The lethal theatre of the absurd that has been the Trump administration’s sabre rattling performances in the Central American basin over the last few months culminated with the military attack on Venezuela and the kidnapping of its president and his wife in the early hours of Saturday morning, Caracas time. The tactical precision of the special operation was excellent, efficient and low cost when it came to human lives. While the number of Venezuelan casualties are yet unknown (although deaths are reported in the dozens and include Cubans among the victims), US forces suffered eight injuries and although some of the helicopters deployed received shrapnel damage, all assets returned to base safely. From a military tactical standpoint, the operation was a success and a demonstration of capability.

Even so, the broader picture is more complicated and therefore less straightforward when it comes to assessing the aftermath. Here I shall break down some of the main take-aways so far.

The strike on Venezuela was interesting because it was a hybrid decapitation and intimidation strike. Although US forces attacked military installations in support of the raid (such as by destroying air defence batteries), they only went after Maduro and his wife using their specialist Delta Force teams. That is unusual because most decapitation strikes attempt to remove the entire leadership cadres of the targeted regime, indulging its civilian and military leadership. They also involve seizing ports and airfields to limit adversary movements as well as the main means of communications, such as TV and radio stations, in order to control information flows during and after the event. The last thing that the attacker wants is for the target regime to retain its organizational shape and ability to continue to govern and, most importantly, mount an organised resistance to the armed attackers. This is what the Russians attempted to do with their assault on Kiev in February 2023.

That did not happen in this instance. Instead, the US left the entirety of the Bolivarian regime intact, including its military leadership and civilian authorities. Given reports of CIA infiltration of Venezuela in the months prior to the attack and the muted Venezuelan response to it, it is likely that US agents were in “backdoor” contact with members of the Bolivarian elite before the event, providing assurances and perhaps security guarantees to them (amnesty or non-prosecution for crimes committed while in power) in order to weaken their resistance to the US move. US intelligence may have detected fractures or weakness in the regime and worked behind Maduro’s back to assure wavering Bolivarians that they would not be blamed for his sins and would be treated separately and differently from him.

This might explain Vice President (now interim President) Delcy Rodriguez’s promise to “cooperate” with the US. That remains to be seen but other Bolivarian figures like Interior Minister Diosdaro Cabello and Defense Minister Vladimir Padrino Lopez, notorious for their leadership of Maduro’s repressive apparatus, may not be similarly inclined given that their post-Maduro treatment is likely to be very different–and they still may have control over and the loyalty of many of the people under their commands.

Trump says that the US “will run” the country for the foreseeable future until a regime transition scenario is developed, but in light of the limited nature of the military operation, it is unclear how the US proposes to do so. What is clear is that the US had real time intelligence from the CIA and perhaps regime insiders that allowed them to track and isolate Maduro in a moment of vulnerability. Ironically, for Maduro this proved fortunate, because given the surveillance that he was subjected to, any attempt to escape Caracas could have resulted in his death by drone. Instead, he and his wife get to be a guest of the US federal justice system.

(As an aside, it is noteworthy that the Maduro’s were indicted on cocaine trafficking charges and possessions of machine guns. No mention is mentioned in the indictments of fentanyl, the justification for the extra-judicial killings of civilians at sea by US forces and one of the initial excuses for attacking Venezuela itself (the so-called “fentanyl shipment facilities”). Possession of machine guns is not a crime in Venezuela, certainly not by a sitting leader facing constant violent threats from abroad. So the US is basically charging them with unlicensed firearms violations in the US rather than in Venezuela–where it has no jurisdiction–even though they do not reside there while switching the basis for the kidnapping from a fictitious accusation to something that may have more evidentiary substance. But in truth, the legal proceedings against the Maduros are no more than a fig leaf on the real reasons for their extraordinary rendition).

Even if limited in nature as a decapitation strike, the immediate result of the US use of force is intimidation of the remaining Bolivarians in government. Unless they regroup and organise some form of mass resistance using guerrilla/irregular warfare tactics, thereby forcing the US to put boots on the ground in order to subdue the insurgents (and raising the physical and political costs of the venture), at some point the post-Maduro Bolivarians will be forced to accept power-sharing with or replacement by the US backed opposition via eventual elections, and as Trump has indicated, the US will take control of Venezuelan oil assets (in theory at least). In his words: “they (US oil companies) will make a lot of money.” For this to happen the US will maintain its military presence in the Caribbean and adjacent land bases, in what Marco Rubio calls “leverage” in case the Venezuelans do not comply as demanded. This is coercive diplomacy in its starkest form.

Source: Wikimedia Commons, November 30, 2025

Put bluntly, this is an extorsion racket with the US military being used as the muscle with which to heavy the Bolivarians and bring them to heel. In light of Trump’s and the US’s past records, this should not be surprising. The question is, has the US read the situation correctly? Are the Bolivarians ao much disliked that the country will turn against them in droves and support an ongoing US presence in the country? Is the military and civilian leadership so weak or incompetent that they cannot rule without Maduro and need the US for basic governmental functioning (which is what the US appears to believe)? Have all of the gains made by lower class Venezuelans been eroded by Maduro’s corruption to the point that a reversal of the Bolivarian policy agenda in whole or in part is feasible? Will average Venezuelans, while thankful for the departure of the despot, accept abject subordination to the US and its puppets? Or will Cuban and Russian-backed civilian militias and elements in the armed forces retreat into guerrilla warfare. thereby forcing the US into a prolonged occupation without a clear exist strategy (i.e. deja vu all over again)?

There are some interesting twists to the emerging story. Maria Corina Machado, the US-backed opposition figure-turned-Nobel Peace Prize winner, has positioned herself to be the power behind the throne for Maduro’s heir apparent, Edmundo Gonzalez, who most election observers believe won the 2024 presidential elections but was denied office due to Maduro’s clearly fraudulent manipulation of the vote count. But Trump says that she “is not ready” and does not have the ” support” or “respect” within Venezuela to run the country. This seems to be code words for “too independent-minded” or “not enough of a puppet” (or even “female”) for Trump, who seems unaware of how a close overt association between his administration and any potential future Venezuelan leader may receive mixed reactions at home and abroad. In any event, sidelining Machado could have some unexpected repercussions.

Then there is the issue of how the US and its Venezuelan allies propose to purge the country of foreign actors like Hezbollah, Russians, Cubans and most importantly from an economic standpoint, the Chinese. Rounding up security operatives is one thing (although even that will not be easy given their levels of experience and preparation); dispossessing Chinese investors of their Venezuelan holdings is a very different kettle of fish So far none of this appears to have been thought out in a measure similar to the planning of the military raid itself.

Finally, Trump’s claims that Venezuela “stole” US oil is preposterous. In 1976 a nationalisation decree was signed between the Venezuelan government–a democracy–and US oil companies where Venezuela gained control of the land on which oil facilities were located and received a percentage of profits from them while the private firms continued to staff and maintain the facilities in exchange for sharing profits (retaining a majority share) and paying sightly more in taxes. That situation remained intact until the 1990s, when a series of market-oriented reforms were introduced into the industry that loosened State management over it. After Hugo Chavez was elected president in 1998 on his Bolivarian platform, that arrangement continued for a short time until 2001 when the Organic Hydrocarbon Law was reformed in order to re-assert State control and foreign firms began withdrawing their skilled labor personnel and some of their equipment when taxes were increased on them. By 2013 the oil infrastructure was decrepit and lacking in skilled workers to staff what facilities are still operating, so Chavez (by then on his death bed) expropriated the remaining private holdings in the industry.

