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Home > Blogs > Anthony Harrington > Colombia: A Chinese alternative to the Panama Canal? Part 2

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

Colombian economy | Colombia: A Chinese alternative to the Panama Canal? Part 2 Anthony Harrington

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.

With the incredible scale of the city building and infrastructure works that China has gone in for within its own boundaries over the last ten years, it clearly has the expertise and the chutzpah to see a project like this through from conception to implementation. One can only speculate about how delighted (not) the US is at the prospect of the Chinese taking such a large position in what the US likes to think of as its own back yard (not a view that pleases many Latin Americans). This might account for the fact that in the FT interview, Santos sounds, rather incredibly, like a man who has several such offers on the table before him and is simply mulling over which would be the better route to go. As he puts it:

“It’s not a new idea. I remember some years ago one of the most prestigious advisors for the World Bank was obsessed by this idea. And president Barco flirted with the idea a lot. But again, it depends on how it is going to be financed... We want to stimulate competition at all levels. If this project is ready I’ll open it up for competition. Of course the country who originated the idea and already has the money and has done all the preliminary work will probably have an advantage over others that will simply look at it as a new and sometimes exotic adventure.”

This can probably be glossed as: “America, if you don’t like the Chinese coming in, give us a really serious counter proposal with bags of US finance!” Either way, Colombia and President Santos look to be in an extremely good position. An infrastructure build out on this scale would be great for the whole region and once built the boost to intra regional trade, as well as to the flow of goods into and out of the region, should be phenomenal.

Further reading on Latin America, the Colombian economy and global trade:

Tags: China , Colombia , infrastructure , Latin America , Panama Canal , US
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