Kuwait plans a future megalopolis – a $100 billion project known as Silk City. The new development is set to transform the oil-rich country but also to hardwire Kuwait into the regional architecture of a rising global power: China (asiatimes.com/).
Since January of 2018, Madinat Al Hareer (translated to Silk City), Kuwait’s future city has been under construction. Conceptualized as a solution to Kuwait’s growing overpopulation and overloaded infrastructure issues, Madinat Al Hareer is also expected to boost Kuwait’s already strong economy.
The city will be connected to Kuwait City via the Jaber Causeway which is still under construction and is highly anticipated due to the numerous attractions it is going encompass upon its completion. With the capability of housing up to 700,000 people, Madinat Al Hareer is going to incorporate multiple other attractions like an Olympic Stadium, nature reservation area over a 2 square kilometers area, and a new airport. A duty-free area in addition to multiple amenities will include business, leisure, athletic and environmental areas, and conventions (weetas.com/madinat-al-hareer-next-big-thing/).
The city also aims to cement Kuwait into a larger, global picture. The selection of the northern area aims at transforming Kuwait into an international hub for huge foreign investments (asiatimes.com/article/a-bridge-to-china-kuwaits-silk-city/).
According to 2008 estimates, Kuwait’s exports, totaling $95.46 billion, consisted of oil, oil products, and fertilizer. Their destinations included: Japan 19.9%, South Korea 17%, Taiwan 11.2%, Singapore 9.9%, the US 8.4%, Netherlands 4.8%, and China 4.4% (2007). Kuwait, with only 130 square km of irrigated land (2003 estimate), less than 1% of arable land, and with an almost non-existent industrial base, depends entirely on imports for almost every necessity and luxury of life. According to 2008 estimates, it imported food, construction materials, vehicles and spare parts, and clothing worth $26.54 billion (f.o.b.). Which came from: US 12.7%, Japan 8.5%, Germany 7.3%, China 6.8%, South Korea 6.6%, Saudi Arabia 6.2%, Italy 5.8%, and the UK 4.6% (2007) (mei.edu/publications/kuwait-looks-towards-east-relations-china).
China is already the largest investor in the Gulf and the Gulf’s number two trading partner. The new transport, logistics and financial hub in the northern Gulf are set to join the People’s Republic’s ambitious Belt and Road Initiative (BRI). Kuwait has already become one of the most active partners in the BRI, too, with it looking east for economic development, while China looks west (asiatimes.com/article/a-bridge-to-china-kuwaits-silk-city/).
Kuwait and China have long enjoyed cordial and friendly bilateral relations. Both sides have been working steadily to broaden and deepen cooperation in the political, economic, and social fields.
The Chinese fondly recall that Kuwait was the first Gulf state to establish diplomatic relations with them 38 years ago, on March 22, 1971. Beijing also appreciate[s] Kuwait’s valuable support on such issues as Taiwan, human rights, and others. Kuwait continues to firmly adhere” to the one-China policy, opposes any attempt to forge two Chinas or one China, one Taiwan” and supports China’s any efforts in safeguarding national sovereignty and territorial integrity.
High-level contacts and bilateral visits reflect the state of relations between countries. The members of the Kuwaiti ruling family holding important positions in the government visited China even before the establishment of diplomatic relations in 1971. The late Amir Shaykh Jabir al-Ahmad Al Sabah visited Beijing in February 1965 when he was Minister of Finance, Industry, and Commerce. Again, in his capacity as Amir of Iraqi-occupied Kuwait, he visited China for three days, beginning on December 26, 1990, to canvass support for ending the Iraqi occupation of his shaykhdom. Following the liberation of Kuwait in February 1991, the late Amir again paid a three-day visit to China to convey his country’s gratitude to the government and people of China for their invaluable support during the darkest days of Kuwait’s history (mei.edu/kuwait-looks-towards-east-relations-china).
The selection of the northern area aims at transforming Kuwait into an international hub for huge foreign investments and will enable us to reach out to far places like the Red Sea and the Mediterranean, Turkey, and Eastern Europe.
