depend on the core–periphery or superior–subordinate relationship to sustain the production model. It is also evident in social relations, which Wallerstein refers to as anti-systemic movements. Society perpetuates the core–periphery principle by placing women and racialized communities in the periphery, while men — especially white men with power — occupy the core. Anti-systemic movements paved the way for the struggle against these inequalities, giving rise, for example, to feminist and Indigenous movements. These have led to the development of theoretical perspectives such as decolonial feminism, which adds analytical variables to the decolonial perspective. According to Yuderkys Espinosa, it emerges from “[…] a subaltern, non-hegemonic voice […] anti-colonial, anti-imperialist, anti-capitalist. […] Its aim is to question and oppose an imperial and racist rationale” (Barroso, 2014, p. 2). Conclusions The modern capitalist world-system has managed to sustain and expand itself thanks to colonial structures that, far from disappearing with decolonization processes, have mutated and perpetuated dynamics of domination and dependence. As discussed, the core–periphery logic has been key to the organization of the international system, not only in economic terms but also in the construction of knowledge, the legitimization of states, the negotiation of international agreements, and the imposition of political and social models from Western hegemony. The colonial legacy remains in the structural subordination of peripheral economies to the interests of the core, the imposition of international norms that favor core countries, and the persistence of racialized and gender-based inequalities within peripheral states themselves. This scheme has not only ensured capital accumulation in the core but has also limited the self-determination of historically colonized peoples, while normalizing their exclusion from political, economic, and epistemic spheres. At the international level, neocolonialism operates through mechanisms such as external debt, unequal trade agreements, and political interference in the internal affairs of peripheral states. In addition, extractivism and territorial dispossession continue to reproduce colonial logics, affecting both peripheral countries and Indigenous communities as well as other historically marginalized groups. In this sense, the modern capitalist world-system not only perpetuates economic exploitation but also reinforces power structures based on racism, sexism, and subalternity. However, as decolonial perspectives point out, the coloniality of power is not an immutable phenomenon. This approach questions the structures of power and knowledge inherited from colonization, seeking to deconstruct Eurocentric discourses and make visible the voices and experiences of the subaltern. Anti-systemic movements have sought to challenge these structures, reclaiming the agency of subaltern peoples and promoting the construction of alternatives that confront the colonial matrix of power. Particularly, decolonial feminism has emerged as a key critique of the intersection between patriarchy and coloniality, showing how women — especially racialized women — have been relegated to the periphery of the system. Thus, analyzing the world-system from a decolonial perspective allows us not only to understand the continuity of structures of domination but also to recognize the spaces of resistance and contestation that emerge within it. In conclusion, the decolonial perspective enables us to rethink the modern world-system from a critical standpoint, recognizing structural inequalities and the need to transform the power dynamics that perpetuate the domination of the core over the periphery. Decolonialism makes it possible to redefine notions of progress, development, and modernity from a perspective free from colonial stereotypes and hierarchies, recognizing the diversity of knowledge and worldviews of Indigenous peoples. It seeks to decentralize power by rethinking and decolonizing power relations between the core and the periphery, between the state and local communities, aiming for a more equitable distribution of resources and benefits. 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In a landmark advisory opinion, the International Court of Justice (ICJ) ruled on 23 July 2025 that all UN member states have legal obligations under international law to address climate change, which the court described as an existential threat to life on Earth. Powerful countries too must be held responsible for their current emissions and past inaction. Possibly in anticipation of such a ruling, Chris Wright, the US Secretary of Energy and former chief executive of Liberty Energy (an oilfield services company), published an article in The Economist a week earlier, arguing that “climate change is a by-product of progress, not an existential crisis”. Whereas the ICJ relied primarily on the IPCC reports, “which participants agree constitute the best available science on the causes, nature and consequences of climate change”, Wright’s view is based on a particular temporal logic.  According to the IPCC reports, most greenhouse gases come from burning fossil fuels, with additional emissions from agriculture, deforestation, industry, and waste. They drive global warming, which is projected to reach 1.5°C between 2021 and 2040, with 2°C likely to follow. Even 1.5°C is not considered safe for most nations, communities, and ecosystems, and according to IPCC, only deep, rapid, and sustained emission cuts can slow warming and reduce the escalating risks and damages. The 2024 state of the climate report, published in BioScience, presents even more worrying assessments. Among other things, the report cites surveys indicating that nearly 80% of these scientists anticipate global temperatures increasing by at least 2.5°C above preindustrial levels by the end of the century, and nearly half of them foresee a rise of at least 3°C.  Wright’s article suggests that the issue of amplifying doubt about climate change may have little to do with engagement with science but rather reflects a deeper temporal logic. This logic is rooted in a Whiggish account of progress to date, a resistance to the reality of the future and the desire for nostalgic restoration. I will explain these elements one by one. The first tier: Whiggism Wright disagrees with most scientific anticipations. His views are likely representative not only of the Trump II administration but also of conservative right-wing populism more generally. It is difficult to understand their climate denialism without an analysis of their views on time and temporality. The most important question concerns the reality of the future. At the first level, Wright provides a kind of textbook example of Whig history, portraying progress as linear, inevitable, and driven by liberal values. Herbert Butterfield introduced the idea of Whig history in his influential 1931 book The Whig Interpretation of History as a critique of a specific way of writing history that he regarded as flawed and intellectually dishonest. Focusing on inevitable progress distorts historical analysis by promoting simplified cause-and-effect reasoning and selective storytelling, emphasising present-day evaluation (and glorification) over understanding the real causes of historical change. In a Whiggish manner, Wright claims that the last 200 years have seen two big changes to the human condition: “human liberty” and affordable energy. As a result of these two things, life expectancy has nearly doubled, and the percentage of people living in extreme poverty has dropped from 90% to 10%. However, Wright’s argumentation is based on non-contextual and, in that sense, timeless representations of the world, despite its “progressivism”.  For example, consider the claim that extreme poverty has dropped from 90% to 10%. It is based on using a fixed dollar threshold, such as USD 2 per day, to measure poverty over 200 years. This is misleading because most people in the 19th century lived in largely non-monetised economies where subsistence needs were met outside of market exchange, and monetary income was minimal or irrelevant. These metrics also obscure shifting and context-bound definitions of basic needs; rely on incomplete historical data; and ignore the role of colonial dispossession and structural inequality in shaping global poverty. While it is true that life expectancy has doubled, largely due to improvements in hygiene and healthcare, the idea that extreme poverty has plummeted from 90% to under 10% also ignores the fact that the global population has grown eightfold, affecting the entire Earth system with devastating ecological and geological consequences. It further ignores that the rise in life expectancy and poverty reduction has come not only from liberalism or economic growth more generally but from ethical and political struggles and public health interventions. Often, these struggles have been fought in the name of socialism and won despite capitalist incentives, market mechanisms, and related political forces. The second tier: blockism At a deeper level, Wright’s views seem to presuppose what Roy Bhaskar calls “blockism”: the postulation of a simultaneous conjunctive totality of all events. This may sound abstract, but it has been a common assumption among many 20th-century physicists and philosophers that the universe forms a static, closed totality. This view stems from an atomist ontology, where individuals are seen as abstract, events follow regular patterns, time is viewed as spatial, and laws that can be expressed mathematically are considered reversible.  In such a conception, time appears as just another “spatial” dimension. According to the block universe model, the past, present, and future all exist equally and tenselessly. The universe is imagined as a four-dimensional geometric object, like a “block” of spacetime. Time is not something that “flows” or “passes”; instead, all moments are spatially extended points in a timeless whole. Blockism suggests that change and becoming are not truly real but are simply parts of our subjective experience.  