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Latin America: the next U.S. President’s agenda ap/wide world photos 6 U.S. relations with Latin America have faltered since 9/11. How much emphasis should the next U.S. President place on issues relating to the Western Hemisphere? by Peter Hakim Venezuelan President Hugo Chávez (center) under a banner that says “Oil company on its way to socialism,” in May 2007. The government had just taken over the last privately owned oil fields, intensifying the power struggle with international companies over petroleum deposits. o one in Washington is really satisfied with the state of Western Hemisphere affairs. Members of Congress from both parties, although hardly blameless for the deterioration of U.S.-Latin American relations, bemoan the region’s alienation from Washington and disparage U.S. policy in the Americas. This past May, Democratic Chair of the House Foreign Affairs Committee Tom Lantos (Calif.) complained about “the Administration’s utter abdication of Latin America policy,” arguing that “warm relations…evaporated long ago….” As early as 2004, then Republican Chair of the Senate Foreign Relations Committee Richard G. Lugar (Ind.) complained about Washington’s “inconsistent engagement with Latin America” and its impact on democracy in the region. Although not always publicly, Latin Americans are far more critical. Repairing the U.S. relationship with Latin America will be a formidable challenge for the next President of the U.S. Trust and credibility have to be restored among the region’s leaders and ordinary citizens. The anti-Americanism that N has taken hold region-wide has to be reversed, and the practice of political and economic cooperation has to be restored. Still, the task of remodeling U.S. policy should be less difficult in this hemisphere than it will be in other regions of the world. As the next President contemplates how to revive U.S. prestige and diminished influence worldwide, Latin America may be the right place to begin. The cost should be lower, and the payoff quicker. Venezuelan president and U.S. antagonist Hugo Chávez Frías recently said he hoped for better relations with Washington once President George W. Bush has left office. Whether Chávez meant it or not, his sentiment is endorsed by most of the region’s leaders. Despite their disappointments in recent years, the vast majority of Latin American countries want good relations with Washington. They know how vital the U.S. is to their interests. With its immense $14 trillion economy, some six U.S. important to Latin America Peter hAkim is president of the Inter-American Dialogue, a Washington-based center for policy analysis and exchange on Western Hemisphere affairs. www.greatdecisions.org 65 6 G r e A t D e c i S i o n S  2 0 0 8 litical role throughout the region. No other country was prepared to assist Colombia’s battle for survival against illicit drug trafficking and guerrilla violence. Mexico is now turning to the U.S. to help contain its burgeoning wave of criminal violence. It was the U.S. that took the controversial step of pressing Rev. Jean-Bertrand Aristide to give up power in Haiti in 2004, and that subsequently prodded Brazil to lead a peacekeeping mission in the country. In 2006, Washington helped to stop the constitutionally suspect ouster of Nicaraguan President Enrique Bolaños Geyer. It also clumsily (and unsuccessfully) intervened to prevent the reelection of its old nemesis, President Daniel Ortega. Even Brazil, which pursues the region’s most stubbornly independent and diverse foreign policy, has made plain how much it values good relations with the U.S. Top foreign policy officials in Brazil’s left-leaning government publicly insist the U.S.-Brazilian relationship has never been stronger. Brazil knows that its international and regional ambitions require amiable ties with the U.S.—and that an adversarial relationship would be costly in multiple ways. Many in Latin America deeply resent and mistrust the U.S., and take pride in resisting Washington’s pressures and inducements. They are sometimes delighted when Chávez or Cuba’s Fidel Castro vilifies Washington, even if they would never do so themselves. But most Latin American governments, whatever their feelings about the U.S. and its policies, resist the anti-American temptation. They know, often from experience, that alienating Washington can carry a high price—and therefore usually try to maintain cordial relationships with the world’s superpower. times that of the entire region, the U.S. is the largest or second-largest trading partner of nearly every Latin American country, and the region’s major supplier of investment capital. This year, Latin American migrants in the U.S. will send more than $60 billion dollars to their families in the region, $25 billion to Mexico alone. Most countries have made clear they want strong trade links and other economic ties with the U.S. Eleven of Latin America’s 19 nations have signed bilateral free-trade pacts with Washing- ton, although two of them still await U.S. congressional approval. Even governments that reject free-trade negotiations with the U.S.—Bolivia and Ecuador, for instance—have lobbied Washington hard for trade preferences to keep U.S. tariffs low. The most vitriolic critic of U.S.-Latin America trade deals, Venezuela, sends most of its oil to the U.S. duty-free. The U.S., however, is not merely a huge market and capital reserve for Latin America. For better or worse, the U.S. continues to play an important po- The next U.S. President will find that, aside from Europe, Latin America is the region that most shares American political values and economic policy views. Despite the hand-wringing of many journalists and political analysts, de- Shared values and preferences 66 L A t i n mocracy in the region has turned out to be surprisingly robust. Every one of 14 recent presidential elections was judged to be free and fair by international observers. Only in one country, Mexico, did the loser dispute the outcome. All the elections were competitive and voter turnout was high everywhere. Fears that a “left-wing” trend in Latin America was about to upend democratic progress and scuttle good economic policy were wildly overblown. The “left” won more than its A m e r i c A True, the pace of reform has slowed, but there has been no wholesale turning back to state control or populism. Many governments publicly rail against the “Washington Consensus” policies promoted by the World Bank and the International Monetary Fund (IMF), but they mostly follow them in practice. Only Cuba’s economy is statemanaged, and only Venezuela pursues radical populist economic practice; governments elsewhere know populism is a luxury they cannot afford.  