“We are seeing a surreptitious clash, a war that no one dares name, between China and the United States for Peru’s soul.”
These are the words (translated from their original Spanish to English by yours truly) of the renowned Mexican geopolitical analyst Alfredo Jalife-Rahme. Jalife-Rahme is a professor, writer, columnist and political analyst of Lebanese descent who specializes in international relations, economics, geopolitics, and globalization. His last two weekly video lectures (in Spanish) have dealt with the wide-ranging causes and potential consequences of Peru’s latest political crisis.
That crisis has already resulted in the impeachment and imprisonment of the democratically elected President Pedro Castillo, and has cost the lives of 27 protesters. After decades of stumbling from crisis to crisis, scandal to scandal and president to president, Peru is locked in an escalating struggle between the oligarchs and privileged classes who are determined to hold onto power at any cost and its legions of poor, voiceless and marginalized, for whom Castillo represented the possibility of something different.
Alas, it was not to be. A complete outsider in Lima, the former rural teacher was outmanoeuvred at every turn by the rabid right-wing opposition to his government in Congress. But according to Jalife, Peru is also a proxy for a much larger struggle between the world’s two geopolitical rivals, the US and China, for the control of vital strategic resources in Latin America.
The “Most Chinese Country” in Latin America
For the moment, this “war” of which Jalife speaks is rather one-sided, given that China, unlike the US, does not tend to meddle in internal politics in the region, or at least hasn’t until now. As Alexander Moldovan, a researcher on social movements and security in Latin America at York University, told Turkish state broadcaster TRT, China’s approach generally respects national sovereignty (as long as you’re not Tibetan or Taiwanese), and as such is popular among both right-wing populists and left-wing leaders alike. Instead, it lets the money do the talking.
China is already Peru’s largest trading partner on both the exports and imports side. A whopping 32% of Peru’s exports go to China, compared with just 12% to the US. In the first eight months of 2022 the total value of Peru’s exports to China grew by 3.3% — no mean feat given China’s economic slowdown resulting from Beijing’s zero Covid policies.
As Peru’s ambassador to China Luis Quesada told Dialogo China in July this year, Peru is the second largest destination for Chinese investment in Latin America, behind only Brazil. It is home to the only port in Latin America that is managed entirely by Chinese capital. An alliance of Chinese state-owned companies, including Cosco Shipping, has invested $3 billion in the recently finished Chancay Port. Located 50 miles north of Lima, the port is expected to become a vital hub for trade between East Asia and South America.
Peru is also one of just three countries in the region, along with Chile and Costa Rica, that have free trade agreements (FTAs) with China, though another five, including Colombia, Panama and Uruguay, are in the process of negotiating FTAs with the Asian giant. Also, there was a clear interest on the part of Pedro Castillo’s government as well as Beijing to intensify and expand their bilateral trade. There was even talk of upgrading Peru’s FTA with China. In Quesada’s words, the Andean country must take advantage of the fact that “we are the most ‘Chinese’ country” in South America.
This probably did not go down well with Peru’s second largest trading partner, the United States, which has a long, ongoing history of organizing or lending its blessing to coups against left-leaning governments in Latin America. In 2019, the US gave its support to a right-wing coup against Bolivia’s then-President Evo Morales. According to Morales, who ended up receiving asylum in Mexico and later Argentina, the main reason for his removal from office was commercial interests in the lithium sector, including seemingly TESLA whose CEO Elon Musk famously tweeted: “We will coup whoever we want. Deal with it!”
As noted in previous pieces (including most recently here), China has made huge incursions into the US’ so-called “back yard” over the past two decades, as both a trading partner and investor.
The US continues to hold sway over Central America and, pound for pound, is still Latin America and the Caribbean’s largest trading partner. But that is predominantly due to its huge trade flows with Mexico, which account for a whopping 71% of all US-LatAm trade. As Reuters reported in June, if you take Mexico out of the equation, China has already overtaken the US as Latin America’s largest trading partner.
