It’s not hard to imagine what was behind Brazilian Foreign Minister Antonio Patriota’s announcement yesterday that Brazil will hire 6,000 Cuban doctors to work in rural parts of Brazil.
As the situation in Venezuela continues to teeter in uncertainty, the Brazilian government has thrown the Cuban government another lifeline. Doing so provides a cushion for a sinking Castro regime that has been kept afloat by the roughly 100,000 barrels of oil per day that Venezuela has sent to Cuba since 2005.
In return, the Cuban government has provided over 30,000 doctors, sports trainers, and advisors at terms very favorable to Cuba. (You think U.S. healthcare costs are high? Imagine the cost of Cuban doctors. Assuming 30,000 of them at $100 per barrel of oil, those guys are worth the equivalent of $333 per day!) The artificially-inflated cost of doctors aside, it’s the sports trainers and advisors that are the concern. I must confess, I have no idea what a Cuban sports trainer is (though I assume he would look something like this.) In reality, they likely provide a service very similar to the advisors: the political counseling, intelligence and military training, propaganda dissemination, and intelligence gathering that has been key to the chavista government’s ability to consolidate its power.
For those advisors, President of Venezuela Nicolás Maduro’s unexpected poor showing in the election presents a zero-sum game. If they cannot shore up the anointed heir of former President Chávez, they may very well lose their lifeline. For that reason, many have speculated that the Cubans are working overtime to help President Maduro. (Though, quite frankly, Maduro’s recent vitriolic attacks on the opposition and the United States seem more like those of a wounded animal than an expression of the subtle, strategic advice one would expect from seasoned intelligence agents.)
It wasn’t supposed to go this way. When the Venezuelan government announced in March that it would hold elections on April 14 to replace the deceased former President Hugo Chávez everything seemed to favor Chávez’s handpicked replacement, Vice President Nicolás Maduro. Only six months earlier, Chávez – battling cancer at the time, though it was unknown to the voters – handily beat the same opposition candidate Hernique Capriles by 11 percent.
But despite the massive outpouring of public grief for Chávez, and the government’s near monopoly control over the media and public resources, Maduro managed to lose more than 1,000,000 votes between October’s contest and last Sunday’s. As a result, it was an unexpected squeaker of an election – 50.8 percent for Maduro and 49 percent for Capriles, with a mere 250,000 votes separating the two.
What had happened was that 14 years of economic and administrative mismanagement had finally caught up to Chávez’s political heir. Lacking the charisma of his predecessor, Maduro struggled during the campaign to evoke the image of the popular leader, even claiming that Chávez had appeared to him in the form of a little bird. But it wasn’t enough. With inflation close to 30 percent, food and electricity shortages throughout the country, and two recent devaluations that have lowered the value of the Venezuelan currency the bolivar by more than 30 percent, voters demonstrated that in the post-Chávez era they are going to be more issue-oriented.
In reality, it shouldn’t have been that much of a surprise; when he was alive, President Chávez’s approval ratings always stood above popular assessments of his government’s performance in public opinion polls. But clearly, it caught the Chavista government by surprise, which thought that the warm and fuzzy memories of their founder would last longer than six weeks.
From the moment he announced that former President Hugo Chávez had passed away, the April 14 presidential elections were Nicolas Maduro's to lose. And whatever the result of any proposed recount, Maduro's 50.7 percent vote against that of the opposition leader Henrique Capriles Radonsky is a sign of weakness.
He had everything in his favor: unlimited access to public resources (money, vehicles, the armed forces), the state-owned oil company PDVSA, near total control over private media, and a huge outpouring of sympathy for the once-popular Chávez who on December 8th had personally named Maduro his successor.
And yet, despite all those advantages, Maduro—compared to the vote of the October 2012 elections that pitted Chávez against Capriles—managed to lose over a million votes to the young, governor of Miranda state, making the ballot on Sunday Venezuela's closest election since 1968.
Clearly, Maduro's failure to live up to his political “father's” image was not for lack of trying. He famously claimed that Chávez had spoken to him as a little bird, tried his best to summon the same emotion and combative rhetoric of the former lieutenant colonel and at last count had referred to him over 7,000 times during the campaign.
But far from this rhetoric, last Sunday 15 million Venezuelan voters proved a new pragmatism. Fourteen years of chavismo have left Venezuela with the highest inflation rates in the region, one of the highest murder rates in the world, electricity and food shortages, and unsustainable levels of public debt....all this despite the record high levels of oil prices globally. Public opinion surveys have constantly showed Venezuelans to be more pro-US and pro-market than many of their fellow citizens around the region—a fact that mystifies commentators who prefer to read Chávez as an organic outgrowth of Venezuelan political culture.
I must admit, I was shocked when the e-mail a colleague had written me flashed on my desktop yesterday. “Chávez is dead.” It wasn’t like I wasn’t expecting it. But like the Chavista advisors that staged the bizarre, incoherent press conference shortly before they announced the Venezuelan President’s death, I was oddly taken aback.
In my defense, unlike them I didn’t have the responsibility—or advantage—of preparing the last near-three months. Amazingly, despite the lead time, in what was later revealed to really be their first post-Chávez press conference, Vice President Nicolás Maduro and the cabinet seemed completely out of sync—first an interminable series of introductions and then incredible allegations of U.S. intervention. And then—almost as an afterthought hours later—the announcement that Chávez was dead.
For the last decade or so, being witness to the Chávez government made me feel like I had a front-row seat to the sort of Latin American history that I had studied as an undergrad and grad student. This time, though, there were real human beings and their lives at risk. But it still—I’m embarrassed to say—felt thrilling.
I sort of came of political-analyst age in the Chávez era. Oddly, I’ll always appreciate the beret-wearing putschist for that.
I remember when I arrived in Washington DC in 1995. Many people said that the region had gotten boring; we all seemed to be marching toward free trade and democratic bliss.
And then came Hugo Chávez. I was visiting Venezuela for a trip for the National Endowment for Democracy in 1998 when he was running for president. At the time, his opponents were a motley crew: a former Ms. Universe; a Yale-educated politician who arrived at political rallies on a white horse; and a 70-year-old traditional politician of the center left. At the time I was sure I would have voted for this charismatic figure, Chávez. My cost-free support for the former coup-plotter was bolstered when a prominent businessman confided to me in hushed tones that he had met with candidate Chávez in a closed-door meeting with business leaders and that he had listened, seemed to understand and quietly supported their cause. “The thing is,” he said, “you put that Rolex on his wrist [and all the perks of power] and he’ll moderate.”
Seemed like a good strategy to me. Vote for the outsider candidate who would clean up the annoying elements of the past, but still get a moderate outsider.
Only it didn’t work out that way.
On Tuesday the Cuban government announced that on January 14, 2013 it will remove one of the most visible and anachronistic symbols of the Castro regime: prohibitions on its citizens traveling outside the island. The question—as with all the recent reforms announced in Cuba—will be how much and how quickly. Little discussed though is also what it will mean for the United States’ own perverse and anti-democratic policies governing U.S. travel to the island.
The change, promised by Raul Castro earlier this year, lifts the 50-year requirement that Cuban citizens have a government-issued exit visa to travel abroad. It’s worth stopping here briefly to reflect on how bizarre the policy is in today’s hemisphere. Imagine any other democratic government autocratically selecting which of its citizens can leave its borders. And the Cuban regime exercised this rule with repressive precision, regularly denying exit visas to political opponents including denying independent blogger Yoani Sanchez an exit visa 20 times in the last five years.