share of elections, but few nations have changed their economic or political course. Democracy is threatened by radical or populist leaders only in a small number of mostly weak and unstable countries. Moreover, Latin American governments have almost universally adopted market economic reforms. The region’s businesses are almost all in private hands, foreign trade and investment are growing, and most governments are keeping their budgets in balance. 6 Latin America: doing quite well, thank you he region’s recent economic upturn will facilitate the efforts of a new Administration to reverse the deterioration of U.S.-Latin American relations. As the region’s economies bounce back from a 20-year slump, Latin America’s sour mood is lifting—and there are fewer reasons to make Washington a scapegoat. Latin America is now completing its fifth year of economic expansion, with no slowdown in sight. Even the recent turmoil in global financial markets has raised few alarm bells. Every country is growing, and the economic dividends are reaching most Latin Americans. Unemployment is down and poverty rates are receding. The growth surge has been accompanied by other good news—historically low inflation, record exports and trade surpluses, declining indebtedness and rising international credit ratings. Some economic clouds remain, however. A buoyant global economy, not improvements in the region’s competitiveness, is driving Latin America’s expansion. Growth rates and productivity badly lag behind those of other developing regions. Future success will require politically painful reforms in such sensitive areas as taxation, labor and pensions. Governments will have to invest more in physical in- T frastructure, improve education, revamp investment-discouraging regulations, expand energy supplies and further reduce trade barriers. The region, in short, can do better. But today’s robust growth puts Latin America in a strong position to confront its challenges. Political and social developments in Latin America present a less favorable picture than the region’s economic performance. The “social agenda” is where Latin Political and social weak points America’s most intractable problems are found. Despite recent gains, some 40% of Latin Americans still live in poverty. Joblessness, while declining, is higher now than it was in 1990. No other region in the world suffers greater inequalities of income and wealth. For the poor and near-poor, these social deficits are compounded by the appallingly low quality of public services— transportation, justice and law, and education and health, for example—and by widespread discrimination against black and indigenous populations. Former Brazilian president and renowned ap/wide world photos A teenage Brazilian girl heads home in a hamlet of Guaribas bearing water from distant springs. To supply fresh water to all Brazilians is a prime goal of today’s government. 67 6 G r e A t sociologist Fernando Henrique Cardoso once said that his country was unjust, not undeveloped. So are most other Latin American nations. Persistent economic and social imbalances have left many Latin Americans alienated and frustrated, and have bred divisive politics in many countries. The recent spate of elections showed that democracy is healthy. It also revealed, however, that the nations of the region are more politically polarized— by class, race and region—than at any time in recent memory. These fissures make governing more difficult and are provoking conflict in some places. They have fueled secession sentiments in Bolivia and precipitated a bitter postelection dispute in Mexico. Polarized politics emerging from deep social rifts explain how Hugo Chávez was elected in 1998, how he managed to acquire virtually dictatorial powers, and why he remains popular in Venezuela (although his attempt to make changes to the constitution that would have given him sweeping new powers was narrowly defeated in a December 2007 vote). His bombastic rhetoric targeting Latin America’s elites resonates across the region because it contains a sizable grain of truth. D e c i S i o n S  2 0 0 8 pacts—by withdrawing in 2006 from one, the Andean Community, and joining the other, the Mercosur. In 2006, Latin America was the only region of the world unable to reach consensus on who should be its representative on the United Nations Security Council. And mistrustful of their neighbors, every country in South America today seeks energy independence. Chávez is a source of disharmony. But his influence should not be exaggerated. The two South American trade pacts, and hemispheric trade talks as well, were deeply troubled before he became a central actor. The OAS does not have a history of strong achievements. Much of the discord among Latin American countries has little to do with Chávez. Few governments support his strident campaign against the U.S. Nor do they see oil-rich Venezuela as much of an economic or social model. They know that Chávez’s “21st Century Socialism” has little to do with socialism; it is mainly about spending money, amassing power and opposing the U.S. ment unless the U.S. reversed its protectionist farm policies. Prospects for hemispheric cooperation were further set back when a post-9/11 Washington redirected the bulk of its foreign policy attention to the Middle East. The U.S.-led invasion of Iraq in 2003, opposed nearly everywhere in Latin America, was a particularly damaging blow. By then, free-trade negotiations had stalled because of Brazilian-U.S. disputes, and Chávez had become an increasingly disruptive force in hemispheric affairs, aggressively promoting an anti-U.S. agenda across Latin America. Not that long ago the nations of the Americas were celebrating a newfound political harmony and working toward the integration of their economies. The U.S., Canada and Mexico ratified the trilateral North American Free Trade Agreement (NAFTA) in 1993. The following year, the hemisphere’s heads of state assembled for the first time in a generation and agreed to negotiate a free-trade arrangement among all 34 countries. But convergence had its limits. The Clinton Administration failed on several occasions to secure renewal from Congress of the fast-track negotiating authority needed to advance regional trade talks. In 200l, Brazilian President Cardoso warned that there would be no hemispheric trade agree- Disharmony in the Americas