In this wider strategy, China plays a key role. Soon after meeting a major delegation from the People’s Republic and signing several key Memorandums of Understanding – including one to begin the first phase of Silk City’s construction. China is involved in Khalifa port in Abu Dhabi, Duqm port in Oman, Jizan in Saudi Arabia, Djibouti and Port Said in Egypt. Kuwait can be part of this, while also connecting to the overland routes of the New Silk Road through Asia and down into Iran and Iraq.
China’s participation in the project – and particularly in the port – is also likely to prove an astute move by Kuwait, as the People’s Republic is often seen as a neutral party in this part of the Gulf. China has good relations with everyone. Countries in the region may have conflicts with each other, but not with China.
For Kuwait, it’s in their interest that both of its neighbors, Iraq and Iran, see the port as a friendly facility. The potential for Kuwait to play a much bigger role in the region lies in its being a conduit to these other markets.
Far from just economic gain, developing the region presents Kuwait with a needed security measure. Silk City’s planners see a future in which this region and the adjacent Al Bubiyan island – opposite Iraq’s Al Faw peninsula and a short distance from the Iraqi port of Um Qasr – will be transformed. A major population right on the border with Iraq will also help assert Kuwaiti rule over this largely empty region.
After Iraq invaded through this area in in the first Gulf War, Kuwait realized that population is a good stabilizer of territory – a first line of defense. Silk City is a way of consolidating sovereignty over this area.
Iraq and Kuwait have several contentious issues between them – such as still-missing Kuwaiti POWs from the 1990-1991 war and Iraqi war reparations, which Baghdad still pays (asiatimes.com/article/a-bridge-to-china-kuwaits-silk-city/).
China’s developing partnership is not solely relegated to Kuwait. Last February, Qatar-China Business Forum was organized by China’s Ministry of Commerce in Beijing. The conference aimed to strengthen joint cooperation, promote bilateral trade, investment and industrial relations. Also discussed were prospects for new partnerships between the two countries. The forum, which was attended by Qatari and Chinese officials and businessmen, decision-makers, investors, and executives from major companies, resulted in the agreement between the two countries to boost their ties.
Another crucial institution is the China-GCC Strategic Dialogue, which was founded in 2010 to upgrade Sino-Gulf ties by upgrading the relationship to the level of strategic. To date, the China-GCC Strategic Dialogue has established strategic partnerships with Qatar, Saudi Arabia, Oman, Kuwait, and the UAE, and has engaged in negotiations with Bahrain.
A number of other institutions have also been established to support China-Gulf interactions, such as the China-GCC Cooperation Forum, China-GCC Trade and Economic Joint Committee, China-Arab States Economic and Trade Forum, and China-GCC Countries Forum on Economic Trade Cooperation (mei.edu/kuwait-looks-towards-east-relations-china).
Former President Hu Jintao twice made that point during his visits to Saudi Arabia to express his support and interest in the organization. I noticed in my meetings with Hu during his official visits to Saudi Arabia in April 2006 and February 2009, how much he knew about the GCC and how keen he was to cement that relationship. His knowledge of the minute details of GCC-China relations was unusual and duly impressive. China has for some time made it clear that it considered the GCC, as an organization, one of its top priorities, in addition to its interest in GCC member states individually. With its keen advocacy of Third World capabilities, it considers the GCC an effective regional organization composed and run by developing nations, like China itself. (arabnews.com/news/511401).
These institutions have served as an important platform for China’s soft-power efforts. For example, various meetings, summits, and agreements organized by these institutions have been utilized to raise awareness about each other and to universalize each other’s interests. In addition, these institutions have also served as platforms to propagate Chinese political views on regional issues and to present China as an alternative to Western powers.
China’s dependence on Gulf oil has been increasing gradually since 1993 when it became a net importer of oil. Last year, it overtook Japan as the second largest importer of oil after the US. Today, it imports 32% of its energy needs. It is estimated that by 2030, China will need to import more than ten million barrels per day (b/d; i.e., more than three-quarters of its domestic consumption). In 2008, China’s oil imports of about 3.6 million b/d were estimated to have cost it around $130 billion. Presently, more than half of China’s oil imports come from the Gulf, with Iran and Saudi Arabia claiming the lion’s share. Within a decade, the Gulf’s overall share is expected to rise to over 70%. Obviously, China’s ever-growing reliance on imported oil will increase its dependency on the Gulf.
