Tag Archives: China

America’s China mistake

This spring, China’s navy accepted the Pentagon’s invitation to participate in the 2014 Rim of the Pacific — RIMPAC — naval exercise to be held off Hawaii. This will be the first time China takes part in the biennial event.

Our allies should signal their intent to withdraw from the exercise if China participates. Failing that, the invitation should be withdrawn. RIMPAC is for allies and friends, not nations planning to eventually wage war on the United States. Russia sent ships in 2012, but while its senior officers may occasionally utter unfriendly words, they are not actively planning to fight the United States. Analyst Robert Sutter was surely correct when he wrote in 2005 that “China is the only large power in the world preparing to shoot Americans.”

That assessment, unfortunately, remains true today. Beijing is configuring its forces — especially its navy — to fight ours. For instance, China has deployed along its southern coast its DF-21D, a two-stage solid-fuel missile that can be guided by satellite signals. The missile is dubbed the “carrier killer” because it can be configured to explode in midair, raining down sharp metal on a deck crowded with planes, ordinance, fuel and sailors. Its apparent intent is to drive U.S. forces out of East Asia.

A pattern of aggressive Chinese tactics also points in that direction. Especially troubling is the harassment in international waters of unarmed U.S. Navy reconnaissance vessels for more than a decade, most notably the blocking of the Impeccable in the South China Sea in 2009. And there was the 2001 downing of a Navy EP-3 and the surfacing of a Song-class attack submarine in the middle of the Kitty Hawk strike group near Okinawa in 2006.

Since then, we have been hearing bold war talk in the Chinese capital, from new leader Xi Jinping to senior officers and colonels who say they relish combat — a “hand-to-hand fight with the U.S.,” as one of them put it in 2010.

Why do China’s officers want to go to war? There is an unfortunate confluence of factors. First, there is a new Chinese confidence bordering on arrogance. Beijing leaders, especially since 2008, have been riding high. They saw economic turmoil around the world and thought the century was theirs to dominate. The U.S. and the rest of the West, they believed, were in terminal decline.

The Chinese military also has gained substantial influence in the last year, perhaps becoming the most powerful faction in the Communist Party. Beginning as early as 2003, senior officers of the People’s Liberation Army were drawn into civilian power struggles as Hu Jintao, then the new leader, sought their support in his effort to shove aside Jiang Zemin, his wily predecessor who sought to linger in the limelight. Last year, the civilian infighting intensified as the so-called Fifth Generation leadership, under the command of Xi, took over from Hu’s Fourth. Like a decade ago, feuding civilians sought the support of the generals and admirals, making them arbiters in the party’s increasingly rough game of politics.

The result of discord among civilian leaders has been a partial remilitarization of politics and policy. Senior officers are now acting independently of civilian officials, are openly criticizing them and are making pronouncements in areas once considered the exclusive province of diplomats.

The remilitarization has had consequences. As Huang Jing of Singapore’s Lee Kuan Yew School of Public Policy said: “China’s military spending is growing so fast that it has overtaken strategy. The young officers are taking control of strategy, and it is like young officers in Japan in the 1930s. They are thinking what they can do, not what they should do.”

What do China’s admirals want? They are supporting their nation’s territorial ambitions to close off the South China Sea to others. This brings them into conflict with nations surrounding that critical body of water and pits them against the U.S. If there has been any consistent U.S. foreign policy over the course of two centuries, it has been the defense of freedom of navigation.

According to a white paper it issued in April, China is building a navy capable of operating in the ocean’s deep water, and has 235,000 officers and sailors. Its navy last year commissioned its first aircraft carrier, and it is reportedly building two more. China has about a dozen fewer submarines than the U.S., but the U.S. has global responsibilities. The Chinese, therefore, can concentrate their boats in waters close to their shores, giving them tactical and operating advantages.

While the Chinese plan to dominate their waters and eventually ours, we are helping them increase their effectiveness with invitations to RIMPAC and other exercises and by including them in joint operations like the one directed against Somali piracy. The U.S. Navy at the same time is continuing to reduce its fleet, currently at 283 deployable ships. As Beijing’s behavior has become more troubling, the Pentagon has clung to the hope that military-to-military relations will somehow relieve tensions with the Chinese.

Yet as Ronald Reagan taught us, the nature of regimes matter. We are now helping an incurably aggressive state develop its military — to our peril. There is something very wrong at the core of the Obama administration’s and the Pentagon’s China policies.