www.caglecartoons.com/angel Boligan Chávez’s belligerence has exacerbated divisions in the 35-member Organization of American States (OAS) and other regional institutions. With or without the U.S., summit meetings of the hemisphere’s leaders have become more acrimonious and less useful. Chávez badly unsettled both of South America’s two major trade Chávez is not responsible for the waning of U.S. influence and credibility in Latin America. The opposite is more nearly true. Washington’s diminished authority paved the way for the Venezuelan leader’s rise. The main culprits in the decline have been the changes in Latin America and its relations with the rest of the world—and Washington’s bad policy choices. As Latin American countries reformed and opened their economies, they inevitably became more and more integrated into the world financial system, and less reliant on the U.S. Even Mexico and Central America, which are economically coupled to the U.S., have developed an array of commercial ties with Europe, China, Japan and India. The U.S.’s strongest economic partner in South America, Chile, has free-trade ties with countries across the globe, including China and Korea. The emergence of China Losing Latin America? 68 L A t i n and India as global actors has expanded Latin America’s political horizons and economic opportunities—and reduced Washington’s ability to shape events in the region. What was not inevitable was the erosion of U.S. credibility in the region or the rapid surge of anti-American sentiment—consequences mostly of the Iraq invasion and the subsequent conduct of the war. The treatment of war prisoners at Abu Ghraib and Guantánamo made Washington look hypocritical. For years, the U.S. government has lectured Latin America about human rights and the rule of law, but seemed to turn its back on these principles when its security was at risk. Washington’s policies in the hemisphere also bear blame. With the U.S. so totally absorbed by the Middle East, it is not surprising that the Bush Administration has been unresponsive, even indifferent, to Latin America. And when it has tried to engage, it has often been either ineffectual or overbearing and uncompromising. Mexicans and Central Americans, for example, were dismayed by President Bush’s failure to deliver on his promise to make U.S. immigration practices less punitive and more welcoming. Mexican Foreign Minister Jorge G. Castañeda (2000–2003) once talked about Washington approving the “whole enchilada” of changes fa- A m e r i c A 6 lucidity information design vored by Mexico. Instead, the only new legislation is focused exclusively on law enforcement, including plans to erect a wall on the U.S./Mexican border, which is seen as particularly offensive. And U.S. debates over immigration, tinged with anti-immigrant and anti-Hispanic sentiments, have sounded mean-spirited and disparaging of Latin America. Trade policy has been an area of some success for the Bush Administration. Although hemisphere-wide negotiations collapsed, Washington has con- Some trade progress lucidity information design cluded bilateral free-trade agreements with most Latin American nations in recent years. Yet these agreements have not generated much goodwill for the U.S. The rigidity of U.S. negotiating positions and the perceived onesidedness of the resulting deals have rankled even the strongest proponents of free trade. The fact is that Washington cannot be a fully reliable negotiating partner as long as congressional Democrats and Republicans are so profoundly divided on trade issues— and agreements are ratified by one or two votes. That leaves no room for flexibility. The Democratic takeover of Congress in January 2007 put in limbo three signed trade pacts awaiting congressional action. In a rare moment of bipartisanship on trade issues, the White House and key congressional Democrats were able to reach accord on a small package of amendments, mostly focused on workers’ rights, intended to open the way for ratification. Still, only one of the pacts, with Peru, has been approved. The agreement with Colombia faces the most problems—because of the vehement opposition from the AFL-CIO and broader concerns about human rights in the country. Another bipartisan accord, setting out what will be required of Colombia, will probably be needed to resolve the outstanding issues. And 69 6 G r e A t Colombia will have to agree to fulfill the new demands. Colombians are understandably frustrated and embittered by the prospect of a long delay, or rejection, of their trade pact. They believe that, more than other countries, Colombia deserves a free-trade arrangement with the U.S. It has been Washington’s most dependable ally in Latin America in recent years and has made important progress in containing criminal and political violence, extending the rule of law and reducing rights abuses of all sorts. Leaving Colombia out will raise questions across Latin America about the reliability of the U.S. as a partner. On several issues, the U.S. remains out of step with the great majority of Latin American countries. The most conspicuous is Cuba. All but two Latin American governments now have diplomatic relations and normal economic ties with the island. Latin American and Caribbean nations overwhelmingly oppose the U.S. embargo and support a U.S. dialogue with Cuban acting President Raúl Castro and other Cuban authorities. Washington’s claim that its Cuban policy is driven by democracy and human-rights considerations rings hollow in Latin America. Latin American governments now agree with Washington that the illicit drug trade is a worsening tragedy for the hemisphere and that user, tranap/wide world photos D e c i S i o n S  2 0 0 8 leaders were offended by the Bush Administration’s hostile and dismissive attitude toward their objections to the Iraq invasion. Almost universally, Latin American governments consider the U.S. to be too openly confrontational toward Venezuela and recoil from continuing U.S. pressures to publicly oppose and condemn President Chávez. They objected to heavyhanded U.S. campaigns to limit the jurisdiction of the new international criminal court, to reject the Venezuelan candidate for a temporary seat at the UN, and to support a weak U.S.endorsed candidate for OAS secretary-general. Latin Americans resent the U.S. for its power and influence, no doubt. What they resent even more is how the U.S. sometimes uses that power. sit and supplier countries should be working together to address the problem. Latin American governments, however, are frustrated that U.S. strategy seems