The world that emerged after World War II had a large part of what is now the Global South in colonial condition. Suffice it to say that the United Nations (UN) was created by convening in January 1942 a conference of 26 nations to reaffirm the commitment to fight against the Axis (Germany, Italy, and Japan) until the very end.

The allied countries (the United States, the Soviet Union [Union of Soviet Socialist Republics; USSR], the United Kingdom, and China) met from August to October in 1944 in Dumbarton Oaks to prepare the statutes and the design of the future UN. The organization was born at the San Francisco Conference in 1945, with 50 participating countries, which approved the Charter of the UN. The organization formally came into being on October 24, 1945, after France, the United States, the United Kingdom, the Soviet Union, and China ratified the treaty. Only the victors of World War II were founding members. And the Big Five retained veto power, as so-called super victors. Asia had only two participating countries—China and India, which would actually win their independence on August 15, 1947—and Africa had two as well—South Africa and Ethiopia. On the other hand, Latin America had 19 countries among the founding members, allies of the United States and considered winners of the war.

Latin America gained its independence at the beginning of the nineteenth century. But almost all of Africa and Asia had been left out of the creation of the UN. The colonies had formed military units for the armies of the motherlands, whose men, after the conflict, were once again second-class citizens. In the colonies, all positions of power in the economy, in education, in health, and in administration were occupied by white men who came from the colonial powers.

But a new feeling was emerging among the national elites, many of whom had had access to higher education, often in the metropolis: a growing sense of dignity, frustration, and injustice. Colonialism did not invest in education, especially in higher education. When Libya obtained independence from Italy, the total number of people with university studies was 28 men and no women.

The COVID-19 pandemic has led to the reconfiguration of global geopolitics. It accelerated and sharpened pre-existing trends (Acharya 2020; Haass 2020a; Rodrik 2020). In so doing, the pandemic has highlighted something even more challenging than the virus itself, namely, the global competition between the United States and China (Actis and Creus, 2020a).

The current international order is in transition, marked by a pandemic outbreak with highly disruptive effects, within the setting of a structural process of a global dispute between the two main international powers. The scope and magnitude of the impact of both processes pose a huge challenge for the rest of the actors in the system, be they states, companies, or international organizations.

Latin America was affected by this like no other region in the world (Nugent and Campell 2021). The pandemic undermined the region’s power capabilities and starkly exposed its weaknesses. At the same time, the increase in tensions between the United States and China exacerbated strategic dilemmas and revealed the need for Latin American countries to redefine and rethink their place in the new order. This chapter analyzes the impact on Latin America of this global power dispute.

The first section discusses the nature of the international order in the making from the perspective of entropic bipolarism. The second section reflects on the place of Latin America in this dynamic, a place marked, perhaps paradoxically, by a condition of both structural weakness and potential strategic relevance, resulting from a renewed interest in the region on the part of the great powers. The third section highlights the need for a sub-systemic approach since the challenges are not uniform and differ throughout the region. South America is identified as the most problematic area and the focus is placed there. Finally, and as a conclusion, some normative issues are addressed, and the strategic options available for the countries of the subregion are discussed according to possible scenarios, placing special emphasis on the gap between what is desirable and what is possible.

The Era of “Entropic Bipolarism”

In 2014, Randall Schweller pointed out that in geopolitical terms the world was leaving behind the “era of order” to give way to the “era of entropy” (Schweller 2014).

Latin America is going through a rough patch: recession, increased poverty and inequality, bankruptcy of thousands of companies, crisis of political representation, and growing international marginalization are the most distinctive features of the region today.

The crisis is global. What is in question is the multi-dependency that goes to the heart of the sort of globalization that has taken place in recent decades, as well as the financial insecurity and ecological irresponsibility that go hand in hand with it (Boyer 2020). In this sense, the comparison with the Great Depression of 1929 is not very relevant. The causes of that crisis were rooted in the mismatch between widespread mass production and the absence of mass consumption. It is to Keynes’ credit to have identified this contradiction and proposed solutions to overcome it. The current crisis, caused by a coronavirus (COVID-19) whose origins and possible mutations are unknown, generates a much more radical uncertainty. There are currently no theoretical schemes capable of accounting for the complexity of the current crisis and its possible solutions.

This uncertainty is serious in the case of Latin America, which has turned out to be the worst hit region. With 8 percent of the world’s population, it accounted for 20 percent of infections and 30 percent of deaths caused by the pandemic by the end of 2021. Latin America is the region that has suffered most intensely the rigors of the pandemic, and its epicenter has been in Brazil.