The real challenge is to reconcile Whiggism and blockism. Wright is not a theorist and might not need to worry about the coherence of his ideas, but the issue is that Whiggism assumes movement, direction, and a normatively positive evolution of change, whereas the block universe denies real temporality: there is no becoming, no novelty, no agency – only timeless existence. Some versions of the block universe attempt to preserve development by proposing that the block grows. The “block” expands as new events are added to reality, but in this view, the present defines the upper boundary of the block, and the future is not truly real. This appears to be consistent with what Wright says about climate change. Everything he has to say about global warming is limited to one short paragraph: We will treat climate change as what it is: not an existential crisis but a real, physical phenomenon that is a by-product of progress. Yes, atmospheric CO2 has increased over time – but so has life expectancy. Billions of people have been lifted out of poverty. Modern medicine, telecommunications and global transportation became possible. I am willing to take the modest negative trade-off for this legacy of human advancement. From the ICJ’s perspective, this interpretation is dreadful, as the current impacts of climate change are already at odds with the rights of many groups of people. It also exhibits basic injustice, as many of the groups that suffer the most from these impacts have done next to nothing to cause the problem. However, here I am mostly concerned with the temporality of Wright’s claims. This temporality is a combination of Whiggism and blockism: so far, history has exhibited progress, but time and processes stop here, in our present moment. The third tier: nostalgia Wright’s view of time is not limited to an ultimately incoherent combination of Whiggism and blockism. There is also more than a mere hint of nostalgia. This is evident in the appeal of a Golden Age at the outset of his article: I am honoured to advance President Donald Trump’s policy of bettering lives through unleashing a golden age of energy dominance – both at home and around the world. The appeal to the Golden Age somewhat contradicts Whiggism. From a nostalgic perspective, it seems that society has been on a downward trajectory instead of progressing. In other words, regression must be possible. Within an overall Whiggish narrative, one can blame certain actors, such as the Democrats in the US political context, for causing moral and political decline.  A nationalist narrative of a “golden age” and a return to a better past (“making us great again”) is essentially connected to the denial of planetary-scale problems, such as climate change, that would clearly require novel global responses. Climate change from a real-time perspective By merging Whiggism with a block-universe ontology (either static or growing), one ends up with a pseudo-historicism that speaks of “progress” while erasing real time. In a way, such a view “performs change” through a highly selective historical narrative, while denying the ontological preconditions of real change. Real change – emergence, transformation, causation – requires a temporal ontology, where the future is real though not yet fully determined. Thus, there is no mention of global emissions that have continued to rise, their delayed effects, feedback loops, or emergent risks given multiple processes of intertwined changes. Are the basic IPCC models based on real historical time? IPCC models often treat the climate system as a bounded system with internally consistent and deterministic dynamics. The IPCC relies on modelling and uses Bayesian methods to assess uncertainties in climate projections. Bayesian statistics involve updating the probability of a hypothesis as more evidence becomes available, based on prior knowledge (priors) and new data (likelihoods). Such an approach tends to be conservative (based on moving averages, for example) and assumes the quantifiability of uncertainty. It may also convey illusory precision, especially when the underlying models or data are uncertain or incomplete. The IPCC models nonetheless indicate – in contrast to Wright – that the future is real, though the future is approached in a somewhat cautious and deterministic manner. However, many climate scientists go beyond the IPCC consensus by assuming that global heating may reach 2.5 °C or even above 3 °C degree warming by the end of the century.  From a critical scientific realist viewpoint, even such anticipations may be too circumspect. Assuming exponential growth (involving cascading events etc.) and given that recent data shows a rise from 1.0°C to 1.5°C in just 15 years (actual data taken on an annual basis, not moving averages), and using this as a basis for anticipating the future, we seem likely to reach the 2 °C mark in the 2040s and the 3 °C mark in the 2060s.  The plausibility of anticipations depends significantly on how the real openness of the future is treated. Anticipations are reflexive and can shape the future. Real time and historical change involves human freedom and ethics. The evolving universe, where time is real, is stratified, processual, and open-ended. Time involves genuine processes, real possibilities, agency, and emergent structures. Such characteristics indicate that the future is not predetermined but can be shaped by transformative agency.  To sum up, from a real historical time perspective, Wright’s combination of Whiggism, blockism, and nostalgia is a recipe for reactionary politics. Glorifying the present, thinking in a timeless way, and longing for a golden age of the past can play a major role in bringing about a dystopian planetary future.

When Hezbollah makes headlines, it’s usually in reference to its military entrenchment in southern Lebanon, its alignment with Iran, or its influence on the internal politics of Beirut. Rarely does the Western Hemisphere—let alone South America—enter the discussion. And when it does, the framing tends to follow a familiar arc: Hezbollah, in search of hard currency, has plugged itself into narcotics, smuggling, and money laundering networks across the continent, particularly in the Tri-Border Area of Paraguay, Brazil, and Argentina. This framing is not entirely wrong—but it is incomplete. The prevailing analysis treats Hezbollah’s South American activity as an opportunistic extension of its Middle Eastern operations: a way to fund the real action elsewhere (Sánchez-Azuara 2024). But this view underestimates the strategic thinking behind the group’s presence in the region. It also overlooks what Hezbollah has built. This is not a haphazard criminal sideline. It is a strategic redundancy network—a deliberately constructed system that enables Hezbollah to replicate key elements of its logistical, financial, and operational architecture outside the Middle East. In engineering, redundancy is the backbone of resilience. Critical systems—airplanes, power grids, even satellites—include backups not because failure is likely, but because failure must not be catastrophic. Hezbollah has applied this principle to its global infrastructure. In South America, it has established a parallel network that functions as an insurance policy. When borders close in the Levant, when sanctions bite into banks in Beirut, when surveillance escalates in Damascus or Baghdad, Hezbollah’s South American infrastructure absorbs the shock. It keeps the lights on. Quietly. Hezbollah’s footprint in South America must be reinterpreted in light of this logic. Its operations are not merely about funding jihad, nor do they reflect simple criminal diversification. Rather, they represent a strategic adaptation: a forward-looking response to growing constraints in the Middle East and a model of globalized insurgency capable of surviving geopolitical disruption. By embedding itself in regions with weak enforcement, complex diasporas, and pliable state actors, Hezbollah has created a system that mirrors and supplements its core operational capacities in Lebanon. The implications ripple outward to multinational corporations, humanitarian NGOs, diplomatic missions, and financial institutions operating in the Western Hemisphere. More Than a Militia: A Low-Burn Threat with High-Stakes Implications for South America Most strategic planning in the Americas does not seriously account for Hezbollah. But Hezbollah includes the Americas in its strategy—and has for years. Reports by the U.S. State Department, regional intelligence agencies, and investigative journalists have traced its fundraising and logistics operations as far back as the 1980s. The group’s involvement in the 1992 bombing of the Israeli Embassy and the 1994 attack on the AMIA Jewish cultural center in Buenos Aires shocked the region and revealed its operational reach. Yet even after those attacks, Hezbollah’s local infrastructure remained largely untouched. Over time, it adapted—becoming quieter, less kinetic, and more commercially embedded. Today, Hezbollah’s presence in the region extends beyond Argentina. Its operatives and facilitators maintain networks across Paraguay, Brazil, Venezuela, and increasingly, Panama and Chile. In some areas, the group benefits from corrupt municipal officials and overburdened law enforcement. In others, it leverages familial ties within Lebanese diaspora communities—many of which have resided in South America for generations and engage in wholly legitimate commerce. This duality allows Hezbollah to move seamlessly between legal and illegal domains, between visibility and invisibility. What is more, Hezbollah’s activities in South America illustrate a critical shift in how non-state actors pursue durability. The post-9/11 focus on active cells, kinetic operations, and centralized command has obscured the ways in which militant groups evolve under pressure. Hezbollah’s Latin American strategy reflects not just persistence, but future-proofing. It prepares the group to operate, fundraise, and survive—even if Lebanon’s political