frozen in place. They would like to open up a real debate on alternatives; however, Washington has been largely deaf on this issue. And Washington has also seemed largely indifferent to Latin America’s deep and pervasive social ills—as it focuses mostly on problems related to trade, finance, drugs and migration, all issues of direct and immediate interest to the U.S. Although the Bush Administration has modestly increased financial aid to Latin America, Chávez’s Venezuela is seen as far more responsive, even by his opponents. On his visit to Latin America earlier this year, President Bush tried to change that perception by emphasizing a U.S. commitment to help address the region’s social needs. Latin Americans remain deeply skeptical, however. Finally, Latin Americans often bristle at the style of U.S. diplomacy and politics—and the attitudes that underlie them. With some justification, they feel that Washington still views the region as its backyard and expects governments there routinely to follow the U.S. lead. They resent being treated as second-class citizens of the hemisphere. Latin America’s Hosting former Mexican President Vicente Fox (2000–2006) at a state dinner in early September 2001, President Bush declared that “the U.S. has no more important relationship in the world than our relationship with Mexico.” And it is true that there are few countries where U.S. interests are more extensively engaged. Mexico is the U.S.’s third-largest trading partner, after Canada and China. Bilateral trade amounts to more Do our neighbors matter? June 2, 2007: Illegal immigrants use inner tubes in attempt to cross the Rio Grande at the U.S. border in Nuevo Laredo, Mexico. Mexicans make up some 70% of all of the illegal immigrants in the U.S. today. 70 L A t i n than $300 billion a year—or some 60% of all U.S. trade with Latin America. Mexico is also a major oil exporter to the U.S. and a prime destination for U.S. overseas investment. More than one half of the 40 million U.S. residents of Latin American origin are Mexicans or Mexican descendants. The majority of undocumented immigrants in the U.S. are from Mexico. With a 2,000mile-long common border that is crossed legally some 250 million times each year, Mexico presents a multitude of security concerns for the U.S. More than half of the illicit drugs entering the U.S. also cross that border. Clearly, vital U.S. interests are served when Mexico is effectively governed, politically stable, economically prosperous and cooperating to resolve shared problems. Political or economic crises put U.S. interests at risk, invariably sparking new immigrant flows, diminishing trade and investment opportunities and reducing Mexico’s capacity for cooperation on many fronts. By any quantitative measure, what happens elsewhere in Latin America is less important to the U.S. The rest of the region is not central to U.S. security; it is neither a source of nor a target for international terrorism. A m e r i c A other U.S. adversaries, and its massive arms buildup, Venezuela is potentially a source of insecurity and vulnerability for the U.S. and Latin America. Latin America’s significance to the U.S., however, goes beyond specific economic interests, security issues or the consequences of uncontrolled streams of migrants and drugs. It is natural for Washington to invest more to promote democratic politics and market economics in Latin America than in other regions. This is the U.S.’s neighborhood—the only place where the U.S. is a full member of regional organizations, where the U.S. President actively participates in periodic summits with all other heads of state and where the U.S. has sought to negotiate a region-wide free-trade arrangement. Latin America is the only place where Washington can have a “good neighbor” policy. Having neighbors that share its values should be reassuring to the U.S. If democratic politics and market economics prosper in its immediate neighborhood, Washington gains needed credibility and experience to pursue these aims elsewhere. If U.S. democracy-building fails in its own neighborhood, where can it plausibly succeed?  Economic relations with South and Central America are expanding, but they are modest compared to Mexico. All of South America’s trade with the U.S., including the oil from Venezuela, amounts only to about 40% of U.S. commerce with Mexico alone. Trade with Brazil, the second-largest U.S. partner in Latin America, accounts for little more than 1% of U.S. trade worldwide. Still, an economic crisis in Brazil, the eighth-largest economy in the world, would have destructive spillover effects across the region, which could importantly damage the U.S. economy. And Brazil is a country that could become much more economically consequential to the U.S.— if it sustains a healthy rate of growth and continues to open its economy. Events in Venezuela are important to the U.S. because that country provides more than 10% of U.S. oil imports. Any interruption in the oil flow could turn very costly to U.S. consumers and the U.S. economy—but this is unlikely to happen any time soon. Venezuela’s leaders, no matter how anti-American their rhetoric, know the nation’s economy depends on petroleum exports to the U.S. Still, with its increasingly close ties to Iran and 6 the next U.S. President’s Latin American agenda atin America will not be a foreign policy priority for the next U.S. President. It will not be a central front in the war on terrorism. Aside from Colombia’s long-running conflict, Latin America is a region at peace, largely free of armed combat within or between countries. Nor is Latin America expected to offer the oversized economic opportunities of rapidly growing China and India. Illicit drugs and undocumented immigration are important issues, but they are old, contentious problems that have mostly divided the U.S. from the region. The challenge for the new Administration will be to find a L way to conduct a constructive and cooperative policy toward Latin America while the region remains a relatively low priority—and U.S. influence in the region is at a low ebb. Western Hemisphere policy has been largely derivative or residual. It is most often driven by a combination of Washington’s broader international agenda, powerful domestic interests, and the demands of national and local politics. Policy choices rarely respond to concrete U.S. interests in Latin America or to the needs of the region. The core elements of Latin American trade agreements, for example, emerge from the cross-cutting pressures of many domestic groups—agricultural producers, drug companies, environmental activists, labor unions and others. Because it engages such deep political passions, immigration policy has been managed almost exclusively as a domestic issue. U.S. decisionmakers largely ignore the effect of U.S. immigration laws on other countries or on their relations with Washington. Antinarcotics strategies are mostly driven by local and national law enforcement agencies in the U.S. Cuba policy, more than anything else, responds to the demands of Cuban-American politics. 