The resumption of diplomatic relations between Costa Rica and China in 2007 was an important step in the relations of the Asian power with the region. All the countries of Central America had relations with Taiwan and this episode was part of the diplomatic battle between Beijing and Taipei. However, the event did not provoke angry reactions from the United States, which has been attached to Beijing for decades.
A new context
Since then, the international context has changed, despite the close interconnection of their economies, relations between the two nations have deteriorated and there is agreement in the American political class on the Chinese “threat”, both in the commercial and military.
China’s engagement with the world is varied and differs across regions, resources, and opportunities. As Evan Ellis points out: “In general (…) China looks to Latin America and the Caribbean (…) secure sources of raw materials and food, reliable access to markets for its goods and services (…) strategic technologies (…) ”.
In Central America, Beijing fought the diplomatic battle for Taiwan, but its main interest is geoeconomic. The geography gives the Isthmus economic value, in addition to its strategic military value due to its proximity to the United States.
Backyard, access to the Gulf of Mexico, soft underbelly, as Reagan called the area. A platform for communications and transport, geography makes it a maritime, air and rail platform, a bridge between two large oceans, between the south and the north of the continent. Ports, airports, multimodal platforms and road construction, important for the hegemonic power, but also for the growing Asian power.
Central America is not as attractive as Chilean copper, Venezuelan oil, or Peruvian iron, but it is an important Chinese gateway for trade with the east coast of the United States.
American reactions
As the global rivalry between the two powers has intensified, the consequences of the relationship with Beijing are changing. When Costa Rica established relations with China, there was no reaction from Washington, but the establishment of relations with Panama, the Dominican Republic and El Salvador prompted a call for consultations by American diplomats in the three countries.
In January 2020, Secretary of State Pompeo warned Costa Rica against the Chinese promises they often make: “only debt, dependence and even the erosion of the sovereignty of certain nations”. Recently, during a visit to El Salvador, Biden’s special envoy expressed concern over the Bukele government’s approach to China, confirming the concern of the American political class over the Chinese presence in its immediate vicinity. .
In addition to the concerns on the banks of the Potomac, it is necessary to underline the increase in activity in China, while recalling that Honduras, Nicaragua and Guatemala do not maintain diplomatic relations with it, despite the commercial activities of the companies. Chinese in Honduras and Guatemala. .
Panama
The Chinese presence had been maintained since before the establishment of diplomatic relations. A Chinese company based in Hong Kong (Hutchinson-Whampoa) was involved in the transit of containers. When President Varela approached Beijing, relations developed rapidly. Panama joined the Chinese Belt and Road Initiative and Xi Jinping visited Panama (2018). Commercially, the ratio has been multiplied by 22.
Talks for a free trade agreement have not progressed and Chinese investment projects are suffering from stagnation. Chinese companies involved in copper in Panama have pulled out. The construction of a new container port is incomplete and the investments in electricity have not yet been completed. The plans for water management and the construction of a fourth lock did not crystallize. And projects involving China have not advanced under the new Cortizo administration.
However, other activities continue. Chinese companies are building a fourth bridge over the canal. The renewal of the contract with Hutchinson for port operations came despite criticism. A new convention center funded and built by China has been completed. Huawei and ZTE provide telephone equipment and cameras for surveillance.
The Confucius Institute operates at the University of Panama and more than 200 Panamanian students have received scholarships to study in China.
The Cortizo government (2019) relaxed its relations with China due to warnings from the United States. During a visit to Panama in October 2018, Pompeo warned President Varela of the dangers of China. However, it is not possible to envisage a decline in relations and a new recognition of Taiwan. China will continue to trade and invest in Panama.
Costa Rica
As part of his policy of expanding the diplomatic border, President Oscar Arias has established relations with Beijing. These relations have been cordial; however, the last two administrations have cooled them off, heeding American warnings. During a visit to Pompeo (2020), the ambassador criticized road construction projects carried out by Chinese companies.
The outcome of the relationship has been positive for both countries and follows the model of Chinese relations with the developing world, Chinese gifts and the opening of local markets to Chinese products.
China began the relationship by buying Costa Rica’s debt, offering a stadium, and signing a free trade agreement. This was followed by visits from Presidents Hu Jintao and Xi Jinping, the donation of the building for the National Police Academy and light aircraft. Today, China continues to open up to pineapple and beef exports. The purchase of Chinese trains is a recent development. Exports to China (2020) represent 2% and imports 14%.
The modernization of Route 32 to the Caribbean was delayed due to design errors and expropriation issues. The idea of creating special economic zones did not move forward, as did the state oil refinery renovation project, which sank into a sea of corruption allegations.
The Confucius Institute is actively functioning, hosted by the University of Costa Rica.
On the diplomatic front, the current administration, plagued by internal problems, has not strengthened ties with Beijing, the president has not visited China and no high-level Chinese visit has been received.
Relations will remain unchanged, Costa Rica is valuable to the Chinese, and trade can be increased despite logistical difficulties. Infrastructure and technology projects can worry the North, so the country will need to find a balance.
Bukele tours
Faced with criticism from Washington for his authoritarian protests (the impeachment of constitutional judges and the attorney general) and the publication of a list of corrupt politicians, the Salvadoran president strengthened his relations with China and refused to receive the envoy of President Biden. He then entered vaccine diplomacy by thanking President Xi for his good offices by purchasing 500,000 vaccines.
Its opponents denounced Chinese “interference”, leading the Chinese embassy to point out that their aid lacks geopolitical considerations and that they have never used foreign aid to interfere in the internal affairs of others. country.
The day after the list was published by the US government, the Bukelist majority in parliament hastily ratified a cooperation agreement signed in 2019 by the previous government. The deal includes $ 500 million of mega-projects funded and executed by China, such as a national stadium, a national library, a water treatment plant on Lake Ilopango, infrastructure for a tourist town, catering. of an archaeological site and the renovation and expansion of the port of La Libertad.
Salvadoran exports reached $ 85.5 million after recognition, but fell to $ 51.9 million in 2019, while Chinese imports reached $ 1,723 million that year.
Culturally, the creation of the Confucius Institute at the University of El Salvador stands out.
Conclusion
China has increased its presence in the region and the United States has increased its warnings to these countries. The Isthmian scenario will be one of competition rather than confrontation, but the United States will continue to practice the 19th century version of the Monroe Doctrine, rejecting extracontinental insertions in its area of influence.
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