The Dragon in the Backyard

New economic cooperation between Latin America and less traditional trading partners is having a significant impact on the region both economically and politically. Top on the list is China’s increasing visibility as a strategic economic partner of the continent, much to the US’ discontent. While China’s cheap manufacturing has hurt countries such as Mexico, its demand for commodities has driven growth in Brazil, Chile and Peru. Focusing less on trade, India has engaged Latin America through increased direct foreign investment. Russia, on the other hand, finds the region a welcome market for its military hardware. Venezuela is a top destination for Russian arms thanks to the left-wing alliance between the two countries dating back to the cold war. An “axis of unity” to counter the US is behind Iran’s economic and diplomatic presence in the region. By fostering closer ties with “radical” regimes, Iran hopes to win the support of international allies against the US. In spite of the growing partnerships, the US and EU remain the biggest trading partners of Latin America. While such status may remain for some time, if the rest of the world is to grow, one would expect a more balanced distribution of economic partnerships in the future. Of course, since such relationships naturally include access to natural resources, a likely result too is greater political tensions. – YaleGlobal