Over the past year or so both the US and the EU have begun refocusing their attentions on the region, often with ham-fisted attempts at diplomacy. They include the EU’s chief diplomat Josep Borrell’s remarks praising the “values” of European colonization of the Americas during a recent speech addressing European and Latin American lawmakers in Brussels.
EU and US Interest in Latin America region is on the rise as the race for lithium, copper, cobalt and other elements essential for the so-called “clean” energy transition heats up. It is a race that China has been winning prettily handily until now.
And while Peru may not form part of the Lithium Triangle (Bolivia, Argentina and Chile), it does boast significant deposits of the white metal. By one estimate, it is home to the sixth largest deposits of hard-rock lithium in the world. It is also the world’s second largest producer of copper, zinc and silver, three metals that are also expected to play a major role in supporting renewable energy technologies.
In other words, there is a lot at stake in how Peru evolves politically as well as the economic and geopolitical alliances it forms.
A “Conspicuous” Meeting
As I noted in my June 22, 2021 piece, Is Another Military Coup Brewing in Peru, After Historic Electoral Victory for Leftist Candidate?, Peru’s largest trading partner may be China but its political institutions — like those of Colombia and Chile — remain tethered to US policy interests:
Together with Chile, it’s the only country in South America that was invited to join the Trans-Pacific Partnership, which was later renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership after Donald Trump withdrew US participation.
Given as much, the rumours of another coup in Peru should hardly come as a surprise. Nor should the Biden administration’s recent appointment of a CIA veteran as US ambassador to Peru, as recently reported by Vijay Prashad and José Carlos Llerena Robles:
Her name is Lisa Kenna, a former adviser to former US Secretary of State Mike Pompeo, a nine-year veteran at the Central Intelligence Agency (CIA), and a US secretary of state official in Iraq. Just before the election, Ambassador Kenna released a video, in which she spoke of the close ties between the United States and Peru and of the need for a peaceful transition from one president to another.
A year and a half later, the presidential transition from Castillo to Boluarte has been anything but peaceful. Almost 30 lives have already been lost in the new government’s brutal nationwide crackdown on protesters.
And it seems that Kenna may have played a key role in setting things in motion. As Jalife notes in his talk, she had a “conspicuous” meeting with Peru’s Defense Minister Gustavo Bobbio Rosas on December 6, just a day day before Peru’s democratically elected left-wing President Pedro Castillo was ousted in an internal coup spearheaded by then-Vice President and now President Dina Baluarte.
A retired brigadier general from the Peruvian military, Bobbio Rosas was appointed as defense minister just one day before his meeting with Kenna and has already been replaced by Jorge Chavez Cresta, a graduate of the West Virginia National Guard and the William J. Perry Center for Hemispheric Defense Studies in Washington. According to the following tweet by Peru’s Ministry of Defense, the meeting between Kenna and Bobbio was meant to tackle “issues of bilateral interest”:
— Mindef Perú (@MindefPeru) December 6, 2022
A Suicidal Move
At the time of this meeting, it was already known that Peru’s congress was preparing its third attempt to overthrow Castillo. A day later, Castillo sealed his own fate by declaring on national television that he was temporarily dissolving Congress just hours before the impeachment vote against him. It remains a mystery why he would make such a suicidal move given: a) he had no support from the judiciary or the military; b) he would probably have prevailed in the afternoon vote, as his advisors reportedly told him; and c) opinion polls had shown he enjoyed significantly higher levels of public support than Peru’s notoriously corrupt, oligarch-controlled Congress.
Following the TV address, Castillo’s impeachment was inevitable. On leaving the presidential palace, Castillo and his family scrambled to the Mexican consulate to apply for asylum but they were arrested en route. Castillo himself has been sentenced to 18 months of pre-trail detention on charges of, among other things, rebellion, conspiracy and abuse of authority. His two defense lawyers have resigned in recent days, raising suspicions that Castillo could be “suicided”, as some people believe happened to Peru’s former President Alan Garcia.
