Less than ten hours before Venezuelan President Nicolas Maduro left his country’s airspace en route to the USS Iwo Jima, he met with Qiu Xiaoqi, a senior Chinese representative to Latin America. A few months earlier, Chinese President Xi Jinping met with Maduro in Moscow. China is Venezuela’s leading source of imports and second largest export market and a crucial source of foreign investment, loans, and technology. Venezuela buys Chinese arms, hosts a Chinese satellite-tracking station, and aligns with Chinese foreign-relations initiatives. While Venezuela is neither a puppet nor a capable ally, and certainly not a reliable trade partner, Chinese influence in the country nonetheless runs counter to the interests of the United States, a situation too common in the region.
As the U.S. grapples with Chinese influence, the standard, institutional response is that China has an edge in Latin America because of its generosity. The Belt and Road initiative and Chinese lending practices mean that easy credit flows from China to the region. There’s a truism, which former Treasury Secretary Larry Summers relayed, “Somebody from a developing country said to me, ‘what we get from China is an airport. What we get from the United States is a lecture.’” Following this line of logic, if the U.S. wishes to compete, it must play Santa Claus. Debt forgiveness, aid, loans, and development are needed to win a competition with China. This may be true; generosity is an essential part of diplomacy. But Santa Claus affects behavior through both negative and positive reinforcement. He maintains a naughty list.
Any effective strategy to reestablish what the November 2025 National Security Strategy (NSS) calls hemispheric preeminence will involve mechanisms to push Chinese influence from the region and impede its further growth. China has built in too many structural advantages—using the power of the state to develop markets—for the United States to compete effectively with a “gift-giving strategy.” The U.S. must work instead to turn back those structural advantages by targeting for sanctions Chinese firms and individuals operating in Latin America who threaten American interests, commercial and otherwise. This course of action is present in the NSS, which explicitly calls for pushing out “foreign companies that build infrastructure in the region.”
Such a move would have significant historical precedence in American policy towards German influence in Latin America in the 1930s. It would also align clearly with the National Security Statement’s prioritization of renewed hemispheric preeminence and assertion that “we want a Hemisphere that remains free of hostile foreign incursion or ownership of key assets, and that supports critical supply chains.” Following the logic of the NSS, there emerges a compelling case to reach back into the history of U.S.-Latin American relations and bring back the Proclaimed List of Certain Blocked Nationals—the naughty list.
If the U.S. is to widen the aperture of its current sanctions regime, it must set aside the conceit that Chinese commercial, party, and state interests are in any way distinguishable. Chinese influence is unlike that of other countries because of this continuity of interests; when an American firm competes with a Chinese one, it is often competing with the Chinese state. While it is often difficult to differentiate between wholly state-owned and mixed ownership enterprises, a clear majority of China’s largest firms are state owned. Moreover, China has refined mechanisms to influence private enterprises through Chinese Communist Party branches. Meanwhile, the Chinese state works for the benefit of its firms, state owned and private, by funding the largest infrastructure projects in the world, negotiating trade agreements, and initiating long-term efforts to secure access to supply chains.
This is not the appropriate venue to catalog Chinese influence in Latin America, but a few details will illustrate the whole. China leads the U.S. in imports and exports for the large ABC economies of Argentina, Brazil, and Chile. China is the largest market for Brazilian beef and soybeans—hurting U.S. producers who once met Chinese demand. Argentina is host to a major Chinese satellite tracking facility. Chinese companies have invested heavily in northern Chile and Argentina’s lithium triangle, competing directly with U.S. companies mining the strategic resource. Chinese automakers have displaced their American competitors through much of the region, especially in electric vehicle markets. Most South and Central American countries have signed up for the Belt and Road initiative—with the notable exceptions of Mexico and Brazil—and China provides far more credit to the region than does the U.S. From vaccines to dams, 5G networks to space programs, Chinese involvement in Latin America has advanced, grown, and entrenched.
China has signed comprehensive strategy agreements with the region’s largest economies and nearly every country in Latin America has rescinded diplomatic recognition of Taiwan. Security agreements are nascent but growing. China operates active facilities in ten ports in Latin America, through which countless tons of Chinese-origin fentanyl precursors have been smuggled, and has opened dozens of Confucius Institutes: nodes of soft-power generation effectively prohibited in the U.S.
The German Precedent
As the U.S. competes with a peer power, seeking to defend its interests among lower and middle income countries, the obvious guide for decision making is the history of the Cold War. There are significant similarities between the U.S.-Soviet rivalry and the current U.S.-China rivalry. There is an aesthetic parallel in the role of communism (sort of), mullahs in Iran, Kims in North Korea, and Daniel Ortega in Nicaragua; and a more fundamental parallel, espionage, the strategic use of loans and foreign aid, and the separation of the world into blocks of influence. But especially in the case of Latin America, the lessons of the Cold War have limits. The U.S-China rivalry is economic not political. There are no revolutions for “capitalism with Chinese characteristics”, rather, there are economists and businessmen weighing competing investment packages and trade deals. Military and intelligence concerns are downstream of economic and commercial concerns. Thus it is useful to look back to the last time the U.S. fought economic and commercial warfare in the region against a great power, the 1930s.
