Friday, November 11, 2016

The Cuba Test - China Eyes New Model for Latin America Relations

The Cuba Test: China Eyes New Model for Latin America Relations
China's emphasis on "knowledge cooperation" could lead to a reframing of
its approach to both Cuba and Latin America.
By Ricardo Barrios
November 11, 2016

Premier Minister Li Keqiang's visit to Cuba this past September — the
first by an acting Chinese prime minister in 56 years of bilateral
relations — held all the comradery and pageantry that one would expect
from a meeting between two of the world's remaining socialist countries.
Headlines boasted of the amount of time China and Cuba's leaders spent
together: "President Raul Castro Spoke with Li Five Times in Less than
One Day"; "Prime Minister Li Talked with Fidel Castro for Nearly Two
Hours." These figures are held up as numerical signs that the friendship
between Cold War comrades China and Cuba is as strong today as it was
when relations were first established in 1960.

Nonetheless, it would be remiss to call the visit a mere show.
Certainly, the spectacle was a large part of the visit. Behind all the
red splendor and ideological vow-renewal of this year's reunion, though,
lies an intriguing proposal that flew under most radars: "knowledge
cooperation." To technologically-starved Cuba, China's pronounced
emphasis on knowledge cooperation may be the most meaningful part of the
visit, which may also hint at more fundamental changes in China's
approach to Latin America and the Caribbean.

Squeezing Oil Out of a Rock: Cuba's Technological Desert

The years have not been kind to Cuba. Caught on the business(less) end
of an embargo that has outlasted the Cold War, the country faced several
decades of economic difficulties. The unraveling of the Soviet bloc
ushered in the euphemistic periodo especial — a period of severe
hardship during which the island lacked everything from fuel to food.
The U.S. Helms-Burton Act of 1995 further aggravated the island's
economic difficulties by tying the legal knot on the embargo's economic
noose around the island.

One of the key ways the embargo affects the Cuban economy is by strictly
limiting the sorts of productive technology, such as industrial
equipment, the island can import. Nearly six decades after the blockade
first began to take shape, the U.S. embargo on Cuba has chocked the
island technologically, affecting virtually all sectors of the island's
economy, from health services to manufacturing. Under the current state
of affairs, Cuba's Drilling and Oil Extraction Company exploits a meager
five percent of its oil potential. Life-saving medical research is
likewise not spared the embargo. According to a 2011 U.N. report, the
Cuban Institute of Oncology's purchase of a flow cytometer fell through
when U.S. company Becton Dickinson learned that the equipment was
destined for Cuba.

The island's lack of industrial technology, when paired with the stifled
private sector, has forced Cuba into years of stunted economic growth
based on squeezing out every bit of economic potential from what
resources and technologies are readily available, leading to many lost
possibilities. Cuba's current technological state relegates it to the
role of commodities exporter, depriving it of the additional revenue it
would make if it were capable of adding value to the raw goods it
presently exports. Nickel, one of Cuba's main exports, for instance, is
exported as-is, with little to no value added. Sugar shares a similarly
unadorned fate. Cuba needs advanced, mainly industrial, technology and
not just cash to revitalize its stagnant economy.

Following the reestablishment of relations, the United States has stood
out as a potential source of technology for Cuba. However, the embargo,
complete with its strong restrictions on what kind of technology can be
exported to Cuba, remains a formidable barrier that limits the transfer
of any industrial technology and equipment to Cuba. Cuba's removal from
the list of state sponsors of terror has eased some of the embargo's
restrictions. Notwithstanding these relaxed restrictions and some
limited exceptions, though, exports to Cuba remain subject to Export
Administration Regulations (EAR) and require a license. The United
States' historical abstention from condemning the embargo at the UN was
simultaneously symbolic of the Obama administration's desire to end the
embargo and of the administration's inability to effect substantial
change without Congress onboard.

China has shown itself a more dynamic participant in the mission to
modernize Cuba. Largely unhindered by the embargo, Chinese
communications firms stand out amongst those most eager to build-up
Cuba's underdeveloped infrastructure. Huawei — whose Chinese hardware
has raised U.S. security national concerns in the past — has established
its presence on the island through Wi-Fi projects meant to increase
internet penetration among ordinary residents. To date, though, few
modernization projects between Cuba and China have strayed from
communications infrastructure into productive industrial technologies.

