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James Mattis: South American countries selling sovereignty to China, Russia

August 17, 2018

SANTIAGO, Chile A Chinese space force in Argentina, Russian control of Venezuelan gas and South American armies equipped with the latest Chinese and Russian hardware. Until recently, it might have sounded like the plot of a geopolitical thriller in a region once considered America’s backyard.

But this is what Defense Secretary James N. Mattis faced on his visit this week to several South American nations, where economic and military posturing by Beijing and Moscow has been on the rise for the past decade.

The whole reason Mr. Mattis made the trip was to try to “recover lost territory in Latin America,” said one foreign ministry official in Argentina, where the U.S. defense secretary stopped Wednesday. “Chinese and Russian influence grew during years in which the U.S. largely abandoned the region,” said the official, who spoke on the condition of anonymity because of his sensitive post coordinating security policies with Washington and other international powers.

Analysts say Chinese loans in recent years have allowed authoritarian leaders to consolidate power in Venezuela, Bolivia and Nicaragua, and have separately generated corruption scandals that brought down the presidents of Ecuador and Argentina.

But there is also a clear security element coursing through Beijing’s approach. Chinese officials obtained key concessions from Buenos Aires to build a satellite tracking station after engineering a $10 billion currency swap in 2009 that allowed then-Argentine President Cristina Kirchner to stabilize her national currency amid a financial crisis in the country.

A 16-story-high antenna rises above a massive satellite dish over a 125-acre compound in an open prairie of Argentina’s Neuquen province. It is operated by Chinese military contractors who can enter the installation for only two hours a day, Argentine officials say.

With that as a backdrop, Mr. Mattis made headlines this week by touting renewed U.S. focus on military-to-military relations with Argentina and Chile, specifically signing a pledge for closer cooperation in combating cyberthreats during a visit Thursday to the Chilean capital of Santiago.

He also has made little secret of his concern over surging Chinese and Russian influence, telling reporters early in the week that countries in the region should be wary of becoming too close with Beijing and Moscow.

“There is more than one way to lose sovereignty. ... It can be with countries that come offering presents and loans,” the defense secretary said in reference to billions of dollars that China has shelled out to struggling leftist governments in South America.

Analysts say the governments have mortgaged their countries’ natural resources and territory in exchange for Beijing’s cash.

“China and Russia bestow benefits and attention on populist governments to capture their leaders,” said R. Evan Ellis, a Latin America analyst with the U.S. Army War College.

U.S. Navy Adm. Kurt Tidd, the outgoing chief of the Pentagon’s Southern Command, has warned that “internationally accepted norms of banking transparency don’t exist in dealings with China.”

The Trump administration appears to hope that a conservative drift in South American politics will open an opportunity for Washington to push back Chinese and Russian penetration.

U.S. officials recently scored an agreement with Argentine President Antonio Macri, a conservative, to build their own installation not far from the Chinese satellite tracking facility. Local press reports have speculated that the U.S. installation could become an air base.

Soaring influence

China’s trade with Latin America has doubled over the past decade to $244 billion. Chinese President Xi Jinping told an international trade conference in Brazil last year that his goal is to double the volume again to a half-trillion dollars.

Beijing controls some 70 percent of Venezuela’s oil reserves and 90 percent of those in Ecuador, according to U.S. government reports. But analysts question the extent to which China invests in crude oil production.

“China is playing a long game,” said Washington-based Latin America analyst James Humire. “It’s sitting on resources to control flow and prices while securing long-term supplies for its economy.”

A onetime executive of Britain’s multinational oil giant BP PLC, who spoke on the condition of anonymity, said a network of Chinese companies with a matrix in Venezuela has systematically engaged in fraud. The former executive, who also has worked for a Chinese energy venture in South America, told The Washington Times that the fraud relied on phantom projects supervised from Chinese embassies whose main purpose was repatriating money to China.

Russia has also been moving into Latin America’s energy sector, most notably taking over the operations of Venezuela’s largest offshore gas platforms, according to industry reports.

The Russian state-owned energy giant Gazprom is also positioned in Bolivia through joint ventures with Bolivian President Evo Morales’ government for much-needed exploration to enhance reserves supplying natural gas to Brazil and Argentina.

China is reported to have obtained important mineral concessions in Bolivia, including exclusive rights to major deposits of lithium, essential for making electric car batteries, cellphones and some computer software.

Satellites and weapons

In the defense realm, developments are perhaps most sweeping in Venezuela, which has emerged over the past 15 years as a major purchaser of Russian weapons. Moscow is reported to have sold more than $11 billion in Russian military equipment to Caracas, including Su-30 fighter jets, Mi-35 attack helicopters, T-72 tanks and highly advanced surface-to-air missile systems.

Despite Venezuela’s worsening economic crisis, which has collapsed the nation’s currency, caused widespread food shortages and triggered a massive flood of refugees to neighboring Colombia, Russia is stepping up its military support for Venezuelan President Nicolas Maduro’s government.

Venezuelan Defense Minister Vladimiro Padrino has said Russian combat pilots have arrived to train the nation’s air force amid warnings of a possible war with U.S.-aligned Colombia, which Mr. Maduro has accused of trying to topple him.

China is also competing for Venezuela’s arms market, according to Mr. Ellis at the U.S. Army War College, who maintains that Beijing offers better loans to buy cheaper weapons compatible with Russian equipment already in Venezuela.

According to statements by Colombia’s defense ministry, the Venezuelan navy has fitted Chinese torpedoes onto its Russian made PT boats.

China is separately reported to have secured major Brazilian defense contracts to develop the “SissGAAz” naval radar system designed to protect the Brazilian coastline, which stretches down much of South America.

Chinese aerospace companies are also pushing for contracts with Latin America’s budding space programs. They have co-developed six satellites with Venezuela, Brazil and Bolivia that have been launched into orbit from China.

Some warn that Chinese and Russian expansion into the region may be too deep to quickly reverse. According to the Argentine Foreign Ministry official who spoke with The Times, Mr. Macri attempted to persuade China to close down its satellite base in Neuquen province at the urging of Vice President Mike Pence, who visited Buenos Aires last year. But the Argentine president desisted when Beijing responded with a threat to close its markets to Argentine soybeans, the official said.

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