landscape collapses or U.S. and Israeli countermeasures grow more precise. This is what makes Hezbollah’s Latin American footprint so consequential—and so misunderstood. It does not need to launch attacks from Buenos Aires or Caracas to matter. Its function lies elsewhere: in logistics, in mobility, in backup planning. Its value is latent—until it isn’t. This article reexamines Hezbollah’s presence in South America as a strategic redundancy network—a global infrastructure designed to insulate the organization from volatility in its home region. It maps Hezbollah’s key nodes across the Tri-Border Area, Brazil, and Venezuela; analyzes how this network blends ideology, crime, and strategic depth; and assesses the risks these structures pose to multinational companies, diplomatic missions, and local governance. By shifting the analytical lens from terrorism-as-attack to terrorism-as-infrastructure, we gain a more accurate understanding of Hezbollah’s evolution. We also sharpen our ability to assess long-term risks that don’t always announce themselves through violence. The threat is not just in what Hezbollah does—but in what it has already built. To understand Hezbollah’s long game in South America, we must stop treating its regional footprint as a patchwork of illicit side hustles and begin seeing it for what it is: a modular system, designed to flex and absorb pressure. Its parts do not function in isolation. They interlock—geographically, financially, and politically—to provide resilience against external disruption (Fanusie and Entz 2017). The Tri-Border Area and Venezuela anchor this network. One provides operational depth; the other, state-enabled sanctuary. This networked approach reflects a deliberate organizational logic: decentralization without disintegration. Hezbollah doesn’t need to command every operation from Beirut to exert control. Instead, it builds regional capacities—trusted facilitators, revenue-generating enterprises, covert logistics—that can operate semi-autonomously while remaining ideologically and financially tethered to the core. The value lies in the system’s adaptability. South America’s legal pluralism, infrastructural gaps, and uneven political allegiances allow Hezbollah to embed itself in multiple jurisdictions, each contributing to a broader architecture of operational continuity. The redundancy isn’t accidental—it’s engineered to allow Hezbollah to absorb disruption without systemic collapse. At the confluence of Paraguay, Brazil, and Argentina lies the Tri-Border Area, a notorious gray zone where Hezbollah has operated with continuity for over three decades (Marinides 2021). Since the 1990s, the group has leveraged this region’s smuggling economy, its cash-based transactions, and its thin rule of law to generate income and obscure its footprints (Giambertoni March 2025; Singh & Lamar 2024). More than a staging ground, the region functions as a logistical twin to Hezbollah’s Levantine infrastructure: cash businesses, hawala systems, safe houses, and a deep bench of operatives linked by blood, marriage, and communal identity. The Lebanese diaspora, concentrated in cities like Ciudad del Este and Foz do Iguaçu, provides both legitimacy and opacity. While most community members engage in legal commerce, Hezbollah operatives exploit social and familial networks to build financial pipelines and conceal movement. Individuals like Assad Ahmad Barakat—an alleged financier whose web of import-export businesses stretched across Paraguay and Brazil—reveal the sophistication and scale of these operations (BBC 2018). But what makes the Tri-Border Area especially valuable is not just what Hezbollah can do there—it’s what it can replicate. This zone mirrors the group’s operational core: informal financial tools, plausible cover, limited state oversight. It offers a plug-and-play platform that persists even when international pressure tightens elsewhere. If the Tri-Border Area is Hezbollah’s logistical limb, Venezuela is its political lung—a place where the group doesn’t just operate despite the state but, increasingly, through it. Under the leadership of Hugo Chávez and now Nicolás Maduro, Venezuela has extended cover to Hezbollah-linked actors in ways that surpass tolerance and verge on partnership. Evidence abounds. In 2015, reports emerged that Venezuelan authorities had issued passports, national ID cards, and even birth certificates to individuals with suspected ties to Hezbollah and other extremist groups (Humire 2020). These documents grant mobility across Latin America and even into Europe. Meanwhile, direct flights between Caracas and Tehran—often operated by Iran’s Mahan Air, a U.S.-sanctioned airline with alleged ties to the Islamic Revolutionary Guard Corps—further illustrate the depth of coordination. Financial networks also interlace. Venezuelan state-owned banks, particularly under Chávez, were reportedly used to move funds on behalf of Hezbollah-aligned entities, sometimes in cooperation with Lebanese banks later implicated in terror financing (Testimony, U.S. Congress 2011). This alignment is less ideological than pragmatic: Hezbollah gains security, access, and mobility; Venezuela gains a partner in sanctions circumvention and international leverage. Crucially, Venezuela adds a layer of strategic camouflage to Hezbollah’s hemispheric model. While the TBA offers discretion, Caracas offers impunity (Berg 2022). The group can move assets, people, and ideas through Venezuelan channels under the guise of diplomatic exchanges or dual-national transactions. This is state-enabled redundancy: not merely a lack of enforcement, but the active insulation of Hezbollah’s operational flexibility. Together, these zones demonstrate that Hezbollah’s South American presence is not improvised—it is layered. When Argentine prosecutors expose a cell in Buenos Aires, networks in São Paulo remain untouched. When Brazil clamps down on a hawala chain, cash still flows through real estate deals in Caracas. The system is designed to endure partial failure, the way cloud computing routes around downed servers or insurgent groups retreat into sympathetic terrain. The architecture matters because it reveals the logic behind Hezbollah’s global adaptation. This is not a franchise operation outsourced to disconnected local actors. It is a strategic mesh that functions like a second operating system: invisible unless you’re looking for it, vital when the primary network goes offline. And increasingly, Hezbollah seems to assume that its primary network will face pressure—from war, collapse, sanctions, or surveillance. Its bet on South America is a bet on resilience: that geography, corruption, and complexity will give it space to breathe, to rebuild, to persist (Vianna de Azevedo 2018). If Hezbollah’s operations in South America offer strategic redundancy, then its model of action is what enables that redundancy to function. Hezbollah is no longer simply a militant group with a sideline in organized crime—it is a criminal-security complex, able to blend ideological loyalty, transnational finance, and illicit commerce into a coherent infrastructure. This hybridization is not an accident of globalization. It is an intentional adaptation: a convergence of warfighting, financing, and shadow governance designed to give the group longevity across regions and regimes. The group’s operations across South America exemplify this logic. Hezbollah traffics in cocaine not because it is drifting ideologically, but because narcotrafficking enables financial independence (Cengiz and Pardo-Herrera, 2023). It launders money through construction firms, front charities, and black-market trade not just to enrich itself, but to diversify revenue streams that are otherwise vulnerable to sanctions, asset freezes, and regulatory scrutiny. The criminal activity is not peripheral—it is integral. It funds social services in Lebanon, underwrites salaries, and maintains Hezbollah’s standing as both a state within a state and an actor without borders. Although Hezbollah’s operations in South America often emphasize logistics, finance, and redundancy, this does not mean the group has abandoned violent ambitions in the region. It has a bloody legacy. In more recent years, several planned attacks have been foiled. In 2023, Brazilian police stopped a Hezbollah-linked plot to assassinate Jewish community members in São Paulo (Ottolenghi 2024). In 2024, Peruvian police arrested Majid Azizi, who was linked to Iran’s Quds force and a plan to kill Israelis (Associated Press 2024). These incidents reinforce that Hezbollah’s South American presence is not merely infrastructural—it remains strategically capable of violence, should conditions allow or directives come from the group’s central leadership. Critically, Hezbollah’s integration into South America’s illicit economies also offers another layer of camouflage. In regions like the Tri-Border Area or peri-urban zones of São Paulo and Caracas, Hezbollah-linked actors look indistinguishable from the broader ecology of criminality—traffickers, smugglers, forgers, corrupt customs agents. This horizontal integration into shared logistics chains, financial systems, and market ecosystems makes it harder to isolate and disrupt Hezbollah’s footprint without simultaneously challenging broader organized crime structures. The result is a kind of strategic opacity: Hezbollah disappears not by hiding, but by blending in. For multinational corporations, humanitarian NGOs, and diplomatic missions operating in South America, this criminal-security complex presents a growing, if largely unacknowledged, threat. The risk does not lie in direct targeting—there is little evidence that Hezbollah seeks to attack Western firms or consulates on South American soil. Rather, the danger lies in proximity and entanglement (Giambertoni April 2025). Financial institutions may unwittingly process laundered money that ultimately funds Hezbollah’s activities. Logistics companies may contract with Hezbollah-linked freight operators (FinCEN 2024). NGOs operating in diaspora communities may encounter pressure, coercion, or