In the economic sphere, the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) (ECLAC 2020) has estimated that the fall in the regional gross domestic product (GDP) reached 7.7 percent, the highest in 120 years. In contrast, the world economy, according to the International Monetary Fund (IMF) (IMF 2021) by 3.3 percent in 2020. Latin America’s performance also compares negatively with that of the Middle East and Central Asia (−4.1 percent), Sub-Saharan Africa (−3.9 percent), and Emerging and Developing Asia (1.7 percent). The macroeconomic figures, however, do not fully describe the depth of a crisis that, together with the loss of more than 1.7 million human lives, has brought with it the collapse of thousands of small- and medium-sized companies and enterprises.

The Active Non-Alignment (ANA) proposal is seductive. Indeed, today Latin America carries less weight than before on the world stage—both economically and politically—and at the same time United States–China tensions are increasing. Being passive in the international arena is not an attractive option, and neither is, in Latin America at least, siding openly with Washington or for Beijing. The thesis of an ANA, then, at least has the advantage of responding to these two concerns that many Latin American analysts have detected for some years.

However, the ANA also has some challenges and they are not easy to overcome. To give this innovative proposal the credit it deserves, it is imperative to identify those challenges and find a way, if possible, to overcome them. I see three initial challenges.

The first is the geopolitical and economic division of Latin America into two distinct spheres, largely determined by the relationship with the United States and with China of the countries in the region. The second is about the difficulty of being symmetrical in the approach and criticism of both superpowers. They are not the same. Third, for Latin America to develop a non-aligned and active international position, it would have to embrace causes that for many countries are still alien or that for many leaders in Latin America today are even anathema.

The division into two subregions occurs mainly through the way countries are linked to the global economy. However, for historical and geographical reasons this division also overlaps others. On the one hand, there is what we could call, following a North American tradition of the 1980s, the Caribbean Basin: Mexico, Central America, the Caribbean islands, and perhaps Colombia and Venezuela, although they rather belong to South America. The countries of the Caribbean Basin, in the first place, have been much more closely related to the United States than the countries of South America. Its main linkage to the world economy is with the United States through the export of manufactures, services—tourism and migration—and other illicit sales such as drugs.

A common thread through this book is that of an international system in transformation. It comprises a declining hegemonic power, new actors, and new configurations of alliances and rivalries, as well as new agendas and challenges.

The more precise characterization of this system elicits a variety of responses among the authors. Some suggest that we are in a multiplex world in the sense of Acharya: “defined by not having a single line of control, nor a meta-narrative about the global order” (Tussie), a “multi-theater cinema”(Heine), “a world without hegemon, culturally and politically diverse, although economically connected, whose security challenges are increasingly transnational, but in which the power to break and build order is dispersed and fragmented” (Roncagliolo and Campodónico). For others, there is an “entropic bipolarism” in which “to the increasingly disorderly and chaotic ‘diffusion of power,’ we must add a ‘transition of power,’ in which a rising power threatens the primacy of an established power” (Actis and Creus) or that of a situation of growing multipolarity—“or more precisely of bipolarity-multipolarity in the global systemic structure” (Armijo).

Yet, there seems to be a coincidence that, in the words of Serbin

Here, Serbin indicates the complexity of the new world by drawing attention to an emerging actor, Eurasia. This overlaps with the analysis of Stuenkel, who proposes the notion of a “Post-Western World” in the making, in which the conventional wisdom about the established international relations patterns in the last centuries is questioned.

It is in this scenario of uncertainty that the ANA proposal arises as a foreign policy doctrine based on certain key principles and not simply contingent interests. The ANA option should not be confused with a certain type of pragmatism that invariably ends in opportunism, doing nothing but eroding the credibility and standing of those who apply it.

• • There is a growing policy trend that in addressing climate change, various trade measures must be implemented to enhance the sustainable practices of global stakeholders.

• • As a response to level up the playing field of global trade partners in enhancing sustainability, the EU recently introduced the European Union (EU) Carbon Border Adjustment Mechanism (CBAM), which will impose a carbon price on certain imports, namely, electricity, aluminium, cement, iron and steel, and fertilizer, to the EU.

• • The EU CBAM may, however, cause trade disputes among World Trade Organization (WTO) members.