Castillo’s wife and children, who face no criminal charges, were released and swiftly granted asylum by the Mexican government. The Baluarte regime responded to Mexico’s “intervention” in its internal affairs by expelling Mexico’s Ambassador Pablo Monroy and declaring him persona non grata.
Naturally, the US government has lent its full support to the Boluarte regime, which from the get-go declared a nationwide “state of emergency.” The new government has so far deployed 140,000 soldiers to the streets in an attempt to crush nationwide protests. Twenty-seven protesters have so far perished in the resulting bloodbath. The protests appear to have coalesced around a number of demands:
- Boluarte’s immediate resignation
- The release of Pedro Castillo as well as full disclosure of what happened on December 7
- New elections (Peru’s Congress has committed to hold fresh general elections but not until April 2024)
- A national referendum on forming a Constitutional Assembly to replace Peru’s current constitution, which was imposed by Alberto Fujimori following his self-imposed coup of 1992.
Amid all the chaos, Jalife identifies a number of what he calls “fractals” that continue to provide some degree of stability. They include the broader economy, which boasts one of the fastest growth rates in Latin America, the financial system and the national currency. The fact that the Peruvian Sol has remained stable since Castillo’s ouster would suggest that the so-called “markets” are not exactly displeased with the recent developments.
By contrast, many governments in Latin America have criticized or even refused to recognize Peru’s unelected coup regime, including Mexico, Argentina, Bolivia, Colombia, Honduras, Venezuela, Cuba, and various Caribbean nations.* Mexico’s President Andrés Manuel Lopez Obrador (aka AMLO), who is scheduled to meet President Joe Biden on Jan 9, has even raised suspicions of US involvement in the coup.
“The first message after President Pedro Castillo’s removal came from the ambassador of the United States in Peru,” AMLO said in a recent morning press conference. “Then when they declare a state of emergency, the ambassador goes to meet with the president appointed by Congress at the [Presidential] Palace in Lima.”
Rising tensions between Peru’s new government and those governments in Latin America that refuse to recognize its legitimacy have fuelled concerns about the potential repercussions for the so-called “Pacific Alliance”, one of Latin America’s biggest trading blocs. The bloc, which was already floundering before the latest crisis in Peru, currently has four full-fledged members: Chile, Peru, Mexico and Colombia, all of whose governments were closely aligned with Washington when the trade agreement was first formed, in 2011.
Today, both Mexico and Colombia’s left-leaning governments refuse to recognize the Baluarte regime. AMLO already suspended a Pacific Alliance summit in late November due to events in Peru, most notably the Congress’ refusal to allow Castillo to travel to the event. The summyr was then scheduled to take place in Lima on December 14, but with Castillo languishing in a jail Mexico once again postponed the event.
Meanwhile, on the ground in Peru the cycle of violence continues. As Peru’s civilian institutions fight among themselves, Peru’s armed forces — the last remaining “backbone” in the country, according to Jalife — is taking firm control.
The newly appointed head of the National Directorate of Intelligence (DINI), Juan Carlos Liendo O’Connor, insists that the ongoing protests in the country are not of a social character but rather form part of a “terrorist insurgency.” A former retired colonel of Peru’s armed forces, Liendo O’Conner has also worked in the Directorate of Strategy, Policy and Plans for US Southern Command, which probably speaks to where his loyalties lie.
But doubts remain as to how long Boluarte’s government will be able to cling to power. Given her government has zero democratic legitimacy, it is unlikely to hang on until the scheduled elections in 2024. As happened with Castillo’s government, its ministers are already falling like flies.
If Boluarte herself were to fall, she would be replaced by the president of Congress, a position that has been occupied since September by José Williams Zapata, a former military general who allegedly once had ties to the Tijuana drug cartel in Mexico and is suspected of covering up the Accomarca massacre (1985), one of the most notorious examples of human rights violations by the Peruvian state during the country’s 20 years of terrorism insurgency.
* Conspicuously absent from the list are the two left-leaning governments of Chile and Brazil.