China strike deals, challenge US in Latin America

Lima - By the time United States President George W Bush arrived in Lima Friday for the annual meeting of the Asia-Pacific Economic Cooperation (APEC) forum, the competition had already made its presence felt. Chinese President Hu Jintao - fresh from a meeting with former Cuban president Fidel Castro in Havana - announced late Wednesday in the Peruvian capital the conclusion of talks on a free trade agreement between China and Peru. The deal is set to expand Chinese influence in the United States' traditional backyard and will secure new markets for China's industrial production. Russia, which turned away from the region following the collapse of the Soviet Union, is also back. The Kremlin not only aims to reactivate its old ties with Cuba, but has also added new allies such as Venezuela. After the summit in Lima, Russian President Dmitry Medvedev is to travel to Brazil, Venezuela and Cuba. In Caracas, he is likely to seal new arms deals worth billions of dollars. The presence and prestige of the US in Latin America has been weakened under the eight-year Bush administration. The deepening global financial crisis, which started off in the US, has further weakened the hold of the only superpower that survived the Cold War in its effort to lead a unipolar world. While China is primarily seeking to consolidate its economic ties with Latin America, Russia is focusing on the arms business and is relying on partners that are controversial, at least to Washington - presidents Hugo Chavez of Venezuela and Raul Castro of Cuba. For former Russian president and current Prime Minister Vladimir Putin, Latin America has become a key element in the development of a multipolar world. Venezuela bought Russian weapons worth 4.4 billion dollars between 2005 and 2008. Military cooperation with Cuba, naval manoeuvres off the Venezuelan coast and flights of long-range Russian nuclear- capable fighter planes are likely to heighten tensions with the US. Moscow is stepping up its activities in the region in the face of US plans for a radar and missile-interception system in Central Europe and as US ally Georgia seeks to join NATO. Washington, in turn, reactivated its Fourth Fleet in the Caribbean and the South Atlantic. The Kremlin action will also have an impact on domestic policy. After the fall of the Soviet Union, the expansion of NATO in Eastern Europe and Western concerns over the conflict in Abkhazia and South Ossetia, Moscow is keen on reaffirming the power it once wielded. Russia's economic entry into Latin America is only just starting, for example through Gazprom's cooperation with Venezuelan state-owned oil firm PDVSA. China's case is quite different. Not only is it swamping markets across the Americas with its cheap products, but it is also increasingly exporting high-value goods like electronic appliances. Latin America partially supplies China's huge internal market with commodities and food, and bilateral trade was valued at more than 102 billion dollars last year. But Beijing's planned investment in infrastructure, announced with great fanfare during Hu's visit to Brazil and Argentina in 2004 - prior to the APEC meeting in Chile, has not materialized. Tariff barriers have not gone down as they were meant to and free trade deals have stalled. Many Latin American firms could simply not compete with Chinese products were they to be granted free entry. Even as officials from both countries announced the free trade agreement between China and Peru, Peruvian textile businesses called for greater protection. The Chinese may soon find out that it will be challenging for them to change the difficult conditions of the Latin American economy.

---------------

Peruvian president Alan Garcia said on Friday it is a national objective that Peru surpasses other South American countries in becoming the first commercial, economic and social partner of China. After receiving Li Changchun, a member of the Politburo Standing Committee of the Communist Party of China, at the Government Palace in Lima, he said that Peru endorses China’s goal of reunifying all of Greater China under a single political entity. “We are always wanted that China will become a single nation and have witnessed China’s enormous social development of China. All peoples can see the positives of that development”, he declared.