• • EU and ASEAN trade relations are currently on an upswing trajectory, and there are therefore some risks involved in implementing the EU CBAM in the ASEAN region.

• • At the same time, despite the perceived adverse effects, there is room for improvement in communicating EU CBAM implementation in ASEAN.

• • The EU should introduce more calibrated approaches to implementing the EU CBAM in ASEAN, particularly considering the political and strategic risks, economic development and capacity, and climate ambitions of individual ASEAN countries.

Few people today remember a world not dominated by the United States. For more than half a century the latter has exerted a powerful influence across much of the world. The leadership and supremacy of the United States were a decisive feature of Latin America’s twentieth-century international relations and on how its regional relations evolved. The rise of Asia in general and China, in particular, have changed this. A plurality of power sources, economic drivers, and world views have flourished in the last decade. China’s sheer material presence on the global stage is shaping the behavior of most other states. This challenges our understanding of how we conceptualize and analyze practical regional cooperation around key issues of development and conflict.

Regionalism in the twenty-first century takes place in a post-hegemonic framework, one fundamentally different from what can be seen as the hegemonic moment of the twentieth century. As of this writing, the almost complete absence of US leadership has been a remarkable aspect of the global health crisis brought about by COVID-19. This has allowed China, Russia, and India to display what has been dubbed as vaccine diplomacy. China is seeking to expand health-related infrastructure and innovation capacity as part of the Belt and Road Initiative (BRI). This speaks to the country’s broader push to position itself as a global health leader. This attempt—with both geopolitical and geoeconomic significance—has been characterized as being as ambitious as the launch of the Bretton Woods institutions and the Marshall Plan in the twentieth century combined. This has the potential to accelerate the shift in balance of the global standing between the United States and its competitors. Perceptions of the United States and its position at the center of the contemporary international order vary, but they have undoubtedly shifted over the last decade. Active Non-Alignment (ANA) and pragmatic regional cooperation are key for Latin America to come to terms with new times, new structures, and new development challenges.

Regionalism in a multipolar world order has its own logic. This is what makes intelligible the confusing mix of cooperation and conflict present in Latin America.

INTRODUCTION

According to international frameworks, climate solutions need to be scaled up in critical international trade issues to fulfil the United Nations Sustainable Development Goals’ (UNSDG) goal 13, the 2015 Paris Agreement, and the decisions taken in the 2021 United Nations Climate Change Conference (COP 26) and the subsequent conference in 2022 (COP 27).

The European Union (EU) and the Association of Southeast Asian Nations (ASEAN) are the two most successful regional blocs, and trade relations between the two are currently on an upswing trajectory. However, the EU’s current plan to impose a Carbon Border Adjustment Mechanism (CBAM) as part of the EU Green Deal will likely cause disputes with global partners, including ASEAN.

This paper analyses the EU CBAM and its technical implementation and, most importantly, the possible implications of the EU CBAM on ASEAN-EU strategic relations. Through literature reviews and interviews with expert partners, this paper attempts to capture the regional perceptions and possible calibrated scenarios of implementing the EU CBAM in the ASEAN region.

Section 1 explains the rationale behind EU CBAM, and its technical aspects, providing the nuanced perspectives of those who support and those who disapprove of its implementation, so as to give readers a balanced view of the issue. Section 2 looks closely at the strategic implications of the EU CBAM to ASEAN-EU relations and discusses ASEAN’s receptiveness to such a policy. Section 3 concludes with possible future scenarios to be explored by the EU and ASEAN for adaptation to the EU CBAM.

SECTION 1: ABOUT THE EU CBAM

As part of its flagship Green Deal policy launched in 2021, the European Union introduced a Carbon Border Adjustment Mechanism (CBAM). If it fully takes off, the EU CBAM will impose a carbon price on certain imports, such as electricity, aluminium, cement, iron and steel, and fertilizer, into the EU region.

The CBAM aims to strengthen global climate change actions, and is much aligned with the EU’s current unwavering commitment to the UN Paris Agreement on climate change. Under the Paris Pledge, countries worldwide are fully committed to limiting global warming to well below 2 degrees Celsius and preferably to 1.5 degrees Celsius.

