The battery of economic sanctions implemented in recent years against Russia and China by the EU and the US is not just another weapon in the framework of a new Cold War. Rather, it expresses the crisis of the neoliberal model of globalization, which questions not only its economic and institutional bases, but also the foundations that give legitimacy to the system. That is, the relationship between the notions of democracy, society and the market, which has clear consequences when reflecting on development strategies in Latin America.
Trends that condition the development of the region
The war in Ukraine has had various kinds of consequences for Latin America. If the rise in the price of hydrocarbons has benefited producing countries and has allowed other countries to gain a share of the global market for their agricultural products, it has also caused strong inflationary tensions. For some analysts The scarcity of raw materials that could hit the West is an opportunity for this region, rich in essential resources for the technological revolution (nickel, lithium, copper, phosphates, etc.).
However, beyond the situation of the conflict, the sanctions have exacerbated global trends that have been observed for some years and have a strong impact on development strategies in the region. We can highlight three:
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Stark Imperialism: The invasion of Ukraine finished destroying the liberal fiction that the great powers could not exercise their power at their discretion over other weaker countries. In reality, this was never the case, but the big difference is that in this crisis the great powers have no qualms about using their power against any other country based on their own interests.
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Geopoliticized economy: The Russian invasion has meant an ideological failure of liberal theory, which assumes trade as international relations peacemaker while protectionist policies are imposed, trade wars are launched and economic interdependence is condemned as a weakness. This is clearly reflected in industrial relocation strategy promoted by the US to face dependence on China.
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Strategic revaluation of raw materials: The war has accentuated the economic and geopolitical importance of raw materials (agriculture, mining and energy), which are increasingly appreciated, not only in commercial terms but also as an essential part of the “strategic autonomy” of each country.
These three tendencies are essential to design development strategies in Latin America.
For example, the exploitation of lithium in Argentina, Bolivia, Chile and Peru is facing explicit pressure from the great powers as part of a global dispute over Who will keep those raw materials?.
On the other hand, the war has shown the fragility of the agricultural fertilizer industry, This forces us to rethink the agrarian model of various countries in the region to make it more resilient to international uncertainties.
green latin america
Within this framework, it stands out that the green transformation that developed countries are committed to could benefit Latin America as a recipient of investment. This reopens an already classic debate in the region regarding the need to:
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Modernize production and energy models.
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Improve physical and digital infrastructures.
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Form specialized human capital.
Discussions on wealth distribution and environmental protection are also pending. A paradigmatic case of this challenge is currently taking place in Chile with the production of green hydrogen.
poles of power
These analyzes continue to work under a logic imperial, by assuming that the region must maintain an integration subordinated to the demands of one of the large blocs that would be forming. For this reason, it is considered that all these processes are strongly conditioned by how the environment evolves. confrontation between China and the USA.
For example, if a greater interdependence between Russia and China finally materializes, the importance of the Chinese market for many Latin American exports could be weakened and the US and the EU would be revalued as main markets.
From this point of view, Latin American economic development continues to be assumed as a variable dependent on the geopolitical needs of a foreign power.
This article is a summary of the GETEM letter (Study Group on the Transformations of the World Economy) number 42, February 2023, “International economic wars and sanctions: Notes for the development of Latin America in the framework of the crisis of neoliberal globalization”.
Jose Sebastian Monsalve EganaResearcher, member of the research group “Study of the Transformations of the World Economy” (GETEM) of the Autonomous University of Madrid (UAM)., Arturo Prat University
This article was originally published on The Conversation. read the original.