Trade between the Gulf states and China is not a one-way affair. During the years 2003-2007, Gulf imports from China more than quadrupled, from around $7 billion in 2003 to $30 billion in 2007. Likewise, total two-way trade also grew almost four times over the same period, from $15 billion to $58 billion. Bilateral trade during 2008 is estimated to have topped the $80 billion mark.
The Gulf states are also increasingly sending significant sums of portfolio investments into China. Bitten by American protectionism, such as the Dubai Ports debacle in 2006, and impressed by a higher growth rate and attracted by better returns in Asia, Gulf investors are gradually turning from West to East — mainly China. All the major sovereign wealth funds of the Gulf have already made significant investments in China; the Kuwait Investment Authority has doubled its investments in Asia over the past two years. The GCC’s “look towards the East” policy and China’s “Go Outward” policy are converging on a win-win position for both sides, with far-reaching consequences for the future of the global economy (mei.edu/kuwait-looks-towards-east-relations-china).
China is the second largest consumer of oil in the world, and this consumption is only likely to grow as is continues building the industrial sector of its economy. It is imperative that it has steady access to a large abundance of oil and that means having strong ties to oil-rich nations to ensure a steady supply. At the same time having a strong influence in the Middle East with the same countries that supply the United States would give China tremendous influence in the world.
China is seeking to accomplish two goals: ensure a large amount of oil on a steady basis to reliably power its economy and secure relations with wealthy trading partners that Chinese businesses can export goods and services to. By investing in many projects such as Silk City, China seeks to avoid the complications the U.S has had with the Arab world’s difficult political culture. Controlling several businesses and having partial ownership of essential projects would give China a great deal of entrenched power in the region that would make it more influential in regional politics.
At the same time, many of the Gulf counties have been steadily growing their economies, diversifying their economic interests outside of petroleum, and becoming some of the richest nations in the world. China wants to tap into this economy and ensure their businesses have an open window to sell into this market.
Another facet that needs to be recognized is the security issue. The US relies heavily on the oil supply from the Middle East to support its economy. Eventually, China hopes to supersede the US not only as the Arab world’s trading partner but as a security ally.
Having an entrenched position within these countries assumes that eventually, China may actually arrive at a place where it could influence the balance of power between it and the US by being able to influence the direction of oil supplies and Arab-US relations in general.
Inevitably, China will become a significant power in the Middle East. From this, one of two scenarios is likely. The first scenario is through massive investments in infrastructure and business development in many of the sheikdoms. China will gain enough soft power to force the Arab world away from dealings with the US. The second consideration is that the Arab nations will use the situation to their advantage by leveraging the power balance between the US and China to gain more beneficial terms in future dealings with either.
During the cold war, the Soviet Union and the United States used arms transfers and military assistance as one element in foreign and security policies that was primarily intended to further a political and ideological competition. But with the end of the cold war, the international arms trade no longer has the same politico-military underpinning.
In the late 1980s, the changes in foreign policy initiated by President Mikhail Gorbachev and Foreign Minister Eduard Shevardnadze transformed the pattern of Soviet arms exports. After 1992, decisions by Russia about foreign, domestic and economic policy altered the size and pattern of arms exports even further. According to the Office of the President, in 1996 military-technical cooperation generated $2.5 billion in revenue of which $2.1 billion was in convertible currency and the rest in currencies that could not be freely converted. Russia also delivered arms and military equipment against debts owed to several foreign countries (www.sipri.org/publications/1998/russia-and-arms-trade).
The exports of black and gray arms represent between 5-15% of total weapons exports from Russia. For example, when the official exports of weapons and military equipment from Russia amounted to $3.8 billion in the early 2000s, the black and gray export was closer to $380 million. Russian merchants of death also have a large scale operation in the Middle East. Russia was accused of supplying arms to terrorist organizations such as Hamas, IG, and Hezbollah with the ruling Assad regime in Syria acting as an intermediary.
