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From issue: Impact Investing: Profit Meets Purpose (Fall 2011)

Fresh Look Reviews

Fresh, unique perspectives on recent books from across the hemisphere originally published in English, Spanish and Portuguese.

In this issue:
Photographs: Lars Klove

China Engages Latin America: Tracing the Trajectory by Adrian H. Hearn and José Luis León-Manríquez

Kevin P. Gallagher

During the early 1990s, many Latin American and U.S. analysts expressed concerns about an Asian giant that was buying Brazilian iron ore and investing in Mexican manufacturing, while at the same time showing signs of out-competing Latin American and U.S. firms in the region. That giant was Japan.

Hysteria heightened and academic research accumulated. But today few people worry about Japan’s role in the region—despite the fact that it is a top-five trading partner and has a large diaspora that includes Peru’s Alberto Fujimori, a former (now jailed) Latin American president.

Is history repeating itself? The new source of hand-wringing in the region is China, which, like Japan years earlier, is portrayed by many as stealing Latin American jobs, plundering the region’s resources and creating diplomatic alliances that could erode the rule of law. At the same time, some U.S. observers see China’s inroads as a threat in the U.S.’s backyard.

How do we make sense of China and Latin America? Are China’s ever-expanding ties a significant threat to Latin American development and/or U.S. strategic interests in the region? These are the questions that a burgeoning group of scholars are beginning to ask. Among them are the editors of China Engages Latin America: Tracing the Trajectory—Adrian H. Hearn of the University of Sydney and José Luis León-Manríquez of the Universidad Autónoma Metropolitana in Mexico City. This is a must-read for those seeking to better understand Chinese engagement in Latin America.

Not only is their book one of the broadest and most balanced in a steady stream of volumes dedicated to the topic; it truly breaks new ground. It does so by presenting the latest and most dispassionate economic analyses of the China–Latin America relationship and anthropological evidence on how this relationship is playing out in communities.

Much of the recent scholarship has concluded that China’s growing economic ties, while fairly beneficial to South American countries, have been costly—politically and economically—to Mexico and Central America. South America has natural resources that it sells to the Chinese, but many Central American countries have suffered retaliation from China because of their recognition of Taiwan. And Mexico’s fewer natural resources not only offer little opportunity for exporting to China but make it more difficult to compete globally with Chinese firms. Meanwhile, U.S. observers are increasingly alarmed that South Americans may be creating political alliances with the Chinese. Not all alliances are of concern, but loans-for-oil deals with Venezuela and satellite cooperation between Brazil and China have raised eyebrows in some Washington circles.

While there is some truth to that overall view, this book goes deeper and wider. Economic essays  do a nice job of separating some of the benefits and costs of the China–Latin America relationship. For example, as Javier Santiso of ESADE Business School and Rolando Avendano of the OECD Development Centre point out, China offers a new source of trade and finance for many countries, and, as the U.S. economy continues to slump, this diversified portfolio is a good thing for many Latin Americans.

However, there are costs as well. Chinese imports are putting pressure on Latin American firms by out-competing them in both world and home markets, and Chinese investment in natural resources can exact a heavy environmental and social toll. The combined effect can push up the value of a country’s currency and threaten long-term economic growth.

In Brazil, for example, China has triggered a debate over de-industrialization and the future of economic growth. In the essay “China’s Challenge to Latin American Development” Enrique Dussel Peters of the Universidad Nacional Autónoma de México shows how Chinese economic activity is accentuating inequalities and creating new sets of winners and losers across the hemisphere. Dussel shows that despite the increasing exports of primary commodities to China from the region (winners), the region as a whole experiences a significant trade deficit due to the import of light manufactured goods (losers).

But the relationship is too new for Latin America or the U.S. to be alarmed. This point is made through contributions by Daniel P. Erikson of the Bureau of Western Hemisphere Affairs at the U.S. Department of State and the essay co-written by Javier Santiso and Rolando Avendano. The Erikson chapter was written before he joined the State Department and does not reflect government views.

