The Political Economy of China–Latin America Relations: The AIIB Membership 3030334503, 9783030334505

Table of contents :
Acknowledgements
Contents
List of Tables
Chapter 1: Introduction
AIIB – General Characteristics
Early History
AIIB Today
Governance
Membership
Latin American Membership of the AIIB
Ecuador – AIIB’s Full Member Since 01 November 2019
AIIB Prospective Countries from LAC
Brazil
Peru
Venezuela
Bolivia
Chile
Argentina
Uruguay
The Puzzle of Latin American Non-fulfilment
References
Chapter 2: Constructing LAC and the AIIB
Introduction
Constructivism: The Foundation
Five Core Constructivist Assumptions
First: “Ideas Matter”
“Ideas Matter” in Latin America
Second: “Identity Matters”
“Identity Matters” in Latin America
Third: Agency Is Key, Especially Creative Agency
Creative Agency in Latin America
Fourth: Brute v. Institutional Facts
Brute vs Institutional Facts in Latin America
Fifth: Institutional Facts Are Self-Fulfilling or Self-Negating
Self-Fulfilling or Self-Negating Institutional Facts in Latin America
Latin American Agency: General Characteristics
The Institution of Mañana
Fantasy Agency (or Incomplete Agency)
Overreliance on Legalism
Personalism
The Regional Strategy Vacuum
References
Chapter 3: Latin America: Both Agent and Patient
Latin American Agency and Foreign Policy Characteristics
Early Crafters of the uti possidetis juris Principle
The Non-intervention Principle in International Law
Practice Favouring Pacific Mediation of Disputes
Rule Forbearing Neglect of Ratification and Laxity in Implementation
Latin America and the Genesis of the Bretton Woods Institutions
Latin Flavour in the Genesis of Bretton Woods
Latin Swing in New Hampshire
References
Chapter 4: LAC and International Political Economy
Introduction
Uninterest
US Hegemonic Impediment
Divergence: Latin America’s Needs—AIIB Interests
Latin American (Lack of) Agency
References
Chapter 5: Conclusion
Status of Latin American Memberships of the AIIB
Brazil: From US$3181 Million to US$5 Million
Peru: US$154 Million
Venezuela: US$209 Million
Bolivia: US$26.1 Million
Chile: US$10 Million
Argentina: US$5 Million
Uruguay: US$5 Million
References
Appendices
Appendix 1: Full AIIB Members by Region—78 Members in Total (as at 28 February 2020)
Appendix 2: Prospective AIIB Members by Region—24 in Total (as of 28 February 2020)
Appendix 3: Key Interviews/Personal Communications with the Authors
Appendix 4: LAC Countries Which Have Endorsed the BRI as of 1 February 2020
References for Appendix 4
Appendix 5: Diplomatic ties Between the PRC and LAC (1960–2019)
Index

Citation preview

The Political Economy of China–Latin America Relations The AIIB Membership

Alvaro Mendez Mariano Turzi

The Political Economy of China–Latin America Relations

Alvaro Mendez • Mariano Turzi

The Political Economy of China–Latin America Relations The AIIB Membership

Alvaro Mendez Fudan Institute for Global Public Policy Fudan University, Shanghai, China

Mariano Turzi UCEMA Buenos Aires, Argentina

ESIC Business & Marketing School Madrid, Spain London School of Economics and Political Science London, UK

ISBN 978-3-030-33450-5    ISBN 978-3-030-33451-2 (eBook) https://doi.org/10.1007/978-3-030-33451-2 © The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer Nature Switzerland AG 2020 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the ­publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and ­institutional affiliations. Cover pattern © John Rawsterne/ patternhead.co This Palgrave Pivot imprint is published by the registered company Springer Nature Switzerland AG. The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Alvaro To Tatiana for her love and support. To Leonor and Alvaro for always believing in me. Mariano To my wife Gladys Pierpauli. Always and forever my one true love. Ab imo pectore

Acknowledgements

We would like to express our gratitude to the many people who have supported us throughout the writing and publication process. First of all, thanks go to Professor Yijia Jing at Fudan University for his continual and positive support of this project. We are also deeply indebted to Natalie Lichtenstein for her guidance in understanding the lay of the AIIB land. We are also grateful to Professor Gregory Chin at York University and Dr Eva-Maria Nag at Durham University for their essential critique of prior work which became the basis of this book. We are deeply grateful to Enrique Garcia, former President of CAF; and to Luis Schmidt, Chilean Ambassador to China, for their support and guidance. We would like to thank David Patrick Houghton, Chris Alden, Jorge Heine, Francisco Javier Forcadell, Daniel Guttman, Tamar L. Gutner, Jerry Wittmeier Bains, Elaine Zuckerman, Barbara J. Bramble, and Jingjing Zhang, for their invaluable input. Finally, we would like to thank the innumerable policy makers, diplomats, academics and others who were interviewed for this project. This book was produced under the Fudan Fellowship Scheme, which allowed one of the authors (Alvaro Mendez) to conduct valuable fieldwork research in China between September 2018 and January 2019. Alvaro Mendez Mariano Turzi

vii

Contents

1 Introduction  1 2 Constructing LAC and the AIIB 27 3 Latin America: Both Agent and Patient 51 4 LAC and International Political Economy 69 5 Conclusion 91 Appendices115 Index125

ix

List of Tables

Table 1.1 Table 1.2 Table 5.1

Process Map for AIIB applicants Prospective AIIB members from Latin America LAC AIIB prospective countries and the BRI

11 15 106

xi

CHAPTER 1

Introduction

Abstract  Latin America and the Caribbean (LAC) is the only global South region wherein just one country, Ecuador, has become a full member of the AIIB, in November 2019 after 22.5 months. Seven more countries are “prospective” members, in order of joining: Brazil, Peru, Venezuela, Bolivia, Chile, Argentina, and Uruguay. This chapter introduces the research question that has guided this book: Why have the Latin American prospective members of the AIIB been so unsuccessful at complying with the membership-completion process? The AIIB seems to be able to finance the very expensive infrastructure LAC needs so badly. Why then have the LAC countries been so negligent? Can this illuminate the broader issue of why is it so hard to get physical infrastructure financed in the region? Keywords  AIIB • Latin America • China • International development • International political economy The genesis of this book lies in the authors’ interest in the political economy of new development aid in the global South, and in particular the role of China both in making room for the agency of global South countries and in emphasizing the construction of physical infrastructure. The region of Latin America and the Caribbean (LAC) is one of the world’s poorest and most backward precisely in physical infrastructure. This one of the © The Author(s) 2020 A. Mendez, M. Turzi, The Political Economy of China–Latin America Relations, https://doi.org/10.1007/978-3-030-33451-2_1

1

2 

A. MENDEZ AND M. TURZI

authors witnessed first-hand when he made a perilous journey to Colombia’s Pacific coast and saw for himself the enormous gap between the claims of the Colombian state and the reality of the Province of Buenaventura. Despite the new port facilities, the road infrastructure just outside the city of Buenaventura is so poor as to render the brand-new port useless as a way of distributing goods by sea to Colombian consumers. The authors noted the striking fact that the “Asian” Infrastructure Investment Bank was branching out into the LAC region, about as far away from its own region as one can get. The advent of the AIIB to LAC was therefore very exciting, as the AIIB seemed to promise finances for the very expensive infrastructure that LAC needs so badly, but except for extractive infrastructure has been unable to build for itself under the terms of trade of the present global political economy. The AIIB was “the new kid in town” and seemed to promise a new order. It also raised “philosophical” questions like: Why is it so hard to get physical infrastructure financed? Are China’s policy banks actually going to foot the bill for all the “connectivity” projects (i.e., over and above the extractive ones) which LAC has lacked for so long? What is China’s self-interest in LAC? Why did AIIB come to so remote a region in the first place? It is hard to keep up with institutions connected to China, because they are constantly evolving and changing. Chinese economic statecraft has utilized the AIIB and the Belt and Road Initiative (BRI) to engage with “America’s backyard”. China had been flogging the BRI very hard in order to gin up enough membership to mount a respectable display at the April 2019 Second Summit of the BRI. China so far has only needed “names” (but lots of them) to validate its scheme, not only for international but also domestic consumption:  – “China is changing global governance and policy”. The first LAC “buyer” of the BRI was Panama in 2017; since then, it has rapidly spread through the region. Nineteen countries have agreed in one form or another to connect up with it (Mendez and Alden 2019). Yet the Initiative itself remains fantasy agency, mostly; certainly in LAC, where Beijing still has not figured out how best to operationalize it. One is astonished to hear both sides keep touting it with no infrastructure to show for the heroic rhetoric. One bright spot is Ecuador, which did become a full member of the AIIB just recently, on 1 November 2019 (MIREMH 2019). What is the point, then, of bringing the AIIB to LAC in particular? In the beginning, the Chinese were touting their policy of non-conditional

1 INTRODUCTION 

3

aid and loans. China does have the power to finance the building of infrastructure through its policy banks, such as the China Development Bank (CDB) or the China Eximbank. But these lack oversight and accountability, and their focus is on extraction of natural resources from the global South, not “connectivity”  – the promise China has used to “sell” specifically the BRI to a South that had been growing sceptical of Chinese commercial goals in their own countries. In interviews and conversations with Latin American and other diplomats, everyone says China is very proud of the AIIB as well as the BRI. But the AIIB’s Bretton Woods governance template has meant the Bank has slipped Beijing’s grasp in many important matters. That is perhaps why LAC were drawn preferentially to the BRI, which is still under Chinese control. Endorsement of AIIB only foreran endorsement of BRI because Beijing did not at first know how to win endorsement of BRI in LAC; their attempt to “mass-market” it through the medium of the China-­ CELAC Forum in January 2018 having been a notable failure (Itamaraty 2018; see also: Zhang 2018). Equally important and intriguing was the motive implicated by the new development model, namely the agency of LAC. The global South is important, and its agency matters. Becoming prospective members of the AIIB would give back agency to LAC countries, who are so inured to dancing to the tune of the great powers of the North. Brazil’s leadership as a Founding Member was intriguing in the beginning, seeming to have caused a cascade of accessions from LAC to what was billed as the “Chinese World Bank”. All the more intriguing was Washington’s campaign to prevent it, and how spectacularly it failed. But how (if at all) is LAC taking the lead in advancing the AIIB today? Ever since the first flush of Brazil’s founding membership, the AIIB has been knocking on LAC’s door. But is anyone home? The hosts appear to have opened the door to the AIIB, but kept it in the parlour waiting, while the hosts cater for other suitors. There is a photograph of AIIB President Jin & Vice-President Alexander meeting in Chile with Chilean President Piñera, on their way to the Inter-American Development Bank’s annual meeting in Argentina in March 2018. They are in the parlour of the Presidential palace, speaking earnestly (MEFT  – Chile 2018). Why has there been no follow-up, even by Chile, in more than a year? In fairness to Chile there has been some follow-up by some very competent career bureaucrats, but Congress showed essentially no interest until recently when the legislative process finally began on 7 May 2019 (Cámara de Diputados – Chile 2019).

4 

A. MENDEZ AND M. TURZI

In the event, the Latin Americans showed they had no stamina. They had only had to write a few letters to become “prospective” AIIB members; likewise, endorsing or “committing” to the BRI, which Beijing had been touting throughout LAC (as in the rest of the global South), required only promises, not the sacrifice of real action. The BRI has proved more popular than the AIIB all over Latin America and the Caribbean – it draws more publicity for one thing, which politicians love. And Memoranda of Understanding on the BRI, like AIIB prospective memberships, cost next to nothing, are interpretively open-ended and at least seem non-committal. Full AIIB membership is rigorous, a serious commitment to a bona fide international organization, no longer merely an endorsement of Beijing. The classical Bretton Woods-style governance of the AIIB means that non-state actors, for example, have more scope to hold the AIIB and its members to account. The authors discovered that the LAC region is the only one in the global South which only has a single full member of the AIIB (Ecuador); seven other countries are still only prospective members at the time of writing, even though in nearly all cases the fiscal burden is very slight. This unusual pattern implicates the theory of Constructivism as an explanation: the Latin Americans have “socially constructed” amongst themselves an Institution of Mañana which pervades both business and politics, at both domestic and international levels. Policy makers ought to prepare for the long run; politicians have but a limited time in power: long-term commitments do not pay off in LAC. Development banks as institutions have capacity to think more in the long term. Latin Americans have the verve for initiatives, but not the stamina to implement, − the same pattern found by Dominguez (2007). LAC having indulged itself in fantasy agency to become “prospective” members, the harder parts of agency (actually taking action) were adjourned sine die. Only the self-image of Very Important Agency mattered. Prospective membership of the AIIB makes no loan money available, yet somehow the fantasy persists that “something will turn up” in the manner of Dickens’ Mister Macawber. There is thus in the region a vacuum of that class of thought which might rise to the dignity of political economy. How then should any theory of political economy shed light on AIIB membership in LAC? It turns out that it does not, whence Constructivism was revealed as indispensable to a satisfactory explanation, as it is hoped this book will show. The rest of this Introduction is organized as follows. First is a capsule “diplomatic history” of the AIIB; next is a discussion of LAC’s self-interest

1 INTRODUCTION 

5

in the Bank; then, a brief discussion of the only full member, Ecuador, followed by some background on each of the prospective members, Brazil, Peru, Venezuela, Bolivia, Chile, Argentina, Uruguay, in order of joining; finally comes a statement of the research puzzle prompting this book and a summary of the thesis. Though a wealth of empirical detail has been included proportional to this book’s size, it was thought best to limit its vulnerability to constantly changing circumstances (Lichtenstein 2019) by writing about the issues in a theoretical frame as well. The book as a whole is organized into five chapters. After this Introduction, the second chapter provides the constructivist analytic framework which the causal explanations in this book are founded on. Chapter three applies Constructivism to Latin America’s (lack of) agency towards the AIIB. Chapter four illuminates the international political economy contradictions in Latin America, and explains why and how they work against effective completion of AIIB membership. Chapter five gives conclusions and the current status of each of the Prospective AIIB countries in Latin America, and proposes future research needs.

AIIB – General Characteristics The Asian Infrastructure Investment Bank (AIIB) is a Multilateral Development Bank (MDB) headquartered in Beijing, China. It is the latest and in some ways most interesting of the development banks in the world today, one of a new breed of New Development Assistance (NDA) institutions providing financial assistance outside the traditional US-dominated system that was created in Washington in the 1940s (Jing, Mendez, and Zheng 2020). Projects at the AIIB are decided based on three key issues: sustainable infrastructure, cross-border connectivity, and private capital mobilization (SEC 2019). Despite its formal title, the AIIB has almost from its inception branched out to parts of the world beyond Asia, as if designed from the ground up to be an alternative World Bank. This book will concentrate on the AIIB in Latin America and the Caribbean (LAC), one of the most severely underdeveloped regions in the world, in sore need of economic development, physical infrastructure above all. The LAC’s self-interest in China’s Bank seems obvious, yet none of the joiners to date has completed its membership, which is a simple matter of paying-in its agreed share of the Bank’s capital by an agreed deadline. LAC is the only region in the world

6 

A. MENDEZ AND M. TURZI

in which none but one “prospective” member has proceeded to completion. This inertia is mystifying, as it holds up the region’s development progress and procrastinates so many opportunities which full membership is supposed to afford; access to infrastructural and other development loans being reserved for full members only. Early History Ever since it was announced by Xi Jinping on behalf of the Chinese government during a speech to the Indonesian parliament in Jakarta on 2 October 2013, the Asian Infrastructure Development Bank (AIIB) has been a hot topic in international development circles (Zhu 2019; The Economist 2013). It was initially conceived as part of a larger plan called One Belt One Road (OBOR), latterly the Belt and Road Initiative (BRI), which explains why it was introduced just a month after Xi Jinping announced the Silk Road Economic Belt in Astana, Kazakhstan in September 2013 (Xinhua 2015). In subsequent months Xi underscored the importance of the AIIB in many international meetings and forums, prompting other nations to bandwagon on the Bank. Despite being billed as a lender to the developing world, Beijing persuaded many developed nations to join the Chinese project  – in which China’s own position is ambiguous – and to do so in the teeth of US (and Japanese) displeasure. Washington believed then and believes today that the AIIB is a deliberate challenge to American hegemony in Latin America and beyond (Freeman 2019). It started up a lobbying campaign in 2014 to “ensure membership in the bank would be limited to smaller countries” (Perlez 2014, A1). The official rationale was subtler, alleging the AIIB would fall short of the Asian Development Bank (ADB) or the World Bank in meeting acceptable standards of human rights protection, accountable procurement, and sound environmental policies (Weiss 2017). In the teeth of this campaign Beijing officially launched the AIIB on 24 October 2014 at a ceremony in Beijing modestly attended by 21 countries. A Memorandum of Understanding was signed by those in attendance. Besides China, this included Bangladesh, Brunei, Cambodia, India, Kazakhstan, Kuwait, Laos, Malaysia, Mongolia, Myanmar, Nepal, Oman, Pakistan, Philippines, Qatar, Singapore, Sri Lanka, Thailand, Uzbekistan and Vietnam (Wan 2016; AIIB 2014). This initial meeting revealed important features about the AIIB: that it would be headquartered in Beijing; that it would be “capitalised with 100 billion, half of which would

1 INTRODUCTION 

7

be initial capital (20 percent paid-in) [and that the] shares [of Founding Members] would be decided by the size of the Member’s GDP, which would mean that China would have the largest share” (Wan 2016, 48); and that membership would be open to any member of the ADB or the World Bank (AIIB 2015). China also used this opportunity to set a deadline of 31 March 2015 for expressing the intention of becoming a Founding Member of the Bank (Weiss 2017). The sparse attendance, mostly by Chinese client states, seemingly vindicated the effectiveness of Washington’s furious lobbying; the strategy seemed to be working, as most major economies kept fairly silent on the AIIB. Nevertheless, Robert Zoellick, ex-President of the World Bank, in a June 2015 op-ed for the Financial Times, spoke up to fault the US for lobbying against the AIIB (Zoellick 2015). Eventually the US “attempt to halt or marginalize the AIIB failed miserably” (Feigenbaum 2017, 33). The tipping-point came on 12 March 2015, when the United Kingdom pledged to join the bank as a Founding Member (UK Government 2015). This decision was part of a larger foreign policy strategy of then-­Prime Minister David Cameron, who designed “to usher in a ‘golden age’ of British-Chinese relations … China [will] become Britain’s second-­largest trading partner” (Hilton, Fenby, and Barnett 2015; see also: Brown 2018). This is probably why a week before the decision, Queen Elizabeth issued a State Visit invitation to Xi Jinping via her grandson Prince William during his visit to the PRC (Zhang and Zhang 2015). These invitations by the Queen to visit “Britain on the advice of the [Prime Minister via its] Foreign and Commonwealth Office, with the aim of strengthening ties and building economic links” (Kennedy et al. 2015, 307) are uncommon and by tradition limited to two Heads of State per year. Xi’s visit to Britain took place in October 2015 (Huang 2015). London’s démarche provided cover for a great number of countries that had hesitated to join under the US campaign of dissuasion. The UK was the first G-7 country to do so. The authority and prestige of such an endorsement “broke the spell” woven by the US and precipitated a cascade of accessions, as countries apprehensive about defying Washington’s “instructions” felt safe under the aegis of the “special relationship” once the British bolted. It is reported that the US was surprised and infuriated by London’s unforeseen decision (Watt, Lewis, and Branigan 2015). The UK is currently the ninth largest shareholder of the AIIB with 3.15% of the total capital and 2.93% of the total votes (AIIB 2019d).

8 

A. MENDEZ AND M. TURZI

France, Germany and Italy followed suit immediately, pledging on 17 March 2015 to join the AIIB as Founding Members. The Swiss followed suit a few days later, on 20 March. From there the cascade came to resemble an avalanche. South Korea pledged on 26 March, and Australia, Russia and Brazil on 29 March 2015 (Wan 2016). By the deadline of 31 March 2015, a total of 57 countries had officially expressed their intention of becoming Founding Members. The AIIB officially opened its doors in January 2016, by which time the majority of Founding Members had completed their memberships, with the exception of Brazil, Kuwait and South Africa, which as of February 2020 still have not completed their memberships (AIIB 2019d). AIIB Today The US and Japan have remained sullenly on the side-lines as the AIIB has continued to lengthen its membership list, which currently stands at 78 Members (see Appendix 1 for the full list of Members) and 24 Prospective Members (see Appendix 2 for the full list of Prospective Members), and to multiply its cooperation agreements with existing institutions: the Eurasian Development Bank, the African Development Bank (AfDB), the European Investment Bank, the European Bank for Reconstruction and Development (EDRB), the Inter-American Development Bank (IDB), the Asian Development Bank (ADB), even the World Bank; as also with newer institutions like the Islamic Development Bank Group (IsDB Group), and the New Development Bank (NDB) (AIIB 2019e). The AIIB’s total initial capitalization was US$100 billion, divided into one million shares of US$100,000 par value, of which 20% must be paidin whilst 80% is callable (Gao and Quayle 2018). As at February 2020, the five largest members are: (1) China, with 30.79% of the shares and 26.52% of the total votes; (2) India, with 8.65% of the shares and 7.6% of the votes; (3) Russia, with 6.75% of the shares and 5.98% of the votes; (4) Germany, with 4.63% of the shares and 4.17% of the votes; and (5) South Korea, with 3.86% of the shares and 3.54% of the votes (AIIB 2019d). Since its inception, the AIIB has disbursed US$12.4 billion in loans to the fifty projects it has approved, including three in Africa (all in Egypt), which demonstrates its ability and intention to finance development beyond Asia (AIIB 2019c). The largest borrowers so far have been (in chronological order) India, Indonesia, Pakistan, Bangladesh and Turkey, but according to the President of the AIIB, Jin Liqun, “Malaysia,

1 INTRODUCTION 

9

Thailand and Vietnam are also ready to receive more funding” (Wu and Tobin 2019). The AIIB has also earned high international investment ratings, evincing its future viability. The first round of ratings came in 2017 when S&P, Moody’s and Fitch all rated the bank at “AAA or equivalent” (Lichtenstein 2018, 124). The latest round in 2019 by the same agencies continues to rate it AAA, with the result that by May 2019 the bank could raise US$2.5 billion from its first five-year global bond sale in London. According to AIIB publicity, this will help the Bank advance its priority “of investing in sustainable infrastructure, developing cross-border connectivity, and promoting environmental, social and governance investing in emerging Asia” and beyond (Wu and Tobin 2019). Governance In line with other MDBs, the AIIB has a two-board structure (Lichtenstein 2018). First, it has a Board of Governors with one delegate for each member country, and second, it has a smaller non-resident Board of twelve Directors elected by the Board of Governors. None of these twelve non-resident Directors can be a member of the Board of Governors (AIIB 2015). As of February 2020, the twelve Directors represented the following Members (all in alphabetical order): Australia, Canada, China, France, India, Indonesia, Korea, Philippines, Russia, Saudi Arabia, Turkey and the United Kingdom (AIIB 2019b). Also, in line with other MDBs the AIIB holds annual meetings of the Board of Governors in a member country. The first such meeting took place on 25 June 2016 in Beijing (AIIB 2016a). The second one was held in mid-June 2017 in Jeju, Korea (AIIB Board of Governors 2017g). The third one was hosted in mid-June 2018 in Mumbai, India (AIIB Board of Governors 2018a). The fourth one was held for the first time outside Asia in July 2019 in Luxemburg (AIIB 2019a). Membership According to Article 3 (1) of the AIIB’s Articles of Agreement, “Membership of the Bank is open to members of the International Bank for Reconstruction and Development [IDBR] or the Asian Development Bank” (AIIB 2015, 2), and the “power to admit new Members is exclusively vested in the Board of Governors … In practice, great importance is

10 

A. MENDEZ AND M. TURZI

attached to achieving an informal consensus among the Bank’s current Members for the admission of new Members” (AIIB 2016b, 2). The procedure for completing a prospective membership is straightforward. The hard part is the prior consent which the national Executive must seek from the Legislative to both the application itself and to the special exemptions from taxes and other liabilities which are amongst the terms and conditions for membership of the Bank. This may require in some cases amendment to the constitution; at a minimum it will require changes to the municipal law of the prospective Member. Once this, the major hurdle, has been cleared, the candidate need only comply with the AIIB’s procedures, culminating in the remittance to the Bank of the following documents, as stipulated in the Manual of Accession to the AIIB (AIIB 2016b), namely – (a) the instrument of acceptance; (b) a scanned copy and original subscription instrument; (c) a letter signed by the duly authorized person designating Governor and Alternate Governor; (d) a letter of support signed by the Governor-designate in compliance with the obligations of article 44.2, which states that “[e]ach member shall promptly take such action as is necessary to make effective in its own territory the provisions set forth in this Chapter and shall inform the Bank of the action which it has taken” (AIIB 2015, 23); (e) a letter signed by the duly authorized person designating the Depository; (f) a letter signed by the duly authorized person designating the formal communication channel; (g) a letter signed by the Governor/Alternate Governor where votes are assigned to a Director; and (h) evidence of payment of the first instalment of the “paid-in shares subscribed” (AIIB 2016b, 6). Table 1.1 below provides additional information on how applicants are to complete their membership.

Latin American Membership of the AIIB The “AIIB is not restricted to financing investment operations in the Asia region … from a membership perspective, this means it is not necessary to be a regional member to benefit from AIIB financing” (Lichtenstein 2018, 94), a fact evidenced by the projects already financed by the AIIB in Egypt. This is a very important feature, which has facilitated the introduction of countries outside the region, and essential to this book about the LAC and the AIIB. In Latin America the AIIB is known as the Banco Asiático de Inversión en Infraestructura (BAII). The region generally knows very little about

1 INTRODUCTION 

11

Table 1.1  Process Map for AIIB applicants Step 1 Step 2

Step 3 Step 4 Step 5 Step 6

Step 7 Step 8 Step 9 Step 10 Step 11 Step 12 Step 13

Potential applicants submit a formal written expression of interest, signed by a duly authorized minister Board of Directors discusses the admission of new members at their meeting. This is expected to include reaching an informal consensus on the decision to admit applicants or known potential applicants Bank prepares indicative terms and conditions of membership for each applicant Meeting is held between Bank and applicant to discuss proposed terms and conditions and explain application process Formal application for membership, signed by the head of government, head of state, foreign minister, or finance minister, is submitted Bank prepares a report for discussion at a meeting of the Board of Directors. At this meeting application is discussed. Advancement depends on how quickly the preceding steps are completed A recommendation is submitted by the Board of Directors to the Board of Governors for their approval Following approval by the Board of Governors, a news release may be issued announcing the decision to admit the new members Applicant prepares necessary domestic authorization and legislation Applicant provides the Bank with seven documents (explained above in chapter) Bank issues a certificate of membership to the new member Bank issues a news release announcing the new member Board of Directors receives an updated statement of voting power

Source: Authors’ Table (see also: AIIB 2016b)

this multilateral bank, not even academics and diplomats of the countries which have shown enough interest to pledge to become Members. Partly this may be thanks to the fact that only Ecuador has become a full Member so far (even whilst officials in Ecuador remain clueless about the 78-nation Bank). Of the current 24 Prospective Members, that is, those whom the Board of Governors have approved to join the bank but who have not paid-in their subscriptions, seven are Latin American. They are Brazil, Venezuela, Peru, Chile, Bolivia, Argentina, and Uruguay (AIIB 2019d). These countries qualified because they were members of the World Bank, which is a criterion of eligibility for membership. In May 2017 the AIIB inked a partnership agreement with the Inter-­ American Development Bank, which according to IDB President Alberto Moreno will “solidify Asia’s standing as one of our region’s key partners in the journey toward sustainable development” (AIIB 2017b). In March 2018 the IDB doubled down on the strategic partnership by noting that it would allow the co-financing of projects in the region’s many countries

12 

A. MENDEZ AND M. TURZI

which “have such important infrastructure deficits and where the need for capital is much greater than [the IDB or any other regional development bank] … alone can serve” (IDB 2018). Ecuador – AIIB’s Full Member Since 01 November 2019 Ecuador became an AIIB prospective member on 19 December 2017 via Resolution 54 of the AIIB’s Board of Governors. The Resolution decreed that Ecuador had to complete the process of paying-in its capital contribution by 31 December 2018, stipulating that Ecuador would buy 50 shares (10 paid-in and 40 “callable”) at US$100,000 each, for a total pledge of US$5 million. Ecuador’s capital contribution was structured as a paid-in investment of US$1 million divided into five instalments of US$200,000 each. The first instalment paid was to count for completion of membership on the expectation that the other four would be made in the four subsequent years (AIIB Board of Governors 2017e). Ecuador failed to complete its membership by the original deadline. The AIIB accommodated with a new Resolution (Resolution 68) extending the deadline by a year to 31 December 2019 (AIIB Board of Governors 2018b). Beijing first promoted the BRI and the AIIB to Ecuadorans during President Xi Jinping’s State Visit to Ecuador in November 2016 (personal communication: unnamed former Ecuadorian diplomat, 2018). Rafael Correa, Ecuador’s President at the time, called it the “most important [visit] by a Head of State in the history of Ecuador” (quoted in: Presidencia-­Ecuador 2016). Xi responded by claiming that Chinese aid to Ecuador had “no conditions attached” (quoted in: Baijie 2016). During this Visit both countries upgraded their diplomatic ties to a “comprehensive strategic partnership” (Fornes and Mendez 2018). A few days later, the Ecuadoran Ministry of Foreign Affairs and Human Mobility (MIREMH) reported that officials from the AIIB would attend the III Seminar on South-South Financial Cooperation to be held in Quito on 29 November 2016 (MIREMH 2016). In 2017 the AIIB issue remained dormant (at least publicly), which made sense in that Ecuador was to hold Presidential elections in early 2017, which Lenin Moreno, Correa’s handpicked successor, won by 51.6% in a deeply contested election billed as “a titanic victory for Correa’s party [and Correa personally]” (Ripley 2019). Shortly after taking office, however, in May 2017 Moreno began to distance himself from Correa, censuring him for getting Ecuador too deeply in debt to China (Long

1 INTRODUCTION 

13

2017; Kato 2017; Casey and Krauss 2018). But after a short while in the Presidency, Moreno realised that China’s embeddedness in Ecuador’s economy impossibly complicated any pushback, and switched to engaging the PRC proactively. This included sending Pablo Campana, Ecuador’s “investment ambassador to the world”, to Beijing in September 2017 (Enriquez and Viveros 2017). At this juncture, in mid-2017, Moreno’s Government took the lead in sending a formal expression of interest to the AIIB. After the Board of Directors reached informal consensus on Ecuador’s prospective membership, Quito accepted the terms and conditions of membership. The AIIB Board of Governors approved Ecuador as a prospective member on 19 December 2017, the same day they approved Belarus, the Cook Islands and Vanuatu (AIIB 2017a). Moreno’s engagement with the PRC continued to expand, driven by concern over Ecuador’s massive indebtedness to China, but his government did little to advance AIIB membership (personal communication: unnamed former Ecuadorian diplomat 2018). Quito and Beijing focussed on the BRI instead, as witness the interview given by Carlos Humberto Larrea, Ecuador’s new ambassador, to a Chinese media outlet in April 2018, when he affirmed that Ecuador was very excited about the BRI because it perfectly fit Quito’s strategic ambition to promote trade, tourism and foreign direct investment in the coming years. He added that it was mutually advantageous to both countries as it would improve Ecuador’s maritime and flight connectivity with the world (PEODSP 2018). By December 2018 Moreno was off to the PRC for a high-profile, three-day State Visit, where he was welcomed by Xi Jinping and Chinese dignitaries with the highest honours. They signed a number of agreements, including a memorandum of understanding (MoU) wherein Ecuador officially endorsed the BRI (MIREMH 2018b). A joint press release reported that Moreno “expressed the interest of Ecuador [in joining] the Asian Infrastructure Investment Bank” (MIREMH 2018a), yet Quito still did nothing to advance the process, and went on to miss the deadline set by the AIIB the previous year. Moreno was nonetheless rewarded financially, with Ecuador obtaining almost US$1 billion in loans at a very attractive interest rate (Reuters 2018), but which did little to advance the connectivity Ecuador needs to boost its economic growth. In 2019 Moreno’s Government again did little to advance membership. As of September 2019 there was no evidence whatsoever of legislative action by the National Assembly in Quito (Mendez 2019).

14 

A. MENDEZ AND M. TURZI

Nevertheless, on 1 November 2019 Ecuador’s Minister of Foreign Affairs, José Valencia, stopped at AIIB headquarters, in the course of an official visit, to personally hand-in the paperwork finalizing Ecuador’s membership to Bank President Jin Liqun (MIREMH 2019). In October 2019 the country underwent one of its most tumultuous episodes in recent history, 11 days of uninterrupted violence and turmoil, which included “8 deaths, 1300+ injuries and 1150+ arrests” (Bremmer 2019). This strongly suggests the government did not involve civil society in the process of completing the membership.

AIIB Prospective Countries from LAC The AIIB has demonstrated interest in the region in multiple ways, the patient acceptance of eight laggard countries in South America above all, and visits by AIIB’s President to Chile and Argentina in 2018 (Mendez 2018); notwithstanding that the region’s participation will be extremely modest, even in the aggregate: amounting to only US$419.7 million including Ecuador’s modest US$5 million. The whole region has less than half of the shares of Canada alone (at US$995.4 million), the only other full member from the Americas; who completed within twelve months of being accepted as a prospective member. Table 1.2 below tabulates Latin American’s participation in the AIIB. It only includes LAC’s prospective members at the time of writing, not Ecuador, which became a full member after 22.5 months on 1 November 2019 (MIREMH 2019). The availability of information differs from country to country. The authors were able to collect information directly from policy-makers in Argentina, Brazil, Bolivia, Chile, Peru and Uruguay (in some cases off the record). It proved impossible to collect information from Venezuela, so the narrative and analysis had to be based solely on publicly available documents and recorded statements. Non-scheduled interviews were used, as the purpose of the inquiry was exploratory. The authors did not use structured interviews or surveys. All interviewees were political elites and are listed along with venue in Appendix 3: Key Interviews/Personal Communications with the Authors. Interviews with other policy makers in Beijing, Washington, and London were also performed for background information (these interviews are not listed). The identities of those were anonymised who were interviewed off the record. The following section

1 INTRODUCTION 

15

Table 1.2  Prospective AIIB members from Latin America Member

Prospective acceptance date

Completion due

Amount Length so far (in million (as at 1 USD) February 2020)

50

29/06/2015

31/12/2022

Peru

1546

21/03/2017

31/12/2020a

5 (orig. 3.1bn) 154.6

Venezuela

2090

21/03/2017

31/12/2020c

209

Bolivia

261

12/05/2017

31/12/2020c

26.1

Chile

100

12/05/2017

31/12/2020c

10

Argentina

50

16/06/2017

31/12/2020c

5

Uruguay

50

18/04/2019

31/12/2020d

5

Brazila

Shares (share votes)

55 months (1678 days) 34 months (1047 days) 34 months (1047 days) 32.5 months (995 days) 32.5 months (995 days) 31.5 months (960 days) 9.5 months (289 days)

Source: Authors’ own elaboration Founding member Missed deadline four times already c Missed deadline twice d Missed deadline once a

b

provides the basics about each country. Chapter Five will update and detail the progress of the membership process of each of the seven prospective Members. Brazil Latin American interest in participating in the AIIB dates from Brazil’s decision to prospect for becoming a Founding Member on 29 March 2015, just three days before the deadline set by Beijing for statements of intent (Wan 2016). According to an unnamed Brazilian policy maker, ex-President Dilma Rousseff embraced the idea of the AIIB when it first came up in 2015 (personal communication – unnamed Brazilian diplomat 2018). Brazil then became one of the 57 countries to sign the Bank’s Articles of Agreement on 29 June 2015. Article 58 of this Agreement stipulated that Brazil would buy 31,810 shares (6362 paid-in and 25,448 “callable”) at US$100,000 each, for a total pledge of US$3.181 billion (AIIB 2015).