Syria has been in a state of civil war for many years with rebels trying to overthrow the pro-Kremlin regime. Since the beginning of the war, Russian arms supplies to Syria have grown exponentially. Moscow officially claims that deliveries are made on previous contracts, but it cannot explain why the number of these contracts suddenly increased many times over. In this case, there is real doubt that the weapons contracts are paid for, since it is no secret that the Assad regime is bankrupt and unable to buy the mountains of weapons supplied over these years from Russia, including small arms, anti-aircraft, and anti-ship missiles, C-SAM (ZRK S-300), tanks T-72 and T-80, and MiG-29 and Su-25 aircraft. And that doesn’t even include the cost of ammunition.
Israeli intelligence agencies have repeatedly implicated the Kremlin in the supply of weapons to Hezbollah, including rockets, ammunition, and small firearms. In fact, the IDF has actively prevented completion of several Kremlin plans for the armament of Hezbollah brokered by Assad. Israeli aircraft have repeatedly destroyed the anti-aircraft missiles S-300, anti-ship missiles Yakhont, and ground-to-ground missiles on Syrian territory that were intended for Hezbollah. Israeli forces seized Russian-made weapons, the ATGM Cornet, from Hamas militants in the Gaza Strip.
Russian smuggling in the Middle East is not limited to the supply of weapons to Hamas and Hezbollah. There are reasons to believe the Kremlin is also supplying weapons to the terrorist group ISIS. Russians could not transfer weapons to militants openly, because it officially recognized ISIS as a terrorist organization. Then there was a scam—a series of staged assaults by militants on the bases of Syrian government troops. Assad’s army retreated without a fight, leaving the entire base along with loads of weapons. Hence, this was a way to deliver arms under the guise of trophies. It is noteworthy that when the relationship between ISIS and the Assad regime went sour, attacks on government troops became violent and the weapons were destroyed (informnapalm.org/).
By 2015, the US was first in value of all arms deliveries made around the world, at a value of $16.9 billion or 36.62% of the total. The US and Russia made up just over half of all arms transfer agreements to developing world countries. Each year, between 2008 and 2015, two or three major suppliers made most of the arms transfers to that market. It was the eighth year in a row that the US was first in this category, and Russia was second in each of those eight years.
Russia is able to offer a variety of munitions, from low-tech gear to advanced weapons systems. It has sold combat aircraft and main battle tanks to China and India and made arms deals with the likes of Malaysia, Burma, and Algeria. Moscow has focused its recent arms-sales efforts on Latin America, where Venezuela has been a principal buyer. Russia has also worked to make it's weapons deal terms more flexible and to improve its follow-on services to clients (www.businessinsider.com/us-russia-global-arms-sales-2016-12).
Recently the issue that has come between the US and Russia is the sale of the S-400 air defense system. The S-400 Triumph (NATO reporting name: SA-21 Growler) is an air defence missile system developed by Almaz Central Design Bureau of Russia. The S-400 Triumph air defence system integrates a multifunction radar, autonomous detection and targeting systems, anti-aircraft missile systems, launchers, and command and control centre. It is capable of firing three types of missiles to create a layered defence. The system can engage all types of aerial targets including aircraft, unmanned aerial vehicles (UAV), and ballistic and cruise missiles within the range of 400km, at an altitude of up to 30km. The system can simultaneously engage 36 targets. The S-400 is two-times more effective than previous Russian air defence systems and can be deployed within five minutes. It can also be integrated into the existing and future air defence units of the Air Force, Army, and the Navy. Russia intends to supply export versions of the S-400 Triumph system to the armed forces of China. Turkey also expressed interest in purchasing S-400 air defence systems (www.army-technology.com/projects/s-400-triumph-air-defence-missile-system/).
Russia’s ability to sell its S-400 air defense system to several different countries in different theaters illustrates the geopolitics of this particular system. Despite US sanctions on the Russian defense company Almaz-Antey, Moscow is offering or has sold the S-400 to a number of countries, including NATO member Turkey. The US is also watching closely for other S-400 sales to countries such as Algeria, Belarus, Iran, and Vietnam, thus reducing the American sphere of influence and boosting Russia’s ability to arm, equip, and train other countries’ air defense capabilities regardless of the theater. The key issue here is what the US will do given the defense requirements of other countries who want to continue to do defense business with Moscow. Both Turkey and, in particular, India now stand out (www.arabnews.com/node/1390056). The U.S. aggressive stance has also set it at further odds with China.
