The US plan for countering China in South America

Asia Times

26-05-2025

In May 2025, US Secretary of State Marco Rubio publicly touted the idea of using Paraguay's surplus electricity from the Itaipu Dam to power American data centers and artificial intelligence infrastructure.
On the surface, this appeared to be a pragmatic proposal. But beneath the rhetoric of innovation lies a deeper geopolitical strategy rooted both in rising US interest in tapping South America's energy and water reserves under the guise of counterterrorism and hemispheric security, and countering China's growing influence in the region.
The Itaipu Dam, co-owned by Brazil and Paraguay, is one of the world's largest hydroelectric plants. For decades, Paraguay has sold its 50% share of the energy produced to Brazil.
However, with the 2023 expiration of the bilateral pricing agreement, the US has been lobbying to redirect some of the dam's surplus electricity toward its energy-hungry tech infrastructure.
Rubio's comments underscore this ambition: 'Paraguay is rich in renewable energy and water. These resources can help power the next generation of AI computing, if we work together,' he declared.
Yet this newfound US interest in Paraguay's energy is not occurring in isolation. It is accompanied by increased US intelligence and military presence in the Triple Frontier, where Brazil, Paraguay and Argentina meet, a region long stigmatized by Washington as a breeding ground for terrorism.
Since the 9/11 terror attacks, the US has sought to justify its surveillance and potential military activities in the Triple Frontier by alleging ties to terrorist groups like Hezbollah. These claims are rooted in the sizable Arab-descendant population—mainly Lebanese—in Ciudad del Este, Paraguay, and Foz do Iguaçu, Brazil.
However, multiple independent studies, including a 2007 analysis by Arthur Bernardes do Amaral (PUC-Rio), have shown that these allegations were never substantiated by intelligence or law enforcement findings.
According to the US State Department's own 'Patterns of Global Terrorism' reports between 1992 and 2004, no verifiable terrorist attacks were conducted or planned from this region. Yet the narrative persisted.
This securitization—defined by the Copenhagen School as the framing of an issue as an existential threat to justify extraordinary measures—allowed the US to maintain political pressure on Brazil and Paraguay to alter their domestic laws and cooperate in intelligence-sharing frameworks like the '3+1' Commission (Argentina, Brazil, Paraguay and the US.).
When the narrative of Islamic terrorism failed to gain traction in Brazil, the US pivoted. Washington began urging Brazil to classify domestic criminal groups, such as the Primeiro Comando da Capital (PCC) and Comando Vermelho (CV), as terrorist organizations—a categorization that Brazilian legal doctrine firmly rejects.
As reported by G1 and Poder360 in 2025, the Lula administration refused these demands, emphasizing that criminal organizations involved in drug trafficking should not be conflated with ideologically motivated terrorist groups.
This effort aligns with past strategies employed in Colombia and Peru, where the 'narcoterrorism' label was successfully deployed to justify US military aid and intelligence operations.
The same rhetorical playbook is now being applied in the southern cone—only this time the target is not insurgents but critical infrastructure.
Brazilian officials have raised alarms that US interest in Itaipu energy directly threatens Brazil's own energy security. For decades, Brazil has depended on Paraguayan energy to support industrial output in its southern states.
The redirection of this energy toward US tech companies would represent not just an economic loss but a strategic reconfiguration of South American energy geopolitics.
Moreover, the proximity of the Guarani Aquifer—a vital freshwater reserve—to US-interested zones raises further concerns. As Bernardes do Amaral observes, 'the securitization of the region masks an ambition to assert control over water and energy assets under the umbrella of counterterrorism.'
Rising US assertiveness also poses a challenge to China's expanding role in South America. The Belt and Road Initiative (BRI) has gained traction through the Bi-Oceanic Railway (also known as the Capricorn Railway), an ambitious infrastructure project designed to link Brazil's Atlantic coast with Chile's Pacific ports via Paraguay and Argentina.
A US military and intelligence presence near this corridor could impede Chinese logistical and construction operations. By stoking regional security fears, Washington may seek to curtail the effectiveness of BRI-linked development—a move that would preserve US commercial and strategic primacy in the hemisphere.
History shows that US foreign policy often blends commercial interest with military justification. From the Cold War's 'communist threat' to the War on Drugs and the War on Terror, the underlying continuity is a desire to maintain hegemony over resource-rich areas.
In the case of the Triple Frontier, the targets are not radicalized cells, but hydropower, water reserves and strategic transportation routes.
What makes the current strategy more insidious is the use of unproven or exaggerated threats—first Hezbollah, then the PCC—as pretexts to reshape regional governance and infrastructure alignment in ways that favor US interests.
The Itaipu Dam and the Guarani Aquifer are not just engineering feats or natural treasures—they are symbols of regional autonomy. As Washington seeks to expand its footprint in South America, cloaked in the language of security and partnership, it is essential for countries like Brazil and Paraguay to critically examine the costs of cooperation.
In resisting attempts to militarize the region under questionable pretenses, South America must assert its right to develop its resources according to its own sovereign priorities, not as pawns in a new great-power rivalry over energy, water and global influence.