This was clearly unwise but it was not illegal and certainly was not a case of stealing anything. Moreover, the Venezuelan oil industry limped along with help from Bolivarian allies like the PRC and Russia because it is the country’s economic lifeline (and cash cow for the political elite dating back decades). So it is neither stolen or completely collapsed. As with many other things, the complexities of the matter appear to be unknown to or disregarded by Trump in favour of his own version of the “facts.”

Regardless, the PRC has stepped into the breech and invested in Venezuela’s oil industry. They may resist displacement or drive a hard bargain to be bought out. It will therefore not be as simple as Trump claims it to be for US firms to return and “make a lot of money” from Venezuelan oil.

It is these and myriad other “after entry” (to use a trade negotiator’s term) problems that will make or break the post-Maduro regime, whatever its composition. In the US the word is that the US “broke it so now owns it,” but the US will never do that. It has seldom lived up to its promises to its erstwhile allies in difficult and complex political cultures that it does not understand. It has a very short attention span, reinforced by domestic election cycles where foreign affairs is of secondary importance. So it is easily manipulated by opportunists and grifters seeking to capitalise on US military, political and economic support in order to advance their own fortunes (some would say this of the MAGA administration itself). If this sounds familiar it is because it is a very real syndrome of and pathology in US foreign affairs: focus on the military side of the equation, conduct kinetic operations, then try to figure out what else to do (nation-build? keep the peace? broker a deal amongst antagonistic locals?) rather than simply declare victory and depart. Instead, the US eventually leaves on terms dictated by others and with destruction in its wake.

One thing that should be obvious is that for all the jingoistic flag-waving amongst US conservatives and Venezuelan exiles, their problems when it comes to Venezuela may just have started. Because now they “own” what is to come, and if what comes is not the peace and prosperity promised by Trump, Rubio, Machado and others, then that is when things will start to get real. “Real” as in Great Power regional conflict real, because launching a war of opportunity on Venezuela in the current geopolitical context invites responses in kind from adversaries elsewhere that the US is ill-equipped to respond to, much less control.

The precedent has been set and somewhere, perhaps in more than one theatre, the invitation to reply is open.

Stay tuned and watch this space.

Conventional wisdom believes that increased prosperity brings with it increased security. As individual, group and national material fortunes rise, domestic crime decreases and tensions ease between States. Yet, in South America improved macroeconomic indicators derived from increased trade within and from without the region have not followed convention. Not only has domestic insecurity increased, but the entrance of the People’s Republic of China as a major regional trade partner has heightened tensions with the United States, which sees a growing security threat associated with the PRC regional presence. Since the US adheres to the Monroe Doctrine as the basis for its regional security posture, this opens up the possibility of conflict with the PRC over its South American activities.

Source: Gateway to South America, 2018.

The Paradox Unpacked.

South America confronts a strategic paradox. It is not threatened by any significant extra-regional threats or serious inter-regional conflict (Venezuela’s threats to annex the oil-rich Essequibo region of Guyana notwithstanding). Its countries are members in good standing of many International organisations and conventions. It maintains deep cultural, diplomatic and military ties with extra-regional partners, including deepening diplomatic relations with the BRICS group (Brazil, Russia, India, China, South Africa) that invited Argentina to join it (along with several other middle powers) in 2024 (the new Argentine government of Javier Milei has rejected the offer). It has extensive trade ties as an exporter and importer of primary and value-added goods within the region well as with extra-regional partners. These ties have extended beyond the traditional trade relationships with the USA and Europe to include the People’s Republic of China (PRC) and Australasia (via the Transpacific Partnership Agreement—TPPA). With some notable exceptions (Bolivia, Brazil and Peru) it has had very few armed coups or revolutionary uprisings in a decade.

As a result, some consider South America to be on the global geopolitical periphery, while others see it as benefitting from non-alignment.(1) The reality is more complex. Although not party to the major conflicts of the age, South America is deeply integrated into core geopolitical networks via memberships by countries and regional organisations in a latticework of international agreements, alliances, conventions, institutions and treaties covering the full scope of global endeavour, from climate change to military alliances. Specific engagements are aligned in different ways due to historical as well as practical reasons depending on the subject and national interests involved.

The paradox is that increased macroeconomic prosperity has accentuated domestic and regional tensions.(2) It is part of a larger split in the world order that involves differences between the post-colonial Global South and the post-imperial Global North, a rift that has widened as the international system transitions from a unipolar to a multipolar realignment. The divide is seen in China’s growing presence in South America, something that is largely welcomed by regional diplomatic and business elites but has drawn negative attention from the hemispheric power that the PRC is eclipsing in terms of trade and investment—the US.

South America is also plagued by transnational crime, political-criminal networks, civil unrest and socio-economic deprivation leading to social disorder and high social violence levels, including homicide rates (one third of the world’s murders happen in Latin America). Recent wealth growth in South America has not translated into increased employment, wages or the provision of public goods and services paid out of tax revenues. To the contrary, relative deprivation has increased because rising social expectations are not met by improvements in material conditions for all. Instead, after years experimenting with market-driven macroeconomic policies (often first employed by authoritarian regimes with poor human rights records) and then an assortment of state-capitalist “correctives,” the region has a checkered record across a swath of socio-economic indicators: income inequality and wealth concentration, childhood poverty and infant mortality levels, education participation and literacy rates, access to electricity, potable water and sanitation facilities, etc.(3)

The paradox is this: As regional overall wealth increased, so too has human insecurity.

Source: Quora.com.

This has happened during a period of relative political stability. The “Pink Tide” of indigenous socialists that came to power Latin America in in the early 2000s (exemplified by Hugo Chavez in Venezuela and Evo Morales in Bolivia) has given way to rightwing national populists (Jair Bolsonaro in Brazil), neo-libertarians (recently elected Javier Milei in Argentina), leftwing populist authoritarians (Nicolas Maduro in Venezuela), and mixes of centre-right and centre-left democratic coalitions in countries like Brazil, Chile and Ecuador (left-centre), or Peru, Paraguay and Uruguay (right-centre), with the elasticity of their respective commitments to democracy duly noted. Political competition is often raucous, but regime continuity has been the regional norm for the last twenty years.

However, in very recent times the foundations of democratic governance throughout the region has come under significant pressure, again due to the extent of social malaise and popular disenchantment with the way in which government authority is acquired and exercised. The January 8, 2023 storming of the Brazilian Congress by thousands of disgruntled supporters of former President Jair Bolsonaro is one example of democratic norm erosion (the norm being parties and their followers accepting legitimate electoral losses in return for being allowed to fairly compete at a designated future point in time). The current crisis in Ecuador, where criminal gangs with connections to foreign organised crime (in this case Albanian drug rings) are violently challenging the authority of the recently elected Noboa government (which campaigned on an anti-crime platform), attacking government offices, taking control of prisons, holding and killing hostages, points to the social and institutional fragility of some regional democracies.

Trade-based Prosperity.

South America has extensive trade links to the world and within the region itself. Its major regional trading bloc, MERCOSUR, is one of the world’s largest, with four permanent members (Argentina, Brazil, Paraguay and Uruguay now joined by Bolivia) holding a combined GDP of USD$2.2.trillion, bolstered by trade with seven regional associate members.(4) Other than Venezuela, all of the region’s States have a working relationship with the MERCOSUR trading bloc as well as participating in smaller trade networks. Having joined MERCOSUR in 2012, Venezuela’s membership was suspended in 2016 for non-adherence to democratic principles. South America also includes the Andean Community (CAN) and Latin American Integration Association (ALADI) as smaller sub-regional trading blocs, the combined total of which is to promote extensive cross-regional economic exchange.