Despite the expectations it raised in Cuba, it’s unlikely that the change will actually allow full freedom of travel. The announcement promised that all that will be necessary to travel overseas is a Cuban passport and—in cases where required—a visa from the country to be visited. But a closer look between the lines reveals that the Cuban government will still retain the right to deny individuals from leaving the country for several reasons including for “national security”—a loophole large enough to permit the Cuban government to prevent democratic opponents (which it often labels as threats to national security) from leaving its borders. In short, no different from what exists now.
Yet as with all things on U.S.-Cuban relations, the bizarreness doesn’t just exist on one side of the Florida Straits. U.S. policy toward Cuba remains frozen in time as well, and with special exceptions and status not enjoyed by other countries. For one, the U.S. maintains a travel restriction that prevents U.S. citizens from traveling to Cuba without a U.S. government license. (Sound familiar?) Cuba is the only country under which there is a specific law that denies U.S. citizens the right to travel to a specific country.
The Russian government’s announcement last week that it would refuse over $50 million of U.S. development assistance for democracy and public health programs echoed a similar trend in the Western Hemisphere. In June, the Venezuela-led Alianza Bolivariana para los Pueblos de Nuestra América (ALBA) asked its members to “immediately expel” the U.S. bilateral development agency USAID (the same that is the target of the Russian government’s ire) from its countries, accusing it of trying to de-stabilize governments. And Ecuador’s President Rafael Correa has announced that he’s drawn up plans to restrict the U.S. development programs in his country.
Predictable anti-yanqui vitriol? Definitely. Warranted? It is their decision to make, and it’s a decision made easier by the skimpy amount the U.S. government allocates to the region today. The existing U.S. budget calls for a meager $1.8 billion for the entire Latin America and the Caribbean region for the next two years. This at a time when China has opened its pocket book to the region—often through loans and grants negotiated behind closed doors.
But mostly, the nationalistic indignation over USAID is just hypocritical. The Latin American leaders that are now railing against and threatening to expel USAID for political interference—directly and indirectly—owe their political ascendance to USAID’s support for democracy and democratic institutions.
Three days before the national vote, electoral observers cite grave concerns: unequal access to media outlets for the opposition candidate; media bias favoring the incumbent; smear campaigns against the opposition; and use of state resources for electoral advantage. Could these courageous observers be finally calling out the abuses of President Hugo Chávez and his government against challenger Henrique Capriles Radonski in the run-up to Venezuela’s 2012 election?
Sadly, no. Those allegations were in 2000 against then-Peruvian President Alberto Fujimori as he tried to run for re-election. Despite a parade of abuses similar to those of 2000, the international community has remained mute on Venezuela.
The contrast between 2000 Peru and Venezuela today is a depressing statement about how far the standards for free and fair elections have declined, as well as the international community’s new tolerance for autocrats who cynically assert national sovereignty to avoid scrutiny over fundamental human and democratic rights.
With a unified, rejuvenated and optimistic opposition and his Bolivarian revolution showing real cracks, President Chávez is facing his first serious electoral challenge since 1998. Chávez’ charisma may still ring strong with the poorer segments of the electorate that constitute his chavista base, but a growing segment of voters remain unconvinced that his revolution is delivering positive outcomes.
The spectacle of two supposed ends of the ideological spectrum—the self-proclaimed socialist Chávez and the neoliberal Fujimori—railing against the IACHR is really not as surprising as it sounds. It’s the common bond of autocratic regimes that want to be free of international scrutiny and the obligations to protect and defend their own citizens that transcends ideology. And for those, the IACHR—which has stood in defense of human rights for over 50 years irrespective of the ideology of the government—makes a logical enemy.
Affiliated with the Organization of American States (OAS), the independent IACHR has defined human rights law and precedence on everything from holding governments accountable for disappearances by military governments during the bloody dictatorships of the 1980s (issuing a groundbreaking report in 1980 in Argentina), to arguing for aligning domestic laws concerning violence against women with international norms (1998), to defending Indigenous rights in land disputes with governments and investors in Nicaragua (1996) and Brazil (2011). Through it all, the IACHR has maintained a steady independence from the political vicissitudes in the region.
In fact, it is the only thing that has really shown any mettle or effectiveness within the inter-American system in recent years.
Because the IACHR lacks the power to enforce its recommendations on the member governments, its authority is moral, based on the regional public shame that comes with failing to uphold the Inter-American Convention on Human Rights (to which, sadly and inexplicably, the U.S. is not a signatory) and the precedence and legitimacy of its history.
I don’t think Cuba should be a member of the Summit of the Americas process. Nor do I think it is worthwhile that divisions over Cuba should dominate a regional summit. But I’ll take a genuine disagreement like we had in Cartagena, Colombia this weekend over the anodyne, empty and ultimately ineffective statements that have come out of past summits.
That the 30-plus elected heads of state walked away from the Sixth Summit of the Americas in Cartagena this weekend with no agreement is a reflection of the diversity and changes within the hemisphere. Standard photo-ops and platitudes have now become an opportunity when—whether on U.S. drug policy or the status of Cuba in the hemisphere—heads of state can express their displeasure and difference with U.S. policy and try to expand the debate. That’s a far cry from the empty, forced consensus over issues like education (Santiago 1997), sustainable development and connecting the Americas (this year’s theme) that have come out of past Summits. None of these were really issues that would normally have been Summit-worthy in any other region. But that’s what’s marked past summits. And, as expected, there was never much followup afterwards, despite all the high-minded commitments.
This time, countries wanted to send a signal. And they did.
Let me be clear, though: under its current leadership Cuba doesn’t belong in the Summit. When it was started in 1994, the Summit of the Americas was intended to be a club of democratically elected leaders. And if it is to mean anything it has to stay that way. Granting access to the Castro brothers who have ruled Cuba since 1959 would contradict the very purpose of the Summit process and demonstrate cowardice in the defense of democratic standards and human rights in the hemisphere.
U.S. regionalists need a reminder that development doesn't end politics and that contemporary Latin America has its own power dynamics. As the region enters a new era marked by increasing geopolitical autonomy and intraregional rivalries, it should be addressed with the mindset of international relations, not just comparative politics.
The full article was published in the March/April 2012 issue of Foreign Affairs. To read more, please visit: http://www.foreignaffairs.com/articles/137101/christopher-sabatini/rethinking-latin-america.
In the last 5 years China’s military activities in Latin America and the Caribbean have grown at an unprecedented rate. Beijing now regularly hosts officers from Colombia, Chile, Mexico, Peru and Uruguay in its military academies, has expanded arms sales and technology transfers to countries like Argentina, Bolivia, Brazil and Venezuela, and in October last year even sent a navy ship to the Caribbean.
Is China—now Brazil and Chile’s number-one trade partner—buttressing its economic interests in the Western Hemisphere with military ties and alliances? Is this the Middle Kingdom’s equivalent of President Barack Obama’s Pacific pivot to balance China’s saber rattling in Asia?
There’s no doubt that China’s torrid economic growth rate and its arrival as an emerging—if not already emerged—global economic superpower has shifted the international system and brought a more muscular Chinese foreign policy. That policy—part of what the Chinese labeled its “Going Out” strategy—has come with a growing Chinese diplomatic, economic and even military presence in many of its closest trade partners. Given China’s need for raw materials to feed its manufacturing growth and urbanization—gobbling up everything from iron, to oil, to soybeans and frozen chicken—the country’s rise has been felt most obviously (at times with alarm) in the developing world, including Latin America.
First the economics. From 2000 to 2010 Latin America’s exports to China shot up 1,500% from 2000 to 2010. With increased commerce has come investment. In 2010 Chinese companies—most of them state-owned enterprises—invested $10.5 billion. While not a large amount relative to China’s other investments globally, it was a 180% jump from just two years earlier. In both cases, though, the focus has been on raw materials. Over 60% of Chinese imports from Latin America are primary products; for Argentina and Venezuela that percentage increases to 88% and 97% respectively. And China’s largest investment deals in the region have been from China’s state-owned enterprises snapping up energy and mining ventures, in Brazil, Argentina and Ecuador.