exploitation. Extractive industries—especially in energy, mining, and infrastructure—face particular exposure (Chehayeb 2023). These sectors rely on subcontractors, regional supply chains, and informal agreements that can overlap with Hezbollah’s facilitation networks. The opacity of ownership structures in some Latin American business environments makes it difficult to know where one entity ends and another begins. A subcontractor in Brazil with access to port logistics might also be part of a shell company system that channels funds back to Beirut. A bonded warehouse in Ciudad del Este may function both as a legitimate import hub and a conduit for hawala-based financing tied to Hezbollah’s broader network. For diplomats, the risks are different but no less concerning. In states with fragile institutions or politicized security services—such as Venezuela or parts of Paraguay—Hezbollah-linked actors may enjoy informal protection from scrutiny. Intelligence-sharing becomes inconsistent. Local officials may be compromised. Embassies may be surveilled—not just by hostile governments, but by non-state actors with access to state resources (Giambertoni March 2025). In these contexts, the lines between criminal enterprise, political patronage, and extremist logistics begin to blur. These risks remain under-assessed. Most private-sector risk management strategies focus on regulatory compliance, physical security, and reputational threats. Few include Hezbollah in their risk matrix—particularly outside of the Middle East. Similarly, many Western diplomatic missions in Latin America treat terrorism as a foreign concern, rather than an embedded dimension of local security dynamics. This leaves a strategic blind spot: a low-visibility, high-impact network capable of exerting pressure not through acts of violence, but through slow, systemic infiltration of commerce, finance, and institutional space. Hezbollah’s strength lies not only in its weapons, but in its ability to move undetected through legal and illegal spheres (Realuyo 2023). Its South American network functions because it is underestimated—because it doesn’t look like a threat until it’s too late. For governments and global businesses alike, failing to recognize this hybrid model is not just an analytical error. It is a real vulnerability. Policy Recommendations If Hezbollah’s operations in South America represent a strategic redundancy network, then our policy responses must move beyond traditional counterterrorism frameworks. We can no longer afford to treat Hezbollah as a regionally bounded threat or assume that the absence of direct attacks in the Western Hemisphere equates to the absence of risk (Williams & Quincoses 2019). What’s needed is a recalibration of threat assessment tools—across intelligence, diplomacy, and corporate risk management—that recognizes Hezbollah’s global infrastructure as a durable, layered, and often latent system of power. Four policy recommendations are set out below. (1) Reframe Counterterrorism to Include Redundancy Networks. Current counterterrorism paradigms often emphasize active cells, plots, and kinetic capability. But Hezbollah’s South American presence thrives in the space between categories—not as an imminent military threat, but as a strategic platform for financing, mobility, and long-term resilience. Intelligence agencies and regional policymakers should explicitly include redundancy mapping in their threat assessments. This means tracing not only individual actors but also financial pipelines, logistics corridors, and diaspora-based facilitation networks.Tools developed to combat transnational organized crime—such as financial intelligence units, sanctions compliance structures, and asset-tracing software—should be integrated into counterterrorism workflows. This is particularly important in countries with weak institutional capacity. Regional partnerships, including within the Organization of American States, should prioritize shared methodologies for identifying overlapping illicit economies that enable both criminal and extremist actors to operate with impunity. (2) Build Strategic Partnerships with the Private Sector. Hezbollah’s infrastructure often intersects with legitimate commercial activities: shipping, construction, hospitality, real estate. As such, private sector actors—including banks, insurers, freight companies, and law firms—are essential stakeholders in any meaningful containment strategy. Governments should expand existing public-private initiatives, like those managed through financial transparency task forces and corporate compliance alliances, to include modules specific to extremist logistics and terrorism-financing risk in the Americas.This also means equipping multinational corporations with the right conceptual frameworks. Current risk matrices focus on political instability, cyber threats, and reputational harm. Few companies assess whether their contractors, vendors, or local partners may serve as inadvertent facilitators of a terrorist redundancy system. Governments can assist by anonymizing and sharing case studies, refining due diligence protocols, and funding third-party investigative work through credible local partners and NGOs. (3) Close Gaps in International and Interagency Coordination. Despite ample documentation of Hezbollah’s activities in the region, international coordination remains ad hoc and episodic. U.S., European, and Latin American enforcement agencies often operate on different threat models, timelines, and political sensitivities. For example, while the U.S. Treasury has sanctioned several Hezbollah-linked individuals and entities in Paraguay and Brazil, host governments have sometimes been reluctant to pursue follow-up action due to domestic constraints or regional geopolitics.To close these gaps, threat fusion centers and regional counterterrorism dialogues must prioritize cross-agency and cross-border approaches. This includes better integration of customs, immigration, and financial enforcement authorities—not just traditional intelligence bodies. Multilateral cooperation should also include non-traditional allies, such as financial technology platforms, compliance software firms, and investigative journalists, all of whom bring unique capabilities to mapping and disrupting Hezbollah’s hemispheric infrastructure. (4) Recognize the Role of State Complicity and Use Diplomatic Leverage Accordingly. Where Hezbollah has flourished, state complicity or neglect has often played a role. Venezuela’s documented provision of false identification documents and banking channels illustrates how strategic partnerships—whether ideological or transactional—can deepen terrorist networks’ resilience. The United States and its allies must tailor their diplomatic messaging and aid strategies accordingly, making clear that support for terrorist-enabling behavior comes with long-term costs.Sanctions regimes must be selective but targeted. Blanket restrictions can alienate host populations and drive illicit actors further underground, while targeted designations—such as those aimed at specific facilitators or entities—can disrupt network nodes without provoking state backlash. Where possible, quiet diplomacy should accompany enforcement, ensuring that pressure is matched by the offer of capacity-building or reputational incentives for cooperation. A smarter approach to Hezbollah’s South American infrastructure doesn’t require new tools so much as a new lens. This is not a traditional terrorist threat—it is a system of persistence, one that blends into markets, moves through paperwork, and grows in spaces where governance is uneven (Biersteker 2016). If left unchallenged, it will not just endure. It will adapt. Conclusion: The Quiet Power of a Backup Plan Hezbollah’s presence in South America is not incidental, improvised, or peripheral. It is engineered. For decades, the group has invested in a hemispheric infrastructure that does not rely on violence to assert its importance. Instead, it does something more dangerous in the long run: it endures. By embedding itself in transnational supply chains, black-market economies, diaspora communities, and state-permissive jurisdictions, Hezbollah has constructed a strategic redundancy network—a system designed not for visibility, but for survivability. This network operates on a different frequency from the one to which most counterterrorism frameworks are attuned. It does not seek attention. It does not announce itself through spectacular attacks. It functions in latency—ready to fund, shelter, transport, or regenerate Hezbollah’s central operations when other routes are disrupted. Like any sophisticated backup system, it exists precisely because failure elsewhere is assumed to be inevitable. The danger lies in underestimating this architecture. Policy models that focus solely on immediate threats—explosives, plots, active cells—miss the strategic significance of a group that is thinking in decades, not news cycles. Hezbollah has learned to operate across borders, sectors, and enforcement regimes. It has turned globalization into a defensive perimeter. And it has done so largely beneath the radar of both policymakers and corporate risk officers. To respond, we must broaden our conception of what constitutes a threat. Hezbollah’s South American operations do not simply reflect a terrorist group looking for cash—they reflect a networked actor preparing for disruption, building flexibility into its geography, financial systems, and political alliances. This demands more than sporadic sanctions or headline-driven crackdowns. It requires an integrated strategy that sees terrorist groups not only as fighters or financiers, but as strategic planners. The lesson of Hezbollah in South America is not that terrorism has gone quiet—it’s that it has gone infrastructure-first. If we continue to ignore the scaffolding in favor of the storm, we will continue to be surprised not by what Hezbollah does—but by how ready it is when the time comes. ReferencesBiersteker, Thomas J. 2016. “The effectiveness of United Nations targeted sanctions.” In Targeted Sanctions: The Impacts and Effectiveness of United Nations Action. Edited by Thomas J. Biersteker, Sue E. Eckert, and Marcos Tourinho. Cambridge: Cambridge University Press.Berg, Ryan. “Venezuela’s Mystery Plane Shows Iran’s Strategic Penetration of Latin America,” U.S. Army, Training and Doctrine Command G-2, Foreign Military Studies Office, July 1, 2022.Cengiz, Mahmut, and Camilo Pardo-Herrera. “Hezbollah’s Global Networks and Latin American Cocaine Trade,” Small Wars Journal, April 26, 2023.Chehayeb, Kareem. “US sanctions Lebanon-South America network accused of financing Hezbollah.” Associated Press. September 12, 2023. https://apnews.com/article/lebanon-sanctions-hezbollah-ofac-c1e66bb0941ee01832aafbcc448856ceFanusie, Yaya J., and Alex Entz. “Hezbollah Financial Assessment,” Terror Finance Briefing Book, Foundation for Defense of Democracies, Center on Sanctions and Illicit Finance, September 2017.