Germany’s Scholz Calls for a New Approach to the Lithium Rush
On a visit to South America, the chancellor pitched partnership rather than exploitation.
Welcome back to Foreign Policy’s Latin America Brief.
Welcome back to Foreign Policy’s Latin America Brief.
The highlights this week: German Chancellor Olaf Scholz makes overtures in South America, the Venezuelan government and opposition move closer to resuming talks, and Brazil’s former president seeks to remain a Florida man.
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How to Green a BMW
German Chancellor Olaf Scholz visited Argentina, Chile, and Brazil beginning last Saturday, becoming the first foreign leader to pay a bilateral visit to newly inaugurated Brazilian President Luiz Inácio Lula da Silva and the first German chancellor to visit Chile in 10 years. Two items were high on Scholz’s agenda in every country: rallying political and military support for Ukraine and expanding collaboration on green energy.
On his first ask, Scholz saw mixed results. Argentine President Alberto Fernández and Chilean President Gabriel Boric clearly condemned Russia’s invasion of Ukraine while Lula said in a joint press conference with Scholz that it was an “error” and “wrong” but more should be understood about the causes of the war. “When one person doesn’t want to, two don’t fight,” he said. He also criticized what he sees as insufficient peace mediation efforts. “Until now, I sincerely haven’t heard very much about how to reach peace in this war,” Lula said.
Scholz responded that Germany and Brazil had a clear joint position condemning Russia’s invasion, suggesting a firmer shared line than Lula had voiced. He said Germany has repeatedly insisted there be talks but that the precondition for everything is that Russia takes a step that involves “withdrawing troops.” Scholz said more of the world is realizing it is necessary to put pressure on Russian President Vladimir Putin for him to back down.
Though Scholz himself has resisted sending arms to Ukraine, he reportedly urged the South American nations to support Kyiv militarily. Fernández and Lula said their countries would not send weapons to Ukraine, while Boric said Chile had pledged to send ships to help clear Russian mines in the Black Sea after the war.
Scholz had sought weapons shipments from Brazil in particular because the country purchased German-made tanks and munitions ahead of its hosting of the 2014 World Cup to be used against potential drone attacks, Welt reported. Those never-used munitions happen to be exactly the type Ukraine needs today.
Lula and Fernández said they hoped to play an active role in bringing the war to an end, with Lula pledging to raise the issue on a visit to Beijing scheduled for March. He proposed rallying actors including China, India, and Indonesia to advocate for peace in Ukraine.
Scholz had more luck on green energy. In Argentina and Chile, he signed agreements to cooperate on mining; both countries are among the world’s top miners of lithium—a key mineral used in batteries for electric cars and other products.
Details of the deals were not made public, but media reports said the Argentine agreement would increase German access to lithium in the country. (German carmaker BMW already sources lithium from Argentina.) Lithium mining in Chile is currently carried out by one Chilean and one U.S. firm; in Argentina, Australian and Chinese firms dominate the most advanced mining projects. Neighboring Bolivia, home to the world’s largest lithium reserves, awarded a Chinese-led group a $1 billion contract last week to help develop the sector.
Such contracts have become hot commodities as the world’s energy transition ramps up. Global lithium output lags behind what the world’s carmakers expect they will need for their planned production of electric vehicles in the coming years and decades.
Scholz tried to distinguish Germany’s lithium-related investment in two ways, Bloomberg reported: German activity in the sector would meet high environmental standards and would aim to base more production-related work locally, thus creating jobs in South America. Scholz pledged that Germany would help train lithium-sector workers, suggesting that German companies would be “real partners” because they could set up their own local versions of Germany’s renowned domestic apprenticeship programs.
“Many raw materials [come] from Argentina or Chile, get shipped to China, are processed there and then sold again,” Scholz said in Buenos Aires. “Can one not move the processing of these materials, which creates thousands of jobs, to those countries where these materials come from?”
While lithium was a priority for Scholz, he stressed that Germany strived to cooperate with South American countries on other green technologies too. Speaking alongside Boric, Scholz mentioned an already up-and-running synthetic fuel plant in southern Chile. German firms Siemens and Porsche are partners at the plant, which produced its first carbon-neutral gasoline in December 2022. The plant has received funding both from the German government and as part of the Chilean government’s national green hydrogen strategy.
Boric appeared fully on board with Scholz’s overtures. The Chilean-German partnership brings potential for “creating value chains, transferring technology, and, as I discussed with the chancellor, benefiting the places where these industrial complexes are developing,” he said. Boric also accepted Scholz’s invitation to co-lead a German initiative called the “Climate Club,” a loosely defined grouping Scholz founded last year to coordinate—and accelerate—global climate change efforts. The group plans to focus on industrial policy and work to promote “just energy transitions,” particularly in the global south. Fernández also said he would join the club.
Lula did not say whether he would join, but he did celebrate environmental cooperation with Germany during Scholz’s visit. In addition to having pledged funds for Amazon conservation upon Lula’s election, Berlin plans to donate $200 million to the Brazilian government for environmental and social cooperation within the first 100 days of Lula’s presidency, German Economic Cooperation and Development Minister Svenja Schulze said.
Germany is not the only actor with plans to create lithium-related jobs that go beyond mining in South America. Chinese car giant BYD supplies Chile with electric cars and buses, and it wants to create a local supply chain in the country, its executive vice president told Bloomberg in December 2022. And the Chilean, Argentine, and Bolivian governments all are in the process of setting up state-run lithium companies, which are at various stages of development.
