Peru’s Choice: a New Deep-Water Port and Used Metro Cars?
Photograph Source: The White House – Public Domain
Between November 15 and 16, 2024, the government of Peru hosted the Asia-Pacific Economic Cooperation (APEC) forum. This 21-country gathering that first started in 1989 brings together the major countries in the Association of Southeast Asian Nations (ASEAN) with the major countries that ring the Pacific Ocean, including the United States and China. There was nothing dramatic at the APEC forum itself, whose Machu Picchu Declaration could have been written at any of the previous forums. There is one sentence in the Declaration that was of interest: “Unprecedented and rapid changes continue to shape the world today.” However, the governments could not elaborate on that sentence given their different views on those changes. Even though the meeting itself did not articulate the “rapid changes,” events outside the meeting in Lima made the nature of these changes very clear.
Used Metro Cars
The U. S. President Joe Biden came to APEC with a rather odd selection of offerings. Standing beside Peru’s President Dina Boluarte, Biden announcedthat the United States is pleased to donate 150 passenger cars and locomotives to the Lima Metro system. This would ordinarily have been a very welcome announcement. However, there was something in that announcement that did not sit well: the cars and locomotives were not new but were used in the Caltrain system. The U.S. government had previously thought of selling them to Peru but then hastened to make this a donation instead.
New goods did come to Peru, but these were not for civilian use. The United States provided Peru with nine Black Hawk helicopters (about $65 million paid to Sikorsky Aircraft by the U.S. taxpayers). These helicopters are to be used against drug traffickers, but there is no guarantee that the Peruvian government will not use them against its citizens. Along the grain of these military helicopters, the U.S. military provided security for the APEC summit, despite the fact that the Peruvian military has shown itself quite capable of managing a summit of this scale.
A Port for South America
Two hours north of Lima, along the wonderful coastline of Peru, sits Chancay, a coastal town famous for being a staging point in the War of the Pacific (1879-1884) between Chile and Peru. What used to be a quiet town is now a major port. In a joint venture, the Peruvian company Volcan Compañí Minera S.A.A. owns 40 percent of the port, while COSCO Shipping Ports of China holds the remaining 60 percent. COSCO is a state-owned enterprise that already owns a part of one port on the Pacific Ocean’s American coastline, in Seattle, Washington.
The Chinese invested $3.6 billion in the Peruvian project, which began in 2021 and is near completion. The deepest part of the port will be 17.8 meters, which will allow it to berth the very large cargo ships that have a capacity of 18,000 TEUs (Twenty-foot Equivalent Units, the standard measurement for the capacity of cargo ships); the largest cargo ship is the MSC Irina, built in China, with a capacity of 24,346 TEUs. During the APEC summit, Presidents Xi Jinping of China and Boluarte of Peru inaugurated the port.
The Chancay port will be complemented by a train line that the Chinese will build that runs from the port into Brazil’s state of Amazonas to the Free Economic Zone within the city of Manaus. Trade between South America and China will be direct and will not need to be transshipped through Central or North America. Shipping time will be drastically reduced, making trade more profitable at both ends. Initially, the port will be a boon for agricultural products (avocados, blueberries, coffee, and cacao). Eventually, though, the Peruvian government hopes to build industrial zones in the hinterland of the port to process these products, including timber, and ensure that value-added gains remain in Peru. One example, the Ancon Industrial Park, is already on the books and will be developed next year. A study of the project by Peruvian scholars expects to see gains for Peru and the rest of South America within a few years.
Investment or Insecurity
The United States tried to shut down Chinese investment in Peru. In 2020, the United States was able to shut out Chinese investment from La Unión port in El Salvador. No such pressure was possible on the Peruvian government, despite its military links to the United States. Last year, retired U.S. General Laura J. Richardson, then head of Southern Command, expressed her views about the Chinese investments to the Center for Strategic and International Studies in Washington: “I’d like to say what the PRC is doing—the People’s Republic of China—looks to be investment, but really I call it extraction, at the end of the day. And I say that it’s in the red zone, just to use… an analogy there. They’re on the 20-yard line to our homeland. Or, we could say that they’re on the first and second island chain to our homeland. And the proximity in terms of this region and the importance of the region, I think that we have to truly appreciate what this region brings, and the security challenges that these countries face.”
The United States tried to make the investment about security, but for Latin American countries, this was an investment. When asked about the port, Peru’s former finance minister Alex Contreras told the Financial Times that “any investment is welcome in a region which has an enormous investment deficit. If you have to choose between no investment and Chinese investment, you will always prefer investment.”
At the G20 meeting in Brazil after the APEC summit, Xi Jinping returned to the theme of the Belt and Road Initiative. China, he said, “will always be a member of the Global South, a reliable long-term partner of fellow developing countries.” From the standpoint of Peru, the port it built did not look like a security threat. It looked instead like development.
This article was produced by Globetrotter.
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