This chapter examines how Latin American regional security actors are engaging with the competition between the United States and China. We look at two factors that raise challenges to the emergence of an active regional response to the systemic dispute. On the one hand, a network of institutions has evolved in the realm of defense diplomacy, led by Washington, which claims a hegemonic role in the sphere of security; on the other, there has been a decline of regional projects in general. We argue that the search for autonomy in the sphere of security in regional terms, a traditional discussion among Latin American scholars and political leaders, must confront these major challenges if the Active Non-Alignment approach (ANA) is to move forward. As relations between China and the United States will continue to impact international politics in the next decades, it is essential that regional actors embark on the admittedly difficult path of debate and negotiation leading to collectively deciding on a road that could enhance their autonomy.

We start by exploring the security dimension of the competition between China and the United States in Latin America. We then move to consider the history and features of the institutional network through which Washington’s influence in the region is being exercised. Finally, we look into the linkage between autonomy and regionalism, to the extent to which it has weakened in government postures and policies and to possible ways forward for its revival.

The Chinese–American Competition in Latin America

The past two decades have been marked by the growing Chinese presence in Latin America (Myers 2018). While Chinese economic and commercial interests are the key drivers of this trend, China has also invested in political and diplomatic relations. In the security sphere, we also see a move toward a greater presence.

China’s strategy includes advancing bilateral ties with Latin American and Caribbean (LAC) region countries, isolating Taiwan and increasing its presence in regional and multilateral organizations, in particular, the Organization of American States (OAS), where China was granted observer status in 2004 (OAS 2004), and the Inter-American Development Bank (IDB), which China formally joined in 2009 (IDB 2009).

At the close of the tragic year 2020, a long negotiation between China and the European Union (EU) was coming to an end. After seven years of arduous meetings about an investment protection treaty between the world’s second-largest economy and its largest market, the process was over. The agreement was of particular importance for Germany, the pro-tempore president of the EU, and whose former defense minister Ursula von der Leyen, chairs the European Commission (EC). The Chancellor of Germany Angela Merkel would not stand for re-election in the country’s general elections in 2021, so this treaty took on special meaning for her. German industry, particularly its automotive sector, is heavily dependent on the Chinese market, a country in which German brands—Volkswagen, Porsche, BMW, Audi, and Mercedes-Benz—are represented and produce cars on a large scale. Mercedes-Benz sells more vehicles in China than in Germany, just as General Motors sells more in China than in the United States. With 30 million cars manufactured a year, China is not only the largest automotive market but also the largest producer.

For Chinese president Xi Jinping, the treaty was key, and he instructed Chinese negotiators to do whatever it took to reach an agreement, including concessions on hot topics such as technology transfers. There was only one problem: this agreement was reached during the transition from the government of US president Donald Trump to that of the newly elected Joseph (Joe) Biden, and this agreement between the EU and China was not well regarded in the United States (Ewing and Myers 2020). Given the dispute between Washington and Beijing and its escalation from commercial to technological to diplomacy, the agreement sent the wrong signal. It would be added to the signing of the Regional Comprehensive Economic Partnership (RCEP), the largest trade agreement on the planet, on November 15, 2020, between China and 14 other countries in Asia and Australasia, as well as President Xi’s announcement at the Asia-Pacific Economic Cooperation (APEC) virtual summit in Kuala Lumpur that same month, of China’s renewed interest in entering the Comprehensive and Progressive Trans-Pacific Agreement (CPTPP) (Albertoni and Heine 2020). China seemed bent on continuing to sign trade and investment agreements, in contrast to an increasingly protectionist and isolationist United States.

Introduction

China’s increasing role in the world is one of the dominant themes of the twenty-first century. Rising from a per capita income similar to those of the poorest African nations in the 1950s, the World Bank now classifies China as an upper-middle-income country and the country has lifted some 800 million people out of poverty. The growth in aggregate income level is even more dramatic: China now has the largest economy in the world in purchasing power parity (PPP) terms and is expected to overtake the United States in current dollar terms later in the 2020s. Militarily, China has vastly expanded the capacity of the People’s Liberation Army (PLA) and increased its role in outer space. Institutionally, it has established powerful new development banks and invited the world to join its massive infrastructure program—the Belt and Road Initiative (BRI).

While the main thrust of China’s expansion thus far has been in Asia, Latin America and the Caribbean (LAC) have also been incorporated, mainly in economic terms. China–LAC relations have burgeoned through trade and finance since the early 2000s. While not all aspects of the encounters have been positive, and many in the region remain skeptical of their new partner’s intentions, the Chinese presence has enabled a diversification of Latin America’s international relations that can only be seen as beneficial. Certainly, relations with the US continue to dominate in the northern half of the region and Europe is a significant partner for South America, but China’s new presence provides important new opportunities.

