Double Handshake

Peru’s defense minister Rafael Rey said his country is in talks with China to purchase “a fleet” of tanks made in China to replace its current 1970s Soviet-era line-up. The country is also planning buy Super Tucano planes from Brazil’s Embraer to fight drug trafficking in the Amazon.

Both Rey and Prime Minister Javier Velasquez were quick to dismiss any notion of a budding military arms race with arch-rival Chile. Times are sensitive given last month’s espionage controversy and 100-plus years of general bad blood stemming from a border dispute. However, the ministers did not mention what Peru’s leading newspaper La Republica reported recently: That in July, a Peruvian military delegation traveled to China to evaluate the MBT-2000 tank model. The result: The Peruvians were initially turned off by the MBT-2000 because they didn’t think it would be able to defeat the Chilean Leopard 24A.

Doesn’t exactly assuage fears.

Anyway, how do you go about closing an arms deal for a buyer on the fence, you may ask? From AP:

Rafael Rey told The Associated Press that the army is testing MBT-2000 tanks brought from China, but wants a better-equipped model of the tank. Peru showed the tanks in a parade on Tuesday.

Rey didn’t say how many tanks Peru would buy. The Lima newspaper La Republica reported that it plans to buy 80 to 120 tanks and has evaluated Chinese, German, Russian, Ukrainian and Polish models.

A parade! There’s a novel way to evaluate military hardware. Tank parades in Beijing during October’s National Day 60-year anniversary and now Chinese tank parades in “the US’s backyard”?

Cue US Congressional fear-mongering.

Last month, a group of 15-20 gunman attacked a Chinese-owned copper project in northern Peru at dawn, killing three workers and torching 80% of the site. According to news reports filed in the following days, two other workers were still missing. The US$1.4 billion Rio Blanco copper project (bought by Fujian-based Zijin Mining Group in 2007) has been the site of violence and controversy before. In 2005, before Zijin took over, security guards killed one protester and allegedly tortured two dozen more. Those who oppose the mine argue it harms the environment and has a negative impact on local society.

Like the Bagua protests earlier this year, November’s Rio Blanco attack illustrates the major tensions between Lima’s economic and industrialization development plans for the country and some locals who fiercely resist it. Peru’s president Alan Garcia himself is a perfect example – he is lauded by international businesspeople for his open foreign investment policies and reviled at home, with an approval rating of 26%. Chinese companies, who are heavily invested in Peru’s mines, are caught in the crossfire.

Chinese mines in Peru have been targets of violence before, but I would argue the backlash against Chinese companies in Peru have little to do with them being Chinese. It is fast, polluting, large-scale development, and social and environmental upheaval that protesters are lashing out against. American and European energy and mining companies have been targeted as well.

Conflicts like the one in Rio Blanco are about development – about if and how it should happen, and who whose decision it should be.

In China, of course, fast, unconstrained, top-down development is near Gospel – The Gospel of Fazhan (or development). I’m using “fazhan” instead of “development” from here out because the word connotates so much more than new buildings and roads. You hear “fazhan” everywhere in China; it is a mantra, an obsession. Fazhan is progress, a thing to believe in. Fazhan levels are the way you compare countries. Fazhan is tied closely to national pride and unity. There are those who want fazhan and those who don’t know any better.

So note how state-owned newspaper China Daily handled the Rio Blanco attack:

Drug cartel behind Zijin Peru copper project attack

A weekend attack on a copper project in northern Peru that left three dead may have been the work of drug traffickers who want to keep the area undeveloped in order to protect their trade, the head of a business leaders group said on Tuesday

…

“There is no dispute or conflict with the community, so this makes you think that criminal interests are behind it, probably drug traffickers,” said Ricardo Briceno, head of Confiep, Peru’s largest business federation. Police said they were still collecting evidence from the attack.

Big mines tend to bring roads, police and development to areas where those involved in the drug trade want to keep a low-profile.