16 

A. MENDEZ AND M. TURZI

This amount has had to be greatly reduced since then (see Table 1.2). Brazil has also missed the 2019 deadline. Instead of extending its deadline by another year again, the AIIB has given Brazil until 31 December 2022 to complete via Resolution 88, a proceeding which hints at being an ultimatum, for all the three Founding Prospective Members yet to complete the process (the other two are Kuwait and South Africa) (see AIIB Board of Governors 2019a). Peru Peru became a prospective member on 21 March 2017 via Resolution 31 of the AIIB’s Board of Governors. The Resolution decreed that Peru must complete the process of paying-in its capital contribution by 31 December 2018, and stipulated that Peru would buy 1546 shares (309 paid-in and 1237 “callable”) for a total pledge of US$154.6 million. Peru’s contribution was structured as a paid-in investment of US$30.9 million divided into five instalments of US$6.18 million each. The first instalment was to count for completion of membership on the expectation that the other four would be made in the four subsequent years (AIIB Board of Governors 2017f). Peru failed to complete its membership by the original deadline. The AIIB accommodated Peru with a new Resolution (Resolution 68) extending the deadline by a year to 31 December 2019 (AIIB Board of Governors 2018b). After Lima missed this deadline, the AIIB took a Resolution (Resolution 89) to extend it again by a year to 31 December 2020 (AIIB Board of Governors 2019a). Venezuela Venezuela became an AIIB prospective member on 21 March 2017 via Resolution 34 of the AIIB’s Board of Governors. The Resolution decreed that Venezuela must pay-in its capital by 31 December 2018, stipulating that it would buy 2090 shares (418 paid-in and 1672 “callable”) for a total pledge of US$209 million. Venezuela’s contribution was structured as a paid-in investment of US$41.8 million divided into five instalments of US$8.36 million each. The first instalment was to count for completion of membership on the expectation that the other four would be made in the four subsequent years (AIIB Board of Governors 2017a). Venezuela failed to complete its membership by the original deadline. The AIIB accommodated Venezuela with a new Resolution (Resolution 68) extending the

1 INTRODUCTION 

17

deadline by a year to 31 December 2019 (AIIB Board of Governors 2018b). After Caracas missed this deadline, the AIIB took a Resolution (Resolution 89) to extend it again by a year to 31 December 2020 (AIIB Board of Governors 2019a). Bolivia Bolivia became an AIIB prospective Member on 12 May 2017 via Resolution 36 of the AIIB’s Board of Governors. The Resolution decreed that Bolivia must pay-in its capital by 31 December 2018, stipulating that it would buy 261 shares (52 paid-in and 209 “callable”), for a total pledge of US$26.1 million. Bolivia’s contribution was structured as a paid-in investment of US$5.2 million divided into five instalments of US$1.04 million each. The first instalment was to count for completion of membership on the expectation that the other four would be made in the four subsequent years (AIIB Board of Governors 2017b). Bolivia failed to complete its membership by the original deadline. The AIIB accommodated Bolivia with a new Resolution (Resolution 68) extending the deadline by a year to 31 December 2019 (AIIB Board of Governors 2018b). After Bolivia missed this deadline, the AIIB took a Resolution (Resolution 89) to extend it again by a year to 31 December 2020 (AIIB Board of Governors 2019a). Chile Chile became a prospective member on 12 May 2017 via Resolution 37 of the AIIB’s Board of Governors. The resolution decreed that Chile must pay-in its capital 31 December 2018, and stipulating that it would buy 100 shares (20 paid-in and 80 “callable”) for a total pledge of US$10 million. Chile’s contribution was structured as a paid-in investment of US$2 million divided into five instalments of US$400,000 each. The first instalment was to count for completion of membership on the expectation that the other four would be made in the four subsequent years (AIIB Board of Governors 2017d). Chile failed to complete its membership by the original deadline. The AIIB accommodated Chile with a new Resolution (Resolution 68) extending the deadline by a year to 31 December 2019 (AIIB Board of Governors 2018b). After Chile missed this deadline, the AIIB took a Resolution (Resolution 89) to extend it again by a year to 31 December 2020 (AIIB Board of Governors 2019a).

18 

A. MENDEZ AND M. TURZI

Argentina Argentina became a prospective member on 16 June 2017 via Resolution 46 of the AIIB’s Board of Governors. The Resolution decreed that Argentina must pay-in its capital by 31 December 2018, whilst stipulating that it would buy 50 shares (10 paid-in and 40 “callable”) for a total pledge of US$5 million. Argentina’s contribution was structured as a paid-in investment of US$1 million divided into five instalments of US$200,000 each. The first instalment was to count for completion of membership on the expectation that the other four would be made in the four subsequent years (AIIB Board of Governors 2017c). Argentina failed to complete its membership by the original deadline. The AIIB accommodated with a new Resolution (Resolution 68) extending the deadline by a year to 31 December 2019 (AIIB Board of Governors 2018b). After Argentina missed this deadline, the AIIB took a Resolution (Resolution 89) to extend it again by a year to 31 December 2020 (AIIB Board of Governors 2019a). Uruguay Uruguay became a prospective member on 18 April 2019 via Resolution 79 of the AIIB’s Board of Governors. The Resolution decreed that Uruguay must pay-in its capital by 31 December 2019, whilst stipulating that it would buy 50 shares (10 paid-in and 40 “callable”) for a total pledge of US$5 million. Uruguay’s contribution is structured as a paid-in investment of US$1 million divided into five instalments of US$200,000 each. The first instalment is to count for completion of membership on the expectation that the other four would be made in the four subsequent years (AIIB Board of Governors 2019b). After Uruguay missed this first deadline, the AIIB took a Resolution (Resolution 89) to extend it again by a year to 31 December 2020 (AIIB Board of Governors 2019a).

The Puzzle of Latin American Non-fulfilment The research puzzle that this book was written to solve is, Why is there this mystifying inertia of the Latin Americans in a matter as simple as completing a minor membership of an investment bank that bids so fair to finance the construction of so necessary a commodity for LAC as connectivity infrastructure?

1 INTRODUCTION 

19

In brief, the authors found the best explanation in the analytic framework of Constructivism. The peoples of the region have constructed informal institutions and social norms that indulge them in taking no concrete action to follow through to the end. They do have good ideas but tend to postpone acting on them until “tomorrow”, which of course never arrives because every day is “today”. This cultural norm, which may well arise from the weakness of LAC states, subtly tends to substitute fantasy agency, wherein Latin Americans can be as vicariously powerful as they can dream of being, for real-world agency, with all of the frustrations and disappointments and defeats that weak states must commonly suffer. This dream world of magical realism may well have been enabled by the protective bubble of insulation and isolation “from the undifferentiated impact of great power contestation in the international system” (Dominguez 2007, 88) which the Monroe Doctrine and the policy of the British Empire created, which shut all other great powers out of the Western Hemisphere during the long formative period that lasted from 1820, when Britain emerged the victor of the Napoleonic Wars, until 2007, with the collapse of US finances and the rise of China as the main contestant for global hegemony. Latin America and the Caribbean are none the less embedded in the international system, however protected they may have been from its worst depredations. It behoves, therefore, to entertain some of the main theories in this field, the better to comprehend the region’s peculiar relationship with it, which may hold the key to understanding the puzzle of Latin Americans’ seemingly anomalous international behaviour.

References AIIB. 2014. “The Memorandum of Understanding on Establishing the Asian Infrastructure Investment Bank (AIIB) was signed in Beijing.” news release, 24 October 2014, https://www.aiib.org/en/news-events/news/2015/ 20150408_004.html. AIIB. 2015. Articles of Agreement. (29 June 2015). (Accessed 16 June 2019). https://www.aiib.org/en/about-aiib/basic-documents/_download/articlesof-agreement/basic_document_english-bank_articles_of_agreement.pdf AIIB. 2016a. “2016 Annual Meeting.” news release, 25 June 2016, https:// www.aiib.org/en/news-events/events/2016-annual-meeting/index.html. AIIB. 2016b. Manual for Accession to the AIIB.  Beijing, China: Office of the Corporate Secretary – Asian Infrastructure Investment Bank.

20 

A. MENDEZ AND M. TURZI

AIIB. 2017a. “AIIB Approves Membership of Cook Islands, Vanuatu, Belarus and Ecuador.” news release, 19 December 2017, https://www.aiib.org/en/newsevents/news/2017/20170616_003.html. AIIB. 2017b. “The Asian Infrastructure Investment Bank and the IDB Group Expand Ties.” news release: Asian Infrastructure Investment Bank, 16 May 2017, https://www.aiib.org/en/news-events/news/2017/20170516_001.html. AIIB. 2019a. 2019 Annual Meeting. https://www.aiib.org/en/news-events/ events/annual-meeting/overview/index.html. Accessed 30 June 2019. AIIB. 2019b. AIIB Governance: Board of Directors. https://www.aiib.org/en/ about-aiib/governance/board-directors/index.html. Accessed 16 June 2019. AIIB. 2019c. Approved Projects. https://www.aiib.org/en/projects/approved/ index.html. Accessed 10 November 2019. AIIB. 2019d. Members and Prospective Members of the Bank. https://www.aiib. org/en/about-aiib/governance/members-of-bank/index.html. Accessed 11 November 2019. AIIB. 2019e. Partnerships. https://www.aiib.org/en/about-aiib/who-we-are/ partnership/index.html. Accessed 16 June 2019. AIIB Board of Governors. 2017a. Admission of the Bolivarian Republic of Venezuela to Membership in the Asian Infrastructure Investment Bank. Resolution 34. (21 March 2017). (Accessed 19 December 2018). https:// www.aiib.org/en/about-aiib/governance/board-governors/index.html AIIB Board of Governors. 2017b. Admission of the Plurinational State of Bolivia to Membership in the Asian Infrastructure Investment Bank. Resolution 36. (12 May 2017). (Accessed 19 December 2018). https://www.aiib.org/en/ about-aiib/governance/board-governors/index.html AIIB Board of Governors. 2017c. Admission of the Republic of Argentina to Membership in the Asian Infrastructure Investment Bank. Resolution 46. (16 June 2017). (Accessed 19 December 2018). https://www.aiib.org/en/aboutaiib/governance/board-governors/index.html AIIB Board of Governors. 2017d. Admission of the Republic of Chile to Membership in the Asian Infrastructure Investment Bank. Resolution 37. (12 May 2017). (Accessed 19 December 2018). https://www.aiib.org/en/aboutaiib/governance/board-governors/index.html AIIB Board of Governors. 2017e. Admission of the Republic of Ecuador to Membership in the Asian Infrastructure Investment Bank. Resolution 54. (19 December 2017). (Accessed 13 June 2019). https://www.aiib.org/en/aboutaiib/governance/board-governors/index.html AIIB Board of Governors. 2017f. Admission of the Republic of Peru to Membership in the Asian Infrastructure Investment Bank. Resolution 31. (21 March 2017). (Accessed 19 December 2018). https://www.aiib.org/en/ about-aiib/governance/board-governors/index.html AIIB Board of Governors. 2017g. Annual Meeting of the Board of Governors (Summary of Proceedings). (Accessed 20 January 2019). https://www.aiib.

1 INTRODUCTION 

21

org/en/about-aiib/governance/board-governors/.content/index/_ download/Summary-of-Proceedings.pdf AIIB Board of Governors. 2018a. Annual Meeting of the Board of Governors (Summary of Proceedings). (25-26 June 2018). (Accessed 10 May 2019). https://www.aiib.org/en/about-aiib/governance/board-governors/.content/index/_download/Summary-of-Proceedings.pdf AIIB Board of Governors. 2018b. Extending the Deadline for Prospective Members to Accede to the Bank’s Articles of Agreement. Resolution 68. (18 December 2018). (Accessed 10 June 2019). https://www.aiib.org/en/aboutaiib/governance/board-governors/index.html AIIB Board of Governors. 2019a. Extending the Deadline for Prospective Members to Accede to the Bank’s Articles of Agreement. Resolution 89. https://www.aiib.org/en/about-aiib/governance/board-governors/ index.html AIIB Board of Governors. 2019b. Admission of the Oriental Republic of Uruguay to Membership of the Asian Infrastructure Investment Bank. Resolution 79. (18 April 2019). (Accessed 11 May 2019). https://www.aiib.org/en/aboutaiib/governance/board-governors/index.html Baijie, An. 2016. Xi says help unconditional. China Daily. (19 November 2016). (Accessed 2 July 2019). http://www.chinadaily.com.cn/world/2016xivisitepc/ 2016-11/19/content_27426699.htm Bremmer, Ian. 2019. What Happens Next in Ecuador. Time. (18 October). (Accessed 7 November 2019). https://time.com/5705202/what-happensnext-in-ecuador/ Brown, Justine. 2018. “Free Trade, Yes; Ideology, Not So Much: The UK’s Shifting China Policy 2010-16.” Journal of the British Association for Chinese Studies 8 (1):92–126. Cámara de Diputados – Chile. 2019. Proyecto de Ley: Aprueba el Convenio Constitutivo del Banco Asiático de Inversión en Infraestructura. Primer trámite constitucional. https://www.camara.cl/pley/pley_detalle. aspx?prmID=13135. Accessed. Casey, Nicholas, and Clifford Krauss. 2018. It Doesn’t Matter if Ecuador Can Afford This Dam. China Still Gets Paid. The New York Times. (26 December 2018). (Accessed 8 June 2019). https://www.nytimes.com/2018/12/24/ world/americas/ecuador-china-dam.html Dominguez, Jorge I. 2007. “International cooperation in Latin America: the design of regional institutions by slow accretion.” In Crafting Cooperation: Regional International Institutions in Comparative Perspective, edited by Amitav Acharya and Alastair Iain Johnston, 83–128. Cambridge, UK: Cambridge University Press. Enriquez, Carolina, and Diana Viveros. 2017. El Gobierno busca inversiones en seis países, entre ellos China y EE.UU.  El Comercio. (1 September 2017). (Accessed 6 July 2019). https://www.elcomercio.com/actualidad/ecuadorinversion-gira-comercioexterior-estadosunidos.html

22 

A. MENDEZ AND M. TURZI

Feigenbaum, Evan A. 2017. “China and the World.” Foreign Affairs 96 (1):33–40. Fornes, Gaston, and Alvaro Mendez. 2018. The China-Latin America Axis: Emerging Markets and their Role in an Increasingly Globalised World. 2nd ed. New York: Palgrave Macmillan. Freeman, Carla P. 2019. Constructive Engagement? The US and the AIIB. Global Policy, 10(4), 667–676. doi:10.1111/1758-5899.12764 Gao, Xuan, and Peter Quayle. 2018. Asian Infrastructure Investment Bank (AIIB). Max Planck Encyclopedia of Public International Law. (Accessed 10 May 2019). https://opil.ouplaw.com/view/10.1093/law-epil/9780199231690/ law-9780199231690-e2196 Hilton, Isabel, Jonathan Fenby, and Robert Barnett. 2015. Has Britain Sold Out to Beijing? Foreign Policy. (23 March 2015). (Accessed 10 January 2019). https://foreignpolicy.com/2015/10/23/china-britain-trade-uk-xi-jinpingcameron-nuclear-investment/ Huang, Cary. 2015. ANALYSIS: Britain’s new ‘special relationship’ with China is built on pragmatism. South China Morning Post. (23 October 2015). (Accessed 5 May 2019). https://www.scmp.com/news/china/diplomacydefence/article/1871449/britains-new-special-relationship-china-built IDB. 2018. Connecting Latin America and Asia: The Role of AIIB. (24 March 2018). (Accessed 10 June 2019). https://vimeo.com/261658926 Itamaraty. 2018. “Special declaration of santiago of the ii ministerial meeting of the celac-china forum on the belt and road initiative.” news release: Ministry of Foreign Affairs: The Federative Republic of Brazil, 22 January 2018, http:// www.itamaraty.gov.br/images/2For oCelacChina/Declaration-ofSantiago%2D%2DII-CELAC-China-Forum-FV-22-01-2018.pdf. Jing, Yijia, Alvaro Mendez, and Yu Zheng. 2020. “New Development Assistance in the Making: An Introduction.” In New Development Assistance: Emerging Economies and the New Landscape of Development Assistance, edited by Yijia Jing, Alvaro Mendez and Yu Zheng, 1–18. Basingstoke, UK: Palgrave Macmillan. Kato, Kenji. 2017. Ecuador looks to foreign investment. The Japan News. (21 December 2017). (Accessed 12 January 2019). https://global-factiva-com. gate3.library.lse.ac.uk/redir/default.aspx?P=sa&NS=16&AID=9LON003400 &an=YOMSHI0020171220edcl00002&cat=a&ep=ASI Kennedy, Susan, Stewart Ross, R.G.  Grant, Joel Levy, and Ros Belford. 2015. Queen Elizabeth II and The Royal Family. Edited by Rob Houston. New York, NY: DK – Penguin Random House. Lichtenstein, Natalie. 2018. A Comparative Guide to the Asian Infrastructure Investment Bank. Oxford, UK: Oxford University Press. Lichtenstein, Natalie. 2019. “AIIB at Three: A Comparative and Institutional Perspective.” Global Policy 10.4 (2019): 582–586. Long, Gideon. 2017. Lenín Moreno unpicks Ecuador’s leftwing legacy. Financial Times. (29 December 2017). (Accessed January 12, 2019)

1 INTRODUCTION 

23

MEFT – Chile. 2018. “Gobierno se reúne con delegación del Banco Asiático de Inversión e Infraestructura para analizar ingreso de Chile a la entidad.” news release: Ministerio de Economía, Fomento y Turismo de Chile, 22 March 2018, https://www.economia.gob.cl/2018/03/22/gobierno-se-reune-condelegacion-del-banco-asiatico-de-inversion-e-infraestructura-para-analizaringreso-de-chile-a-la-entidad.htm. Mendez, Alvaro. 2018. The Asian Infrastructure Investment Bank comes knocking on Latin America’s door: is anyone home? LSE Latin America and the Caribbean Centre Blog. (27 April 2018). (Accessed 20 June 2019). http:// blogs.lse.ac.uk/latamcaribbean/2018/04/27/the-asian-infrastructure-investmentbank-comes-knocking-on-latin-americas-door-is-anyone-home/ Mendez, Alvaro. 2019. “Latin America and the AIIB: Interests and Viewpoints.” Global Policy:1–6. doi: https://doi.org/10.1111/1758-5899.12733. Mendez, Alvaro, and Chris Alden. 2019. “China in Panama: From Peripheral Diplomacy to Grand Strategy.” Geopolitics:1–23. doi: https://doi.org/10.108 0/14650045.2019.1657413. MIREMH. 2016. “III Seminar on South-South Financial Cooperation will analyze the role of the new development bank in the world.” news release: Ministerio de Relaciones Exteriores y Movilidad Humana de Ecuador, 29 November 2016, https://www.cancilleria.gob.ec/en/iii-seminar-on-southsouth-financial-cooperation-will-analyze-the-role-of-the-new-developmentbank-in-the-world/. MIREMH. 2018a. “Comunicado Oficial.” news release: Ministerio de Relaciones Exteriores y Movilidad Humana del Ecuador, 14 December 2018, http:// www.cancilleria.gob.ec/en/ecuador-and-china-establish-integralstrategic-partnership/. MIREMH. 2018b. “Ecuador se adhiere a la iniciativa china de la Franja y la Ruta como resultado de la visión “pragmática” del gobierno.” news release: Ministerio de Relaciones Exteriores y Movilidad Humana: Gobierno de la Repúplica del Ecuador, 14 December 2018, https://www.cancilleria.gob.ec/ ecuador-se-adhiere-a-la-iniciativa-china-de-la-franja-y-la-ruta-como-resultadode-la-vision-pragmatica-del-gobierno/. MIREMH. 2019. “Canciller Valencia se reúne con Vicepresidente chino y Canciller Wang Yi en el marco de VIII consultas diplomáticas.” news release: Ministerio de Relaciones Exteriores y Movilidad Humana de Ecuador, 1 November 2019, https://www.cancilleria.gob.ec/canciller-valencia-se-reunecon-vicepresidente-chino-y-canciller-wang-yi-en-el-marco-de-viii-consultasdiplomaticas/. PEODSP. 2018. Entrevista exclusiva con Carlos Larrea, embajador de Ecuador en China: “Al igual que China, nosotros también queremos crecer en cuanto a la calidad de vida de nuestros ciudadanos”. People's Daily & People's Daily Online. (12 April 2018). (Accessed 6 July 2019). http://spanish.peopledaily. com.cn/n3/2018/0412/c31621-9448573.html

24 

A. MENDEZ AND M. TURZI

Perlez, Jane. 2014. U.S.  Opposing China’s Answer to World Bank. New  York Times: A1. (9 October 2014). https://www.nytimes.com/2014/10/10/ world/asia/chinas-plan-for-regional-development-bank-runs-into-us-opposition.html Presidencia-Ecuador. 2016. “China refuerza su papel estratégico en Ecuador y la región.” news release: Presidencia de la República del Ecuador, 17 November 2016, https://www.presidencia.gob.ec/china-refuerza-su-papel-estrategicoen-ecuador-y-la-region/. Reuters. 2018. Ecuador clinches $900 mln loan from China -Moreno. Reuters. (12 December 2018). (Accessed 6 July 2019). https://www.reuters.com/ article/ecuador-debt-china/ecuador-clinches-900-mln-loan-from-chinamoreno-idUSL1N1YH0YJ Ripley, Brian. 2019. From Rafael Correa to Lenín Moreno: Ecuador’s Swing to the Right. Council on Hemispheric Affairs. (2 July 2019). (Accessed 6 July 2019).www.coha.org/from-rafael-correa-to-lenin-moreno-ecuadorsswing-to-the-right/ SEC. 2019. ASIAN INFRASTRUCTURE INVESTMENT BANK: Registration Statement. U.S.  Securities and Exchange Commission. (9 May 2019). (Accessed 11 June 2019). https://www.sec.gov/Archives/edgar/data/ 1733112/000119312519145194/d644843d424b1.htm The Economist. 2013. An Asian infrastructure bank: Only Connect. The Economist. (4 October 2013). (Accessed 15 May 2019). https://www.economist.com/analects/2013/10/04/only-connect UK Government. 2015. “UK announces plans to join Asian Infrastructure Investment Bank.” news release, 12 March 2015, https://www.gov.uk/gover nment/news/uk-announces-plans-to-join-asian-infrastr uctur einvestment-bank. Wan, Ming. 2016. The Asian Infrastructure Investment Bank: the Construction of Power and the Struggle for the East Asian International Order. New  York: Palgrave Macmillan. Watt, Nicholas, Paul Lewis, and Tania Branigan. 2015. US anger at Britain joining Chinese-led investment bank AIIB. The Guardian. (13 March 2015). (Accessed 10 April 2019). https://www.theguardian.com/us-news/2015/mar/13/ white-house-pointedly-asks-uk-to-use-its-voice-as-part-of-chinese-led-bank Weiss, Martin A. 2017. “Asian Infrastructure Investment Bank (AIIB).” Congressional Research Service (Washington: Library of Congress). https:// fas.org/sgp/crs/row/R44754.pdf. Wu, Wendy, and Meaghan Tobin. 2019. China-backed Asian Infrastructure Investment Bank raises US$2.5 billion from bond sale in London. South China Morning Post. (10 May 2019). (Accessed 10 June 2019) Xinhua. 2015. Chronology of China’s Belt and Road Initiative. THE STATE COUNCIL THE PEOPLE'S REPUBLIC OF CHINA. http://english.gov.

1 INTRODUCTION 

25

cn/news/top_news/2015/04/20/content_281475092566326.htm. Accessed 25 June 2019. Zhang, Yunbi. 2018. President Xi: Belt, Road needs Latin flavour. China Daily. (23 January 2018). (Accessed 12 June 2019). http://www.chinadaily.com. cn/a/201801/23/WS5a66766da3106e7dcc135d89.html Zhang, Yunbi, and Chunyan Zhang. 2015. Prince William arrives in China to warm welcome. China Daily. (2 March 2015). (Accessed 11 May 2019).www. chinadaily.com.cn/world/cn_eu/2015-03/02/content_19688379.htm Zhu, Jiejin. 2019. “Two Approaches to Institutionalizing the New Development Assistance: A Comparative Analysis of the Operational Institutions of NDB and AIIB.” In New Development Assistance: Emerging Economies and the New Landscape of Development Assistance, edited by Yijia Jing, Alvaro Mendez and Yu Zheng, 75–98. Basingstoke, UK: Palgrave Macmillan. Zoellick, Robert. 2015. Shunning Beijing’s infrastructure bank was a mistake for the US. Financial Times. (7 June 2015). (Accessed 25 May 2 ­ 019). https:// www.ft.com/content/c870c090-0a0c-11e5-a6a8-00144feabdc0

CHAPTER 2

Constructing LAC and the AIIB

Abstract  This chapter introduces the paradigm of Constructivism in international relations to show how it may account for the conundrum of Latin American and Caribbean inertia in a case wherein action should be both easy and profitable. Other international relations paradigms cannot begin to explain the paradox of persistent do-nothingism in the teeth of every rational motive and material incentive to act. The peoples of the region have “constructed” between themselves quite a few customary modes of behaviour which debilitate their demonstrated capacity for agency in international affairs, squandering the opportunities that fortune and destiny have presented to them time and again. The net result is a vacuum of effectual strategy across the region in their relations with China as in their relations with the United States and other extra-regional powers. Keywords  AIIB • Latin America • China • Constructivism • Agency

Introduction The classical schools of thought in international relations look foremost and sometimes exclusively to the external material world for the causes of state acts in foreign affairs (Lantis and Beasley 2018; Waltz 1979). This one-sided view of the world, which leaves the invisibles and intangibles of

© The Author(s) 2020 A. Mendez, M. Turzi, The Political Economy of China–Latin America Relations, https://doi.org/10.1007/978-3-030-33451-2_2

27

28 

A. MENDEZ AND M. TURZI

human consciousness out of account, has by Arnold Wolfers been called the “billiard balls” model, whereby “every state represents a closed, impermeable, and sovereign unit, completely separated from all other states” (Wolfers 1962, 19). Such a model leaves unaccountable the paradox of behaviours like LAC’s non-engagement with the AIIB, despite the many material incentives it has to engage. We need to understand better what is happening inside the “black box”, and how an invisible hand or “agent [is] moving the balls around the table” (Houghton 2018, 224). This entails investigating agency and its immaterial determinants, the “role of ideas, norms, knowledge, culture, and argument in politics, stressing … the role of collectively held or ‘intersubjective’ ideas and understandings on social life” (Finnemore and Sikkink 2001, 392). Mental factors prove indispensable for comparing the different (or similar) foreign policy actions or inactions of groups of countries that possess similar (or different) material endowments, when the latter are exposed as inconclusive or insufficiently explanatory. Such are the prospective members of the AIIB belonging to the LAC region. But using Constructivism, researchers get to “go inside states, [and observe the] societal-level normative and ideational forces” which shape foreign policy (Kaarbo 2015, 199; Katzenstein et al. 1999). Constructivism cracks open the black box to give us a peek into the invisible causal nexus inside. In this study our task shall be to look through the Constructivist prism to understand relations between the countries of Latin America and the AIIB, in particular an apparent inability or unwillingness to pay-in petty sums of capital in order to fulfil their pledges to the AIIB despite how vital functional membership may be to the region’s development.

Constructivism: The Foundation The significance of Constructivist processes in foreign policy was first noted by Robert Keohane, who at first called it the “reflective approach” (Keohane 1988, 379). Mainstream readings assume that the paradigm does not rise to the dignity of a theory but is only a method of research (Checkel 1998, 325), an “approach”, − an “empty vessel that merely specifies a social ontology without … specifying which social relationships it is concerned with” (Flockhart 2016, 81). It is beyond the scope of this

2  CONSTRUCTING LAC AND THE AIIB 

29

work to debate whether Constructivism is a proper IR theory or not. It offers unrivalled advantages just as a method, making it possible “to theorize about matters that seem to be unrelated because the concepts and propositions normally used to talk about such matters are also unrelated” (Onuf 1998, 58). Constructivism has been in use for decades as an analytic framework alternative to the established paradigms of International Relations. Despite its proliferation in the literature, because of its abstraction it is inaccessible to “many scholars and students [who] find it difficult to grapple with” (Houghton 2018, 225). The following five core assumptions of Constructivism are offered as a way to simplify the concept by reducing it to its elements, which are ideas, identity, agency, social facts, and self-­ fulfilment. To further aid comprehension, these elements have been arranged in “causative order”, that is, ideas form the matrix from which identity springs. Identity is a special class of ideas which condition agency. Agency in turn, especially collective agency, but sometimes also individual if it is creative or entrepreneurial, yields social or “institutional” facts. These facts are consolidated or “locked-in” by their self-fulfilling effects on collective behaviour. The reader should note well that agency stands at the centre of this scheme like a keystone, holding it up. It follows that ideas and identity are the “inputs” to agency, while social facts and their self-fulfillingness are its “outputs”. Five Core Constructivist Assumptions  irst: “Ideas Matter” F The first and probably most primordial assumption shared by Constructivists is that ideas are fundamental causes of actions and events. Ideas are will-­o’the-wisps easily discounted as unstorable, uncountable, immeasurable. Nevertheless, although “[f]orce may be how international affairs are waged; ideas are why. Consequently, any study of international affairs must start with a study of ideas” (Brands 2003, 1; see also: Graebner 1964). Ideas are beliefs held by agents, and beliefs make up their motives and their rules of thumb for action. This world of ideas is “critically important, as they construct (constitute) both identities and interests  – hence the constructivist slogan ‘ideas matter’ – and within this emphasis there is a particular focus on collective ideas and norms” (Houghton 2007, 29). One may say, ideas are the “floorplan” out of which social reality is con-

30 

A. MENDEZ AND M. TURZI

structed; subject, however, to the limits imposed on human reality by the “timber” of brute facts (q.v.). The conjecture that ideas matter in foreign policy making and international relations was first broached by Goldstein and Keohane (Goldstein and Keohane 1993b) in an influential coedited book, Ideas and Foreign Policy: Beliefs, Institutions, and Political Change. But this was rooted in earlier work evaluating the belief systems of individual agents (see: Bronfenbrenner 1961; Holsti 1962; Osgood 1966; Holsti 1967; Finlay et  al. 1967; Stoessinger 1967; Gamson and Modigliani 1971). Some scholars argue that “belief systems are ‘ideas’ … and therefore the question has never been whether ideas ‘matter,’ but rather … whose ideas [matter]” (Sullivan 2001, 31). Constructivists have noted that, for better or worse, elites in both the private and public sectors are the most important, maybe the only important actors. The ideas they are prepossessed-of are the ones shaping how the communities they lead will act in the international system. To explain their conduct of foreign affairs, it is necessary to investigate what they believe (Grieco et al. 2015, 93). Ideas serve two political purposes: first, as “hooks: competing elites seize on popular ideas to propagate and to legitimize their interests, but the ideas themselves do not play a causal role” (Goldstein and Keohane 1993a, 4; see also: Berger and Luckmann 1967). As hooks, popular ideas are expropriated “to justify actions that were motivated by considerations of wealth and power, not by visions of justice and truth” (Krasner 1993, 257). But the flip-side and second purpose ideas can serve is to “often exert major [presumably legitimate] impact on policy” (Goldstein and Keohane 1993a, 26; see also: Sikkink 1993). “Ideas Matter” in Latin America The relevance of this constructivist paradigm for Latin America and the Caribbean is particularly important, as the elites are certainly the group leading the foreign policy making process (FPMP). The two political purposes of ideas identified by Goldstein and Keohane (1993a) have been documented in the literature and can also be observed in the behaviour of policymakers throughout the region. As hooks ideas are used by “Latin American political elites [who have not been] eager to extend rights and liberties to all their fellow citizens, or even most of them” (Weeks 2015, 21); they then become instruments “to maintain [elites’] dominance within societies” (Best 2008, 53). This is not a new development and goes back to the beginning of these republics, when the independence leaders

2  CONSTRUCTING LAC AND THE AIIB 

31

or founding fathers of the region, such as Bolivar, San Martin and O’Higgins, produced constitutions that were democratic in the abstract, but elitist and authoritarian in functional design. Most of these constitutions “had the familiar three-part division of powers, but [they] gave vast authority to the executive, carefully circumscribed the powers of congress and courts, and enshrined corporate privilege in the only groups deemed capable of governing and holding society together” (Wiarda 1995, 178). The second purpose of ideas, as argued by Goldstein and Keohane, finds equal resonance in Latin America, where elites have undue influence over the foreign policy making process, particularly the business elites. As a result, in Latin America “elite ideas matter”, and these are “more likely to become entrenched in sectors of great interest for business elites” (Dargent 2015, 32), which end up capturing the foreign policy process throughout the region and advancing elite interests. This conclusion depends on the capture theory: that public agency is “beholden to those interests in [sic] which they have been created to regulate” (Furlong 2008, 225; see also: Bernstein 1955; Stigler 1971). S econd: “Identity Matters” The second shared Constructivist assumption is that identity matters  – whatever identity may be. No consensus has ever been found amongst IR scholars on what identity is and how it affects foreign policy (Vucetic 2018). We can know some things about it: It emerges from the world of ideas, in particular, those which agents have about themselves. Ideas held by “groups and states are not given or set in stone … [but] shaped by the [prior] identities of the actors” in the manner of feedback; “identities are molded by a variety of ideational factors – culture, religion, science, and normative beliefs” (Grieco et al. 2015, 93). This implies that identities are ideas carried over from the past, which may or may not be altered by the new ideas of creative agents like norm entrepreneurs. One might venture to say that identity is a subset of ideas, that is, although all identities are ideas, not all ideas are identities. These kinds of ideas constitute the self-image of persons, whether it is natural persons or international persons. According to Wendt, it is what an agent or “actor attributes to itself while taking the perspective of others, that is, as a [idealised] social object” (Wendt 1994, 385); with the end-up that “identity matters because it facilitates collective action against outsiders” (Wendt 1999, 293), who do not share in and may even be inimical to our (ideal) self. This can have far-reaching effects in international relations.