71 6 G r e A t Nonetheless, the next President can make a difference—if he or she is prepared to exercise leadership and challenge the domestic political and economic interests that now shape the contours of Western Hemisphere policy. It has been done in the past. The Alliance for Progress (the 1961 economic development program launched by President John F. Kennedy after Fidel Castro took power in Cuba) and the 1977 Panama Canal treaties did not emerge from domestic political considerations and were not residual—nor did NAFTA, the first President Bush’s (1989–93) initiatives for debt relief and regional trade or President Bill Clinton’s 1995 financial rescue package for Mexico. They all addressed real problems in Latin America and served genuine U.S. interests in the region. What policies would best serve U.S. interests in Latin America? What would it take for the next U.S. President to restore this country’s influence and standing in Latin America—and rebuild cooperation with the region’s governments? Washington’s first task will be to demonstrate renewed respect for in- D e c i S i o n S  2 0 0 8 sought free-trade agreements or trade preferences from the U.S.—and why the lead item on the next President’s Latin American agenda should be the development of a new strategy for regional economic integration. The 34nation Free Trade Area of the Americas (FTAA), projected to be completed in 2005, has been largely discredited, and there is today no alternative plan, framework or clear objective for advancing economic cooperation in the hemisphere. The White House’s most difficult challenge will be to fashion a bipartisan approach to regional (and international) trade policy. For the U.S. to play a lead role in shaping a coherent economic strategy in the hemisphere, Democrats and Republicans in Congress will have to resolve their deep division over trade matters. Key congressional Democrats and the White House were able to find common ground on the contentious issue of fitting labor rights into trade pacts, and they should be able to make progress on other sticking points. They will especially need to agree on measures to compensate U.S. workers for the dislocations that expanding trade and technological change invariably produce. And they will have to renew First things first ternational rules and institutions. That has to be the starting point for repairing U.S. relations with Latin America. The U.S. cannot be seen as arrogant or highhanded in global or regional affairs. It cannot claim the right to invade other countries preemptively or take decisions unilaterally against a consensus of other nations. And the U.S. needs to play by the rules it wants others to follow. It cannot be a significant voice on human rights when it condones torture and denies prisoners fair trials. It cannot be a credible defender of democracy when it interferes in other nations’ elections. And Washington’s policies, while serving U.S. interests, have to be made more relevant to Latin America’s own needs—for faster and more stable growth, a sustained reduction in poverty and inequality, moderation of political and social tensions and progress against a seemingly endless wave of crime and violence. What Latin American nations mainly want and need most from Washington is greater access to U.S. markets, investment capital and new technologies. That is why the bulk of them have enhanced economic cooperation the hemisphere’s tangled trade arrangements ALthoUGh neGotiAtionS toward the Free Trade Area of the Americas (FTAA)—the most ambitious regional integration scheme ever launched in the Western Hemisphere—have stalled, a large number of free-trade and integration efforts continue to be pursued across the hemisphere. Geography, commercial interests and political considerations have been factors in every negotiation and agreement. But today, politics are taking a more prominent role than ever before, a clear reflection of the divisions and tensions in hemispheric relations. When FTAA talks broke down in 2004, the U.S. had established free-trade arrangements with three nations of the hemisphere—Mexico, Canada and Chile. Washington has since completed negotiations with nine other countries—El Salvador, Guatemala, Costa Rica, Honduras, Nicaragua, the Dominican Republic, Peru, Panama and Colombia (although the U.S. Congress may postpone ratification of the last two agreements for some time). Except for Nicaragua, these are all countries that basically share Washington’s economic policy preferences and consider themselves, in varying degrees, political allies of the U.S. Former U.S. Trade Representative and now World Bank President Robert Zoellick has called for the U.S. to bring all of these nations into a single free-trade area—which, he argues, would become the core of a future hemispheric arrangement. Some, however, have argued that this would be a sure way to further aggravate current interAmerican schisms and put any hemispheric accord even further out of reach. The three main Latin American trade arrangements have taken different paths. All five of the Central American Common Market countries (Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua) now have free-trade agreements (FTAs) in force with the U.S. It is expected that FTAs will encourage deeper integration among the countries as well as with the U.S. None of the countries of the Mercosur (or Southern Common Market)—Brazil, Argentina, Paraguay or Uruguay— have pursued FTAs with the U.S. From time to time, however, authorities in Uruguay have made clear their dissatisfaction with Mercosur and interest in free trade with the U.S.; they recently signed an investment framework with Washington. Mercosur has been weakened in recent years by political and economic policy differences among its members, and by its lack of enforceable rules and mechanisms for effective 72 L A t i n the White House’s expired authority to negotiate trade deals. Washington will have to systematically engage Brazil in the search for greater hemispheric economic cooperation. More than anything