…

The company and people from the business community say townspeople now support the construction of the mine, though violence has broken out before at Rio Blanco.

The Peruvian government has also struggled at times to win the public debate over the benefits that big mines bring to isolated towns in the Andes.

The article is lifted from a Reuters report filed the previous day, which distanced itself a bit from the all-is-well comments from Briceno. Rio Blanco’s violent history disappears, as do mentions of environmental concerns. Indeed, with a few edits, the article becomes China Daily’s perfect affirmation of the Gospel of Fazhan – everyone welcomes fazhan with open arms except for the criminals.

It is much easier for China’s government to convince its own people that fazhan is a universal aspiration. Again, few of them need converting to the Gospel, and there’s no reason foreigners wouldn’t believe in the same thing. For every protest or attack against a Chinese mining interest abroad, China Daily and Xinhua will be there to dutifully explain that the cause was a few bad seeds at odds the vast majority of supporters.

But how does China sell the Gospel of Fazhan abroad to those who might resist it, to those who don’t share the same values? There is no doubt China will continue transform all of Latin America with its resource-buying and fazhan-leading. This reality is settled by governments, by trade agreements and investment policies.

But if China hopes to get along harmoniously with the Latin American people whose lives are being utterly transformed by all this fazhan, it may be useful to recognize and plan for the fact that not everyone is a believer.

Well, since DH cannot be anymore “harmonized” in China than it already is, I thought I’d offer a quick update on the “Amazon’s Tiananmen,” a label that’s been used to describe the violent clashes between indigenous Indians and Peruvian police in June over land use in Peru’s Amazon jungle. The tensions bubbled over three months ago, as Peru’s government continued opening up more areas of the country for oil and mineral exploration without consulting the local inhabitants. All in all, around thirty police officers and protesters were killed and more than 200 were injured.

When I first wrote about the clashes in the days that followed, I questioned the “Tiananmen” comparison. Aside from the timing (happening in early June, around the time of the 20-year anniversary of the China protests) and easily simplified narrative (oppressive government cracking down on its own people), I didn’t find a lot of similarity between the two protests.

One thing that I did get wrong in that earlier post, however, was the amount of media coverage Peru’s protesters got. I had rashly predicted that the incident would not capture international attention like China’s protesters got twenty years previously. Yet, in the weeks that followed Peru’s clashes, the incident made front-page headlines worldwide. Some of these news sources jumped on the “Amazon’s Tiananmen” label, while most did not.

Regardless, mounting international pressure and Lima’s backtracking culminated in the apology and resignation of the country’s prime minister Yedude Simon and congress’s repealing some of the laws granting wanton commercial development in tribal areas. This is not to say that all foreign development has stopped in the area, but I submit that the protests did have a major impact in Lima, something I would not have predicted had you asked me in June.

So, what then of the “Tiananmen” label? Survivor International, a British NGO, whose director Stephen Corry coined the term as far as I can tell, is still using it. Last week, Survivor published another indictment of Peru’s government in the 100 days that followed the “Amazon’s Tiananmen” and called for an independent investigation of what happened really happened in June.

But while China’s Tiananmen legacy inside the country is hushed at best and forgotten at worst, it seems to me that the Peru’s “Tiananmen” stands to be held up by indiginous groups as a major (if bloodied) victory, given Lima’s repentance over the incident. Would anyone in participating in the 1989 demonstrations claim the same?

Here’s an illustrative anecdote of one on-the-ground service that can vary widely between China and Latin America: Moneygram.

Earlier this year when I was in Peru, I began using Moneygram, an international money transfer service similar to Western Union, to have money sent from the US in order to avoid exorbitant ATM charges. The service generally works well, but your results may vary.

This is how Moneygram worked in Lima, Peru. I would walk one block from my house, turn right at the corner and walk into a small shop that specialized in international wire transfers. I told the clerk an eight-digit number and handed over my passport. The clerk filled out a single Moneygram form, made a copy of my passport and asked if I wanted my cash in US dollars, Nuevo Soles or a combination of the two. The process took literally ten minutes.