South America exports primary and value-added goods to the EU, North America and Asia, with investment flows and value-added products coming into the region primarily from the US, People’s Republic of China (PRC) and the European Union (EU). In the last 20 years the PRC has overtaken the US as South America’s main trading partner in exports and imports, with nineteen countries signing up to the Belt and Road Initiative. The volume of trade between South America and the PRC rose from US$14 billion in 2000 to US$500 billion in 2022.  Eight South American countries now have “strategic partnerships” that have made the PRC their largest trading partner and in 2022 Latin American-PRC trade exceeded US-Latin American trade by USD$72 billion.(5)

Even so, the USA accounts for 22 percent of Latin American foreign trade (mostly with Mexico) and retains its dominant position as South America’s main foreign interlocutor when factoring in other exchanges involving diplomatic and military relations, professional services, dollar remittances and cultural interactions (e.g. concerts and other artistic endeavours). In 2020-21 the volume of trade between South America and extra-regional partners briefly dropped as a result of the Covid pandemic’s impact on supply chains, but it has returned to surpass pre-pandemic levels even if the total value of South American trade in 2023 is less than previous year because of price deflation and low (1.7 percent) annual GDP growth.(6)

Foreign investors have recently focused on lithium and other strategic mineral extraction as well as forestry, fuel and agricultural export sectors. PRC firms have joined Australian, European and US firms in developing brine-based extraction facilities in the so-called “Lithium Triangle” encompassing NW Argentina, NE Chile, Western Bolivia and SE Peru. There is potential for more expansion of the sector, and Chile has moved to nationalise the industry within its borders. However, the surge in extractive enterprises has seen increased environmental damage (groundwater pollution in particular), something that has caused backlash from environmental and indigenous groups connected to the lands in which they are located. That constitutes a political problem for the elected governments that govern them.

Moreover, as trade linkages  increased, so has the presence of transnational and domestic organised crime. To “traditional” illicit trade such as narcotics, which itself has increased significantly in the last decade, there are now added an assortment of other criminal enterprises that use legitimate commercial trade conduits as covers for their activities. Fisheries poaching, animal, human and weapons trafficking and an assortment of other black market enterprises have been added into the mix. The Hezbollah presence in the Tri- border area joining Argentina, Brazil and Paraguay is a salient example of the criminal/ideological nexus.

 Similarly, construction of modern container terminal facilities by PRC firms has facilitated increased volumes of goods arriving in South American ports, but has not been matched by increases in resources, personnel or the efficiency of administrative agencies responsible for trade. Corruption permeates customs and border control units in spite of government promises to clean up their respective sectors, so the problem is  compounded rather than mitigated by the advances in trade volumes within and from without the region. One specific concern is that container terminals built along the Panama Canal and at several South American ports may be used for criminal as well as legitimate ends given lax enforcement capabilities.

To be sure, increases in foreign trade and investment and entrance of the PRC into South American markets have brought material benefits to the region. But PRC investment is focused on capital-intensive infrastructure (such as power plants), extractive and logistics activities that has resulted in increased income inequalities because employment opportunities are limited, elites monopolise revenue streams derived from those sectors, tax evasion is rampant and environmental degradation and land dispossession are closely associated with the industries in which investment is concentrated. Even as a trickle-down effect, trade-driven economic prosperity has not produced the anticipated results.

 Instead, material hardship has produced mass migrations throughout South America. Venezuela has lost 7 million people under the Maduro regime, with most heading to Colombia, the US and Chile. Argentines and Peruvians have flocked to Chile because of its relative stability and growth, and Paraguayans and Uruguayans have sought greener pastures in their larger neighbours as well as further abroad. For Brazilians, the destinations of choice are the US and Portugal (which also serves as a gateway into the Eurozone). For many recipient countries, the presence of thousands of non-citizen migrants poses grave challenges to public good and services provision, stretching many of them to the breaking point. That is believed to contribute to increased crime, disorder and ethnic/nationalist conflict between native-born locals and foreign migrants. Accordingly, migration has turned into a regional security issue.

The Security Dilemma.

Arrival of the PRC as a South American trade and investment partner produced an adverse reaction on the part of the US. The US sees pernicious effect in Chinese “dollar” and “debt” diplomacy, where PRC-partnered firms, national and/or state governments are offered favourable terms for PRC direct economic assistance and infrastructure development loans that sometimes includes unduly influencing local officials responsible for approving and administering those projects. Dollar diplomacy is seen as contributing to South America’s culture of corruption, much in the way PRC dollar diplomacy is viewed in Subsaharan Africa, South Asia and Pacific Island nations. Moreover, the debt side of PRC loan facilitation can result in debt traps, where unserviceable loans are traded for equity swaps in sectors where the PRC has financially contributed, again along lines seen elsewhere. Since debt swaps occur in strategically important sectors, that makes them a threat to national sovereignty and hence a security concern.(7)

Many Chinese projects in South America have “dual use” potential that can serve military/security as well as civilian purposes. Along with investment in modernising sea- and airports, key examples of this are, most broadly, the prevalence of Chinese telecommunications firms in South American broadband networks and, more specifically, PRC satellite tracking facilities erected in Argentina, Bolivia, Peru, Venezuela (and Cuba) over the last fifteen years in addition to space research partnerships with Brazil and Chile that grant Chinese access to jointly operated ground stations in those countries. The PRC-operated signals stations are controlled by Chinese intelligence services, are staffed by Chinese nationals and are suspected of engaging in electronic and technical eavesdropping on regional communications as well as undertaking offensive and defensive tasks (such as hacking and jamming) that integrate with PRC military assets in space and in the oceans surrounding the continent.(8) Chinese surveillance systems are also used by South American domestic security services, leading to concerns that they may be employed in invasive ways and/or are being accessed and data mined by PRC intelligence via embedded “backdoors” in them.(9)

PRC Signals Collection Land Base, Bajada del Agrio, Neuquen, Argentina. Source: The Storiest, December 2022.

To this is added US concern about the potential for the PRC to establish military bases in South America. A recent PRC proposal to build a PLAN naval facility in Ushuaia, in Argentine Tierra del Fuego, has raised concerns about their ability to project force across the strategic Magellan Strait choke point and onto Antartica.(10) 

That creates a “security dilemma.” It is a situation where a State, perceiving that a rival seeks military-security advantage over it, prepares for impending conflict by increasing its full-spectrum fighting capabilities. Seeing that the first State is bolstering its forces, the rival responds in kind, leading to a tit-for-tat arms race and a greater possibility for miscalculations leading to conflict. Whatever eventuates, what matters here are perceptions of threat and planning for conflict rather than the actualities of threat when it comes to force projection. 

Entrance of the PRC as a trading partner, strategic investor and diplomatic interlocutor in South America is seen by the US as a threat to regional stability, thereby making South America a potential contestation zone. There is real possibility that a regional security dilemma is in the making. Recent statements by senior US military officials confirm this view.(11)

Issue linkage and decoupling.

“Issue linkage” in international affairs refers to a negotiating strategy where one issue (migration) is linked to another (climate change) in order to facilitate agreement on both; and to concrete outcomes where two or more issues are linked in practice (say, trade and security).(12) The historical record is for security partners to preferentially trade with each other and vice versa. The bipolar trade and security arrangements of the Cold War are a classic example of the practice. However, in the 1990s some countries including New Zealand began to de-couple their trade and security alignments. They separated their trade portfolios from their security commitments, figuring that the post-Cold War environment eased tensions on a global scale that permitted a move towards more elastic types of linkage.

