India Markets closed

With China slowing down, India’s burgeoning role in Latin America assumes significance

By Shaheli Das

In the wake of the recent political crisis in Venezuela, Latin America is once again in the radar of the international community. Truly, the region is dynamic in its own terms. A once insignificant zone, is today an imperative destination for most great powers of the world. In this context, it is interesting to identify the intentions and objectives of the Asian giants i.e. China and India, in the region respectively.

Chinese Objectives in Latin America

Given the diplomatic milestones accomplished so far, it is evident that over the last two decades Latin America has attained a very high place for itself on China s foreign policy agenda. For instance, the White Paper on Latin America and the Caribbean published in 2008 and 2016 respectively; the ambitious 1+3+6 cooperation framework announced by President Xi Jinping in 2014; and the adoption of the China- CELAC Cooperation Plan 2015-2019.

Interestingly, the region of South America comprises of 33 Latin American and Caribbean nations. Of these China maintains formal diplomatic relations with 28 countries. This is the highest number of diplomatic allies that China has in any other region of the world, making it a zone of considerable importance for the country.

With the growing economic clout of Beijing, the country now strives to fulfil three major objectives: securing acknowledgement of full market status, obtaining the raw materials as well as diversifying the source of such imports, sustaining its access to the market so as to secure the export of its manufactured commodities. In this context as well, the region holds great importance for China. The Latin American Countries (LAC) possess a wealth of natural resources, which are crucial to China s brisk economic development. For instance, Argentina s soya, Brazilian meat and Venezuela s oil are a case in point. Interestingly, Sino-Latin American trade has surged from US$241.5 billion in 2000 to US$260 billion mark in 2017. At present, China ranks as Latin America s second largest trading partner, after United States.

Further, China has significant geopolitical interests in the region. As is mentioned in the White Papers published in 2008 and 2016 respectively, acknowledgement of the One China policy would be the political basis for the institution of diplomatic relations between China and Latin America. Further, the region also appears in Beijing s larger framework of advocating its version of democracy in international relations (guoji guanzi minzhuhua) i.e. creating a multipolar international order wherein the Middle Kingdom revives its customary position at the core of international affairs. Finally, China adheres to the principle of multipolarity and the idea of multilateralism, for which it requires a network of allies from the Global South, including the LAC. Beijing also engages with these nations at various multilateral platforms such as the China- CELAC Forum, UN, OAS, G5, BRICS, and the BASIC group.

Undoubtedly, a key reason behind Chinese endeavour to penetrate into South America is its attempt to counterbalance the United States. In order to countervail the US pivot to Asia, a region that China perceives lies within its sphere of influence, the country is decisively making inroads into the LAC that the US historically considered as its backyard .

India and Latin America
India, alike China, is another important player in the region. However, unlike Chinese intentions, India does not seek to outweigh the importance of any other country in Latin America. Infact, India scores a point over other players in the region by its technique of coming in with a clean slate. While the LAC have had a long history of combating foreign interference in its local affairs as well as dealing with predatory capitalism, India has no record of undermining local economies or subverting governments.

Separated by a massive geographical distance, coupled with cultural ignorance, the relationship between these two entities has traversed an uneven trajectory. However, in the recent years the trend of the emergence of democracies in the LAC has altered the political culture of the region shifting its focus to issues such as regional integration, economic development as well as equitable growth. On the other hand, the opening up of the Indian economy has led to significant external integration of the nation with foreign markets such as that of Latin America.

In the recent past several high level visits have taken place, indicating the rising importance of the region on India s foreign policy agenda. For instance, soon after his appointment as the Prime Minister in 2014, Mr. Narendra Modi visited Brazil to participate in the sixth BRICS summit. Later, in May 2018 M Venkaiah Naidu chose Panama, Guatemala and Peru for his first sojourn as the vice president of India. In June, the same year, President Ram Nath Kovind visited Suriname and Cuba. Soon after in November 2018 Mr. Modi visited Argentina to attend the 13th G20 Summit.

This leads to a discussion on the fundamental reasons that have driven India into the region in the recent years:

First, India seeks to bolster its ties with the LAC in order to augment and transcend the Non-Aligned Movement. As a developing nation herself, India seeks to forge ties with the other developing nations and democracies in the region to promote the causes of world peace, security and co-operation, justice, elimination of colonialism, neo-colonialism and imperialism, eradication of racism, apartheid and every form of foreign aggression, domination and intervention.

Second, the region is important to India from the economic perspective. Bilateral trade between India and Latin America has surprisingly mounted from $2 billion in 2000 to $36.5 billion in 2017. However, the figure does not stand ground before the whopping US$260 billion Sino-Latin American bilateral trade.
Appreciatively, despite the vast geographic distance, the Indian government has recognised the huge trade potential in the markets of the region. A case in point is the institution of the Focus: LAC program in November 1997 by the Ministry of Commerce and Industry of the Government of India. In this, India signed Preferential Trade Agreement (PTA) with MERCOSUR and another PTA with Chile. At present, several Indian companies are making investments in the region in the sectors of information technology, mining, agrochemicals, manufacturing, energy and pharmaceuticals. For instance, ONGC, Wipro, Infosys, Mahindra, Cadilla among others are present in Brazil; Tech Mahindra, Dr. Reddy s, Wipro, Sun Pharma are present in Mexico; Mahindra & Mahindra, Tata Motors, Maruti Suzuki, and Godrej are present in Chile.

Third, the region is a chief supplier of India s energy security. India imports 20percent of its crude oil supplies from the countries of Venezuela, Mexico, Brazil and Columbia. Given India s strategic interest in diversifying the source of such imports and reducing the country s dependence on West Asia for the same, Latin America has quickly figured on India s radar.

Fourth, India cooperates with the LAC at various multilateral forums such as IBSA, BRICS, G20, UN and G77 to name a few. Essentially, both India and the LAC find common ground as developing nations and seek to forge a South-South cooperation. At various multilateral forums, these nations offer each other support and call for reformation of the international financial institutions (such as IMF and World Bank) and global governance bodies (such as the United Nations Security Council) so as to tender developing nations with a greater voice in the international sphere.

Despite a distinct difference at the level of political and economic engagement both India and China are major players in the region in their own rights. Indeed, it would take India some time catch up the pace of China in LatAm, but it cannot be overruled that a slowing down of the Chinese economy in the recent years has resulted in India s burgeoning role in the region. It would be interesting to observe whether India can furnish China with a tough competition in the years ahead.

The author is an expert on China-Latin America Relations and visiting fellow at Fudan University.