else, it was the failure of Brazil and the U.S. to reach an agreement that paralyzed the FTAA negotiations. No new hemisphere-wide trade or economic proposals can prosper without the support of both nations. Brazil is a crucial partner for the U.S. on other issues as well. Indeed, interAmerican relations today largely pivot on Brazil and the U.S. When these two countries find grounds for cooperation, almost everyone else will join in. When they cannot, the hemisphere usually remains divided. Good relations with Brazil are vital to Washington’s credibility in the region and to expand opportunities for both countries to pursue their interests. As a welcome side effect, they help to offset the influence of President Chávez. Washington and Brasília are not always natural partners. They have clashing positions on many important issues, but they often find ways to cooperate. A m e r i c A quire persistent attention from both Washington and Mexico. But Mexico, like Brazil, should also be regularly consulted on regional and world issues because it is also a country that matters internationally and has broad global interests. Over the longer term, the core challenge will be how to manage the continuing, irrevocable economic and demographic integration of the U.S. and Mexico, which is fiercely resisted by many in both countries. Although a long string of critical issues—energy, trade, security, drug trafficking and violent crime—buffet U.S.-Mexican relations, immigration is the vital center. This issue, more than any other, will determine the quality of U.S. bilateral ties with Mexico for many years to come. Washington’s approach to immigration is critical for many other countries of Latin America as well—and has a powerful impact on U.S. relations across the region. The rancorous debates last year about immigration reform and its decisive defeat in the Senate make it hard to imagine a constructive change in policy any time soon. Yet immigration will almost certainly be on the agenda of the next President. The question is whether it is possible to craft a policy package relations with Brazil In response to Washington’s urging, Brazil agreed to command UN peacekeeping operations in Haiti, and its recent agreement to cooperate on biofuel development has added a potentially far-reaching dimension to the countries’ bilateral relations (particularly if the U.S. lowers its sky-high tariff on Brazilian ethanol). The two nations ended up on opposite sides in the recent crucial World Trade Organization Doha Round negotiations (which have reached an impasse after failure to reach a compromise on reducing farm subsidies and lowering import tariffs on manufactured goods), however, and they disagree on how to respond to the challenge of Hugo Chávez. The next Administration will have to sustain a constructive relationship with Brazil to advance its agenda in the region (and beyond). That will require the U.S. to accept Brazil’s independent foreign policy and to accommodate the differences in perspective between the two countries. No country in the world has a more varied and extensive set of relations with the U.S. than Mexico. The routine, dayto-day elements of the relationship re- 6 mexico and immigration conflict resolution. The prospective entry of Venezuela, with its authoritarian politics, populist economics and disruptive style, is a source of additional uncertainty about the future of Mercosur. The Andean Community has been unsettled by Venezuela’s withdrawal, a decision provoked by Colombia and Peru’s completion of FTAs with the U.S. Bolivia and Ecuador, which can normally be counted on as close allies of Venezuela, have remained in the Andean group. Although they (and Colombia) have asked Venezuela to return—a step Chávez says he is considering—they have also suggested they may join the Mercosur. Led by Brazil, all 12 countries of South America have signed onto another regional integration project, the still largely undefined Unisur or South American Union. This would bring together the four current members of Mercosur and aspirant Venezuela, the four Andean Community participants, Chile (which belongs to neither group), and two countries on the South American mainland that are normally grouped with the Caribbean (Suriname and Guyana). It is hard to imagine that Unisur will emerge as a strong economic or political alliance—given the open antagonism among many of the participating countries and the general distrust that pervades relations in South America. The Venezuelan-led ALBA, the Bolivarian Alternative for Latin America, is Hugo Chávez’s most prominent effort (among several) to forge a broad anti-U.S. alliance that will eventually be able to exclude the U.S. from Latin America. ALBA is not a free-trade arrangement; its members—Venezuela, Cuba, Nicaragua and Bolivia—call it a People’s Trade Agreement and emphasize its commitment to social development and mutual support. Precisely because its aim is to exclude the U.S., ALBA is not an appealing alternative for most Latin American countries. Ironically, aside from Cuba, all of its members are closely linked economically to the U.S. Nicaragua enjoys a free-trade pact with the U.S., Bolivia enjoys U.S. trade preferences, and Venezuela sells most of its oil to the U.S. U.S. bilateral agreements with a dozen hemispheric partners currently dominate the trade policy picture in Latin America. The alternative approaches—the Andean Community, Mercosur, Unisur, and ALBA—are, for a variety of reasons, just not working very well. But, regardless of how successful these bilateral and subregional agreements are, none of them can offer the economic gains that would come with a comprehensive, hemispheric accord that brings together every economy in the Americas. A European-style trade arrangement is what would most benefit the nations of the Western Hemisphere. Too bad hemispheric negotiations remain stymied. 73 6 ap/wide world photos G r e A t D e c i S i o n S  2 0 0 8 gions, Washington could turn the war against drugs into a war against poverty as well. Washington can demonstrate its concern for improving the living standards of Latin America’s poor by making sure that all of its programs and policies in the region have robust social dimensions. A Guambian Indian mother and child in a small opium poppy field southwest of Bogata, Colombia. The tribe’s major concern is to prevent government fumigation of poppy fields from ruining crops they depend on to survive. that, on the one hand, can gain U.S. public support and congressional approval and, on the other, will be viewed as fair-minded in Latin America. Mexico and other countries will certainly not be satisfied with legislation that does not include a reasonably-sized temporaryworkers program and a path to legal status (and eventually citizenship) for the 12 million immigrants who have entered the U.S. unlawfully. Passage of new U.S. laws that are seen as unduly harsh to illegal immigrants will offend most of Latin America and make any short-term U.S.