32 

A. MENDEZ AND M. TURZI

In particular, the material forces that other schools of thought think so important actually have no intrinsic meaning, as Constructivism reveals, because their intersubjective, socially created meaning rests on the ideas that have been “alchemically wed” to form an identity. The nuclear weapons of France and Great Britain are fundamentally different for Americans than Chinese, Russian, or Pakistani ones (Wendt 1992). The devices themselves, as brute facts, are nearly the same, but the identity that Americans and Britons have constructed for each other render British weapons unthreatening, unlike Chinese. “National identity, in this case and others, helps to construct the meanings attached to purely material factors” (Houghton 2018, 227). “Identity Matters” in Latin America Perhaps due to the many ideational similarities amongst the nations of the region, which complicates the establishment of anything distinctive, the Latin American state invests itself deeply in constructing and sustaining a national identity. They “organize the nation’s space-time, providing a narrative of historical continuity for the national territory and points in time and space for the remembrance of key moments of that narrative” (Radcliffe and Westwood 1996, 171). This is especially an elite project. Those who command the major institutions hold the “power container” (Zhang 2017, 332) of the nation-state and its proper territory by deploying ideology, culture and history to forge a common hegemonic order of stories, images, symbols and values selected to constitute one identity for the many peoples with many identities (such as family, religious, “guild”, and racial identities) who make up one nation, but who could have made up several or none. National identity is an instrumentality for creating sovereign power at home and abroad. It is a discourse capable of mobilizing or demobilizing socio-political groups. “It is a modern [i.e. post-mediaeval] political instrument, which provides a way of coordinating and uniting diverse interests, values, and aims, thus offering the possibility of mobilization across lines of other identities” (Lambert 2006, 21). Any identity that works has ipso facto something going for it.  hird: Agency Is Key, Especially Creative Agency T The assumption shared by most accounts of Constructivism is that the keystone of its theory and method is agency. Wendt epitomizes the school of the all-dispositiveness of agency with his celebrated byword, “Anarchy is what states make of it” (Wendt 1992, 391). Constructivists hold to

2  CONSTRUCTING LAC AND THE AIIB 

33

agency in the teeth of the concept’s essentially contested meaning: “Actors and agents are treated synonymously and attributions of agency can change, not only within theories, but also within the space of a sentence. Rarely is it clear what agency is, what it means to exercise agency, or who and what might do so” (Wight 2006, 178). Agency is the ability which people and institutions have to act autonomously at least in the sense of taking initiatives. It is circumscribed by the society that agents both individuals and collective are embedded in, which preconditions and therefore limits “what they [even] imagine they would like to do. For the same reason, much of what we think of as agency consists of desires and behavior that are socially induced” and reinforced (Lebow 2016, 146–147). In simpler, rough and ready terms agency is the human “ability to think, act, and make choices independently” (Giddens et al. 2017, A1). Giddens (1985) elaborates that agency is a peculiar mode of political power in so far as it implies “‘transformative capacity’, the capability to intervene in a given set of events so as in some way to alter them” (Giddens 1985, 7), which, one may surmise, arises from the peculiar human capacity for self-consciousness and self-referentiality. Other sophisticated attempts at definition abound:  – agency is “the temporally constructed engagement by actors of different structural environments – the temporal relational contexts of action – which, through the interplay of habit, imagination, and judgment, both reproduces and transforms those structures in interactive response to the problems posed by changing historical situations” (Emirbayer and Mische 1998, 963). This definition is a mirror of agency that “catches it in the act” of its essential both-sided nature as a social construction: that it reproduces and replaces prior constructs ceaselessly and “automatically”. To sum up, “human beings matter because it is they who fashion – and have the capacity to change – social reality” (Houghton 2007, 28). In the interaction of agency and “structure” (which is prior agency routinized), the “act of construction, the co-constitution of people and society, makes [foreign policy]” (Onuf 1989, 42; see also: Giddens 1979). This opens the possibility that what “small states lack in structural clout they [may be able to] make up through creative agency” (Cooper and Shaw 2009, 2). Creative Agency in Latin America Latin America and the Caribbean’s proximity to the Colossus of the North can mislead analysts to conclude that the region lacks politically significant agency. For sure, the agency of LAC states is circumscribed by US systemic

34 

A. MENDEZ AND M. TURZI

power, but systems are not plenums, and agency like hope springs eternal in the “cracks” or flaws that exist in hegemonic agency too. What LAC states lack in structural power they may make up with entrepreneurship (Mendez 2017). Whether entrepreneurial or not, the region’s increasingly autonomous relations with Beijing is notable; for instance, Panama appears to be breaking its traditional dependency on the US in favour of a distinctly entrepreneurial approach, at least for now, to developing a commercial if not also a strategic relationship with the People’s Republic of China (Mendez and Alden 2019). Relevant here is the interaction with the AIIB of some of the countries of the region, in that it defied US efforts to prevent allies to become members of the AIIB, by arguing that it would undercut established standards on human rights, accountable procurement, and environmental sustainability (Mendez and Houghton 2020). Agency in the region has been successful mostly for short-term projects, not so much for long-term ones. An important exception is a certain influence that some countries in Latin America have exerted in the wider world through norm entrepreneurship, a special type of agency that convinces “a critical mass of states (norm leaders) to embrace new norms” (Finnemore and Sikkink 1998, 895), especially “in crafting new jurisprudence and establishing new human rights practices” (Sikkink 2015, 356). Such agents are also known inside multilateral organisations as “international rule innovators” (Dominguez 2007, 85), who demonstrate “transformative capacity in leading new processes of cooperation and sectoral integration” (Riggirozzi and Tussie 2017, 17).  ourth: Brute v. Institutional Facts F A fourth assumption of Constructivism is “the critical distinction between ‘brute’ (or natural) and ‘institutional’ (or social) facts” (Houghton 2018, 226). This originated with Searle (1995), who “baptized some of the facts dependent on human agreement as ‘institutional facts,’ in contrast to noninstitutional, or ‘brute,’ facts. Institutional facts are so called because they require human institutions for their existence. Brute facts require no human institutions for their existence” (Searle 1995, 2). Brute facts are the “givens” (the data) that any theory has to analyse (Kratochwil 1989), because the data “do not depend upon our ideational beliefs or perceptions for their existence” (Houghton 2007, 28). Gravity is a brute fact. We may jump from the top floor of the Shard in London believing that gravity is socially constructed and so may be reconstructed, but we will splat on the pavement regardless. By contrast, most political issues are invented notions that begin and end with some agents

2  CONSTRUCTING LAC AND THE AIIB 

35

choosing to begin or end them (or acquiescing, consciously or not, in others’ choices). For example, on 8 December 1991, the Soviet Union ceased to exist as an international person by the agency of three natural persons, − (with massive and necessary social support of course) – Boris Yeltsin, Leonid Kravchuk and Stanislav Shushkevich who announced their decision to simply dissolve it (Bohlen 1991). Unlike brute facts, institutional facts are ideas that are taken for granted because they are already conceived, elaborated and self-fulfillingly settled … that is, until they are not settled. It might be said that these facts have become “etched in wax, but not in stone”. Brute vs Institutional Facts in Latin America Altitude is one brute fact that many in Latin America must live with. If you fly to La Paz in Bolivia you will be landing in one of the highest cities in the world, situated “at an average elevation of 12,000 feet (3658 meters) above sea level” (Penn 2001, 133). Prepare yourself as much as you please, you will feel a shortness of breath on arrival (though it is likely to be resolved within hours), but you will still be 12,000 feet above sea level. Bilateral relations between countries in the region, on the other hand, at whatever elevation are “socially constructed” institutional facts (Merke 2016, 94). For instance, Argentina and Brazil constructed perpetual peace between themselves in lieu of their traditional enmity by giving each other “proofs of engagement [which] taken together helped to construct a common frame of revised values that accumulated in the form of political friendship” (Oelsner and Vion 2011, 143). Looking at the case of Chile and Bolivia, the social reality is wholly different: a difficult bilateral relation defined by a mutual, perpetual “culture of rivalry” (Wehner 2010, 5; see also: Kacowicz 1998).  ifth: Institutional Facts Are Self-Fulfilling or Self-Negating F Nowadays it is generally understood that many social or institutional facts are self-fulfilling (when not self-negating). For example, why does anybody stop at traffic lights or accept paper money? Mere lanterns have no power to stop other cars and mere paper banknotes are intrinsically worthless. One does not stop at a green light because one expects cross-traffic drivers will stop, and those drivers expect you will continue on, with the net result that the shared expectations are mutually self-fulfilling. So with paper money: each pays the other with scraps of paper, expecting the other to accept, and each accepter expects the next payee will accept, and so it goes. However, the realisation that social facts are self-fulfilling, as obvious

36 

A. MENDEZ AND M. TURZI

as it may seem now, never occurred until it arose in the context of spotting errors in positivist empiricism in the social sciences, which had at first assumed that social facts were as “objective” as brute facts (Houghton 2009). It was found out by experiment that you must give up the assumption that you are external to the world of the social facts being investigated, lest your theory become a “self-fulfilling (or self-­ negating) prophecy” (viz. prediction). It was Robert Merton who broached this problématique, calling it “a false definition of the situation evoking a new behavior which makes the originally false conception come true” (Merton 1948, 195, emphasis added). From reflecting on this paradox, it was realised that our conceptualisations of social “reality have self-fulfilling potency. Theories can be realized in history” (Berger and Luckmann 1967, 145), if practitioners come to expect each other to act according to conceptions of some famous academic authority. This structure-­altering potential intrinsic to social facts means that mere theories have “constitutive or creative potential” (Houghton 2009, 553). Andre Kukla (1994) was the pioneer in elaborating how autogenetic beliefs are “born reciprocal”, as if always already assumed between multiple persons who interact with social determinateness. Even bandwagoning in international relations bears hallmarks of being born reciprocal. In Wendt’s view, all culture consists of self-fulfilling social predictions – which incidentally is some evidence that “culture” spans all five Constructivist assumptions, − made by “actors act[ing] on the basis of shared expectations, [which] tends to reproduce those expectations” (Wendt 1999, 42). Self-Fulfilling or Self-Negating Institutional Facts in Latin America Latin American states have socially constructed between themselves a shared political culture of distrust, intra-continental autarky, and uncooperativeness which is self-fulfilling to the extent that Latin American leaders imagine it true of other Latin American leaders – at best (if they are not guilty of it, too) − and proceed to act in ways that are mutually suspicious, and end up being antagonistic and uncooperative when not outright internecine. Once these perceptions are ingrained in the region’s political culture, they become very difficult to undo, as they would have to change for everybody at the same time. The assumption that other heads of state and other states of the region cannot be counted on to cooperate or “have your back” because it is a mutual assumption causes the lack of cooperation to get worse by perpetually reinforcing it (Edelstein 2012).

2  CONSTRUCTING LAC AND THE AIIB 

37

Latin American Agency: General Characteristics The Institution of Mañana Deborah Gerner defines foreign policy as a three stage process: the “intentions, statements, and actions of an actor – often, but not always, a state – directed toward the external world” (Gerner 1995, 18). A pervasive tendency of Latin American political culture is to engage intensely in imagining and wishing intentions, and making grand statements, while putting off the last, most important phase of action until mañana (“tomorrow”). The uniform neglect of the simple steps required to complete their memberships by LAC’s prospective AIIB members (except that Uruguay at this stage only just became a prospective member in April 2019) is typical. This predilection for intentions and statements in the FPMP is because throughout the region the persistent tendency is to simply act in the short term for the benefit of current officeholders, thereby neglecting the strategic long-term planning that may not gratify those who hold power over short-term political cycles. So pervasive is the tendency to postpone the acid test of action – and to adjourn intentions and statements (the phases of FPMP prior to action) endlessly, to evade coming to the end of the process and being confronted, once the preliminaries are over, with the imperative to act, − that the inference of an informal institution springs to mind at once. It would contribute to the understanding of foreign policy in LAC to give this pattern a name. Let it be the Institution of Mañana. The existence of such an Institution is not an idiosyncratic inference of the authors but rests on an empirical basis. An OECD functionary has made similar observations in the presence of one of the authors: “They [foreign ministry personnel of a Latin American country] come here to the OECD, make all sorts of commitments, sign all sorts of things, then go back home and never execute anything” (personal communication – unnamed source at the OECD). This pattern is hardly confined to international relations; it is pervasive even in business, where inefficiency should be far costlier than in IR. There it has been termed the Mañana Syndrome, which has been observed to characterize the business culture of certain Latin American countries (Jessup and Jessup 1993), and to retard the process of reaching business decisions (Grosse 1990). It is not pretended that this institutional fact is absolute – some Latin American companies are managed exceptionally well by any standard (Stephens and Greer 1995), − merely that it is a very common, culturally distinctive social norm that

38 

A. MENDEZ AND M. TURZI

has direct and observable effects on the conduct of foreign affairs in Latin America and the Caribbean. Its reality is corroborated by the number of scholars who have theorised its origin. Some say it is rooted historically in the Moorish culture of Andalucia (Lewis 2003); others say it arises from a (lack of) internalization of the work ethic: “In cultures where external locus of control operates, people tend to postpone decisions more (‘mañana syndrome’) than in cultures where internal locus of control operates” (de Mooij 2011, 252). Still others place its origin in prior cultural factors such as pedagogy (Leidner et al. 1997; Kras 1995); different conceptions of time (de la Vega and Callado 2002; Raat and Brescia 2010; see also: Huntington 2004b); or religion, inter alia (Huntington 2004a). It has even been described by outsiders as infectious (Martin 2014), yet also a source of conflict with peoples from other regions of the world (Hurn and Tomalin 2013). Fantasy Agency (or Incomplete Agency) It makes sense that hand in hand with the Institution of Mañana goes a syndrome that one might call Fantasy Agency, because it is a substitute for dealing with the real world of Hoy (“today”). The appearance of reality becomes more important than reality itself. Latin Americans tend to connive with each other in this by avoiding, for example, checking each other’s academic degrees. Education abroad is highly prestigious in the region, and it is common to pretend a greater breadth of education than one really has, because it takes effort to catch out. To take a very typical example, Iván Duque, during his campaign to be elected President of Colombia in 2018, claimed on his c.v. that he had a degree from Harvard but “although he was accepted on one of its programmes [Harvard officials said] ‘he did not complete it as he withdrew’. His only Harvard studies, it turned out, were two five day courses … [only then he] amended his CV” (Long 2018). Likewise, in 2018 in Peru a scandal erupted when the press revealed that five legislators  – Moisés Mamani, Betty Ananculí, Esther Saavedra, Yesenia Ponce and Maritza García – had lied about having completed secondary school  – yet none was investigated by the Legislature (La República 2018). In 2005 Sebastian Piñera  – although holding a PhD form Harvard  – stretched the truth by claiming he had graduated with “maximum honors” (a non-existent qualification of

2  CONSTRUCTING LAC AND THE AIIB 

39

Harvard degrees), and he flat-out made up that he had taught a course there (Daza and Del Solar 2017). Even former Argentine President Cristina Fernandez de Kirchner underwent a ten-year long controversy over her law degree (Riera 2014). In that case Fantasy Agency operated to falsify what was factually true – she had completed the degree (Lavieri 2014). The substitution of appearance for reality is in no way confined to persons in public life, who may sometimes be exposed; it deeply corrupts policy making as well. Where else could a government get away with pretending to “develop” its Pacific coast, when in fact it is reputed too dangerous to go there to see it for oneself! In August 2014 one of the authors was treated to an official presentation in Calí in re the coast, which claimed that a brand-new superhighway ran from Calí to Colombia’s only significant Pacific port, Buenaventura; when in fact he had just returned from a journey on that very road, where he saw for himself that not only was it old, but in such disrepair that the coach had to snake around the potholes. The new highway was a daydream woven for the consumption of outsiders. In fairness it cannot be gainsaid that recently new construction has shown up here and there along the way. Fantasy Agency does not absolutely preclude action, but it procrastinates it unconscionably long and often sine die. Fantasy Agency may be said to be the default mode of foreign policy in LAC, a condition that exceptional persons must have surmounted whenever any real agency does come out of the region. Such persons exist everywhere (although elsewhere they appear to be less relied on) and have been termed “political entrepreneurs”, a word originally coined by Robert Dahl, who defined it in terms of homo politicus as having “the skill and drive [to parlay] a small amount of initial resources into a sizable political holding” (Dahl 1961, 227). In the context of international relations we adopt the definition of political entrepreneurs as “individuals whose creative acts have transformative effects on politics, policies, or institutions” (Sheingate 2003, 185), and who can “re-frame identity issues within a specific institutional context so to embark on dramatic foreign policy shifts provid[ing] a theoretically eclectic treatment of foreign policy change which reasserts the role of agency” (Alden and Aran 2017, 14; see also: Barnett 1999). It is the kind of personal exceptionalism that is not lacking in the history of LAC foreign affairs; if anything, it stands out all the more against the background of Fantasy Agency and the Institution of Mañana.

40 

A. MENDEZ AND M. TURZI

Overreliance on Legalism Latin American creative agency has been noted for “crafting new jurisprudence” (Sikkink 2015, 356) of global impact. Permeating the foreign affairs sphere in LAC is “the idea and perception that foreign policy … is essentially a legal or economic matter more than a political or military one” (Sotomayor 2015, 50). Foreign policy making is dominated by lawyers who overrely on the letter of public international law, a cultural norm acquired when foreign affairs were embedded in the transactions of the Spanish and Portuguese Empires, and the only way a person could “count” as anything like a peer of the realm was through earning “doctorates in civil or canon law, and [thus] until recently most foreign ministers and career diplomats held law degrees” (Holsti 1996, 170–171); a tradition alive today, so the authors surmised and the literature confirms. Lawyers (sometimes economists) are everywhere “in charge of supervising and implementing foreign policies” (Sotomayor 2015, 49). This legalistic cultural norm of foreign policy making is a special case of Fantasy Agency; Latin Americans imagine they gain honour and status by Following The Law. The criollo elites believe it is in their “national interest to follow the law because it enhances [their] reputation … Legalism is the intellectual milieu in which policy is often made” (Holsti 1996, 170). Policy makers are even observed (in the AIIB case as in others) to ignore incentives to take strategic action, because of an ingrained presumption that legal gestures and principled statements are brute facts of the real world. For example, Latin Americans know they need infrastructure but are unrealistic about its affordability. Loans from the AIIB as from any other bank, public or private, must be repaid with compound interest, after the costs of constructing the Bank’s “presence” in the LAC region and the hypothetical feasibility of its opportunities (not guarantees) is sunk. Yet relations with the AIIB are deemed finished as soon as its legal form is inked in. Incomplete or Fantasy Agency, dwelling on a legalist plane, has a negative impact on the execution of foreign policy by severing its intentions and statements from action, relegating the latter to mañana and reinforcing that institution. Herein lies the genesis of the LAC’s informal “rule” in favour of states forbearing each other’s lax implementation, which derogates from the classical precept of international law, pacta sunt servanda. This rule, however, usefully allows cooperation to co-exist with conflict (Vermeer-­Künzli

2  CONSTRUCTING LAC AND THE AIIB 

41

2009). The Fantasy Agency perception that no consequences ensue for laxity or neglect of servanda becomes a self-fulfilling prophecy in the LAC region, in classic Constructivist fashion, with some potential to spill over into international law. Forbearance of non-performance has been characteristic of LAC since the nineteenth century, with a few academics having identified it as such (Toranzo 1992; Dominguez 2007; see also: Standish and Bell 2004). But it is a double-edged sword which undercuts Latin American agency as often as it helps it muddle through. The fizzle of the AIIB in LAC is just the latest instance of this informal norm. Personalism The net result of the foregoing cultural influences on LAC is a penchant for personalism in politics. Despite seeming a “museum” that exhibits every form of government known to man, “there are … features of Latin American political culture and its social structure … visible in just about all types of regimes in the region [e.g.] a tendency toward personalism in leadership styles and relationships of power” (Hellinger 2014, 35–36). Latin American political culture is distinct, identifiable and influential: “[f]or many observers of international politics, Latin America has become synonymous with caudillaje culture that is said to span the length and breadth of the continent” (Ebel et al. 1991, 5). One main trait of personalism that deeply impacts the way both government and businesses in LAC are run is “the extensive networks of personal relationships. Family and personal friendships are among the greatest values of all the Latin American people” (Feldmann 2014, 34). To manage large-scale enterprises so as to benefit friends and family is fraught with systemic risks and considered elsewhere in the world as a disqualifying conflict of interest. It conduces to a “lack of long-term planning [which] leads … to improvisation for survival”. Companies focus on “rapid management performance directed at short-term results with emphasis on crisis solving” (cited in: Feldmann 2014, 35). Methodical strategy formation is mostly unknown in Latin American business: “companies operate on a daily basis … [having] not even an implicit strategy, and as a result there is no longterm strategic vision” (Brenes 2014, 35). Personalism “reflects a cultural difference that inclines Latin America toward ‘corporatism,’ a type of society where the state treats society as a family” (Hellinger 2014). Before long this devolves into clientelism in both business and government, in which personal corruption becomes

42 

A. MENDEZ AND M. TURZI

necessary and ubiquitous (Roniger 2012). In the context of Beijing bilaterally promoting the BRI to the states of LAC, this means that Beijing’s counterparties in the region tend to consult their own image rather than any program or strategy transcendent to the person of el jefe. The strongman or caudillo image makes more of an impact in LAC in both business and politics than any concept of a future to be shaped by testable visions of what could and ought to be.

The Regional Strategy Vacuum The insidious sway of Fantasy Agency and the Institution of Mañana top out in their repercussions on the relations between the LAC states. The countries of the region are so everlastingly adjourning the performance of their agreed duties to each other that, had the rule forbearing laxity not existed, it would have been necessary to invent it. The downside is that mutual aid is practically non-existent. Characteristic of LAC foreign policy making is that states succeed but sporadically in constructing inter se the self-fulfilling, self-reinforcing norms which might normalize their conduct enough to fix the reciprocal trust prerequisite to collective agency (e.g., in the manner of the European Union), even when constructing their own multilateral organizations, let alone when partaking in those which, like the AIIB, were crafted by foreigners. The supreme irony is how well Latin Americans think up rules of universal applicability when it comes to constructing institutions designed for the benefit of all mankind, but not themselves in particular. LAC agency stood out in the existing multilateral institutions like the UN and the Non-aligned Movement during the Cold War. The Charter of Economic Rights and Duties of States, for example, was a pillar of the New International Economic Order (NIEO) acclaimed by the UN General Assembly in 1974. These were rights to development formulated in universal terms for the benefit of all mankind, upholding the “equity, sovereign equality, interdependence, common interest and cooperation among all States” (Sacerdoti 2015). Though it seemed to arise in the 1970s from “demands for ‘development-related rights’ and the ‘corresponding obligations of developed countries and the international community as a whole’”, the fact is that this “project of international development [is revealed] as emanating from Latin America, and in post-­revolutionary Mexico in particular” (Thornton 2018, 409). Yet neither Mexico nor

2  CONSTRUCTING LAC AND THE AIIB 

43

Latin America ever reaped any benefit for itself from its own utopianism. Whether or not the Latin Americans were hoping to benefit themselves, it matters that they do all their thinking in terms of legal universals, and that lends itself all too easily to expropriation by peoples from other parts of the world who are single-­mindedly pursuing their own benefit, not LAC’s. On the few occasions when LAC multilateral organizations do manage to hang together and Latin Americans are in command of them, they show glimmers of strategic realism. An example was the Second Ministerial Meeting of the China-CELAC Forum summit in Santiago, Chile in 2018, at which Xi Jinping attempted to recruit for his Belt and Road Initiative the whole LAC region at once by way of CELAC endorsing a joint communiqué. The Latin Americans politely but firmly declined in the Special Declaration of Santiago (Itamaraty 2018). But Beijing just switched tactics and contrived to trigger a cascade of bilateral endorsements by LAC governments acting unilaterally without consulting their peers, − a quintessential outcome in Latin America.

References Alden, Chris, and Amnon Aran. 2017. Foreign Policy Analysis: New Approaches. 2nd ed. Abingdon, UK: Routledge. Barnett, Michael. 1999. “Culture, Strategy and Foreign Policy Change: Israel’s Road to Oslo.” European Journal of International Relations 5 (1):5–36. doi: https://doi.org/10.1177/1354066199005001001. Berger, Peter L., and Thomas Luckmann. 1967. The Social Construction of Reality: A Treatise in the Sociology of Knowledge. Reprinted 1991 ed. London: Penguin Books. Bernstein, Marver H. 1955. Regulating Business by Independent Commission. Princeton, NJ: Princeton University Press. Best, Joel. 2008. “Historical Development and Defining Issues of Constructionist Inquiry.” In Handbook of Constructionist Research, edited by James A. Holstein and Jaber F. Gubrium, 41–64. New York: Guilford Press. Bohlen, Celestine. 1991. “The Union Is Buried: What’s Being Born?” The New York Times, 8 December. Brands, Henry William. 2003. “Ideas and Foreign Affairs.” In A Companion to American Foreign Relations, edited by Robert D. Schulzinger, 1–14. Malden, MA: Blackwell Publishing. Brenes, Esteban R. 2014. “Strategy development.” In Strategy and Competitiveness in Latin American Markets: The Sustainability Frontier, edited by Urs Jäger and Vijay Sathe, 109–117. Cheltenham, UK: Edward Elgar.

44 

A. MENDEZ AND M. TURZI

Bronfenbrenner, Urie. 1961. “The Mirror Image in Soviet-American Relations: A Social Psychologist’s Report.” Journal of Social Issues 17 (3):45–56. doi: https://doi.org/10.1111/j.1540-4560.1961.tb01682.x. Checkel, Jeffrey T. 1998. “The constructivist turn in international relations theory.” World Politics 50:324–348. Cooper, Andrew Fenton, and Timothy M. Shaw, eds. 2009. The Diplomacies of Small States: Between Vulnerability and Resilience, International political economy series. Basingstoke, UK: Palgrave Macmillan. Dahl, Robert A. 1961. Who Governs? Democracy And Power In An American City. New Haven, CT: Yale University Press. Dargent, Eduardo. 2015. Technocracy and Democracy in Latin America: The Experts Running Government. Cambridge, UK: Cambridge University Press. Daza, Maria Loreto, and Bernardita Del Solar. 2017. Piñera. Biografía no autorizada. Santiago, Chile: Debate. de la Vega, L.F., and J.E. Callado. 2002. Casos de marketing: Pearson Educación. de Mooij, M. 2011. Consumer Behavior and Culture: Consequences for Global Marketing and Advertising. Thousand Oaks, CA: SAGE Publications. Dominguez, Jorge I. 2007. “International cooperation in Latin America: the design of regional institutions by slow accretion.” In Crafting Cooperation: Regional International Institutions in Comparative Perspective, edited by Amitav Acharya and Alastair Iain Johnston, 83–128. Cambridge, UK: Cambridge University Press. Ebel, Roland H., Ray Taras, and James D. Cochrane. 1991. Political Culture and Foreign Policy in Latin America: Case Studies from the Circum-Caribbean. Albany, NY: State University of New York Press. Edelstein, David M. 2012. “Conclusions: Rethinking Interwar Grand Strategies.” In The Challenge of Grand Strategy: The Great Powers and the Broken Balance between the World Wars, edited by Jeffrey W.  Taliaferro, Norrin M.  Ripsman and Steven E. Lobell, 308–334. Cambridge: Cambridge University Press. Emirbayer, Mustafa, and Ann Mische. 1998. “What is Agency?” American Journal of Sociology 103 (4):962–1023. doi: https://doi.org/10.1086/231294. Feldmann, Paulo Roberto. 2014. Management in Latin America: Threats and Opportunities in the Globalized World. Cham, Switzerland: Springer. Finlay, David J., Ole R. Holsti, and Richard R. Fagan. 1967. Enemies in Politics. Chicago: Rand McNally. Finnemore, Martha, and Kathryn Sikkink. 1998. “International norm dynamics and political change.” International Organization 52 (4):887–917. doi: https://doi.org/10.1162/002081898550789. Finnemore, Martha, and Kathryn Sikkink. 2001. “TAKING STOCK: The Constructivist Research Program in International Relations and Comparative Politics.” Annual Review of Political Science 4:391–416.

2  CONSTRUCTING LAC AND THE AIIB 

45

Flockhart, Trine. 2016. “Constructivism and Foreign Policy.” In Foreign Policy: Theories, Actors, Cases, edited by Steve Smith, Amelia Hadfield and Timothy Dunne, 79–94. Oxford, UK: Oxford University Press. Furlong, Scott R. 2008. “Bureaucratic Agencies: Delegation of Authority.” In Encyclopedia of Public Administration and Public Policy, edited by Evan M. Berman and Jack Rabin, 225–229. New York: Taylor & Francis. Gamson, William A., and Andre Modigliani. 1971. Untangling the Cold War: A Strategy for Testing Rival Theories. Boston, MA: Little Brown. Gerner, Deborah. 1995. “The Evolution of the Study of Foreign Policy.” In Foreign Policy Analysis: continuity and change in its second generation, edited by Laura Neack, Jeanne A.  K. Hey and Patrick Jude Haney, 17–32. London: Prentice Hall. Giddens, Anthony. 1979. Central Problems in Social Theory: Action, Structure and Contradiction in Social Analysis. London: Macmillan Education. Giddens, Anthony. 1985. The Nation-State and Violence. Vol. Two of A Contemporary Critique of Historical Materialism. Cambridge, UK: Polity Press. Giddens, Anthony, Mitchell Duneier, Richard P. Appelbaum, and Deborah Carr. 2017. Essentials of Sociology. 6th ed. New York: W.W. Norton & Company. Goldstein, Judith, and Robert O. Keohane. 1993a. “Ideas and Foreign Policy: An Analytical Framework.” In Ideas and Foreign Policy: Beliefs, Institutions, and Political Change, edited by Judith Goldstein and Robert O. Keohane, 3–30. Ithaca, NY: Cornell University Press. Goldstein, Judith, and Robert O. Keohane, eds. 1993b. Ideas and Foreign Policy: Beliefs, Institutions, and Political Change. Ithaca, NY: Cornell University Press. Graebner, Norman A. 1964. Ideas and Diplomacy: Readings in the Intellectual Tradition of American Foreign Policy. New York, NY: Oxford University Press. Grieco, Joseph M., G.  John Ikenberry, and Michael Mastanduno. 2015. Introduction to International Relations: Enduring Questions and Contemporary Perspectives. London: Palgrave. Grosse, Robert. 1990. “Doing Business in the Andes Countries.” In International Business Handbook, edited by V.H. Kirpalani, 67–96. London: Haworth Press. Hellinger, Daniel C. 2014. Comparative Politics of Latin America: Democracy at Last? 2nd ed. London: Routledge. Holsti, Kalevi J. 1996. The State, War, and the State of War. Cambridge: Cambridge University Press. Holsti, Ole R. 1962. “The belief system and national images: a case study.” Journal of Conflict Resolution 6 (3):244–252. doi: https://doi.org/10.1177/ 002200276200600306. Holsti, Ole R. 1967. “Cognitive Dynamics and Images of the Enemy.” In Image and Reality in World Politics, edited by John C.  Farrell and Asa P.  Smith, 16–39. New York: Columbia University Press.

46 

A. MENDEZ AND M. TURZI

Houghton, David Patrick. 2007. “Reinvigorating the Study of Foreign Policy Decision Making: Toward a Constructivist Approach.” Foreign Policy Analysis 3 (1):24–45. Houghton, David Patrick. 2009. “The Role of Self-Fulfilling and Self-Negating Prophecies in International Relations.” International Studies Review 11 (3):552–584. doi: https://doi.org/10.1111/j.1468-2486.2009.00873.x. Houghton, David Patrick. 2018. “Constructivist Analyses of Foreign Policy.” In Oxford Research Encyclopedia of Foreign Policy, edited by Cameron Thies, 223–240. New York: Oxford University Press. Huntington, Samuel. 2004a. Who are We?: The Challenges to America’s National Identity. New York, NY: Simon & Schuster. Huntington, Samuel P. 2004b. “The Hispanic Challenge.” Foreign Policy (141):30–45. doi: https://doi.org/10.2307/4147547. Hurn, B., and B.  Tomalin. 2013. Cross-Cultural Communication: Theory and Practice. B: Palgrave Macmillan UK. Itamaraty. 2018. “SPECIAL DECLARATION OF SANTIAGO OF THE II MINISTERIAL MEETING OF THE CELAC-CHINA FORUM ON THE BELT AND ROAD INITIATIVE.” news release: Ministry of Foreign Affairs: The Federative Republic of Brazil, 22 January 2018, http://www.itamaraty. gov.br/images/2ForoCelacChina/Declaration-of-Santiago%2D%2DIICELAC-China-Forum-FV-22-01-2018.pdf. Jessup, Jay M., and Maggie L. Jessup. 1993. Doing Business in Mexico. Rocklin, CA: Prima. Kaarbo, Juliet. 2015. “A Foreign Policy Analysis Perspective on the Domestic Politics Turn in IR Theory.” International Studies Review 17 (2):189–216. doi: https://doi.org/10.1111/misr.12213. Kacowicz, Arie Marcelo. 1998. Zones of peace in the Third World: South America and West Africa in comparative perspective. Albany, NY: State University of New York Press. Katzenstein, Peter J., Robert O.  Keohane, and Stephen D.  Krasner, eds. 1999. Exploration and Contestation in the Study of World Politics. Cambridge, MA: MIT Press. Keohane, Robert O. 1988. “International Institutions: Two Approaches.” International Studies Quarterly 32 (4):379–396. doi: https://doi. org/10.2307/2600589. Kras, Eva. 1995. Management in Two Cultures: Bridging the Gap Between U.S. and Mexican Managers. 2nd ed. Yarmouth, ME: Intercultural Press. Krasner, Stephen D. 1993. “Westphalia and All That.” In Ideas and Foreign Policy: Beliefs, Institutions, and Political Change, edited by Judith Goldstein and Robert O. Keohane, 235–264. Ithaca: Cornell University Press.

2  CONSTRUCTING LAC AND THE AIIB 

47

Kratochwil, Friedrich. 1989. Rules, Norms and Decisions: On the conditions of practical and legal reasoning in international relations and domestic affairs. Cambridge, UK: Cambridge University Press. Kukla, Andre. 1994. “The Structure of Self-Fulfilling and Self-Negating Prophecies.” Theory & Psychology 4 (1):5–33. doi: https://doi.org/ 10.1177/0959354394041001. La República. 2018. Certificados y títulos falsos persiguen a Fuerza Popular. La República. (22 April 2018). https://larepublica.pe/politica/1231430certificados-y-titulos-falsos-persiguen-a-fp/. (Accessed 29 June 2019). Lambert, Peter. 2006. “Myth, Manipulation, and Violence: Relationships between National Identity and Political Violence.” In Political Violence and the Construction of National Identity in Latin America, edited by Will Fowler and Peter Lambert, 20–36. Basingstoke, UK: Palgrave Macmillan. Lantis, Jeffrey S., and Ryan K.  Beasley. 2018. “Comparative Foreign Policy Analysis.” In Oxford Research Encyclopedia of Foreign Policy, edited by Cameron Thies, 185–207. New York: Oxford University Press. Lavieri, Omar. 2014. Para la Justicia no hay dudas: Cristina Kirchner es abogada. Infobae. (6 November 2014). https://www.infobae.com/2014/11/06/ 1606860-la-justicia-no-hay-dudas-cristina-kirchner-es-abogada/. (Accessed 2 July 2019). Lebow, Richard Ned. 2016. National Identities and International Relations. Cambridge, UK: Cambridge University Press. Leidner, Dorothy, Sven Carlson, Joyce Elam, and Martha Corrales. 1997. “A multicultural perspective of the impact of EIS on organizational intelligence, decision making and structure.” INSEAD Working Paper. Lewis, Richard D. 2003. The Cultural Imperative: Global Trends in the 21st Century. Yarmouth, ME: Intercultural Press. Long, Gideon. 2018. Duque readies to become Colombia’s youngest president. Financial Times. (11 June 2018). https://www.ft.com/content/097800e26d03-11e8-852d-d8b934ff5ffa. (Accessed 16 June 2019). Martin, Lynn. 2014. Home Sweet Anywhere: How We Sold Our House, Created a New Life, and Saw the World. Naperville, IL: Sourcebooks. Mendez, Alvaro. 2017. Colombian Agency and the Making of US Foreign Policy: Intervention by Invitation. Abingdon, UK: Routledge. Mendez, A., & Alden, C. 2019. China in Panama: from peripheral diplomacy to grand strategy. Geopolitics, 1–23. Merke, Federico. 2016. “English School and Constructivism.” In Routledge Handbook of Latin American Security, edited by David R.  Mares and Arie Marcelo Kacowicz, 88–97. London: Routledge. Mendez, Alvaro, and David Patrick Houghton. 2020. “Sustainable Banking: The Role of Multilateral Development Banks as Norm Entrepreneurs.” Sustainability 12 (972):1–20. https://doi.org/10.3390/su12030972.

