The US and China are in a War “for Peru’s Soul”, says Mexican Geopolitical Analyst

“We are seeing a surreptitious clash, a war that no one dares name, between China and the United States for Peru’s soul.”

These are the words (translated from their original Spanish to English by yours truly) of the renowned Mexican geopolitical analyst Alfredo Jalife-Rahme. Jalife-Rahme is a professor, writer, columnist and political analyst of Lebanese descent who specializes in international relations, economics, geopolitics, and globalization. His last two weekly video lectures (in Spanish) have dealt with the wide-ranging causes and potential consequences of Peru’s latest political crisis.

That crisis has already resulted in the impeachment and imprisonment of the democratically elected President Pedro Castillo, and has cost the lives of 27 protesters. After decades of stumbling from crisis to crisis, scandal to scandal and president to president, Peru is locked in an escalating struggle between the oligarchs and privileged classes who are determined to hold onto power at any cost and its legions of poor, voiceless and marginalized, for whom Castillo represented the possibility of something different.

Alas, it was not to be. A complete outsider in Lima, the former rural teacher was outmanoeuvred at every turn by the rabid right-wing opposition to his government in Congress. But according to Jalife, Peru is also a proxy for a much larger struggle between the world’s two geopolitical rivals, the US and China, for the control of vital strategic resources in Latin America.

The “Most Chinese Country” in Latin America

For the moment, this “war” of which Jalife speaks is rather one-sided, given that China, unlike the US, does not tend to meddle in internal politics in the region, or at least hasn’t until now. As Alexander Moldovan, a researcher on social movements and security in Latin America at York University, told Turkish state broadcaster TRT, China’s approach generally respects national sovereignty (as long as you’re not Tibetan or Taiwanese), and as such is popular among both right-wing populists and left-wing leaders alike. Instead, it lets the money do the talking.

China is already Peru’s largest trading partner on both the exports and imports side. A whopping 32% of Peru’s exports go to China, compared with just 12% to the US. In the first eight months of 2022 the total value of Peru’s exports to China grew by 3.3% — no mean feat given China’s economic slowdown resulting from Beijing’s zero Covid policies.

As Peru’s ambassador to China Luis Quesada told Dialogo China in July this year, Peru is the second largest destination for Chinese investment in Latin America, behind only Brazil. It is home to the only port in Latin America that is managed entirely by Chinese capital. An alliance of Chinese state-owned companies, including Cosco Shipping, has invested $3 billion in the recently finished Chancay Port. Located 50 miles north of Lima, the port is expected to become a vital hub for trade between East Asia and South America.

Peru is also one of just three countries in the region, along with Chile and Costa Rica, that have free trade agreements (FTAs) with China, though another five, including Colombia, Panama and Uruguay, are in the process of negotiating FTAs with the Asian giant. Also, there was a clear interest on the part of Pedro Castillo’s government as well as Beijing to intensify and expand their bilateral trade. There was even talk of upgrading Peru’s FTA with China. In Quesada’s words, the Andean country must take advantage of the fact that “we are the most ‘Chinese’ country” in South America.

This probably did not go down well with Peru’s second largest trading partner, the United States, which has a long, ongoing history of organizing or lending its blessing to coups against left-leaning governments in Latin America. In 2019, the US gave its support to a right-wing coup against Bolivia’s then-President Evo Morales. According to Morales, who ended up receiving asylum in Mexico and later Argentina, the main reason for his removal from office was commercial interests in the lithium sector, including seemingly TESLA whose CEO Elon Musk famously tweeted: “We will coup whoever we want. Deal with it!”

As noted in previous pieces (including most recently here), China has made huge incursions into the US’ so-called “back yard” over the past two decades, as both a trading partner and investor.

The US continues to hold sway over Central America and, pound for pound, is still Latin America and the Caribbean’s largest trading partner. But that is predominantly due to its huge trade flows with Mexico, which account for a whopping 71% of all US-LatAm trade. As Reuters reported in June, if you take Mexico out of the equation, China has already overtaken the US as Latin America’s largest trading partner.

Over the past year or so both the US and the EU have begun refocusing their attentions on the region, often with ham-fisted attempts at diplomacy. They include the EU’s chief diplomat Josep Borrell’s remarks praising  the “values” of European colonization of the Americas during a recent speech addressing European and Latin American lawmakers in Brussels.

EU and US Interest in Latin America region is on the rise as the race for lithium, copper, cobalt and other elements essential for the so-called “clean” energy transition heats up. It is a race that China has been winning prettily handily until now.

And while Peru may not form part of the Lithium Triangle (Bolivia, Argentina and Chile), it does boast significant deposits of the white metal. By one estimate, it is home to the sixth largest deposits of hard-rock lithium in the world. It is also the world’s second largest producer of copper, zinc and silver, three metals that are also expected to play a major role in supporting renewable energy technologies.

In other words, there is a lot at stake in how Peru evolves politically as well as the economic and geopolitical alliances it forms.

A “Conspicuous” Meeting 

As I noted in my June 22, 2021 piece, Is Another Military Coup Brewing in Peru, After Historic Electoral Victory for Leftist Candidate?, Peru’s largest trading partner may be China but its political institutions — like those of Colombia and Chile — remain tethered to US policy interests:

Together with Chile, it’s the only country in South America that was invited to join the Trans-Pacific Partnership, which was later renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership after Donald Trump withdrew US participation.

Given as much, the rumours of another coup in Peru should hardly come as a surprise. Nor should the Biden administration’s recent appointment of a CIA veteran as US ambassador to Peru, as recently reported by Vijay Prashad and José Carlos Llerena Robles:

Her name is Lisa Kenna, a former adviser to former US Secretary of State Mike Pompeo, a nine-year veteran at the Central Intelligence Agency (CIA), and a US secretary of state official in Iraq. Just before the election, Ambassador Kenna released a video, in which she spoke of the close ties between the United States and Peru and of the need for a peaceful transition from one president to another.

A year and a half later, the presidential transition from Castillo to Boluarte has been anything but peaceful…

Read the full article on Naked Capitalism

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