“Soft despotism is a term coined by Alexis de Tocqueville describing the state into which a country overrun by "a network of small complicated rules" might degrade. Soft despotism is different from despotism (also called 'hard despotism') in the sense that it is not obvious to the people."

Wednesday, April 15, 2009

China locking in Latin American resources for years.

The economies of Latin America will revive, and when they do, the give-away contracts signed with the Chinese will look very sour. Why it is taking so long for this to sink into the collective American skull is beyond me.


Deals Help China Expand Its Sway in Latin America

Published: April 15, 2009 NY Times

CARACAS, Venezuela —
As Washington tries to rebuild its strained relationships in Latin America, China is stepping in vigorously, offering countries across the region large amounts of money while they struggle with sharply slowing economies, a plunge in commodity prices and restricted access to credit.

In recent weeks, China has been negotiating deals to double a development fund in Venezuela to $12 billion, lend Ecuador at least $1 billion to build a hydroelectric plant, provide Argentina with access to more than $10 billion in Chinese currency and lend Brazil’s national oil company $10 billion. The deals largely focus on China locking in natural resources like oil for years to come.

China’s trade with Latin America has grown quickly this decade, making it the region’s second largest trading partner after the United States. But the size and scope of these loans point to a deeper engagement with Latin America at a time when the Obama administration is starting to address the erosion of Washington’s influence in the hemisphere.

“This is how the balance of power shifts quietly during times of crisis,” said David Rothkopf, a former Commerce Department official in the Clinton administration. “The loans are an example of the checkbook power in the world moving to new places, with the Chinese becoming more active.”

Mr. Obama will meet with leaders from the region this weekend. They will discuss the economic crisis, including a plan to replenish the Inter-American Development Bank, a Washington-based pillar of clout that has suffered losses from the financial crisis. Leaders at the summit meeting are also expected to push Mr. Obama to further loosen the United States policy toward Cuba.

Meanwhile, China is rapidly increasing its lending in Latin America as it pursues not only long-term access to commodities like soybeans and iron ore, but also an alternative to investing in United States Treasury notes.

One of China’s new deals in Latin America, the $10 billion arrangement with Argentina, would allow Argentina reliable access to Chinese currency to help pay for imports from China. It may also help lead the way to China’s currency to eventually be used as an alternate reserve currency. The deal follows similar ones China has struck with countries like South Korea, Indonesia and Belarus.

As the financial crisis began to whipsaw international markets last year, the Federal Reserve made its own currency arrangements with central banks around the world, allocating $30 billion each to Brazil and Mexico. (Brazil has opted not to tap it for now.) But smaller economies in the region, including Argentina, which has been trying to dispel doubts about its ability to meet its international debt payments, were left out of those agreements.

Details of the Chinese deal with Argentina are still being ironed out, but an official at Argentina’s central bank said it would allow Argentina to avoid using scarce dollars for all its international transactions. The takeover of billions of dollars in private pension funds, among other moves, led Argentines to pull the equivalent of nearly $23 billion, much of it in dollars, out of the country last year.

Dante Sica, the lead economist at Abeceb, a consulting firm in Buenos Aires, said the Chinese overtures in the region were made possible by the “lack of attention that the United States showed to Latin America during the entire Bush administration.”

China is also seizing opportunities in Latin America when traditional lenders over which the United States holds some sway, like the Inter-American Development Bank, are pushing up against their limits.

Just one of China’s planned loans, the $10 billion for Brazil’s national oil company, is almost as much as the $11.2 billion in all approved financing by the Inter-American Bank in 2008. Brazil is expected to use the loan for offshore exploration, while agreeing to export as much as 100,000 barrels of oil a day to China, according to the oil company.

The Inter-American bank, in which the United States has de facto veto power in some matters, is trying to triple its capital and increase lending to $18 billion this year. But the replenishment involves delicate negotiations among member nations, made all the more difficult after the bank lost almost $1 billion last year.

China will also have a role in these talks, having become a member of the bank this year.

China has also pushed into Latin American countries where the United States has negligible influence, like Venezuela.

In February, China’s vice president, Xi Jinping, traveled to Caracas to meet with President Hugo Chávez. The two men announced that a Chinese-backed development fund based here would grow to $12 billion from $6 billion, giving Venezuela access to hard currency while agreeing to increase oil shipments to China to one million barrels a day from a level of about 380,000 barrels.

Mr. Chávez’s government contends the Chinese aid differs from other multilateral loans because it comes without strings attached, like scrutiny of internal finances. But the Chinese fund has generated criticism among his opponents, who view it as an affront to Venezuela’s sovereignty.

“The fund is a swindle to the nation,” said Luis Díaz, a lawmaker who claims that China locked in low prices for the oil Venezuela is using as repayment.