“FinCEN Alert to Financial Institutions to Counter Financing of Hizballah and its Terrorist Activities.” U.S. Treasury Financial Crimes Enforcement Network. October 23, 2024. https://www.fincen.gov/sites/default/files/shared/FinCEN-Alert-Hizballah-Alert-508C.pdfGiambertoni, Marzia. “Hezbollah’s Networks in Latin America.” RAND. March 31, 2025. https://www.rand.org/pubs/perspectives/PEA3585-1.htmlGiambertoni, Marzia. “Hezbollah’s Network on America’s Southern Doorstep.” RAND. April 1, 2025. https://www.rand.org/pubs/commentary/2025/04/hezbollahs-network-on-americas-southern-doorstep.html“‘Hezbollah treasurer’ Barakat arrested in Brazil border city.” BBC. September 21, 2018. https://www.bbc.com/news/world-latin-america-45610738Humire, Joseph B. 2020. “The Maduro-Hezbollah Nexus: How Iran-backed Networks Prop up the Venezuelan Regime.” The Atlantic Council. https://www.atlanticcouncil.org/in-depth-research-reports/issue-brief/the-maduro-hezbollah-nexus-how-iran-backed-networks-prop-up-the-venezuelan-regime/“Judge orders preventative detention for Iranian and 2 Peruvians in thwarted plot to kill Israelis.” Associated Press. April 24, 2024. https://apnews.com/article/peru-iran-killing-plot-detention-israeli-b89d6b69b182feafb96b44cbdefa190aMarinides, Demetrios. “Hezbollah in Latin America: A Potential Grey Zone Player in Great Power Competition.” William J. Perry Center for Hemispheric Defense Studies, National Defense University, September 2021.Ottolenghi, Emanuele. 2024. “Hezbollah Terror Plot in Brazil.” International Institute for Counter-Terrorism. https://ict.org.il/hezbollah-terror-plot-in-brazil/Realuyo, Celina B. “Rising Concerns about Hezbollah in Latin America Amid Middle East Conflict.” Weekly Asado. Wilson Center. December 1, 2023. https://www.wilsoncenter.org/blog-post/rising-concerns-about-hezbollah-latin-america-amid-middle-east-conflictSánchez-Azuara, Raúl. “Hezbollah, Entrenched in Latin America,” Diálogo Américas, March 15, 2024.Singh, Rasmi, and Jorge Lamar. “Underworld Crossroads: Dark Networks and Global Illicit Trade in the Tri-border Area Between Argentina, Brazil, and Paraguay.” Small Wars Journal. August 6, 2024. https://smallwarsjournal.com/2024/08/06/underworld-crossroads-dark-networks-and-global-illicit-trade-tri-border-area-between/Vianna de Azevedo, Christian. 2018. “Venezuela’s toxic relations with Iran and Hezbollah: An avenue of violence, crime, corruption and terrorism.” Revista Brasileira de Ciências Policiais 9(1): 43-90.Williams, Phil, and Sandra Quincoses. 2019. “The Evolution of Threat Networks in Latin America.” Jack D. Gordon Institute for Public Policy. Florida International University. https://gordoninstitute.fiu.edu/research/research-publications/evolution-of-threat-networks-in-latam.pdf

Abstract To deliver low-carbon transitions, we must understand the dynamics of capital. To this end, I develop a theory of energy-capital relations by reading Adam Smith’s The Wealth of Nations from an energy-analysis perspective. I argue that, for Smith, capital is any resource used to support production with the intention of generating profits through market exchange. In The Wealth of Nations, capital enables access to new sources of energy and increases energy efficiency. This theory of energy-capital relations explains trends seen in historical energy data: because it is profit driven, capital does not save energy, it redirects it to new uses. This suggests that low-carbon investment can only enable a low-carbon transition if coupled to a systematic challenge to the profit drive.JEL Classification: B12, O44, P18, Q43, Q57Keywordseconomic growth, low-carbon transitions, Adam Smith, history of economic thought, capital, energy, capitalism 1. Introduction: Energy, Capital and Low-Carbon Transitions Under Capitalism To date, the green rhetoric of states and companies has not led to meaningful reductions in carbon emissions. In absolute terms, annual global carbon emissions from fossil fuels increased from ~6 gigatons of carbon per year in 1990 to ~10 gigatons of carbon per year in 2022 (Friedlingstein et al. 2023). Carbon emissions are largely driven by the energy system that supports the capitalist economy, and there is no evidence that this is decarbonizing at the global scale. In 2020, fossil fuels accounted for around 80 percent of total world energy supply, the same figure as in 1990 (IEA 2022). In 2022 carbon emissions from fossil fuels accounted for around 90 percent of total global carbon emissions, up from 80 percent in 1990 (Friedlingstein et al. 2023). Carbon emissions from energy and industrial processes hit an all-time high in 2023 (IEA 2024). To change this increasingly dire picture, it is essential that we understand the economic drivers of emissions, and what economic changes are needed to reverse current trends. There is disagreement over the extent and nature of economic change needed to facilitate a low-carbon energy transition. Radical economists agree that the global reliance on fossil fuels will require going beyond market-based solutions (Li 2011; Pianta and Lucchese 2020; Pollin 2019). But this still leaves us with a broad spectrum of options (Chester 2014). Can a low-carbon transition be implemented within a broadly capitalist framework if it is guided by an interventionist industrial strategy (Pollin 2015)? Or does it require changes to fundamental capitalist dynamics (Davis 2019; Riley 2023)? To cast new light on these debates, I take a step back from the immediate issues and take a history of economic thought approach. To this end, I explore the relationship between capital and energy in Adam Smith’s (1975) The Wealth of Nations. I use the resulting view of energy-capital relations to put forward an explanation of how energy use has developed under capitalism, and to explain why a low-carbon transition is unlikely without addressing core capitalist dynamics. The decision to develop the analysis of energy-capital relations from The Wealth of Nations is grounded in the more general epistemological claim that returning to older works of economic theory is a useful way to conduct economic analysis. Blaug (1990) reminds us that all current economic theory is built from seldom read historical texts, and historians of economic thought have argued that revisiting these texts offers the opportunity to uncover new ways of interpreting key ideas, providing theoretical context that may have been forgotten (Bögenhold 2021; Schumpeter 1954). Additionally, actively engaging with historical thought presents the possibility for moments of creativity as old and new ideas are brought together. For example, Mair, Druckman, and Jackson (2020) use an analysis of economic ideas in utopian texts from the twelfth to nineteenth centuries to develop a vision of work in a post-growth future, and Stratford (2020, 2023) develops a theory of rents and resource extraction grounded in an analysis of the historical evolution of the concept of rent. The general approach of critical engagement with history of thought is perhaps best developed in the Marxist literature, where a substantive body of work draws on Marx’s writings to critically explore environment-economy relationships (e.g., Malm 2016; Moore 2017; Pirgmaier 2021; Saitō 2022). On the other hand, relatively little attention has been paid to Adam Smith in the context of ecological or environmental economic analysis. Most recent interest in Smith’s environmental thought has come from environmental historians (see Steeds 2024 for a review). However, Steeds (2024), building on Jonsson (2014), has made the case for reading Smith as an ecological economist, arguing that Smith shares core ontological precepts of the discipline—notably that it is the environment that underpins all economic activity. Smith (1975) is particularly relevant to debates about low-carbon transitions because The Wealth of Nations is the starting point for an interpretation of capital theory that has become widely used in energy-economy analyses. Capital theory itself has a long and storied history, with analysts giving it a variety of characteristics (Cannan 1921; Kurz 1990; Mair 2022). Contemporary economic analyses of energy generally use a physical concept of capital. A common position for economists who focus on energy is that energy is important because energy use and capital are “quantity complements”: all else equal, when capital increases the energy used in production increases (Elkomy, Mair, and Jackson 2020; Finn 2000; Sakai et al. 2019). Conceived of as “representative machinery,” capital is seen as the physical stuff that channels energy use into production (Keen, Ayres, and Standish 2019: 41). Or as Daly (1968: 397) puts it, “physical capital is essentially matter that is capable of trapping energy and channeling it to human purposes.” This physical conception has its roots in the dominant interpretation of capital from The Wealth of Nations. Prior to The Wealth of Nations, capital was a predominantly monetary construct, but historians of economic thought argue that after The Wealth of Nations, capital is taken to be predominantly physical (Hodgson 2014; Schumpeter 1954). However, I argue that Smith’s view of capital is actually a long