Still, Scholz’s pitch could help raise the bar for countries and companies trying to get a piece of South America’s lithium rush—so that actors commit to taking the provision of local jobs more seriously.
Sunday, Feb. 5: Ecuador holds local elections as well as a nationwide referendum on changing eight points in its constitution.
Friday, Feb. 10: Brazilian President Lula visits U.S. President Joe Biden at the White House.
What We’re Following
Election wrangling in Peru. For the second time since nationwide anti-government protests broke out following the December 2022 impeachment of former Peruvian President Pedro Castillo, the country’s legislature voted down a proposal to move new presidential elections—currently scheduled for 2026—forward to this year.
Most Peruvians favor holding elections this year, as does Peruvian President Dina Boluarte. But some members of Castillo’s Free Peru party said their support depends on ensuring Peru also holds a referendum on a new constitution. Boluarte said she would continue to liaise with Congress to reach a deal.
All the reasons to love Uruguay. Political and economic stability in the 3.4 million-person country of Uruguay should not be written off as impossible to replicate in larger countries, Americas Quarterly’s Brian Winter wrote this week. Uruguay is not simply stable because it is relatively rich, he argues; as recently as 20 years ago, the country’s poverty rate was 40 percent. A bipartisan commitment to providing a social safety net helps explain its gradual improvement in equality since then. Today, the country has a 7 percent poverty rate.
That gradual pace of change has led some Uruguayans to emigrate to seek a faster pace of life and business; in 2019, 18.3 percent of the country’s citizens lived abroad, mostly in Canada, Argentina, Spain, and the United States, according to the South American Observatory of Migration. But many have also found solid business opportunities by staying. “Boring is good. God, I wish Argentina and Brazil were this boring,” one investor told Winter.
A new Florida man? Former Brazilian President Jair Bolsonaro has applied for a U.S. tourist visa that would allow him to remain in the country for six more months. Since late December 2022, he has been based in Florida and is thought to have entered the United States on a diplomatic visa that would have expired on Jan. 1, when Lula was inaugurated. A 30-day grace period follows such expirations.
While Bolsonaro’s claim is being processed, he has planned political appearances in the United States. A flyer for an event with a conservative activist in Miami today describes Bolsonaro as “president of Brazil.” He refused to fully concede last October’s presidential election and is currently being investigated by Brazilian authorities in connection with the Jan. 8 attack on Brasília. Bolsonaro denies any responsibility.
The questions over Bolsonaro’s role in the Jan. 8 riots have prompted some lawmakers in Washington to argue he should not enjoy access to a U.S. tourist visa. Three senators have introduced a bill that would deny U.S. visas to foreign government officials who undermine free elections, a direct response to Bolsonaro’s case.
Question of the Week
Trying to lighten the mood in a sometimes tense joint press conference with Scholz on Monday, Lula jokingly referenced a humiliating soccer defeat that Germany dealt Brazil in the 2014 World Cup semifinals.
In Brazil, the game is often referred to only by its score. What was it?
“The only thing that can’t happen is Germany coming to play soccer in Brazil and defeating the Brazilian national team by 7-1,” Lula said. “When you come play in Brazil, at the most, tie 0-0 as that’s a good amount.”
FP’s Most Read This Week
• Europe Doesn’t Need the United States Anymore by Rajan Menon and Daniel R. DePetris
• Why Saudi Arabia Doesn’t Want Iran’s Regime to Fail by Talal Mohammad
• South Korea Could Sweep Up Europe’s Tank Market by Blake Herzinger
In Focus: Unlocking Venezuela’s Talks
Venezuelan opposition members traveled to Europe last weekend to gather logistical and financial support for a humanitarian deal they made with the government of President Nicolás Maduro. They want European officials to unfreeze sanctioned Venezuelan state assets held in European banks to contribute to a $3 billion humanitarian fund for Venezuela. The fund is a confidence-building measure designed to pave the way for formal negotiations in Mexico City, which are set to resume in the coming months. Maduro broke off the last round of talks in October 2021.
Maduro’s government, for its part, invited the United Nations’ top human rights envoy to visit Venezuela last weekend. Volker Türk held meetings with the government and opposition as well as with civil society groups. While the government’s invitation aimed to call attention to the effect of sanctions in the country, Türk said he also heard concerns from victims of abuse about arbitrary detentions, poor prison conditions, and killings during demonstrations. “I perceive that there is a general recognition across the political and social spectrum of the need for reform,” Türk added.
Türk said he also raised concerns with authorities about a proposed law in Venezuela’s congress that would allow nongovernmental organizations to be banned if the government deems them a threat to national security. The chair of a separate U.N. fact-finding body on human rights in Venezuela called the bill a “point of no return in the closure of the civic and democratic space.”
Whether the bill moves forward will be another point to watch as possible negotiations approach.
In a report last month for the Wilson Center, Abraham Lowenthal argued that the international community should support the talks despite the many obstacles to their success, as they carry a chance of improving conditions in Venezuela and jointly addressing the issues of humanitarian crisis, human rights, electoral issues, re-institutionalization, and economic recovery.
A scholar of democratic transitions in other countries, Lowenthal wrote that many negotiated transitions elsewhere “took years to achieve. They often experienced reversals and zigzags” and required “strategic patience.”
Catherine Osborn is the writer of Foreign Policy’s weekly Latin America Brief. She is a print and radio journalist based in Rio de Janeiro. Twitter: @cculbertosborn
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