With China’s economic attention have come loans and grants. Recently the Financial Times estimated that in 2009-2010 the Chinese provided more loans globally (over $110 billion) than the World Bank (around $103 billion) in 2009–10. This included generous long-term concessionary loans to President Hugo Chávez of Venezuela and President Rafael Correa of Ecuador guaranteed by both with cheap oil exports to China.
Citing an op-ed she wrote condemning violence against gays and lesbians, Senator Jim DeMint (R-SC) for weeks led the charge in the U.S. Senate to block the nomination of Mari Carmen Aponte to be the U.S. Ambassador to El Salvador. On Monday, the Senate voted 49 to 37 to block Aponte’s nomination, 11 votes short of the 60 needed to break a Republican-sponsored filibuster. Lost in the lead-up to the vote and the outcome was a key question: why is a position against violence targeting homosexuals and in defense of gay rights a valid reason to reject a nominee to an ambassadorship?
At issue for Senator DeMint and the 48 Republicans (and one Democrat, Senator Ben Nelson [NE]) was Aponte's op-ed titled “For the Elimination of Prejudices Wherever They Exist” in the El Salvadoran daily La Prensa Gráfica on July 28th this year. The offending op-ed declared that everyone has a responsibility to “inform our neighbors and friends about what it means to be lesbian, gay, bisexual or transgender” and praised El Salvador for signing—along with the U.S. and 80 other nations—a UN declaration for the elimination of violence against gays and lesbians.
Echoing the sentiments of a coalition of conservative El Salvadorans and Latin Americans who had objected to the essay, DeMint said this week that, “We should not risk…an ambassador who shows such a blatant disregard for [El Salvador’s] culture…” Never mind the fact that Ambassador Aponte—posted in El Salvador for the last 15 months on a recess appointment—was only implementing the administration's initiative in support of Gay Pride Month, which really means this is a policy issue better taken up with the President. The larger issue should be whether making locals uncomfortable on issues of human rights should be the way we gauge our policy and diplomats. Would we pursue the same course in other civil and political rights? Human rights in Syria? Voting rights in Russia? When did homophobia or violence against the LGBT community become a matter of local culture that deserves respect?
In both Ecuador and Bolivia, the rhetoric of political inclusion is crashing into the politics of identity and collective rights. Both Ecuadorian President Rafael Correa and Bolivian President Evo Morales and their broad, heterogeneous movements rode to power by tapping popular frustration over social and political exclusion and discrimination. Their electoral arrival came in the wake of the collapse of traditional party systems that for decades had survived with a near monopoly of power, sustained through closed deal-making and the effective disenfranchisement of vast segments of the population.
Now, though, both presidents are confronting a grassroots backlash by the very particularistic groups that they claim to represent. It is as much a story of the genie they uncorked, as an example of challenges of governing nationally in an era of competing rights and identities and escalating demands. The outcome will test not only the fate and intentions of both governments-but also the future of the Andean region and the viability of those nation-states.
Since being re-elected in 2009 under a new constitution, President Correa has clashed repeatedly with indigenous organizations in Ecuador. Ironically many of those same groups celebrated the 2008 plurinational constitution inspired by the President as the most significant achievement for inclusion in Ecuador's history.
According to the 2001 census, close to seven percent of the Ecuadorian population identified itself as indigenous. And many are increasingly self-defining as individual nationalities, with identities often tied to specific territories inside Ecuador. Since the early 1990s, the indigenous civil society organization Confederation of Indigenous Nationalities of Ecuador (CONAIE) and the indigenous party Pachacutik have claimed to speak almost exclusively on behalf of all those indigenous nationalities and ethnicities. Their participation, much like their history, has tended to be outside the system. While Pachacutik, for example, has had representatives in the national congress, it has tended to act as a spoiler rather than a loyal opposition. Pachakutik has contributed to the downfall of three governments-President Bucaram in 1997, President Mahuad in 2000, and President Gutiérrez in 2005-when their presidents have failed to meet the indigenous group's demands.
I wrote an op-ed in the Miami Herald today in reference to an article by Andres Schipani ("Ping-Pong Diplomacy") in the Summer 2011 Americas Quarterly to be released on August 10 and available in Barnes & Noble stores beginning August 15.
In the summer of 1989, U.S. yachtsmen sailed the Black Sea Regatta after the Soviet Odessa Sports Club had participated in the Liberty Cup Yacht Race around the Statue of Liberty. The exchange was one of hundreds of sports-related exchanges between the Cold War enemies that included hockey, tennis, baseball and diving before the fall of the Berlin Wall.
In contrast, no such policy — until now — has taken off with Cuba.
Sports have always been an effective tool for fostering cross-cultural awareness and breaking down ideological stereotypes. Consider this: Between 1955 and 1985 the U.S. State Department issued on average 1,700 visas a year to Soviet athletes, artists, scientists and students in a policy of “soft power” diplomacy.
In the same vein, the now-famous ping-pong diplomacy launched by President Richard Nixon with China started with a table tennis match. Those early efforts undermined the communist governments’ efforts to isolate their citizens and were instrumental in building trust between citizens — and effectively weakened control of governments over their citizens.
The full text of this morning's editorial can be accessed here.
Christopher Sabatini is editor-in-chief of Americas Quarterly and senior director of policy at the Americas Society and Council of the Americas.
With inflation this month reaching a projected 6.3 percent per year and a currency that has increased 47 percent against the dollar since the end of 2008, could the Brazilian economic miracle be just a bubble? Though there are warning signs, there are also positive signals that indicate Brazil be able to power through--though at significant cost.
First the negative signals. Chief among these is the signs of an overheating economy. In June the Central Bank’s adjusted, upward, the rate of inflation to 6.3 percent--slightly over its target. Add to this near full employment, the limited efforts to reduce the Brazilian government’s stimulus (through BNDES and federal spending--especially in preparation for the World Cup and Olympics), and the promise to increase the minimum wage by 14.5 percent next year and it looks like a pressure cooker. Granted it doesn’t approach Argentina or Venezuela, but 6 percent-plus inflation touches the upper limits of the government’s comfort level and is Brazil’s highest rate since 2005.
Second is the overvalued Brazilian real. High interest rates (an effort by the Central Bank to contain inflation), record high commodity exports, and a flood of foreign investment have swollen the value of the real. The appreciated value of Brazilian currency against the U.S. dollar and the renminbi has hurt exports and undercut domestic manufacturing. And in an economy in which corporations have come to rely on foreign credit, the appreciated exchange rate has led many to take out dollar-denominated loans. A drop in the value of the real relative to the dollar would place a serious crimp on those corporations. Any sort of devaluation in Brazil’s floating exchange rate will be tough on the economy.
Now we know: President Hugo Chavez admitted last night that he has cancer.
A lot hinges on his recovery.
The debate - and fear - swirling around Venezuelan President Hugo Chavez's absence demonstrates the institution-less condition that twelve years of his government have left Venezuela in. Where before his absence after June 10 left the country wondering about his condition, the news now of his battle with cancer has opposition and allies alike all-too aware of his fallibility--and worrying about the polarized country's future. His absence has left a vacuum in Venezuela underscoring a system that is not only incapable of selecting a replacement but also institutionally incapable of balancing competing (some of them criminal and potentially violent) elements within the government. The risk--not just now--is that even should he return to full health, Venezuela is fast becoming a failed state, held together by one sultanistic leader and the opposition's hatred of him.