way from the almost purely physical views seen in much energy-economy work. Rather, Smith’s view of capital is proto-Marxist. As Evensky (2005: 141) puts it, “Whether or not it was from Smith that Marx developed his notion of capital as self-expanding value, the outlines of that conception were certainly available to him in Smith.” From Smith’s perspective, capital is defined primarily as a socio-physical construct (Blaug 1990; Evensky 2005; Meek 1954). Capital sometimes has physical forms, which enables it to interact with flows of energy, but these are always conditioned by the social dynamics of profit and exchange. Making a direct connection to energy requires reading Smith from the contemporary perspective of energy-economy analysis as developed by the subdisciplines of ecological, biophysical, and exergy economics (Brockway et al. 2019; Jackson 1996; Keen, Ayres, and Standish 2019; Smil 2017a). This is because, as a construct, “capital” pre-dates “energy,” and Smith was writing before the first recorded use of the term energy as we would understand it today (by physicist Thomas Young in 1807, see: Frontali 2014). So although work into energy—particularly among ecological economists and their forerunners in energy systems analysis (Cleveland et al. 1984; Odum 1973; Sakai et al. 2019)—uses a concept of capital that has its roots in an interpretation of Smith’s capital theory, explicit links are missing in Smith’s text. Despite this, Steeds (2024) argues that Smith’s analysis of agriculture shows an understanding of what contemporary analysts would call energy, a theme I develop here focusing on Smith’s conceptualization of capital. The rest of this article is structured as follows. In section 2, I set out an interpretation of Smith’s capital theory from The Wealth of Nations that emphasizes the way it sees physical elements of capital as defined by social forces. In section 3, I outline the ways that energy fits into Smith’s theory of capital. This is the first contribution of the article, as I make novel links between Smith’s capital theory and contemporary energy-economy analysis. In section 4, I apply this interpretation of energy-capital relations to the historical evolution of energy use under capitalism, and the question of low-carbon transitions. This is the second contribution of the article, as I argue that Smith’s capital theory highlights the importance of the social context of energy systems. Specifically, it provides compelling explanations for the phenomenon of “energy additions”—where past “transitions” under capitalism have been associated with the overall growth of energy use (York and Bell 2019). This implies that the challenge of a low-carbon transition is not only investment in low-carbon energy systems but in challenging the logic of capitalism such that low-carbon energy can replace, rather than add to, the use of high-carbon energy. 2. Capital as a Socio-physical Construct in The Wealth of Nations Interpretations of Smith’s capital theory generally emphasize its physical aspects (e.g., Cannan 1921; Hodgson 2014; Schumpeter 1954). These readings focus on Smith’s initial description of capital as a subset of the accumulation of the physical outputs of production (in Smith’s terminology “stock” [cf. Smith 1975: 279]), and the skills and abilities of workers (Smith 1975: 282). The focus on physical aspects of Smith’s capital theory makes sense from a history of ideas perspective. The physical aspects of Smith’s capital stand in contrast with earlier definitions that were primarily monetary (Hodgson 2014). There is also an intellectual lineage that can be traced in Smith’s views on capital, principally through Smith’s relationship with the French Physiocratic school whose own economic analysis emphasized physical flows (Meek 1954; Schumpeter 1954). However, the fact that Smith introduced a new role for physical goods within a broader concept of capital does not imply that Smith’s theory of capital was purely physical (Robinson 1962). Rather, Smith views capital as the accumulated monetary and physical resources that are brought into production to generate a profit. To see this, let us look first at Smith’s view of circulating capital. Smith splits capital into two forms, circulating and fixed, and he is explicit that circulating capital has both monetary and physical forms. For Smith, circulating capital is defined by the fact that to turn a profit from it, its owner must give it up in exchange for something else. Consequently, circulating capital takes multiple forms: it is the money that will be used to pay wages to a worker, the product produced by that worker, the money realized at the point of sale of the product, and the commodities purchased using the money realized. As Smith (1975: 279) puts it, circulating capital is continually going from the capitalist “in one shape, and returning to him in another. . . it is only by means of such circulation. . . that it can yield him any profit.” Circulating capital is a process of purchasing and selling resources, often with a monetary form, in order to make more money (Evensky 2005). Circulating capital has different forms (some physical, some not) at different points in its circulation, but it is consistently capital. Even when capital takes on its physical form, for Smith it is the underlying social dynamics of exchange and profit that define it as capital. In his opening to book 2, Smith argues that capital is an emergent property of exchange-based economies (Smith 1975: 276). In a society with no division of labor, he argues, people are self-sufficient, and there is very little exchange. But once you have a division of labor, you get exchange because each worker uses their labor to produce a subset of the goods needed to live. Other workers use their labor to produce a different subset of goods. The two then trade with one another to ensure all their needs are met. Drawing on the work of the Physiocrats, Smith then observes that production takes time (Schumpeter 1954). Consequently, in a market system, the purchasing of goods from other people “cannot be made till such time as the produce of his own labor has not only been completed, but sold” (Smith 1975: 276). This means that in either a monetary or barter economy, there has to be a stock of physical goods previously accumulated in order to enable work to happen before the products of that work have been sold (or are available for barter). For Smith, these goods are a form of capital. In this sense, capital can be physical commodities—but physical commodities accumulated in order to support exchange. For Smith, profits are also an essential part of the definition of capital (Meek 1954). Whether fixed or circulating, physical or monetary, what makes something capital is the desire of the capitalist to earn money from it (e.g., Smith 1975: 281, 332). Smith’s theory of profit is scattered through The Wealth of Nations and is not entirely comprehensive (Blaug 1990; Christensen 1979). However, Smith does identify a construct called profits with some core tendencies that are sufficient to group him in the classical approach to profit as surplus and deduction (Hirsch 2021; Kurz 1990; Meek 1977). For Smith, surplus is primarily derived from the value that labor adds to raw materials. This value then goes to pay the wages of the worker and other costs of production, one of which is “the profits of their employer” (Smith 1975: 66). So, Smith’s theory of profit is deductive. Profit is the money capitalists attempt to gain back from production after all costs—including wages—have been accounted for (Meek 1977). An important addition here is that the profit drive for Smith is speculative: capitalists bring capital to support production because they “expect” to generate more money (Smith 1975: 279, 332)—it is not guaranteed. The attempt to gain profit is because capitalists use this as their income (cf. Smith 1975: 69, 279). This attempt is central to the dynamics of capital because profit is the “sole motive” that a capitalist has for bringing their resources into the exchange cycle of the economy (Smith 1975: 374). To summarize, for Smith, capital is the accumulated resources (whether physical or monetary) brought to bear in support of exchange-based production, the ultimate aim of which is to provide the owner of capital with an income (profits). Consequently, it is not correct to view Smith’s capital theory as purely or even predominantly physical. Rather Smith’s capital is a socio-physical construct. This interpretation is not a refutation of other readings that emphasize the physical aspect of Smith’s theory. The physical elements are present, are important, and are relevant to our discussion of energy. However, the underlying premise is always that these physical elements are defined by social relations of profits and exchange. This analysis fits with readings of Smith that see his capital theory as proto-Marxist because of the way it frames capital in terms of social relations (Hodgson 2014; Pack 2013; Tsoulfidis and Paitaridis 2012). But it strongly cautions away from discussions of capital that abstract from these social relations in ways that leave capital as purely physical things. As with Marx (2013), when Smith talks about capital as physical things, his focus is on the way the physical interacts with social relations. 3. How Does Energy Fit into Smith’s Capital Theory? Having sketched an interpretation of Smith’s capital theory focusing on the interplay of profit, exchange dynamics, and monetary and physical resources, we can turn to the question of how energy fits into Smith’s capital theory. In this section, I draw on energy-economy analysis to suggest two key ways in which energy might fit into Smith’s capital theory: 1. Capital is used to bring new energy sources into production.2. Capital is used to make existing energy flows more efficient. 