Neocolonialism in the 21st century

Neocolonialism in the 21st Century: Recent geopolitical events from South America to the Arctic have revived the global debate on neocolonialism. Read here to learn more.

Recent reports of U.S. military action and political transition rhetoric in Venezuela, combined with President Donald Trump’s statements at the World Economic Forum, Davos, have revived debates on neocolonialism, a form of domination without formal annexation.

From sanctions and regime engineering in Latin America to renewed interest in Greenland and the Arctic Sea routes, contemporary geopolitics suggests that colonial impulses have not disappeared; they have merely changed form.

In an era of climate change, financial leverage, and strategic chokepoints, power is increasingly exercised without flags, governors, or empires, but with profound effects on sovereignty.

What is Neocolonialism?

Neocolonialism refers to the indirect control of formally sovereign states through:

• Economic leverage
• Trade and commodity dependence
• Debt and financial conditionality
• Corporate dominance over resources
• Political and security influence

Unlike classical colonialism, Neocolonialism avoids territorial rule. Yet it shapes domestic policy choices, often aligning them with the strategic and economic interests of external powers.

Kwame Nkrumah famously described it as “the last stage of imperialism”, where political independence exists, but economic and strategic autonomy does not.

Origins of Neocolonialism

1. Post-Independence Control Without Colonies

Following 19^th-20th century decolonisation, major powers sought to preserve influence through:

• Markets and finance
• Security alliances
• Technology and trade dependence

Colonies disappeared, but dependency structures remained.

2. Cold War Logic

• Superpowers supported “friendly” regimes regardless of democratic legitimacy.
• Coups, covert interventions, and economic pressure were used to prevent ideological realignment.

3. Global Capitalism and Institutions

• IMF, World Bank conditionalities
• Commodity-linked trade systems
• Financial openness without productive diversification

These entrenched asymmetries between capital-exporting and resource-exporting states.

Neocolonialism in South America

1. Commodity Export Dependence as a Policy Trap

Many South American economies remain structurally dependent on a single commodity:

• Chile (1970s): Collapse in copper prices (1974–75) reduced revenues, facilitating austerity and externally aligned restructuring under Pinochet.
• Venezuela (post-2014): Oil price crash triggered hyperinflation and fiscal collapse, overwhelming domestic policy autonomy.

Such dependence exposes states to external price cycles, constraining sovereignty even without direct intervention.

2. Foreign Corporate Control and Profit Outflows

• High-value mining and hydrocarbon sectors historically dominated by foreign firms.
• Profits are often repatriated, limiting domestic capital formation.

Examples:

• Chile (1971): Nationalisation of copper under Salvador Allende targeted US firms like Anaconda and Kennecott.
• Bolivia (2003 Gas War): Protests against foreign-linked gas export plans led to political upheaval and renewed resource sovereignty.

3. Regime Engineering and Political Intervention

During the Cold War, political outcomes were often shaped to protect external economic interests:

• Chile (1973): Coup against Allende followed covert economic pressure and intervention.
• Brazil (1964): Military coup against João Goulart, with tacit US support, ushered in decades of authoritarian rule.

Here, democratic choice was subordinated to strategic alignment, a hallmark of neo-colonial influence.

4. Security Leverage and Transnational Repression

• Security cooperation replaced colonial administration.
• Operation Condor (1970s) coordinated repression across multiple South American states with documented external awareness.

Outcome: Sovereignty persisted on paper, but political options were tightly constrained.

5. Debt-Development Trap

• The 1982 Latin American debt crisis exposed dependence on foreign capital.
• IMF stabilisation programmes prioritised:
  • Fiscal austerity
  • Privatisation
  • Creditor confidence

The result was the “Lost Decade”, low growth, welfare compression, and shrinking policy space for industrial transformation.

Challenges Associated with Neocolonialism

1. Erosion of Policy Sovereignty

• Argentina (2001): IMF-linked austerity following default triggered mass protests and rapid political collapse.
• Demonstrates how market discipline can override democratic mandates.

2. Inequality and Elite Capture

• Chile under Pinochet: Market reforms stabilised the macro-economy but entrenched inequality.
• 2019 protests revealed how elite-external alignments hollow out social contracts.

3. Democratic Backsliding

• Repeated regime engineering normalised authoritarian governance in the name of “stability” or “anti-communism.”

4. Externally Reinforced Resource Curse

• Venezuela’s oil dependence amplified vulnerability to global shocks.
• Welfare collapses post-2014 highlights the dangers of mono-commodity development models.

5. Structural Instability

• Panama (1989): Removal of Noriega stabilised geopolitics but left institutional fragility.
• Venezuela sanctions: Migration waves and polarisation rather than smooth transition.

Neocolonialism in the Present Day

Modern Neocolonialism operates through systems, not soldiers:

1. Sanctions and Financial Chokepoints

• Control over SWIFT, dollar liquidity, and banking access can paralyse economies without military force.

2. Technology and Supply-Chain Dependence

• Dependence on foreign chips, defence platforms, and surveillance tech creates strategic compliance.

3. Debt, Ratings, and Investor Discipline

• Credit ratings and bond spreads shape policy more than voters.
• “Investor confidence” becomes a veto power over welfare and regulation.

4. Corporate Arbitration and Treaty Locks

• Investment treaties deter environmental or labour regulation due to fear of litigation.

5. Information and Narrative Power

• Media ecosystems and digital platforms influence legitimacy, consent, and international perception.

Neocolonialism, Climate Change, and Arctic Geopolitics

President Trump’s remarks at Davos, including renewed suggestions of “purchasing Greenland”, highlight a new frontier of neo-colonial anxiety:

• Climate change is melting Arctic ice, opening the Northern Sea Route (NSR).
• NSR could drastically reduce shipping time between East Asia, Europe, and North America.
• It also enables China-Western Hemisphere trade integration, which the U.S. seeks to obstruct.

Ironically, climate denial coexists with climate-driven strategic competition, giving rise to what may be termed “great-power climate wars.”

As Inuit leader Sara Olsvig notes, “There’s no such thing as a better coloniser”, a reminder that strategic interest often overrides indigenous rights and ecological concerns.

Implications

For South America

• Heightened political volatility
• Sanctions-driven economic distress
• Increased securitisation and counter-alignment

For Global Order

• Weakening of UN Charter norms
• Normalisation of coercive transitions
• Encouragement of sphere-of-influence politics

For Development

• Disrupted long-term planning
• Oscillation between imposed models
• Delayed industrial upgrading and welfare consolidation

Way forward

Durable sovereignty requires:

• Economic diversification
• Regional cooperation
• Control over resources and data
• Strong multilateral norms restraining coercion

In the absence of these, independence risks becoming merely symbolic, while real power is exercised elsewhere.

Conclusion

Neocolonialism is the art of ruling without ruling openly, where sovereignty exists in form but not always in substance. In South America, it has historically deepened dependency, inequality, and instability, even when justified as democracy promotion or market reform.

Today, as climate change, finance, and technology reshape power, neocolonialism is becoming subtler yet more pervasive.

Related articles:

• Colonization
• Decolonization
• Colonization of Africa
• Neo-fascism: Resurgence in Europe?