After his speech last night, the Vice President, Elias Jaua and others called for "maximum unity" in the Partido Unido Socialista de Venezuela (PSUV). That unity is likely to fray with President Chavez's uncertain recovery and his probable intermittent absence as he seeks treatment. Criminal elements within the regime are likely to pursue any means possible to avoid being revealed and relinquishing their nefarious and lucrative businesses. Already there are rumors of individuals within the government reaching out to segments of the opposition.
The situation should be a reminder, not just to the U.S. whose policy on Venezuela has been adrift the last three years but also to Venezuela's neighbors that this regime--and the eventual transition to another leader (whenever and whoever that may be)--is not likely to follow the relatively smooth patterns of the democratic transitions of the 1980s. The U.S. and neighboring governments should see this as an opportunity to begin to lay plans for how to best deal the likely implosion of the Bolivarian government, in a way that should involve efforts to form a government of national unity and rebuild consensus and the rule of law in the polarized and politicized country.
In the meantime, one of the worst things the opposition could do now is to try to force a confrontation with the government. In the past, the opposition engaged in a deluded and ultimately dangerous strategy of street politics--organizing mass protests as a sign of strength in the hopes of bringing down the government or provoking a violent reaction by elements within it. Unfortunately, on April 11, 2002 they got what they wanted--though at the cost of human life, Chavez came out the victor. Doing the same now could provoke a political crisis with dangerous consequences. Let's hope now that they have rediscovered the merits of competing in elections and have a number of new, fresh leaders that they use this opportunity to double down and focus on the presidential elections in 2012.
On Monday this week, the White House finally sent to Congress for approval the free-trade agreements (FTAs) with South Korea, Panama and Colombia. The Senate Finance Committee is already tackling the legislation by holding today a “mock” markup of all three implementation bills. Only this time, after President Barack Obama re-negotiated key provisions of the agreements to please segments of the Democratic base, it isn’t President Obama or his labor cohorts that are putting trade expansion at risk—but the Republicans in Congress.
Included in the FTAs sent to the Hill this week is a provision for continued funding of trade adjustment assistance (TAA). Designed to provide support for U.S. workers hurt by foreign trade, TAA has been a part of every trade bill since the 1960s, making it easier for Democratic representatives to vote in favor of trade by avoiding the charge that they were coldly placing global economic concerns over the interests of domestic labor.
Now, though, Congressional Republicans have decided to use TAA as a symbol of their zeal to cut public spending. Senator Mitch McConnell and Representative John Boehner have stated their intent to separate it from the vote on the FTAs—a move that will complicate Democratic support. The targeting of TAA as an example of economically damaging profligacy, though, is spurious; the budget for TAA is only estimated to account for $1 billion. This amounts to a drop in the bucket compared to the $13 billion of new exports that the FTAs are expected to generate for the U.S. economy.
Moreover, the tactic represents political cynicism at its worse. Since the agreements were originally negotiated under the George W. Bush administration, Republicans have derided Democrats as hurting American jobs and betraying U.S. allies when they have balked at supporting them. They were right then. But at the time they were negotiated, it was reasonable to expect—on the part of Republicans and Democrats alike—that TAA would be part of the package, as it has been for decades. Now, Republicans are changing the game. If they insist on sticking to their new rules, they will be the ones who will hurt the U.S. economy, U.S. workers and abandon U.S. allies who committed to an FTA under a Republican president.
*Christopher Sabatini is editor-in-chief of Americas Quarterly and senior director of policy at the Americas Society and Council of the Americas.
The election guessing game in Peru has ended and now the Humala guessing game has begun: Will Ollanta Humala be the Peruvian equivalent of Venezuela’s Chávez or Brazil’s Lula? The answer, on which may hang Peru’s torrid rates of economic growth—among the highest in the region—and web of free-trade agreements with everyone from China to the United States, has become a parlor game for investors and observers, as we all watch whom Humala nominates to his cabinet. More than the people he chooses to populate his first round of appointments, the answer may actually lie in his formation as a military officer.
When he first ran for president in 2006, Humala professed his admiration for Venezuelan President Hugo Chávez; he even campaigned in the trademark-Bolivarian red tee shirt. Only five years later, the one-time lieutenant colonel who led an uprising against former elected autocrat President Alberto Fujimori, claimed he was a moderate leftist in the mold of former Brazilian President Luiz Inácio Lula da Silva, who embraced markets and foreign investors and reduced poverty.
It’s not hard to understand why he shifted role models. In the intervening five years, President Chávez has gone from the leader of an anti-American bloc of countries during the years of President George W. Bush to the head of the most dysfunctional economy in the region, with rates of inflation this year likely topping 25 percent and an economy that, even with the spike in oil prices, will be one of the last to rise out of the region’s post-recession torpor. In contrast, President Lula, by hewing to a course of fiscal stability, appointing confidence-instilling technocrats and supporting both foreign investors and Brazilian companies, has both kept Brazil on a path of stable economic growth and—combined with innovative social policies—reduced the number of the Brazilian poor by up to 38 million. No mean feat.
The first round of elections in Peru shocked the country and the world. After what appeared to be enviable rates of economic growth and stability, a slim majority of voters rejected the center, aided in part by a three-way split between former Lima Mayor Luis Castañeda Lossio, former President Alejandro Toledo and former Prime Minister Pedro Pablo Kuczynski. In a vitiated party system, the center lost to two candidates on either side of the spectrum—Keiko Fujimori, the daughter of Alberto Fujimori who governed from 1990 to 2000 and is now jailed for corruption and human rights violations, and Humala.
Latin America’s new global profile and trade and diplomatic connections mean that it will increasingly be affected by and can positively affect world events—in this case the popular rumblings in the Middle East and North Africa.
If Latin America has truly arrived—as the World Bank and many have proclaimed—we need to understand more the region’s relationship with the world and its events. Leave aside for a moment legitimate concerns that Latin America’s arrival are overplayed and the fact that these grandiose sweeping statements do not apply the entire region. (Venezuela, as much as it wants to be a global player, is stuck in some combination of Bolivarian fantasy and 1970s retrograde project—making it just basically a sad, deluded nuisance.)
What it does mean is that increasingly, whether its economic policymaking in China, drought in Africa or the turmoil in the Middle East and North Africa, Latin America has a stake—often underestimated but real. It’s time to stop imagining Latin America as an isolated region, like a bug trapped in amber.
Let’s take one example: the popular uprisings across the Middle East and North Africa (and the repressive reaction in Bahrain, Libya, Syria and Yemen). Here are five ways they affect Latin America and in which Latin America can play a positive diplomatic and economic role in shaping their outcomes.
1. The Shifting Sands of Relations: During the administration of President Luiz Inácio Lula da Silva Brazil and Mercosur built closer trade and diplomatic relations with the Middle East. Economically, the last two years have seen a flurry of trade negotiations between Mercosur and the Middle East and North Africa that have produced framework agreements and pending FTAs: a framework agreement with Morocco in 2010 an FTA with Israel in 2010, a still pending FTA with Egypt signed in 2010, and a framework agreement with Jordan in 2008 to name just a few. In addition, the Lula Administration created the Summit of South American-Arab Countries to better coordinate policy between the regions and serve to deepen trade ties.
