Peru: Caught between decades of Chinese investment and renewed US regional interest
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Howard LaFranchi Staff writer
| Lima, Peru
When Peru鈥檚 then-President Jos茅 Jer铆 came under fire earlier this year for meeting secretly with Chinese businessmen at a Chinese-Peruvian chifa restaurant in Lima, the new U.S. ambassador offered what he thought was a clever response.
Bernie Navarro invited Mr. Jer铆 to his residence for hamburgers. He then posted a photo on social media under the caption, 鈥淐hanging the menu.鈥�
Peru鈥檚 Congress subsequently removed Mr. Jer铆 from office over cascading corruption charges. Although less than three months later he is all but forgotten, many Peruvians haven鈥檛 let go of the American ambassador鈥檚 鈥渉amburger diplomacy.鈥�
Why We Wrote This
The United States says Peru could lose its 鈥渟overeignty鈥� to China if it continues to work with it as an investment partner. But, throughout its history, Peru has looked west to China as much as it has looked north to the U.S.
The invitation not only seemed to equate Peru's unique fusion cuisine with Chinese food. It came on the heels of a warning from the U.S. ambassador that Peru was at risk of 鈥渓osing its sovereignty鈥� to China. And in that context, it was interpreted as something of a declaration of intent: Latin America should thwart China鈥檚 rising influence in the region with a return to Uncle Sam. This was reinforced by President Donald Trump鈥檚 new National Security Strategy, declaring the region under the U.S.鈥檚 sphere of influence.
The problem with such an edict is that it fails to recognize how Peru and much of Latin America have evolved from the days of U.S. domination, says Jorge Del Solar, a Lima entrepreneur with companies that make metal containers and paper products. And, as Peru prepares to elect its next president in a June runoff, choosing between two candidates likely on far ends of the ideological spectrum, pressure from the U.S. on Peru to choose one superpower over the other is raising the stakes of the race.聽聽
鈥淲e would be happy to see the United States renew its interest in us and especially to receive new U.S. private investment,鈥� Mr. Del Solar says. 鈥淏ut the day is past for them to tell us that dealing with China is a danger.鈥�
Two historic relationships
In January, the U.S. labeled Peru a 鈥淢ajor Non-NATO Ally,鈥� a designation that aims to enhance military, security, and economic cooperation. That, combined with a flurry of initiatives 鈥� from plans for a new naval base in the Pacific port city of Callao to pressure on the government to purchase new F-16s from Washington 鈥� points to the implementation of the U.S.鈥檚 National Security Strategy.
Widely dubbed the 鈥淒onroe Doctrine,鈥� it aims to renew U.S. strategic dominance in the Western Hemisphere and reduce China鈥檚 presence and influence, from the Arctic to Tierra del Fuego.
When it comes to Peru, U.S. priorities extend beyond blunting China鈥檚 influence to addressing the country鈥檚 chronic political instability 鈥� currently on full display in a tumultuous presidential election process that will extend to a June 7 runoff. The frontrunner, conservative Keiko Fujimori, is the daughter of former President Alberto Fujimori, who became an early example of the populist authoritarian leader. She is expected to face off against the radical left-wing candidate Roberto S谩nchez Palomino, who has promised a partial nationalization of natural resources and dramatic state spending.聽
The expected faceoff could put Peru鈥檚 鈥渇amous macroeconomic stability at risk,鈥� according to former finance minister Luis Miguel Castilla. U.S. officials already worry the country鈥檚 weak institutions, including law enforcement, provide fertile ground for drug-trafficking gangs and other illicit activities like illegal mining. They鈥檝e made clear the U.S. is the best partner to help address these challenges.
But this zero-sum perspective fails to recognize Peru鈥檚 long and deep ties to China, experts say.
鈥淭here鈥檚 no question we have a different geopolitical view when it comes to China鈥� compared with Washington, says Diego Garc铆a-Say谩n, a former Peruvian foreign minister. In 1873, Peru became the first South American country to establish diplomatic relations with China. Today, China is Peru鈥檚 top trade partner, 鈥渁nd we have an established Chinese community that is part of who we are as Peruvians,鈥� he says.
Throughout its history, Peru has looked west to China as much as it has looked north to the United States, says Mr. Garc铆a-Say谩n. And although Peruvians value relations with both big powers 鈥� they don鈥檛 accept 鈥渓essons鈥� on how to conduct those relations from either one.
鈥淚t no longer works these days to command from the top,鈥� he says of the current U.S. diplomatic approach.
A central feature of Washington鈥檚 concern over China鈥檚 influence in Peru is a Chinese-owned megaport 60 miles north of Lima at Chancay. U.S. officials say the deep-water port 鈥� the reason for Ambassador Navarro鈥檚 鈥渓ost sovereignty鈥� comment 鈥� could someday be transformed into a dual-use facility serving the Chinese navy.
鈥淯sed for military operations 鈥� against whom?鈥� Mr. Garc铆a-Say谩n asks. 鈥淭his kind of argument makes no sense to us.鈥�
The port at Chancay has become something of a point of pride for many Peruvians who see it as a boon to regional development.
鈥淐hancay is rather quickly becoming a hub for all of South America, with about half of the commerce passing through the port destined for other countries,鈥� says Cynthia Sanborn, director of the Center for China and Asia-Pacific Studies聽at Universidad del Pac铆fico in Lima.
鈥淭he fact that it鈥檚 a Chinese operator of the port doesn鈥檛 of itself mean the country is ceding its sovereignty,鈥� says Zenel Garcia, associate professor of security studies at the U.S. Army War College in Carlisle, Pennsylvania. 鈥淵ou have to look at the agreements governing the port鈥檚 operations and the degree of control the host country鈥檚 institutions hold in those operations,鈥� he says. 鈥淧eru is holding its own.鈥�
Economy vs. security?
Some experts wonder if something of a two-track relationship may be developing: one economic and development-focused, primarily with China, and the other military and security-centered, primarily with the U.S.
鈥淭he challenge for a country like Peru will be to manage this diversification of relations with the major powers from the perspective of national interest, and without aligning with or alienating either power,鈥� says Manuel Rodr铆guez Cuadros, a former Peruvian foreign minister.
Bruno De Ferrari, the president of a Lima metal-container manufacturing company, says he would love to see more U.S. investment in Peru 鈥� but will be strategic by working with China in the meantime.
鈥淭rump says he wants the U.S. to play a big role in South America,鈥� he says, showcasing a variety of the metal containers his company manufactures with mostly Chinese steel. 鈥淭hey just have to understand that in their absence things have changed.鈥�
A聽staunch business conservative, Mr. De Ferrari says he agrees with the U.S. ambassador that the port at Chancay could someday pose a risk to Peru鈥檚 sovereignty. 鈥淏ig ports are like embassies,鈥� he says. 鈥淭hey鈥檙e a little piece of the country that owns them.鈥�
He foresees China maintaining its strong economic presence in Peru, one way or another.
And until the U.S. can concretely show Peruvians that it has the same level of interest in doing business here, Mr. De Ferrari says, little will change.