The Trump administration imposed sanctions on the Chinese military on Thursday for buying fighter jets and missile systems from Russia in breach of a sweeping US sanctions law punishing Moscow for meddling in the 2016 US election. The US State Department said it would immediately impose sanctions on China’s Equipment Development Department (EDD), the military branch responsible for weapons and equipment, and its director, Li Shangfu, for engaging in “significant transactions” with Rosoboronexport, Russia’s main arms exporter. The sanctions are related to China’s purchase of 10 SU-35 combat aircraft in 2017 and S-400 surface-to-air missile system-related equipment in 2018, according to the State Department. In Beijing, the Chinese government expressed anger and demanded the sanctions be withdrawn (www.reuters.com/article/us-usa-russia-sanctions/u-s-sanctions-china-for-buying-russian-fighter-jets-missiles-idUSKCN1M02TP).
This intelligence site has previously reported that Russia is building its economic base and influence in the world by availing itself to countries under US or UN sanctions as a viable trading partner. Based on this strategy it is using its arms business to further undermine the effectiveness of US sanctions and bolster its own position as a sphere of influence in the world.
It is also a source of revenue for the Russian economy they will continue to foster through both legitimate sales and black-market deals. In the long run, Russia’s arms sales will constitute a serious threat for the United States. In addition to eroding the effectiveness of US sanctions, technology such as the S-400 changes the battlefield dynamics by enhancing the defenses of hostile countries. The fact that Russia has been willing to turn a blind eye or actively encourage an illicit market to further their customer base explains how important the arms market has become for them.
The US needs to recognize that Russia’s arms business is only going to expand and proliferate, especially to countries and groups that are sanctioned by the US. Russia has grown to become the second largest arms merchant in the world just behind the United States. In time it is capable of becoming the largest, thus Russia will remain a significant threat to US authority. In response, the US needs to start developing more diverse measures and threats to deal with foreign adversaries; measures that do not rely solely on sanctions. It will also have to deal with adversaries that will be able to obtain more sophisticated weapons because of this.
Brazil continued to be the top destination of exports, with $316 mm, followed by Mexico ($153 mm), Venezuela ($74 mm), Colombia ($71 mm), Peru ($62 mm), Chile ($60 mm), Argentina ($44 mm), Guatemala ($31 mm), Dominican Republic ($27 mm) and Ecuador ($24m). In these days of austerity and budget cuts in the region, affordable Indian generic medicines are preferred by Latin American consumers as well as their governments. In recent years, Mexico has become the chief beneficiary of relations with India.
In 2016 Mexico became the top destination of India’s exports to Latin America and the leading destination in the world of India’s car exports. Exports to Mexico were $2.865 bn in 2015-16. Mexico, the second-largest economy in the region, has been growing and India’s exports to that country have also been steadily increasing. Mexico’s share of India’s vehicle exports was $1.03 bn out of the total Indian exports of $5.6 bn. Even more interesting is that vehicle exports to Mexico have shown an impressive 31% growth from 2014-15 (thewire.in/43577).
In June 2016 Indian Prime Minister Narendra Modi visited Mexico City for a working visit at which time he agreed with Mexican President Enrique Pena Nieto to raise the level of bilateral relations between the two countries from 'privileged' to 'strategic partnership'. The two leaders agreed to “Seek ways to deepen our cooperation in aerospace issues, in science and in technology as well. We will also launch concrete projects in areas such as agriculture, agricultural research, biotechnology and waste management, management of natural disasters and solar energy.” (sandiegouniontribune.com/). Bilateral trade has grown rapidly in recent years, at double-digit rates consistently.
A well-diversified basket, comprising, inter alia, chemicals & petrochemicals, engineering goods, automobiles & auto parts, pharmaceuticals, diamonds, textiles & garments, and gasoline round out the array of trading goods. Crude oil is still the major Mexican export to India, besides fertilizers, iron & steel, and engineering goods. The areas assessed to have maximum growth potential are mining (projects in Mexico), food processing and infrastructure (projects in India), automobiles & auto parts, textiles & garments, software and IT, pharmaceuticals, engineering, renewable energy, and biotechnology.