48 

A. MENDEZ AND M. TURZI

Merton, Robert. 1948. “The Self-Fulfilling Prophecy.” The Antioch Review 8 (2):193–210. doi: https://doi.org/10.2307/4609267. Oelsner, Andrea, and Antoine Vion. 2011. “Friends in the region: A comparative study on friendship building in regional integration.” International Politics 48 (1):129–151. doi: https://doi.org/10.1057/ip.2010.37. Onuf, Nicholas Greenwood. 1989. World of Our Making: Rules and Rule in Social Theory and International Relations. Columbia, SC: University of South Carolina Press. Onuf, Nicholas Greenwood. 1998. “International Relations in a Constructed World.” In Constructivism: A User’s Manual, edited by V. Kubalkova, Nicholas Greenwood Onuf and Paul Kowert, 58–70. Armonk, NY: M.E. Sharpe. Osgood, Charles Egerton. 1966. Perspective in Foreign Policy. Palo Alto, CA: Pacific Books. Penn, James R. 2001. Rivers of the World: A Social, Geographical, and Environmental Sourcebook. Santa Barbara, CA: ABC-CLIO. Raat, W.  Dirk, and Michael M.  Brescia. 2010. Mexico and the United States: Ambivalent Vistas. Edited by Michael M.  Brescia. 4th ed. Athens, GA: University of Georgia Press. Radcliffe, Sarah A., and Sallie Westwood. 1996. Remaking The Nation: Place, Identity and Politics in Latin America. London: Routledge. Riera, Ariel. 2014. ¿CFK no tiene título de abogada? Chequeado. (12 November 2014). https://chequeado.com/ultimas-noticias/icfk-no-tiene-titulo-de-abogada/. (Accessed 2 July 2019). Riggirozzi, Pia, and Diana Tussie. 2017. “Rethinking Our Region in a Post-­ Hegemonic Moment.” In Post-Hegemonic Regionalism in the Americas: Toward a Pacific–Atlantic Divide?, edited by Jose Briceño-Ruiz and Isidro Morales, 16–31. London: Routledge. Roniger, Luis. 2012. “Favors, “Merit Ribbons,” and Services: Analyzing the Fragile Resilience of Clientelism.” In Clientelism in Everyday Latin American Politics, edited by Tina Hilgers, 25–40. New York, NY: Palgrave Macmillan. Sacerdoti, Giorgio. 2015. New International Economic Order (NIEO). Max Planck Encyclopedia of Public International Law. https://opil.ouplaw.com/ view/10.1093/law:epil/9780199231690/law-9780199231690-e1542?rskey =eOEU9N&result=1&prd=OPIL. (Accessed 5 June 2019). Searle, John R. 1995. The Construction of Social Reality. New  York, NY: The Free Press. Sheingate, Adam D. 2003. “Political Entrepreneurship, Institutional Change, and American Political Development.” Studies in American Political Development 17 (2):185–203. doi: https://doi.org/10.1017/S0898588X03000129. Sikkink, Kathryn. 1993. “The Power of Principled Ideas: Human Rights Policies in the United States and Western Europe.” In Ideas and Foreign Policy: Beliefs, Institutions, and Political Change, edited by Judith Goldstein and Robert O. Keohane, 139–170. Ithaca: Cornell University Press.

2  CONSTRUCTING LAC AND THE AIIB 

49

Sikkink, Kathryn. 2015. “Latin America and the Idea of International Human Rights.” In Routledge Handbook of Latin America in the World, edited by Jorge I. Dominguez and Ana Covarrubias, 349–361. Abingdon, UK: Routledge. Sotomayor, Arturo C. 2015. “Legalizing and Judicializing Territorial and Maritime Border Disputes in Latin America: Causes and Unintended Consequences.” In American Crossings: Border Politics in the Western Hemisphere, edited by Maiah Jaskoski, Arturo C.  Sotomayor and Harold A.  Trinkunas, 38–65. Baltimore, MD: Johns Hopkins University Press. Standish, Peter, and Steven M.  Bell. 2004. Culture and Customs of Mexico. London: Greenwood Press. Stephens, Gregory K., and Charles R. Greer. 1995. “Doing business in Mexico: Understanding cultural differences.” Organizational Dynamics 24 (1):39–55. doi: https://doi.org/10.1016/0090-2616(95)90034-9. Stigler, George J. 1971. “The Theory of Economic Regulation.” The Bell Journal of Economics and Management Science 2 (1):3–21. doi: https://doi. org/10.2307/3003160. Stoessinger, John G. 1967. “China and America: The Burden of Past Misperceptions.” In Image and Reality in World Politics, edited by John C. Farrell and Asa P. Smith, 72–91. New York: Columbia University Press. Sullivan, Michael P. 2001. Theories of International Relations: Transition vs Persistence: Palgrave Macmillan US. Thornton, Christy. 2018. “A Mexican International Economic Order? Tracing the Hidden Roots of the Charter of Economic Rights and Duties of States.” Humanity: An International Journal of Human Rights, Humanitarianism, and Development 9 (3):389–421. Toranzo Roca, Carlos F. 1992. Diversidad étnica y cultural. La Paz, Bolivia: Instituto Latinoamericano de Investigaciones Sociales - ILDIS. Vermeer-Künzli, Vermeer. 2009. “The Merits of Reasonable Flexibility: The Contribution of the Law of Treatiese to Peace.” In Peace through International Law: The Role of the International Law Commission. A Colloquium at the Occasion of its Sixtieth Anniversary, edited by Georg Nolte. Heidelberg, Germany: Springer. Vucetic, Srdjan. 2018. “Identity and Foreign Policy.” In The Oxford Encyclopedia of Foreign Policy Analysis, edited by Cameron G.  Thies. New  York: Oxford University Press. Waltz, Kenneth. 1979. Theory of International Politics. London: Adisson-Wesley Publishing Company. Weeks, Gregory 2015. U.S. and Latin American relations. Second edition. ed. Chichester, UK: Wiley Blackwell. Wehner, Leslie. 2010. “From Rivalry to Mutual Trust: The Othering Process between Bolivia and Chile.” GIGA Working Papers 135 (May).

50 

A. MENDEZ AND M. TURZI

Wendt, Alexander. 1992. “Anarchy is what states make of it: the social construction of power politics.” International Organization 46 (2):391–425. doi: https://doi.org/10.1017/S0020818300027764. Wendt, Alexander. 1994. “Collective identity formation and the international state.” The American Political Science Review 88 (2):384. doi: https://doi. org/10.2307/2944711. Wendt, Alexander. 1999. Social Theory of International Politics. Cambridge, UK: Cambridge University Press. Wiarda, H.J. 1995. Democracy and Its Discontents: Development, Interdependence, and U.S. Policy in Latin America. London: Rowman & Littlefield Publishers. Wight, Colin. 2006. Agents, Structures and International Relations: Politics as Ontology. Cambridge: Cambridge University Press. Wolfers, Arnold. 1962. Discord and Collaboration: Essays on International Politics. Baltimore, MD: The Johns Hopkins Press. Zhang, Xin. 2017. “Chinese Capitalism and the Maritime Silk Road: A World-­ Systems Perspective.” Geopolitics 22 (2):310–331. doi: https://doi.org/10.10 80/14650045.2017.1289371.

CHAPTER 3

Latin America: Both Agent and Patient

Abstract  This chapter reveals the hidden history of Latin American agency in the genesis of many of the foundational concepts of contemporary international law and customary interstate conduct. Additional to mainstays like uti possidetis juris and non-intervention in the internal affairs of states is the origin of the public international or “multilateral development bank” (MDB) in the Inter-American Bank of 1939 (whic arguably may be traced back to 1844 in Argentina). Latin Americans, however, did not merely think up concepts; they were “present at the creation” of the Bretton Woods institutions in the 1940s, deeply involved in the shaping of their competences. Keywords  AIIB • Latin America • China • Foreign policy • Agency

Latin American Agency and Foreign Policy Characteristics Latin American political entrepreneurs “have been international rule innovators not just ‘price takers’” (Dominguez 2007, 126) in multiple ways, including being the originators of: (1) the uti possidetis juris principle of settling territorial boundaries; (2) the principle of non-intervention in internal affairs; (3) the practice in favour of pacific mediation of disputes; and (4) toleration of lax implementation, all which have transcended their

© The Author(s) 2020 A. Mendez, M. Turzi, The Political Economy of China–Latin America Relations, https://doi.org/10.1007/978-3-030-33451-2_3

51

52 

A. MENDEZ AND M. TURZI

original context and been taken up as rules and principles in international law generally. Each of the four is discussed below. It is noteworthy that the influence of LAC on international law is disproportionate to the weakness of LAC states. The political culture puts much stock in legality as a mode of action, and this spills over into international relations generally. The instance which concerns us the most is the significant Latin American influence on the Bretton Woods institutions. It is ironic that the Incomplete or Fantasy Agency that characterises so much of LAC politics, both at home and abroad, and has kept the peoples of the LAC region comparatively backward, also gave rise to the very development institutions supposed to raise LAC and other regions out of their backwardness. Early Crafters of the uti possidetis juris Principle Latin Americans were the first in the world to establish in the international realm the uti possidetis juris principle, “that new states should take over the previous administrative or colonial [territorial] boundaries” (Buzan and Wæver 2003, 307). Latin America adopted this rule “a century before its spread throughout Africa, Asia and the former Soviet Union” (Dominguez 2007, 126–127). In “South America the ‘borders at the time of independence’ were taken to be the divisions [of the Spanish colonial empire] of 1810, [and] in the case of Central America those of 1821” (Fabry 2010, 67). This solved the security dilemma of newly independent countries weakening themselves and each other by resorting to war, as the Westphalian system allows, to expand or “recover” territory claimed to be “rightfully theirs” (giving away to the Spanish Crown opportunities to reestablish its colonial rule in the case of LAC). It also forestalled the diversion of public funds to military build-ups and arms races, and enabled cooperation between states in the region that chose to take up the opportunity. However imperfect the principle, it evolved into a guiding directive for “territorial management [with only] six major exceptions to it over time” (Thies 2016, 116). Consequently, Latin American borders have been relatively stable; there have been no “significant shift[s] in international boundaries in the Americas since 1942” (Dominguez 2007, 90–91). This norm which began as a way of forestalling succession disputes has blossomed into what scholars now refer to as the “territorial integrity norm” (Zacher 2001, 215); “the norm of fixed borders” (Atzili 2007, 141); or the “norm against conquest” (Fazal 2007, 5). By any name it

3  LATIN AMERICA: BOTH AGENT AND PATIENT 

53

marks a general decline of the acceptability of interstate war and a consolidation of the belief that “force should not be used to alter interstate boundaries” (Zacher 2001, 215; Thies 2016). The Non-intervention Principle in International Law Latin Americans were the first in the world to work out a principle of non-­ intervention as a matter of international law (Lake 2017). Partly this arose from their attempt to prevent the simultaneous and sudden independence of the Spanish colonies from devolving into a pretext for internecine territorial wars, and partly to defend the region as a whole, and each country in it, from the “gunboat diplomacy” of the great powers of the day (Dominguez 2007). Two important principles of international law were broached by Argentines, as it happened, amid international disputes. The first was the Calvo Doctrine, conceived in 1868 by Carlos Calvo who “argued that [his] nation’s sovereignty was inviolable and that foreign governments did not have an automatic legal right to intervene to protect their nationals because this gave foreigners a privileged status over local citizens” (Smith 2007, 34). This foundation was built-on by Argentine Foreign Minister Luis María Drago who formulated “in a note to the American government in 1902 that intervention to enforce the collection of public debts was illegitimate” (Krasner 1999, 21), yielding the eponymous Drago Doctrine. Argentines lobbied hard to establish both in international law. Their efforts achieved some success when Latin American officials, attending the 1928 Sixth International Conference of American States in Cuba, “introduced a resolution calling for adherence to the principle of non-­ intervention and declaring that ‘no state has a right to intervene in the internal affairs of another’ for any reason” (Gilderhus, LaFevor, and LaRosa 2017, 64). Washington rejected this resolution but could not suppress the idea. The US “regarded intervention as a right authorized by international law. Whenever necessary, they would use it in defence of U.S. citizens and property” (Gilderhus, LaFevor, and LaRosa 2017, 64). A few years later, however, President Franklin D. Roosevelt, in pursuit of his Good Neighbor Policy, declared at the “seventh Pan-American Conference at Montevideo (1933) that ‘no State has the right to intervene in the internal affairs or external affairs of another’” (Khanna 2013, 280). The 1928 Conference resolution bore fruit later when the United Nations Charter came to be debated in 1945, and the framers ended up

54 

A. MENDEZ AND M. TURZI

enshrining it in the Charter’s Article 2 (7): “Nothing contained in the present Charter shall authorize the United Nations to intervene in matters which are essentially within the domestic jurisdiction of any state or shall require the Members to submit such matters to settlement under the present Charter” (UN 1945, 3). Shortly afterwards, in 1948, the Organization of American States (OAS) declared in Article 15 of its original charter: “No State or group of States has the right to intervene, directly or indirectly, for any reason whatever, in the internal or external affairs of any other State” (LeBlanc 1977, 11). This ought to mean the financial affairs and economic policies of states; however, many of the multilateral development banks of the global North, especially the World Bank and the International Monetary Fund (IMF), have ridden roughshod over this principle in the form of a martinet conditionality that intervenes deeply not only in the recipient country’s finances, but even in their society and culture. In contrast, Chinese policy banks have pointedly avoided just this sort of intervention, and Beijing has insisted on continuing this policy in the makeup of the AIIB, whence analysts argue that the Bank rejects “political lending conditionality” (Wang 2019, 232). The non-­ conditionality pledge of these Chinese policy banks resonates in the global South, but more ought to be done to ensure that these banks act sustainably, and especially that they heed Corporate Social Responsibility (CSR) principles, an issue which the IR literature has largely ignored. Foreign policy analysts could learn from the management literature, which has already enriched the fund of knowledge by addressing the role of CSR in the international banking industry (see: Forcadell and Aracil 2017; Forcadell, Aracil, and Úbeda 2019). Practice Favouring Pacific Mediation of Disputes A shared commitment to an activist mediation of international disputes is another institutional fact that Latin Americans constructed long before they had set up international organisations, even the OAS. This international legal quasi-rule emerged in the late nineteenth century to attempt to keep the peace between South American states in an era of conflict over international boundaries, when uti possidetis juris was still seriously contested (Kacowicz 1998). The ensuing long South American peace lasting till the Great Depression relied on a multitude of makeshifts (not only formal international mediation and arbitration) each of which in its own way contributed; even “the long US occupation of Nicaragua [1912–1933] interrupted the active

3  LATIN AMERICA: BOTH AGENT AND PATIENT 

55

contestation of boundaries” (Dominguez 2007, 93; see also: Gobat 2005). The depth of the American states’ commitments is attested in what they evidently conceived to be their region-wide self-interest in dampening interAmerican hostilities. “The chi square statistic [‘intermediary activity in south and middle American regions’] is insignificant, which means that states were not sub-regional specialists … [but each] volunteered [to intermediate] across subregions, proportionate to the distribution of disputes in each subregion throughout Latin America” (Dominguez 2007, 93). A pre-existing inter-American institution of activist pacific intermediation was carried over to the formal international organizational sphere, with impressive results: the founding of the OAS (Shaw 2004). Its procedures performed far better than one has come to expect from such organizations. Empirical tests of the OAS’s efficacy in intervening to pacify conflict compared to other regional and global international organisations proved it far more successful (Dominguez 2007; Nye 1971; Zacher 1979). Lest these findings overestimate the Organization, be it noted that it was less efficacious at permanently settling ongoing armed conflicts or defusing peacetime conflicts and forestalling war. The OAS superseded neither coalitions of the willing nor bilateral negotiations between hostile states that “often yielded effective solutions” (Dominguez 2007, 94). This critical qualification corroborates the inference of an institutional fact underlying the OAS and constituting its actual efficacy. These observations tend to affirm the reality of a regional American entente (in a broad sense) that can carry over to issues and outcomes in New Development which only tangentially pertain to peace. Rule Forbearing Neglect of Ratification and Laxity in Implementation States quite often claim one thing but aim at another. This gap takes on three distinctive qualities in the Americas: (1) American states deny (maybe even to themselves) that there is a gap, officials talk as if they never heard of systematic inconsistency; (2) states are heavy on their claims of the salience and utility of international cooperation but ignore issues of their lax enforcement; (3) states never stop entering into formal and informal agreements which may close the gap between obligation and enforcement, or it may widen it. American states have no qualms about signing agreements they expect never to ratify, so long as it helps manage relations with

56 

A. MENDEZ AND M. TURZI

other American states and contributes to their own self-image as interAmerican team players. But this actually yields, in just the manner of a self-fulfilling prophecy, an informal inter-American “society” with a life of its own which, notwithstanding its dampened impact on state conduct, does impose on the time and effort of state actors. The US is as much a practitioner as Latin America of alacrity of pledges but laxity of enforcement, and both ends of the Hemisphere deploy the “rule” as a tool of choice in managing interrelations (Dominguez 2007). Latin Americans pioneered the now common practice of forbearing procrastinated accession to and lax implementation of multilateral covenants, whilst informally acting through them even when “more honoured in the breach than the observance”. What may seem paradoxical, that rule breaking may be a rule or may as a rule lead to no consequences, has lasted so long, across so many purposes and eras, and is so little sanctioned by the high contracting parties, that it is now generally accepted despite trammelling the processes or organizations involved. “In the inter-­American setting, agreements are signed but many states fail to ratify, even though the agreement expects all signatories to ratify” (Dominguez 2007, 95). Excepting Ecuador, this is happening today with the LAC prospective members of the AIIB who neglect membership no matter how easy China makes completing it (Mendez 2019). This internationally significant pattern reaches all the way back to the nascence of the Spanish American states. The Liberator Simon Bolívar, after winning the independence of the Viceroyalty of New Granada (Colombia, Venezuela and Ecuador) in 1819, and the Viceroyalty of Peru (Peru and Bolivia) in 1824, almost immediately called the Panama Congress in 1826, when delegates from “Gran Colombia [sc. New Granada], Central America, Peru, and Mexico met … to consider plans for continental unity. The Congress … [agreed on] mutual defence in case of attack by a foreign power, the peaceful settlement of disputes, reciprocal rights of citizenship and repudiation of the slave trade … [yet only] Gran Colombia ratified the treaties” (Henderson et al. 2000, 110). Yet neither did Gran Colombia denounce the treaties to sanction the others’ failure to ratify. Two decades later in 1847, the First Lima Conference was attended by representatives from “Bolivia, Chile, Ecuador, New Granada (Colombia), and Peru … [who] approved several treaties including one creating a defensive alliance among the five republics, but none was ever approved” by their respective legislatures (Henderson et al. 2000, 110).

3  LATIN AMERICA: BOTH AGENT AND PATIENT 

57

Two more decades later in 1867, a Second Lima Conference was convened by envoys from “Bolivia, Chile, Colombia, Ecuador, Guatemala and Venezuela … as Peru was embroiled in a serious dispute with Spain … [which they unsuccessfully tried to mediate.] They also drafted a treaty providing for a defensive alliance, but it was never ratified” (Henderson et al. 2000, 110). In the twentieth century a similar gap between formal promises and actuality was observable in the matter of economic integration. Argentina, Brazil, Chile, Mexico, Paraguay, Peru, and Uruguay signed the Treaty of Montevideo in 1960, establishing the Latin American Free Trade Association (LAFTA) to disassociate the region from the global economy. Ecuador, Colombia, Venezuela, and Bolivia joined later. Although LAFTA established a twelve-year transition period to abolish most trade barriers by single-product negotiations, it was set to fail from the get-go with “governments scarcely mentioned it in their development programs … no attempt was made to coordinate investments, or to provide special benefits for the lesser developed members. LAFTA also lacked the funds to finance projects of regional importance and scale” (Dominguez 2013, 111). In 1980 LAFTA was replaced by the Latin American Integration Association (LAIA), but this association “also failed to have a lasting effect on regional integration in Latin America” (Alcañiz 2018, 75). A similar fate was met by the 1961 General Treaty of Central American Economic Integration creating the Central American Common Market (CACM), which was supposed to free more than 90% of Central American trade categories. The CACM mandated a common external tariff on top of intra-regional trade liberalisation. From its inception up to 1970 intra-­ regional trade rose from 5% to 26% of the Central American total. In 1969 Honduras and El Salvador embroiled each other in a long, bloody war. That war and other factors such as spotty compliance with “CACM rules and institutions” (Dominguez 2013, 122) stopped CACM’s momentum. By 1990, intra-regional trade as a percentage of total trade had fallen to half the 1970 level. The 1969 conflict between El Salvador and Honduras “calls attention to a recurrent Latin American outcome: simultaneous conflict and cooperation. Gains from CACM economic integration did not prevent war” (Dominguez 2007, 96–97). Plainly, the Constructivist byword that international anarchy is what states make of it is vindicated by the foregoing, but the conflict inevitable in a state of anarchy needs not (and in the case of Central America has not) precluded cooperation even in tandem with war. The record of failure of

58 

A. MENDEZ AND M. TURZI

formal legalism is not the whole story; in performing the function of keeping most states of the region perennially interested in their common good, the Constructivist recognises in these seemingly do-nothing international congresses a valuable social construct. Eventually, the sheer doggedness of Latin American agency achieved a little success in international politics beyond their own region. The long history of informal legality is probably contributing more than anything else (other than possibly aversion to further indebtedness) to the LAC Members’ lax approach to completing their accession to the AIIB (Mendez 2019). The same pattern of limited scope is nonetheless observable amid the successes. For example, at the Fifth International Conference of American States held in Santiago de Chile in 1923, under the leadership of the president of Paraguay (Manuel Gondra) the Gondra Treaty was signed to prevent and avoid conflict between American states (Osmanczyk 2003). A follow-up conference in Washington in 1929 specified the details on arbitration and drafted a general convention on conciliation. At this stage, the Gondra Treaty “was passed as an essentially face-saving device to cover up the general failure to achieve anything of real significance” (Sicker 2002, 87). “Ten years later, several major Latin American countries had yet to ratify it, including Paraguay and Bolivia who savaged each other in the interim during the Chaco War” (Dominguez 2007, 95). In 1940 the American states founded the Inter-American Peace Committee as a dispute-resolution forum. “[T]he Committee did not meet [for the first time] until 1948, although it would in the 1950s become effective for conflict resolution between states” (Dominguez 2007, 95). Nearly all of the LAC countries subscribed the American Convention on Human Rights in 1969, but not until 1978 had enough states ratified it to bring into play the Inter-American Court on Human Rights in 1979 (which the Convention had set up). “In the early 1990s, democratic regimes governed in most countries in the Americas, yet only ten had acceded to the jurisdiction of the Inter-American Court” (Dominguez 2007, 95). Likewise, US President Jimmy Carter inked the Convention in 1977, but the United States has yet to ratify, let alone accept the Court’s jurisdiction. Likewise, the safeguarding of representative democracy as an obligation of international law was first expressed in Buenos Aires in 1936 in the Declaration of Principles of Inter-American Solidarity and Cooperation which “presented the matter in terms of security from external threats, referring to the ‘existence of a common democracy throughout [Latin] America’ as the basis for ‘political defence’ of the

3  LATIN AMERICA: BOTH AGENT AND PATIENT 

59

hemisphere” (Atkins 1997, 122). The irony was that “most signatory ­governments were undemocratic” at that time (Dominguez 2007, 96). Again, the irony did not preclude the inter-American construction of such a norm in the teeth of non-implementation, which may come to fruition at a later date, just as the pattern here expounded would predict. The Inter-American Treaty of Reciprocal Assistance of 1947, known as the Rio Treaty, committed LAC to “recognition and protection of human rights and freedoms, on the indispensable well-being of the people, and on the effectiveness of democracy for the international realization of justice and security” (cited in: Judge and Langdon 2017, 46). Although the Treaty ceded to the signatories a broad mandate to act collectively in defence of democracy, “they [have] never invoked or applied the Rio Treaty to protect democracy per se since the treaty went into force on 3 December 1948” (Acevedo and Grossman 1996, 135). And during the Cold War, Rio was effectively suspended; for instance, in “1954, the United States backed the military overthrow of a democratically elected president in Guatemala. Following the Cuban Revolution in 1959, Latin America turned [into a battlefield with numerous examples of interventions] … [The US] made strenuous efforts to undermine the Allende regime in Chile” (Heine and Weiffen 2015, 33). The few times the Rio Treaty has been invoked is to deal with external threats (Shaw 2004).

Latin America and the Genesis of the Bretton Woods Institutions Latin Flavour in the Genesis of Bretton Woods Latin Americans’ persistent efforts to construct intergovernmental legality were destined to enjoy the most success where the Latin Americans themselves least expected it. Most scholars assume that the 1944 Bretton Woods accords emanated from decisions of the powerful in London and Washington (see: Staples 2006; Rist 2008), but an increasing number have counterargued that they “were also shaped by a set of incremental institutional changes that pre-dated the negotiations and left important legacies” (Helleiner 2016, 627; see also: Thornton 2018). One of these important legacies was an earlier Latin American proposal for a multilateral development bank in 1939 called the Inter-American Bank (IAB).

60 

A. MENDEZ AND M. TURZI

The template of the IAB can be traced back to the first Pan-­American Conference in 1890 (at the latest), where the idea was broached of reforming national banking charters to make it easier for the banks of each American state to deal in inter-American banking transactions, particularly if so many examples might blaze a trail for an International American Bank with branches in each of the states (Villaseñor 1941). Some analysts trace the 1890 events back to still earlier episodes of Latin American agency; e.g., Argentine lawyer Juan Bautista Alberdi’s 1844 initiative for the creation of a “Continental Bank to finance the economic progress of the American republics … [but without] the inclusion of the United States” (Diaz-Bonilla and del Campo 2010, 1–2). Investigation of the theory of an Alberdi genesis is beyond the scope of this book, but what is clear from multiple credible sources is that it was Latin American agency that resurrected the idea at the seventh International Conference of American States at Montevideo in 1933: “an inter-­American organization for economic and financial cooperation, to consist of a governing board, an economic advisory committee, and an Inter-­American Bank” (Villaseñor 1941, 165). LAC persisted, under Mexican leadership, in promoting this idea at various regional summits: in Buenos Aires in 1936; in Lima in 1938; and in Panama City in September/October 1939 at a Meeting of Foreign Ministers (Urquidi 1996). The Panama meeting was crucial in two ways: (1) it set up the Inter-­ American Financial and Economic Advisory Committee (IFEAC) (State 1939) as the regional “agency for economic cooperation on the multilateral plane” (Mecham 1961, 235); and (2) a month later in November 1939, it decided to convene in Guatemala the First Meeting of Finance Ministers, where Eduardo Villaseñor, head of the Bank of Mexico and Undersecretary of the Ministry of Finance and Public Credit, made the case for an Inter-­American Bank, with a six-prong institutional plan: “[1] it would serve as a currency clearing house, [2] act as financial agent for the central banks in international capital markets, [3] help stabilize currency levels of member countries, [4] study trade and exchange problems, [5] aid in settling international balances accepting both gold and silver” (Thornton 2017, 151) and, last but not least, “[6] act as a channel for the investment of capital which will promote sound economic development in the American Republics” (Villaseñor 1941, 166). Villaseñor would later refer to his performance in Guatemala as his “most important public manifestation” (quoted in: Thornton 2018, 161) over the lifespan of his career as a policy-maker.

3  LATIN AMERICA: BOTH AGENT AND PATIENT 

61

The proposal received broad support from the other Latin American countries attending the meeting, particularly Brazil, Colombia, Peru and Uruguay (Helleiner 2014). Scholars conclude that Latin Americans lobbied so hard at this stage because they had become loath lest “their proposals for a permanent, multilateral financial institution continue to be put off, so US officials decided that they needed to take an active role in its creation, to ensure US interests were protected” (Thornton 2018, 274). The first steps were taken by Adolfe Berle, Assistant Secretary of State for Latin American Affairs, who by November 1939 realized that without involving the Treasury Department he was going to get nowhere. But he was uncertain of the support of Treasury Secretary Henry Morgenthau, because Sumner Welles, the deputy who had dealt with IFEAC earlier in 1939, was from the State Department not Treasury. In “a meeting with Berle and Welles on November 28, however, Morgenthau offered full technical assistance … [possibly] encouraged by a memo [which Harry Dexter White] wrote to him that same day in which he outlined [the IAB’s] potential benefits” (Helleiner 2014, 60). Well before this, in the mid-1930s, White “had already outlined his commitment to a new kind of multilateral economic order that would endorse freer trade and stable currencies, but also exchange rate adjustments and the regulation of cross-border capital movements” (Helleiner 2006, 948). He became the supervisor of the project “via IFEAC which held its first consultations in Washington in December of 1939” (Thornton 2018, 274). By early February 1940 the “IFEAC as a whole had agreed on a draft convention and by-laws for the banks to be submitted to governments for comment, and final texts were released publicly on April 16” (Helleiner 2014, 59). Shortly afterwards, in May 1940, the IAB was subscribed by “the United States and eight Latin American countries (Bolivia, Brazil, Colombia, [the] Dominican Republic, Ecuador, Mexico, Nicaragua and Paraguay)” (Lichtenstein 2018b, 52). US Congressional approval for the IAB proved elusive owing to domestic politics. A case in point was Carter Glass (D, Va.), Chairman of the Senate Banking and Currency Committee, who objected “that Congress would have no control over the IAB” (Helleiner 2014, 76), as it would be steered for the most part by Latin American nations. The net result was that the US never ratified. Morgenthau and White won their battle at the Executive level but “lost the larger war [in Congress] concerning the IAB’s establishment” (Helleiner 2016, 638). Despite the failure, the original IAB structure became “the first draft of subsequent plans for a

62 

A. MENDEZ AND M. TURZI

Stabilization Fund and a World Bank” (Oliver 1996, 99). At least three features of the IAB have been identified as innovative and influential on the Bretton Woods institutions: “[1] its mandate to provide public international loans to achieve development objectives, [2] its provisions addressing capital flight from poorer countries, and [3] its control and ownership by governments” (Helleiner 2014, 63). Natalie Lichtenstein, the Inaugural General Counsel at the AIIB, similarly argues that numerous “key IBRD financial and governance provisions can be seen in [the] earlier unsuccessful effort to create [the IAB], including the all-important capital structure and voting patterns” (Lichtenstein 2018b, 52). When Dexter White was tasked with drafting a proposal for an international bank in early 1942, he could spontaneously think of the IAB because he had helped shape its design along with the Latin Americans, who foresaw that their interests lay, above all, in mobilizing development loans. It was Mexican officials who led the way: in May 1943 Antonio Espinosa de los Monteros, head of Nacional Financiera (Industrial Development Bank) and Rodrigo Gomez from the Bank of Mexico urged White’s (IMF) draft to be accompanied by another agency which could provide long-term capital (Thornton 2017). Mexico, dissatisfied by the failure of the IAB proposal in 1939, was determined that the post-War planning process should advance some of its own goals. Eduardo Villaseñor, head of the Bank of Mexico and one of the foremost IAB advocates, “was also deeply involved in the discussion of the postwar plans” (Helleiner 2014, 162). Latin Swing in New Hampshire The ostensibly US-designed IMF and IBRD thus actually emerged from “incremental institutional innovations that were layered one on top of one another [sic]” (Helleiner 2017, 20). The central role of Latin America and the global South in the genesis of Bretton Woods is “interesting given the recent initiatives relating to alternative structures for the economic and financial system [now] emanating from the South” (Negi 2017, 133); − such as the AIIB. Of the 44 nations that attended the Bretton Woods conference in 1944 28 were from Africa, Asia and Latin America. Nineteen were Latin American, “a remarkable continent-­wide diplomatic presence” (Scott-Smith and Rofe 2017, 3). It would be a distortion to claim that the global South determined the outcome of the Conference, but their “role

3  LATIN AMERICA: BOTH AGENT AND PATIENT 

63

did herald the arrival of a new era in which the powers of the day would have to accustom themselves to the idea of accommodating the voices of new players in the international system” (Negi 2017, 130). Contrary to the conventional accounts that the nations of the South were invited to fill in empty seats or to legitimate “the predetermined ‘Anglo-American’ prints on the drawing board” (Negi 2017, 129–130), the evidence is that Latin America mattered a great deal not only in the pre-history of Bretton Woods, but in its actual outcome: [Historians] have long explained the creation of the IMF and the World Bank through the framework of “sterling-dollar diplomacy” … a bilateral process of reconciliation between US and British visions for the postwar economic order. In this reading, there are two protagonists: … Harry Dexter White, who chaired the conference’s First Commission, on the Fund, and … John Maynard Keynes, who chaired the Second Commission, on the Bank. But almost always overlooked is the existence of a Third Commission, on “Other Means of International Financial Cooperation,” chaired by Mexico’s Minister of Finance, Eduardo Suárez. (Thornton 2017, 149)

Given this history, it cannot be gainsaid that Latin American agency is instinct in the architecture of the AIIB, which mirrors that of the IBRD in so many aspects. This is evident in the fact that the AIIB’s Charter was the handiwork of a former Senior Counsel of the World Bank, in whose own words “the legal lineage of the AIIB Charter … [shows] considerable overlap with the Charters of other MDBs. Indeed, the history of the creation of other MDBs shows the same pattern. … The choice to build upon an MDB model can be seen as a reflection that this model was considered a useful and valuable one” (Lichtenstein 2018a, 12). The deep history of the AIIB is thus deeply ironic: – that the Latin Americans could have been so very creative in inventing the visionary idea of an inter-­American or multilateral development bank, yet at the same time so very inept in realizing for themselves the banal profits of their own brainchild. The authors did not come to this conclusion lightly. They discovered that the usual, more “mechanical” causes which academics apply to the course of international relations did not well explain the LAC region’s puzzling, self-defeating conduct. The next chapter will demonstrate the futility of attempts to explain impersonally the very personal debilitation of agency in this part of the world.

64 

A. MENDEZ AND M. TURZI

References Acevedo, Domingo, and Claudio Grossman. 1996. “The Organization of American States and the Protection of Democracy.” In Beyond Sovereignty: Collectively Defending Democracy in the Americas, edited by Tom Farer, 132–150. Johns Hopkins University Press. Alcañiz, Isabella. 2018. “Debt, Democracy, and Post-Neoliberalism: Thirty Years of Regional Integration in Latin America.” In Latin America Since the Left Turn, edited by Tulia G. Falleti and Emilio A. Parrado, 68–87. Philadelphia, PA: University of Pennsylvania Press. Atkins, G.P. 1997. Encyclopedia of the Inter-American System: Greenwood Press. Atzili, Boaz. 2007. “When Good Fences Make Bad Neighbors: Fixed Borders, State Weakness, and International Conflict.” International Security 31 (3):139–173. doi: https://doi.org/10.1162/isec.2007.31.3.139. Buzan, Barry, and Ole Wæver. 2003. Regions and Powers: The Structure of International Security. Cambridge, UK: Cambridge University Press. Diaz-Bonilla, Eugenio, and Maria Victoria del Campo. 2010. A Long and Winding Road: The Creation of the Inter-American Development Bank: Lulu.com. Dominguez, Jorge I. 2007. “International cooperation in Latin America: the design of regional institutions by slow accretion.” In Crafting Cooperation: Regional International Institutions in Comparative Perspective, edited by Amitav Acharya and Alastair Iain Johnston, 83–128. Cambridge, UK: Cambridge University Press. Dominguez, Jorge I. 2013. “Regional Economic Institutions in Latin America: Politics, Profits and Peace.” In Integrating Regions: Asia in Comparative Context, edited by Miles Kahler and Andrew MacIntyre, 107–141. Stanford, CA: Stanford University Press. Fabry, Mikulas. 2010. Recognizing States: International Society and the Establishment of New States Since 1776. Oxford, UK: Oxford University Press. Fazal, T.M. 2007. State Death: The Politics and Geography of Conquest, Occupation, and Annexation. Princeton, NJ: Princeton University Press. Forcadell, Francisco Javier, and Elisa Aracil. 2017. “Sustainable banking in Latin American developing countries: Leading to (mutual) prosperity.” Business Ethics: A European Review 26 (4):382–395. doi: https://doi.org/10.1111/ beer.12161. Forcadell, Francisco Javier, Elisa Aracil, and Fernando Úbeda. 2019. “The Influence of Innovation on Corporate Sustainability in the International Banking Industry.” Sustainability 11 (3210):1–15. Gilderhus, Mark T., David C. LaFevor, and Michael J. LaRosa. 2017. The Third Century: U.S.–Latin American Relations since 1889. 2nd ed: Rowman & Littlefield Publishers.

