Not Picking Sides and the “New Neutrals”: Active Nonalignment,Great Power Competition,and the Global South

A recent Bloomberg news item entitled “not picking sides is paying off for these countries,” stated that

Geopolitics is shaping the flow of trade and investment around the world in ways it hasn’t for decades.… Sandwiched between a US-led Western bloc and another dominated by Russia and China sit at least 101 nations that we’ve dubbed the New Neutrals. Members of this informal group are betting they can attract investment from both blocs and benefit economically if they avoid picking sides. (Bloomberg, October 22, 2024)

This is happening on a variety of fronts.

One of them is foreign investment. As the United States and the European Union circle their wagons, block Chinese investment projects, and raise tariffs against Chinese goods, Chinese companies set up shop elsewhere. Another front is trade itself, as the share of trade in these countries in the middle with China and Russia has increased, and the share of trade with the West has fallen. The “New Neutrals” are importing more Chinese goods as well as more Russian oil. Chinese electric vehicles are gaining market share, and China, in the first quarter of 2024, overtook Japan as the number one exporter of automobiles, largely because of e-cars.

Great power competition is thus reshaping the international political economy in new and unexpected ways. Globalization is being reshaped by geopolitics. New terms, like “nearshoring” and “friendshoring,” have come to the fore and changed the way we think about investment and trade decisions. The politicization of international economic relations assigns priority to ideology, national defense, and security over strictly business decisions. A key concern is how trade and investment choices will affect the international balance of power.

In this context, which some describe as a Second Cold War, and I prefer to refer as one of great power competition, a key question is how should countries in the Global South react to this new international environment? To answer it, one must keep in mind the strong imbrication of politics and economics in an interdependent world. As governments regain centrality in framing the direction and flow of trade and investment in ways that were not the case in the past—when these decisions were left largely to transnational companies—a proper understanding of this new environment, as well as the best way to manage it to maximize the advantages for developing nations, becomes essential.

The above-quoted Bloomberg note shows that, far from taking sides in this contest, many countries, mostly from the Global South, are keeping their powder dry, refusing to be cajoled into one camp or the other. For them, the choice between “democracy or autocracy” is a false one. These countries opt instead for nonalignment, which allows them to pick and choose among the various offerings on the table from the great powers and act accordingly. This increases their leverage and negotiating capacity, as well as their ability to make the most of a difficult situation of heightened international tensions. The latter is marked by the worst pandemic in a century, several major wars, and the onset of the devastating effects of climate change. Developing nations are thus pressed to come up with their own response to the challenge posed by a cover story of The Economist, entitled “How to survive a superpower split” (The Economist, April 11, 2023).

The purpose of this article is to elaborate on one response that has emerged to that question, namely, active nonalignment (ANA), one that The Economist refers to as “the new nonalignment.” The first section examines the rise of ANA in Latin America (Fortin et al., 2023b). The second section discusses its specific features and what makes it the preferred foreign policy choice in the current international environment. The third section elaborates on the tactics it applies to attain its objectives. The fourth and final section draws some conclusions.

ANA in Latin America

The term ANA was coined in Latin America in 2019–2020 (Fortin et al., 2020, 2021; Ominami, 2019). This was due to a triple whammy that hit the region at the time. The COVID-19 pandemic hit Latin America hard—so hard that it was arguably the most affected in the world. With 8% of the world’s population, Latin America suffered 28% of the global fatalities from COVID, according to official figures. The region also saw its worst economic downturn in 120 years, according to the United Nations Economic Commission for Latin America and the Caribbean (ECLAC). Its GDP fell by 6.6% in 2020, twice the rate of the global GDP downturn, which was 3.3% (ECLAC, 2021). At the same time, the region found itself pressured by the United States and China to hew to their own respective foreign policy preferences. The net result was a further deepening of the region’s crisis, with major projects canceled, ideological divisions sharpened, and polarization exacerbated.

One casualty of these tensions was a 2016 Chilean initiative presented to China: the installation of a fiber-optic submarine internet cable from Valparaiso to Shanghai. This would have been the first such cable connecting Asia with South America. At the time (and today), all electronic communications between both regions had to go via North America, with the ensuing latency delays and higher costs associated with it, as there is no internet cable across the South Pacific. With Chile being the country with the highest digital penetration in South America, according to some indicators, this would have positioned the country as China’s digital gateway to South America, in a pole position in the digital age. Yet, it was not to be. Although a memorandum of understanding (MoU) between the Chilean and Chinese governments was signed in 2016, committing to give due consideration to the project, and a prefeasibility study was undertaken in 2017, as the project made its way through the Chilean bureaucracy, it was ended abruptly in 2019. In April 2019, United States Secretary of State Mike Pompeo made a mini-tour of South America that started in Chile. In Santiago, he made clear to President Sebastian Piñera that the project was unacceptable to Washington. Shortly thereafter, the project was canceled (Heine, January 19, 2024). And this was by no means the only case.