Indian investments in Mexico are estimated (to be) several hundred million dollars, and Mexico is now in a catching-up phase. Most major Indian IT companies, several pharmaceutical companies, and engineering companies in tires, packaging, and electrical equipment have a growing Indian presence in Mexico, whereas Mexican investments in India are in multiplexes, housing & infrastructure, auto parts, cement, and food processing. (Arcelor Mittal made one of its early major takeovers in Mexico).
Investments from India in Mexico are estimated significantly above US$ 1 billion. Most of the leading Indian companies in IT/software (TCS, Infosys, Wipro, NIIT, BirlaSoft, HCL, Aptech, Hexaware, Patni, Tech Mahindra etc.) and pharmaceutical (Claris Life Sciences, Wockhardt, Sun Pharma, Dr. Reddy’s Laboratories, Torrent Pharmaceuticals, Lupin Pharma, Zydus Pharma etc.) sector have set up joint ventures in Mexico taking advantage of its strategic location, large market and investment-friendly policies. In 2008, JK Tyres of India bought Mexican tire company Tornel. Leading Mexican companies like Homex, Cinepolis Cemex, and Mexichem have likewise invested in India in recent times. Major investments in the steel and mining sector have also been made by the Arcelor Mittal Group.
Through Mexico’s own sizable market and investment-friendly policies, it is eminently placed to offer the strategic advantage of the world’s largest NAFTA market, already drawing large FDIs from the USA and elsewhere. Indian cinema Bollywood’s estimated the immense potential for Mexico and Latin America yet remains to be explored. Apex chambers from both sides have several cooperation MOUs, and Indian business delegations regularly participate in several major trade fairs in Mexico (indembassy.org/).
However, India's vibrant, growing diverse democratic culture has caught Mexico's fancy. Indian Government Programs such as 'Make in India', 'Digital India’, etc. are key initiatives to attract investment, and many Mexican companies are interested in sectors such as food processing, IT and telecom, auto components, Infrastructure (affordable housing) among others and are keen to take advantage of these programs. Mexico is India’s ninth supplier with around $1.8 billion in 2015. Overall, the value of Indian crude oil imports has gone down by an average -40% from all supplying countries, since 2011, when crude oil purchases were valued at $122.1 billion. But, Mexico is one of the countries that upped the value of their crude oil supplies to Indian importers by 31%.
The ‘MakeinIndia’ programme is of interest to the Mexican companies. Over the last several decades, Mexico had a similar program “Made in Mexico”, that evolved from a simple low-tech, high-volume, low-mix assembly-based manufacturing model into an emerging industrial powerhouse with in-country capabilities to produce a gamut of sophisticated items, ranging from high-tolerance, precision machine components that are incorporated into modern jetliners to delicate and highly calibrated devices that are used in life saving medical procedures.
The “Made in Mexico” program has come to embody quality, as well as to represent one of the world’s most competitive total landed cost manufacturing locations. This program has translated to low or exempted MFN import tariffs for more than 70% of the 12,119 tariff codes. This has positioned the country among the most open in the world (Free Trade Agreements with more than 45 countries) and has generated a trade-to-GDP ratio of more than 61% (more than United States, Brazil, and even China), etc. (thedollarbusiness.com/).
India’s involvement in South America goes back to the early 21st century with Brazil. In the 21st century, Brazil focused on the idea of reciprocal multilateralism, i.e. the rules of multilateral orders should benefit all nations, and not merely be dictated by the superpowers for their benefit. The President maintained the tradition of formulating and programming foreign policy as a state policy. Lula, in his entire tenure, is stated to have visited around 80 countries. India, too, shared similar views on reciprocal multilateralism like Brazil. The essence of this idea was rightly projected when both the countries led the developing world during the trade negotiations over agricultural subsidies in 2003 in Cancun. The unified stance of resistance marked the beginning of a new era in international relations and hinted at non-accommodation of North-South relations.