3.1. Accessing new energy sources For Smith, one of the key ways that capitalists aim to generate profits from capital is by using it to increase labor productivity (in Smith’s terms “abridging” labor, see: Smith 1975: 17, 282). Here we have a link to energy-economy analysis, where labor productivity is often described in terms of substituting human labor for other forms of energy—since the industrial revolution this has typically happened through some form of fossil fuel–powered machinery (Smil 2017a). Smith discusses machinery in a number of places across The Wealth of Nations. Indeed, Kurz (2010: 1188) writes that one of Smith’s key growth mechanisms is the replacement of “labor power by machine power.” In chapter 11 of book 1 of The Wealth of Nations (Smith 1975: 263), Smith discusses how cloth production in Italy was made more productive than in England by employing wind and water mills in the former, while the latter treaded it by foot. This is the same example pointed to by energy scientist Vaclav Smil (2017a), who argues that the introduction of waterwheels into industrial production were a source of substantive labor productivity growth. Energy-analysis allows us to say why the wind and water is more productive than the treading. Energy provides a variety of functions, known as “energy services,” which are essential for production processes (Grubler et al. 2012). These are intuitive when put in the context of everyday experiences: achieving a comfortable temperature in an office or workplace requires thermal energy. Transporting goods or people requires kinetic energy. In the case of cloth production, the fulling process requires kinetic energy to manipulate the fibers of the cloth. To deliver energy services, energy sources go through a series of transformations, known as the conversion chain (Brockway et al. 2019; Grubler et al. 2012). Energy is accessible to us through different carriers—known as primary energy sources (such as food, oil, or gas). In most use cases primary energy sources are then converted into other forms before delivering their service (Smil 2017b). This conversion is done by “conversion technologies.” Muscles are a “technology” that can be used to convert the chemical energy in food into mechanical energy. Oil or solar energy may be converted into electricity. Different economic processes may use multiple forms of energy with energy from multiple carriers requiring transformation multiple times. From the perspective of increasing labor productivity, what is important is having energy available to do “useful” work (meaning provide the specific energy services that serve the interests of the system) (Brockway et al. 2019). The more energy available to do useful work, the more economic activity can be carried out per person. One way to increase the amount of useful energy available is by adding new primary energy sources to the system. This process often requires new conversion processes that enable the energy in the primary energy sources to be accessed and converted into energy services. In the case of cloth production, the introduction of wind or water mills is an example of capital taking the form of a new conversion technology that enables access to a different primary energy source (Smil 2017b). In the human-powered treading process, solar energy is converted into chemical energy through the agricultural system. The chemical energy in food products acts as the primary energy source. People then eat this food, converting it to mechanical energy that manipulates the cloth as they tread it under foot. On the other hand, a wind or water mill introduces a new conversion technology that enables access to the energy available in wind and water by converting it into mechanical energy. Note that this process is not only about energy efficiency. Wind and water mills are typically more energy efficient than human-power, but just as crucially they are more powerful: they bring a greater quantity of energy into the process of cloth production (Smil 2017b). The importance of scale is seen across energy-economy analysis. Hall and Klitgaard (2012: 117) draw on Polyani’s (1944) substantive definition of an economy to argue that all economic activity is the application of work to transform natural resources into goods and services. In the past, most of the work of transformation was done through muscle-power, but today muscle-power is a much smaller proportion of total work carried out because of the development of machinery that allows us to supplement our muscles with the “‘large muscles’ of fossil fuels.” 3.2. Increasing energy efficiency There are places in The Wealth of Nations where we might hypothesize about energy efficiency gains explicitly. For instance, Smith tells an apocryphal tale involving a child and a fire engine, presented as an example of innovation leading to labor productivity growth. Smith writes that in the earliest fire engines a boy would be employed to open and shut different valves, until one such boy finds a way to connect the valves such that they “open and shut without his assistance” (Smith 1975: 20). Such an innovation adjusts capital in order to enable it to convert more of the primary energy source into useful energy. Prior to the boy’s innovation, the system required two primary energy inputs: the fossil energy to power the machine, and the food energy to power the boy. Once the boy innovates, the primary energy associated with his action is removed from the process and the machine uses only the fossil energy, thus increasing its overall energy efficiency. But machinery is not the only way in which humans’ access and turn energy flows toward growth of the economy in Smith’s capital theory. Smith considers the useful abilities of workers to be a form of capital and here we can see another place where energy efficiency may fit into Smiths capital theory. When defining the useful abilities of workers Smith refers to dexterity: the skills and abilities acquired by workers through the repetition and simplification of tasks. When defining dexterity Smith talks about it in terms of efficiency gains. For example, a worker specializing in the production of nails will become more skilled in their production, and hence more efficient (Smith 1975: 18). But nowhere does Smith imply that an increase in dexterity is miraculous. And although it is intimately bound up with social organization through the division of labor, we can see how energy may fit into the process. Specifically, the increase in dexterity can be understood as partly a function of the fact that energy flows are being used more efficiently. Workers learn the best way to stir the fire, to heat iron and shape the head of the nail. An increase in the skill of a worker enables them to use energy more efficiently. In this way, more efficient use of energy flows can be seen as one of the ways that the division of labor enables increases in productivity. 3.3. Summary of the energy-capital relation in The Wealth of Nations Smith views capital as the monetary and physical resources that are brought by capitalists into exchange processes with the intention of generating an income for themselves. Smith, like Marx, is clear that all production ultimately rests on inputs from the natural environment, so it is not surprising that in The Wealth of Nations we found examples of a subset of capital that generates profits by changing the way energy is used in production processes. Specifically, I presented two mechanisms that can be identified in The Wealth of Nations: bringing new energy sources into the economy (the transition from human power to wind and waterpower in the fulling process), and being made more energy efficient (through machinery innovations and specialization of labor). We can now apply this interpretation of Smith’s energy-capital theory to the question of low-carbon transitions. The examples I have elaborated support Steeds (2024: 35) notion that Smith has an “intuitive” understanding of energy. Some of the critical functions of Smith’s conception of capital can be explained in terms of how it mediates our relationship to energy. In this way, Smith’s reading is close to more modern accounts of the role of energy (Keen, Ayres, and Standish 2019, Sakai et al. 2019). But what differentiates Smith’s from these accounts is an explicit emphasis on the social context in which energy is used by capital. Some accounts of the energy-economy relationship effectively, or explicitly, reduce production to energy use. In Smith’s account by contrast, energy use is framed and shaped by social forces. Recalling Smith’s core understanding of capital from section 2, it is clear that energy is being harnessed by capital in an attempt to generate profits within a market process. In other words, in a capitalist economy where most production follows the logic of capital, the major driver of energy use will be the attempt to generate incomes for the owners of capital. This insight, though simple, is often overlooked and has profound implications for a low-carbon transition. 