This is how Moneygram works in Beijing, China. Before setting out this morning, I checked Moneygram’s website for locations. Ostensibly, there are 331 agents around Beijing that one can receive a transfer, according to the company’s website. Bank of China branches make up most of the list. So far so good. Armed with my transfer number and passport I set out on my bike looking for the nearest BOC branch on the list.

Four hours and five banks later, I had the RMB in my pocket. The first BOC bank referred me to their head Beijing City branch, saying that was the only place I could accept a transfer. Fine. I peddled to Chaoyangmen and waited an hour in that bank’s immense lobby waiting for my number to be called and studying the display of commemorative coins celebrating the upcoming 60th anniversary of the People’s Republic of China.

When I made it to counter, the teller had no idea what a Moneygram was. Luckily he called for help and, after some serious digging through drawers, came up with the requisite paperwork. He slid the paper to me and told me to fill it out. When I handed it back, he took the sheet and my passport and disappeared for 20 minutes.

“This is no good,” he told me when he returned, “the names are wrong.”

“Oh, here,” I tried to explain, “she must have written ‘Tom’ for ‘Thomas’” I wrote down T-O-M Pellman in my notebook and showed him.

“No, that’s not right. You need to telephone the sender to confirm the names.”

“How about ‘Thomas Pellman’ instead of ‘Thomas Eugene Pellman’? Sometimes in the US we don’t write our middle names.”

“That is right,” he said hesitantly but then walked off and talked on a phone for ten minutes. “Sorry, Moneygram will only let us transfer money if the name the sender writes matches the name you write. You need to tell the sender to add this word,” he pointed to my middle name, “and then we can finish it.”

“This is stupid. I don’t have time to call her; I’ve already wasted an hour here. Do you think I’m tricking you into getting this money because I wrote down my middle name and the sender didn’t?”

“Sorry, there’s nothing I can do.”

And so, back on the bike. The next bank had, miraculously, heard of Moneygram, but the computer system was down. I stopped next at an Industrial and Commercial Bank of China, which referred me to another branch down the road. I bit more peddling and I found myself at another ICBC further down the road, waiting, again, for the better part of an hour. This time, I carefully filled out the form leaving out my middle name on the sheet and luckily the teller didn’t raise the issue. I signed my name at least five times to various papers. The teller stamped a red oval at least a dozen times. Suddenly he looked up.

“Wait, what’s your zip code in Beijing?”

“I’m not sure; it’s in Nanluoguxiang.”

He grimaced, turned and shouted to his manager down the row. He turned back and wrote “10000″ in the zip code box.

Finally, I had my cash.

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I know grinding bureaucracy in China is nothing new, so I hope this doesn’t come across as whiny. Truth be told, this banking episode is about on par with every other time I’ve stepped into a bank in China.

There are some fairly obvious reasons for why using international money services like Moneygram are so different between places like China and Peru. The RMB not being a fully convertible currency makes every international money move in and out of the country a major headache. Even having to step foot in a bank (versus going to a specialty shop like I dealt with in Lima) adds time and hassle. Also, I’m sure that the money remittance infrastructure around Latin America is much more sophisticated due to emigrants needing easy ways to send their pay from abroad back home.

Deeper though, there is something deeply defeating about how every time you step into a bank in China, you expect something (invariably for ridiculous reasons) to go wrong. Makes you yearn for that South American efficiency!

Here’s an article from Fortune magazine published late last month on Chinese telecom suppliers making inroads in Latin America I’d meant to link to earlier. The gist: Chinese companies Huawei and ZTE are moving into the Latin American market following their success offering low-cost cell phones in Africa. Both companies have done very well in the latter continent – Huawei now has a 29% market share of the phone-company gear industry there, nipping at the heels of market leader Ericsson, with 30%. ZTE, an 11-year-old company, is now the world’s six-largest handset seller.