The two countries pursued their stance of negotiating on their terms--not just by what is prescribed by the major powers—and came together again to form the G4 group.
Along with Germany and Japan, the two emerging nations supported each other in order to bid for a permanent seat in United Nations Security Council (UNSC).
Brazilian investments in India comprise sectors like automobiles, IT, mining, energy, biofuels, and footwear. On the other hand, Indian companies have invested in areas of IT, pharmaceuticals, energy, agri-business, mining and engineering/auto sectors. The Indian companies that have marked their presence in Brazil are Tata Consultancy Services (TCS), Wipro, Infosys, Cadilla, Mahindra, L&T, Renuka Sugars, United Phosphorus, and Polaris are present in Brazil.
Indian pharmaceutical laboratories, such as Dr. Reddy’s Laboratories and Ranbaxy, which are big exporters of generic medicines, have formed joint ventures and installed factories in Brazil as well. The Brazilian companies gaining a foothold in India include Marco Polo (automobiles), Vale (biggest mining company), Stefanini (IT), Gerdau (Steel) (idsa.in/backgrounder/). Much of the recent push toward India is due in part to the current political climate emanating from the United States.
The tactics employed by U.S. President Trump toward Latin American countries have been seen as bullying and remarks seen as racist. Specifically, in the case of Mexico, the situation between the U.S. has been greatly jeopardized. Current U.S. policies have cornered Mexicans and jeopardized their economy. Mexico depends on the U.S. for 81% of its exports and nearly 50% of its imports. Statistics show that U.S. and Mexico trade is at least 1.5 billion a day. The recent H-1B announcements by President Donald Trump have prompted Ambassador Madam Melba Pria to invite Indian professionals to Mexico.
India is a part of SAARC, ASEAN, and other organizations just as Mexico is part of NAFTA and TPP amongst others. Indian companies are doing business on the entire American continent taking advantage of the regional collaboration agreements Mexico holds with its neighbors. A couple of examples; through NAFTA, India has access to the entire North American region and through the Pacific Alliance, they can do business as any other Mexican company in South American countries such as Chile, Colombia and Peru (thedollarbusiness.com/).
At a time when the developing world is experiencing frustrations with the traditional major power partners and are suspicious of their overall motives, India is taking advantage of this situation and offering itself up as an alternative to the major powers. Several possibilities have the potential to arise from this. If trends continue as they are, in the next ten years India’s position as an economic trading partner will grow considerably; to the point of overtaking the U.S, E.U. and China as the chief economic power in the Latin American region.
This presents several considerations for how it will impact the geopolitical landscape. As countries such as Mexico develop greater economic ties to India, they will become less dependent on North American business to sustain their economy. In the long run, this will greatly erode the power of U.S. influence in the region. At the same time, this situation is also working to erode the growing influence of China, who has likewise been using its economic prowess to strengthen its power in the region. This development is likely to heighten hostilities between India and China who, as this reporting site has discussed in previous reports, are in the developing stages of a modern-day global cold-war.
What must be understood by the nations of the developed world is that India presents a new sphere of influence.
Where many nations in the developing world have come to see traditional global powers such as the E.U, North America, and China as domineering and racist in their dealings, India is a country that still is recognized as part of the developing world and has endured similar discrimination from the same institutions. This has made it easier for India to be seen as a comrade state rather than as a potential exploiter. India is capitalizing on this strategy as a means to build global relations with trading partners. So far, in the years that India has been involved in Latin America, it has shown little interest in pursuing much beyond the means of economic interests. Nor is it a real possibility that India would do so in the immediate future. However, if circumstances should change, India could viably become another means Latin American countries can turn to for military support and possibly more.
The U.S. needs to understand that in the coming years India will be a serious power in the Western Hemisphere, one that will have interest in the direction of the region and serious influence to impact what happens. In response, the U.S. needs to begin developing a strategy for how it intends to address this issue in the future. India will be a powerful ally in several matters. It could also be a powerful means to marginalize the U.S. power base and thereby present a new balance of power that Latin American countries will be able to turn to as an alternative if they do not wish to be reliant or succumb to U.S. pressures.