The underlying assumption for de-coupling was that it would supersede rather than counterpoise trade and security commitments. In simple terms, countries would try not to straddle the divide between antagonistic foreign partners, but instead would “silo” approaches to them so as to insulate one issue from the other. Or, they would create parallel trade/security linkages with different partners as circumstances dictated.

However plausible this may have been in theory, South American embrace of the PRC as a trade partner has alarmed the US. The result is a perverse issue-linkage where the growth of PRC-South American trade and investment is seen by the US as a potential pathway to an increased PRC military-security presence in the region. Given continued US adherence to the 1823 Monroe Doctrine when it comes to hemispheric security (which affirms that the US will militarily resist attempts by non-hemispheric powers to establish a military presence in the Western Hemisphere), that offers a chilling prospect for regional peace (see endnote 11 for US military official’s statements to this effect).

Problems of Governance and Democratic Backsliding.

The South American strategic paradox (increasing overall prosperity/increasing inequality and insecurity) is grounded in its mixed governance record. While relative democratic stability in the majority of countries freed citizens from the fear of state violence and gave them nominal voice in selecting their political leaders, democracy has not universally brought with it improved transparency, lesser corruption and more accountability in government (Chile and Uruguay being exceptions). In some cases it replaced dictatorial practices with an electoral veneer that better disguised the self-serving behaviour of economic and political elites.

This has led to a regional phenomenon known as “democratic backsliding,” a process in which democracies are undermined from within by presidential imposition, so-called “constitutional coups” (where legislatures manufacture justifications and use institutional procedures to impeach and remove presidents), and by a general “hardening” of the institutional order when it comes to accountability and transparency.(13) Government processes become increasingly opaque and unresponsive to the popular will. Nepotism, patronage and clientelism rival meritocratic criteria for social and bureaucratic advancement. Efficiency in the provision of public goods and services is reduced and black and grey (informal) markets expand. In response, crime rises, disillusioned populations lose faith in democracy and disenchanted groups adopt nihilist social and political attitudes rooted in a sense of survivalist alienation.(14) In effect, inequality, indifference and lack of opportunity undermine good governance.(15) 

The crisis in Ecuador is emblematic in that regard because the very concept of an elected sovereign with monopoly over the use of organised violence within national borders is now being challenged by non-state actors in the form of transnational crime syndicates.

To recap: improved macroeconomic conditions boosted by increased trade have not extended to South American masses in the form of growing employment, rising wages and better public services. Corporate and individual tax evasion remains a hemispheric problem. Corruption is endemic and resources to combat crime and increase official transparency and accountability are insufficient in most countries. That prevents States from controlling their borders and streets in efficient fashion, so the foreign trade sector becomes a magnet for illegal activities and domestic criminality turns into a social pandemic in many places.

That is the ultimate cause of South America’ strategic paradox. Lacking responsive government and effective regulatory enforcement, the benefits of trade have not served the regional commonweal and instead have exacerbated social inequalities that increase domestic insecurity. The emergence of the PRC as the region’s largest trading partner has also caused a defensive security reaction from the US that has the potential to cause a regional security dilemma. Macroeconomic growth in South America may have improved thanks to the upsurge in foreign trade, but increased regional security has not come with it.

NOTES

¹ Andres Malamud and Luis L. Schenoni, “Latin America is Off the Global Stage and That is OK,” Foreign Policy, September 10, 2020.   https://foreignpolicy.com/2020/09/10/latin-america-global-stage-imperialism-geopolitics/

² For an early analysis of the contradiction, see Laura Jaitman and Stephen Machin, “Crime and Violence in Latin America and the Caribbean: towards evidence-based policies,” CentrePiece, Winter 2015/2016  https://cep.lse.ac.uk/pubs/download/cp461.pdf.

³ CEPALSTAT, Statistical Databases and Publications. United Nations, ECLASC/CEPAL, November 2023. https://statistics.cepal.org/portal/cepalstat/dashboard.html?theme=1&lang=en.

⁴ Council on Foreign Relations, “Mercosur: South America’s Fractious Trade Bloc,” Backgrounder, May 9, 2023.  https://www.cfr.org/backgrounder/mercosur-south-americas-fractious-trade-bloc.

⁵ US House of Representatives, Foreign Affairs Committee, “China Regional Snapshot: South America,” Foreign Affairs Committee Media Centre Press Release, October 25, 2022.  https://foreignaffairs.house.gov/china-regional-snapshot-south-america/

⁶ United Nations, ECLAC, “Value of Latin America and the Caribbean’s Goods Exports Will Fall 2% in 2023 in a Context of Great Weakness in Global Trade,” CEPAL, Press Release, November 2, 2023. https://www.cepal.org/en/pressreleases/value-latin-america-and-caribbeans-goods-exports-will-fall-2-2023-context-great.

⁷ Nicolas Devia-Valbuena and General Alberto Mejia, “How Should the US Respond to China’s Influence in Latin America?” United States Institute for Peace, August 28, 2023. https://www.usip.org/publications/2023/08/how-should-us-respond-chinas-influence-latin-america.

⁸ Cate Cadell and Marcelo Perez del Capio, “A growing global footprint for China’s space program worries Pentagon,” Washington Post, November 21, 2023. https://www.washingtonpost.com/world/interactive/2023/china-space-program-south-america-defense/?itid=hp_only-from-the-post_p004_f001.

⁹ Jeff Seldin, “China Infiltrating US “Red Zone” With Latin American Push,” Voice of America: Americas, August 4, 2023.  https://www.voanews.com/a/china-infiltrating-us-red-zone-with-latin-american-push/7212335.html.

¹⁰ Guillermo Saavedra, “China Pressures Argentina to Build Naval Base,” Dialogo Americas, January 3, 2023.  https://dialogo-americas.com/articles/china-pressures-argentina-to-build-naval-base/.

¹¹ John Grady, “Chinese Actions In South America Pose Risks to US Safety, Senior Military Commanders Tell Congress,” US Naval Institute News, March 8, 2023.  https://news.usni.org/2023/03/08/chinese-actions-in-south-america-pose-risks-to-u-s-safety-senior-military-commanders-tell-congress.

¹² Giovanni Maggi, “ Issue Linkage,” in Kyle Bagwell and Robert. W. Staiger, eds. The Handbook of Commercial Policy, Vol. 1, Part B, pp. 513-564. Elsevier/ScienceDirect, 2016.   https://economics.yale.edu/sites/default/files/2022-10/IssueLinkageDraft_041216.pdf.

¹³ Mainwaring, Scott and Aníbal Pérez-Liñán. “Why Latin America’s Democracies Are Stuck.” Journal of Democracy, Vol. 34, N. 1, 2023, pp.156-170. Project MUSE, https://doi.org/10.1353/jod.2023.0010.

¹⁴ For an early discussion of this syndrome, see Paul G. Buchanan, “That the Lumpen Should Rule: Vulgar Capitalism in the Post-Industrial Age,” Journal of American and Comparative Cultures, V.23, N.4 (Winter 2000), p.1-14. https://www.proquest.com/openview/3e47ea2c49d289b57f0641c02cc8b592/1?pq-origsite=gscholar&cbl=29587

¹⁵ Adriana Arreaza Coll,  “Latin America’s Inequality Is Taking A Toll on Governance,” Americas Quarterly, February 8, 2023. https://www.americasquarterly.org/article/latin-americas-inequality-is-taking-a-toll-on-governance/#:~:text=Low%20educational%20and%20occupational%20mobility,in%20income%20in%20the%20world.

It is worth pausing to consider the broader context in which these developments have played out, both in terms of background context as well as some of the specific issues canvassed during the junket. First, we must address some key concepts. Be forewarned: this is long.