A major problem that Latin America must face in this new context is the growing conflicts between the United States and China and the expectations that Latin America should “take sides” in this struggle. Although the tensions reached an apex during the presidency of Donald Trump in the United States, no one expects them to disappear under the new Biden administration there. Indeed, although the tone may moderate, the conflicts may even increase as Biden officials try to enlist European and Asian allies to contain China’s power. Keeping its distance from such power struggles should be a major foreign policy goal for the LAC region in the coming years.

The word “crisis” is inherent to Latin America. Throughout two centuries of independent history, the region has gone through many crises. Some triggered from abroad and others self-induced, the majority generated in the interface between domestic and international affairs. According to the Economic Commission for Latin America (ECLAC), however, the crisis of 2020–2021, caused by the COVID-19 pandemic, has been the worst in 120 years. In 2020, the region’s economy contracted by 7.7 percent (versus 3.5 percent for the world economy), per capita income fell to 2010 levels, and poverty levels to those of 2006. As a result, in 2021, 33.7 percent of the region’s population, one in three Latin Americans, lives below poverty levels (ECLAC 2021). Data indicate that the region faces another lost decade, this time between 2015 and 2025, since the 2015–2019 five-year period was already one of slow growth. Although the pandemic has affected the entire world, there have been regions that have emerged as winners (such as East Asia) and others that have done so as losers (such as Latin America) in the wake of this humanitarian catastrophe. The outlook of a stagnant region, one that is caught in the middle-income trap in that every 30 or 40 years it goes through a “lost decade” in which everything achieved in the previous 10 years fades away and demands a new start, is nothing less than overwhelming, to put it mildly.

What hope for the future can the 660 million Latin Americans have in these circumstances?

The previous lost decade in the region, in the eighties, was triggered by an event beyond its borders—the rise of interest rates in the United States in 1982, which led to the so-called “debt crisis.” The same is true for the current crisis, triggered by the Covid-19 pandemic, which arose in 2020 from a virus that emerged in Wuhan, China. Once again, the crisis surprised a fragmented Latin America, making a coordinated response that could have lessened its effects (González et al. 2021), difficult, if not impossible. Far from being a mere addendum to its condition, the region’s location in and interaction with the international political economy is central to its development and progress.

The concept of Active Non-Alignment (ANA) was initially proposed by Carlos Ominami in a text published in August 2019. The specific reference was to the Chilean case, but the call of “our only option is that of an active non-alignment that puts politics at the center of international action […]. We must defend multilateralism and international law with all our might” (Ominami 2019) was to Latin America as a whole—and even beyond.

The notion resonated. The Puebla Group, made up of former Latin American and European presidents and leaders, declared in its November 2019 Manifesto: “Our Latin America can only assume a position of active non-alignment putting the interests of our peoples first and ensuring uncompromising respect for our sovereignty” (Grupo de Puebla 2019, emphasis in original).

An article by the present authors with an initial approach to the subject was published in Spanish in Foreign Affairs Latinoamérica in July 2020 (Fortin, Heine and Ominami 2020a) and later reproduced in English (Global Policy, 2020), French (IRIS, 2020), and Mandarin (IISS 2020). A subsequent article was published in two international outlets (NUSO 2020; WSI 2020).

In August 2020, Chile’s Foro Permanente de Política Exterior, a think tank, organized a webinar on the subject, with the participation of six former Latin American foreign ministers from Argentina, Brazil, Chile, Colombia, Mexico, and Peru to analyze its viability and scope (FPPE 2020). The stimulating discussion that took place there confirmed not only that the proposal had struck a chord but also that there was the need to explore its content in more detail, both conceptually and in terms of its policy implications.

Thus, this book. Its central objective is to bring together a group of Latin American analysts, practitioners, and Latin Americanists to reflect on the scope and implications of the ANA option to further elaborate its meaning and relevance for the contemporary conjuncture.

The selection of authors and topics was made on the basis of three criteria:

• 1. A wide thematic coverage: The ANA option arises as a response to the conflict between the United States and China, which was triggered by essentially economic (trade, investment) and technological issues (5G, artificial intelligence, semiconductors), but has gone further, to include ideological and military dimensions. It is a hegemonic struggle with a wide scope. The ANA option aims to encompass the full range of foreign policy dimensions and their interrelationships with national development policies.