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Full Steam Ahead For Sino-Colombian Relations?

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By Emma O’ Leary*

china_colombia_flags_1Relations between China and Colombia are taking off, with China set to develop a railway linking Colombia’s two coasts in an effort to improve the efficiency of its coal exports. The project has been widely touted as a rival to the Panama Canal, which has been the dominant pan-oceanic route since it opened in 1914. While the project is unlikely to usurp the Canal as the favoured path for trade between the Atlantic and Pacific Oceans, it will certainly boost the volume of Colombian coal heading east to Asia, a further reflection of flourishing Sino-Colombian relations.

This is a relationship that has been gathering momentum recently, as the Asian Dragon seeks to secure access to Colombia’s raw material deposits, and Colombian President Juan Manuel Santos looks for new trading partners with Colombia’s traditional export markets of the US and Europe still mired in economic gloom. There have been reports that the two are soon expected to start negotiations on a free trade agreement.

Few will deny that a diversification of Colombia’s trade relations away from the US is a welcome move. However, given the dire human rights record held by the Colombian and Chinese governments, and the history of violent displacements in both, the Asian Dragon’s expanding influence in the Andes is a cause for concern.

Dry Canal To Provide New Path To Export Revenues

Now the two countries are in talks about plans to build a ‘dry canal’; an ambitious railway project that would link Colombia’s coal-rich north-eastern region with ports on its west coast. The US$7.6bn railroad, which would be funded by the Chinese Development Bank and operated by China Railway Group, would move up to 40mn tonnes of cargo a year from Colombia’s economic heartland to the Pacific coast and on to fuel-hungry Asia. “It’s a real proposal? … and it is quite advanced,” Santos said in an interview with the Financial Times. “The studies [the Chinese] have made on the costs of transporting per tonne, the cost of investment, they all work out.”

Lending further weight to the project is a feasibility study completed by the National University of Colombia (UNC). The UNC identifies a route that cuts through the Central American isthmus just below the Panamanian border as a possible location for a railway between Colombia’s two coasts. The route would link Tarena on the Caribbean coast with Tribuga on the on the Pacific coast, requiring the construction of a 385km railroad.

The project would fulfill a long-held Colombian dream of establishing its own inter-oceanic trade route, an ambition which has remained out of reach since Panama achieved independence in 1903, after 82 years as part of the Republic of Colombia, wrenching control of the soon-to-be built canal from Colombian hands. While the construction of such a railway would be an extremely ambitious and expensive project for Colombia to complete alone, the availability of Chinese funding means that the plan is entirely feasible. “I don’t want to create exaggerated expectations, but it makes a lot of sense,” Santos said in the interview. “Asia is the new motor of the world economy”.

Colombia Digs Deeper For Coal To Feed Asian Dragon

China’s insatiable appetite for coal is certainly the driving force behind Colombia’s push to increase its production of the fuel. China consumes more coal than any other nation in order to feed its busy power stations and steelmaking plants. In October it imported 15.7 million tonnes of the fuel, up 28% on its imports a year earlier. Colombia, as the world’s fourth biggest exporter of coal, is a natural target for Chinese investment. Its coal production rose 6% to 20.3 million tonnes in the first quarter of this year, while exports jumped nearly 10%. Energy Minister Carlos Rodado has said production will shoot up 17% to 87 million tonnes this year.

And it seems as though these figures will just keep growing, with all of Colombia’s major coal mines implementing ambitious expansion plans. Glencore, the world’s biggest commodities trader, plans to double coal output at Prodeco, its Colombian unit, to 20.7 million tonnes by 2015. Colombia’s largest coal producer Cerrejón is spending US$1.3bn on an expansion plan that will see its production, currently at 32 million tonnes, rise to 40 million tonnes in 2015. In total, local and international coal mining companies operating in Colombia are expected to invest US$8.7bn in mine expansion during the 2009 – 2020 period, boosting output to 160mn t by 2020, almost double the 87mn tonnes expected for this year.

For Colombia’s part, it is no position to turn down the Asian dragon’s offer to help develop its ailing transport infrastructure. While emerging economies like Colombia are often rich in resources like coal, iron ore and copper, they lack the funds needed to develop the mines and transport infrastructure needed to export these resources efficiently. The World Economic Forum ranked Colombia’s infrastructure 95th out of 142 countries, reflecting the fact that infrastructure bottlenecks and deficiencies are the main problem for Latin America’s main coal producer as it seeks to hike production of the fuel. Energy Minister Rodado’s prediction of 17% growth coal production to 87 million tonnes this year is uncomfortably close to the capacity limit of Colombia’s overstretched and undeveloped ports. Significant investments in the country’s transport network, like the US$7.6bn proposed by China, are badly needed.

Eastern Promise As Bogotá Shifts Outlook Away From The West

As well as helping close the gap in investment in Colombia’s transport infrastructure, the dry canal project also reflects a changing outlook in Bogotá’s trade relations. While its neighbours Brazil, Ecuador and Peru have wholeheartedly embraced the export opportunities presented by China’s insatiable appetite for their natural resources, Colombia has held back, preferring instead to rely on its traditional trading partners of the US and Europe. Colombia has long been the only South American nation with a Pacific Coast without membership of the Asia Pacific Economic Cooperation (APEC).