Despite forging ties to Venezuela and extending loans to other nations that have chafed at Washington’s clout, Beijing has bolstered its presence without bombast, perhaps out of an awareness that its relationship with the United States is still of paramount importance. But this deference may not last.

“This is China playing the long game,” said Gregory Chin, a political scientist at York University in Toronto. “If this ultimately translates into political influence, then that is how the game is played.”

Simon Romero reported from Caracas, and Alexei Barrionuevo from Rio de Janeiro.


  1. Nice work on attending the party, Bob. Like the sign. Love to see one of those shots around the old mill. Maybe you could incorporate it into some kind of post heading. So it's decent size to look at.

  2. The president's gesture precedes a trip this week to Trinidad and Tobago for a key meeting of hemispheric powers -- the Summit of the Americas.

    Castro said Cuba had "resisted and it will continue to resist."

    "It will never beg for alms. It will go on forward holding its head up high and cooperating with the fraternal peoples of Latin America and the Caribbean; with or without Summits of the Americas; whether or not the president of the United States is Obama, a man or a woman, a black or a white citizen."
    Obama on Cuba

  3. Maggie's Madness blog
    chronicles violence in Mexico.

    Incidents of gang executions, corruption, kidnappings, found bodies and inventory of trophies too numerous to list are reported by Maggie. One recent post included the following seizures.

    1 Browning Machine Gun 50mm with capacity of 800 shots fired per minute powerful enough to penetrate any shield.
    5 rifles
    2 handguns
    1 grenade launcher
    1 hand grenade
    261 chargers
    29 cartridges
    750 grams of cocaine
    3 vehicles


    1 Surburban no plates
    3 AR-15's
    1 .50 calibre Barrett rifle
    2 AK-47's
    3 Radios
    1 .45 revolver
    93 magazines
    cartridges of different calibres

  4. They seem to like the Barrett .50

  5. Retaining a mere border patrol, however, is simply not enough to protect American citizens anymore. With violence within Mexico increasing and the greatest crimes occurring just miles from the Texas border, the necessity of federal measures grows more urgent with each day.

    Government interference has been successful in the past—in an effort to crack down on drug trafficking, U.S. federal officials recently caught over 750 suspects involved in Mexican drug cartels that had spread to the United States. Here, too, the government should get involved.

    America needs to guarantee for its own citizens the kind of national safety Mexican refugees expect when they flee their homeland for our country, and for this nothing less than a deployment of the National Guard will do.
    Protecting Our Citizens

  6. Your tea party attendance doubled Seattle's, Bob, according to Gerard.

  7. Barrett Firearms Letter of Opposition to the proposed LA Ammo Ban

    To: Chief William J. Bratton
    Los Angeles Police Department


    All of my knowledge in the use of my rifle in the field of law enforcement had been turned upside down by witnessing how your department used yours. Not to protect and serve, but for deception, photo opportunities, and to further an ill-conceived effort that may result in the use of LA taxpayer money to wage losing political battles in Washington against civil liberties regarding gun ownership.

    Please excuse my slow response on the repair service of the rifle. I am battling to what service I am repairing the rifle for. I will not sell, nor service, my rifles to those seeking to infringe upon the Constitution and the crystal clear rights it affords individuals to own firearms.

    Letter was dated December 11, 2002.

    I'm not sure what Barrett's policy is today, but the rifle is banned in CA to best of my knowledge.

  8. I don't think I'm far off on my count. Counted a hundred around me, and there had to be 10 times that.

  9. I trust your numbers, and Gerard's.
    No surprise there, it bein' Seattle.

  10. On the topic of Mexico, does anyone know what happened to Mark of the Mark in Mexico blog out of Oaxaca?

    He just disappeared suddenly around July 7, 2007. He'd been reporting on the riots there, as well as corruption throughout Mexico.

  11. You got to remember, too, this is the first time, to my knowledge, anyone has ever really protested anything in Idaho. It's not what we generally do.

    Heard Portland had a pretty good turnout.

  12. I'll try Sam, but not promise. I don't know what I'm doing.

    There are a whole bunch of new condos along the old mill side of the riverbank, and lots back beyond, plus a great big hotel, and some medical buildings.

  13. ...this is the first time, to my knowledge, anyone has ever really protested anything in Idaho. I passed through Twin Falls a day or so after the bikers "visited" the town for Evil Kneivel's Snake River jump. Seemed like every outsider got the png treatment. I was stuck waiting for a Volvo water pump to be sent down by Greyhound from Boise. Fixed the car curbside at a city park. Did not feel welcome. Seemed like a local protest to outsiders at the time.

  14. Those bikers were all just jealous of Evil, getting all the attention.

    And, they they yearned for his fancy clothes, and walking stick.

    They talk big, but jump the Canyon? Nah...

  15. 99 and 44/100 percent pure

    Marilyn Chambers, RIP.

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