Latin America, As a Whole, Refuses to Embrace Total Economic War Against Russia

Even as the pressure rises to endorse the West’s sanctions against Russia, most countries, including U.S. neighbor Mexico, prefer to sit on the fence. 

On March 2, only four out of 33 Latin American and Caribbean countries — Cuba, Nicaragua, El Salvador and Bolivia — abstained in the vote to condemn Russia’s invasion during the emergency meeting of the United Nations General Assembly. The real number would have almost certainly been five if Venezuela’s diplomats hadn’t been barred from attending the vote after Maduro’s cash-strapped government had fallen behind on its subscription fees.

On the other side of the divide, a small number of governments in the region have publicly endorsed the West’s paralyzing economic sanctions against Russia. They include Ecuador, Colombia, Chile and Guatemala. The rest of the countries occupy the vast middle ground between the two polar extremes. Despite condemning Russia’s invasion of Ukraine, they have expressed opposition to the US-NATO-led push to isolate Russia from the global economy.

Most importantly, they include the two heavyweight economies of Latin America, Brazil and Mexico, which together account for roughly 60% of the region’s GDP. To put that in perspective, the two largest economies of the European Union, Germany and France, account for just under 40% of the total GDP of the European Union.

Treading a Cautious Line

Mexico’s President Andrés Manuel Lopéz Obrador trod a very cautious line when the war broke out, refusing even to mention Russia or Ukraine by name in his first public response: “We are not in favor of any war,” he said during his morning press conference. Since then the tone has risen. On February 24, Mexico’s Foreign Secretary Manuel Marcelo Luis Ebrard justified Mexico’s rejection of Russia’s invasion of Ukraine by citing Mexico’s experience of losing roughly half of its territory to a neighboring state:

“Due to our history and tradition, the way we formed as a nation, we must forcefully reject and condemn the invasion of a country like Ukraine by a great power like Russia.”

But while Mexico’s government has intensified the language it uses regarding the Russian invasion of Ukraine, it still refuses to apply sanctions against Russia. “We are not going to take any sort of economic retaliation because we want to maintain good relations with all the governments of the world,” Lopez Obrador told reporters.

Ebrard said six days ago that the only way that Mexico would back economic sanctions is if they were endorsed by a majority of members of the United Nations’ Security Council, which is unlikely given that its permanent members include both Russia and China while its non-permanent members include Mexico itself, Brazil, India and the United Arab Emirates. Also sitting on the Council as temporary members are Ghana, Kenya and Gabon, which all supported the condemnation of Russia but whose position on UN sanctions is not entirely clear.

At home and abroad Mexico’s government has come under a barrage of criticism for not taking part in the international pile on to sanction Russia. Enrique Quintana, a veteran columnist at El Financiero, Mexico’s most widely read financial newspaper with close ties to Bloomberg, warned that AMLO’s Mexico risked being caught in the middle of two advancing armies in the escalating economic war:

On a battlefield, staying in the middle of two armies is not the most advisable choice, but it is what the government of President López Obrador seems to be doing.

It is even less so when commercial and financial relations are so asymmetrical. We are strongly integrated into North America and tremendously distant from Russia commercially and financially. And even less so, when the likelihood is that in the end the Putin government will lose the war economically.*

Today, acting ambiguously, pretending that there is a military conflict between two countries rather than a unilateral, cruel and disproportionate invasion, ultimately means siding with Russia.

Whether this is so or not, the fact that Mexico’s attitude could be perceived in this way by some of our main trading partners is highly risky.

You can talk as much as you want about the good relations we have with the United States, but the reality is that we are opening completely unnecessary fronts that can bring us incalculable costs.

[*NC: this, in my view, is not nearly as obvious as the author suggests. I refer readers to Yves’ recent article, Russia Sanctions Blowback Only Beginning: Globalization in the Crosshairs, Russian Retaliation Coming? Since that was posted, the FT has revealed that the sanctions have so far cost BlackRock $17 billion in losses on its Russian exposure]

Mexico is not the only major Latin American economy that is refusing to apply economic sanctions against Russia. Brazilian President Jair Bolsonaro said his nation “will not take sides” in the conflict days after criticizing the indiscriminate nature of the economic sanctions imposed on Russia.

Like AMLO, Brazil President Jair Bolsonaro said his country was “not going to take sides… We are going to continue to be neutral and help, however possible, to find a solution.”

Continue reading on Naked Capitalism

Leave a Comment

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s