Indeed, on the streets of Lima, the cheapest cell phone model belongs to ZTE, which goes for about 80 soles (US$27) if memory serves. Like so many Chinese-made products, low-price usually translates to questionable quality. Buying my handset there, I remember the sales girl convincing me that I should spend the extra US$7 to buy the second-cheapest handset, a Nokia, which was much better quality, she assured me. It will be interesting to see how the company fares offering its up-market ZTE i766, which boasts mobile television.

The article discusses one major advantage that both Huawei and ZTE enjoy that other foreign telecom companies don’t: a well-connected, deep-pocketed government:

Huawei and ZTE benefit from the fact that the Chinese government holds stakes in dozens of local phone companies. It is not surprising that these telcos increasingly buy much of their infrastructure from homegrown companies. Financially, China’s telecom suppliers also benefit (like some struggling U.S. companies today) from tax rebates and R&D grants. But what really irks rivals are the government’s low- to no-interest “loans” that needn’t be repaid, and the deep discounts local companies get on the energy and raw materials they purchase from other Chinese companies. According to public filings, this year ZTE received a credit line from the government of nearly $15 billion. Beijing bestowed $10 billion on Huawei in 2004.

Chinese blue chips from different industries also offer “bundles” to emerging-market countries: Buy our phone gear and we’ll source your raw materials. “China coupled a Huawei, oil, and magnesium deal in an African package,” says James Mulvenon, author of a famous Rand report on Chinese defense electronics and technology. “Cisco can’t compete.”

Will we see similar telecom, oil and copper “bundles” between China and Latin America in the near future?

Image: unplggd.com

Last November, just before 2008’s APEC conference in Lima, Peru, China made news by releasing its first policy white paper describing its overall strategy for engagement with Latin American and the Caribbean. It’s a lengthy and far-ranging document, with sections devoted to political visits, trade cooperation and even sports exchanges. One finishes this document thinking: China’s top priority in Latin America may be procuring natural resources, but it has much more planned than that.

What about the reverse? Does, say, Brazil have an overall strategy for engaging with China? Has it been codified in its own white paper? Are Brazilian students flocking to Chinese language programs in Sao Paulo to gain a leg-up for the explosion of Chinese investment that’s to come over the next twenty years? The answers are all no. From Reuters:

China and Latin American specialists speaking at a conference in Sao Paulo said China sees Latin America as vital to its own future energy, food and economic security, but that the region had been slow to develop China policies.

“Latin America is acting toward China’s expansion in the world in a reactive, disorganized or ad hoc fashion,” said David Shambaugh, professor of political science at The George Washington University.

“When I asked Itamaraty (Brazil’s foreign ministry) about its strategy on China, I got blank stares. There is no strategy.”

Shambaugh, who is very well-respected on China-Latin American relations, has talked about Latin America’s unpreparedness for China before. Countries like Brazil and Argentina granted China market economy status years ago, which has created problems as Chinese manufactuers undercut local producers. “It’s almost as if these (countries) didn’t do their homework,” said Shambaugh. “The United States, Europe, Japan and Australia did not grant China market economy status.”

This alleged lack of strategy includes language. The article notes there are only two serious Chinese language studies programs in all of Latin America, one in Mexico City, the other in Buenos Aires. It is telling that in Latin America, the biggest development in Chinese language learning has come from China itself, in the form of its promoting Confucius Institutes abroad. These centers, which promote Chinese language learning and culture, are springing up throughout Latin America and the rest of the world. As of May, 328 institutes had been established, including a new one at Catolica University in Santiago, Chile.

I’ll add tourism to this list as well. Traveling in Peru, Chile and Argentina, I often asked tour operators about the prospect of Chinese tourists. Many of their eyes lit up at the prospect of a billion customers. Like many countries, Latin American countries are anticipating a wave of newly monied Chinese tourists to arrive in the coming years.