 

 

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“Latin American trade with China is now close to 100 billion US dollars … and that shows everything grows just as the relations between China and Colombia have grown”.


 

Enrique Posada, vice president of the Colombia-China Friendship Association

However, the protracted wait for the ratification of Colombia’s free trade agreement with the Obama administration, as well as growing concerns about slowing demand from the US and the EU due to continued economic malaise, have seen Santos look east for a new trade partner. “Things look pretty good” says Enrique Posada, director of the think tank Asia-Pacific Virtual Observatory and vice president of the Colombia-China Friendship Association. “Latin American trade with China is now close to 100 billion US dollars … and that shows everything grows just as the relations between China and Colombia have grown,” says Posada, who served as a senior diplomat at the Embassy of Colombia in China.

Colombia’s Trade, Industry and Tourism Minister, Sergio Diaz-Granados, is now pushing for membership of APEC. Trade between Colombia and China has increased from US$10mn in 1980 to more than US$5bn last year, making China Colombia’s second-biggest trade partner, after the US. “I see Colombia being serious about opening up to Asia as a strategic plan, which has happened because (President) Juan Manuel Santos has been studying the issue of Asia since he was foreign trade minister” says Posada. It seems the Santos administration has finally recognised the geographical advantage that Colombia, the only South American nation with both an Atlantic and a Pacific Coast, has over its neighbours.

Dark Side Of The Hunt For Black Gold

The fact that Colombia’s coal mining boom is in full swing is clearly in evidence at Cerrejón, in the northern department of Guajira. This mine, the world’s largest open-pit facility at 30 miles long and five miles wide, accounts for 0.4% of Colombian GDP. However, its continued expansion has destroyed communities in the region, many of which have already been swallowed whole by the growing facility.

Cerrejón’s expansion reflects the fact that the while the development of mines and related infrastructure is certainly good news for Colombia’s external trade, it is not so positive for the country’s beleaguered indigenous and afro-Colombian communities. Many of these live on land in prime mining regions, land that Santos’ administration believes is central to propelling the coal boom. The development of these lands as mines has long-reaching negative consequences for Colombia’s richly diverse ecosystem and for its rural communities.

Large-scale mining projects can completely alter a region’s landscape. These projects often involve environmental overhauls such as changing the course of waterways, requiring dynamite explosions that create heavy noise pollution, pushing humans and animals out of their habitats. The significant amount of infrastructure needed to support mines, including transport networks like China’s proposed dry canal, require huge amounts of land, resulting in widespread deforestation.

As well leaving a large environmental footprint, mining has traditionally been a driving force behind armed conflicts in Colombia. Multinationals, paramilitaries and illegal miners compete for control of mineral rich land that has often belonged to indigenous and afro-Colombian communities for centuries. This is reflected in the fact that rates of human rights violations in mining zones are higher than in other areas. The latest report published by the United Nations Development Programme (UNDP) claims that competition between powerful interests for soil and subsoil rights can become a latent form of pressuring land evictions.

According to the union (Sintraminercol), 87% of all displaced persons originate from mining and energy producing municipalities (35% of total municipalities), and 80% of the human rights violations and violations of International Humanitarian Law that have occurred in Colombia in the last 10 years were committed in these places. Peace Brigades International cites the recent massacres committed in South Bolívar, allegedly related to disputes between illegal armed groups over control of natural resources, and the miners from the municipality of Zaragoza who fled after receiving threats from paramilitary groups, as examples of this.

The involvement of China in the Colombian mining sector is an added cause for concern for both mine workers and rural communities, as many of its domestic and international mines have dismal human rights records. Chinese involvement in Zambia’s copper mines mirrors the pattern of its investment in Colombia. It has invested more than US$400mn in Zambia’s mining industry, and Zambia earned US$2.2bn from copper exports to China last year. However, a recently released report by Human Rights Watch claims that Chinese-run copper mines in Zambia are dangerously unsafe and owners routinely flout the rights of workers. The pressure group says miners are threatened with dismissal if they became involved in union activities

Colombia is at a pivotal moment in its economic and social development. Under the guise of former President Álvaro Uribe’s democratic security policy, the military victories of Colombia’s armed forces against the guerrilla since 2005 have created a sense of security resulting in flourishing foreign investment. Developing its relations with China will allow Colombia access to the increasing FDI needed to exploit the full potential of the country’s rich natural resource reserves, while easing its dependence on the US. However, more public discussion is needed about the potential threat posed to the country’s bio-diversity and its rural communities, especially the vulnerable indigenous and Afro-Colombians, by this nascent relationship.


* Emma O’Leary graduated with a first class honours degree in History and Politics from University College Cork and then spent two years living and working in Spain before moving to London. She  studied for an MA in Latin American Studies at the Institute for the Study of the Americas, and was awarded the 2009/10 ISA Scholarship. She now works for an international research and intelligence company headquartered in London.