In the years before the U.S. entrance into World War II, the country prepared for the potential of a coming conflict in a number of ways. In Latin America, this meant securing the Panama Canal, monopolizing strategic supply chains, negating the German state’s economic initiatives, and countering the German diaspora’s commercial influence. According to the most significant history of the American campaign, Max Paul Friedman’s 2003 Nazis and Good Neighbors: The United States Campaign Against the Germans of Latin America in World War II, the region was a priority: “Of the nearly 100 meetings of the joint planning committee of the State, Navy, and War Departments in 1939 and 1940, all but six had Latin America at the top of the agenda.” And, of the major Axis powers, the signatories of the Tripartite Pack, Germany had by far the most influence in the region.
German influence was twofold. The German state sought to secure beneficial trade agreements with Latin American countries through import-export bartering (not unlike that between China and Venezuela) and an inflated compensation currency. The other source of influence was a diaspora of German-speaking expatriates who, through the efforts of the Nazi Party’s foreign branch, the Auslands-Organisation, were impelled to organise on behalf of the state and party. This could range from displays of patriotism to acts of espionage. The Auslands-Organisation ensured the presence of Nazi party imagery at German parades and festivals, organized a plebiscite in support of the Anschluss of Austria, and enforced a system of shunning. Germans insufficiently supportive of the Nazi party would see their businesses boycotted and face expulsion from a network of social organizations. During the war, members of the Auslands-Organisation provided communication lines between Germany and spies in the United States. Its membership was entirely composed of German nationals, 100,000 of whom moved to Latin America in the wake of World War I.
Far more extensive than China’s Confucius Institutes, the Auslands-Organisation similarly used control of education funding to influence school curriculum. Of the hundreds of elite-oriented German schools in Latin America, nearly all came under the control of Nazi Party agents. Similar tactics brought into line the diaspora’s tradition of civic clubs, German workers’ unions—bundled into the Deutsche Arbeitsfront—and cultural holidays. And, like as with China today, relatives of those who fell afoul of the party could be threatened or harassed within Germany.
The German intelligence operation in Latin America was limited but mainly drew from the diaspora. German agents tracked shipping through ports, reported on American war-industrial efforts, and attempted to map the Panama canal. These same activities are why Chinese ties to dozens of Latin American ports, and active facilities in ten, are considered a national-security threat. German firms worked with the Auslands-Organisation to provide funding and cover to spies. Where the Auslands-Organisation was suppressed, as happened with increasing frequency in the years and months before the outbreak of war, it went underground, using diplomatic outposts as cover for Nazi Party and intelligence operations. Like with China, the interests of private enterprise, the Party, and the state were indistinguishable.
According to Friedman, American war-industrial advisor Bernard Baruch predicted (probably incorrectly) that, without American intervention, “German economic penetration could bring [Latin America] under her control without firing a single shot.” There was further hyperbole—fears ranging from Peruvian U-Boat bases to paratroopers in Brazil—but it became clear to American policymakers that it was a matter of national security to reduce German commercial and economic influence in Latin America. The tool that the U.S. used was the Proclaimed List of Certain Blocked Nationals.
Issued on July 17, 1941, five months before the attack on Pearl Harbor, the Proclaimed List prohibited American firms from doing business with listed businesses and individuals. American businesses that did not fire their German agents, regardless of their presence on the Proclaimed List, could lose their export licenses. The list operated like a virus, non-American firms that did business with those listed would themselves be placed on the list. In under a year, the Proclaimed List grew to six thousand persons. Secretary of State Dean Acheson wrote that the list sought “the elimination from positions of economic and social importance of those whose political ideas and policies rendered them undesirable.”
The Proclaimed List included those who posed a clear threat, members of Auslands-Organisation and Luftwaffe reservists operating a commercial airline within range of the Panama Canal, and those who challenged the U.S.’s economic interests. The German diaspora was wealthy; it operated near monopolies in national industries like coffee processing and pharmaceutical production. Local German contacts and businesses collaborated with the German state trade initiative toward Latin America, reducing American shares of export markets through competition. Like with China today, the U.S. feared that Latin American economies dependent on German trade and short-term loans could be swayed on matters of foreign relations. Besides, according to Friedman, “To North American officials raised on the Monroe Doctrine, the creation of exclusive bilateral trade relations in a region they claimed for their own was unacceptable.”