China on the Rise and Transitional Conflict.

For the last three decades the PRC has been a nation on the ascent. Great in size, it is now a Great Power with global ambitions. It has the second largest economy in the world and the largest active duty military, including the largest navy in terms of ships afloat. It has a sophisticated space program and is a high tech world leader. It is the epicenter of consumer non-durable production and one of the largest consumers of raw materials and primary goods in the world. Its GDP growth during that time period has been phenomenal and even after the Covid-induced contraction, it has averaged well over 7 percent yearly growth in the decade since 2011.

The list of measures of its rise are many so will not be elaborated upon here. The hard fact is that the PRC is a Great Power and as such is behaving on the world stage in self-conscious recognition of that fact. In parallel, the US is a former superpower that has now descended to Great Power status. It is divided domestically and diminished when it comes to its influence abroad. Some analysts inside and outside both countries believe that the PRC will eventually supplant the US as the world’s superpower or hegemon. Whether that proves true or not, the period of transition between one international status quo (unipolar, bipolar or multipolar) is characterised by competition and often conflict between ascendent and descendent Great Powers as the contours of the new world order are thrashed out. In fact, conflict is the systems regulator during times of transition. Conflict may be diplomatic, economic or military, including war. As noted in previous posts, wars during moments of international transition are often started by descendent powers clinging or attempting a return to the former status quo. Most recently, Russia fits the pattern of a Great Power in decline starting a war to regain its former glory and, most importantly, stave off its eclipse. We shall see how that turns out.

Spheres of Influence.

More immediate to our concerns, the contest between ascendent and descendent Great Powers is seen in the evolution of their spheres of influence. Spheres of influence are territorially demarcated areas in which a State has dominant political, economic, diplomatic and military sway. That does not mean that the areas in question are as subservient as colonies (although they may include former colonies) or that this influence is not contested by local or external actors. It simply means at any given moment some States—most often Great Powers—have distinct and recognized geopolitical spheres of influence in which they have primacy of interest and operate as the dominant regional actor.

In many instances spheres of influence are the object of conquest by an ascendent power over a descendent power. Historic US dominance of the Western Hemisphere (and the Philippines) came at the direct expense of a Spanish Empire in decline. The rise of the British Empire came at the expense of the French and Portuguese Empires, and was seen in its appropriation of spheres of influence that used to be those of its diminished competitors. The British and Dutch spheres of influence in East Asia and Southeast Asia were supplanted by the Japanese by force, who in turn was forced in defeat to relinquish regional dominance to the US. Now the PRC has made its entrance into the West Pacific region as a direct peer competitor to the US.

Peripheral, Shatter and Contested Zones.

Not all spheres of influence have equal value, depending on the perspective of individual States. In geopolitical terms the world is divided into peripheral zones, shatter zones and zones of contestation. Peripheral zones are areas of the world where Great Power interests are either not in play or are not contested. Examples would be the South Pacific for most of its modern history, North Africa before the discovery of oil, the Andean region before mineral and nitrate extraction became feasible or Sub-Saharan Africa until recently. In the modern era spheres of influence involving peripheral zones tend to involve colonial legacies without signifiant economic value.

Shatter zones are those areas where Great Power interests meet head to head, and where spheres of influence clash. They involve territory that has high economic, cultural or military value. Central Europe is the classic shatter zone because it has always been an arena for Great Power conflict. The Middle East has emerged as a potential shatter zone, as has East Asia. The basic idea is that these areas are zones in which the threat of direct Great Power conflict (rather than via proxies or surrogates) is real and imminent, if not ongoing. Given the threat of escalation into nuclear war, conflict in shatter zones has the potential to become global in nature. That is a main reason why the Ruso-Ukrainian War has many military strategists worried, because the war is not just about Russia and Ukraine or NATO versus Russian spheres of influence.

In between peripheral and shatter zones lie zones of contestation. Contested zones are areas in which States vie for supremacy in terms of wielding influence, but short of direct conflict. They are often former peripheral zones that, because of the discovery of material riches or technological advancements that enhance their geopolitical value, become objects of dispute between previously disinterested parties. Contested zones can eventually become part of a Great Power’s sphere of influence but they can also become shatter zones when Great Power interests are multiple and mutually disputed to the point of war.

Strategic Balancing.

The interplay of States in and between their spheres of influence or as subjects of Great Power influence-mongering is at the core of what is known as strategic balancing. Strategic balancing is not just about relative military power and its distribution, but involves the full measure of a State’s capabilities, including hard, soft, smart and sharp powers, as it is brought to bear on its international relations.

That is the crux of what is playing out in the South Pacific today. The South Pacific is a former peripheral zone that has long been within Western spheres of influence, be they French, Dutch, British and German in the past and French, US and (as allies and junior partners) Australia and New Zealand today. Japan tried to wrest the West Pacific from Western grasp and ultimately failed. Now the PRC is making its move to do the same, replacing the Western-oriented sphere of influence status quo with a PRC-centric alternative.

The reason for the move is that the Western Pacific, and particularly the Southwestern Pacific has become a contested zone given technological advances and increased geopolitical competition for primary good resource extraction in previously unexploited territories. With small populations dispersed throughout an area ten times the size of the continental US covering major sea lines of communication, trade and exchange and with valuable fisheries and deep water mineral extraction possibilities increasingly accessible, the territory covered by the Pacific Island Forum countries has become a valuable prize for the PRC in its pursuit of regional supremacy. But in order to achieve this objective it must first displace the West as the major extra-regional patron of the Pacific Island community. That is a matter of strategic balancing as a prelude to achieving strategic supremacy.

Three Island Chains and Two Level Games.

The core of the PRC strategy rests in a geopolitical conceptualization known as the “three island chains” This is a power projection perspective based on the PRC eventually gaining control of three imaginary chains of islands off of its East Coast. The first island chain, often referred to those included in the PRC’s “Nine Dash Line” mapping of the region, is bounded by Japan, Northwestern Philippines, Northern Borneo, Malaysia and Vietnam and includes all the waters within it. These are considered to be the PRC’s “inner sea” and its last line of maritime defense. This is a territory that the PRC is now claiming with its island-building projects in the South China Sea and increasingly assertive maritime presence in the East China Sea and the straits connecting them south of Taiwan.

The second island chain extends from Japan to west of Guam and north of New Guinea and Sulawesi in Indonesia, including all of the Philippines, Malaysian and Indonesian Borneo and the island of Palau. The third island chain, more aspirational than achievable at the moment, extends from the Aleutian Islands through Hawaii to New Zealand. It includes all of the Southwestern Pacific island states. It is this territory that is being geopolitically prepared by the PRC as a future sphere of influence, and which turns it into a contested zone.

The 3 Island Chains. (Source: Yoel Sano, Fitch Solutions)

The PRC approach to the Southwestern Pacific can be seen as a Two Level game. On one level the PRC is attempting to negotiate bilateral economic and security agreements with individual island States that include developmental aid and support, scholarship and cultural exchange programs, resource management and security assistance, including cyber security, police training and emergency security reinforcement in the event of unrest as well as “rest and re-supply” and ”show the flag” port visits by PLAN vessels. The Solomon Island has signed such a deal, and Foreign Minister Wang has made similar proposals to the Samoan and Tongan governments (the PRC already has this type of agreement in place with Fiji). The PRC has signed a number of specific agreements with Kiribati that lay the groundwork for a more comprehensive pact of this type in the future. With visits to Vanuatu, Papua New Guinea and East Timor still to come, the approach has been replicated at every stop on Minister Wang’s itinerary. Each proposal is tailored to individual island State needs and idiosyncrasies, but the general blueprint is oriented towards tying development, trade and security into one comprehensive package.