Obama’s ‘China Syndrome’

Secretary of State John Kerry spent the weekend showing what predictably comes of the North Koreans behaving badly:  China benefits.  Unfortunately, this is not the only example of the Obama administration’s cravenness in the face of misbehavior on the part of Beijing and/or its proxies. Call it Team Obama’s China Syndrome.

Let’s start with the umpteenth time the Chinese “good-cop” vs. North Korean “bad cop” gambit has been run against the West.  After weeks of Kim Jong-Un’s regime threatening to unleash “nuclear fire” on our allies and on us, the post-Americans in the Obama cabinet have responded as did their predecessors – by rewarding both Pyongyang and its Chinese sponsors.

Concessions from the United States and its allies to date include: forgoing a long-scheduled – and needed – test of an American Minuteman III intercontinental ballistic missile; terminating joint U.S.-South Korean military exercises; inducing Seoul to offer to resume aid to the North; offering new bilateral negotiations between Washington and Pyongyang; and promising to remove the modest missile defenses sought by our allies if only the new top Kim in Pyongyang would make the same empty promise as his forefathers to denuclearize.

To be sure, Beijing wants us to know that it is not happy with North Korea. The Chinese supported a new round of UN sanctions after the Kim dynasty’s latest nuclear and missile tests, although considerably weakening them in the process.  The state-controlled media has been allowed to criticize Pyongyang.  And Secretary Kerry’s interlocutors encouraged him to believe that they shared his view that the North must behave better from now on.  Or it will be further isolated, or be scolded sharply or something else really bad.

Please.  We are once again being treated with the contempt reserved by the xenophobic Middle Kingdom for kow-towing foreigners.  The Chinese enable North Korea to survive as a gulag-nation.  As Nina Shea pointed out Monday in National Review, international human rights monitors have described it as “a prison without bars.”  But for Beijing’s food, fuel and forced repatriation of refugees, the Kim dynasty would have been out of business decades ago.

It is nothing less than outrageous that under U.S. administrations of both parties China has for years been given a pass on the dangerous behavior in which it is enabling its client to engage. Why would anyone think such a response this time will be met by anything but more of the same sort of belligerence from North Korea?

And, notwithstanding the kerfuffle last week about a disputed Defense Intelligence Agency finding that advanced North Korean missiles could be equipped with nuclear weapons, one thing should be clear:  Pyongyang has today the means to act on its threats to this country through shorter-range missiles launched from offshore and capable of electro-magnetic pulse attacks, weapons smuggled across our borders or potentially via satellites it has now been able to put into orbit.

It would be bad enough if such benighted efforts to appease China were happening in a vacuum.  But what makes them worse than in those in the past, is that they come against a backdrop of many other threatening Chinese activities.  Such activities enormously exacerbate the dangers associated with encouraging it to behave aggressively, either through cut-outs or in its own right.  These include:

  • The Chinese are said to be engaging in millions of cyber attacks against U.S. official and private sector computers every day.  They are not simply seeking to purloin proprietary and classified information.  The former have been a tremendous boon to the PRC’s economy and competitiveness.  The latter have translated, among other things, into incalculable cost-avoidances on defense research and development that would otherwise have been required to field a world-class military. Taken together, such attacks are, if not actual acts of cyberwarfare, certainly precursors to it.
  • It seems the ominous implications of China working with trading partners like Australia to foster deals denominated in other-than-U.S. dollars are being studiously ignored.  Such efforts appear to be precursors to ending our currency’s status as the world’s reserve, with potentially devastating repercussions for our already-perilous fiscal situation.
  • China is engaging in an escalating pattern of assertions of sovereignty throughout the East and South China Seas.  These increasingly involve threats to American allies in the region that are going uncontested by the United States’ declining power there.
  • Last but not least, Team Obama has assiduously low-balled the growing capability of China’s armed forces.  Its Pacific Commander asserts that the greatest challenge in his area or responsibility is climate change.  The much-touted U.S. military’s “pivot” to the region has vaporized in the wake of the latest round of budget cuts – and still more that have been promised by Secretary of Defense Chuck Hagel.