Santiso and Avendano show how some Latin American firms, such as Bematech in Brazil, Nemak in Mexico and Koramsa in Guatemala, are forging alliances with China to climb value chains and become more competitive. Erikson brings balance to the U.S. security side by highlighting select opportunities for U.S. cooperation with China in the Western Hemisphere, such as widening the Panama Canal, disaster relief and environmental protection. Erikson concludes, “If China and the United States both deal with Latin America in a manner that is open, transparent and respectful of multilateral systems, then this may usher a new breed of regional diplomacy with lessons for U.S.–China cooperation in other parts of the world.”

This volume adds depth and nuance to the polarized debates over development and security. But even more valuable is the contribution it makes to a broader understanding of China in Latin America, drawing not just on the work of economists and political scientists, but anthropologists as well.

An example of this is the chapter by Hearn, Alan Smart and Roberto Hernàndez Hernàndez, which is perhaps the most unique in this emerging literature on China and Latin America. These authors trace the evolution of Chinese communities in Mexico, beginning in 1864, when Chinese laborers were contracted to build railroads between the U.S. and Mexico. Those communities have now established diaspora networks with mainland China and facilitate Chinese imports into Mexico.

The book also features one of the first treatments of the Cuba–China relationship in a chapter written by Mao Xianglin, Carlos Alzugaray Treto, Lis Weiguang, and Hearn, which documents the key role played by China in technology transfer to Cuba in the form of medical exchanges, language training, household manufactures, and technology to help access natural resources.

Any anthology will be uneven, and thus some of the contributions in the book will be longer lasting than others. Much of the work by the economists is clear and rigorous. But since the China–Latin America economic relationship is changing so rapidly, such analyses stand as simply the latest snapshot. The chapters by anthropologists run the deepest, and will find interested readers for a long time to come.

If this book has a unifying argument, it is that, while China presents a “challenge” on a number of different levels, Chinese resource extraction is not yet de-industrializing the region; nor is it squandering Latin American resources or causing domestic ecological crises and geopolitical problems beyond the region. But a careful reader of this book would be keen to follow these issues and start a conversation about how to mitigate such problems in a preventive manner. “As China becomes a more active and assertive global player, it is crucial that the international community develop ways to integrate Chinese business practices into multilateral regimes for improving governance and accountability,” the editors conclude.

That said, Chinese engagement raises serious questions for both the region and the United States. Will Latin America respond by abandoning the Washington Consensus and adopting a more state-led model of economic development, as China has? Will the region learn to develop a foreign policy that accommodates both China and the U.S. or will nations make a choice? Will Latin Americans treat newcomers as they hope to be treated when they enter foreign lands? All future books on the subject will need to build on this one.

Mexico and Its Diaspora in the United States: Policies of Emigration since 1848 by Alexandra Délano

Marta Tienda

The abrupt resignation in mid-March of the U.S. ambassador to Mexico—just as President Barack Obama was embarking on a five-day friendship mission to Latin America—is a stark example of the delicate, often irascible bilateral relationship. A diplomatic cable unearthed by WikiLeaks, in which Ambassador Carlos Pascual characterized Mexican security forces as ineffective and riddled with infighting, had ignited President Felipe Calderón’s wrath.

Despite public assertions that U.S.–Mexico ties are stronger than ever, the Pascual affair exposed the underside of a thorny bilateral relationship that unfolds on multiple fronts such as the drug war, border security, trade, and migration—each with different political fault lines.

That a Mexican president would dare to openly excoriate a sitting ambassador and publicly criticize the U.S. government reflects—in part—Mexico’s increased capacity to leverage the inherent asymmetry with its powerful northern neighbor since 1980. It appears that Mexico has found its voice in negotiating with the United States. At least that is what Alexandra Délano argues in Mexico and Its Diaspora in the United States: Policies of Emigration since 1848.

