Political Risk Latin America Blog @PolRiskLatam

Colombia: A Chinese alternative to the Panama Canal? Part 2

Posted in News and Articles, Political Risk by politicalrisklatam on February 21, 2011

by Anthony Harrington for Qfinance, February 21st, 2011.

Perhaps as little as five years ago the Chinese were gathering an unenviable reputation for themselves as neo-colonialists, charging around Africa buying everything that wasn’t nailed down or state owned, with, so it is said, palpably little regard for the fate or prospects of the locals. That was not exactly a sustainable way of doing business and the penny seems to have dropped in Beijing, which appears to be approaching the task of building relations with Latin America from a rather more mature and thoughtful perspective.

With its massive foreign reserves and a pressing need to diversify against the possibility that, despite his protestations, Bernanke really is about monetizing the gigantic US debt, China appears to have grasped the fact that it can afford to be a good deal longer term in its thinking. The game need not be about grabbing strategic resources with both hands and hang the locals. Beijing can, in fact, afford to play a far more sophisticated hand.

A classic case in point is China’s offer to Colombia to build a land-based alternative to the Panama Canal. As Colombia’s President Juan Manuel Santos told the Financial Times, the idea is being very seriously put forward by China, with delegation after delegation turning up in the Colombian capital to brief the President and his advisors on the scale, scope and likely costs of the project. Santos played a fairly cagey hand in the interview, saying that he “did not want to create exaggerated expectations” concerning the project”, but he added that the Chinese had manifestly done their homework. “The studies that they’ve made on the costs of transporting per tonne, the cost of investment, it all works out,” he said.

For China, the project would be a huge coup. It would give them fantastic access to Latin America, from the Pacific to the Caribbean. Part of the plan, according to the FT, involves building a new city, from scratch, south of the existing Colombian city of Cartagena, on the Caribbean coast, which would act as the hub for exporting throughout South and Central America. Moreover the Chinese are not simply contemplating a coast to coast railway, but an entire rail network through the region. (continue reading… )

 

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