The Trump Corollary
The most recent National Security Strategy (NSS) is rightly recognized as an important departure from past statements. Instead of working backward, from externals to proposed actions, it proceeds from a clear articulation of American interests, which are treated as sufficient impetus for policy. The NSS lists American interests in Latin America, which are worth quoting in full:
We want to ensure that the Western Hemisphere remains reasonably stable and well-governed enough to prevent and discourage mass migration to the U.S.; we want a Hemisphere whose governments cooperate with us against narco-terrorists, cartels, and other transnational criminal organizations; we want a Hemisphere that remains free of hostile foreign incursion or ownership of key assets, and that supports critical supply chains; and we want to ensure our continued access to key strategic locations. In other words, we will assert and enforce a “Trump Corollary” to the Monroe Doctrine
The Trump Corollary’s goal is a restoration of American hemispheric preeminence. In Latin America, drug interdiction and migration are highlighted, but so too is the role of China. Like the original Monroe doctrine and the WWII-era application of the Roosevelt Corollary, great-power intrusion in the Western hemisphere is to be treated as necessarily a threat to American interests. The NSS explicitly calls for pushing out “foreign companies that build infrastructure in the region.” Here, the NSS seems to dispense with the disastrous conceit that Chinese state and commercial interests are distinct, that there are any firewalls between the interests of Chinese businessmen and those of the Chinese Communist party.
Much as the U.S. once equated German commercial successes with an encroaching military power, and took steps to extinguish both, it ought to revive the Proclaimed List to target Chinese nationals and Chinese firms who threaten hemispheric preeminence, and their collaborators in Latin America. For one, this means constructing a new sanctions regime. As it stands, the U.S. places sanctions on Chinese individuals and firms to express disapproval, as is the case with sanctions on Xinjiang-based firms, and inhibit military-industrial capacity—military end-use sanctions. While such sanctions are necessary, they insufficiently address the continuity between various Chinese interests. The aperture needs to be widened.
A sanctions regime based on the Proclaimed List and in line with the NSS would review Chinese firms and individuals operating in Latin America, targeting those who threaten American interests. And a new Proclaimed List will practice the same guilt-by-association tactics as the original. American firms that do business with proscribed firms and individuals should be penalized. Foreign firms that do business with proscribed firms and individuals should themselves be added to the Proclaimed List.
Of particular interest for this list should be Chinese Communist Party members abroad and any individual who has interacted with the United Front Work Department (UFWD), perhaps the clearest Chinese analog to the Auslands-Organisation. The UFWD absorbed the Overseas Chinese Affairs Office and controls a technologically-enabled propaganda network. Its activities are restricted in several countries, including the U.S. and Taiwan; it blurs the lines between commerce and espionage, cultural celebration and tech censorship; and the extent of its presence in Latin America is unknown but extensive. According to one report, “[The UFWD] operates through a fluid network of cultural associations, chambers of commerce, friendship centers and media outlets. The goal is to gain legitimacy among local elites, promote Beijing’s interests and shape public opinion.” Using a combination of diaspora contacts and official state organs, the UFWD is the vanguard of Chinese influence in Latin America and the world.
A Proclaimed-List style of sanctions, initiated for explicit national security objectives, is procedurally possible under the International Emergency Economic Powers Act (IEEPA). They would not necessarily infringe on China’s permanent normal trade relations status—although that status ought to be reevaluated in light of the NSS. The procedural and legal mechanisms of the Proclaimed List itself cannot be recreated, because they relied on World War II-era executive orders and trade restrictions which are no longer in place.
Guidelines
When the U.S. first implemented the Proclaimed List, it made a number of mistakes, all of which can be learned from.
For one, the Proclaimed List was paired with a program of deportation and internment. Over 6,500 German, Japanese, and Italian nationals, living in Latin America, were interned in the U.S. This program was, in part, a justified wartime measure: many of the interned were spies, Axis diplomats, and influential Nazi Party officials. However, many more were innocent. Latin American countries used the deportation program to expel vagrants and political opponents. Many Jewish refugees from Europe, including some previously interned in Germany, were swept up in the process. A revived Proclaimed List needn’t recreate this aspect of the program.
Also, the initial implementation of the Proclaimed List suffered from a human capital problem. Some of those in charge of gathering names for the list had limited language skills, few local contacts, or a drinking problem. As a result, many names were incorrectly included on the Proclaimed List, damaging relationships with Latin American allies. Similarly, poor local intelligence led to overreactions in Washington. The political instability of Latin America was sold as German-backed coups to President Roosevelt. If the U.S. is to reassume hemispheric preeminence, it must act on accurate information.
Finally, the initial implementation of the Proclaimed List damaged relations between the U.S. and Latin American countries. To some extent, this was unavoidable. The Monroe Doctrine has always chafed. However, a renewed Proclaimed List ought to take into account Latin American sensitivities; local governments, security services, and even industry leaders should be consulted in the composition of the list. And, in line with the NSS’s call to “near-shore” industry, some thought should be given to how the commercial exclusion of Chinese firms might serve to develop local Latin American competitors.
Looking forward, the United States faces a rival whose ability to influence Latin America is far greater than Germany’s ever was. China is a larger trade partner with comparatively easier access to the region. Its capacity for espionage is far greater. The technology of today makes intercontinental coordination far easier. And, whereas the region was of marginal interest to Germany in the 1930s, China has more deeply-vested aims. China’s territorial claims impel it to seek diplomatic leverage over every country lest they support competing claims; China needs Latin-American food imports; and, from lithium to satellite-tracking, Latin America is full of opportunities for the furtherance of Chinese interests. China will not abandon the region unless it is forced to. Thus, if America is to make good on the Trump Corollary, it must be forceful. A new naughty list is one necessary step of many.