Délano, an assistant professor of global studies at The New School in New York City, completed her book well before the Pascual affair, but she bases her conclusion on an analysis of U.S.-bound migration over the past 160 years, which she uses to chronicle the evolution of the relationship and argue that U.S.-bound migration is no longer simply a safety valve for Mexican underemployment. Focusing on emigration policies, she methodically documents how Mexico changed its posture toward the exodus of its citizens from indifference—dubbed “the policy of having no policy” by Manuel Garcia y Griego—to strategic, proactive engagement.

Demography is not destiny, but it can serve as a powerful resource to advance geopolitical agendas. According to the U.S. Census Bureau, the population of Mexican origin ballooned from 9 million to nearly 32 million between 1980 and 2010. The Mexican-born population increased fivefold during this period, from 2.2 million to 11.5 million, and witnessed an unprecedented geographic dispersal beyond the traditional southwestern states.

Délano explains how Mexico changed its relationship with its powerful neighbor to the north to better serve its political and economic interests at home and abroad. But the story is more nuanced as it unfolds against the backdrop of globalization, bilateral economic interdependence and the rise of international terrorism.

To frame her argument, Délano describes the labor flows between Mexico and the U.S. in early chapters that cover two key periods: 1848–1942, when the United States called all the shots; and 1942–1982, a time of sporadic and lopsided bilateralism that mainly served U.S. economic interests. Because it exposed the depth of U.S. economic interests south of the Rio Grande, Délano claims that the 1982 economic crisis in Mexico was a turning point in the bilateral agenda, but she argues that the North American Free Trade Agreement (NAFTA) was even more significant, despite or perhaps because “Mexico agreed to avoid the issue [of migration] in the process of negotiation and ratification of the free trade agreement.”

The presumption that NAFTA would automatically stabilize migration flows between two countries with huge wage differentials ignored deep social networks and economic ties. Uncoupling migration policy from the broader bilateral agenda was an important step in Mexico’s strategy to reach out to the Mexican-origin population, targeting both the Mexican expatriate communities and the Mexican-American population.

The migration story during these periods is known mainly from the U.S. perspective. Délano deftly reframes it through the lens of emigration to identify the economic and social circumstances that facilitated Mexico’s policy shift from benign neglect to strategic engagement of its nationals living north of the border.

Relying on primary and secondary sources, she elaborates how Mexico shifted from passive to proactive emigration policies. Several circumstances, she argues, strengthened Mexico’s ability to align the reality of emigration with its economic interests: the sheer size and diversity of the Mexican expatriate community; the volume of remittances; internal pressure to protect nationals living abroad; and Mexico’s transition in 2000 from single-party rule to free democratic elections.

Délano concludes that Mexico found its new voice through direct engagement with the expatriate community; the creation and expansion of institutions to serve Mexicans living in the U.S.; and public positions in defense of migrants’ rights. “In the past 20 years, and more emphatically since 2000, Mexico reversed a long history in which its migration policy consisted of softly promoting migrants’ return, helping them maintain their ties to the home country through contacts between community organizations and consulates, and providing protection as well as support in crisis situations,” she notes. The activism of Mexican consulates transcended conventional legal support and cultural programs to include programs for financial literacy and legislation that enabled nationals living abroad to vote in federal elections.

Some concrete examples: the expansion of consular offices and the sponsorship of outreach activities in the U.S.; direct engagement with migrant organizations abroad to promote investment in Mexico; strategic enlistment of cooperation from prominent Mexican-American organizations; enactment of the dual nationality policy in 1996; and creation of the Instituto de los Mexicanos en el Exterior (IME). Also, in 2002, the Mexican government—in an effort to facilitate identification of its citizens—released a secure version of its consular identification card, the Matricula Consular, which is issued to Mexicans living abroad who lack a passport. Délano notes the success of the Matricula Consular: “As a result of the Mexican government’s lobbying efforts, by the end of 2006 more than 400 financial institutions, 390 cities, 170 counties, and 1,200 police departments considered that the document was safe and facilitated the identification of residents in their localities.”