Particularly worrying about the administration’s China Syndrome is its blindness with regard to Beijing’s nuclear build-up.  For example, the Chinese construction of 3,000 miles of hardened tunnels to conceal their clearly expanding strategic forces, their vast and growing number of shorter-range nuclear capable missiles aimed at Taiwan and other U.S. regional allies and assets and submarine pens dug into mountains stands in sharp contrast to the atrophying U.S. deterrent and to Team Obama’s blind, unilateral pursuit of “a world without nuclear weapons.”  It persists in claiming Beijing has only a few hundred weapons, an estimate that may be off by a factor of ten.

President Obama is enabling the emergence in China of the next – and perhaps the next sole – superpower.  No good can come of a syndrome that has that effect.

China’s UAV Expansion

Washington Free Beacon’s Bill Gertz has a startling piece today on China’s expansion of its unmanned aerial vehicle capabilities.

From the piece:

New unarmed drone deployments include the recent stationing of reconnaissance and ocean surveillance drones in Northeast Asia near Japan and the Senkaku islands and along China’s southern coast. Drones also are planned for the South China Sea where China has been encroaching on international waters and bullying nations of that region in asserting control over international waters, said officials familiar with intelligence reports…

Of particular concern to U.S. intelligence agencies are two new missile-equipped drones known as the CH-4 and Yi Long. The aircraft were shown off along with six other military drones at a major Chinese arms show last November in Zhuhai.

China is not keeping its growing expertise in this area to itself:

According to [Richard] Fisher [with the International Assessment and Strategy Center], China is also exporting two of its armed drones, the Yi Long and CH-3, to the United Arab Emirates and Pakistan.

The UAE government purchased the Yi Long, and a smaller CH-3 was sold to Pakistan and repackaged by Islamabad as the Shahpar.

Fisher said he is concerned China will sell the new and larger CH-4 to Iran.

Clearly, proliferation of UAV technology needs to be watched closely, with our defense strategies adjusting accordingly.

In addressing UAV proliferation, however, one path we should avoid is that of seeking codification of international rules to govern UAVs, which will likely have the effect of inhibiting our own self-defense while doing little to affect the behavior of countries like China.  I expanded on this issue a bit in yesterday’s American Spectator.

China and U.S. Debt

Originally published at The American Thinker

As the U.S. federal debt is steadily climbing closer to $17 trillion, President Obama and Congressional leadership are making statements that we “don’t have an immediate crisis in terms of debt.” All the same, our bloated federal debt does pose a crisis. Not only will it slow economic growth, threaten us with higher interest rates, and increase inflation; it also allows China to threaten our national security and status as a world power.

How does China’s ownership of the U.S. debt really pose a danger to our national security?

China currently owns over 7% of U.S. federal debt via U.S. treasury securities. If China were to decide to dump those treasuries, it would greatly increase the burden of servicing U.S. debt. This could lead to a currency crisis forcing the U.S. to raise interest rates. Higher interest rates and higher risk for borrowers will potentially make it difficult for the U.S. to find creditors and will create the conditions for a recession.

Additionally, statements made by numerous Chinese officials have expressed support for the use of U.S. debt ownership as a weapon. Statements such as a senior editor of the state-run media outlet China’s People’s Daily who wrote, “now is the time for China to use its ‘financial weapon’ to teach the United States a lesson if it moves forward with a plan to sale arms to Taiwan.” In addition, according to China Times, the country’s central bank deputy governor Yi Gang announced, “China is fully prepared for a looming currency war should it, though ‘avoidable,’ really happen.”

Despite statements such as these, most analysis of U.S.-China policy, including reports from the U.S.-China Business Council (UCBC) as well as a report issued in July 2012 by former Secretary of Defense Leon Panetta, argue that the threat of using large holdings of U.S. debt for political advantage is nothing more than hot air.

The conventional wisdom is that China would never dump U.S. securities because an abrupt movement out of U.S. securities would be detrimental to both China and the United States. It would not be rational for China to take huge losses because they would be harming themselves.

The problem with the conventional wisdom is that it leaves several questions unanswered, such as: what if China is not rational? Alternatively, what if the potential damage to the Chinese economy is a calculated harm, which will serve an ultimate end goal?

China has been growing their financial sector but not for reasons of improving the livelihood of their citizenry. The growth in their financial sector has had little effect on the country’s GDP, which they have covered by artificially inflating their GDP growth to a reported 7.8% when in actuality, economic indicators indicate it to be closer to 3-4%.