-Latin American cooperation on migration virtually impossible. It will also set back relations on other fronts. The social agenda—alleviating poverty, reducing income disparities, ending racial and ethnic discrimination, and fixing broken public services—is Latin America’s most critical challenge. And it provides the next Administration with its best opportunity to demonstrate renewed U.S. relevance to the region and to generate considerable goodwill. Additional financial commitments will be required, but what Washington mostly has to do is reconfigure current U.S. programs and policies so they are more directly rel- evant to Latin America’s social needs. U.S.-promoted free-trade agreements, for instance, are spurring exports and investment, helping to accelerate growth and creating new jobs—all essential for addressing poverty and inequality. But complementary policies are needed to assure that the benefits of trade reach excluded groups and compensate losers. The U.S. should be concerned about the distribution of gains from the trade agreements it negotiates. Similarly, by shifting antidrug funds from crop eradication to development and job creation in coca-growing re- There are several other policy changes that would help to align U.S. policies more closely with the interests and objectives of Latin America, while advancing U.S. interests:  The next President of the U.S. will assume office a half century after Fidel Castro took power in Cuba. Virtually every Latin American nation would warmly welcome a decision by Washington to dismantle the web of restrictions it now imposes on the island and to join with the other governments of the Americas to work toward a successful reintegration of Cuba into hemispheric affairs.  It is also time that the U.S. works with Latin American partners to define a new multilateral strategy to combat drugs and associated criminal activity. The current U.S. approach is inflexible and unresponsive to specific national circumstances, and it is too narrowly focused on crop eradication and drug interdiction. Washington could also do more to respond to Latin Ameri- other desirable initiatives most critical challenge www.caglecartoons.com/Keefe 74 L A t i n can calls for the U.S. to cut its drug demand, to stem the flow of guns that fuel violence in the region, and to invest more in alternative development programs. The Bush Administration’s recently proposed anticrime initiative with Mexico contains many of the elements of a new and potentially productive approach.  Whatever problems Hugo Chávez poses for the U.S. will be sharply diminished if Washington is broadly engaged in the region and its policies are generally aligned with the interests of Latin America. But the U.S. also needs to implement a consistent policy toward Chávez, one aimed at minimizing his disruption of hemispheric affairs and supporting greater democracy in Venezuela (but only through constitutional means). It should not expect other Latin American governments to unite behind anti-Chávez initiatives.  Washington should do all it can to remain helpfully involved with countries like Bolivia and Ecuador that have allied themselves with Venezuela. Efforts to isolate or punish these countries will be counterproductive, pushing them closer to Chávez and alienating other Latin American nations. The new President cannot be expected to advance on all these policy fronts simultaneously, but he or she does have to set the right tone and direction, and make some headway on key issues of style and substance. Even a few sentences about Latin America in the Inaugural Address would be a helpful start. The President might suggest that the U.S. is ready to join with the nations of Latin America in a common effort to confront their problems—and that Washington needs their advice and help in dealing with hemispheric and international challenges. He might go on to highlight the importance of rebuilding mutual trust and respect in inter-American relations and to emphasize how important Latin America’s economic and political success is to U.S. interests. The President will have the opportunity to reinforce that message later in 2009, when the Western Hemisphere heads of state gather in Trinidad and To- A m e r i c A 6 doumont/cartoonists&writers syndicate/cartoonweB.com bago for the fifth Summit of the Americas since 1994. The other 33 leaders will be taking the measure of the U.S. President and listening carefully to the proposals he or she advances for addressing inter-American issues. With every country in the hemisphere (aside from Cuba) participating, the lead-up to the summit will be the right place to start working to reenergize regional cooperation and rebuild confidence in the hemisphere’s multilateral institutions. The new Administration will find it especially difficult to advance on the two most critical challenges—reforming U.S. immigration laws and developing new strategies for hemispheric trade and economic cooperation. Policy change on either of these issues will be resisted by potent domestic constituencies and will run headlong into the apprehensions of the American public about both migration and trade. Still, even modest progress on these issues will help to improve attitudes in Latin America, and set the stage for additional changes. Washington should be able to advance further on other issues—like assisting Latin America in grappling with its social agenda and confronting its crime surge, or shifting the emphasis of U.S. antidrug strategies. Cuba policy is certainly ripe for revision. If policy changes cannot be made, Washington will have to lower its expectations in Latin America and be sat- isfied with a more limited and less ambitious agenda for the hemisphere. U.S. influence on political and economic developments in the region will continue to erode—along with the willingness of Latin American governments to accept Washington’s leadership or support its policies. Latin America’s own agenda will diverge more and more from that of Washington and opportunities for building an economically integrated hemisphere or for establishing broad political cooperation will fade. Most Latin