3  LATIN AMERICA: BOTH AGENT AND PATIENT 

65

Gobat, Michel. 2005. Confronting the American Dream: Nicaragua under U.S. Imperial Rule. Durham, NC: Duke University Press. Heine, Jorge, and Brigitte Weiffen. 2015. 21st Century Democracy Promotion in the Americas: Standing up for the Polity. London: Routledge. Helleiner, Eric. 2006. “Reinterpreting Bretton Woods: International Development and the Neglected Origins of Embedded Liberalism.” Development and Change 37 (5):943–967. doi: https://doi.org/10.1111/j.1467-7660.2006.00508.x. Helleiner, Eric. 2014. Forgotten Foundations of Bretton Woods: International Development and the Making of the Postwar Order. Ithaca, NY: Cornell University Press. Helleiner, Eric. 2016. “Incremental Origins of Bretton Woods.” In The Oxford Handbook of Historical Institutionalism, edited by Orfeo Fioretos, Tulia G. Falleti and Adam Sheingate, 627–641. Oxford, UK: Oxford University Press. Helleiner, Eric. 2017. “What’s Been Missing from Conventional Histories of Bretton Woods?” In Global Perspectives on the Bretton Woods Conference and the Post-War World Order, edited by Giles Scott-Smith and J. Simon Rofe, 17–34. Cham, Switzerland: Palgrave Macmillan. Henderson, J.D., H. Delpar, A.C. Henderson, M.P. Brungardt, and R.N. Weldon. 2000. A Reference Guide to Latin American History: M.E. Sharpe. Judge, E.H., and J.W. Langdon. 2017. “The Rio Treaty, September 1947.” In The Cold War through Documents: A Global History, edited by E.H.  Judge and J.W. Langdon, 44–49. Rowman & Littlefield Publishers. Kacowicz, Arie Marcelo. 1998. Zones of peace in the Third World: South America and West Africa in comparative perspective. Albany, NY: State University of New York Press. Khanna, V.N. 2013. International Relations. 5th ed. New Delhi, India: Vikas Publishing House. Krasner, Stephen D. 1999. Sovereignty: Organized Hypocrisy. Princeton, NJ: Princeton University Press. Lake, David A. 2017. “Laws and Norms in the Making of International Hierarchies.” In Hierarchies in World Politics, edited by Ayşe Zarakol, 17–42. Cambridge, UK: Cambridge University Press. LeBlanc, Lawrence J. 1977. The OAS and the Promotion and Protection of Human Rights. The Hague, Netherlands: Martinus Nijhoff. Lichtenstein, Natalie. 2018a. A Comparative Guide to the Asian Infrastructure Investment Bank. Oxford, UK: Oxford University Press. Lichtenstein, Natalie. 2018b. “Governance of the Asian Infrastructure Investment Bank in Comparative Context.” In AIIB Yearbook of International Law: Good Governance and Modern International Financial Institutions, edited by Peter Quayle and Xuan Gao, 50–67. Beijing, China: Asian Infrastructure Investment Bank.

66 

A. MENDEZ AND M. TURZI

Mecham, J.  Lloyd. 1961. The United States and Inter-American Security, 1889–1960. Austin, TX: University of Texas Press. Mendez, Alvaro. 2019. “Latin America and the AIIB: Interests and Viewpoints.” Global Policy:1–6. doi: https://doi.org/10.1111/1758-5899.12733. Negi, Archna. 2017. “Voice and Vote for the Weaker Nations: Mexico’s Bretton Woods.” In Global Perspectives on the Bretton Woods Conference and the Post-­ War World Order, edited by Giles Scott-Smith and J. Simon Rofe, 129–148. Cham, Switzerland: Palgrave Macmillan. Nye, Joseph. 1971. Peace in Parts: Integration and Conflict in Regional Organization. Boston, MA: Little, Brown. Oliver, Robert W. 1996. International Economic Co-Operation and the World Bank. Reissue with a New Introduction ed. Basingstoke, UK: Palgrave Macmillan. Osmanczyk, Jan. 2003. Encyclopedia of the United Nations and International Agreements. Edited by Anthony Mango. 3rd ed. Vol. 2: G to M. New York, NY: Routledge. Rist, Gilbert. 2008. The History of Development: From Western Origins to Global Faith. 3rd ed. London: Zed Books. Scott-Smith, Giles, and J.  Simon Rofe. 2017. “Bretton Woods: A Global Perspective.” In Global Perspectives on the Bretton Woods Conference and the Post-War World Order, edited by Giles Scott-Smith and J. Simon Rofe, 1–13. Cham, Switzerland: Palgrave Macmillan. Shaw, Carolyn M. 2004. Cooperation, Conflict and Consensus in the Organization of American States. New York, NY: Palgrave Macmillan. Sicker, Martin. 2002. The Geopolitics of Security in the Americas: Hemispheric Denial from Monroe to Clinton. Westport, CT: Praeger. Smith, Joseph. 2007. Historical dictionary of United States-Latin American relations, Historical dictionaries of U S diplomacy. Lanham, Md.: Scarecrow Press. Staples, Amy L. 2006. The Birth of Development: How the World Bank, Food and Agriculture Organization, and World Health Organization Changed the World, 1945–1965. Kent, OH: Kent State University Press. State. 1939. Establishment of the Inter-American Financial and Economic Advisory Committee. U.S.  Department of State  - Foreign Relations of the United States Diplomatic Paper V (The American Republics). (Accessed 10 June 2019). https://history.state.gov/historicaldocuments/frus1939v05/ch3 Thies, Cameron G. 2016. “Traditional Security: War and Peace.” In Routledge Handbook of Latin American Security, edited by David R.  Mares and Arie Marcelo Kacowicz, 113–126. London: Routledge. Thornton, Christy. 2017. “Voice and Vote for the Weaker Nations: Mexico’s Bretton Woods.” In Global Perspectives on the Bretton Woods Conference and the Post-War World Order, edited by Giles Scott-Smith and J.  Simon Rofe, 149–165. Cham, Switzerland: Palgrave Macmillan.

3  LATIN AMERICA: BOTH AGENT AND PATIENT 

67

Thornton, Christy. 2018. ““Mexico Has the Theories”: Latin America and the Interwar Origins of Development.” In The Development Century: A Global History, edited by Stephen J. Macekura and Erez Manela, 263–282. Cambridge, UK: Cambridge University Press. UN. 1945. CHARTER OF THE UNITED NATIONS AND STATUTE OF THE INTERNATIONAL COURT OF JUSTICE. In. San Francisco, CA: The United Nations. https://treaties.un.org/doc/publication/ctc/uncharter.pdf Urquidi, Victor L. 1996. “Reconstruction vs. Development: The IMF and the World Bank.” In The Bretton Woods-GATT System: Retrospect and Prospect After Fifty Years: Retrospect and Prospect After Fifty Years, edited by Orin Kirshner, 30–51. Armond, NY: M.E. Sharpe. Villaseñor, Eduardo. 1941. “The Inter-American Bank: Prospects and Dangers.” Foreign Affairs 20 (1):165–174. doi: https://doi.org/10.2307/20029137. Wang, Hongying. 2019. “The New Development Bank and the Asian Infrastructure Investment Bank: China’s Ambiguous Approach to Global Financial Governance.” Development and Change 50 (1):221–244. doi: https://doi. org/10.1111/dech.12473. Zacher, M.W. 1979. International Conflicts and Collective Security Organization, 1946–77: The United Nations, Organization of American States, Organization of African Unity, and Arab League: Praeger Publishers. Zacher, Mark W. 2001. “The Territorial Integrity Norm: International Boundaries and the Use of Force.” International Organization 55 (2):215–250. doi: https://doi.org/10.1162/00208180151140568.

CHAPTER 4

LAC and International Political Economy

Abstract  This chapter consults international political economy for possible explanations of the Latin American failure to complete membership of the AIIB (with the exception of Ecuador). Four putative mechanisms are proposed and tested: China’s uninterest in Latin American participation; hegemonic impediment by the United States; incompatible interests between Latin America and China in the infrastructure sector or the project investment portfolio; or LAC’s peculiar kind of agency. The chapter demonstrates that structural, external factors cannot account for the delay in ratifying membership, but rather finds the explanation in factors endogenous to the region. Keywords  AIIB • Latin America • China • International political economy

Introduction A number of theories bid fair to explain why Latin American countries have been so remiss in completing their memberships of the AIIB. On the supply side (i.e., China), uninterest might account for the current situation. On the demand side (i.e., Latin America), reasons for inaction might be: structural (hegemonic) impediments; divergence of interests between the aims of AIIB and the needs of Latin America; lack of agency on the part of Latin American governments. These theories will be analysed in the same order. © The Author(s) 2020 A. Mendez, M. Turzi, The Political Economy of China–Latin America Relations, https://doi.org/10.1007/978-3-030-33451-2_4

69

70 

A. MENDEZ AND M. TURZI

Uninterest Between 1970 and 1979 the normalisation of overall China-Latin America relations ensued on the United Nations unseating Taiwan and putting the People’s Republic of China in its stead. Eleven Latin American countries extended diplomatic recognition to Beijing, and more than ten commercial agreements were signed. Foreign trade increased 76.8% as a result, from US$146 million in 1970 to over US$261 million in 1979, according to the Japan External Trade Organization’s data (Regalado Florido 2009). The 1980s in Latin America was a “lost decade” for development, due to a debt crisis and hyperinflation. But it coincided with a process of reform and opening in China. During this time China-Latin America relations showed a modest but steady trend closer. The “roaring 1990s” brought to Latin America a decisive shift from an import-substitution industrialization (ISI) strategy to export promotion, foreign capital attraction, deregulation, and privatisation of state-owned enterprises. During this period bilateral economic links between China and Latin American countries increased markedly. Total trade had reached US$12.6 billion by 2000, the year before China’s accession to the WTO, an average annual growth rate of over 20% (Shambaugh 2008). Trade was not homogeneous across the region; China gave priority to Brazil, Mexico, Argentina, and Chile. After 2000, total bilateral trade increased from US$12 billion to approximately US$275 billion in 2015, a 22-fold increase (Fornes and Mendez 2018). On the Latin American side, the failure of neo-liberalism and the Washington Consensus propelled the electoral victories of more progressive/leftist leaders in many countries. After the 2002 economic downturn the region recovered due to strong international commodity prices, until 2009 when the global economic crisis hit the region, causing an economic contraction of almost 2% according to IMF figures (IMF 2010). An ensuing regional rebound peaked in 2010 with an economic growth rate of 3.7%. Growth declined annually thereafter to 2.6% in 2011, 2.4% in 2012, 2.2% in 2013, 2.1% in 2014, 1.9% in 2015 and 0.8% in 2016 (IMF 2016a). The global decline in commodity prices significantly affected the region which, coupled with China’s economic slowdown, reduced the appetite for imports. LAC contracted 0.6% in 2016, with recessions in Argentina and Brazil plus a crash of the Venezuelan economy by 16.5% (IMF 2016b; see also: Reuters 2017). Since then, anaemic economic growth has returned, with 2017 seeing 3.1%. By January 2019 the IMF estimated that growth had

4  LAC AND INTERNATIONAL POLITICAL ECONOMY 

71

declined slightly to 1.1% in 2018 but was projected at 2% in 2019 and 2.5% in 2020 (IMF 2019). During the era of commodity-driven growth from 2002 through 2014, governments in Latin America made significant progress in combating poverty and inequality. In 2002 almost 45% of the region’s peoples lived in poverty; a figure reduced to 27.8% by 2014. Extreme poverty also declined from 11.2% to 7.8% (ECLAC 2019). Public policies helping this decline included supporting per capita income levels and “targeted” public expenditures – known as conditional cash transfer programs – for poor households. Since 2015, however, the Latin American poverty rate has risen to 30.2% of the region’s population in 2017, and extreme poverty increased to 10.2% in 2017 (ECLAC 2019). This reversal is attributed to economic setbacks in Brazil and Venezuela, according to the UN  Economic Commission for Latin America and the Caribbean (ECLAC).  In contrast, poverty reduction since 2015 has continued in Argentina, Colombia, Costa Rica, El Salvador, and Paraguay. The most recent estimates put bilateral China-Latin America trade at US$306 billion in 2018 (CRS 2019), more than half of what President Xi set as the goal: US$500 billion by 2025. China’s imports from Latin America amounted to about US$158 billion in 2018, or 7.5% of China’s overall imports; while China’s exports to the region amounted to US$148 billion, or 5.9% of its total exports. Imports from Latin America in 2017 consisted primarily of natural resources, including ores 31%, soybeans 19%, petroleum 16%, and copper 9%. Exports to Latin America consisted of electrical machinery and equipment 21%; machinery and mechanical appliances 15%; motor vehicles and parts 6%; and a wide array of industrial and consumer products (CRS 2019). China has become the top trading partner of Brazil, Chile, Peru, and Uruguay. The composition of ChinaLatin America trade has a significant impact on theory. The import basket from the region is primarily composed of minerals and foodstuffs. These are critical assets for continued development, social stability, and Communist Party dominance in the PRC (Turzi 2016). Thus, the credibility of commitments from Latin America is relevant to China, and the AIIB represents a low-cost institutional investment to solve time-inconsistency problems (Beardsley 2008). Political actors in Latin America have historically been beset by short-term incentives to satisfy the demands of their constituents, to the neglect of actions that are in their longterm interest.

72 

A. MENDEZ AND M. TURZI

The foregoing confirms an upward trend in relations between China and Latin America. In terms both quantitative – verified by the growing trade and investment figures, − and qualitative – supported by the expanding areas of cooperation, − the available evidence does not support the argument of Chinese uninterest in the region. What, then, of an hypothesis that China is uninterested not in Latin America in absolute terms, but only relatively uninterested as it pertains to membership of the AIIB? AIIB Vice-President Danny Alexander declared in a 2018 FT interview that “[t]he bank can invest in projects outside Asia. Non-Asian projects will always be a pretty small proportion of our lending and the focus will be on connectivity that benefits Asia by enhancing the connectivity of Asia with other regions”. Alexander acknowledged that the AIIB maintains “a qualified relationship to the Belt and Road Initiative (BRI), the signature policy of Xi Jinping, China’s president, to finance and build infrastructure in more than 80 countries. We have member countries that are enthusiastic about BRI and member countries that are not enthusiastic about BRI” (Kynge 2018). The AIIB finances both projects connected to the BRI and others that are unconnected. Indeed, the AIIB is not just a stand-alone bank; it is one component of a broader vision of China’s expansion into neighbouring and more distant areas. This encompasses an overland link between China and Europe via Central and West Asia, and the connexion of China to Southeast and South Asia by sea. The lesser strategic importance of Latin America within the BRI framework would be the factor sustaining the argument of Chinese uninterest. According to China’s official Belt and Road Portal website, of the seven Latin American AIIB prospective members, four – Chile, Bolivia, Uruguay, and Venezuela – had by May 2019 signed a BRI memorandum of understanding, BRI cooperation agreement, or BRI framework agreement. Ecuador as the only full member from the region did the same by signing a BRI MoU on 14 December 2018 (Mendez 2019), which is almost a year before it completed its AIIB membership on 1 November 2019 (MIREMH 2019). Relatively less interest is methodologically not equivalent to uninterest. The AIIB had signed an MoU with the leading regional multilateral development lender in Latin America, the Inter-­ American Development Bank, in March 2017, and another with the African Development Bank in May 2017 (Kynge 2018). These co-financing agreements coincided with six Latin American countries  – Argentina, Chile, Ecuador, Bolivia, Peru and Venezuela  –

4  LAC AND INTERNATIONAL POLITICAL ECONOMY 

73

beginning the membership process. Brazil was among the 57 founding members. The AIIB’s intent to partner with development banks from other regions signals a significant stage in its becoming not merely an Asian regional lender but a global financial institution (Zhu 2019). In fine, there is little evidence in favour of the uninterest hypothesis. The AIIB has unambiguously reached out to Latin America. Institutionally, that is consistent with its own interest in expanding its role globally. Adding to the equation the political variable, Latin American membership of the AIIB is in line with Chinese foreign policy objectives in the region and supports President Xi’s BRI initiative. No agency or veto-points on the Chinese side are identifiable which suggest the result can be attributed to Chinese uninterest.

US Hegemonic Impediment Latin America’s lesser strategic importance for the United States has been a hallmark of Washington’s lack of engagement in the region; nonetheless, when George W. Bush began his Presidency in 2000, he appeared to signal an intention and a willingness to strengthen ties with the region. This was signalled by an invitation to Mexico’s then-President Vicente Fox to visit the White House ahead of any other head of state in Europe or Canada. On that occasion, Bush declared the US had “no more important relationship in the world” than with Mexico (quoted in: White House 2001), an appraisal reserved in the past exclusively for Great Britain. The 9/11 terrorist attacks on the US and the ensuing wars in Afghanistan and Iraq, the global war on terror, the international campaign against alQaeda, and the clash with Iran shifted US foreign policy away from its “backyard” onto the Middle East. President Obama likewise relegated the region to the bottom of his priority list; moreover, his own foreign policy legacy was a strategic pivot toward Asia to deal with a rapidly rising China. The nuclear deal with Iran, contention with a growingly assertive Russia, the Arab Spring, and the expansion of ISIS into Syria kept the Obama Administration busy in the foreign policy arena. In the decade and a half that Latin America has taken the hindmost seat in the jalopy which is US foreign policy, China has built bridges and deepened inroads. Leaving aside particular Administrations’ orientations, and viewing the matter from a more structural perspective, the argument can certainly be made that the AIIB runs counter to US interests. The correlation between multilateral development banks, shareholders’ interests, and funding

74 

A. MENDEZ AND M. TURZI

­ estinations has been widely established in the academic literature (Easterly d and Pfutze 2008). Washington has relevant national commercial and financial interests in multinational development banks such as the World Bank. The United States plays a dominant role in the World Bank’s and IMF’s lending priorities (Harrigan et al. 2006; Kilby 2009), and there is a correlation between fund allocation and trade flows (Fleck and Kilby 2006). A correlation has also been found to UN voting (Dreher and Sturm 2012). And this institutional leveraging does favour US private firms. As a major international donor, China’s global influence has increased. The AIIB itself is evidence of its clout and ambition (Stallings and Kim 2017), especially if taken together with the New Development Bank.  China’s simultaneous promotion of both these institutions has been interpreted as seeking revision of the international order. The new global architecture would centre on China and radiate outwards to developing economies in South-East Asia, Africa, and Latin America (Peng and Tok 2016). If the AIIB makes inroads on Washington’s strategic power through lending, it would be reasonable to expect the US to resist the loss of power where possible. In Asia the United States is the overarching and engaged hegemon; China – and Russia and India – being rising regional powers. But in Latin America the United States is only a semi-engaged hegemon, with China an expanding extra-regional player. In theory, the US should seek to prevent what Robert Pape terms “soft balancing”: weaker states checking a unipolar power by leveraging “non-military tools, such as international institutions, economic statecraft and strict interpretations of neutrality” to limit or constrain the superpower (Pape 2005). Concentrating, then, on Latin America, it is where US power asymmetry could explain the inaction in completing membership of the AIIB by the states of the region. Then-Chief of US diplomacy Rex Tillerson outlined the pillars of US policy engagement towards the region: economic growth and prosperity, security provision, and democratic governance (U.S Department of State 2019). Among the issues highlighted were democratic erosion, economic slowdown, rising poverty, narcotrafficking, immigration, and free trade. None of these issues collides with the acts of Latin American countries toward the AIIB. If no structural issues are at stake, that would suggest seeking an explanation in the actors. According to a Pew Research Report of October 2018, 57% of respondents in Argentina, 52% in Mexico and 50% in Brazil saw China playing a more important role in the world than it did 10 years ago. By contrast, the US was perceived the same way by 43% in Argentina, 46% in Mexico and 30%

4  LAC AND INTERNATIONAL POLITICAL ECONOMY 

75

in Brazil. When asked about preference for the world’s leading power, the Argentines – the anomaly in the region – appeared to favour China (35%) over the US (33%). Brazilians and Mexicans both revealed preferences for the US, 51% to 28% and 48% to 41%, respectively. At least 40% have positive views of China in Brazil, Mexico and Argentina. And no negative opinions surpassed the 33% mark (Pew 2018). This ought not to be construed as affecting countries’ willingness to cooperate with the United States on regional and global challenges. Two factors might explain the US power to block Latin American membership of the AIIB. One is that the closer a country is to the US – as measured in terms of military aid, trade volume, and degree of ideological convergence, – the more likely the US can exert influence to persuade the country to do or not do something. A parallel example is Japan. On the other hand, close allies of the US, viz. Canada, India, Israel, Korea, United Kingdom, Vietnam, did complete their memberships of the AIIB. In Latin America the Administrations of Macri in Argentina, Piñera in Chile, and Bolsonaro in Brazil have close – and seek closer – relations with Washington. This might have some explanatory power, especially coming off the G-20 meeting in Buenos Aires, where the Trump Administration reportedly increased scrutiny and pressure on these countries in the context of the US-China trade war (LPO 2019). The second factor is that the more power asymmetry between the weaker country and the US, the likelier the US can exert diplomatic pressure, especially on a matter of secondary importance like AIIB membership. Yet countries with even more power asymmetry from the US than the Latin American prospective Members, viz. Madagascar, Ethiopia, Sudan, have completed joining the bank. Methodologically, a more positive way to measure US power is on prospective Members, not on Members. Being a perennial prospective Member might result from neutrality strategies like hedging or fence-sitting by Latin American states under US influence. But to date there is no evidence – either from case studies or from a comparative approach – that causally links a tougher stance by Washington to Latin American delay of AIIB full membership.

Divergence: Latin America’s Needs—AIIB Interests From the early twentieth century onwards, Latin American governments have proactively intervened in the domestic economy to consolidate territorial sovereignty and promote long-term development with a gamut

76 

A. MENDEZ AND M. TURZI

of policies that relate to infrastructure investment and export-sector protectionism (Pérez Caldentey 2016). The former favoured assets which would enhance export-sector competitiveness. This meant that the export sectors of these developing economies were consolidated by the international political economy of infrastructure investment, in the process generating the revenues needed to hold government coalitions together. The average infrastructure investment rate in LAC, both public and private, in the 1980s was 3.6% of GDP, but fell to 2.2% in the next decade 1990–2001. Yet even the higher investment rates in Latin America in the 1980s are low compared to developing economies like China (8.5%) or India (4.7%), according to data for the 1992–2011 period compiled by McKinsey Global Institute (MGI 2013). The debt crises of the late 1980s destroyed the ISI economic matrix, and public investment dwindled due to fiscal constraints and debt service. Public infrastructure investment in the 1990s fell to 1.1% of GDP, yet private investment in infrastructure increased from 0.5% of GDP in the 1980s to 1.2% in the 1990s (Lardé 2016). Because this increase did not offset the fall in public investment, total infrastructure investment declined. The commodity prices boom generated a cycle of economic prosperity in the 2003–2013 period marked by improvement in the terms of trade, windfall profits, and improved public finances. For ten years Latin America sustained per capita GDP growth and partially recovered its rate of infrastructure investment. By 2009 total infrastructure investment had reached 2.9% of GDP, the second-highest level recorded for the 1980–2013 period (Lardé 2016). Latin American governments, in a relatively sound macroeconomic position, tried a countercyclical policy, and applied the tax revenue cornucopia to infrastructure projects. In the period 2008–2015 public investment outstripped private investment in Argentina, Bolivia, Chile, Colombia, Costa Rica, El Salvador, Guatemala, Mexico, Nicaragua, Panama, Paraguay, Peru, and Uruguay (Serebrisky et al. 2018). Infrastructure improvements in transport and connectivity affect multiple sectors of the economy by increasing efficiencies for the exchange of goods, services and information. Infrastructure also improves the quality of life by allowing greater access to social and public services like health and education. More infrastructure is a necessary, though not a sufficient condition for ameliorating inequality, and for closing the many poverty, productivity, innovation, education, health and environmental gaps in Latin American societies (Vazquez and Chin 2019). The need for infrastructure development in Latin America is well established in the academic literature and by development assistance organizations (Lardé 2016). In 2011 an

4  LAC AND INTERNATIONAL POLITICAL ECONOMY 

77

ECLAC study investigated the dimensions of the infrastructure insufficiency in Latin America and the Caribbean, and calculated the region would need to commit an annual average of 6.2% of GDP to infrastructure investment in order to meet the needs of businesses and consumers from 2012 to 2020 (Lardé 2016). By 2017 the average investment stood at just one-third that figure, and preliminary update work on the 2011 study indicates that investment ought to be between 5.4% and 8.6% of GDP from 2016 to 2030. According to IDB’s 2018 data, average infrastructure investment in LAC is estimated at 2.8% of GDP, while the UN goal is 5.2% (MMC and IDB 2018). Six countries – Argentina, Brazil, Chile, Colombia, Mexico, and Peru – account for over 90% of infrastructure investment in the region (MMC and IDB 2018). Estimates of the infrastructure-financing gap vary, but it is generally accepted that to close the gap, investment needs to double at the very least. The World Bank’s Logistics Performance Index 2018 (Arvis et al. 304 2018) indicates that LAC remained stable, with a score of 2.66/5 since 2016. The region trails behind Europe and Central Asia, East Asia and Pacific, and Middle East and North Africa, running only slightly ahead of South Asia (2.51) and Sub-Saharan Africa (2.45). Individually, six of the seven Latin American members of the AIIB have higher scores than the regional average: Argentina (2.89), Brazil (2.99), Chile (3.32), Ecuador (2.88), Peru (2.69) and Uruguay (2.97). The underperformers were Bolivia (2.36) and Venezuela (2.23) in 2018. And of the 160 countries covered by the LPI, the Latin American AIIB members in 2018 are ranked as follows: 34th (Chile), 56th (Brazil), 61st (Argentina), 62nd (Ecuador), 83rd (Peru), 85th (Uruguay), 131st (Bolivia), and 142nd (Venezuela) (Arvis et al. 2018). Another metric that corroborates this is the World Economic Forum’s (WEF’s) Global Competitiveness Report 2018. The infrastructure pillar of this report ranks Chile at 41st out of the 140 countries covered. The AIIB Latin American prospective members ranks are as follows: Uruguay 53rd, Ecuador 59th, Argentina 68th, Brazil 81st, Peru 85th, Bolivia 102nd, and Venezuela 118th (WEF 2018). The regional logistics performance gap persists, and undercuts supply chain reliability and service quality. As a result, infrastructure and trade facilitation are the crux of the region’s relative deficit in basic connectivity and access to international trade (De La Torre and Alain 2019). Consequently, China is now concerned with broadening the logistics policy agenda, focussing on supply chain resilience, cybersecurity, environmental sustainability and skills shortages (Arvis et al. 2018). Theoretically, delegating infrastructure to multilateral development banks such as the World Bank or the IDB reduces dilemmas of coordination

78 

A. MENDEZ AND M. TURZI

and collaboration (Stein 1990; Martin 1992; Milner 1997; Lake and Powell 1999). And delegation to international organizations is likelier when the costs of establishing a specialized agent exceed the benefits to any one state (Hawkins et al. 2006). Thus, delegating infrastructure construction finance to the AIIB would make sense for LAC.  Moreover, China’s infrastructure specialization positions it to provide services that LAC states cannot or will not do for themselves. The region lacks the technical expertise, credibility, legitimacy and other resources to make this kind of long-term policy commitment (Hawkins et al. 2006). In this circumstance delegation is also likelier. In the 2013–2018 period the greater share of regional capital investment was private. Commercial banks supplied over half of the capital (50.55%) for infrastructure projects (MMC and IDB 2018). Following the 2008 financial crisis, regulatory tightening, and new Basel III capital adequacy standards have decreased private financiers’ ability to support infrastructure projects, which became costlier as banks turned to holding more liquid assets and reducing their overreliance on short-term lending. In tandem with the withdrawal of Western banks, Asian, notably Chinese and Japanese banks have given a capital injection to the infrastructure sector. Sumitomo Mitsui Banking Corporation contributed US$3.6 billion across 45 infrastructure projects in the period 2013–2017, and Industrial and Commercial Bank of China (ICBC) lent US$1.68 billion over six projects (MMC and IDB 2018). According to ECLAC 2018 data, financing by Chinese public banks in the region since 2010 has exceeded any one loan portfolio of the IDB, the World Bank, or the Development Bank of Latin America (CAF). The total amount provided in 2005 was US$30 million. By 2010 this figure had peaked at US$35.7 billion, for an average of US$14.1 billion per year between 2011 and 2016 (ECLAC 2018). The China Development Bank and the China Export-Import Bank have become the largest lenders in Latin America. Cumulative lending to Latin America and the Caribbean in the period 2005–2017 surpassed US$140 billion (CRS 2019). The Chinese created three regional investment funds in 2014 and 2015: the China-LAC Industrial Cooperation Investment Fund (US$20 billion), and the Special Loan Program for China-LAC Infrastructure Project (US$10 billion), both administered by the China Development Bank; and the China-LAC Cooperation Fund (US$10–15 billion), administered by China Eximbank (ECLAC 2018). In this context, the AIIB has opened the door to the induction of Latin American countries as Members in order to increase China’s direct investment to US$250 billion in the period

4  LAC AND INTERNATIONAL POLITICAL ECONOMY 

79

2015–2019. Latin American governments are thus increasingly looking to China to address the region’s infrastructure deficit. Indeed, 52% of China’s loan portfolio in Latin America has been in the infrastructure sector (ECLAC 2018). In the next decade Chinese state banks and Chinese financial platforms like the US$40 billion Silk Road Fund, the BRI and the AIIB are capable of providing up to US$300 billion per year to the Latin America and Caribbean region to modernise its infrastructure. The higher appetite for risk of Chinese firms, for whom LAC represents a low-cost learning opportunity, potentiates their deep pockets. Relatively lax labour, safety, and environmental standards region-wide allow Chinese firms to learn to compete in markets and against firms that are local, national, regional, and global. The Chinese have yet to catch on to the regulatory framework that the West developed by trial and error to protect themselves from environmental, social, and political risks. The transport and energy sectors have been the primary focus of Chinese infrastructure construction in Latin America, and a key component of Chinese foreign policy toward the region (Dussel Peters et al. 2018). However, operational infrastructure is still rare; successful Chinese project delivery has been scarce, and Chinese investors remain wary of operating in Latin America and the Caribbean. The reasons cited are the region’s perceived prohibitive distance from Asia and concerns over regulatory climate and public contracting processes perceived as excessively complex and demanding (Myers 2019). The pattern of Chinese funding in infrastructure in Latin America is observably concentrated in (a) countries with difficulty accessing external credit, and/or (b) countries rich in natural resources; viz., Venezuela with 44.0% of China’s loan portfolio, Brazil with 26.0%, Ecuador with 12.3%, and Argentina with 10.8%. Almost 15% of the portfolio is in the form of loans underwritten by commodities or accompanied by commodityexport agreements (ECLAC 2018). Chinese firms building infrastructure in Latin America concentrate on turnkey projects: public or private construction, or design and construction projects of which the time-period and price are agreed beforehand, and the counterparty assumes responsibility for operations and maintenance once construction is over (Dussel Peters et al. 2018). Countries receiving more Chinese bank financing also were the sites of more turnkey projects: by 2018 the biggest Chinesecontracted turnkey project-holders in LAC in value terms were Venezuela (38.3%), Brazil (15.4%), Ecuador (12.9%), Mexico (6.6%), and Argentina (5.3%) (ECLAC 2018). Except for Mexico, all are AIIB prospective Members. Mexico is not on the member list because Mexico and China

80 

A. MENDEZ AND M. TURZI

are rivals over manufactures for export to the United States. Mexico has the advantage of proximity: it is one of the most important exporters of manufactured goods to the US market since the beginning of the Border Industrialization Program in the mid-1960s. China has the advantage of scale: it is the world’s largest exporter of manufactured products, especially consumer goods. In 2000 Mexico was the undisputed leader in the field of manufactured exports to the United States in a wide variety of product categories. In less than a decade, China displaced Mexico as the dominant exporter to the US economy. In 2017 Mexico accounted for 41.7% of U.S. imports from LAC and 36.3% of U.S. exports to the region (CID 2019). Chinese companies have faced unanticipated problems creating project delays. Chinese infrastructure firms have relied on local and national host governments for risk assessments and feasibility studies, but with little luck (Myers 2019). Even for firms who have carried out due diligence, taken prudent precautions, and complied with local procedures and regulations, Latin American political risk – whether electoral uncertainty or civil society resistance  – has been an unsettling phenomenon to grapple with. Consequently, Chinese infrastructure financing is often perceived to have low social, political and environmental standards. Continued demand for Chinese infrastructure investment and finance in LAC has spared neither Chinese firms nor their partners and communities debilitating uncertainty, especially given China’s relative lack of dispute resolution mechanisms (Moynihan 2017). Chinese firms occupied in infrastructure projects in the region offer an increasingly wide array of services: design, manufacturing, technology, connected supplies, and post-construction. On the public sector side, China knowingly assumed high levels of risk for the strategic aim of consolidating political partnerships and guaranteeing economic gains in the region. This gambit has often failed, as in the case of Venezuela. The AIIB and BRI ventures are consistent from the Chinese point of view with increasing the size, scope, and reach of Chinese firms globally, and in Latin America. These initiatives reflect the Chinese public sector’s interest in expanding its governance of globalization in the twenty-­first century, in line with taming US hegemony and with President Xi’s goal of restoring China to a geopolitically commanding position in world affairs (Ferdinand 2016; Yu 2017). Within this grander scheme, it is all the more puzzling why Latin America lags in its acceptance of Xi’s signature connectivitybased foreign policy vision, whether it is the BRI or the AIIB.

4  LAC AND INTERNATIONAL POLITICAL ECONOMY 

81

One supposes that AIIB prospective Members would want to integrate themselves into Asia’s value chains and enhance economic integration at home first by cooperating with China on infrastructure. Yet the Initiative for the Integration of Regional Infrastructure in South America (IIRSA) was never adapted to integrate with the BRI. IIRSA was created to promote basic infrastructure, transportation, communications, and energy. Strategically, IIRSA was meant to become the foundation for greater commercial and social integration in the South American continent (Carciofi 2012). It is puzzling why LAC is not more active in infrastructure cooperation, since infrastructure is supposed to facilitate commodity exports. The export basket China receives from LAC is much less sophisticated than the region’s exports to the rest of the world. Exports to China are 72% commodities, according to ECLAC’s 2016 data (ECLAC 2018). Low-, medium- and high-technology manufactures accounted for just 8% of exports to China compared with 57% of global exports. The import basket is the reverse: low-, medium- and high-tech manufactures accounted for 91% of the region’s imports from China. South America makes up 6.49% of China’s total imports and 3.15% of its total exports (CID 2017). The top five products in Latin America’s export basket to China accounted for 60% of total exports: soybeans (21.8%), copper ore and concentrates (15.6%), iron ores and concentrates (12.8%), refined copper (10.5%), and oil (8.8%) (ECLAC 2018). The seven prospective AIIB Members have large shares in China’s South American import basket. Brazil topped the list in 2017 at 49.3%, followed by Chile at 19.6%, Peru at 12.3%, Venezuela at 6.8%, and Argentina at 4.3%. Uruguay held 7th place at 2.5%., followed by Bolivia at 0.34% (Ecuador as the only full member of the AIIB was in 8th place at 1.06%; see: CID 2017). Three countries in the region have often run trade surpluses with China: Venezuela, Brazil and Chile. Exports of a few commodities account for the surpluses of all three. In 2016 this group expanded to include Peru. Of the seven AIIB prospective Members only two have deficits with China: – Argentina and Bolivia (ECLAC 2018).