China has pumped extensive liquidity into their internal currency markets and it is easy to assume that the growth of their currencies’ liquidity is a step toward gaining international reserve status for the Yuan. This currency liquidity requires China to have an export market to develop for the Yuan. Over the past few decades, China has become a global manufacturing hub with a near-monopoly on numerous key rare earth resources, China is positioning itself as the key global manufacturing and trade hub for an array of components and finished goods. The country now produces 20% of global manufacturing output, rendering the rest of the world dependent on the flow of goods out of China.The icing on the cake of being the hub of manufacturing and trade would be to have the Chinese Yuan as the world’s reserve currency.

At present, the global financial system is centered on the U.S. dollar. Countries from around the world keep huge reserves of our currency lying around for the sake of international trade. This reserve currency status that the dollar possesses allows the U.S. to sustain an assertive foreign policy. If the dollar were to cease being the global reserve currency, the U.S. government will be much weaker internationally. In addition, the country will have a much harder time financing our debt, leading an already difficult to manage debt impossible to maintain and collapsing our economy.

It is important to note that China is not a capitalist nation. Capitalist nations have thriving open markets and numerous freedoms such as an open internet. The people of China do not have the luxury of capitalism; they have a repressive communist government interested in power.

China’s power grab does not involve only financial markets. The Chinese military has been growing at exorbitant rates over the past few years. Not only does China have a large nuclear stockpile and a growing drone program, the growth of their naval fleet through the development of the aircraft carrier Liaoning — along with several more planned in the future — will help solidify their status as a superpower. An aircraft carrier will allow China to deploy troops and aircraft to regions around the world.

The Chinese People’s Liberation Army has been linked to hacking groups that are seeking the ability to sabotage power grids and steal intellectual property at alarming rates. Chinese hackers have stolen terabytes of data from U.S. corporations involved in the United State’s critical infrastructure.

Not only is China employing a highly antagonistic posture towards America. Their actions have grown more aggressive toward their neighbors over the past several years. These activities continuously test America’s commitment to its Asian allies.

China has grown increasingly belligerent towards Japan both militarily as well as through their financial markets thanks to a longstanding dispute over the contested Senkakus Islands in the East China Sea.

Additionally, China, which regards Taiwan as a renegade province, has threatened to use nuclear weapons in response to Taiwan’s interests in autonomy. This makes China the only country with nuclear capabilities to threaten to use the bomb against people and territories they consider their own.

When one looks at their trajectory, it is not hard to conclude that China’s long-term goal is to replace the U.S. as the world’s sole superpower. While they have a lot to lose by reverting to financial terrorism and dumping the dollar, they may feel that they will come out on top after toppling the dollar.

With a weakened America, and the international community relying on the Yuan as a reserve currency, it is not hard to imagine China making good on their belligerence towards their neighbors. After island hopping across Asia and the Pacific, it would only be a matter of time before we start seeing the Chinese navy patrolling around Europe, Africa, and America.

Despite statements made by various analysts, there is a real threat that China will dump U.S. debt. The theory that they will not because it would hurt their economy is predicated on the idea that China is a rational actor looking for financial growth. However, any country that manipulates and lies to prop up their financial markets; considers financial terrorism as a viable option for getting what they want; and threaten their neighbors as well as their own people with nuclear weapons is not a rational actor that belongs in the category of “superpower.” Our growing national debt is a danger in and of itself, but giving China the ability to flex its muscles by means of that debt is something that should not be allowed to happen.

Paul Rosenzweig: China’s Cyber-hacking

Paul Rosenzweig, former Deputy Assistant Secretary for Policy, former Acting Assistant Secretary for International Affairs, Department of Homeland Security; author, Cyberwarfare: How Conflicts in Cyberspace are Challenging America and Changing the World, spoke to the Center for Security Policy’s National Security Group Lunch on Capitol Hill on the topic of: The Mandiant Report and China’s Cyber-hacking: Where We Are, and What Needs to Be Done.

[CLICK HERE FOR TRANSCRIPT PDF]

Chinese Nightmare

A new generation of Communist Party leaders in China are touting “the Chinese Dream.”  That may sound like the local counterpart to the laudable American one – whereby everyone has a chance to better themselves through the exercise of rights to life, liberty and the pursuit of happiness.

Unfortunately, the Chinese dream is emerging against the backdrop of dismal economic performance and growing domestic unrest over the communists’ corrupt and oppressive rule.  In response, Beijing is pursuing a massive military buildup with even deliberately understated official projections showing continued dramatic growth.  It will be by more than 10.7 percent this year alone.