None of this comes as a surprise. For over two decades the PRC has been using its soft power to cultivate friends and influence policy in Pacific Island states. Whether it is called checkbook or debt diplomacy (depending on whether developmental aid and assistance is gifted or purchased), the PRC has had considerable success in swaying island elite views on issues of foreign policy and international affairs. This has helped prepare the political and diplomatic terrain in Pacific Island capitals for the overtures that have been made most recently. That is the thrust of level one of this strategic game.

That opens the second level play. With a number of bilateral economic and security agreements serving as pillars or pilings, the PRC intends to propose a multinational regional agreement modeled on them. The first attempt at this failed a few days ago, when Pacific Island Forum leaders rejected it. They objected to a lack of detailed attention to specific concerns like climate change mitigation but did not exclude the possibility of a region-wide compact sometime in the future. That is exactly what the PRC wanted, because now that it has the feedback to its initial, purposefully vague offer, it can re-draft a regional pact tailored to the specific shared concerns that animate Pacific Island Forum discussions. Even if its rebuffed on second, third or fourth attempts, the PRC is clearly employing a “rinse, revise and repeat” approach to the second level aspect of the strategic game.

An analogy the captures the PRC approach is that of an off-shore oil rig. The bilateral agreements serve as the pilings or legs of the rig, and once a critical mass of these have been constructed, then an overarching regional platform can be erected on top of them, cementing the component parts into a comprehensive whole. In other words, a sphere of influence.

Western Reaction: Knee-Jerk or Nuanced?

The reaction amongst the traditional patrons has been expectedly negative. Washington and Canberra sent off high level emissaries to Honiara once the Solomon Islands-PRC deal was leaked before signature, in a futile attempt to derail it. The newly elected Australian Labor government has sent its foreign minister, sworn into office under urgency, twice to the Pacific in two weeks (Fiji, Tonga and Samoa) in the wake of Minister Wang’s visits. The US is considering a State visit for Fijian Prime Minister (and former dictator) Frank Baimimarama. The New Zealand government has warned that a PRC military presence in the region could be seriously destabilising and signed on to a joint US-NZ statement at the end of Prime Minister Ardern’s trade and diplomatic junket to the US re-emphasising (and deepening) the two countries’ security ties in the Pacific pursuant to the Wellington and Washington Agreements of a decade ago.

The problem with these approaches is two-fold, one general and one specific. If countries like New Zealand and its partners proclaim their respect for national sovereignty and independence, then why are they so perturbed when a country like the Solomon Islands signs agreements with non-traditional patrons like the PRC? Besides the US history of intervening in other countries militarily and otherwise, and some darker history along those lines involving Australian and New Zealand actions in the South Pacific, when does championing of sovereignty and independence in foreign affairs become more than lip service? Since the PRC has no history of imperialist adventurism in the South Pacific and worked hard to cultivate friends in the region with exceptional displays of material largesse, is it not a bit neo-colonial paternalistic of Australia, NZ and the US to warn Pacific Island states against engagement with it? Can Pacific Island states not find out themselves what is in store for them should they decide to play the Two Level Game?

More specifically, NZ, Australia and the US have different security perspectives regarding the South Pacific. The US has a traditional security focus that emphasises great power competition over spheres of influence, including the Western Pacific Rim. It has openly said that the PRC is a threat to the liberal, rules-based international order (again, the irony abounds) and a growing military threat to the region (or at least US military supremacy in it). As a US mini-me or Deputy Sheriff in the Southern Hemisphere, Australia shares the US’s traditional security perspective and emphasis when it comes to threat assessments, so its strategic outlook dove-tails nicely with its larger 5 Eyes partner.

New Zealand, however, has a non-traditional security perspective on the Pacific that emphasises the threats posed by climate change, environmental degradation, resource depletion, poor governance, criminal enterprise, poverty and involuntary migration. As a small island state, NZ sees itself in a solidarity position with and as a champion of its Pacific Island neighbours when it comes to representing their views in international fora. Yet it is now being pulled by its Anglophone partners into a more traditional security perspective when it comes to the PRC in the Pacific, something that in turn will likely impact on its relations with the Pacific Island community, to say nothing of its delicate relationship with the PRC.

In any event, the Southwestern Pacific is a microcosmic reflection of an international system in transition. The issue is whether the inevitable conflicts that arise as rising and falling Great Powers jockey for position and regional spheres of influence will be resolved via coercive or peaceful means, and how one or the other means of resolution will impact on their allies, partners and strategic objects of attention such as the Pacific Island community.

In the words of the late Donald Rumsfeld, those are the unknown unknowns.

A recent speech by New Zealand foreign minister Nanaia Mahuta has sparked a wave of criticism, mostly from conservative Anglophone commentators and politicians. Dubbed the “Taniwha and Dragons” speech, most of the criticism rested on the double premise that NZ is “sucking up” to the PRC while it abandons its obligations to its 5 Eyes intelligence partners. Some have suggested that NZ is going to be kicked out of 5 Eyes because of its transgressions, and that the CCP is pulling the strings of the Labour government.

These views are unwarranted and appear to be born of partisan cynicism mixed with Sinophobia, racism and misogyny (because Mahuta is Maori and both Mahuta and PM Ardern are female and therefore singled out for specific types of derision and insult). Beyond the misinterpretations about what was contained in the speech, objections to Mahuta’s invocation of deities and mythological beasts in the speech misses the point. Metaphors are intrinsic to Pasifika identity (of which Maori are part) and serve to illustrate basic truths about the human condition, including those involved in international relations. As an astute observer noted, imagine if a US Secretary of State was an indigenous person (such as Apache, Cherokee, Hopi, Mohican, Navaho, Sioux or Tohono O’odham, to name a few). It is very possible that s/he would invoke ancestral myths in order to make a point on delicate foreign policy issues.

Hon. Nanaia Mahuta, New Zealand Foreign Minister (photo: New Zealand Labour Party).

This post will clarify a few facts. First, on military and security issues covering the last two decades.

New Zealand has twin bilateral strategic and military agreements with the US, the first signed in 2010 (Wellington Declaration) and the second in 20012 (Washington Declaration). These committed the two countries to partnership in areas of mutual interest, particularly but not exclusively in the South Pacific. New Zealand sent troops to Afghanistan as part of the US-led and UN-mandated occupation after 9/11, a commitment that included NZSAS combat units as well as a Provincial Reconstruction Team (PRT) in Bamiyan Province that mixed humanitarian projects with infantry patrols. More than 3500 NZDF troops were deployed in Afghanistan, at a cost of ten lives and $300 million.

Similarly, NZ sent troops to Iraq after the US invasion, serving in Basra as combat engineers in the early phase of the occupation, then later as infantry trainers for Iraqi security forces at Camp Taji. More than 1000 NZDF personnel were involved in these deployments, to which can be aded the SAS operators who deployed to fight Saddam Hussein’s forces and then ISIS in Iraq and Syria after its emergence. There are a small number of NZDF personnel serving in various liaison roles in the region as well, to which can be added 26 NZDF serving as peacekeepers in on the Sinai Peninsula (there are slightly more than 200 NZDF personnel serving overseas at the moment). In all of these deployments the NZDF worked with and now serves closely with US, UK and Australian military units. The costs of these deployments are estimated to be well over $150 million.