Yet, aside from some enterprising Chinese and Taiwanese businessmen I met in Lima, no one I spoke to was prepared to handle Chinese-speaking tour groups. Nearly no one in these tourism industries speak the language or understand the, um, unique demands of the Chinese tourist (hot water thermoses, slippers, casinos, shopping). It seems that when the tourism wave hits Latin America, it will be Chinese-owned (or ethnically Chinese-owned) tourism companies that will cash in.

So, how long will Latin American countries wait before they formulate their own China strategy?

The Tiananmen anniversary stories are just about wrapping up by this time. Medias around the world filed stories about Beijing’s efforts (some involving umbrellas) to hush up foreign correspondents and shoo Beijingers from the square. I sent a favorite China blog, The China Beat a couple of paragraphs about the minimal media response from Lima, Peru. Today, though, I wanted to add one more note to that brief dispatch in light of a new Tiananmen reference from Peru that came across my desk today.

First, a quick bit of background. In the past few days, violence has erupted between police and indigenous groups in Peru’s Amazon jungle over land use rights of the rainforest. Local people are rioting over the government’s plan to open the region for oil, gas and mineral exploration. Possibly up to 100 people have been killed in and around Bagua, the deadliest instance of social unrest since the mid-1990s clashes between police and the Shining Path.

Given the timing, Survival International, a London-based NGO that advocates for tribal peoples’ rights and its director Stephen Corry, has come up with an analogy for the protests in the Amazon:

Their protests signal that the colonial era has finally drawn to a close. No longer are Amazon Indians prepared to put up with the illegal and brutal treatment which has been routine. That’s finished. This is the Amazon’s Tiananmen. If it finishes the same way, it will also end Peru’s international reputation.

Corry goes on to call for oil companies operating in the region to suspend their operations until calm has been restored and indigenous groups are given a fair listen.

It’s fascinating to me how Tiananmen is invoked here. On the most basic level, “Amazon’s Tiananmen” is similar to the original in that it, at first blush, involves an oppressive government cracking down on its people. Never mind that the circumstances around “Amazon’s Tiananmen” have almost nothing in common with the original besides this fact. This week’s “Tiananmen” has nothing to do with political corruption and fundamental government reform, nothing near the international visibility, nor are the protesters largely non-violent as they were in the original.

But notice the second part: If it finishes the same way, it will also end Peru’s international reputation. This week’s protesters in the rain forest will likely not be able to fundamentally change the course of Lima’s business plans in the region anymore than Beijing students were able to twenty years ago. Nevertheless, the blood being shed may serve to damage Lima’s international reputation as it did for Beijing. Here, invoking the Tiananmen analogy does not ask Amazonians to expect to “win” in their struggle anymore than student protesters “won” twenty years ago. Take heart martyrs, Survival International seems to be arguing, this is the price you pay for favorable media coverage.

Will the foreign response to this week’s violence in Peru rival that in Tiananmen two decades ago? I doubt it, for a couple of reasons.

First, Beijing’s Tiananmen became such a huge event internationally partly because foreign medias were already in the capital covering Gorbachev’s highly publicized visit to China. The large amount of coverage that Tiananmen received in 1989 was partly due to the fact that a number of world-wide media outlets happened to find themselves in the right place at the right time. Contrast that with the isolation of Bagua, Peru and the limited amount of information available. I’m not expecting an iconic “tank man” photo to emerge from this week’s unrest.

Second, despite indigenous peoples’ rights being an utterly worthy cause in my view, it does not have the sex appeal of protesters for “democracy.” Indeed, part of the foreign fascination with Beijing’s Tiananmen was in how easily the media was able to pit the sides: Evil Communist government vs. Good Democratic protesters. Of course the reality was much more complicated, but how easily a news story can be consumed becomes a major factor in how well-known it can become with the public.