Latin American (Lack of) Agency The process of globalization has created new competitive pressures to which states have responded with regional cooperation. A region is a space with geographical limits (Hurrell 1995). By pooling resources and sovereignty, states  – especially the rule-taking ones  – hope to contain the ­disruptive

82 

A. MENDEZ AND M. TURZI

forces from shifts in balances of power and economic interdependence. Gamble and Payne (1996) define regionalism as a state-­led project to reorganize a particular space along defined economic and political lines. The establishment of regional organizations is a typical case of regionalism, as their memberships give a clear idea of the boundaries of the region (Hettne 2003). Rüland et al. (2006) and Renard (2015) essayed a classification of the forms of supra-regional cooperation: (1) inter-regionalism is region-toregion cooperation; (2) extra-regionalism is cooperation between a regional group and at least one country outside the region; (3) cross-regionalism means bilateral relations between members of different regional groups; (4) trans-regionalism happens when a new group is formed across two or more existing regional groups; and (5) pan-­ regionalism defines cooperation which is inclusive in nature, covering members from many regions. Constructivism theorizes this classification by conceptualizing regions as “reflexive agents that both constitute and are constituted by interregional interaction and the ongoing ‘externalization’ within this form” (Gilson 2002). Constructivism spotlights the role of agency in co-constituting structure; at the same time, it accounts for the systemic conditioning of international agency. The identities and interests of the “units” are not fixed and given, but emerge from the normative understandings that arise between and within nations over time (Mendez 2017). Mere unorganized regions do not formulate common external policies, and even internal policy coordination is limited and incomplete. LAC countries accordingly have room to pursue policy inaction with respect to AIIB membership. China has reacted with a strategy of pursuing bilateral free trade agreements (FTAs), first proposed by Chinese President Hu Jintao and further promoted by Xi Jinping in a quest to weave China’s own global network of FTAs (Heath 2016). However, China has fewer agreements with Latin America than with most other regions. As at the date of publication, only three countries had FTAs with China: Chile, Costa Rica, and Peru. MOFCOM acknowledges a fourth under negotiation with Panama, and is reportedly exploring a fifth with Colombia, although no negotiations have been launched. China has sixteen Bilateral Investment Treaties (BITs) in LAC: with Argentina, Bahamas, Barbados, Bolivia, Canada, Chile, Colombia, Costa Rica, Cuba, Ecuador, Guyana, Jamaica, Mexico, Peru, Trinidad and Tobago, and Uruguay (UNCTAD 2019). China prefers bilateral dialogue because it furnishes more leverage than a multilateral framework. In the global trade governance system, Latin America has the peculiarity of being the most contentious region regarding China, having

4  LAC AND INTERNATIONAL POLITICAL ECONOMY 

83

brought the largest number of cases against it in the WTO. By early 2019, the WTO Dispute Settlement Gateway registered that (aside from Canada, Japan and the US) Guatemala, Mexico and Brazil were the only active complainants against China in the world in WTO disputes, and LAC was also the only developing region with WTO cases against China (WTO 2019). In early 2015 China and countries of the region signed the China-Latin American and Caribbean Countries Cooperation CELAC Plan 2015–2019, the aim of which is to increase annual bilateral trade to US$500 billion and bilateral financial cooperation to US$250 billion by 2025, with more emphasis on high value-added goods (China-CELAC Forum 2015). At the second China-CELAC ministerial summit held in January 2018, both sides agreed an updated plan extending through 2021 (CELAC 2018). Beijing invited LAC countries to connect to the BRI. That China-CELAC Forum is about more than trade, investment and finance: it sweeps-in tributary sectors such as infrastructure, energy, raw materials, and manufacture. It has also become involved in science, technology, security, politics, and people-to-people exchanges. The non-economic aspects include facilitating more exchange of governance experiences, deepening cultural exchanges, and constructive dialogue on international affairs (CELAC 2018). China has relentlessly touted its respect for sovereignty, responsible behaviour, and non-conditionality, which did not fall on deaf ears in LAC.  But the narrative of “win-win” and of complementarity-­ based “common development”, though necessary, is not sufficient. China aims to become more than just a model of economic development; its goal is to realise a community of shared destiny with Latin America. Observers have noted that the quest for autonomy has historically been one of the key normative elements in the discursive construction of regional projects in LAC (Puntigliano and Briceño-Ruiz 2013). Autonomy became at once the end-all and the overriding means to Latin American development. Its symbolic power drew on a long history of foreign intervention and domination, and stressed defence of sovereignty through selfdetermination, non-intervention, and territorial integrity (Briceño Ruíz and Simonoff 2017). Autonomy is thus a right to self-determination without external interference. Ironically, Latin Americans’ understanding of autonomy is tied to their taste for political projects that promote the state as a proactive presence in the economy, and the driver of development. Traditionally, this has come from nationalist or leftist ideologies, and runs counter to the political and economic interests of powerful extra-regional actors like the United States and multinational corporations (Muñoz

84 

A. MENDEZ AND M. TURZI

2018). The latest iteration of the quest for autonomy precisely coincides with the return of the Left in Latin America and Beijing’s big push for engagement with the region. In the mid-2000s the so-called New Left or Pink Tide  – the surge of Leftist, non-Communist governments in Venezuela, Argentina, Brazil, Chile, Uruguay, Paraguay, Ecuador and Bolivia – swept up three-­quarters of South America’s population (Rojas 2017). Their political projects sought autonomy through creation of new regional governance organisations like ALBA, CELAC, and UNASUR, which rested on specific priorities: strengthening state authority and prerogatives, promotion of neo-developmentalism, and the struggle against poverty and inequality. These structures reflected a preference for political over economic forms of integration and a clear bias against neoliberalism (Riggirozzi and Tussie 2017; Sanahuja 2012). It was the kind of political and spatial autonomy that attempted to shield itself from US and global capitalist interference (Legler 2013). Over the course of the first decade of the 2000s there was a shift in trade patterns toward East Asia, especially in South America. Despite its extraordinary countercyclical spending programs that had long kept up significant growth rates, China began to slow down in 2011 and in every year thereafter according to World Bank data. Every percentage point drop in Chinese GDP meant a GDP drop in South America because of its commodity dependency. The delayed reverberation of the global crisis began region-wide in 2012 in South America, first with the decline in prices of agro-industrial commodities and mined minerals, then with the collapse of oil prices in 2014, sending deadly shockwaves to the political economy of the New Left coalitions. Could the delay to AIIB membership, then, be a result of shifting political coalitions? It does not look like a strong argument. First, the infrastructure needs in the region are objective and manifest, and transcend partisan coalitions. Secondly, analysis of the seven prospective Latin American AIIB Members yields not even a cursory correlation. Venezuela and Bolivia acceded as prospects in March and May of 2017, respectively. In both states the same President held office from their acceptance date to their completion due date, Dec 31, 2018: Nicolás Maduro and Evo Morales, respectively. This was also the case with LAC’s only full AIIB Member: Lenin Moreno was in office from acceptance in December 2017 to actual completion in November 2019. None of these coalitions shifted. Chile and Argentina acceded in May and June of 2017, respectively. In Argentina both acceptance and non-completion happened during the administration of Mauricio Macri. Chile acceded to the AIIB during Michelle Bachelet’s Presidency but failed to ratify both under the Bachelet and under the

4  LAC AND INTERNATIONAL POLITICAL ECONOMY 

85

Sebastian Piñera administration (as at February 2020). Brazil was a Founding Member in 2015. But by December 2018 Brazil had impeached Dilma Rousseff and Acting President Michel Temer was leaving office, which had relegated AIIB membership to insignificance. Peru transitioned from the Presidency of Pedro Pablo Kuczynski (PPK) to that of Martín Vizcarra Cornejo during the membership-completion period. Peru had acceded prospectively in March 2017, but by March 2018 PPK had been driven from office by a corruption scandal (Collyns 2018). Could a change of President be the cause? Especially when, as in Chile and Brazil, it brings a changed ideological orientation? The explanatory power of this is weak. First, a change of President cannot account for the other four cases, where no such change correlates with non-completion. Secondly, non-ratification has never meant repudiation of the AIIB or even a deterioration of relations with China. Neither in the three cases of change nor in the four cases of continuity that occurred between accession and non-ratification did significant changes in the magnitude or direction of their bilateral relations with Beijing take place which could have accounted for their puzzling inaction on AIIB membership. The conclusion must be that none of the usual rational choice-type explanations of international political economy can explain the LAC anomaly. The Constructivist explanation is the only one left standing.

References Arvis, Jean-François, Lauri Ojala, Christina Wiederer, Ben Shepherd, Anasuya Raj, Karlygash Dairabayeva, and Thomas Kiiski. 2018. “Connecting to Compete 2018 Trade Logistics in the Global Economy.” The World Bank (Washington, DC). http://documents.worldbank.org/curated/en/576061531492034646/ pdf/128355-WP-P164390-PUBLIC-LPIfullreportwithcover.pdf Beardsley, Kyle. 2008. “Agreement without Peace? International Mediation and Time Inconsistency Problems.” American Journal of Political Science 52 (4):723–740. Briceño Ruíz, José, and Alejandro Simonoff. 2017. “La Escuela de la Autonomía, América Latina y la teoría de las relaciones internacionales.” Estudios internacionales 49 (186):39–89. Carciofi, Ricardo. 2012. “Cooperation for the provision of regional public goods: the IIRSA case.” In The Rise of Post-Hegemonic Regionalism: The Case of Latin America, edited by Pia Riggirozzi and Diana Tussie, 65–79. London: Springer. CELAC. 2018. “Declaration of Santiago.” News release: Ministry of Foreign Affairs: The Federative Republic of Brazil, 22 January, https://celac.rree.gob. sv/documento-oficial/declaration-of-santiago-of-the-ii-meeting-of-ministers-offoreign-affairs-of-the-celac-china-forum/

86 

A. MENDEZ AND M. TURZI

China-CELAC Forum. 2015. Cooperation Plan (2015–2019). (23 January 2015). (Accessed 2 July 2019). http://www.chinacelacforum.org/eng/ zywj_3/t1230944.htm CID. 2017. Where did China import from in 2017. In Atlas of Economic Complexity: Center for International Development at Harvard University. CID. 2019. Atlas of Economic Complexity. (Accessed 10 January 2020). http:// atlas.cid.harvard.edu/. Accessed. Collyns, Dan. 2018. Peru president Pedro Pablo Kuczynski resigns amid corruption scandal. The Guardian. (22 March 2018). (Accessed 2 June 2019). https://www.theguardian.com/world/2018/mar/21/peru-president-pedro-pablokuczynski-resigns-amid-corruption-scandal CRS. 2019. “China’s Engagement with Latin America and the Caribbean.” Congressional Research Service (Washington, DC). https://fas.org/sgp/crs/ row/IF10982.pdf De La Torre, Augusto, and Alain, Ize. 2019. Latin American Growth: A Trade Perspective. Policy Research Working Paper. (Accessed 2 July 2019). http:// documents.worldbank.org/curated/en/690421559580059769/pdf/LatinAmerican-Growth-A-Trade-Perspective.pdf Dreher, Axel, and Jan-Egbert Sturm. 2012. “Do the IMF and the World Bank influence voting in the UN General Assembly?” Public Choice 151 (1–2):363–397. doi: https://doi.org/10.1007/s11127-010-9750-2. Dussel Peters, E., Ariel Armony, and Shoujun Cui, eds. 2018. Building Development for a New Era: Asian Studies Center: University of Pittsburgh. Easterly, William, and Tobias Pfutze. 2008. “Where Does the Money Go? Best and Worst Practices in Foreign Aid.” Journal of Economic Perspectives 22 (2):29–52. doi: https://doi.org/10.1257/jep.22.2.29. ECLAC. 2018. “Exploring new forms of cooperation between China and Latin America and the Caribbean.” ECLAC (Santiago, Chile). https://repositorio. cepal.org/bitstream/handle/11362/43214/1/S1701249_en.pdf ECLAC. 2019. “Social Panorama of Latin America 2018.” Economic Commission for Latin America and the Caribbean (Santiago, Chile). https://www.cepal. org/en/publications/44396-social-panorama-latin-america-2018 Ferdinand, Peter. 2016. “Westward ho—the China dream and ‘one belt, one road’: Chinese foreign policy under Xi Jinping.” International Affairs 92 (4):941–957. doi: https://doi.org/10.1111/1468-2346.12660. Fleck, Robert K., and Christopher Kilby. 2006. “How Do Political Changes Influence US Bilateral Aid Allocations? Evidence from Panel Data.” Review of Development Economics 10 (2):210–223. doi: https://doi.org/10.1111/ j.1467-9361.2006.00313.x. Fornes, Gaston, and Alvaro Mendez. 2018. The China-Latin America Axis: Emerging Markets and their Role in an Increasingly Globalised World. 2nd ed. New York: Palgrave Macmillan.

4  LAC AND INTERNATIONAL POLITICAL ECONOMY 

87

Gamble, Andrew, and Anthony Payne. 1996. “Conclusion: the new regionalism.” In Regionalism and World Order, edited by Andrew Gamble and Anthony Payne, 247–264. London: Macmillan. Gilson, Julie. 2002. “Defining Inter-Regionalism: The Asia-Europe Meeting (ASEM).” School of East Asian Studies, University of Sheffield. Harrigan, Jane, Chengang Wang, and Hamed El-Said. 2006. “The economic and political determinants of IMF and world bank lending in the Middle East and North Africa.” World Development 34 (2):247–270. doi: https://doi. org/10.1016/j.worlddev.2005.07.016. Hawkins, Darren G., David A. Lake, Daniel L. Nielson, and Michael J. Tierney, eds. 2006. Delegation and Agency in International Organizations. Cambridge: Cambridge University Press. Heath, Timothy R. 2016. “China’s evolving approach to Economic Diplomacy.” Asia Policy 22:157–192. Hettne, Björn. 2003. “The New Regionalism Revisited.” In Theories of New Regionalism. International Political Economy Series, edited by F Söderbaum and Shaw T.M. London: Palgrave Macmillan. IMF. 2010. “World Economic Outlook: Rebalancing Growth.” International Monetary Fund (Washington, D.C.). https://www.imf.org/external/pubs/ ft/weo/2010/01/ IMF. 2016a. “Regional Economic Outlook Update  – Latin America and the Caribbean: Are Chills Here to Stay?” International Monetary Fund (Washington, D.C.). https://www.imf.org/en/Publications/REO/WH/Issues/2016/04/ 05/Latin-America-and-the-Caribbean-Are-Chills-Here-to-Stay IMF. 2016b. “World Economic Outlook  – Subdued Demand: Symptoms and Remedies.” International Monetary Fund (Washington, D.C.). https://www. imf.org/en/Publications/WEO/Issues/2016/12/31/Subdued-Demand-Symptomsand-Remedies IMF. 2019. “World Economic Outlook Update: A Weakening Global Expansion.” International Monetary Fund (Washington, D.C.). https://www.imf.org/en/ Publications/WEO/Issues/2019/01/11/weo-update-january-2019 Kilby, Christopher. 2009. “The political economy of conditionality: An empirical analysis of World Bank loan disbursements.” Journal of Development Economics 89 (1):51–61. doi: https://doi.org/10.1016/j.jdeveco.2008.06.014. Kynge, James. 2018. AIIB set to extend reach to Latin America and Africa. Financial Times. (7 May 2018). (Accessed 02 July 2019). https://www. ft.com/content/d45f9f00-4fa7-11e8-9471-a083af05aea7 Lake, David A., and Robert Powell, eds. 1999. Strategic Choice and International Relations. Princeton, N.J.: Princeton University Press. Lardé, Jeannette. 2016. Latin America’s infrastructure investment situation and challenge. FAL Bulletin 347 (3): 1–17. (Accessed 30 June 2019). https:// repositorio.cepal.org/bitstream/handle/11362/40849/S1600759_en.pdf?se quence=1&isAllowed=y

88 

A. MENDEZ AND M. TURZI

Legler, Thomas. 2013. “Post-hegemonic regionalism and sovereignty in Latin America: optimists, skeptics, and an emerging research agenda.” Contexto Internacional 35 (2):325–352. LPO. 2019. “Trump presiona a Macri para que cierre la base espacial de China en Neuquén”. (16 April 2019). (Accessed 2 July 2019). https://www.lapoliticaonline.com/nota/118765-trump-presiona-a-macri-para-que-cierre-labase-espacial-de-china-en-neuquen/ Martin, Lisa L. 1992. “Interests, power, and multilateralism.” International Organization 46 (4):765–792. doi: https://doi.org/10.1017/ S0020818300033245. Mendez, Alvaro. 2017. Colombian Agency and the Making of US Foreign Policy: Intervention by Invitation. Abingdon, UK: Routledge. Mendez, Alvaro. 2019. “Latin America and the AIIB: Interests and Viewpoints.” Global Policy:1–6. doi: https://doi.org/10.1111/1758-5899.12733. MGI. 2013. “Infrastructure Productivity: How to Save U$1 Trillion a Year.” McKinsey Global Institute. https://www.mckinsey.com/~/media/McKinsey/ Industries/Capital%20Projects%20and%20Infrastructure/Our%20Insights/ Infrastructure%20productivity/MGI%20Infrastructure_Full%20report_ Jan%202013.ashx Milner, Helen V. 1997. Interests, Institutions, and Information: Domestic Politics and International Relations. Princeton, N.J.: Princeton University Press. MIREMH. 2019. “Canciller Valencia se reúne con Vicepresidente chino y Canciller Wang Yi en el marco de VIII consultas diplomáticas.” News release: Ministerio de Relaciones Exteriores y Movilidad Humana de Ecuador, 1 November 2019, https://www.cancilleria.gob.ec/canciller-valencia-se-reunecon-vicepresidente-chino-y-canciller-wang-yi-en-el-marco-de-viii-consultasdiplomaticas/ MMC, and IDB. 2018. Overview of Infrastructure Investment in Latin America. Marsh & McLennan Companies: Global Risk Center and IDB Invest. (Accessed 10 June 2019). https://www.mmc.com/content/dam/mmc-web/Files/ Overview-of-Infrastructure-Investment-in-Latin-America.pdf Moynihan, Harriet. 2017. “China’s Evolving Approach to International Dispute Settlement. Chatham House.” Royal Institute of International Affairs. https:// www.chathamhouse.org/sites/default/files/publications/research/201703-29-chinas-evolving-approach-international-dispute-settlement-moynihan-final.pdf Muñoz, Heraldo. 2018. “The Dominant Themes in Latin American Foreign Relations: An Introduction.” In Latin American Nations in World Politics, edited by Heraldo Muñoz and Joseph S. Tulchin, 1–16. New York: Routledge. Myers, Margaret. 2019. The Reasons for China’s Cooling Interest in Latin America, Americas Quarterly. Americas Quarterly. (23 April 2019). (Accessed 30 June 2019). https://www.americasquarterly.org/content/how-beijing-sees-it

4  LAC AND INTERNATIONAL POLITICAL ECONOMY 

89

Pape, Robert Anthony. 2005. “Soft Balancing Against the United States.” International Security 30 (1):7–45. Peng, Zhongzhou, and Sow Tok. 2016. “The AIIB and China’s Normative Power in International Financial Governance Structure.” Chinese Political Science Review 1 (4):736–753. doi: https://doi.org/10.1007/s41111-016-0042-y. Pérez Caldentey, Esteban 2016. “A time to reflect on opportunities for debate and dialogue between (neo)structuralism and heterodox schools of thought.” In Neostructuralism and heterodox thinking in Latin America and the Caribbean in the early twenty-first century, edited by ECLAC, 31–83. Santiago, Chile: ECLAC. Pew. 2018. “Pew Global Attitudes Survey.” Pew Research Center. https://ec. europa.eu/knowledge4policy/dataset/ds00139_en Puntigliano, Andres Rivarola, and Jose Briceño-Ruiz, eds. 2013. Resilience of Regionalism in Latin America and the Caribbean: Development and Autonomy. Basingstoke, UK: Palgrave Macmillan. Regalado Florido, Eduardo. 2009. Current Economic Relations Between China and Latin America. Vrf Series: Ide-Jetro 448 (March). (Accessed 29 June 2019). https://www.ide.go.jp/library/English/Publish/Download/Vrf/ pdf/448.pdf Renard, Thomas. 2015. “Partnerships for effective multilateralism? Assessing the compatibility between EU bilateralism, (inter-)regionalism and multilateralism.” Cambridge Review of International Affairs 29 (1):1–18. doi: https:// doi.org/10.1080/09557571.2015.1060691. Reuters. 2017. Venezuela’s economy shrank 16.5 percent in 2016: government. (22 December 2017). (Accessed 5 July 2019) Riggirozzi, Pia, and Diana Tussie. 2017. “Rethinking Our Region in a Post-­ Hegemonic Moment.” In Post-Hegemonic Regionalism in the Americas: Toward a Pacific–Atlantic Divide?, edited by Jose Briceño-Ruiz and Isidro Morales, 16–31. London: Routledge. Rojas, René. 2017. “The Ebbing “Pink Tide”: An Autopsy of Left-Wing Regimes in Latin America.” New Labor Forum 26 (2). Rüland, Jürgen, Heiner Hänggi, and Ralf Roloff, eds. 2006. Interregionalism and International Relations: A Stepping Stone to Global Governance? London: Routledge. Sanahuja, Jose Antonio. 2012. “Regionalismo post-liberal y multilateralismo en Sudamérica: El caso de UNASUR.” In El regionalismo “post–liberal” en América Latina y el Caribe: Nuevos actores, nuevos temas, nuevos desafíos Anuario de la Integración Regional de América Latina y el Gran Caribe 2012, edited by Andres Serbin, Laneydi Martínez and Haroldo Ramanzini Júnior, 19–72. Buenos Aires, Argentina: CRIES. Serebrisky, Tomás, Ancor Suárez-Alemán, Cinthya Pastor, and Andreas Wohlhueter. 2018. “Lifting the Veil on Infrastructure Investment Data in Latin America and the Caribbean.” Inter-American Development Bank. https://publications.

90 

A. MENDEZ AND M. TURZI

iadb.org/en/publication/lifting-veil-infrastructure-investment-data-latinamerica-and-caribbean Shambaugh, David. 2008. China’s new foray into Latin America. Yale Global Online. (17 November). (Accessed 10 June 2019) Stallings, Barbara, and Eun Mee Kim. 2017. Promoting Development: The Political Economy of East Asian foreign Aid. Singapore: Palgrave. Stein, Arthur A. 1990. Why Nations Cooperate: Circumstance and Choice In International Relations. Ithaca, N.Y.: Cornell University Press. Turzi, Mariano. 2016. “The Agropolis: South America, China, and the Soybean Connections.” In The political economy of China-Latin American relations in the new millennium: brave new world, edited by Carol Wise and Margaret Myers, 170–188. Abingdon, UK: Routledge. U.S Department of State. 2019. “Joint Regional Strategy.” Bureau of Western Hemisphere Affairs and Bureau for Latin America and the Caribbean, State Department. https://www.state.gov/wp-content/uploads/2019/06/JRS_ WHA-LAC_UNCLASS-508.pdf UNCTAD. 2019. “World Investment Report.” United Nations Conference on Trade and Development. https://unctad.org/en/PublicationsLibrary/ wir2019_en.pdf Vazquez, Karin Costa, & Chin, Gregory T. 2019. The AIIB and Sustainable Infrastructure: A Hybrid Layered Approach. Global Policy, 10(4), 593–603. https://doi.org/10.1111/1758-5899.12771 WEF. 2018. “The Global Competitiveness Report 2018.” World Economic Forum. https://www.weforum.org/reports/the-global-competitveness-report-2018 White House. 2001. “Remarks by President George Bush and President Vicente Fox of Mexico at Arrival Ceremony.” News Release, 5 September 2001, https://georgewbush-whitehouse.archives.gov/news/releases/2001/ 09/20010905-2.html WTO. 2019. Dispute Settlement Gateway. https://www.wto.org/english/ tratop_e/dispu_e/dispu_e.htm. Accessed 8 July 2019. Yu, Hong. 2017. “Motivation behind China’s ‘One Belt, One Road’ Initiatives and Establishment of the Asian Infrastructure Investment Bank.” Journal of Contemporary China 26 (105):353–368. https://doi.org/10.1080/1067056 4.2016.1245894. Zhu, Jiejin. 2019. Is the AIIB a China-controlled Bank? China’s Evolving Multilateralism in Three Dimensions (3D). Global Policy, 10(4), 653–659. https://doi.org/10.1111/1758-5899.12763.

CHAPTER 5

Conclusion

Abstract  The chapter reviews the main arguments relied upon to explain the puzzle of LAC’s lack of commitment to full membership of the AIIB. It proceeds to review the latest developments in each of LAC’s seven prospective countries in order to determine its current trajectory and likely future development. It closes with final conclusions about the AIIB and its prospects in the Latin American region. In this book we have attempted an answer to the question of why Latin Americans have been so remiss as prospective Members of the AIIB. The authors discovered that LAC is the only region in the global South with only one full member of the AIIB, Ecuador. At the time of writing seven countries were still only prospective members. Observation convinces that this delay is not explained by external factors: neither the AIIB-specific nor the China-related, and probably not the US-imposed, either. None resulted from specific countries’ domestic conditions or particular leaders’ characteristics. We have considered and dealt with international political economy and geopolitics questions: What is China’s self-interest in LAC? Why did AIIB come to so remote a region in the first place? and grappled with structural questions about LAC’s development: Why – despite the dire need and the evident positive economic and societal effects – is it so hard to get physical infrastructure financed in LAC? Where, then, does that leave the region? By way of conclusion, we wish to review the latest developments amongst Latin America’s perennially prospective Members, in order to © The Author(s) 2020 A. Mendez, M. Turzi, The Political Economy of China–Latin America Relations, https://doi.org/10.1007/978-3-030-33451-2_5

91

92 

A. MENDEZ AND M. TURZI

ascertain that business as usual still pervades the region and is not likely to change. We then proceed to draw our final conclusions about the AIIB and its prospects in the region. Keywords  AIIB • China • Latin America • Agency • Foreign policy

Status of Latin American Memberships of the AIIB Brazil: From US$3181 Million to US$5 Million Brazil was the first country in LAC to become a prospective Member of the AIIB when it decided to be one of the 57 countries to sign the AIIB’s Articles of Agreement as a prospective Founding Member on 29 June 2015. According to Article 58 of the Agreement, Brazil had to complete the process of paying-in its capital to accede to full membership by 31 December 2016, and it was stipulated that Brazil would buy 31,810 shares at US$100,000 each, for a total pledge of US$3181 billion (AIIB 2015). The initial decision to join the AIIB was taken by former President Dilma Rousseff and it proved fateful that, true to the personalist nature of Brazilian politics, Rousseff’s decision to join the Bank was a “very personal, and solitary decision; she did not consult anyone in the bureaucracy” (personal communication – unnamed Brazilian diplomat 2018). It is not pretended that the Ministry of Foreign Affairs would have opposed her; they too believed in the AIIB. But the neglect to engage the whole state left the decision vulnerable to Brazil’s electoral and cyclical vagaries. The Chinese, from their perspective embedded in a system culminating in a top leader, could not have predicted that Brazil’s top leader, once they had interested her in the Bank, would be unable to carry through with her promises! Since 2015 Brazil’s economic and political situation has changed radically. Back then, pledging US$3.18 billion was ambitious but feasible. Membership of the New Development Bank (or “BRICS Bank”) is a case in point: Brazil’s paid-in capital to the NDB amounted to about US$10 billion in 2016 (Mares and Trinkunas 2016). But by 2016, the year Brazil was supposed to complete its membership of the AIIB, it was facing one of the biggest economic crises in its history (The Economist 2016). And politics was as much in turmoil as the market, as witness Rousseff’s

5 CONCLUSION 

93

impeachment on charges of corruption (Romero 2016). It was clear by that point that Brazil would not meet the deadline. Anticipating this, the AIIB Board of Governors quietly acted at the end of November 2016 to extend Brazil’s deadline to 31 December 2017, the same time next year (AIIB Board of Governors 2016). News of this extension was ignored for months until the Financial Times finally picked it up in March 2017, reporting it as owing to the political and economic upheaval after Rousseff’s removal (Feng and Mitchell 2017), a drastic new reality which Brazil had to adapt to immediately. The AIIB showed itself even more forbearing when Brazil downsized its stake drastically, from US$3.181 billion (31,810 shares) to a mere US$5 million (50 shares) (Spegele 2017). Despite this negligible burden on its fisc, Brazil also missed the new deadline, and the Board of Governors were obliged to grant yet another extension, to 31 December 2018 (AIIB Board of Governors 2017g). Brazil proceeded to miss this third deadline in a row, and again the AIIB accommodated, extending it to 31 December 2019 (AIIB Board of Governors 2018b). As at February 2020 Brazil still has not deposited US$5 million. Itamaraty, Brazil’s Ministry of Foreign Affairs, gave its seal of approval back in 2017, when the matter was moved to the Ministry of Finance. Finance has yet to complete its due diligence, before sending it on to Congress for legislative approval (personal communication – unnamed Brazilian diplomat 2018). No bill has been introduced in Congress and further delay is likely in 2020 with Bolsonaro still in office. Brazil failed to complete its prospective Founding Membership for the fourth time at year end 2019. Along with Argentina, Brazil is the only other prospective Member from LAC that has not officially endorsed the BRI (see Table 5.1 below). Peru: US$154 Million Peru became an AIIB prospective member on 21 March 2017 via Resolution 31 of the AIIB’s Board of Governors. According to the AIIB, Peru had to pay-in its capital contribution to accede to full membership by 31 December 2018, and it was stipulated that Peru would buy 1546 shares at US$100,000 each, for a total pledge of US$154.6 million (AIIB Board of Governors 2017e). Peru failed to complete its membership by the original deadline. The AIIB accommodated Peru with a new resolution

94 

A. MENDEZ AND M. TURZI

(Resolution 68) extending the deadline by a year to 31 December 2019 (AIIB Board of Governors 2018c). The first communication of Peru’s intent to join the AIIB had been verbally and enthusiastically expressed by PPK on a State Visit to China in September 2016 (personal communication: RREE  – Peru 2018). The Peruvian Ministry of Economy and Finance (MEF) then followed up with a “Letter of expression of interest” to the AIIB sent through China’s Ministry of Foreign Affairs (Gobierno de Perú 2018). On 21 March 2017 the AIIB Board of Governors notified MEF of their approval. Puzzlingly, Peru did not attend the Board of Governors’ immediately ensuing Second Annual Meeting held in Jeju, Korea in June 2017. It was the only prospective member from LAC who missed it (AIIB Board of Governors 2017f), a neglect that seemed to clash with PPK’s enthusiasm. Chinese officials went so far as to contact the Peruvian Embassy in Beijing and request an explanation for the dereliction and to inquire into Peru’s progress, evidence of how proactive Beijing was at one time in nudging the countries of LAC to put their affairs in order. Nevertheless, in Lima some progress was actually made: on 26 October 2017 MEF sent to the Directorate of Economic Affairs (DAE) at the Ministry of Foreign Affairs a technical report to incorporate into the accession instrument to help Congress reconcile membership with the Constitution (personal communication: RREE  – Peru 2018). This is a politically difficult step which may explain in part why Latin America lags: its culturally conditioned solicitude for legality, both constitutional and international. On 7 December 2017 PPK’s Government promulgated Law 30,695 (Public Sector Debt Law for Fiscal Year 2018), which did provide for paying-in the capital in five yearly instalments (MEF 2017). However, by March 2018 Peru was engulfed in a corruption scandal of huge proportions which drove PPK to resign (Collyns 2018). The ensuing political crisis cratered Peru’s membership after all appropriation directives for fiscal year 2018 came under hostile scrutiny (MEF  – Peru 2018). VicePresident Martín Vizcarra assumed the Presidency, which most international analysts agreed was a good thing for Peru if not for the AIIB (Tegel 2018).

5 CONCLUSION 

95

Vizcarra was enterprising and did his best to achieve completion by the 2018 deadline. He submitted a bill to Congress on 24 October 2018 (Gobierno de Perú 2018), which the Foreign Relations Committee approved unanimously on 21 November, and on 29 November sent it on to the Plenary for debate (Comisión de Relaciones Exteriores 2018). But nothing happened, which is expected as the process is long and tedious. Two weeks later, Foreign Affairs sent a “very urgent” letter to Congress dated 14 December 2018 requesting utmost priority in meeting the deadline, reminding them of its imminence and that membership had been vetted by multiple authorities within the Peruvian Government (MRE – Peru 2018). Still Peru failed to complete. As with the other countries in the region, the AIIB reset the deadline to 31 December 2019 (AIIB Board of Governors 2018c). Like other LAC prospective Members, Lima has given more priority to the BRI than to the AIIB. In fact, Peru endorsed the BRI officially on 26 April 2019 during the Second BRI Summit in Beijing (Véliz 2019). It took Lima over 20  months just to introduce legislation to advance its AIIB membership. It was far prompter to commit to the BRI, endorsing it with fanfare and submitting legislation almost simultaneously with the Summit, on 10 April 2019 (see: Congreso de la República 2019). Peru has missed the 2019 deadline. The country is still engulfed in its long political crisis, which is still having an impact. On 29 May 2019, for instance, President Vizcarra threatened to dissolve Congress if his antigraft proposals were not approved, stating, “Our firm decision to correct and change the political and justice system affects powerful interests that are protected by unscrupulous politicians” (Quoted in: Reuters 2019). As at February 2020, the legislative process is ongoing, as the appropriation of the first of five US$6.18 million instalments must be enacted by the Plenary. Peru did send Gonzalo Gutierrez, former Minister of Foreign Affairs, to attend the Fourth Annual AIIB Meeting in Luxembourg in July 2019, affirming the presumption that Lima is still interested (AIIB Board of Governors 2019b). Mañana reigns supreme nonetheless. Venezuela: US$209 Million Venezuela became an AIIB prospective Member on 21 March 2017 via Resolution 34 of the Board of Governors. The resolution decreed that Venezuela must complete the process of paying-in its capital contribution

96 

A. MENDEZ AND M. TURZI

by 31 December 2018, and stipulated that Venezuela would buy 2090 shares at US$100,000 each, for a total pledge of US$209 million (AIIB Board of Governors 2017a). Venezuela failed to complete its membership by the original deadline. The AIIB adapted itself to Venezuela with a new resolution (Resolution 68) extending the deadline by a year to 31 December 2019 (AIIB Board of Governors 2018c), which Venezuela has again missed. Little is known about Venezuela or its relation to the AIIB, not surprisingly, as the Maduro regime is totally opaque and the “most egregious case of Latin American corruption”, according to many experts (Warf 2018, 39). For an organization that touts its transparency, it is difficult to understand why the Board of Governors would accept Venezuela as a Member. A hallmark of Western MDBs’ lending, which might be positive in itself, is “political lending conditionality” (Wang 2019, 232). It is possible that the AIIB is signalling that they reject this norm. If so, it becomes likelier that the PRC swayed this decision, as Beijing has consistently stood by Maduro in the teeth of his and his allies’ criminal acts in so many aspects of political life – a support that was on full display as recently as September 2018, when Maduro paid a State Visit to China for meetings with Xi Jinping and Li Keqiang; while also signing an MoU officially endorsing the BRI (State Council  – PRC 2018; Arana 2018). But this could thrust specifically the AIIB into a vulnerable position someday for supporting corrupt regimes. What is known is that when the AIIB agreed to accept Venezuela as a prospective Member in March 2017, Venezuela’s state-run media treated it rather as an entitlement than an invitation, the headlines vaunting the privileges to accrue to Venezuela through membership (Noticias 24 2017); or they portrayed it as Caracas defying the West, or pushing back against IMF and World Bank “imperialism” (teleSur 2017). Oddly, the Venezuelan accession process has been handled by Petróleos de Venezuela (PDVSA), the state-owned oil company, who have been in the business of executing government policy since the late President Chavez thrust them into it (Gallegos 2016); exponentially increasing “the likelihood of systemic corruption” (von Soest 2013, 73). The US Treasury Department estimates that “approximately $11 billion went missing [from PDVSA] between 2004 and 2014” (USDT 2017). Academic observers contend that PDVSA resources have been used for “leisure trips to places like Sydney, Hawaii, Paris and Colorado” (Gallegos 2016, 173).