Diplomatically, in 2010 President Lula tried briefly to breathe life into the Israeli-Palestinian peace discussions—though the effort failed. And of course later the same year, Brazil and Turkey negotiated with Iran in an attempt to head off a tightening of international sanctions against the Iranian regime for continuing its nuclear program. We can debate the merits and results of Brazil’s forays into the region, but they clearly indicate a desire to assert itself into diplomatic deadlocks. With popular protests now changing the composition of governments in the Middle East and North Africa, will those same desires extend to negotiations between citizens and autocratic governments? Exchanges with newly elected governments? From the wave of democratic transitions in the late 1970s and throughout the 1980s Latin America has experience in giving autocrats the boot and electing and sustaining democratic regimes. Can they help? Or will they continue to play broker to autocratic regimes? One area that represents an opportunity now is in the occupied territories of West Bank and Gaza. With the recently announced accord between Hamas and Fatah, Brazil could leverage its relations there to try to broker negotiations at a time when the U.S. and Israel appear increasingly marginal. Doing so, however, will require Brazil to accept and push for the acceptance on the part of the Palestinians of the basic conditions for discussions: the renunciation of violence and the recognition of Israel by the Palestinian authorities on the other side of the table.
President Obama’s trip one week later: Did it matter? It barely made a splash in the U.S. media, but at a regional and personal level it did. Talk to Brazilians, Chileans or Salvadorans and they appreciate the fact that he went there. Sure, he couldn’t do it with the festive, family-oriented aura that he had hoped, given world events, but it was precisely the frenzied swirl of those events that gave his trip to the region that much more credibility in the region.
For many of us (here I speak not of Latin Americans but Latin Americanists) rooting from the sidelines, his trip meant, “Yes, yes he does care!!!” (Maybe we’re just really needy.)
But the proof now is in what happens next. The personal relationships President Obama developed with Presidents Rousseff, Piñera and Funes are immeasurably important. There may be no tangible, obvious benefits of personal chemistry (speaking at least from a diplomatic standpoint), but these things are important. They allow a president to make a phone call, personally press a position and establish the foundation for the sort of partnership that he talked about.
Conservative critics have had a field day criticizing President Barack Obama’s trip to Brazil, Chile and El Salvador this week. Former speaker of the house and now presidential aspirant Newt Gingrich implied the President was abdicating his leadership by taking the long-anticipated trip to Brazil, Chile and El Salvador and Fox News commentator Sean Hannity referred to it as a “vacation in Rio.” Besides revealing a troubling—even offensive—stereotype and disregard of the region, they are also wrong.
To be sure, the president’s long-overdue tour of South America couldn’t have come at a worse time in terms of world events. The NATO aerial campaign to establish a no-fly zone to contain Muammar Gadaffi from slaughtering his own citizens, the threat of nuclear meltdown in post-tsunami Japan, the Saudi-led crackdown against popular protests in Bahrain, and the budget battles in Washington provided plenty of reasons for staying. But it would have been a diplomatic disaster if he had remained behind.
In his January State of the Union address President Obama declared—somewhat unexpectedly—his desire to travel to Brazil. The president’s promise captured the imagination of Brazilians and offered a high-level opportunity to repair frayed political and economic relations with the world’s soon-to-be fifth largest economy. In the last 12 years, Brazil has risen from poverty and the periphery to become an emerging regional and world power, an ascendance that under former president Luiz Inacio Lula da Silva often caused diplomatic friction with the United States and provoked a dramatic shift in the region’s economic order in which China overtook the U.S. to become Brazil’s (and Chile’s) number one trade partner.
Inclusion. The concept will likely figure large during President Barack Obama’s planned trip to Brazil, Chile, and El Salvador from March 19 to 23. This is so, not only for symbolic reasons (the U.S. President is a powerful symbol of inclusion and U.S. meritocracy), but also the significant advances and challenges of the countries he’ll be visiting on his first trip south of Trinidad and Tobago. Will he address it realistically or gloss over the ongoing challenges?
While it is a complicated issue, fraught with the complexities of economic growth, race, and social policy, one policy prescription for improving economic and social inclusion stands out above all others: Equal access to education. Education has been demonstrated to be the single most important variable affecting social mobility. And who better than Obama—the biracial son of an absentee father who went on to study at Columbia University and Harvard Law School—to discuss the benefits of quality education?
In recent years, the growth of the Latin American middle class, especially in Brazil, has been significant. But those gains are delicate and limited by race. More than a decade of stable economic policy coupled with social policy innovations has lifted over 40 million people in the region out of poverty in what was, and remains, the most unequal region in the world. These numbers are nothing to sniff at, but they belie the fragility of this new middle class. Most academic or technocratic measures of “middle class-ness” rely on measuring income, while most journalistic reporting on the middle class tends to cite these arrivistes’ access to credit.
Neither really captures the security of the middle class. That it has grown is undeniable. But its definition and stability—not to mention its deeper meaning, given Latin America’s racial history—are open to debate. For one, tying the definition strictly to income or credit access obscures other more sustainable elements of modern-day (U.S. and European) notions of middle class: Namely, equal access to public and social programs such as quality education, health care, or pensions.
The people-power revolutions that ousted the decades-old autocratic governments of Ben Ali in Tunisia and Hosni Mubarak in Egypt and are rocking the rest of the Middle East have prompted Cuba watchers --yet again-- to wonder when the last redoubt of Cold War dictatorship in the hemisphere is next. It isn't, and we have U.S. policy partly to blame.
For the last two decades, from Eastern Europe to Egypt, none of the countries that has experienced a people's revolution has been under a U.S. embargo. Though it is about to be the target of focused sanctions as a result of its bloody response to the protestors (and deservedly so) before the current uprising even Libya saw its sanctions ended in 2004 by the George W. Bush administration. In the case of Libya --and in the past-- targeted sanctions tied to a specific act by the government can provoke a course correction or even collapse. Over the long-term, though, sanctions actually seal a country off from the rest of the world and allow a government to dig in. The inverse relationship between isolation and people's revolution is no coincidence. Contact with the outside world builds capacity and ideas insidious to even the most tyrannical regime.
Whether it was the 1989 Velvet Revolution in then-Czechoslovakia, the end of communist rule in Poland (two years after U.S. sanctions were ended after the crackdown on Solidarity) or the broad coalition that ended the 30 year-reign of Mubarak last week, the symbols, motivations and means of these peaceful transitions owe much to the sort of contacts that the 52-year U.S. embargo on Cuba has cut off. Defended as a way to deny the regime of Fidel and Raúl Castro the resources to oppress its own people, the U.S.' half century-old sanctions against Cuba have, in pursuing this noble effort, become a blunt instrument. In the name of this cause, the embargo has sealed off the Cuban people from personal interaction with average Americas and denied it the inspiration and tools for its own liberation. Communication, contact and even limited trade is not a zero sum game; sometimes, yes, the regime may benefit, but sometimes the people benefit more, especially when it helps break down the control over information that such regimes need to survive.
Make no mistake. The level and type of repression in Cuba exceeds that in Egypt under Mubarak or even Eastern Europe under communism. Fifty years of cruel, systematic repression by the Castro regime, the penetration of government spies throughout society and the suffocating control of the state over the economy have atomized civil society, closed off freedom of expression and left Cuban citizens dependent for their livelihoods on the state. As a result, many Cubans --especially the younger generation-beaten down by decades of repression, deprived of inspiring contact with the outside world and denied broad access to the tools of communication-- are left waiting for the end of a gerontocracy.
In contrast to the looming political fights over spending, healthcare repeal, and immigration, free trade could be a rare case where President Barack Obama will benefit from Republican control of the House of Representatives. After all, the pending Colombia and Panama free-trade agreements (FTAs) were originally negotiated by George W. Bush’s administration and then held back from being presented to Congress when the Democrats won a congressional majority.
