Avoiding Cold War Proxy Conflicts in the Central American Region: How to Achieve a “Win-Win” Relationship Between China and the U.S.

During the Cold War, the hegemonic power of the United States and the Soviet Union forced the Central American region (Guatemala, Belize, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, and the Dominican Republic) to choose sides. The result was the creation of a proxy war within the region, with at least half a million casualties and the destruction of the infrastructure and economies. This case brought a bad reputation for the U.S. because of the issues like the Iran-Contra scandal, the International Court of Justice (ICJ) indictment against the U.S. for illegal paramilitary actions against Nicaragua, and the support given by the U.S. government to right-wing dictatorships in the region, among others.

We must avoid repeating this problem and propose that Central America, through its regional institutions, e.g., the Central American Integration System (SICA), should join together and negotiate as a region. This paper offers a solution to avoiding the historical issues of hegemonic polarized competition within the area that would destroy the advances enjoyed over the past 40 years. Note that the U.S. was the only hegemonic power in the region during this time. Today, this is changing with the arrival of the People’s Republic of China (PRC), a new power entering the area.

Hegemonic actions within the region led to a zero-sum game which took away the chance to have economic development. We propose, in part, that Guatemala and Belize should join the region in recognizing China. Doing this would enable the area to unite to negotiate with China as we did with the U.S. through the Central American Free Trade Agreement (CAFTA) and the European Union has done with the world. Hence, we could take advantage of the Belt and Road Initiative (BRI), especially in infrastructure and economic advancement, through trade and outside private investment.

Fear of Chinese motives is a significant concern. Let us look at the problems faced in the region since the end of the Cold War. At the outset, many nations in the region did not have diplomatic relations with China, and we were affected by a host of unending problems, such as:

  • Waves of migration
  • Lack of economic opportunities
  • Endemic corruption throughout the region; e.g., Honduras ex-president, Juan Orlando Hernandez, was extradited to the U.S. and charged with drug trafficking and arms trading. China was not involved in any of these activities.
  • Guatemala, which still has diplomatic relations with Taiwan, and in 2022 was ranked 150/180 on the Corruption Perceptions Index.
  • Infiltration of drug cartels into regional governmental structures
  • Changes in how national governments deal with significant issues, e.g., The President of El Salvador, Bukele’s, approach towards gangs was not “Made in China.”

We do not believe that China uses the BRI for wholly altruistic reasons. The initiative is in the best interests of the PRC to invest in Latin America. For instance, the BRI provides an alternative to current regional logistic conditions. It enables a reliable flow of money for infrastructure that reduces production and trade costs. These elements improve China’s influence in the region while ensuring better trade relations with, first, the recipient and, indirectly, regional nations.

However, the Chinese experience in Venezuela was not without problems. After injecting $60 billion in sovereign loans for projects secured by petroleum and following the reduction in oil exports coupled with Venezuelan corruption. In Venezuela, at least 25 percent of the funded projects have not been concluded. This is consistent with sound capitalist ventures recognizing that the BRI sometimes makes risky investments.

Recognizing that state-to-state lending was not a good business practice, and in light of problems faced in Venezuela, China changed its approach and now favors directly financing Chinese companies already in the region and multi-lateral partnerships. Additionally, commercial banks are currently engaged in funding the region. These changes have led to more transparency in their commercial relationships.

We are not unaware of the “debt trap” that can result from Chinese investments. However, even if that is the case,  the  Central American region already owes the International Monetary Fund (IMF) over $20 billion, representing over 60% of the regional GDP in debt.

Further, we recognize that China has made significant investments in Africa and other continents. For example, a railroad project in Kenya – the Nairobi Expressway, $764 million, and a $1.5 billion fully-automated deep water port in Nigeria, an oil-producing country. Another example is China’s investment in a deep water port in Greece.

China has helped the above (and many other) nations improve their infrastructure and develop economically. Even if these projects gain political leverage for China, there is no requirement that the recipient nation agrees to host military bases to date. However, China has two offshore military bases while the U.S. has more than 80, with bases in the region, e.g., Honduras and El Salvador.

The U.S. has done much to alleviate the problems in the region, like the $4.2 billion in private sector investment in Central America. And different strategies are done to stabilize the region by generating jobs, sharing technology, supporting private investments, and supporting loan applications from the region to international financial institutions. Complementing this are programs like the Millennium Challenge Corporation’s programs aimed at various issues critical to the region.

China has a capitalist economic engagement (BRI) and Free Trade Agreements (FTAs). The Chinese want local government stability and have no wish to change governments or economic systems. This is the same as the relationship between the U.S. and Saudi Arabia, Egypt, and Vietnam — all of which have political systems that contradict the stated policies of the U.S. China came into this hemisphere with an economic reason and not an ideological one like that of the Soviet Union. As locals, we want to help the U.S. support the idea that having China in the region is a “win-win” for everyone.

Only the U.S. and the PRC can afford to build significant infrastructure projects on a regional level. Examples include a dry canal connected by rail and road with a deep water port on the Atlantic coast and another on the Pacific; railway, roads, telecommunication connections, and fighting the effects of global warming throughout Central America.

History has taught us the harmful effects of the Cold War in Central America. Throughout this piece, we proposed a different perspective: to prevent securitization in a zero-sum game competition between China and the United States. Otherwise, Central America could be the platform for new low-intensity conflicts, including new technologies like cyberwar, disinformation, economic sanctions, and other destabilizing actions. This sort of competition would bring out the worst in both of them. This should not be seen as an ideological war. China works under a capitalistic system as much as the U.S.

As we said in the introduction, the United States is at its best when it does what it does best, i.e., competing under a capitalist system using soft power. It is expected that both countries will try to use intelligence, political leverage, influence, etc., to maintain control over policymakers, the private sector, and civil society. However, we must not forget that as long as Central America’s integration goes deeper and does well, the U.S. will benefit from it. We do not want the U.S. to disengage in the region; on the contrary, we want to be a priority for the U.S. China is, therefore, a good thing because it brings more economic attention from the U.S. toward the region. This is why both must build their relationship with the region based on respect for national sovereignty and as equal partners with common interests.

*Pablo Baltodano holds a B.A. in Intelligence and Security Studies from Bellevue University in the U.S.  (Summa Cum Laude). He is a former Consul General from Nicaragua to Mexico and former elected president of the Honorable Associations of the Consul Generals for two consecutive terms.

*Jack Brown holds a B.S. in political science from Harvard College and an MBA and MPA from Bucknell University in the U.S. He is a professor of English, history, and political science at Universidad Americana (UAMC) Managua, Nicaragua. He has lived in this country for more than 30 years.

[Header image: CIA The World Factbook – Regional maps]

The views and opinions expressed in this article are those of the authors.

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