A New Path for China-Cuba Ties: Knowledge Cooperation

It is within this still-bleak technological context that Li came to Cuba
with his offer of knowledge cooperation. Li's September visit follows
visits by President Xi Jinping and Vice Premier Wang Yang, in 2014 and
2015 respectively. One of the crucial tasks of this latest visit lay in
coming up with a roadmap for future Sino-Cuban cooperation. In one of
his many talks with Raul Castro, Li proposed "sharing developmental
experiences and launching knowledge cooperation" as the new basis of
Sino-Cuban relations.

According to Li, "knowledge cooperation" refers to "utilizing ideas as
starting points in order to deepen bilateral, win-win cooperation." Li
further elaborated that this new approach to China-Cuba relations would
be based on four points: industry, commerce, culture, and intelligence.
Li placed particular emphasis on the fourth point, which can be further
broken down into sharing developmental experiences and developing
intellectual cooperation. China's State Council carried the point home,
asserting that Li has vowed "to help Cuba industrialize."

It is too early to say what we can expect to see from the newborn
Sino-Cuban initiative. The concept itself remains highly obscure;
"knowledge cooperation" could just as easily refer to technology
transfers and development as it could to joint research or even simply
to the sharing of abstract "developmental experiences." While Cuba
certainly welcomes any sort of cooperation with China, the country is
more anxious to get its hands on productive technology, rather than just
a list of developmental dos and don'ts.

For now, the island's reaction has been restrained. One sign of this is
Cuban media's positive, yet sober, tone. Spanish-language media
(including the Cuban Communist Party's own newspaper, Granma, and the
pan–Latin American Telesur) has not mirrored Chinese media's fixation on
"knowledge cooperation." Neither has Cuban media explicitly echoed
"knowledge cooperation" as the new basis of Sino-Cuban ties. Instead,
Cuban news outlets have focused their coverage on specific areas of
cooperation, which include industrial development, as well as medical
research and environmental protection. Interestingly, while Chinese
media has emphasized the signing of 20 agreements, Cuban media has
reduced the list to 12. Four of these agreements are credit agreements
to fund assorted projects, such as a wind farm, and a bioelectric plant
connected to the Hector Rodriguez sugar mill — Cuba's greatest sugar

Knowledge Cooperation: A New Model for Sino-Latin American Relations?

Li's emphasis on a different kind of cooperation is timely, if not
entirely new. China, which has long identified itself as a developing
country and a member of the global south, has often called for greater
intellectual cooperation, as well as technology transfers, that will
level the global playing field. Nonetheless, China has typically been
the receiver of new technologies, rather than the provider. This role
reversal, wherein China is expected to give or facilitate rather than
receive advanced technologies, comes as a consequence of China's
increasing technological sophistication — especially vis-a-vis other
developing countries.

These new expectations laid upon China, while perhaps inconvenient, are
not wholly problematic. There are several reasons why China should
already be looking for a new model on which to base its cooperative
relations with Latin American, regardless of regional expectations.

First, there is increasing suspicion throughout Latin America that the
region is essentially digging its own grave by focusing on exporting
commodities to China. China's traditional economic model for engaging
with Latin America has consisted mainly of importing commodities while
exporting cheap manufactured goods. Chinese economic engagement in the
region has thus resulted in more affordable goods for all, but often at
the cost of lost manufacturing jobs in Latin America. Experts today are
pointing out that, if things were to continue down this path, Latin
American industry would be hollowed out by the Chinese competitors their
commodities feed.

Second, the other main component of Chinese economic engagement with the
region — Chinese investment in commodities and commodities-related
infrastructure — has similarly come under attack by local communities
that are unwilling to bear the primarily environmental costs of
monoculture and mineral exploitation. Local strikes over mining projects
in Peru and even the Nicaragua Canal are just some specific examples of
recent backlashes against what was once seen as overwhelmingly
beneficial exchange with China.

As recent initiatives show, Chinese policymakers are already keenly
aware of the shortcomings of China's current commodities-centered model
toward Latin America, and are searching for an alternative. Li's
statements in Cuba, as well as the "China-LAC Science and Technology
Partnership" and the "China-LAC Young Scientists Exchange Program,"
unveiled at the China-CELAC forum last year, are initiatives meant to
drive Sino-LAC relations up the value chain. The time is right for China
to seek a new model toward Latin America — one that makes good on
China's repeated assurances that it understands the needs of developing
countries like itself. China's knowledge-cooperation with Cuba may be
the test to see how serious China is about taking things with Latin
America to the next level.

Ricardo Barrios is a second-year Master's student in International
Politics at Peking University. He is also a Global Intern at the
Carnegie-Tsinghua Center for Global Policy.

Source: The Cuba Test: China Eyes New Model for Latin America Relations
| The Diplomat -

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