This opportunity for bipartisan collaboration is particularly true of the Colombia deal which has been on the table since 2006, but only if the president is able to overcome the opposition of one of the most vocal and intense coalitions of anti-free trade groups ever, comprising U.S. labor unions and human rights groups. Their collaboration on raising legitimate human and labor rights concerns in Colombia have created a ardent alliance that combines a historically grave (though much improving) human rights and labor rights situation with groups that traditionally have resisted free trade. Both groups include themselves in the Democratic Party, with one of the most outspoken and strident of the groups, the AFL-CIO, constituting an important electoral base for the President in his 2012 reelection bid. Unfortunately, advocates—including moderate Democrats and seasoned policymakers -- of the deal have been making the wrong argument to this powerful constituency, focusing on Colombia’s improvements in human rights and strategic importance rather than the very real benefits this deal will have for American workers and manufacturers.
This is not to say that maintaining the U.S.-Colombia relationship isn’t important. Colombia has been a steadfast ally in its region, surrounded by the anti-institutional, anti-American Venezuelan President Hugo Chávez and the voluble (though still willing to cooperate with the U.S. on some fronts) Ecuadorian President Rafael Correa.
Colombia has also clawed its way back from the brink of becoming a failed state under siege from two narcoguerrilla groups and an array of criminal paramilitaries. At the height of the violence in the late 1990s, according to a government-created independent commission, there were 32,000 forced disappearances -- the bulk of them during the decade between the mid 1990s to the mid 2000s -- and 113,000 acts of political violence. Workers’ unions bore a large part of the brunt of the violence, with 275 union members killed in 1996. Since that time, the Colombian government has made tremendous strides, reducing the murder rate from 67 per 100,000 in 2002 to 33 per 100,000 in 2008, rearranging and improving the judicial system, and launching a series of investigations into the murder of union activists and the disappearances. Correspondingly, union deaths plunged to 39 in 2010. While higher than other professions, the general decline is not surprising; according to the Colombian Attorney General in 40 percent of the cases the motives behind past crimes against union members were not linked to labor activism but to generalized violence.
Human rights groups and U.S. labor activists that have drawn a line in the sand to oppose this agreement have focused on these issues, arguing that not enough progress has been made to warrant the U.S. government approving the FTA. (Never mind the fact that the Colombian Congress has approved the agreement, as do a majority of Colombians, including some labor unions. In fact, current Vice President Angelino Garzón, a former leading union activist, has been pushing hard for the agreement.) Groups such as Latin American Working Group and U.S. labor unions, such as AFL-CIO, while conceding that progress has been made, continue to add demands—many of them vague and immeasurable—that range from a complete investigation of all cases of political violence dating back to 1993 to a further reduction in the murder of unionists—though what point would be acceptable is unclear. In countering this argument, pro-FTA commentators have fallen into the trap of defending Colombian government’s progress in human rights and labor rights and its importance as an ally. Pro-FTA advocates such as former Assistant Secretary of State Bernie Aronson pleas that after the success of the U.S.-Colombian program to reduce crime and all the steps taken by Colombia to investigate abuses, not approving the FTA is “slap in the face” of our ally.
But this isn’t the point. Pro-FTA advocates could make a much stronger argument by pointing out the benefits to the U.S. economy and workers.
The first key point to understand is that the most commonly used argument against free trade -- increased competition from cheap, foreign imports -- doesn’t apply to Colombia. Thanks to a U.S. policy originally adopted in 1991 designed to provide legal economic alternatives to narcotics production, 90 percent of Colombian exports already enjoy duty-free access to the U.S. market.The Colombia FTA would actually level the playing field by opening up the Colombian market to U.S. exporters.
Second, in the four years since the U.S. signed but did not ratify its agreement with Colombia, U.S. businesses have lost market share in Colombia. In just one year (2008), U.S. exports to Colombia declined by 50 percent. U.S. agriculture has largely borne the brunt of this loss: According to U.S. government estimates, since 2008 American farmers have lost over $800 million dollars in exports to Colombia. Why? Largely because of competition from wheat and beef producers in Brazil and Argentina. In these cases, the lower costs of their goods due to proximity would be wiped out if tariffs on U.S. goods were removed.
Competition is only about to get stiffer; Canada recently signed a free-trade agreement with Colombia. Now Canadian wheat and beef producers and even automobile manufacturers -- where U.S. parts can be shipped across the border to Canada for assembly and from there sold to Colombia -- are licking their lips at the prospect of a market in which U.S. imports face tariffs ranging on average 15.8 percent for automobiles, up to 108 percent for beef, and up to 248 percent for wheat.
Finally, American states are already taking advantage of the Colombian market even without an FTA. California, for example, shipped over $300 million of its locally produced goods to Colombia; Ohio $105 million; South Carolina $93 million; and Wisconsin just under $100 million. When tariffs are lowered on U.S. goods being sold in Colombia these numbers will only increase.
Though far less contentious, the Panama agreement has equal opportunities to expand state trade. Not surprisingly, U.S. port states do a considerable business with the canal-bisected isthmus country. Alabama traded $28 million worth of goods to Panama in 2009; California $230 million, Mississippi $419 million and even far-north New Jersey $103. But while Panama lacks the human rights cloud that hangs over Colombia, unfortunately (and unjustly), the fate of the Panama FTA is tied to its Colombian counterpart.
What all the above-mentioned states have in common is that their congressional delegations voted against the majority of past free-trade agreements presented to the U.S. Congress. And despite their political votes in one or both houses of Congress, the vast majority of these states have seen their exports grow in those markets. For instance, after 40 percent of its representatives and all of its senators opposed NAFTA in 1994, California’s exports to Canada and Mexico shot up by 151 percent from 1992 to 2009. Since the Golden State’s Senate delegation opposed the FTA with Chile in 2003, its exports to that country have increased by 300 percent from 2002 to 2009. Ohio benefited equally from NAFTA, even after the majority of its congress people and both of its senators voted against it, with its exports growing 114 percent to the expanded North American market. In some cases the corresponding imports have affected producers, though -- contrary to what you hear -- manufactured goods still make up the bulk of the U.S. exports to Latin America.
Why then all the opposition to Colombia? The simple fact is that for trade opponents Colombia represents the perfect target. Traditional U.S. human rights groups -- many of whom have always opposed U.S. free-trade agreements with the region from NAFTA to Peru -- have staked out their position on the country’s bloody human rights past. U.S. labor unions, which have yet to fully support any free trade agreements, in the case of Colombia has taken up the cause of the murder of its brethren. Both are powerful and loud constituencies for the Democratic Party and both have recognized that this could be the case on which they beat back the momentum on free trade. Evidence of their disingenuousness is their inability to articulate and specific, concrete human or labor rights targets that the Colombian government has to meet to win their support. Instead, in the face of substantial and undeniable progress the groups demand vague goals (in the words of Samuel Gompers “More”), but what is never clear and keeps changing.
For the Colombia FTA to be approved, it must first be presented to Congress, and that depends on Obama. So far, his rhetoric has not been encouraging. In his most recent State of the Union address, the president said he would push for the FTAs if he could ensure that they will be good for American workers. But U.S. workers are not competing with Colombian workers -- the latter’s producers are already entering the U.S. duty free. The issue is now to have the Colombian market open to U.S. products that U.S. workers produce.
Unfortunately, many of the advocates for the Colombian agreement are not helping the president make the case. Telling American workers during a time of economic distress that Colombians deserve a trade agreement for being a good ally or improving their human rights record simply isn’t going to work. In part we do they do this because they are distracted by the vocal coalition decrying conditions inside Colombia, when Colombia itself has already approved the agreement. But telling American workers why the FTA would good for their livelihood -- which it is -- will. That should be part of a broader debate the president should lead on trade.
Latin America is changing. Do we have the tools and intellectual framework to deal with it?