4. A Smithian Analysis of Low-Carbon Transitions Under Capitalism In this section, I apply the insights from the reading of Smith’s capital theory to historical data on energy use under capitalism. I argue that the theory provides a simple and compelling explanation for the constant expansion of energy use as new forms of energy have been added to the mix. Capitalists seek to use energy to grow their profits; therefore, they invest in efficiency measures or new energy sources in order to increase the total energy available to them. Energy is never saved in the sense of not being used. Rather, it is made available to new profit-seeking ventures. Across both mainstream and radical interventions into low-carbon transition debates, there is often a focus on the investment needed to grow low-carbon and energy efficiency programs (e.g., Hrnčić et al. 2021; Pollin 2015, 2019; Qadir et al. 2021). The central argument in these works is that low-carbon transitions require substantial but not unreasonable levels of investment in low-carbon energy and energy efficiency programs. Approaching this from the perspective of energy-capital relations developed in this article, we are looking at the need to transition capital from one conversion technology to another. Today, much capital takes the form of conversion technologies designed to access the energy in fossil fuels. For a low-carbon economy we need capital to take the form of conversion technologies that can access energy in wind, solar, or other low-carbon forms. It is tempting to think about this in terms of the transition described by Smith from labor power to wind power in the fulling process. However, there is a fundamental difference between the transition from one energy source to another as developed in The Wealth of Nations, and that needed in the low-carbon transition. Historically, transitions between dominant energy sources under capitalism have been consistent with Smith’s argument that capital is only motivated by the desire for profit. Past energy transitions under capitalism have been driven by a search for greater profits enabled by the new energy sources, not by pro-social or pro-ecological values. For example, Malm (2016) argues that the English transition from wood to water was driven by the desire of capitalists to concentrate and better control their workforce, simultaneously reducing losses from theft, making workers more efficient, and bringing a greater scale of energy into the production process. The consequence of the consistent searching for profits in capitalist energy transitions is that we have very few examples of energy sources declining under capitalism at the macro-scale. Under capitalism, energy transitions are better described as energy additions (York and Bell 2019). In recent decades, there has been a remarkable growth in the use of low-carbon energy sources, but at no point in this period has energy production from fossil fuels decreased (figure 1; Malanima 2022). Indeed, looking at the evolution of 9 categories of primary energy sources since 1820 (figure 1), only fodder has seen a prolonged decrease under capitalism. For instance, in absolute terms, energy from coal overtakes fuelwood as the largest primary energy carrier in the late 1800s. But after this point the energy supplied by fuelwood continues to grow. Even in the case of fodder, although it has been in decline for approximately sixty years it still provided more than twice as much energy in 2020 than it did in 1820. Looking specifically at low-carbon fuels, the charts for renewables and nuclear energy show dramatic spikes and rapid growth. But these spikes do not coincide with declines in any other fuel source, and the International Energy Agency (IEA 2023a, 2023b) reports that 2022 was an all-time high for coal production, and forecasts record oil production in 2024.   Figure 2 depicts global energy efficiency, the scale of global production, and the total primary energy use 1820–2018. Energy efficiency of the global capitalist economy has improved drastically over the two-hundred-year period covered: in 2018, producing one unit of output took only 40 percent of the energy it would have taken in 1820. But as energy efficiency has grown, so has total energy use and total output, and these changes dwarf the gains in energy efficiency. In 2018, 41 times as much energy was used as in 1820, while global production grew by 2 orders of magnitude over the same period.   From the lens of our interpretation of Smith’s capital theory, the constant expansion of fossil fuel use alongside renewables and energy efficiency gains is not surprising. The purpose of capital development and deployment in our Smithian lens is to increase income for capitalists by facilitating exchange. So, we would expect capitalists to invest in capital that enables them to access new sources of energy, like renewables, in order to bring a greater scale and quantity of energy into production. But we would also expect them to continue to invest in fossil fuels for the same reasons. More energy means more production means more profit. Likewise, we would expect capitalists to use their capital to increase energy efficiency: this reduces their costs. But we would also expect capitalists to take subsequent energy savings and use them to increase production further. As energy is used more efficiently in any given process, more energy is available to be used elsewhere in the economy or, as new energy sources are brought into production, the old sources are made available for new processes (Garrett 2014; Sakai et al. 2019; York and Bell 2019). As long as the capitalist appetite for greater incomes is present, they will seek to direct energy “savings” into new or expanded forms of production. The practical implication of this theoretical analysis is that investment in low-carbon energy sources and energy efficiency measures—no matter how bold the proposals—will not succeed without a change to the social dynamics of capitalist production. Achieving a low-carbon transition therefore requires the formidable task of coupling a large and sustained investment program in renewables and energy efficiency with a challenge to the structural logic of capital. This requires wide-ranging shifts within capitalist economies to build low-carbon energy infrastructure and develop ways of producing that disrupt the constant profit chasing of capital. The former is required to ensure action can begin now, while the latter is needed to ensure that low-carbon investments do not simply continue to expand the energy base of capitalist production. Elaborating on such possibilities is beyond the scope of this article. However, there are research programs that seek to understand alternatives to profit-driven capitalist production, notably work in post-capitalism and the post-growth/degrowth literatures that identify noncapitalist logics of production (Gibson-Graham 2014; Colombo, Bailey, and Gomes, 2024; Mair 2024; Vandeventer, Lloveras, and Warnaby 2024). A useful future direction for research lies in asking how such non-capitalist modes of production might be scaled and applied to the global energy system. 5. Conclusion In this article I have used a history of economic thought approach to analyze the relationship between energy and capital. Rereading The Wealth of Nations, I argued that Smith’s theory of capital is fundamentally socio-physical. Smith views capital as any accumulated resource that is used to support the exchange cycle of the market economy with the expectation that this will return a profit for the owner of the resource. Based on this reading, I argued that there are two ways in which energy might enter into Adam Smith’s capital theory: (1) capital is used to bring new energy sources into production; and (2) capital is used to make existing energy flows more efficient. Using this view of energy-capital relations, we can explain the major trends in historical energy-capital relations under capitalism. Over the last two hundred years, energy use has grown continuously, and the incorporation of new primary energy sources has not systematically led to reductions in older primary energy sources. This is consistent with the idea that capital is used to bring new energy sources into production. Investment in renewables is what we would expect: renewable energy technology allows capitalists to access new primary energy sources. They use this to generate more profits. They continue to invest in fossil fuel technology for the same reasons. Over the last two hundred years, there have been substantive gains in energy efficiency, and these have not led to reductions in energy use. This is consistent with the idea that capital is used to make energy use more efficient. The motivation of capitalists to make energy more efficient is to be more profitable. They then take energy savings from energy efficiency gains and use these to increase production, in an attempt to make more profits. The implication of this analysis is that investment in low-carbon technology and energy efficiency is the (relatively!) easy part of achieving a low-carbon transition. These dynamics are fundamentally compatible with the logics of capital. The barrier to achieving a low-carbon transition is that as long as this investment takes the form of “capital” (i.e., it chases profits and supports exchange processes), then it is unlikely that investment in renewables or energy efficiency programs will reduce energy use from fossil fuels. To achieve a low-carbon transition we must invest in low-carbon technology and energy efficiency, while simultaneously developing new organizational forms that challenge the capitalist dynamics of expansion and accumulation. AcknowledgmentsI would like to thank Christiane Heisse, Don Goldstein, and Robert McMaster, for their careful reviews and Enid Arvidson for her editorial work, all of which greatly improved the article. I would like to thank participants of the workshops Economic Theory for the Anthropocene (organized by the Centre for the Understanding of Sustainable Prosperity and the University of Surrey Institute for Advanced Studies) and The Political Economy of Capitalism (organized by the Institute for New Economic Thinking Young Scholar Initiative working groups on the Economics of Innovation and Economic History). Particular thanks to Richard Douglas, Angela Druckman, Ben Gallant, Elena Hofferberth, Tim Jackson, Andy Jarvis, Mary O’Sullivan, and Elke Pirgmaier for fruitful discussions. I would like to thank the Marxist Internet Archive for making The Wealth of Nations freely available.Declaration of Conflicting InterestsThe author declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.FundingThe author disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This work was partly funded by the Economic and Social Research Council through the Centre for the Understanding of Sustainability, grant no. ES/M010163/1.ORCID iDSimon Mair https://orcid.org/0000-0001-5143-8668Note1 The full sources for the Maddison Project Database are Abad and Van Zanden (2016); Álvarez-Nogal and De La Escosura (2013); Baffigi (2011); Barro and Ursúa (2008); Bassino et al. (2019); Bértola et al. (2012); Bértola (2016); Broadberry et al. (2015); Broadberry, Custodis, and Gupta (2015); Broadberry, Guan, and Li (2018); Buyst (2011); Cha et al. 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