Soft power or imperialism?
Last week the American President reminded Latin American countries of the Monroe Doctrine and warned them about Chinese efforts to spread China's influence.
China moves into Latin America
WHILE Donald Trump was in Davos last week trying to persuade the global plutocracy that “America First” does not mean “America alone”, China’s foreign minister, Wang Yi, was promoting globalisation, free trade and co-operation in Latin America. For his hosts, the contrast was striking. Mr Trump has insulted Mexico, El Salvador and Haiti, discourages investment in the United States’ southern neighbour, and talks trade protectionism. China, in the soothing words of Mr Wang, offers Latin America a “strategy of mutual benefit and shared gain”.
He was speaking at a meeting between China and the Confederation of Latin American and Caribbean States (CELAC), a talking shop comprising all the region’s 33 countries…
The meeting marked the maturing of a relationship that has developed precociously in this century. Total annual trade between China and Latin America shot up from almost nothing to more than $200bn by 2014… Latin America’s exports to China increased by around 30% last year…
The biggest changes are in Chinese investment and lending. Until recently, these focused on oil, mining and Venezuela. Now they are centred on Brazil and Argentina, and are in more sectors…
China’s interest in Latin America is not matched by other big powers. The Trump administration has no clear strategy… The European Union (EU) remains the largest single source of foreign investment. But the conclusion of a long-awaited trade agreement with Mercosur, which includes Brazil and Argentina, has so far been thwarted… “The EU hasn’t worked out clearly what it wants of Latin America,” concludes a new report by the Elcano Institute, a think-tank in Madrid.
The same applies to Latin America in its embrace of China. This brings undoubted benefits. Apart from money, Latin American governments like—and take at face value—China’s stance on global governance and climate change. But the region is entering into a political entanglement with an external power that has no interest in democracy…
See also:
Beware of ‘predatory’ Chinese investment in the Americas, warns Rex Tillerson
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Labels: China, economics, international relations, international trade, soft power
Externality
When developments outside a political system cause changes within the system, we label those developments externalities. Often externalities, like this one, are unexpected.
With U.S. competition hurting its marijuana business, Mexico warms a little to legalization
For decades, marijuana flowed in one direction across the U.S.-Mexico border: north.
These days, drug enforcement agents regularly seize specialty strains of retail-quality cannabis grown in the United States being smuggled south.
Widespread legalization in the U.S. is killing Mexico's marijuana business, and cartel leaders know it. They are increasingly abandoning the crop that was once was their bread and butter and looking elsewhere for profits, producing and exporting drugs including heroin and fentanyl and banking on extortion schemes and fuel theft.
So when Mexico's tourism secretary this week boldly declared his hopes that Mexico will legalize marijuana for recreational use in an effort to reduce growing violence across the nation, some balked at the notion that marijuana was driving the bloodshed.
 |
| Legalization protest last May |
[T]hat a Cabinet member was willing to advocate such a policy marks a dramatic shift from a time when Washington dictated a hard-line drug policy across Latin America…
The legalization debate comes amid Mexico's bloodiest wave of violence yet. There were more than 29,000 homicide victims in 2017, more than in any year since the government began releasing homicide records two decades earlier.
The drug trade generates between $6 billion and $8 billion a year for Mexico, according to the RAND Drug Policy Research Center, which estimates that 15% to 26% of that comes from marijuana…
The tourism secretary, Enrique de la Madrid… a member of the ruling Institutional Revolutionary Party, is one of a growing number of Mexican leaders who have called for pot legalization…
In the U.S., marijuana is legal in some form in a majority of states and will soon be permitted for recreational use in eight. Cannabis is already legally sold for recreational use in Uruguay and will be later this year in Canada. Several Latin American countries, including Chile, Brazil, Peru, Costa Rica and Colombia, have changed laws to make marijuana more available for either medical or recreational use.
Full legalization faces an uphill battle in Mexico, where a majority of voters and the Catholic Church are opposed to the idea. A 2015 poll conducted by the newspaper El Universal found that two-thirds of Mexicans oppose decriminalizing cannabis, although 63% said they backed a debate on the issue…
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Labels: concepts, externalities, international trade, Mexico, politics
Go north, young businessmen
An expression of soft power that promises benefits for China, its customers, and its markets.
China to develop Arctic shipping routes opened by global warming
China has announced plans to develop shipping lanes through the Arctic to become a "Polar Silk Route".
Beijing said global warming meant viable shipping routes through the Arctic would become increasingly important for international trade.
It said China would work with Russia and other Arctic countries to develop the polar route.
It is part of an ambitious bigger scheme to transform China's land and sea connections to Europe and beyond.