In Panama, after a change of government in 2019, the incoming government proceeded to suspend major Chinese projects, such as the fourth bridge over the canal, a $1.4 billion project that had been won by a Chinese company in an open bid, as well as to cancel a railway project from Panama City to Chiriquí, near the country’s northern border (Dialogue Earth, March 25, 2020). In Ecuador, in 2021, in the last days of the Trump 1.0 administration, the International Financial Development Corporation (IFDC) lent $3.5 billion to Ecuador on the condition that it exclude all Chinese technology from its telecommunications grid. The loan was also subject to another condition, namely, that Ecuador should privatize assets for an equivalent sum, public sector assets to be jointly determined by the IFDC and the Ecuadorian government, opening the door to serious conflicts of interest in so doing (Gallagher & Heine, January 26, 2021). Across the region, Washington pressured governments to block the Chinese company Huawei from participating in bids to add 5G technology to their telecommunications grids (Stuenkel, May 10, 2019).

It is in this context that ANA arose. Distressed by Latin America’s crisis and the deep divisions emerging in the region because of it—divisions that led to the unprecedented election of the first non-Latin American to the presidency of the Inter-American Development Bank in 2020—we proposed that Latin American countries should put their own national interests front and center and not give in to the pressures of the great powers. ANA made the case for greater regional coordination and cooperation to deal with the many challenges arising in the international environment. Its objective is to regain international autonomy for countries whose economic difficulties and regional fragmentation have increased their dependency on the great powers (Fortin et al., 2023a, January 30, 2023).

ANA took a page from the honorable tradition of the Non-Aligned Movement (NAM) of the 1960s and 1970s. At the time, the newly independent countries from the then-called Third World, led by statesmen such as Jawaharlal Nehru, Gamal Abdel Nasser, Kwame Nkrumah, and Sukarno, bandied together to deal with Cold War tensions and the threat of nuclear war, launching a platform that stood post-colonial states well (Damodaran, 1983, pp. 41–49). Yet, ANA also draws on the realities of the new century, ones in which South–South trade and investment flows have spiked, from 20% of such flows in the 1970s to over 50% today (The World Bank, 2015). In the new century, the diplomatie des cahiers des doleances (“victimhood diplomacy”) of yesteryear’s Third World, which led to the demands for a New International Economic Order (NIEO) in the 1970s and 1980s, has been replaced by something very different. This is the “collective financial statecraft” embodied in newly created entities like the Asian Investment and Infrastructure Bank (AIIB), the New Development Bank (NDB), as well as the Belt and Road Initiative (BRI) (Roberts et al., 2017). All of this creates an environment that is much more conducive to responding to the demands of developing nations, now no longer simply at the mercy of Western-dominated institutions like the World Bank and the International Monetary Fund.

Great Power Competition in our Time

Quite apart from the specific conditions in Latin America that triggered the rise of ANA as an approach to foreign policy, the latter also responds to a broader diagnosis of the international situation in the third decade of the new century. The basic premise of ANA is that for the first time since the end of the Second World War, weaker powers—mostly the developing nations—now have much more room for maneuver and freedom of choice in terms of their foreign relations. In other words, they have the luxury of not having to pick sides in the current competition among the great powers—largely between the United States and China, but one in which Russia also plays a role.

Why so? The answer is straightforward. During the years of the Cold War, roughly from 1947 to 1989, although there was strong competition between the United States and the Soviet Union in the ideological and military spheres, there was not that much of it on the economic front. Given the closed nature of the Soviet economy and its smaller size in relation to the United States one, it was very difficult for Moscow to compete with Washington in matters of trade, investment, and financial cooperation. And in the post-Cold War era, sometimes referred to as the “unipolar moment,” from 1991 to 2016, the United States’s unbridled hegemony meant that there was not much of a choice either. Washington’s (and, for a time, the “Washington Consensus”) was the only game in town.

Yet, that is no longer the case. In 2014, China’s GDP surpassed that of the United States in Purchasing Power Parity (PPP) terms, and according to some projections, will be bigger than that of the United States in terms of market prices by 2030. A recent study by the US Government Accountability Office (GAO) concluded that from 2013 to 2021, Chinese state-funded sources spent $679 billion on infrastructure projects abroad, whereas US state-funded sources spent a mere $76 billion in the same period on such projects (US Government Accountability Office, September 12, 2024). In other words, although the US economy is larger than the Chinese one (representing 24% of world GDP versus 19% of China’s) and is more advanced in terms of science and technology in several sectors, China’s larger public sector allows Beijing to deploy resources abroad in a way that Washington is not able to. It is, of course, very different to be part of a market dominated by a monopoly (which is the case when one power exercises undisputed hegemony in the international system) or even one by a duopoly, in which two companies agree not to compete with each other (as might occur when there is a clear division of spheres of influence between great powers), than to do so in one in which there is fierce competition between two companies of roughly comparable size (as is the case between the United States and China today). The latter offers many more opportunities to third parties vying for the favor of one or the other.