From Brazil to Mexico, Latin America has found new diplomatic muscle, asserting itself into international issues and all the while deepening ties with new trade partners from China to Russia. At the same time, despite increased rhetoric of regional solidarity and independence from the U.S., the region is at its most divided, ideologically and in its economic trajectories.
All this presents a challenge, not just to U.S. policymakers, but to policy analysts and scholars alike. For the first time, Latin America is becoming a complex international relations topic.
In the past, Latin Americanists (a term I apply loosely to people who work in or on the region) have tended to focus on domestic and development issues. Discussions of U.S. policy, by policymakers and analysts alike, have followed a different path for Latin America than for other regions.
In the 19th and first half of the 20th centuries Latin America was largely seen as the backyard of the United States. During the Cold War, the region was the staging ground for proxy wars between the U.S. and the Soviet Union, in which broader ideological battles were projected onto (and inflamed) internal social, political struggles. With the third wave of democratization and the fall of the Berlin Wall came the heady days of collective action for democracy and the promise of economic integration.
That ended. And with the rise of the anti-globalization governments aspiring to build a multipolar world by cozying up to rogue regimes (read: Venezuelan President Hugo Chavez), the rise of China and India with their voracious appetites for natural resources, and Brazil’s aspirations to find a political role commensurate with its size, economic potential and independent world view, we’re no longer dealing with your grandfather or even father’s region.
Latin America has entered the realm of foreign policy in which the U.S. is not the primary axis around which countries define their economic and political interests or defend themselves. That’s not to say that, as one unfortunately titled article in Foreign Affairs said, the U.S. is “losing Latin America.” Yes, U.S. influence has waned in the region, giving political and economic space for these diverse relations in the region. But despite all the talk of other countries eclipsing it in the region, it remains a powerful force in defining the agenda, both positive and negative, for the region.
What is significantly different is that the U.S. now has to grapple with multiple, competing issues, a far more diverse region (in terms of orientation and interests), greater potential for intra-regional friction, and more contrarian countries—even when they may agree on broad points of principle.
I’ve never been one of those people who, in lamenting policy and politics in the U.S., builds up another country to disparage my own. Yet I must admit, this week I felt pangs of envy in hearing Québec officials talk with cool rationale about the economic calculations behind their immigration policies.
I was in Montreal on a trip organized by the Québec delegation in NYC. While I was there I had the opportunity to meet with high-level officials and community groups working on immigration and the integration of future and recent arrivals into Québec’s economy and society. The ways they described their policies and their future efforts couldn’t contrast more with what is occurring in the United States. For those in Québec, immigration is a demographic imperative: they need an influx of young workers to replace the province’s aging workforce. Getting them is critical to sustaining the province’s economic growth, competitiveness and paying for the pensions of those soon-over-the-hill French Canadians approaching retirement. As the Immigration Minister Kathleen Weil said, “We’re now in competition with Ireland and Australia for skilled labor.” (Her mention of Australia revealed the tough competitors Canada faces today in trying to attract immigrants, “Sure they have the weather and beaches, but they also have sharks,” she said trying to put the best face on Québec’s notoriously brutal winters. On this, I would also encourage the Ministry to highlight Australia’s baby-eating dingoes for the non-swimming immigrants thinking of setting up a new life in Australia.)
You would never hear the same immigration maturity just south of the Canadian border. While the problem of labor force replacement is more acute in Québec than in the U.S., we do need to worry about replacement rates for our declining fertility rates—and it is only going to become more serious. Between 2002 and 2012, 28 million jobs will be created in the U.S. requiring less than a high school education—given rising education rates in the U.S., the native-born population will not be able to fill that demand.
Like Québec, we also need a regular flow of immigrant labor too to shore up our social security system. Despite what the anti-immigrant nativists would have you believe, immigrants—even undocumented immigrants—pay more in taxes than they take out, providing a critical source of new revenue for those soon-to-be retiring baby boomers that threaten to bankrupt our social security system. According to a 2007 Social Security Administration Report just the addition of 100,000 new, net immigrants per year increases the long-range actuarial balance of our taxable payroll by .07 percent. If you multiply that with the approximately million immigrants that arrive on our shores each year, that’s a real revenue source.
We hear it often: the rule of law is essential for investment. For over a decade, a legion of organizations and scholars--from the World Bank to Douglass North--have argued that if countries really want to develop they need to develop an independent, impartial, pro-market system for the application of laws and their adjudication. And those that don’t establish the rule of law will be ignored by international investors and the global market.
If only it were true.
The relationship isn’t that easy or clear. There are plenty of examples of countries and economies that have prospered without the effective rule of law; ones that haven’t even though they may have it; and plenty of companies that are willing to invest even in abysmal or deteriorating conditions.
It may be heretical to say it, but we have oversold the rule of law. Truth is: it matters most for small and medium enterprises. For large investors, national economies and specific economic sectors, it matters far less than we’ve convinced ourselves.
Let me highlight some of the overblown assumptions we’ve made about the rule of law and economic growth. Only by understanding them can we really recognize, in a more nuanced and targeted way, the limited, though important, way that the rule of law is important and for whom.
Myth 1: Big Investors Need the Rule of Law
In a famous speech, then-Secretary of State Colin Powell made an argument for countries to reform their judicial systems by stating that “capital is a coward. It flees from corruption, bad policies, conflict and unpredictability.” Left out of this was the bald truth that big investors can afford to invest in less safe conditions nationally because they come with their own protection: arbitration agreements. Many of the contracts negotiated in private equity, vendor agreements, and even fixed investments establish that in the event of a contract dispute both parties will submit to international arbitration--often under the Inter-American Convention on International Commercial Arbitration (1975) and the UNICITRAL Model Law on International Commercial Arbitration (1985)--with arbitration occurring outside the country.
What this does is effectively take the issue outside the country’s system for the rule of law, obviating the sweeping reform of the judicial system, an overhaul of commercial codes, and the creation of an effective, transparent independent system for the naming and oversight of justice officials necessary for the rule of law.
Sure, this international arbitration is great for investors who don’t have to wait for the lengthy, uncertain process of wholesale reform of a country’s legal and judicial system. And it’s a boon to policymakers who can establish an effective, quick pathway to attract investors. But it does little for pressuring the system as a whole for reform and reduces the advocacy and urgency for broader reform. Yes, other disputes will arise that do not rise to the level of arbitration and that will need to be dealt with in the local courts, even for the big investors. This can include matters of resolution of bankruptcy claims, contract violation, arbitrary regulatory changes, and intellectual property violation. To be sure, the threat of these complications--often costly--is a disincentive for investment. But, for many of the largest investors looking to sink their funds into a lucrative market, these are only one of the calculations among many that they make, which brings me to the next point.
This week, from June 6 to 8, the Organization of American States (OAS) will hold its General Assembly with all the region’s foreign ministers and secretaries gathering in
Different country, same divisions, on different sides. As with the outcome at the last OAS General Assembly, some artful diplomacy could produce a positive step that will finally--for the good of regional diplomacy and Honduras--help to move this process along.
Asserting the democratic rule of law and recovering social peace is a difficult task, especially in places like Rio de Janeiro’s favelas and Colombia’s one-time, crime-ridden cities and war-torn countryside. Democratic and sustainable crime control means establishing state control in places where it has never been present or where it was lost long ago. It also means more than just plopping down an occupying, even pacifying force. Establishing and maintaining peace requires developing a state that can deliver services to local populations.
My recent trip and discussions with police, policymakers and experts on this theme in Rio have reminded me this is no easy task.