President Xi Jinping's $1tn (£700bn) Belt and Road Initiative seeks to rebuild much of Eurasia's infrastructure of ports, roads and rails, and put China at its centre…
"China hopes to work with all parties to build a 'Polar Silk Road' through developing the Arctic shipping routes," China said in its first official policy paper on the polar region.
It said every country's "rights to use the Arctic shipping routes should be ensured"…
The north-east passage offers China a faster sea route to many ports than the current routes using, in many cases, the Suez or Panama canals.
The new route could take 20 days off the 48 days it currently takes to get to Rotterdam from China via the Suez Canal, estimates suggest…
The paper does acknowledge China's interests in oil and gas, minerals, fishing and other resources in the region, but it expresses an interest in developing them co-operatively with other nations and Arctic states.
The paper encourages businesses to build infrastructure and conduct commercial trial voyages in the Arctic.
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Labels: China, economics, international trade, soft power
One complication of many
What takes precedence? UK sovereignty? EU treaties? historical fishing rights? the British navy?
Denmark to contest UK efforts to 'take back control' of fisheries
The British government’s plan to “take back control” of its waters after leaving the EU is about to be challenged by a claim from Denmark that its fishermen have a historical right to access to the seas around Britain dating back to the 1400s.
Officials in Copenhagen have mined the archives to build a legal case that could potentially be fought in the international court of justice in The Hague, although officials hasten to say that this is not their intention.
Denmark is seeking a Brexit deal that recognises the right of its fleet to continue to exploit a hundred shared stocks of species such as cod, herring, mackerel, plaice and sand eel…

The development suggests that leaving the EU will not reap the dividends promised by prominent leave campaigners, including the foreign secretary, Boris Johnson, who has claimed that the union’s “crazy” common fisheries policy has halved UK employment in the industry…
Denmark’s foreign affairs minister, Anders Samuelsen, told the Guardian the issue was crucial to many communities in Denmark and that they would be making their case through the EU’s chief negotiator, Michel Barnier.
“Danish fishermen have historically been fishing across the North Sea. The common fisheries policy in the EU has regulated this, based on historical rights and preserving our common stocks that don’t follow economic zones,” he said…
The Danish MEP Ole Christensen, who sits on the committee, said: “If, and I am really not hoping for this, UK and EU27 does not reach an agreement, it would be terrible for both parties.
“If we are not able to fish in UK waters and the UK cannot export their catch to the EU27, it will hurt everyone, not least the people who make their living in the sector. For the sake of everyone, we need to keep an open mind and work on getting a fair deal.” …
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Labels: EU, international trade, sovereignty, UK
Complexity
Some things are much more complex than they appear at first glance.
Why U.K. Is Struggling to Find the Path to ‘Brexit’
A recently leaked memo… has highlighted cabinet divisions over Britain’s withdrawal from the European Union, while suggesting that the government may need six additional months to settle on a plan and to recruit tens of thousands of extra civil servants.
The document identified tensions between enthusiasts for British withdrawal… and those fighting to preserve closer economic ties to the bloc…
[T]he more cautious types want to preserve Britain’s access to the European market by maintaining membership in the customs union or the single market, or perhaps some combination of the two…
What’s the difference between the customs union and the single market?
Both the customs union and the single market eliminate tariffs between member states. The customs union sets tariffs with non-European nations, so members share a common trade policy with the rest of the world. The single market removes non-tariff trade barriers, too, for instance by maintaining common product standards…
Is the European customs union a more practical and reachable goal?
It might be. Not all members belong to the European Union… Britain would be able to trade freely in goods within the union… But Britain would have to comply with some European Union regulations.
So what does the British government say about Brexit plans?
As little as possible… it refuses to give a running commentary, saying that would weaken its negotiating position. But British officials had not prepared for Brexit before the referendum and are having to examine its impact on every sector of the economy — a huge exercise. In doing so, they appear to be uncovering more questions than answers…
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Labels: EU, International Organizations, international trade, UK
Political track and economic track
Iran's supreme leader might be talking like an isolationist Islamist, but businesses seem to be headed in another direction.
Peugeot-Citroen back on the road in Iran with deal to build cars
The French carmaker Peugeot-Citroen (PSA) has announced its return to Iran under a €400m joint venture with its old partner Iran Khodro in Tehran that has been made possible by the lifting of nuclear sanctions.
At the same time, Boeing has confirmed reports it will start selling airliners to Iran following the nuclear accord reached in 2015.
The first cars produced under the PSA venture are set to be sold in February, with the aim of producing 200,000 vehicles a year by 2018.
PSA is the first western carmaker to announce a return to Iran since many economic sanctions were lifted in January when a landmark nuclear deal with world powers took effect…
Iran’s industry and commerce minister, Mohammad Reza Nematzadeh, said more joint ventures were on the way…
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Labels: economics, international trade, Iran