ANA’s Grand Strategy

If ANA is the foreign policy doctrine, what is the grand strategy that goes with it? As indicated above, it is in the nature of great power competition in our time, one marked by the existence of a declining hegemon (the United States) and a rising power (China), that the contest for the “hearts and minds” of nations around the world is relentless. The hegemon is bent on showing that it still commands much support, whereas the rising power must demonstrate that its standing in the international hierarchy is moving upwards. As a result, there are powerful incentives to respond to and accommodate the demands of weaker powers.

As Kassab has indicated, this opens the door for “playing the field” and maximizing the side payments and minimizing the conditionality for any given economic or social project developing nations are keen on (Kassab, 2020). By “playing the field” is meant the playing of one great power against another, on the premise that “what one of them won’t give you, the other will.” This reflects the very different priorities of great powers and of developing nations. For the former, the international agenda is dominated by geopolitical concerns and how to deal with the threats from adversaries, mostly other great powers. For developing nations, their main concerns are economic and social ones. How to grow at a higher rate, how to get more investment, how to do more trade, how to create more jobs, and how to raise the standard of living of the population are what drive them. To attain these objectives, developing nations will often have to rely on the great powers to provide them with the capital, market access, and technology that propel economic growth in our era. In how to go about doing that lies much of the secret to the success of an effective foreign policy in our time. And in checking the availability of one or the other of the great powers for any specific project, be it a dam, a bridge, a port, or a railway line, lies the essence of what “playing the field” is all about. Developing nations today thus have options, and much depends on the way they play their cards. For those purposes, ANA provides a handy guide to action.

ANA’s Tactics

If “playing the field” is ANA’s grand strategy, what are its tactics? In other words, how do you translate these broad guidelines into operational diplomatic behavior? Again, here, we must distinguish between the great powers and the weaker ones. In international relations (IR) literature, the classic distinction has been between “balancing” and “bandwagoning.” By the first, it is meant taking a strong stance against another power. By the second, we refer to aligning with the position of another state.

Balancing against a great power is not much of an option for developing nations. The assumption has thus been that their only choice is to bandwagon. Yet, that is not correct. There is an intermediate stance, a middle road between balancing and bandwagoning. That is hedging. In situations of high uncertainty, such as that of international tensions like those we are going through now, and where the wrong decision may have disastrous consequences, rather than going all-in with one side or the other, the best option may well be to cover your back. This means changing positions whenever necessary, behaving unpredictably, and even in a contradictory manner.

In Southeast Asia, ASEAN member states like Indonesia, Malaysia, and Vietnam have been especially effective in applying hedging, as the work of Malaysian political scientist Kuik Cheng-Chwee has shown so eloquently (Cheng-Chwee, 2024, pp. 49–76). Hedging has also been apparent in Latin American foreign policies in the recent past. Brazilian foreign policy during President Luiz Inacio Lula da Silva third term (2023–2027) is a case in point. Brazil is China’s number one trading partner in Latin America and the destination of half of all Chinese Foreign Direct Investment (FDI) in the region. One of the very first visits abroad of President Lula was to China in April 2023, with a sizeable business delegation. Brazil and China were among the founding members of the BRICS group, and in his first two terms in office, President Lula made the Global South a foreign policy priority. Yet, Brazil has never joined the NAM, an entity where it participates as an observer (Amorim, 2023, pp. 251–262).

More recently, and to the surprise of many, Brazil announced that it would not join China’s BRI, although 22 Latin American and Caribbean countries have already done so (China Global South Project Newsletter, October 30th, 2024). The reason for this is very simple: Brazilian diplomacy likes to keep its options open and not be seen as siding with one or another of the great powers. In practical terms, signing onto the BRI would not make much difference for Brazil’s trade and investment links with China. The demand for Brazilian commodities in China will remain strong, and the Brazilian market is so attractive that Chinese capital will continue to flow to Brazil in any event. Signing a BRI MoU with Beijing is largely a symbolic gesture that Brasilia prefers to skip, so as not to appear too close to the former Middle Kingdom in the current great power competition.

Conclusion

Latin America was late to the NAM. No Latin American delegation attended the 1955 Bandung Conference in Indonesia, and only one Latin American leader, Fidel Castro, took part in the 1961 Conference in Belgrade that formally launched the Movement. Yet, in the third decade of the new century, the region has taken the lead in the revival of nonalignment that has taken place in 2022–2024 (Foreign Affairs, May–June 2023, pp. 8–43). The reaction across much of Africa, Asia, and Latin America to the war in Ukraine—so much at variance with that of the West; the expansion and steadily higher profile of the BRICS group; and the strong condemnation of developing nations of the war in Gaza and the West’s all-out support for Israel in it have impelled the Global South to the forefront of international politics in our time (Foreign Policy, December 25, 2023). It is thus out of the complex interaction between great power competition, the contestation of the current world order by the Global South, and the revival of nonalignment, albeit in a new incarnation, this time as ANA, that much of the dynamics of world politics will be determined in the years to come.