5 CONCLUSION 

97

PDVSA’s involvement with the AIIB was in evidence when Venezuela attended the Second Annual Meeting of the Board of Governors in Jeju, Korea in 2017. Caracas sent PDVSA’s CFO Simon Zerpa, a protegé of Maduro, as Head of Delegation and sole member of the mission (AIIB Board of Governors 2017f). According to its public statements, Zerpa’s attendance was supposed to open the “doors for access to resources, development financing and support for social investment” (Lucena 2017). Shortly afterwards, the US Treasury Department named Zerpa and a dozen other high-ranking officials at PDVSA in an indictment for corruption (USDT 2017). PDVSA exports to the US under the trade name Citgo “to process its crude” (Vasquez 2018, 13), and so it must file with the US Securities and Exchange Commission (SEC). In its SEC Annual Report in December Caracas stated that in March 2017 “Venezuela joined the Asian Investment Bank … to strengthen its relationship with Asia” (SEC 2017), which is not true. In mid-February 2018 Zerpa was removed from his post at PDVSA to minimize the impact of his indictment on dealings with US refineries via Citgo, but he was merely recycled through the revolving door to become Economy and Finance Minister (Ulmer 2018). He was then sent to the AIIB’s Third Annual Meeting in India in mid-June 2018, again as Head of Delegation. This time he brought six more delegates with him, making their mission the largest of all the prospective Members in the world (AIIB Board of Governors 2018a); an outlay that would have been better spent on paying-in membership dues. In 2019 Caracas also sent a delegation to the AIIB’s Fourth Annual Meeting in Luxembourg, but on this occasion just two delegates were sent (AIIB Board of Governors 2019b). Aside from attending Annual Meetings and making misleading public statements, no evidence has come to light that Caracas has done a thing to complete its membership. Its pledge of capital is extremely high compared to other countries in the region; it has by far the largest stake, US$209 million, higher than runner-up Peru by US$54.4 million, and just shy of 100% of the other seven stakes combined, which together stand at US$210.7 million. It is ten times higher than Chile’s (US$10 million) and twenty times larger than Argentina’s, Brazil’s, Ecuador’s and Uruguay’s (US$5 million each). It is not clear if Caracas properly vetted its decision to acquire so many shares, or simply was pleasing Beijing. The incumbent administration faces probably the worst crisis in Venezuelan history, and LAC is reacting to it. The IDB, for instance, which normally avoids getting involved in d ­ omestic

98 

A. MENDEZ AND M. TURZI

politics, recently moved to distance itself from Maduro’s regime by derecognizing it and opting to accredit Juan Guaidó as the legitimate leader of the country (Politi 2019). Beijing was not amused, as witness their decision to disapprove a visitor’s visa for Guaidó’s chosen representative to the IDB Annual Meeting, which was supposed to have taken place in Chengdu, China in March 2019. The impasse yielded the regrettable decision to cancel the meeting at the last minute, which is a serious issue considering that China has been a non-borrowing member of the IDB since 2009 (Mendez 2018). By 2016 Venezuela was indebted to China for approximately US$65 billion and struggling to repay (Schipani 2016). Caracas shows no sign of knowing what they want out of AIIB membership, lately focussing instead on advancing their ties with the Belt and Road Initiative (BRI); which in fairness has smitten other LAC countries like Bolivia, Chile, Ecuador, Peru and Uruguay (see Table 5.1 below). Bolivia: US$26.1 Million Bolivia first crossed paths with the AIIB in Macao in June 2016 at the Seventh International Infrastructure Investment and Construction Forum, where the former Head of the Bolivian Ministry of Development Planning (MPD), Rene Orellana Halkyer, spoke with AIIB officials about the implications of membership. Orellana was deeply impressed, and upon his return debriefed President Evo Morales, who gave his full support. Orellana became the foremost driver of Bolivia’s membership at that stage, and he is the one who submitted a formal written expression of interest to the Board of Governors (personal communication: unnamed Bolivian policy maker at MPD 2018). Four months later, in October 2016, Chinese Foreign Minister Wang Yi visited Bolivia, during which Morales extolled the expansion of bilateral ties for trade, investment, energy and infrastructure (EFE 2016). By December 2016, Bolivia had submitted its official request or formal application for membership (personal communication  – unnamed Bolivian policy maker at the Ministry of Development Planning 2018). Five months later on 12 May 2017 it was accepted (AIIB Board of Governors 2017b). They gave Bolivia until 31 December 2018 to pay-in its dues. Bolivia bid to acquire 261 shares at US$100,000 each for a total of US$26.1 million, a rather large sum for such a small country. Nevertheless, speaking over official radio in August 2017, Foreign Minister Fernando Huanaconi

5 CONCLUSION 

99

claimed Bolivia would not need two years to complete, but only until year’s end 2017 (Corz 2017). Predictably, Bolivia missed its self-imposed deadline as well as the extended deadline of 31 December 2018. The AIIB decreed yet another extension: 31 December 2019 (AIIB Board of Governors 2018c), which Bolivia has duly missed. A high-ranking Bolivian Government official, speaking to the authors in April of 2018, had been “pretty certain” the deadline would be met. He excused the lack of a clear plan, stating, “In Bolivia we do not act until it is absolutely necessary” (personal communication: unnamed Bolivian policy maker at MPD 2018). Bolivia’s cluelessness may have to do with Orellana’s having been succeeded in January 2017 as MPD Chief by Mariana Prado Noya, who lacks the technical expertise to formulate a plan. Regardless, Bolivia has been quiet about its plans lately. But Prado Noya along with Luis Alberto Arce, Bolivia’s ex-Minister of Economy and Public Finance, did attend the AIIB’s Second Annual Meeting in Jeju, Korea in 2017, which would suggest Bolivia is still keen on membership (AIIB Board of Governors 2017f). However, Bolivia failed to attend the Third Annual Meeting in India in June 2018 (AIIB Board of Governors 2018a). Bolivia cannot complete without legislating the fiscal appropriations for its capital contribution and the legal exceptions to Bolivia’s constitution and laws required by the AIIB. The Executive has yet to send a bill to the Plurinational Legislative Assembly, nor is one timetabled for any time soon. With the right Executive support, the process could be expedited (personal communication  – unnamed Bolivian policy maker at MPD 2018). As at February 2020, no sign of movement has been detected, yet La Paz continues to engage ever more deeply with China. Morales travelled to Beijing in June 2018 for a State Visit, − his fourth – where he and Xi agreed a strategic partnership. During this visit, Morales also signed an MoU officially endorsing the BRI (ICTSD 2018). Recently, he also legislated a loan of US$396 million from China Eximbank to subsidize 85% of the construction of Bolivia’s first steel plant by Sinosteel (S&P Global Platts 2018). Chile: US$10 Million Chile has played a major role in Latin America’s relations with China, historically. It was the second country in LAC (after Cuba) and the first in South America to recognise the PRC; the first to recognise it as a market

100 

A. MENDEZ AND M. TURZI

economy and to support its accession to the WTO; and the first to sign an FTA with it (Fornes and Mendez 2018). Chile also officially endorsed the BRI in November 2018 (see Table 5.1 below) (MINREL 2018). In the framework of its Comprehensive Strategic Partnership with China, inked in November 2016 (MINREL 2016), Chile wanted to set itself up as a platform for the renminbi in Latin America, so as to put itself in the vanguard of the region. Joining the AIIB is “a new and important signal of the strengthening of the relationship not only bilaterally but also in a regional context” (personal communication: unnamed Chilean diplomat 2018). Chile’s membership of the AIIB was broached in November 2016, when then-President Michelle Bachelet notified Xi Jinping directly during his State Visit to Chile (personal communication: DIRECON 2018). On 13 March 2017 Chile submitted a formal letter of interest to the AIIB, followed by other steps as stipulated (Cámara de Diputados  – Chile 2019b). Two months later, on 12 May 2017, the AIIB announced acceptance. Chile subscribed 100 shares, for a total of US$10 million, which would be paid-in in five instalments of US$400,000 each (AIIB Board of Governors 2017d). Chile then began its own process with impact assessments of the costs and benefits of membership, undertaken by the General Directorate of International Economic Affairs (DIRECON) in coordination with their commercial office in Beijing; a proceeding ventured in pursuit of an agenda of investment outside Latin America (personal communication: DIRECON 2018). Coordinating with the Ministry of Finance, DIRECON dedicated itself to exploring accession alternatives, claiming that the transaction costs of joining the Bank is for developing countries a significant barrier to entry (an odd excuse, given the modest cost of Chilean membership). In any case, the Chileans discovered at that point that contributions could be made in financial assets and other mechanisms as defined in the negotiations. A multidisciplinary team of technocrats from the Ministry of Finance, DIRECON, the Central Bank, the Internal Revenue Service, and the Embassy and Commercial Office in Beijing were put in charge of the whole process (personal communication: DIRECON 2018). It could therefore be said to be the most professional on record in LAC. That said, Chile did not send a delegation to the 2018 Annual Meeting in India for reasons unknown (AIIB Board of Governors 2018a). Chile also failed to complete by the original deadline of 31 December 2018. As usual, the Board of Governors accommodated with a new resolution (Resolution 68)

5 CONCLUSION 

101

extending it by another year to 31 December 2019 (AIIB Board of Governors 2018c). It is surprising that the Chileans also missed that new deadline, because in early 2018 the Chilean Government reported to the authors that the Ministry of Finance was coordinating dispatch of the Instrument of Acceptance plus proof of payment of the first instalment, which along with a few other documents was supposed to have concluded the process. The complication arose that the Directorate of Juridical Affairs (DIJUR) had to partake in transmitting to the Chilean Congress the AIIB Articles (Constitutive Agreement), which like all headquarters agreements contemplated fiscal exemptions that pose two recurrent problems for Chile. The first was the AIIB’s requirement of exemption from all taxes, whereas Chile’s policy is to exempt from only direct taxes. The second was the AIIB’s requirement of facilities to mobilize funds and foreign exchange, a provision contradicting the Organic Law of the Central Bank and its competence to regulate exchange transactions. The Ministry of Finance are working on the recognition of “reservations” to be incorporated into the Letter of Support. The reservations once negotiated, the Letter of Support will allow the Chilean Congress to pay the first instalment. The authors were told that the deadlines depended on negotiations, but that agreements were expected “in the coming weeks” (personal communication: DIRECON 2018). That was over a year ago, in February 2018. The Ministry of Finance did complete its report on 9 April 2019 (see Mensaje #026–367 in: Cámara de Diputados  – Chile 2019b). The process, in other words, is more time-consuming than even the most efficient of the Latin American countries could have anticipated. A few weeks later, on 2 May 2019, the bill to appropriate money for Chile’s agreed shares was submitted to the Chamber of Deputies, and on 7 May 2019 referred to the Foreign Relations Committee and related committees (Cámara de Diputados – Chile 2019b). It is important to note that the delay was not just due to technical or legal issues concerning tax exemptions; it was also political. Support fizzled among politicians and policymakers after the initial enthusiasm for the AIIB was “hijacked” by the more exciting BRI, which does sound more grandiose to elected politicians than the Asian Infrastructure Investment Bank (personal communication: unnamed Chilean diplomat 2018). The appropriations bill for Chile’s shares passed the Chamber of Deputies on 18 July 2019 by 101 votes to 0 (Mendez 2019). The bill then moved to the Senate for the second constitutional procedure; this was swiftly completed on 3 October

102 

A. MENDEZ AND M. TURZI

2019 (Cámara de Diputados – Chile 2019a). The approved bill was then sent to the Executive for final consideration. Now that process has been delayed. Mañana is everywhere in Latin America. Argentina: US$5 Million Argentina is one of just two countries on the list of prospective Members from LAC who have not officially endorsed the BRI (see Table 5.1 below). According to the official account given to the authors by the Argentine Government via its Embassy in London, Argentina did not request but received an invitation from the AIIB itself (i.e., not a formal invitation from a third party or prior member) (personal communication: Subsecretaría de Relaciones Financieras Internacionales  – hereinafter “Treasury” 2018). The authors surmise that Beijing prompted this informal overture in late 2016 to coincide with the official State Visit planned for Argentina’s President, Mauricio Macri, in mid-2017 with the intention of interesting Buenos Aires in joining the Bank. Macri had been to China in September 2016 for the G20 Summit in Hangzhou (Patey 2017), and Beijing did its best then to impress the President, who in 2015 had campaigned to lessen Argentina’s dependency on China (Curia 2015). Beijing’s overtures worked: in early 2017 the Minister of Public Finance, Luis Caputo, submitted an official expression of interest to the AIIB via its Embassy in Beijing. There was no time to complete the process in time for Macri’s State Visit to the PRC in mid-May 2017 (Xinhua 2017b), but just a month later, on 16 June 2017, the Board of Governors approved Argentina as a prospective Member with the proviso that Buenos Aires pay-in its capital contribution by 31 December 2018, stipulating that its share would be a modest US$5 million (AIIB Board of Governors 2017c). Merely a week after becoming a prospective Member, Minister Caputo stated, “Argentina will be able to begin presenting projects [to the AIIB] for infrastructure development and job creation” (Xinhua 2017a), but this was a gross misrepresentation of the facts. Prospective membership offers nothing but a small space on the AIIB’s website. At that point, Caputo was leading the process of completion in cooperation with Macri and the Ministry of Foreign Affairs, who are the only entities in the Executive that can endorse an instrument of accession (personal communication: Treasury 2018).

5 CONCLUSION 

103

At the beginning of 2018, analysts held a rosy view of the country: the IMF “was forecasting almost 2% growth for the year, but Argentina’s … economy ultimately contracted 2.5% in 2018” (Sullivan 2019). Macri was forced to implement massive cuts and structural reforms, which included downsizing his own government from 19 to 10 ministries (Pardo 2018). This Ministry of Public Finance, which initially oversaw the membership process, ceased to exist in June 2018 and was absorbed by the Treasury (TN 2018), which had other priorities in 2018 than advancing AIIB membership, inflation having risen from 25% in late 2017 to “48% at the end of 2018” (Sullivan 2019). Sovereign constitutional and administrative acts are prerequisite to becoming a member state of the AIIB. Only Congress may approve the Constitutive Agreement, an instrument with the status of an international treaty, along with corresponding exceptions in domestic law (viz., tax exemption, immunities in municipal law, and submission to compulsory arbitration). Only thereafter may Treasury authorise the Central Bank to subscribe the agreed capital shares on behalf of the Republic (personal communication: Treasury 2018). As at February 2020, no evidence has come to light that a bill has been introduced in Congress. The Presidential elections in October 2019 were also a distraction, the deadline of 31 December 2019 was missed. The Institution of Mañana reigns supreme in Buenos Aires too. Uruguay: US$5 Million Uruguay became a prospective Member on 18 April 2019 via Resolution 79 of the Board of Governors, which decreed that Uruguay must complete by 31 December 2019, stipulating that it would buy 50 shares at US$100,000 each, for a pledge of US$5 million (AIIB Board of Governors 2019a). Montevideo’s interest in the AIIB can be traced back to Uruguayan President Tabaré Vasquez’s State Visit to the PRC in October 2016. It had started with an impassioned talk by Danilo Astori, the Head of the Ministry of Finance and Economics (MEF), who asserted foreign direct “investment [was] the only way for Uruguay to grow” (PresidenciaUruguay 2016a). A few days later, President Xi Jinping welcomed Vasquez to the Great Hall of the People, where they agreed a Strategic Partnership, an important démarche in that China has been Uruguay’s main trading partner for the last several years (Fornes and Mendez 2018).

104 

A. MENDEZ AND M. TURZI

Xi and Vasquez also discussed the possibility of signing a bilateral FTA (Presidencia-Uruguay 2016b), a move left unachieved to this day, as critics point out that it may violate existing Mercosur rules (Koop 2018). Vasquez then met with Premier Li Keqiang to pore over the fine points of the Strategic Partnership. It was then that Chinese officials for the first time showcased the BRI and the AIIB together as flagship initiatives not just in Asia, but also in Latin America (MRREE 2016); a hard sell by Beijing at that time, given that neither initiative has been operationalised in LAC by the PRC apart from making Brazil – a member of BRICS – a “prospective” Founding Member of the AIIB since 2015, which can be used to sell the idea to the whole global South. In late January 2018 President Tabaré welcomed Chinese Foreign Minister Wang Yi to Uruguay (FMPRC 2018), who lobbied for Montevideo to endorse the BRI bilaterally. A few days prior, Wang had tried to convince the whole LAC region to endorse the BRI multilaterally (Zhang 2018) at the Second Ministerial Meeting of the CELAC-China Forum in Santiago, but failed spectacularly when the region politely declined to play “group ball” (Itamaraty 2018). Wang’s Uruguay visit paid off. In April 2018 the former President of Uruguay’s Central Bank (BCU), Mario Bergara – (now a Presidential candidate) – travelled to China along with other Uruguayan officials to commemorate 30 years of diplomatic ties between Montevideo and Beijing. In an interview with Chinese journalists, Bergara effused that Uruguay was looking “forward to exploring the enormous potential of [their] cooperation within the Belt and Road initiative” (quoted in: Xinhua 2018; Global Times 2018). On the sidelines, Bergara met with AIIB President Jin Liqun. Bergara pledged in coordination with MEF to consider the proposal to join (personal communication: unnamed Uruguayan diplomat 2019). In August 2018 Montevideo announced its endorsement of the BRI via an MoU signed by its Minister of Foreign Affairs, Rodolfo Nin Novoa, in Beijing (MRREE 2018b, see Table 5.1 below). While Nin was in town, the AIIB was again brought up at the XIX Uruguay-China Joint Commission meeting on 16 August 2018 (MRREE 2018a). In late 2018 MEF sent a formal expression of interest to the AIIB in accordance with

5 CONCLUSION 

105

the Manual for Accession to the AIIB (see Table 1.1 in Chap. 1). After the Board of Directors discussed the admission, the indicative terms and conditions for Uruguay were received in January 2019 (personal communication: unnamed Uruguayan diplomat 2019). Uruguay soon submitted its application (AIIB 2016). On 18 April 2019 the Board of Governors approved and Uruguay, along with Côte d’Ivoire, Guinea and Tunisia, were invited to join as prospective Members (AIIB 2019). Uruguay’s share is very modest with a pledge of just US$5 million and a paid-in investment of US$1 million divided into five instalments of US$200,000 each. The first instalment counts as completion in the expectation that the other four will be made in the four subsequent years (AIIB Board of Governors 2019a). Uruguay is currently the only country in LAC given less than a year (8.5  months) to complete (by 31 December 2019). Montevideo seems quite confident about it – (fantasy agency?). The process is being led by MEF and BCU, but Legislative approval is also required. According to an April 2019 internal newsletter of the Debt Management Unit at MEF, completing membership is described as the “second stage” of a process (MEF – Uruguay 2019). Uruguay sent a delegation to participate in the Fourth Annual Meeting in Luxembourg in July 2019 (AIIB Board of Governors 2019b). Shortly afterwards, one Uruguayan Government source reckoned that full membership is possible in 2019, contingent (as ever) on Legislative ratification (personal communication, unnamed Uruguayan diplomat 2019). Given LAC’s “speediness”, it is not surprising that Uruguay missed the 2019 deadline. Uruguay only just recently held Presidential elections, in October 2019, and Congressional activity typically dwindles at these times (Altman and Chasquetti 2005). Final Reflection: Which Came First: The Chicken (BRI) or the Egg (AIIB)? In Asia as in reality, the BRI came first, then the AIIB, but in Latin America things happen backwards. Beijing has been showcasing both initiatives to the region since about 2015, but in the beginning had no clue how to operationalize “sale” of the BRI to such a faraway region. It opted to close the sale of the AIIB first, particularly in the aftermath of the First BRI Summit in Beijing in 2017, which disappointingly few heads of state attended; yet two from LAC did show up – Bachelet from Chile and Macri from Argentina (Xinhua 2017c).

106 

A. MENDEZ AND M. TURZI

Learning a valuable lesson, Beijing in preparing for the Second BRI Summit in April 2019 concentrated all its efforts on one thing: – getting countries to officially endorse the BRI.  This strategy seemed to pay off when Panama became the first country in LAC to climb aboard the bandwagon in November 2017 (MIRE 2017). China was excited and laid plans to get the whole region on board. The plan was to win an all-in regional multilateral endorsement at the China-CELAC Forum Ministerial Meeting in Santiago de Chile in January 2018. The PRC sent Foreign Minister Wang Yi to rally the LAC countries with a friendly letter from Xi Jinping in hand, which flatteringly claimed that the BRI needed “Latin flavour” (Zhang 2018; see also: Li 2018). When this strategy failed, Beijing got the message instantly and without missing a beat switched to a bilateral backup; a démarche which incidentally had the effect of sidelining the AIIB. The strategy worked and by the time the Second BRI Summit took place a bit more than a year later, in April 2019, a total of 19 LAC countries were on board (see Table 5.1 below; see also Appendix 4 for a list of the LAC countries who as at February 2020 have endorsed the BRI). Ending this book with the case of Uruguay seems apposite. It is the first country in LAC to become a prospective Member after endorsing the BRI, in August 2018. All seven other prospective members have either not endorsed the BRI at all (Brazil and Argentina), or had become Members before endorsing (Peru, Venezuela, Bolivia, and Chile) (see Table 5.1 below). The case of Uruguay marks a renewal of energy by Beijing in advancing the AIIB. The PRC seems finally to be waking up to the reality that their vague notions and grandiose BRI rhetoric cannot be implemented in LAC Table 5.1  LAC AIIB prospective countries and the BRI Prospective AIIB LAC member

AIIB acceptance as prospective

BRI endorsement as of 1 February 2020

Brazila Peru Venezuela Bolivia Chile Argentina Uruguay

29-Jun-2015 21-Mar-2017 21-Mar-2017 12-May-2017 12-May-2017 16-Jun-2017 18-Apr-2019

No Yes: 26-Apr-2019 Yes: 14-Sep-2018 Yes: 20-Jun-2018 Yes: 02-Nov-2018 No Yes: 20-Aug-2018

Source: Authors’ table Prospective Founding Member

a

5 CONCLUSION 

107

without cross-border infrastructure in place, which the AIIB is needed to finance. Infrastructure in LAC is so primitive that the only comparable region is sub-Saharan Africa. A few days after Uruguay was invited in, Beijing celebrated with an effusive opinion piece written by an Uruguayan expatriate now working for the PRC and published by China Daily (the official organ of record) under the title “Exciting times ahead for ChinaUruguay relationship” (Santo 2019). Only time will tell if Beijing’s renewed interest will help nudge Montevideo and the region as a whole toward finally making good their membership pledges and getting past their tendency to put off life itself until Mañana.

References AIIB. 2015. Articles of Agreement. (29 June 2015). (Accessed 16 June 2019). https://www.aiib.org/en/about-aiib/basic-documents/_download/articlesof-agreement/basic_document_english-bank_articles_of_agreement.pdf AIIB. 2016. Manual for Accession to the AIIB.  Beijing, China: Office of the Corporate Secretary – Asian Infrastructure Investment Bank. AIIB. 2019. “AIIB Approves Membership of Côte d’Ivoire, Guinea, Tunisia, and Uruguay.” News release, 22 April 2019, https://www.aiib.org/en/newsevents/news/2019/20190422_001.html AIIB Board of Governors. 2016. Extending the Deadline for Founding Signatories to Ratify the Bank’s Articles of Agreement. Resolution 20. (28 November 2016). (Accessed 10 July 2019). https://www.aiib.org/en/about-aiib/governance/board-governors/index.html AIIB Board of Governors. 2017a. Admission of the Bolivarian Republic of Venezuela to Membership in the Asian Infrastructure Investment Bank. Resolution 34. (21 March 2017). (Accessed 19 December 2018). https:// www.aiib.org/en/about-aiib/governance/board-governors/index.html AIIB Board of Governors. 2017b. Admission of the Plurinational State of Bolivia to Membership in the Asian Infrastructure Investment Bank. Resolution 36. (12 May 2017). (Accessed 19 December 2018). https://www.aiib.org/en/ about-aiib/governance/board-governors/index.html AIIB Board of Governors. 2017c. Admission of the Republic of Argentina to Membership in the Asian Infrastructure Investment Bank. Resolution 46. (16 June 2017). (Accessed 19 December 2018). https://www.aiib.org/en/aboutaiib/governance/board-governors/index.html AIIB Board of Governors. 2017d. Admission of the Republic of Chile to Membership in the Asian Infrastructure Investment Bank. Resolution 37. (12 May 2017). (Accessed 19 December 2018). https://www.aiib.org/en/aboutaiib/governance/board-governors/index.html

108 

A. MENDEZ AND M. TURZI

AIIB Board of Governors. 2017e. Admission of the Republic of Peru to Membership in the Asian Infrastructure Investment Bank. Resolution 31. (21 March 2017). (Accessed 19 December 2018). https://www.aiib.org/en/ about-aiib/governance/board-governors/index.html AIIB Board of Governors. 2017f. Annual Meeting of the Board of Governors (Summary of Proceedings). (Accessed 20 January 2019). https://www.aiib. org/en/about-aiib/governance/board-governors/.content/index/_download/Summary-of-Proceedings.pdf AIIB Board of Governors. 2017g. Extending the Deadline for Founding Signatories to Ratify the Bank’s Articles of Agreement. Resolution 55. (19 December 2017). (Accessed 10 June 2019). https://www.aiib.org/en/aboutaiib/governance/board-governors/index.html AIIB Board of Governors. 2018a. Annual Meeting of the Board of Governors (Summary of Proceedings). (25–26 June 2018). (Accessed 10 May 2019). https://www.aiib.org/en/about-aiib/governance/board-governors/. content/index/_download/Summary-of-Proceedings.pdf AIIB Board of Governors. 2018b. Extending the Deadline for Prospective Founding Members’ Ratification of the Bank’s Articles of Agreement. Resolution 67. (18 December 2018). (Accessed 28 May 2019). https://www. aiib.org/en/about-aiib/governance/board-governors/index.html AIIB Board of Governors. 2018c. Extending the Deadline for Prospective Members to Accede to the Bank’s Articles of Agreement. Resolution 68. (18 December 2018). (Accessed 10 June 2019). https://www.aiib.org/en/aboutaiib/governance/board-governors/index.html AIIB Board of Governors. 2019a. Admission of the Oriental Republic of Uruguay to Membership of the Asian Infrastructure Investment Bank. Resolution 79. (18 April 2019). (Accessed 11 May 2019). https://www.aiib.org/en/aboutaiib/governance/board-governors/index.html AIIB Board of Governors. 2019b. The Fourth Annual Meeting of the Board of Governors: Summary of Proceedings. (July 12–13, 2019). (Accessed 11 November 2019). https://www.aiib.org/en/about-aiib/governance/boardgovernors/.content/index/_download/Proceedings-of-the-Annual-Meetingof-the-Board-of-Governors-July-12-13-2019.pdf Altman, David, and Daniel Chasquetti. 2005. “Re-election and political career paths in the Uruguayan Congress, 1985–99.” The Journal of Legislative Studies 11 (2):235–253. doi: https://doi.org/10.1080/13572330500158656. Arana, Ismael. 2018. China sostiene a Nicolas Maduro. El Mundo. (15 September 2018). (Accessed October 10, 2018). https://global-factiva-com.gate3. library.lse.ac.uk/redir/default.aspx?P=sa&an=MUNDO00020180915ee9f00 012&cat=a&ep=ASE Cámara de Diputados  – Chile. 2019a. Oficio de Ley al Ejecutivo. Oficio N° 15.041. https://www.camara.cl/pley/pdfpley.aspx?prmID=26003&prmTIP O=OFICIOPLEY. Accessed 11 November 2019.

5 CONCLUSION 

109

Cámara de Diputados  – Chile. 2019b. Proyecto de Ley: Aprueba el Convenio Constitutivo del Banco Asiático de Inversión en Infraestructura. Primer trámite constitucional. https://www.camara.cl/pley/pley_detalle.aspx?prmID=13135. Accessed 12 December 2019. Collyns, Dan. 2018. Peru president Pedro Pablo Kuczynski resigns amid corruption scandal. The Guardian. (22 March 2018). (Accessed 2 June 2019). https://www.theguardian.com/world/2018/mar/21/peru-president-pedro-pablokuczynski-resigns-amid-corruption-scandal Comisión de Relaciones Exteriores. 2018. Oficio No. 2017  – 2018–2019/ CREE-CR.  Congreso de la República del Perú. (29 November 2018). (Accessed 31 May 2019). http://www.leyes.congreso.gob.pe/Documentos/ 2016_2021/Oficios/Comisiones_Ordinarias/OFICIO-217-2018-2019CRREE-CR.pdf Congreso de la República. 2019. Proyecto De Ley Que Declara De Necesidad E Interes Nacional La Integración De La “Franja Y La Ruta De La Seda Para La Cooperación Con China Como Aporte Al Desarrollo Economico Del Peru”. Proyecto de Ley No. 4221. (10 April 2019). (Accessed 10 June 2019). www. leyes.congreso.gob.pe/Documentos/2016_2021/Proyectos_de_Ley_y_de_ Resoluciones_Legislativas/PL0422120190416.pdf Corz, Carlos. 2017. Bolivia acelera trámites y en diciembre pasa a ser miembro pleno del Banco Asiático. La Razon. (17 August 2017). (Accessed 10 June 2019). http://www.la-razon.com/economia/Bolivia-Banco-Asiatico-ChinaHuanacuni_0_2766323366.html Curia, Walter. 2015. Carta de Macri a China: los acuerdos podrían ser inconstitucionales. El Cronista. (13 March 2015). (Accessed February 18, 2019). https://www.cronista.com/economiapolitica/Carta-de-Macri-a-China-losacuerdos-podrian-ser-inconstitucionales-20150313-0052.html EFE. 2016. China confirms $4.86 bn loan to Bolivia for infrastructure projects. EFE News Service. (16 October 2016). (Accessed 7 July 2019). https://www. efe.com/efe/english/business/china-confirms-4-86-bn-loan-to-boliviafor-infrastructure-projects/50000265-3061311 Feng, Emily, and Tom Mitchell. 2017. China-led AIIB gives Brazil and South Africa extra year to join. Financial Times. (28 March). https://www.ft.com/ content/c0c0f6f2-1384-11e7-b0c1-37e417ee6c76 FMPRC. 2018. “President Tabare Vazquez of Uruguay Meets with Wang Yi.” News release: Ministry of Foreign Affairs of the People Republic of China, 25 January 2018, https://www.fmprc.gov.cn/mfa_eng/zxxx_662805/t1529721.shtml Fornes, Gaston, and Alvaro Mendez. 2018. The China-Latin America Axis: Emerging Markets and their Role in an Increasingly Globalised World. 2 ed. New York: Palgrave Macmillan. Gallegos, Raul. 2016. Crude Nation: How Oil Riches Ruined Venezuela. Lincoln, NE: Potomac Books – University of Nebraska Press.