The book marshals compelling evidence that Mexico has strengthened its bargaining position in the bilateral relationship with respect to emigration policies. But Délano acknowledges that asymmetry persists. This is most starkly evident in its failure to negotiate a comprehensive migration agreement that included a legalization program; an exemption from the annual country limit for visas; an expanded temporary worker program; enhanced border security; and economic development initiatives targeted to key sending regions. Post 9/11, the U.S. government recast immigration as a security issue, and in 2006 authorized legislation to extend a fence along the U.S.–Mexico border and expand Border Patrol operations.

Rather than creating more symmetry in the bilateral migration agenda, the U.S. has militarized the border and merged its migration and national security policies. The unprecedented geographic dispersal of Mexico’s expatriate community has further complicated its emigration policy agenda, thanks to the surge of anti-immigrant policies at state and local levels in response to stalled immigration reform in the United States.

Délano conducted fieldwork in eight Mexican consulates and interviewed 50 members of IME. She also interviewed nine Mexican government officials and four members of prominent U.S. migration organizations. Her focus on emigration policy from a Mexican perspective may warrant an emphasis on key Mexican stakeholders. However, in light of the Pascual resignation, it would have been helpful to solicit the perspectives of prior ambassadors to Mexico during the period that Mexican emigration policies evolved. John D. Negroponte (1989–1993), James R. Jones (1993–1997) and Antonio Garza (2002–2009) could have added a bilateral perspective to Délano’s narrative.

It is not clear that diaspora is an appropriate term to characterize the Mexican exodus to the United States. Délano chose the term “to reflect characteristics of the Mexican experience that are sometimes overlooked, including the[…]complex transnational identities and relationships that migrants and their organizations have developed with their home country.” Despite its title cachet, this is an academic question about which scholars disagree. The theoretical framing of Délano’s thesis as a multilevel analysis also exaggerates claims of uniqueness and at times diffuses attention from the story line.

Still, Mexico and Its Diaspora offers a refreshing perspective in a well-trodden field and raises broader questions about the extent and conditions under which originating states can manage migration to maximize benefits for both domestic and expatriate citizens.

No voy en tren: Uruguay y las perspectivas de un TLC con Estados Unidos (2000–2010) by Roberto Porzecanski

Juan Cruz Díaz

In the first decade of the 2000s, Uruguay unsuccessfully tried to sign a bilateral free-trade agreement (FTA) with the United States. These efforts were pursued first by the administration of President Jorge Batlle (2000–2005) of the center-right Partido Colorado and then by President Tabaré Vázquez (2005–2010) of the center-left Frente Amplio coalition. Many observers believed the drive to enact a U.S.–Uruguay FTA reflected Uruguay’s dissatisfaction with the structure and benefits of the regional trading bloc Mercado Común del Sur (MERCOSUR), which many Uruguayans believe never lived up to expectations. It also demonstrated Uruguay’s willingness to defy regional powerhouses Argentina and Brazil—MERCOSUR’s two biggest partners—which both opposed unilateral Uruguayan efforts to negotiate with the United States.

But why didn’t the two parties succeed in getting an agreement that fit Uruguay’s needs and was seemingly aligned with U.S. trade policy?

In No voy en tren: Uruguay y las perspectivas de un TLC con Estados Unidos (2000–2010) (I’m Not Getting on the Train: Uruguay and the Prospects for a Free Trade Agreement with the United States, 2000–2010), Roberto Porzecanski artfully addresses this question. Porzecanski, a Uruguayan Fulbright scholar and a consultant for McKinsey & Co., uses his extensive background in political science to describe—with remarkable clarity—the behind-the-scenes story of the policies, negotiations and political economy calculations that drove nearly a decade of failed Uruguayan efforts to sign an FTA with the United States.

