Thursday, 20 February 2014

Israel in the Pacific

          A vast sector of the globe receives less than its due share of attention from the world’s media.  Latin America covers nearly 13 per cent of the world’s land surface, has a population of some 600 million and a Gross Domestic Product (GDP) totalling nearly 6 trillion US dollars, outpacing India’s by some distance and approaching China’s.  The region’s potential is enormous, held back from its full realisation by poverty on a vast scale and staggering inequalities in income.  All the same, great steps have been taken towards creating effective economic, financial and commercial structures designed to enhance the region’s development and its trade, both internally and with the outside world.

            Equally unnoticed by the media has been Israel’s long-time involvement in Latin America – and the fact that the Arab-Israeli dispute is being played out not only in the Middle East, but also halfway across the world.

The overwhelming presence of the world’s super-power, the United States, to the north has produced varied reactions in the nation states of Latin America.  Four of them are distinguished by their vehement opposition to the USA and all its works - Bolivia, Cuba, Nicaragua and Venezuela.  Iran has seized on this antagonism to advance its own global strategy Israel’s Defense Minister, Moshe Ya’alon, believes Iran has terrorist bases in all four states.  To gain political, economic, cultural and religious influence in the region, Iran has been using every opportunity to exploit these countries’ desire to combat what they see as “American imperialism”.

Two of them, Venezuela and Bolivia, egged on by Iran, have been subscribing to a rabid anti-USA, anti-Israel line for years.  Both are now deeply involved with Mercosur – or the Southern Common Market – which was created as far back as 1991 as an economic and political bloc by Argentina, Brazil, Paraguay and Uruguay. Venezuela became a full member only in 2012; Bolivia’s membership awaits ratification. But it was back in 2005, before either had become involved, that Mercosur concluded a framework agreement with Israel aimed at liberalizing trade between them.

The Mercosur-Israel accord covered 90 per cent of bilateral trade, and incorporated a calendar of progressive tariff reductions in four phases: immediate, 4, 8 and 10 years. The resulting free trade agreement – the first between Mercosur and a country outside Latin America – was sealed in December 2007 and became fully effective in March 2011 when it was finally ratified by the Lower House of the Argentine parliament. The other Mercosur members – Brazil, Paraguay and Uruguay – had already voted legislative confirmation.

A glance at the map will reveal that the countries that now constitute Mercosur cover by far the majority of the South American land mass, but that none has a Pacific coastline.  In June 2012 a grouping of Latin American countries with just that factor in common came together to form a new bloc – the Pacific Alliance.  Founded by Chile, Colombia, Mexico and Peru, the new mechanism aims to integrate the economic and trade development of its members both internally and with the rest of the world.  With a GDP of  some 2 trillion US dollars, this group of nations is the eighth-largest economy in the world.

It so happens that Israel had already negotiated a free trade agreement with one of the founding members of the Pacific Alliance,Mexico, back in 2000, and  had been in intense negotiations with another, Colombia, for no less than fifteen years when, in June 2013, the two nations finally signed a free trade treaty in Jerusalem.  The treaty aims to increase trade and promote investment particularly in the field of technology.

Under the terms of the Colombia-Israel agreement 70 per cent of the two countries’ exports will be exempt of tariffs and customs duties immediately, and the percentage will increase gradually in the following ten years until it covers the whole of bilateral trade.  Bilateral trade, weighted heavily in Colombia’s favour in 2013, reached almost 700 million dollars. Israel sells mainly manufactured and high technology goods and services and Colombia provides items such as coal, coffee, and emeralds.

Israel’s involvement with the non-Mercosur sector of the Latin American world was further strengthened when, on February 10, 2014, it was accepted as an observer nation to the Pacific Alliance.  Except for Turkey, Israel is the first Middle East country to be granted observer status in this group. Observer status, which includes involvement in staff work and attending conferences, is the first step in expanding relations with a group whose combined economies amount to some $2 trillion.

Meanwhile Iran continues to take advantage of its stronger standing with the West to improve relations with various countries, including its friends in Latin America.  In January 2014 Iran’s Deputy Foreign Minister, Majid Ravanchi, toured Cuba, Venezuela and Bolivia on a relations-boosting exercise.

Taking his cue from Iran, and striking while the iron is hot, Israel’s prime minister, Benjamin Netanyahu, will later in 2014 be paying a rare visit to Mexico and Colombia, the two Pacific Alliance countries with which Israel has free trade agreements. 

Latin America is a global economic and trade powerhouse with enormous potential, but also a political battleground on which vested interests manoeuvre to gain strategic advantage on the world stage.  It must be acknowledged that Israel has played the political game in Latin America unlike, perhaps, in other theatres extremely well. It now finds itself positioned advantageously to exploit the gains to its own, and to its partners’, benefit.

Published in the Jerusalem Post on-line, 20 February 2014:

Published in the Eurasia Review, 23 February 2014:

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