110 

A. MENDEZ AND M. TURZI

Global Times. 2018. Uruguay: Central bank seeks further finance cooperation. Global Times. (15 April 2018). (Accessed 4 July 2019). http://www. globaltimes.cn/content/1097925.shtml Gobierno de Perú. 2018. “Proyecto de Resolución Legislativa 3571-2018-PE.” In Convenio Constitutivo del Banco Asiático de Inversión en Infrastructura. http://www.leyes.congreso.gob.pe/Documentos/2016_2021/Proyectos_ de_Ley_y_de_Resoluciones_Legislativas/PL0357120181025.pdf. (accessed 12 July 2019). ICTSD. 2018. Bolivia suma acuerdos con China y Rusia. Puentes: Análisis e Información sobre Comercio y Desarrollo Sostenible para América Latina. (22 June 2018). (Accessed 7 July 2019). https://www.ictsd.org/bridges-news/ puentes/news/bolivia-suma-acuerdos-con-china-y-rusia Itamaraty. 2018. “Special Declaration of Santiago of the II Ministerial Meeting of the CELAC-China Forum on the Belt and Road Initiative.” News release: Ministry of Foreign Affairs: The Federative Republic of Brazil, 22 January 2018, http://www.itamaraty.gov.br/images/2ForoCelacChina/Declarationof-Santiago%2D%2DII-CELAC-China-Forum-FV-22-01-2018.pdf Koop, Fermin. 2018. Uruguay seeks alliance with China, challenging Mercosur. Dialogo Chino. (13 November 2018). (Accessed 10 May 2019). https:// dialogochino.net/12277-uruguay-seeks-alliance-with-china-challengingmercosur/ Li, Wang. 2018. Adding Latin flavor to Chinese win-win wisdom. CGTN News. (24 January 2018). (Accessed June 10 2019). https://news.cgtn.com/ news/3345444e7a677a6333566d54/share_p.html Lucena, Anais. 2017. PDVSA participa en reunión del BAII para demostrar potencialidades de Venezuela. (17 June 2017). (Accessed 5 June 2019). http:// www.radiomundial.com.ve/article/pdvsa-participa-en-reunión-del-baii-parademostrar-potencialidades-de-venezuela Mares, David R., and Harold A. Trinkunas. 2016. Aspirational power: Brazil on the long road to global influence. Washington, DC: Brookings Institution Press. MEF  – Peru. 2018. “Comunicado.” News release: Ministerio de Economia y Finanzas del Perú, 20 March 2018, https://www.mef.gob.pe/es/noticias/ notas-de-prensa-y-comunicados?id=5643 MEF – Uruguay. 2019. Uruguay in Focus. (April 2019). (Accessed 5 July 2019). http://deuda.mef.gub.uy/innovapor tal/file/26755/1/newsletterabril-2019-.pdf MEF. 2017. Ley De Endeudamiento Del Sector Público Para El Año Fiscal 2018. El Peruano. (7 December 2017). (Accessed 15 June 2019). http://www.leyes. congreso.gob.pe/Documentos/2016_2021/ADLP/Normas_ Legales/30695-LEY.pdf Mendez, Alvaro. 2018. The Asian Infrastructure Investment Bank comes knocking on Latin America’s door: is anyone home? LSE Latin America and the

5 CONCLUSION 

111

Caribbean Centre Blog. (27 April 2018). (Accessed 20 June 2019). http:// blogs.lse.ac.uk/latamcaribbean/2018/04/27/the-asian-infrastructure-investmentbank-comes-knocking-on-latin-americas-door-is-anyone-home/ Mendez, Alvaro. 2019. “Latin America and the AIIB: Interests and Viewpoints.” Global Policy:1–6. doi: https://doi.org/10.1111/1758-5899.12733. MINREL. 2016. “Chile and China establish a Comprehensive Strategic Partnership.” News release, 22 November 2016, https://minrel.gob.cl/chileand-china-establish-a-compr ehensive-strategic-par tnership/minrel/2017-05-03/122721.html MINREL. 2018. “Canciller Ampuero firma acuerdo de Cooperación entre Chile y China de la iniciativa de la Franja y la Ruta.” News release: Ministerio de Relaciones Exteriores: Gobierno de Chile, 2 November 2018, https://minrel. gob.cl/canciller-ampuero-firma-acuerdo-de-cooperacion-entre-chile-y-chinade-la/minrel/2018-11-02/113923.html MIRE. 2017. Memorando de entendimiento entre el gobierno de la república de panamá y el gobierno de la república popular china sobre la cooperación en el marco de la franja económica de la ruta de la seda y la ruta marítima de la seda del siglo xxi. Acuerdos panamá-china. (17 Noviembre 2017). (Accessed 20 February 2019). https://mire.gob.pa/images/PDF/documentos%20y%20 formularios/Acuerdoschina/RUTA%20DE%20LA%20SEDA.pdf MRE – Peru. 2018. Oficio – RE (APA) N° 3-0-B/183. Ministerio de Relaciones Exteriores del Perú. (13 December 2018). (Accessed 1 June 2019). http:// www.leyes.congreso.gob.pe/Documentos/2016_2021/Oficios/Otras_ Instituciones/OF-RE-APA-3-0-B-183.pdf MRREE. 2016. “Audiencia del Presidente Vázquez con Primer Ministro chino, Li Keqiang.” News release, 20 October 2018. MRREE. 2018a. “Comisión Mixta Económico-Comercial y de Cooperación Uruguay-China.” News release: Ministerio de Relaciones Exteriores de Uruguay, 24 August 2018, https://www.gub.uy/ministerio-relaciones-exteriores/comunicacion/noticias/comision-mixta-economico-comercialy-de-cooperacion-uruguay-china MRREE. 2018b. “Uruguay adhiere a la iniciativa Una Franja, Una Ruta (OBOR).” News release: Ministerio de Relaciones Exteriores de Uruguay, 20 August 2018, http://www.mrree.gub.uy Noticias 24. 2017. Estas son las ventajas del ingreso de Venezuela al Banco Asiático de Inversión en Infraestructuras BAII. Noticias 24. (16 June 2017). (Accessed 5 May 2019). https://www.noticias24.com/venezuela/noticia/334197/ estas-son-las-ventajas-del-ingreso-de-venezuela-al-banco-asiatico-de-inversionen-infraestructuras-baii/ Pardo, Daniel. 2018. Luis Caputo renuncia como presidente del Banco Central de Argentina: qué significa la movida en pleno paro nacional y con Macri en Nueva York. BBC Mundo. (25 September 2018). (Accessed 7 July 2019). https:// www.bbc.com/mundo/noticias-america-latina-45645125

112 

A. MENDEZ AND M. TURZI

Patey, Luke. 2017. China Made Mauricio Macri a Deal He Couldn’t Refuse. Foreign Policy. (24 January 2017). (Accessed 7 March 2019). https://foreignpolicy. com/2017/01/24/china-made-mauricio-macri-a-deal-he-couldnt-refuse/ Politi, James. 2019. IDB scraps annual meeting after China excludes Venezuela. Financial Times. (23 March 2019). (Accessed 02 July 2019). https://www. ft.com/content/7bbfbe10-4cfa-11e9-bbc9-6917dce3dc62 Presidencia-Uruguay. 2016a. “Disertación del Ministro Danilo Astori en la provincia china de Guangdong.” News release, 17 October 2016, https://www. presidencia.gub.uy/sala-de-medios/fotografias/disertacion-ministro-daniloastori-provincia-china-guangdong Presidencia-Uruguay. 2016b. “Presidentes Tabaré Vázquez y Xi Jinping acordaron avanzar rápidamente en un tratado de libre comercio Uruguay-China.” News release, 18 October 2016, https://www.presidencia.gub.uy/comunicacion/ comunicacionnoticias/tratado-libre-comercio-uruguay-china-vazzquez-jinping Reuters. 2019. Peruvian president threatens to dissolve Congress unless anti-graft reforms passed. Reuters News. (30 May 2019). (Accessed 10 June 2019). https://uk.reuters.com/article/uk-peru-politics/peruvian-president-threatens-todissolve-congress-unless-anti-graft-reforms-passed-idUKKCN1SZ2ZW Romero, Simon. 2016. Dilma Rousseff Is Ousted as Brazil’s President in Impeachment Vote. The New  York Times. (31 August 2016). (Accessed 15 May 2019). https://www.nytimes.com/2016/09/01/world/americas/brazil-dilma-rousseff-impeached-removed-president.html S&P Global Platts. 2018. Bolivia inks deal for Mutun steel project with China’s Sinosteel. (30 March). https://www.platts.com/latest-news/metals/saopaulo/bolivia-inks-deal-for-mutun-steel-project-with-21178306 Santo, Nicolas. 2019. Exciting times ahead for China-Uruguay relationship. China Daily. (25 April 2019). (Accessed 6 July 2019). http://www.chinadaily.com. cn/a/201904/25/WS5cc123b3a3104842260b84d1.html Schipani, Andres. 2016. Handouts offer little relief in Venezuela’s food crisis. Financial Times. (16 November 2016). (Accessed 10 June 2019). https:// www.ft.com/content/cdbcd9d2-a950-11e6-809d-c9f98a0cf216 SEC. 2017. Exhibit D to the Bolivarian Republic of Venezuela’s Annual Report on Form 18-K to the United States Securities and Exchange Commission for the fiscal year ended December 31, 2016. U.S. Securities and Exchange Commission (10 June 2019). (21 December 2017). https://www.sec.gov/Archives/ edgar/data/103198/000119312517376486/d505622dex99d.htm Spegele, Brian. 2017. Brazil Cuts Stake in China-Led Infrastructure Bank. Wall Street Journal. (12 May 2017). (Accessed 22 June 2019). https://www.wsj. com/articles/brazil-cuts-stake-in-china-led-infrastructure-bank-1494596694 State Council  – PRC. 2018. “Premier Li meets with Venezuelan president.” News release: The State Council of the People’s Republic of China, 14 September 2018, http://english.gov.cn/premier/news/2018/09/14/content_281476302772198.htm

5 CONCLUSION 

113

Sullivan, Mark P. 2019. Argentina: An Overview. Congressional Research Service. (26 April 2019). (Accessed 7 July 2019). https://crsreports.congress.gov/ product/pdf/IF/IF10932 Tegel, Simeon. 2018. Corruption scandals have ensnared 3 Peruvian presidents. Now the whole political system could change. The Washington Post. (12 August 2018). (Accessed 10 May 2019). https://www.washingtonpost.com/ world/the_americas/corruption-scandals-have-ensnared-3-peruvian-presidents-now-the-whole-political-system-could-change/2018/08/11/0cd43ab 0-9a82-11e8-a8d8-9b4c13286d6b_story.html?noredirect=on&utm_term=. f0a224e1aeeb teleSur. 2017. Video: Venezuela trabaja en su ingreso al BAII. teleSur tv. (30 July 2017). (Accessed 30 May 2019). https://www.youtube.com/ watch?v=L8GyxdA9XLQ The Economist. 2016. Brazil’s crisis Irredeemable? The Economist. (2 January 2016). https://www.economist.com/news/briefing/21684778-former-staremerging-world-faces-lost-decade-irredeemable TN. 2018. Nicolás Dujovne, más superministro que nunca: Hacienda absorbe Finanzas. Todo Noticias. (15 June 2018). (Accessed 7 July 2019). https:// tn.com.ar/politica/nicolas-dujovne-superministro-el-ministerio-de-haciendaabsorbe-la-cartera-de-finanzas_875703 Ulmer, Alexandra. 2018. Update 1-Venezuela removes U.S.-sanctioned Zerpa as PDVSA CFO. Reuters. (15 February 2018). (Accessed 10 June 2019). https:// www.reuters.com/article/venezuela-pdvsa/update-1-venezuela-removes-u-ssanctioned-zerpa-as-pdvsa-cfo-idUSL2N1Q5129 USDT. 2017. “Treasury Sanctions 13 Current and Former Senior Officials of the Government of Venezuela.” News release: US Department of Treasury, 26 July 2017, https://www.treasury.gov/press-center/press-releases/Pages/ sm0132.aspx Vasquez, Patricia I. 2018. “China, Oil, and Latin America: Myth Vs. Reality.” Atlantic Council (Adrienne Arsht Latin America Center). https://www.atlanticcouncil.org/images/publications/china-oil-latam-final.pdf Véliz, Víctor. 2019. El Perú implementará iniciativa La Franja y la Ruta. El Peruano. (26 April 2019). (Accessed 22 June 2019). https://www.elperuano. pe/noticia-el-peru-implementara-iniciativa-franja-y-ruta-77947.aspx von Soest, Christian. 2013. “Persistent systemic corruption: why democratisation and economic liberalisation have failed to undo an old evil.” Zeitschrift für Vergleichende Politikwissenschaft 7 (Supplement 1):57–87. doi: https://doi. org/10.1007/s12286-013-0157-6. Wang, Hongying. 2019. “The New Development Bank and the Asian Infrastructure Investment Bank: China’s Ambiguous Approach to Global Financial Governance.” Development and Change 50 (1):221–244. doi: https://doi. org/10.1111/dech.12473.

114 

A. MENDEZ AND M. TURZI

Warf, Barney. 2018. Global Corruption from a Geographic Perspective: Springer International Publishing. Xinhua. 2017a. Argentina spotlights value of joining China-led AIIB. China Daily. (23 June 2017). (Accessed 6 July 2019). www.chinadaily.com.cn/business/2017-06/23/content_29857258.htm Xinhua. 2017b. China, Argentina pledge to strengthen bilateral ties. Xinhuanet. (17 May 2017). http://www.xinhuanet.com//english/2017-05/17/ c_136292648.htm Xinhua. 2017c. Full text: Joint communique of leaders roundtable of Belt and Road forum. http://www.xinhuanet.com//english/2017-05/15/c_136286378.htm Xinhua. 2018. Interview: China’s further opening up “very good news” for the world: Uruguayan economist. Xinhua News Agency. (11 April 2018). (Accessed 5 July 2019). http://www.xinhuanet.com/english/2018-04/11/ c_137104154.htm Zhang, Yunbi. 2018. President Xi: Belt, Road needs Latin flavour. China Daily. (23 January 2018). (Accessed 12 June 2019). http://www.chinadaily.com. cn/a/201801/23/WS5a66766da3106e7dcc135d89.html

Appendices

Appendix 1: Full AIIB Members by Region—78 Members in Total (as at 28 February 2020) Member state Shares (in alphabetical (share order) votes)

Prospective acceptance date

Actual completion

Amount Length of completion (in million (in rounded months USD) & days)

Regional members (44 in total as of 1 February 2020) Afghanistan

866

23/03/2017 13/10/2017

86.6

Australiaa

36,912

29/06/2015 25/12/2015

3691.2

Azerbaijana

2541

29/06/2015 24/06/2016

254.1

Bahrain

1036

12/5/2017

103.6

Bangladesha

6605

29/06/2015 22/03/2016

660.5

Brunei Darussalama Cambodiaa

524

29/06/2015 25/12/2015

52.4

623

29/06/2015 17/05/2016

62.3

Chinaa Cyprus

297,804 29/06/2015 25/12/2015 29,780.4 200 12/5/2017 25/6/2018 20.0

24/8/2018

6.5 months (204 days) 6 months (179 days) 12 months (361 days) 15.5 months (469 days) 9 months (267 days) 6 months (179 days) 10.5 months (323 days) 6 months (179 days) 13.5 months (409 days) (continued)

© The Author(s) 2020 A. Mendez, M. Turzi, The Political Economy of China–Latin America Relations, https://doi.org/10.1007/978-3-030-33451-2

115

116 

APPENDICES

(continued) Member state Shares (in alphabetical (share order) votes)

Prospective acceptance date

Actual completion

Amount Length of completion (in million (in rounded months USD) & days)

Fiji

125

23/03/2017 12/12/2017

12.5

Georgiaa Hong Kong, China Indiaa

539 7651

29/06/2015 25/12/2015 23/03/2017 07/06/2017

53.9 765.1

83,673

29/06/2015 11/01/2016

8367.3

Indonesiaa

33,607

29/06/2015 14/01/2016

3360.7

Irana

15,808

29/06/2015 16/01/2017

1580.8

Israela

7499

29/06/2015 15/01/2016

749.9

Jordana Kazakhstana

1192 7293

29/06/2015 25/12/2015 29/06/2015 18/04/2016

119.2 729.3

Koreaa Kyrgyz Republica Lao PDRa

37,387 268

29/06/2015 25/12/2015 29/06/2015 11/04/2016

3738.7 26.8

430

29/06/2015 15/01/2016

43.0

Malaysiaa

1095

21/08/2015 27/03/2017

109.5

Maldivesa Mongoliaa Myanmara Nepala

72 411 2645 809

29/06/2015 29/06/2015 29/06/2015 29/06/2015

04/01/2016 25/12/2015 25/12/2015 13/01/2016

7.2 41.1 264.5 80.9

New Zealanda Omana

4615 2592

29/06/2015 25/12/2015 29/06/2015 21/06/2016

461.5 259.2

Pakistana Philippinesa

10,341 9791

29/06/2015 25/12/2015 31/12/2015 28/12/2016

1034.1 979.1

Qatara

6044

29/06/2015 24/06/2016

604.4

Russiaa Samoa

65,362 21

29/06/2015 28/12/2015 13/05/2017 06/03/2018

6536.2 2.1

Saudi Arabiaa

25,446

29/06/2015 19/02/2016

2544.6

Singaporea

2500

29/06/2015 25/12/2015

250.0

8.5 months (264 days) 6 months (179 days) 2.5 months (76 days) 6.5 months (196 days) 6.5 months (199 days) 18.5 months (567 days) 6.5 months (200 days) 6 months (179 days) 9.5 months (294 days) 6 months (179 days) 9.5 months (287 days) 6.5 months (200 days) 19 months (584 days) 6 months (189 days) 6 months (179 days) 6 months (179 days) 6.5 months (198 days) 6 months (179 days) 12 months (358 days) 6 months (179 days) 12 months (363 days) 12 months (361 days) 6 months (182 days) 10 months (297 days) 7.5 months (235 days) 6 months (179 days) (continued)

 APPENDICES 

117

(continued) Member state Shares (in alphabetical (share order) votes)

Prospective acceptance date

Actual completion

Amount Length of completion (in million (in rounded months USD) & days)

Sri Lankaa

2690

29/06/2015 22/06/2016

269.0

Tajikistan

309

29/06/2015 16/01/2016

30.9

Thailanda

14,275

29/09/2015 20/06/2016

1427.5

Timor-Leste Turkeya

160 26,099

23/03/2017 22/11/2017 29/06/2015 15/01/2016

16.0 2609.9

United Arab Emiratesa Uzbekistana

11,857

29/06/2015 15/01/2016

1185.7

2198

29/06/2015 30/11/2016

219.8

Vanuatu

5

19/12/2017 06/03/2018

0.5

Vietnama

6633

29/06/2015 11/04/2016

663.3

12 months (359 days) 6.5 months (201 days) 8.5 months (265 days) 8 months (244 days) 6.5 months (200 days) 6.5 months (200 days) 17 months (520 days) 2.5 months (74 days) 9.5 months (287 days)

Non-regional members from Europe (24 members in total as of 1 February 2020) Austriaa Belarus

5008 641

29/06/2015 25/12/2015 19/12/2017 17/01/2019

500.8 64.1

Belgium

2846

23/03/2017 10/07/2019

284.6

Denmarka Finlanda

3695 3103

27/10/2015 15/01/2016 29/06/2015 07/01/2016

369.5 310.3

Francea

33,756

29/06/2015 16/06/2016

3375.6

Germanya Greece

44,842 100

29/06/2015 25/12/2015 12/05/2017 20/08/2019

4484.2 10.0

Hungary

1000

23/03/2017 16/06/2017

100.0

Icelanda Ireland Italya

176 1313 25,718

29/06/2015 04/03/2016 23/03/2017 23/10/2017 29/06/2015 13/07/2016

17.6 131.3 2571.8

Luxembourga Maltaa Netherlandsa Norwaya Polanda

697 136 10,313 5506 8318

29/06/2015 29/06/2015 29/06/2015 29/06/2015 09/10/2015

69.7 13.6 1031.3 550.6 831.8

25/12/2015 07/01/2016 25/12/2015 25/12/2015 15/06/2016

6 months (179 days) 13 months (394 days) 27.5 months (840 days) 2 months (66 days) 12 months (368 days) 11.5 months (353 days) 6 months (179 days) 27 months (831 days) 2.5 months (85 days) 8 months (249 days) 7 months (214 days) 12.5 months (380 days) 6 months (179 days) 6 months (192 days) 6 months (179 days) 6 months (179 days) 8 months (250 days) (continued)

118 

APPENDICES

(continued) Member state Shares (in alphabetical (share order) votes)

Prospective acceptance date

Actual completion

Amount Length of completion (in million (in rounded months USD) & days)

Portugala

650

29/06/2015 08/02/2017

65.0

Romania

1530

12/05/2017 28/12/2018

Serbia

50

18/12/2018 15/08/2019

5.0

Spaina

17,615

29/06/2015 15/12/2017

1761.5

Swedena

6300

29/06/2015 23/06/2016

630.0

Switzerlanda United Kingdoma

7064 30,547

29/06/2015 25/04/2016 29/06/2015 25/12/2015

706.4 3054.7

153

19 months (590 days) 19 months (595 days) 7.5 months (241 days) 29.5 months (904 days) 11.5 months (360 days) 8 months (270 days) 6 months (179 days)

Non-regional members from Africa (8 members in total as of 28 February 2020) Egypta

6505

29/06/2015 04/08/2016

650.5

Ethiopia

458

23/03/2017 13/05/2017

45.8

Guinea

50

18/04/2019 12/07/2019

5.0

Madagascar

50

16/06/2017 25/06/2018

5.0

Sudan

590

23/03/2017 13/09/2018

59.0

Algeria

50

18/12/2018 27/12/2019

5.0

Ghana

50

18/12/2018 21/02/2020

5.0

Côte d’Ivoire

50

18/04/2019 26/02/2020

5.0

13 months (402 days) 1.5 months (43 days) 2.5 months (86 days) 12 months (374 days) 17.5 months (539 days) 12 months (379 days) 14 months (430 days) 10 months (315 days)

Non-regional members from North America (1 member in total as of 28 February 2020) Canada

9954

23/03/2017 19/03/2018

995.4

12 months (361 days)

Non-regional members from Latin America (LAC) (1 member in total as of 28 February 2020) Ecuador

50

19/12/2017 01/11/2018

Source: Authors’ own elaboration Founding member

a

5.0

22.5 months (693 days)

 APPENDICES 

119

Appendix 2: Prospective AIIB Members by Region—24 in Total (as of 28 February 2020) Member

Shares (share votes)

Prospective Completion acceptance date due

Amount (in million USD)

Length so far in rounded months and days as at 1 February 2020

Regional prospective members (6 in total in alphabetical order) Armenia

374

21/3/2017

31/12/2020c 37.4

Cook Islands Kuwaita

5

19/12/2017

31/12/2020c 0.5

5360

4/12/2015

31/12/2022d 536

Lebanon

1397

26/06/2018

31/12/2020c 139.7

01/05/2018

31/12/2020c 5

16/06/2017

31/12/2020c 1.2

Papua New 50 Guinea Tonga 12

34.3 months (1047 days) 25.5 months (774 days) 50 months (1520 days) 19 months (585 days) 21 months (641 days) 31.5 months (960 days)

European prospective members (1 in total) Croatia

50

30/12/2019

31/12/2020

1.1 month (33 days)

Latin America and the Caribbean prospective members (7 in total in alphabetical order) Argentina

50

16/06/2017

31/12/2020c 5

Bolivia

261

12/05/2017

31/12/2020c 26.1

Brazila

50

29/06/2015

Chile

100

12/05/2017

31/12/2022d 5 (orig. 3.1bn) 31/12/2020c 10

Peru

1546

21/03/2017

31/12/2020c 154.6

Uruguay

50

18/04/2019

31/12/2020b 5

Venezuela

2090

21/03/2017

31/12/2020c 209

31.5 months (960 days) 32.7 months (995 days) 55 months (1678 days) 32.7 months (995 days) 34.3 months (1047 days) 9.5 months (289 days) 34.3 months (1047 days)

African prospective members (10 in total in alphabetical order) Benin

50

13/07/2019

31/12/2020b 5

6.6 months (203 days) (continued)

(continued) Member

Shares (share votes)

Prospective Completion acceptance date due

Amount (in million USD)

Djibouti

50

13/07/2019

31/12/2020b 5

Kenya

50

01/05/2018

31/12/2020c 5

Libya

526

18/12/2018

31/12/2020b 52.6

Morocco

50

18/12/2018

31/12/2020b 5

Rwanda

50

13/07/2019

31/12/2020b 5

Senegal South Africaa Togo

50 5905

03/12/2015

31/12/2022d 590.5

50

18/12/2018

31/12/2020b 5

Tunisia

50

18/04/2019

31/12/2020b 5

Length so far in rounded months and days as at 1 February 2020 6.6 months (203 days) 21 months (641 days)3.5 13.5 months (410 days) 13.5 months (410 days) 6.6 months (203 days) 50 months (1519 days) 13.5 months (410 days) 9.5 months (289 days)

Source: Authors’ own elaboration Founding member Missed deadline once c Missed deadline twice d Missed deadline four times already a

b

Appendix 3: Key Interviews/Personal Communications with the Authors Interviewee/Key actor Title/Department/ (in chronological order) Organisation

Place/Date

Chile: DIRECON (Juan Bonilla Ibañez)

Written Communication via Chile’s Embassy in London: 8 February 2018.

Brazil: Unnamed Interviewee Peru: Ministerio de Relaciones Exteriores de Perú (RREE)

General Directorate of International Economic Affairs (DIRECON) Ministerio de Relaciones Exteriores de Chile Brazilian Diplomat

Undisclosed Location: 28 March 2018. Dirección General de Asia y Written Communication via Peru’s Oceanía Embassy in London “MRE_ Ministerio de Relaciones DAO_As1”: 15 February 2018. Exteriores de Perú (continued)

(continued) Interviewee/Key actor Title/Department/ (in chronological order) Organisation

Place/Date

Bolivia: Unnamed Interviewee

Undisclosed Location: 13 April 2018.

Bolivian Policy Maker at the Ministry of Development Planning (MPD) Argentina: Ministry of Subsecretaría de Relaciones Treasurya (Martín Félix Financieras Internacionales Soto) Secretaría de Hacienda, Ministerio de Hacienda República Argentina Ecuador: Unnamed Former Ecuadorian Interviewee Diplomat Chile: Unnamed Chilean Diplomat Interviewee Uruguay: Unnamed Uruguayan Diplomat Interviewee

Written Communication via Argentina’s Embassy in London: 16 March 2018.

Shanghai, China: 25 September 2018. Undisclosed location: 27 November 2018. Undisclosed location: 21 June 2019.

Ministry of Public Finance at the time of the communication in March 2018

a

Appendix 4: LAC Countries Which Have Endorsed the BRI as of 1 February 2020 Country/Date

Date

Instrument/Outcome

Panama Trinidad & Tobago Antigua & Barbuda Bolivia Dominica Guyana Uruguay Costa Rica Venezuela Grenada Suriname El Salvador Chile Dominican Republic Cuba Ecuador Barbados Jamaica Peru

17 November 2017 15 May 2018 6 June 2018 19 June 2018 13 July 2018 27 July 2018 20 August 2018 3 September 2018 14 September 2018 21 September 2018 23 September 2018 01 November 2018 02 November 2018 02 November 2018 09 November 2018 14 December 2018 26 February 2019 15 April 2019 26 April 2019

MoU (MIRE 2017) MoU (BRI Portal 2018b) MoU (BRI Portal 2018a) MoU (ICTSD 2018) MoU (ZBZSX 2018) MoU (DPI-Guyana 2018) MoU (MRREE 2018) MoU (RREE 2018) MoU (Arana 2018) MoU (Xinhua 2018a) MoU (Xinhua 2018b) MoU (Cao 2018) MoU (MINREL 2018) MoU (CeiRD 2018) MoU (Arce 2019) MoU (MIREMH 2018) MoU (BRI Portal 2019a) MoU (BRI Portal 2019b) MoU (Véliz 2019)

Source: Authors own table from various sources included in the table (see full references below)

122 

APPENDICES

References for Appendix 4 Arana, Ismael. 2018. China sostiene a Nicolas Maduro. El Mundo. (15 September 2018). (Accessed October 10, 2018). https://global-factiva-com.gate3. library.lse.ac.uk/redir/default.aspx?P=sa&an=MUNDO00020180915ee9f00 012&cat=a&ep=ASE Arce, Maria Josefina. 2019. Valora positivamente Cuba la iniciativa china de la Franja y Ruta de la Seda. Radio Habana Cuba. (27 April 2019). (Accessed 7 July 2019). http://www.radiohc.cu/especiales/comentarios/189362-valorapositivamente-cuba-la-iniciativa-china-de-la-franja-y-ruta-de-la-seda BRI Portal. 2018a. “China, Antigua and Barbuda sign MOU to co-construct Belt and Road.” news release, 6 June 2018, https://eng.yidaiyilu.gov.cn/qwyw/ rdxw/57191.htm BRI Portal. 2018b. “China, Trinidad and Tobago sign MOU on cooperation within the framework of B&R Initiative.” news release, 15 May 2018, https:// eng.yidaiyilu.gov.cn/qwyw/rdxw/55332.htm BRI Portal. 2019a. “China, Barbados signed MOU on jointly building the Belt and Road cooperation.” news release, 26 February 2019, https://eng.yidaiyilu.gov.cn/qwyw/rdxw/80608.htm BRI Portal. 2019b. “China, Jamaica signed MoU on Belt and Road cooperation.” news release, 15 April 2019, https://eng.yidaiyilu.gov.cn/qwyw/rdxw/ 85836.htm Cao, Descheng. 2018. Agreements help deepen cooperation with El Salvador. China Daily. (2 November). (Accessed January 8, 2019). http://www.chinadaily.com.cn/a/201811/02/WS5bdb941ca310eff30328610c.html CeiRD. 2018. “Blog: RD y China: La historia entre dos Naciones.” 2 November 2018. https://www.ceird.gob.do/wp/rd-y-china-la-historia-entre-dos-naciones/ DPI-Guyana. 2018. “Guyana signs onto China’s ‘Road and Belt’ initiative.” news release: Department of Public Information of Guyana, 27 July 2018, http:// dpi.gov.gy/guyana-signs-onto-chinas-road-and-belt-initiative/ ICTSD. 2018. Bolivia suma acuerdos con China y Rusia. Puentes: Análisis e Información sobre Comercio y Desarrollo Sostenible para América Latina. (22  June 2018). (Accessed 7 July 2019). https://www.ictsd.org/bridgesnews/puentes/news/bolivia-suma-acuerdos-con-china-y-rusia MINREL. 2018. “Canciller Ampuero firma acuerdo de Cooperación entre Chile y China de la iniciativa de la Franja y la Ruta.” news release: Ministerio de Relaciones Exteriores: Gobierno de Chile, 2 November 2018, https://minrel. gob.cl/canciller-ampuero-firma-acuerdo-de-cooperacion-entre-chile-y-chinade-la/minrel/2018-11-02/113923.html MIRE. 2017. Memorando de entendimiento entre el gobierno de la república de panamá y el gobierno de la república popular China sobre la cooperación en el marco de la franja económica de la ruta de la seda y la ruta marítima de la seda

 APPENDICES 

123

del siglo xxi. Acuerdos panamá-China. (17 Noviembre 2017). (Accessed 20 February 2019). https://mire.gob.pa/images/PDF/documentos%20y%20 formularios/Acuerdoschina/RUTA%20DE%20LA%20SEDA.pdf MIREMH. 2018. “Ecuador se adhiere a la iniciativa china de la Franja y la Ruta como resultado de la visión “pragmática” del gobierno.” news release: Ministerio de Relaciones Exteriores y Movilidad Humana: Gobierno de la Repúplica del Ecuador, 14 December 2018, https://www.cancilleria.gob.ec/ ecuador-se-adhiere-a-la-iniciativa-china-de-la-franja-y-la-ruta-como-resultadode-la-vision-pragmatica-del-gobierno/ MRREE. 2018. “Uruguay adhiere a la iniciativa Una Franja, Una Ruta (OBOR).” news release: Ministerio de Relaciones Exteriores de Uruguay, 20 August 2018, http://www.mrree.gub.uy RREE. 2018. “Costa Rica firma con China iniciativa de la Franja y la Ruta.” news release: Ministerio de Relaciones Exteriores y Culto: República de Costa Rica, 3 September 2018, https://www.rree.go.cr/?sec=servicios&cat=prensa&cont =593&id=4180 Véliz, Víctor. 2019. El Perú implementará iniciativa La Franja y la Ruta. El Peruano. (26 April 2019). (Accessed 22 June 2019). https://www.elperuano. pe/noticia-el-peru-implementara-iniciativa-franja-y-ruta-77,947.aspx Xinhua. 2018a. China, Grenada signs MOU to cooperate on B&R construction. Xinhua News Agency. (21 September 2018). (Accessed 12 July 2019). http:// en.silkroad.news.cn/2018/0921/112140.shtml Xinhua. 2018b. China, Suriname vow to deepen cooperation under BRI framework. Xinhua’s China Economic Service. (25 September 2018). (Accessed January 12, 2019). https://global-factiva-com.gate3.library.lse.ac.uk/redir/ default.aspx?P=sa&an=XNHA000020180925ee9p00231&cat=a&ep=ASE ZBZSX. 2018. “China and Dominica sign a memorandum of understanding on the “Belt and Road”.” news release: Xiamen Xingyuheng Metal Co., Ltd., 13 July 2018, http://www.zbzsx.com/new/new-67-882.html

124 

Appendices

Appendix 5: Diplomatic ties Between the PRC and LAC (1960–2019) Country

Country’s leader

China’s leader

Date established

Cuba Chile Peru Mexico Argentina Guyana Jamaica Trinidad and Tobago Venezuela Brazil Suriname Barbados Ecuador Colombia Antigua and Barbuda Bolivia Grenada Uruguay Bahamas Dominica Costa Rica Panama Dominican Republic El Salvador

Fidel Castro Salvador Allende Juan Velasco Luis Echeverría Alejandro Agustín-Lanusse Linden Forbes Burnham Michael Manley Eric Eustace Williams Carlos Andrés Pérez Ernesto Geisel Johan Ferrier Jon Michael Geoffrey Jaime Roldós Aguilera Julio César Turbay Ayala Vere Bird Hernán Siles Zuazo Herbert Blaize Julio María Sanguinetti Hubert Ingraham Roosevelt Skerrit Óscar Arias Juan Carlos Varela Danilo Medina Salvador Sánchez Cerén

Mao Zedong Mao Zedong Mao Zedong Mao Zedong Mao Zedong Mao Zedong Mao Zedong Mao Zedong Mao Zedong Mao Zedong Mao Zedong Hua Guofeng Hua Guofeng Hua Guofeng Hu Yaobang Hu Yaobang Hu Yaobang Zhao Ziyang Jiang Zemin Hu Jintao Hu Jintao Xi Jinping Xi Jinping Xi Jinping

28 September 1960 15 December 1970 02 November 1971 14 February 1972 19 February 1972 27 June 1972 21 November 1972 20 June 1974 28 June 1974 15 August 1974 28 May 1976 30 May 1977 02 January 1980 07 February 1980 01 January 1983 09 July 1985 01 October 1985a 03 February 1988 23 May 1997 23 March 2004 01 June 2007 12 June 2017 01 May 2018 21 August 2018

Source: Authors’ table from multiple sources a Grenada first established diplomatic relations with the PRC on 1 October 1985, but because Grenada also reached out to Taiwan in 1989, the PRC severed relations with it on 7 August 1989. Both sides resumed relations much later, on 20 January 2005 (see: Fornes and Mendez 2018)

Index

A Agency, 1–5, 19, 28, 29, 31–35, 39–42, 58, 60, 62, 63, 69, 73, 81–85 Argentina, 3, 5, 11, 14, 18, 35, 57, 70, 72, 74–77, 79, 81, 82, 84, 93, 97, 102, 105, 106 Asian Infrastructure Investment Bank (AIIB), 2–18, 27–43, 54, 56, 58, 62, 63, 69, 71–82, 84, 85, 92–107 B Beijing, 34, 42, 43 Belt and Road Intiative (BRI), 72, 73, 79–81, 83, 93, 95, 96, 98–100, 102, 104–106 Bolivia, 5, 11, 14, 17, 35, 56–58, 61, 72, 76, 81, 82, 84, 98, 99, 106 Brazil, 3, 5, 8, 11, 14, 15, 35, 57, 61, 92, 93, 97, 104, 106 Bretton Woods, 3, 4, 52, 59–63

C CELAC, 3, 43 Central American Common Market (CACM), 57 Chile, 3, 5, 11, 14, 17, 35, 43, 56–59, 70–72, 75–77, 81, 82, 84, 85, 97–101, 105, 106 China, 34, 43, 69–76, 78–85 Colombia, 71, 76, 77, 82 Constructivism, 28–36 Creative agency, 33–34 D Drago, Luis María, 53 E Ecuador, 2, 4, 5, 11–14, 56, 57, 61, 72, 79, 81, 82, 84 El Salvador, 57

© The Author(s) 2020 A. Mendez, M. Turzi, The Political Economy of China–Latin America Relations, https://doi.org/10.1007/978-3-030-33451-2

125

126 

INDEX

F Fantasy Agency, 38–40, 42 G Gondra Treaty, 58 Guatemala, 57, 59, 60 H Honduras, 57 I IBRD, 62, 63 Ideas, 28–32, 35 Identity, 29, 31, 32, 39 Incomplete agency, see Véase Fantasy Agency Infrastructure, 72, 76–81, 83, 84 Institution of Mañana, 4, 37–39, 42 Inter-American Treaty of Reciprocal Assistance, 59 International Monetary Fund (IMF), 70, 74 L Latin America, 1, 4–6, 10, 19, 28, 30–38, 40–43, 51–63, 69–84 Latin America and Caribbean (LAC), 1–5, 14–18, 27–43, 52, 56, 58, 59, 63, 78, 92–94, 97–99, 102, 104–106 See also Latin America Latin America Free Trade Association (LAFTA), 57

M Mexico, 42, 56, 57, 60–63, 70, 73, 74, 76, 77, 79, 82 Multilateral Development Bank (MDB), 63 N Non-intervention, 51, 53–54 O One Belt One Road (OBOR), 6 Organization of American States (OAS), 54, 55 P Paraguay, 57, 58, 61, 71, 76, 84 Personalism, 41–42 Peru, 5, 11, 14, 16, 38, 56, 57, 61, 71, 72, 76, 77, 81, 82, 85, 93–95, 97, 98, 106 Political economy, 76, 84, 85 Prospective members, 8, 11, 72, 75, 79, 81 U United Nations, 53 United States, 73–75, 80, 83 Uruguay, 5, 11, 14, 18, 37, 71, 72, 76, 81, 82, 84, 97, 98, 103–106 V Venezuela, 5, 11, 14, 16, 56, 57, 71, 72, 79–81, 84, 95–98, 106 X Xi Jinping, 6, 7, 12, 13, 72, 82