April 16, 2009

China makes Latin American inroads

China is using its checkbook to gain influence in Latin America, a former U.S. Commerce Department official said.

This is how the balance of power shifts quietly during times of crisis, David Rothkopf said in a report Thursday in The New York Times. Loans are an example of the checkbook power in the world moving to new places.

China is negotiating deals that include a $12 billion development fund in Venezuela and a loan of $1 billion to Ecuador for a hydroelectric plant, The New York Times said.

Another deal offers Argentina more than $10 billion in Chinese currency. Brazil's national oil company has been negotiating with China for a $10 billion loan.

Meanwhile, U.S. influence in the region appears diminished.

In comparison to China's efforts, the Inter-American Development Bank, where the United States has considerable influence, lent $6 billion last year. It also lost $1 billion in 2008.

Economist Dante Sica at consulting firm Abeceb in Buenos Aires, said the Chinese found the door open in Latin America because of a lack of attention that the United States showed to Latin America during the entire Bush administration.