China’s new leaders evidently dream of maintaining control at home by behaving more aggressively abroad.  That’s a formula for a nightmare for its neighbors, and for the rest of us.

New York Times: Seized Chinese Weapons Raise Concerns on Iran

 

Chinese companies continue to do business with Iran. The available evidence indicates that the business includes selling sophisticated weaponry to the Iranians. In fact, in this latest case cited by the New York Times, it is a state-owned Chinese company’s sophisticated missiles that were headed from Iran to Jihadists, probably in Yemen…

An Iranian dhow seized off the Yemeni coast was carrying sophisticated Chinese antiaircraft missiles, a development that could signal an escalation of Iran’s support to its Middle Eastern proxies, alarming other countries in the region and renewing a diplomatic challenge to the United States.

Among the items aboard the dhow, according to a review of factory markings on weapons and their packing crates, were 10 Chinese heat-seeking antiaircraft missiles, most of them manufactured in 2005.

The missiles were labeled QW-1M and bore stencils suggesting that they had been assembled at a factory represented by the state-ownedChina National Precision Machinery Import and Export Corporation, sanctioned by the United States for transfers of missile technology to Pakistan and Iran.

The Chinese missiles were part of a larger shipment interdicted by American and Yemeni forces in January, which American and Yemeni officials say was intended for the Houthi rebels in northwestern Yemen.

Questionable Chinese mining practices in Latin America

Originally published at the Americas Report

China has conducted an economic foreign policy under the slogan of “win-win”.

This concept is based on the notion that China’s investments abroad could help China’s growth as well as the infrastructure of the countries where Chinese investments are pursued.

As Elizabeth Economy has pointed out, in order to advance its investments, mostly in countries that provide raw materials, China includes broader trade and aid deals to promote the development of the recipient country’s infrastructure.

In Latin America, China is the third largest foreign investor, mostly in the mining and hydrocarbon industry. Considering the broader picture, a recent study by the Economic Commission for Latin America and the Caribbean (ECLAC) predicts that China will become Latin America’s most important trading partner within the next five years. ECLAC suggests the need for a more balanced trade relationship as most of the exports out of Latin America are in the form of raw materials (59%) with a high ratio of manufactured products coming from China to Latin America. When China invests it secures an equity share of production on terms comparable to other co-owners (mainly the host country). Likewise, China usually makes a loan to the producer country in return for a purchase agreement.

In Latin America, mining industry contracts were awarded to China to help exploit valuable subsoil resources.

Ecuador and Peru offer two different models of Chinese investment that are very telling not only about China but also about how these two different political regimes deal with this issue.

Ecuador, a member of the Bolivarian Alliance, is one of the largest recipients of Chinese investment, particularly in the area of mining and oil.

The government of Ecuador has signed a number of deals with China. One of the largest such projects is a huge mine called Ecuacorriente. The Chinese company signed an agreement with the Ecuadorian government where the former obtained 50% of the profits.

China has developed a large loan operation. Ecuador is the recipient of loans from China, which China considers as a good will gesture.  The interest payments on these loans are high and come with strings attached as Ecuador is obliged to use Chinese contractors to build the projects. Most importantly, these contracts are not available to the public. However, a letter signed by PetroEcuador and Petro China was recently disclosed. The letter seems to suggest that Petro-China can seize oil from Ecuador’s other international clients if the country fails to repay any part of the loan.

Chinese companies have been guilty of environmental negligence, giving rise to protests from the Confederation of Indigenous Nationalities of Ecuador (CONAEI), the largest indigenous organization and one of the groups that initially supported President Rafael Correa for president. As pointed out by Carolina Ocampo-Maya, from the Vale Columbia Center on Sustainable International Investment,   neither China nor any Chinese mining company is part of two major trans-national organizations promoting better practices in mining, which are the International Council on Mining and Metals and the Extractive Industries Transparency Initiative. Likewise, China has not signed the International Labor Organization’s 169 Convention protecting the rights of Indigenous and Tribal Peoples, the main tool used by Latin American communities to demand consultation on matters affecting their territories and way of life.”.

In fact, Chinese oil and mining companies have amongst the worst records in labor rights, environmental responsibilities and transparency. In addition, these companies only deal with high level government officials instead of with the local population.

President Correa, who in the past, fought Chevron’s environmental policies and pursued a big law suit against the company has not set up clear guidelines on issues related to transparency or environmental issues.