The NZDF exercises regularly with US, Australian and other allied partners, including the US-led RimPac naval exercises and Australian-led bi- and multilateral air/land/sea exercises such as Talisman Saber. It regularly hosts contingents of allied troops for training in NZ and sends NZDF personnel for field as well as command and general staff training in the US, Australia and UK. RNZN frigates are being upgraded in Canada and have contributed to US-led freedom of navigation exercises in the South China Sea (against PRC maritime territory extension projects) and anti-piracy and international sanctions enforcement missions in the Persian Gulf. Among the equipment purchases undertaken during the last two decades, the NZDF has bought Light Armoured Vehicles (Strykers, as they are known in the US), Bushmaster armoured personnel carriers, C-130J “Hercules” transport aircraft, P-8 “Poseidon” anti-submarine warfare and maritime surveillance aircraft, Javelin anti-tank portable missiles and a range of other weapons from 5 Eyes defence contractors. In fact, the majority of the platforms and equipment used by the NZDF are 5 Eyes country in origin, and in return NZ suppliers (controversially) sell MFAT-approved weapons components to Australia, the US, UK , NATO members, regional partners and some Western-leaning regimes in the Middle East.

After the estrangement caused by the dissolution of the ANZUS defence alliance as a result of NZ’s non-nuclear decision in the mid-1980s, a rapprochement with the US began in the aftermath of the 9/11 attacks. The 5th Labour government sought to capitalize on the moment and sent troops into Afghanistan and later Iraq using the cover of UN resolutions to deflect political attacks. That led to improved military-to-military relations between the US and NZ, something that has been deepened over the years by successive NZ governments. The intelligence relationship embodied in the Echelon/5 Eyes agreement was slightly curtailed but never ended even when ANZUS dissolved, and was gradually restored as the main security partnership to which NZ was affiliated. Now the NZDF is considered a small but valued military and intelligence partner of the US and other 5 Eyes states, with the main complaints being (mostly from the Australians) that NZ does not spend enough on “defense’ (currently around 1.5 percent of GDP, up from 1.1 percent under the last National government, as opposed to 2.1 percent in Australia, up from 1.9 percent in 2019) or provide enough of its own strategic lift capability. The purchase of the C-130J’s will help on that score, and current plans are to replace the RNZAF 757 multirole aircraft in or around 2028.

The dispute over US warships visiting NZ because of the “neither confirm or deny” US policy regarding nuclear weapons on board in the face on NZ’s non-nuclear stance was put to rest when the Arleigh Burke-class destroyer USS Sampson (DDG-102) participated in the RNZN 75th anniversary celebrations in November 2016 after an agreement between the then National government and US Department of Defense on assurances that it was not carrying or using nukes as weapons or for propulsion. As if to prove the point of bilateral reconciliation, on the way to the celebrations in Auckland DDG-102 diverted to provide humanitarian support to Kaikura earthquake relief efforts after the tremor of November 14th (the week-long anniversary fleet review involving foreign naval vessels began on on November 17th). A Chinese PLAN warship also participated in the anniversary Fleet Review, so the message conveyed by the first official NZ port visit by a US warship in 30 years was made explicitly clear to the PRC.

As for intelligence gathering, NZ is a core part of the 5 Eyes signals intelligence collection and analysis network. Over the years it has moved into the field of military signals intelligence gathering as well as technical and electronic intelligence-gathering more broadly defined. More recently, in light of the emergence of non-state terrorism and cyber warfare/espionage threats, the role of 5 Eyes has been upgraded and expanded to counter them. To that end, in the last decade NZ has received multiple visits from high-ranking intelligence officials from its partners that have dovetailed with technological upgrades across the spectrum of technical and electronic signals intelligence gathering. This includes addressing issues that have commercial and diplomatic sensitivities attached to them, such as the NZ decision to not proceed with Huawei involvement in its 5G broadband rollout after high level consultations with its 5 Eyes partners. More recently, NZ has been integrated into latest generation space-based intelligence collection efforts while the focus of the network returns to more traditional inter-state espionage with great power rivals like China and Russia (we shall leave aside discussion of the benefits that the GCSB and NZDF may receive from Rocket Lab launches of US military payloads but we can assume that they would be significant).

As routine practice, NZSIS and GCSB officers rotate through the headquarters of 5 Eyes sister agencies for training and to serve as liaison agents. Officers from those agencies do the same in NZ, and signals engineers and technicians from 5 Eyes partners are stationed at the collection stations at Waihopai and Tangimoana. GCSB and SIS personnel also serve overseas alongside 5 Eyes employees in conflict zones like Afghanistan and Iraq. While less standardized then the regular rotations between headquarters, these type of deployments are ongoing.

5 Eyes also maintains a concentric ring of intelligence partners that include France, Germany, Japan, Israel, and Singapore. These first-tier partners in turn use their respective capabilities to direct tactical and strategic intelligence towards 5 Eyes, thereby serving as the intelligence version of a “force multiplier” in areas of common interest. One such area is the PRC, which is now a primary focus of Western intelligence agencies in and outside of the Anglophone world. This common threat perception and futures forecasting orientation is shared by the NZ intelligence community and is not going to change anytime soon unless regimes like those in Russia and the PRC change their behaviour in significant ways.

Source: EFF Graphics

For its part, the PRC (the peer competitor with the most interest in New Zealand), has no such complex and sophisticated intelligence networks with which to avail itself. It has intelligence partners in North Korea, Russia, Iran and other small states, but nothing on the order of 5 Eyes. As a result, it is much more reliant on human intelligence collection than its rivals in the 5 Eyes, something that has become a source of concern for the 5 Eyes community and NZ in particular (as the supposed weak link in the network and because of its economic reliance on China, of which more below). While the PRC (and Russia, Israel and Iran, to name some others) are developing their cyber warfare and espionage capabilities, the fact is that the PRC continues to rely most heavily on old-fashioned covert espionage and influence operations as well as relatively low tech signals intercepts for most of its foreign intelligence gathering. NZ’s counter-espionage and intelligence efforts are focused on this threat.

That brings up the issue of trade. Rather than “sucking up” to China, the foreign minister was doing the reverse–she was calling for increased economic distance from it. That is because New Zealand is now essentially trade dependent on the PRC. Approximately 30 percent of NZ’s trade is with China, with the value and percentage of trade between the two countries more than tripling since the signing of the bilateral Free Trade Agreement in 2008. In some export industries like logging and crayfish fisheries, more than 75 percent of all exports go to the PRC, while in others (dairy) the figure hovers around 40 percent. The top four types of export from NZ to the PRC are dairy, wood and meat products (primary goods), followed by travel services. To that can be added the international education industry (considered part of the export sector), where Chinese students represent 47 percent of total enrollees (and who are a suspected source of human intelligence gathering along with some PRC business visa holders).

In return, the PRC exports industrial machinery, electronics (cellphones and computers), textiles and plastics to NZ. China accounts for one in five dollars spent on NZ exports and the total amount of NZ exports to China more than doubles that of the next largest recipient (Australia) and is more than the total amount in value exported to the next five countries (Australia, US, Japan, UK and Indonesia) combined. Even with the emergence of the Covid pandemic, the trend of increased Chinese share of NZ’s export markets has continued to date and is expected to do so in the foreseeable future.

Although NZ has attempted to diversify its exports to China and elsewhere, it remains dependent on primary good production for the bulk of export revenues. This commodity concentration, especially when some of the demand for export commodities are for all intents and purposes monopolized by the Chinese market, makes the NZ economy particularly vulnerable to a loss of demand, blockages or supply chain bottlenecks involving these products. Although NZ generates surpluses from the balance of trade with the PRC, its reliance on highly elastic primary export commodities that are dependent on foreign income-led demand (say, for proteins and housing for a growing Chinese middle class) makes it a subordinate player in a global commodity chain dominated by value-added production. That exposes it to political-diplomatic as well as economic shocks not always tied to market competition. Given the reliance of the entire economy on primary good exports (which are destined mainly for Asia and within that region, the PRC), the negative flow-on effects of any disruption to the primary good export sector will have seriously damaging consequences for the entire NZ economy.