Porzecanski provides a perspective on many issues that led to the ultimate failure of negotiations, ranging from lack of support from the presidents’ own political coalitions to the inability of either administration to build a nationwide consensus that an FTA was in Uruguay’s best interests. He also raises factors not widely discussed elsewhere, such as the Uruguayan government’s inability to predict the reactions of Brazil and Argentina—both keen to prevent the FTA. Pointedly, the book quotes one particularly strong statement from Argentine Foreign Minister Jorge Taiana (2005–2010): “It is impossible for a MERCOSUR member to individually negotiate a trade agreement unless they intend to leave the bloc.”

Nevertheless, as Porzecanski explains, Uruguay risked the alienation of domestic groups and regional allies for several reasons. President Batlle, a free-trade believer, wanted an FTA to open new markets and find alternatives to MERCOSUR, a bloc that he initially supported before becoming skeptical.

President Vázquez and his economy minister, Danilo Astori, wanted to raise the country’s international profile, hoping that MERCOSUR would be flexible enough to allow a unilateral trade strategy. Vázquez was also thinking about his re-election prospects, and Astori was considering a possible future presidential run. Both men believed the conclusion of an FTA would win them significant political support at home—but they were wrong. In the end, former agriculture minister and current President José Mujica—a skeptic of the FTA at the time—defeated Astori in the Frente Amplio primary election in June 2009. Astori, now the vice president, later agreed to be his running mate.

Although not part of Porzecanksi’s focus, a deeper analysis of the U.S. perspective would have helped readers understand the larger context. Still, the book is a solid work. The first two chapters focus on basic concepts of FTA negotiations and U.S. trade liberalization strategy toward Latin America, which are presented in a concise manner and always in the context of Uruguayan politics.

Porzecanski begins with the regional integration challenges of MERCOSUR that the Batlle administration faced. In particular, he notes, the 2001–2002 financial crisis complicated bilateral relations between Argentina and Uruguay. Also, the 2001 Summit of the Americas in Québec City, along with the U.S.-led push for a Free Trade Area of the Americas (FTAA), added new pressures to the trading bloc. In that environment, the book explains how the Batlle administration embarked on a bilateral trade negotiation strategy that ended with the signing of a bilateral investment treaty (BIT) during the final months of his presidency in October 2004. The BIT was ratified in December 2005 during President Vázquez’ presidency.

The chapters where Porzecanski shows the internal dynamics and struggles of President Vázquez’ government constitute the core of the book. They provide an impressive amount of detail supported by interviews and solid theoretical architecture. Internal disagreements dominated the Vázquez administration: the ministers of economy and industry strongly backed the FTA, while the then-minister of foreign affairs, Reinaldo Gargano, was against it. “An FTA will not be signed, don’t worry,” Gargano said in a public statement contradicting the president.

No voy en tren also explores Vázquez’ struggles with businesses, academics, the media, and opposition politicians—many of whom opposed the agreement. Although there were some business leaders who argued that an agreement with “Uruguay’s most important trading partner” was crucial, others—especially academics—advocated for “more and better MERCOSUR” instead.

Of special interest to readers is the detailed and vivid description of how Vázquez and Astori tried to develop a uniquely Uruguayan model for an FTA with Washington, once they realized the U.S.–Peru agreement was unpopular with the governing coalition. They believed—erroneously it turned out—that they could negotiate special concessions from the George W. Bush administration for a “Uruguayan Way,” since Washington seemed to be favorable to striking a deal.

However, data and wide-ranging field research in the book show that an FTA at the time would have been “going against the current” of a Uruguayan political system that was largely committed to MERCOSUR.

The failure of the FTA led to the signing of a Trade and Investment Framework Agreement (TIFA) with the U.S. in January 2007. This was a second-best solution that left open the door for future, more comprehensive negotiations. But as the book makes clear, the TIFA also encountered strong resistance inside and outside the government. So is an FTA off the table? The author convincingly argues that it is, but points out that President José Mujica—once a detractor—now appears to acknowledge some benefits of the TIFA.

This book fills a decade-long void of analysis of the Uruguayan case, and is an important piece of scholarship in its own right. President Vázquez, by trying to convince Uruguayans about the urgency of the FTA, once said, “The train, sometimes, only comes once.”

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