Finally, foreign conglomerates are at the heart of this week’s protests, unlike Tiananmen, which was largely an internal affair. Survival International’s article urges foreign oil firms – Anglo-French’s Perenco, Argentina’s PlusPetrol, Canada’s Petrolifera, Spain’s Repsol, Brazil’s Petrobras – to suspend business until calm has been restored. The foreign interests at play in Peru, I think, will weaken the potential for a unified international denouncement of Peru’s government the same way there was in the wake of Tiananmen. Simply put, huge foreign companies (their lobbyists, their employees, their crisis-inflicted governments) have something to gain in Lima eventually having its way in the jungle. In the end, these powerful players, and their money and influence may find a way to ensure that the Amazonians’ plight doesn’t too closely resemble the students’ and workers’ who took to the streets twenty years ago last week.

Image: BBC

The China Beat has been publishing an interesting collection of reactions from around the world to this week’s 20-year anniversary of the Tiananmen protests. In the three-part series, dispatches have come in from Hannoi, Tokyo, Hong Kong, New Zealand, Italy, Singapore and India. I added a brief Latin American perspective, on Peru’s media coverage of the anniversary that you can read here.

Apologies for the recent lack of activity here. I’ve been traveling (currently in Puerto Varas, Chile) and have been trying to keep computer time to a minimum.

Anyone who travels is occasionally (or constantly) reminded of where he has been. Whether we like it or not, a mountain skyline, a village’s music, a drive along a coast remind us of past travels. So, in the spirit of my time on the road (and this blog’s theme), I thought I’d offer up some thoughts on places I’ve been and the China destinations they reminded me of (however superficially). Fellow travelers, add your own additions below!

1. Cuzco, Peru – Lijiang, Yunnan
Though historically these two destinations are nowhere near the same size (Lijiang was a small picturesque Naxi village, while Cuzco was capital of the Incan empire), the cobblestone streets, the mountain backdrop and pushy tourism industries put these two cities in the same league for me. Actually, Cuzco struck me as a mix between Lijiang and the Yunnan backpacker mecca Dali, with its narrow winding alleys lined with tour agencies, pizza restaurants, cafés and bars.

2. Iquique, Chile – Qingdao, Shandong
Both sprawling seaports combine good seafood, high-rise construction and patches of urban beaches. Iquique is hemmed in by large sand dunes to the east, while Qingdao is now pushing up against Lao Shan in the same direction. Though not in the red-roof Bavarian style of Qingdao, Iquique’s Plaza Prat retains its own early 20th century architectural flavor. Also, while nowhere near as famous as Tsingtao beer, Iquique even has its own local brew: Iquiqueño.

3. San Pedro de Atacama, Chile – Kashgar, Xinjiang
Aside from both being desert towns, these two cities initially seem to share little else in common: The former is a largely traditional Muslim town with heavy influences from “the Stans” across the border; the latter is a tiny backpacker bastion in the Atacama Desert. However, the dust and sand, the starry nights and stone/adobe buildings in San Pedro reminded me more of Kashgar’s old quarter than any other place I’d been. Now, if only llamas and alpacas could survive in the desert like camels do in the Silk Road town.

4. Lake Titicaca, Peru/Bolivia – Tai Lake, Jiangsu
Who would have thought that setting out from Puno, Peru, the world’s highest navigable lake is presently slimed like one of China’s high-profile ecological disasters? As you head out further into Lake Titicaca, however, the green algae layer recedes and the water takes on the deep blue unlike anything found in Central China.

Capon Street is the heart of Lima’s vibrant Chinatown, which spans a number blocks east of the city’s historic downtown. The name “Capon” is dated to colonial times, the nickname of 16th-century priest Manuel Loayza who lived there. Technically, the street is actually the 7th block of Ucayali Street.

With its walkway inlaid with Chinese Zodiac animals and brightly painted faux-Chinese architecture, Calle Capon is both a commercial walking street and tourist draw. Nicer restaurants, banks, shops and casinos run along both sides. There are also smaller booths advertising horoscope readings and Fengshui consultation.