That is why the Foreign Minister spoke of diversifying NZ’s exports away from any single market. The only difference from previous governments is that the lip service paid to the “eggs in several baskets” trade mantra has now taken on urgency in light of the realities exposed by the pandemic within the larger geopolitical context.

Nothing that the Labour government has done since it assumed office has either increased subservience to China or distanced NZ from its “traditional” partners. In fact, the first Ardern government had an overtly pro-Western (and US) slant when coalition partners Winston Peters and Ron Mark of NZ First were Foreign Affairs and Defence ministers, respectively. Now that Labour governs alone and NZ First are out of parliament, it has re-emphasized its Pacific small state multilateralist approach to international affairs, but without altering its specific approach to Great Power (US-PRC) competition.

The situation addressed by Mahuta’s speech is therefore as follows. NZ has not abandoned its security allies just because it refuses to accept the premise that the 5 Eyes be used as a diplomatic blunt instrument rather than a discreet intelligence network (especially on the issue of human rights); and it is heavily dependent on China for its economic well-being, so needs to move away from that position of vulnerability by increasingly diversifying its trade partners as well as the nature of exports originating in Aotearoa. The issue is how to maintain present and future foreign policy independence given these factors.

With those facts in mind, the Taniwha and Dragon speech was neither an abandonment of allies or a genuflection to the Chinese. It was a diplomatic re-equilibration phrased in metaphorical and practical terms.

The Labour-led government in New Zealand has settled on a new mantra when it comes to addressing the US-China rivalry. It claims that New Zealand is ideally situated to become a bridge between the two great powers and an honest broker when it comes to their interaction with the Southwest Pacific. This follows the long-held multi-party consensus that New Zealand’s foreign policy is independent and autonomous, and based on respect for international norms and multinational institutions.

The problem is that the new foreign policy line is a misleading illusion. It ignores historical precedent, the transitional nature of the current international context, the character and strategic objectives of the US and the PRC and the fact that New Zealand is neither independent or autonomous in its foreign affairs.

The historical precedent is that in times of conflict between great powers, small states find it hard to remain neutral and certainly do not serve as bridges between them. The dilemma is exemplified by the island of Melos during the Peloponnesian Wars, when Melos expressed neutrality between warring Athens and Sparta. Although Sparta accepted its position Athens did not and Melos was subjugated by the Athenians.

In stable world times small states may exercise disproportionate influence in global affairs because the geopolitical status quo is set and systemic changes are incremental and occur within the normative framework and around the margins of the system as given. When international systems are unstable and in transition, small states are relegated to the sidelines while great powers hash out the contours of the emerging world order—often via conflict. Such is the case now, which has seen the unipolar system dominated by the US that followed the bi-polar Cold War now being replaced by an emerging multi-polar system aggregating new and resurgent powers, some of which are hostile to the West.

In this transitional moment the US is in relative decline and has turned inward under a Trump administration that is polarizing at home and abroad. It is still a formidable economic and military power but it is showing signs of internal weakness and external exhaustion that have made it more reactive and defensive in its approach to global affairs. China is a rising great power with global ambition and long-term strategic plans, particularly when it comes to power projection in the Western Pacific Rim. It sees itself as the new regional power in Asia, replacing the US, and has extended its influence world-wide.That includes involvement in the domestic politics and economic matters of Pacific Island states, including Australia and New Zealand.

China’s rise and the US decline are most likely to first meet in the Western Pacific. When they do, the consequences will be far reaching. Already the US has started a trade war with the Chinese while reinforcing its armed presence in the region at a time when China cannot (as of yet) militarily challenge it. China has responded by deepening its dollar and debt diplomacy in Polynesia and Melanesia as part of the Belt and Road initiative, now paralleled by an increased naval and air presence extending from the South and East China Seas into the blue water shipping lanes of the Pacific.

There lies the rub. New Zealand is neither independent or autonomous when it confronts this emerging strategic landscape. Instead, it has dichotomized its foreign policy. On the security front, it is militarily tied to the US via the Wellington and Washington Declarations of 2010 and 2012. It is a founding member and integral component of the Anglophone 5 Eyes signal intelligence gathering network led by the US. It is deeply embedded in broader Western security networks, whose primary focus of concern, beyond terrorism, is the hostile activities of China and Russia against liberal democracies and their interests.

On trade, New Zealand has an addict-like dependency on agricultural commodity and primary good exports, particularly milk solids. Its largest trading partner and importer of those goods is China. Unlike Australia, which can leverage its export of strategic minerals that China needs for its continued economic growth and industrial ambitions under the China 2025 program, New Zealand’s exports are elastic, substitutable by those of competitors and inconsequential to China’s broader strategic planning. This makes New Zealand extremely vulnerable to Chinese economic retaliation for any perceived slight, something that the Chinese have been clear to point out when it comes to subjects such as the South China island-building dispute or Western concerns about the true nature of Chinese developmental aid to Pacific Island Forum countries.

As a general rule issue linkage is the best approach to trade and security: trading partners make for good security partners because their interests are complementary (security protects trade and trade brings with it the material prosperity upon which security is built). Absent that, separating and running trade and security relations in parallel is practicable because the former do not interfere with the latter and vice versa. But when trade and security relations are counterpoised, that is, when a country trades preferentially with one antagonist while maintaining security ties with another, then the makings of a foreign policy conundrum are made. This is exactly the situation New Zealand finds itself in, or what can be called a self-made “Melian dilemma.”

Under such circumstances it is delusional to think that New Zealand can serve as a bridge between the US and China, or as an honest broker when it comes to great power projection in the Southwest Pacific. Instead, it is diplomatically caught between a rock and a hard place even though in practice it leans more West than East.

The latter is an important point. Although a Pacific island nation, New Zealand is, by virtue of its colonial and post-colonial history, a citizen of the West. The blending of Maori and Pacifika culture gave special flavor to the Kiwi social mix but it never strayed from its Western orientation during its modern history. That, however, began to change with the separation of trade from security relations as of the 1980s (where New Zealand began to seek out non-Western trade partners after its loss of preferred trade status with UK markets), followed by increasingly large waves of non-European immigration during the next three decades. Kiwi culture has begun to change significantly in recent years and so with it its international orientation. Western perspectives now compete with Asian and Middle Eastern orientations in the cultural milieu, something that has crept into foreign policy debates and planning. The question is whether the new cultural mix will eventuate in a turn away from Western values and towards those of Eurasia.

The government’s spin may just be short term diplomatic nicety posing as a cover for its dichotomous foreign policy strategy. Given its soft-peddling of the extent of Chinese influence operations in the country, it appears reluctant to confront the PRC on any contentious issue because it wants to keep trade and diplomatic lines open. Likewise, its silence on Trump’s regressions on climate change, Trans-Pacific trade and support for international institutions may signal that the New Zealand government is waiting for his departure before publicly engaging the US on matters of difference. Both approaches may be prudent but are certainly not examples of bridging or brokering.

While New Zealand audiences may like it, China and the US are not fooled by the bridge and broker rhetoric. They know that should push come to shove New Zealand will have to make a choice. One involves losing trade revenues, the other involves losing security guarantees. One involves backing a traditional ally, the other breaking with tradition in order to align with a rising power. Neither choice will be pleasant and it behooves foreign policy planners to be doing cost/benefits analysis on each because the moment of decision may be closer than expected.