Brazil hits ‘Chinese wall’ to reach Pacific Ocean

The allies of Palacio do Planalto are the same ones who are blocking the plans for integration and trade integration in South America, photo – note the development of the importance of the growth in trade with China and its impact on each of the states of the Union

DefenseNet Memo

On the same day that the withheld report (first text) warned of Chinese measures to obstruct integration plans, the Lula government announced this with great pomp at a conference whose subject is published below.

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Devisa Net

Brazil hits ‘Chinese wall’ to reach Pacific Ocean

Report reserved
August 14, 2024

The Lula government’s project to create five integration and trade routes in South America, led by the Minister of Planning, Simon Tebbit, risks being left without one of its main pillars, if not the main pillar: opening a logistical outlet to Europe and Asia via the Pacific.

According to information circulating in Brasilia, negotiations with the Peruvian authorities regarding Brazil’s access to the giant port of Chancay, scheduled to open in November, are hitting a Chinese wall.

Last May, the Peruvian Congress amended the Port System Law. With the new rule, all owners of private ports for public use now have the right to “automatic exclusivity” in using the facility.

The timing of the change could not be more appropriate for China’s Cosco Shipping Ports, which is responsible for the Changkai Port project. The group, one of the world’s largest port operators, will have 100% access to the terminal, with no obligation to open it to third parties. In other words, Cosco will be able to decide which companies and cargoes will have access to the port.

In this case, Beijing will use all its influence in Peru, which can be measured in huge numbers, whether in direct investments in logistics, mining, infrastructure, energy, etc., or in the trade balance, as it is responsible for a third of the exports from the South American country. It is a soft power that is not so soft.

The Brazilian government has received information that Cosco already has several contracts linked to large Chinese groups operating in Peru, particularly in the mining sector. In the past ten years, China has invested more than $15 billion in mineral extraction in the South American country. Chancay will apparently be a “Port of the Republic of China” in Peruvian territory, with less space for “third-party” cargo, such as Brazil.

It was for no other reason that COSCO and a consortium of Chinese banks led by Bank of China and China Minsheng Banking Corp. spent more than US$3.5 billion on the project.

The current scenario contrasts with the optimistic speech Simone Tippett gave in March this year, when she visited the works at the port of Chancay in Peru. The port complex is part of the so-called South American Integration Route 3, one of five routes developed by the Brazilian government. It includes the states of Acre and Rondônia, north of Mato Grosso do Sul, as well as Bolivia and Peru.

The difficulty of accessing the Peruvian port has already emerged as a frustration factor for two sectors of the Brazilian economy in particular, agribusiness and mining. This does not mean that Brazilian goods will be blocked from Chancay. However, priority will be given to the Chinese, due to their business not only in Peru, but in other countries in the region.

In Chile, for example, Beijing has also invested heavily in mining, particularly in strategic minerals for energy transition, such as copper and lithium. It’s money that’s flowing into the veins to feed the Chinese’s geopolitical and economic interests on the continent. Even with Brazil’s natural advantage over its South American neighbors, it’s hard to compete with Beijing.

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