Chinese companies are greedy and draconian in contrast to those companies linked to members of the Organization for Economic Development (OECD), which is mostly comprised of Western countries. OECD companies not only comply with environmental and labor laws but also hold a permanent dialogue with local communities and have an open transparent policy that prevents bribery and corruption.

However, Chinese companies do not always behave in a draconian way unless the host country permits them to do so.

The case of Peru provides an instructive example as Barbara Kotschwar, Theodore Moran, and Julia Muir have shown.

A Chinese company, Shougang, won a bid to work in Peru in the exploitation of steel. According to the agreement with the Peruvian government, they were supposed to invest $150 million in the community over three years but they failed to live up to this agreement.  The company also fired Peruvian workers and brought laborers from China. Furthermore, they forced Peruvian workers into cramped living quarters in order that single family homes could be occupied by multiple families or workers.

Shougang also paid amongst the lowest wages and fired workers without giving a reason.

According to a report by the UN Refugee Agency,  the company forces its employees to renew their contracts and also changes the company’s trading name every six months in order to prevent the workers from organizing.  In addition, protests by workers were brutally repressed by the police.

On the other hand, a second Chinese mining company operating in Peru, state-owned Chinalco, has so far behaved differently. Chinalco’s open-pit copper mine, high in the Andes just outside the town of Moro Cocha is due to become operational sometime in 2013. Chinalco underwent a major project of relocation of the town’s approximately 5000 residents by building a new town six miles from Moro Cocha. This has been met by mixed reviews from the residents as for many it is an improvement in their living standards while for others the environment is very sterile and the houses, at 400 sqaure feet each, are too small. So far, Chinalco has respected labor rights, has not imported Chinese laborers, has complied with environmental laws, and has invested in the community while maintaining a network of local communications.

Kotschan, Moran and Muir explain the different types of behavior by both Chinese companies by referring to the time they started their operation. Shougang began its operations under the authoritarian government of Alberto Fujimori, whereas Chinalco began its operations after democracy was re-established. It was under the democratic government of Alejandro Toledo that civil society began to flourish; indigenous rights were enhanced and local government more fully developed. Chinalco could not avoid this important transformation.

While in Ecuador, Correa has claimed that mining is a natural resource he wishes to exploit since economic growth is important to him, he has ignored the rights of the Ecuadorian population.

For a leader of the Bolivarian revolution that has promised inclusion  and claims to  represent the most oppressed in society as against ‘the factual powers” as he likes to call them, his tolerance of China’s  19th century brutal capitalism looks surprising on the surface but it has its own logic.

Correa’s citizens’ revolution is, in fact, a system where citizens empower the president and not the other way around. Correa’s top-down approach is exactly like the Chinese top-down approach. All this comes at the expense of civil society and workers’ rights.

If we look at the Ecuadorian constitution, we can clearly see that it gives significant prerogatives to the state. The state is responsible not merely for guaranteeing or expanding liberties and rights but the Ecuadorian constitution empowers the state with overall national planning and involvement in all aspects of life in the name of the “social interest”.  The constitution also provides the executive power with prerogatives that are unacceptable in a true constitutional democracy. (See deeper analysis here)

Therefore, it is not surprising that in Correa’s Ecuador, the behavior of the Chinese companies not only reflects the ruthlessness , anti-civil society approach of these companies but also the exploitative approach of the Ecuadorian government, whose regime is built on a top-down model, despite claiming to represent the poor.

Chinese companies will always try to take advantage of the weaknesses of countries where they invest. They are ruthless and have no self-regulation. This is true of so many Chinese companies in their own country that have used this same model of massive relocation, environmental degradation and poor labor practices. The questions for countries in Latin America are whether the exploitation of raw materials is to their benefit in terms of alleviation of poverty and long term  environmental impacts as well as are they getting a fair deal.  Therefore, it is up to the different governments to set up the appropriate conditions that prevent exploitation of their workers and irreversible environmental destruction.  Aggravating the situation is that transparency, the rule of law, and good governance are generally very weak in Latin America, with some exceptions.

Even though the story is not fully told, the more positive experience of Chinalco in Peru can only be reproduced in countries that maintain a strict rule of law and proper enforcement.

Nancy Menges and Luis Fleischman are co-editors of the Americas Report. Luis Fleischman is also the author of the upcoming book  “Latin America in the Post-Chavez Era: The Security Threat to the United States”