The term “failed state” has become a fashionable term to describe countries like Somalia, Afghanistan and Haiti, but we also now know that there can be pockets of state failure elsewhere. While not as broad, dangerous or deep as those countries teetering on the edge of anarchy, pockets of failed states suffer from the same need: to develop the institutional and physical infrastructure to integrate deprived communities into the nation state and the legal market economy.
For the last two days I’ve been traveling with a group of security experts to observe and discuss with Sérgio Cabral, the governor of Rio de Janeiro, the state’s security plan to prepare for the 2014 World Cup and the 2016 Summer Olympics. Among the group were former NYC Police Commissioner and LAPD Chief William Bratton and his colleague (and AQ co-author) Bill Andrews, former Vice President of Costa Rica and senior fellow at the Brookings Institution Kevin Casas Zamora, local civil society, private-sector leaders, and the leadership of the newly created “pacification police” (policia pacificadora), or as their local units on the ground are called, UPPs. The latter is a police force created by Governor Cabral that serves as local beat cops in the crime-ridden favelas.
In the next ten years, Rio de Janeiro is going to host both the finals of the World Cup of soccer and the 2016 Summer Olympics. Can the city that coined the word favela (and with it all the connotations of desperation and lawlessness) and the reputation as one of the most crime-ridden cities in the world pull off these massive international events? Certainly, Rio state authorities are doing everything they can to allay international fears and address concerns.
This week I toured a once-infamous Rio favela, Dona Marta, with a representative of the governor of Rio de Janeiro’s cabinet. My impression of the favela that I visited is that there certainly has been progress. We visited one of three police precincts that had been recently established to pacify the informal neighborhood. The one we visited had seven video cameras posted throughout the favela, friendly beat police walking the narrow, twisting stairs that threaded their way among the houses, and a sense of peace, even civility. A success by any standards in what many consider to be the quintessential den of crime and lawlessness.
Unfortunately, it’s only one of over 300 favelas in Rio de Janeiro. The plan is to take each one, one at a time, with a combination of rooting out local drug lords and criminal networks and establishing a system of community policing, providing basic services (such as electricity and social services) to these informal settlements perched on cliffs overlooking the city or islands within the city. By all accounts, including that of former New York City Commissioner Bill Bratton, this is the only way to do it.
When it comes to Latin America, the Obama administration's change in tone from the early days of the last administration has been tremendously important. The emphasis on multilateralism has helped to salve long-standing wounds. The emphasis on broader social goals and the willingness to listen has echoed the growing demand to be listened to south of the border. And President Barack Obama's State of the Union shout out for free trade with Panama and Colombia has demonstrated that this administration will not jettison the best initiatives of President George W. Bush in the name of partisanship. All this is very welcome.
But still there's been a troubling sense of anachronism in this administration's rhetoric toward Latin America. Part of this reflects the understandable tendency to define things in regional generalities; but doing so tends to boil them down to retrograde platitudes. It obscures policymakers' sophisticated understanding of differences in the region--and the changes that have occurred in the last 10 years.
If the first 5 years of the Bush administration seemed like a replay of 1980s, with the Manichean obsession with our enemies, unabashed support for specific candidates and a loss of sense of scale--with an inordinate amount of attention devoted to Cuba, Nicaragua and El Salvador--today it's beginning to feel like we're partying like it's 1999. We're running out of retro.
(A fuller version of this article will appear in the forthcoming SIPA News magazine.)
The occasional explosion of violence between native born-French and Northern African immigrants or the recent riots between African immigrants and Italian citizens in Calabria, Italy remind us that immigration is not just a U.S. phenomenon. (The violence also reminds us that for all the ugliness of U.S. public opinion or U.S. policy toward immigrants, the U.S.’s anti-immigrant backlash is relatively tame in comparison.) The pull of labor markets and the desire to seek a better life remains strong across the world.
The problem is that the pull for jobs and the policy to facilitate immigration and integration do not always match. Perhaps more problematic is that the principal engine for workers to cross borders (the businesses that employ them) remain largely unwilling confront the contradiction between need for and receptiveness to immigrants. While they may attract them and admit they benefit from them, businesses are too often unwilling to defend immigrants and immigration.
Who Wants Immigrants? Turns out most of us do.
According to the Economist Intelligence Unit’s (EIU) Global Migration Barometer1, of the top ten countries ranked by their attractiveness and accessibility for migrants all but two are in English speaking (Australia, Canada, U.S., the UK, and New Zealand) or in Northern Europe (Sweden, Norway, Belgium.) The outliers are Singapore and Hong Kong, both small economies that have actively sought to bolster their shallow workforce with the skills of immigrant workers.
Co-Author: Mitch Seligson
The new found momentum for allowing homosexuals to openly serve in the U.S. military springs from attitudinal changes that have taken place since the “don’t ask don’t tell” policy of 17 years ago. If only this type of generational change were occurring south of our own borders. Recent surveys demonstrate that levels of political tolerance of gay rights in Latin America have changed little across generations.
The most basic measure of tolerance is that of citizens to accept the right of a citizen (in this case a homosexual) to run for political office. Sadly, even by this basic measure of tolerance, younger generations in Latin America are only marginally more supportive of political gay rights, especially in the most notoriously intolerant environments for homosexuals, Jamaica and Haiti.
This piece was co-authored with Mitchell Seligson of Vanderbilt University.
According to the UN Commission on Trade and Development over 60 percent of the population south of the Rio Grande is under 35 years old. Latin America’s young people will have an impact on political stability and the economy not just in their home countries but also in the U.S., where Latin America accounts for 20 percent of U.S. exports and is the major source of narcotics consumed in the U.S. There’s also the issue of immigration, where a backlash against Hispanic immigration has fueled a growing desire to close borders and sometimes spilling over into an ugly racist anger against immigrants already within our borders. With the huge demographic bubble south of U.S. border, the lack of economic opportunity faced by many of the young means that in the years ahead larger numbers of them will be knocking on U.S. doors for entry.
Below are the results from surveys conducted by the AmericasBarometer at Vanderbilt University in 2008 that examine youth attitudes and activities compared to their older counterparts.
The good news is that, despite lack of economic opportunity and the drug-fueled violence in Mexico and Central America and the Andes, two decades after the democratic transitions swept out military governments in every country throughout the region (except Cuba) Latin America’s “democratic generation” remains satisfied with democracy. But it’s not all good news. There is a support for violent protest—along the lines of factory seizures and sealing of highways we have seen in countries like Chile and Argentina—and a limited interest in local politics. But as we show below, the former does not mean support for such extra-legal activities enjoy broad support. In fact it remains marginal, though it is larger in the under 35 generation in Chile.
One thing is clearly revealed in the graphs below: whether you’re a marketer or a politician, if your target is the younger generation: use the Internet.
Two recent crises have overtaken the U.S.’s broader policy framework and agenda for the region. First, there was the coup in Honduras, now the tragedy in Haiti. The first was a potentially avoidable political train wreck that ended up dividing the hemisphere, the latter, one of the worst humanitarian disasters in the hemisphere’s history and an opportunity to unite the hemisphere.
Together the two countries, whose populations total just under 17 million people, have dominated the U.S. policy agenda in a region with close to 600 million people. In other words, we risk having lost our focus on genuine regional powers such as Brazil and looming political problems such as Venezuela by focusing on the immediate crises of just under 3 percent of the region’s population.
But there is hope. For all its heart-wrenching tragedy, Haiti is an opportunity to forge a broader hemispheric coalition and agenda in a way we failed in Honduras. Creating this historical partnership requires establishing a broad regional framework for monetary pledges, coordination, modalities, and goals of a comprehensive, long-term relief plan for Haiti that builds off Brazil and Chile’s long-standing commitment and the U.S.’s deep pockets and military and humanitarian presence.
Time, though, is running out.