Americans are looking forward to a new Administration in Washington. They want relations with the U.S. to improve. But they are today wary and distrustful of Washington. They will need to see the new President moderate U.S. policy in the Middle East and globally. In the region, they will want to see changes in attitude and strategy that demonstrate Washington is ready to resume a sustained and respectful partnership with Latin America—that it is willing to break old habits and patterns, listen carefully to advice from the region, and turn to multilateral and cooperative approaches. The new President will find that that Latin Americans are ready to work with a U.S. Administration that is  willing to work with them. oPinion BALLotS After PAGe 64 75 L A t i n A m e r i c A D i S c U S S i o n 1. The U.S. should repair its relations with Latin America. Pro: Countries in Latin America are neighbors of the U.S., and good relations with them are crucial to dealing with cross-border issues such as illegal immigration, drug trafficking and international terrorism. In addition, some 60% of all U.S. trade is with Latin America, and several of the countries are important energy sources for the U.S. It is in U.S. interests—for both economic and security reasons—to cultivate close ties with these countries. con: Latin America may be close geographically to the U.S., P oLicy oPtionS 1. Why does dissatisfaction with U.S. policy toward Latin America run so high in Washington? Why have Latin Americans become so alienated from the U.S.? 2. According to the author, repairing U.S. relations with Latin America will be easier to accomplish than with other parts of the world. What are his arguments? Do you agree with them? 3. Does Latin America matter much to the U.S.? Why, or why not? Is this hemisphere likely to be a priority for U.S. policy under a new Administration? What should be the primary goals of the U.S. in Latin America? 4. Discuss the strengths and weaknesses of Latin American economies. What gains have been made in recent years? What are the unresolved problems? Is economic growth benefiting the poor? What has to be done to address poverty and inequality in the region? Can the U.S. be helpful? How? 5. What are some other key challenges confronting Latin American governments? Discuss in each case how the U.S. might be able to assist. 6. What has been Chávez’s role in the hemisphere? Has Venezuela become a threat to other countries in Latin America? Does it represent a serious challenge to U.S. policy and interests in the region? Does it present a viable alternative to the “Washington Consensus” free-market approach to development in Latin America? 7. What U.S. policy changes would be most welcome by Latin American governments? Would these changes serve U.S. interests in the region? What are the major obstacles that the next Administration will face in pursuing these changes? Q U e S t i o n S but there are issues of much greater concern to Washington, for example in the Middle East. And in terms of trade, Canada and China are larger trading partners than Latin America. In addition, free-trade pacts with Latin American countries can have a negative impact on employment in the U.S., hurting U.S. industry and workers as jobs and manufacturing move south of the border. 2. The next U.S. President should make a serious effort to help strengthen the lagging economy of Mexico—the third-largest trade partner of the U.S. and a true neighbor in need. Pro: Some 60% of all trade with Latin America is with Mexico; more than 40 million U.S. residents are from Mexico; the majority of undocumented immigrants come from Mexico; more than half of all illicit drugs cross the Mexican border. U.S. interests would certainly be best served by helping shore up an economically prospering, stable Mexico. con: The U.S. doesn’t have to bother much with Mexico as it is not a military (or any other kind of) threat and can just continue to provide cheap labor for U.S. employers (in both the U.S. and Mexico), a market for our goods and a hefty supply of illegal drugs. Birdsall, Nancy, and Hakim, Peter, “Poverty and Inequality in Latin America: How the U.S. Can Really Help.” CGD Brief, Oct. 2007. Authors suggest the U.S. could do a lot more to help Latin America advance its social agenda if Washington were ready to do more to assist its neighbors address problems of poverty and inequality. Available from Inter-American Dialogue. Castañeda, Jorge G., “Latin America’s Left Turn.” Foreign Affairs, May/June 2006, pp. 28–43. The former foreign minister of Mexico emphasizes two “lefts” exist in Latin America—one closed-minded and populist and the other pragmatic and modern—and that the U.S. must strengthen the hand of the latter. R eADinGS & reSoUrceS Hakim, Peter, “Is Washington Losing Latin America?” Foreign Affairs, Jan./Feb. 2006, pp. 39–53. An extended discussion of how and why U.S.-Latin American relations have deteriorated so badly in recent years and what is making it so difficult for the U.S. to develop policies that can restore cooperation in hemispheric affairs. ________, “U.S.-Latin American relations post-9/11.” Great Decisions 2004, pp. 75–86 (paper). The author provides a concise overview of U.S. policy toward Latin America and explores why hemispheric relations seem strained. ________, A cooperacao entre Brasil e EUA, Estado de Sao Paulo, April 7, 2007, S.P., Brazil (English translation available). A brief analysis of why Brazil is so important to U.S. interests in Latin America and how the U.S. and Brazil, despite their many disagreements, have managed to develop constructive relations. Shifter, Michael, “In Search of Hugo Chávez.” Foreign Affairs, May/June 2006. pp. 45–59. An analysis of constitutional changes that Chávez seeks to impose in order to further concentrate power and advance his goals of “21st-century socialism” in Venezuela and the rest of Latin America. Also, available online, the author’s Nov. 2007 update titled “Slouching Toward Authoritarianism.” “Latin America.” Current History, Feb. 2007. Entire issue. This annual survey of the region, containing articles by respected academics and observers, highlights the most important challenges facing the nations of the Western Hemisphere. “Latin America and the United States: Commerce between friends and foes.” The Economist (London), Oct. 6, 2007. pp. 39–40. A succinct overview of pan-American trade diplomacy as U.S. Congress weighed a bilateral trade pact with Peru. to LeArn more ABoUt thiS toPic AnD to AcceSS weB LinkS to reSoUrceS Go to www.greatdecisions.org/latinamerica 76