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Fractured Continent: The Turmoil and Promise of Latin America

During President Obama’s years in office, the United States has pivoted toward Asia, chosen to lead from behind in the Islamic Middle East and Africa, and proposed some new trade and investment initiatives with Europe. And it has virtually ignored Latin America. US relations with its neighbors in the Western hemisphere have for the most part been by-products of its domestic policies on international drug trafficking and illegal immigration—a very weak and unimaginative agenda for a region that is walking a tightrope of conflict between populist authoritarianism and genuine democracy.

Some realpolitik analysts will say Latin America is secondary because it poses no security threat to the United States. The region is committed by treaty to nonproliferation and none of its countries are producing nuclear weapons. Latin America is not a haven and potential training ground for radical Islamic terrorists. There is no cultural or political base of support for an al-Qaeda presence in the region, and national intelligence services are alert to any foreign extremists. So, if there is no immediate security threat, the thinking seems to go, why worry?

But what may seem to be common sense in Washington is a shortsighted, reductionist view of what is important in Western-hemisphere relations. It fails to take into account the hard-won political and economic advances in consolidating democratic governance achieved in the region with significant US support. The two most important developments, both begun during the Clinton administration but continued under President Bush, were the US military cooperation with Colombia that helped to contain the vicious FARC guerrilla insurgency (which has been supported by Cuba, Venezuela, and Ecuador), and the billions of dollars provided to Brazil through the International Monetary Fund, which gave financial support to the progressive government of President Luiz Inácio Lula da Silva. These are very tangible examples of how the US should engage in Latin America when political action is necessary to further a shared interest in democratic government and social development in the region. Unfortunately they are also examples that seem to exist in a vacuum.

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To speak of Latin America collectively can be seriously misleading. Geographically, the term refers to twenty-four countries that lie south of the United States, from Mexico and the Caribbean island nations to the Andean range facing the Pacific Ocean down to the Antarctic extremities of Argentina and Chile, with Brazil, the Amazonian giant, anchoring the region on the south Atlantic. This diversity produces enormous differences in culture, economic resources, climate, and ecology for the nearly six hundred million people who live in this geographic jigsaw. One of the few things that can be said with certainty is that Latin America’s national societies have never achieved regional political unity or an integrated vision of what the region wants. Today, the region is fractured ideologically by a fault line that runs the length of the region from Havana to Buenos Aires.

On one side of this divide is a group of eight countries calling themselves ALBA (Bolivarian Alliance of the Countries of Our America), a group created in 2005 by Fidel Castro and the late Hugo Chávez, whose allies include Ecuador, Bolivia, and Nicaragua. The group is bankrolled by Venezuelan petrodollars that have attracted several Caribbean island members, such as Antigua and St. Kitts. What ALBA pursues is never very clear but it agrees at minimum with a worldview premised on resistance to the US in all areas. It also declares itself to be in the vanguard of implanting twenty-first-century socialism based on the example of Cuba’s authoritarian one-party system. ALBA has aligned diplomatically with Iran and North Korea and backed non-intervention in Syria’s civil war. Argentina is not an ALBA member, but it frequently cozies up to the radical Bolivarians when it seeks financial handouts from oil-rich Venezuela. Ecuador and Bolivia are also doing nicely with the foreign income earned by their oil industries that provide natural gas exports and Chinese oil purchases. Without these petrodollars, ALBA would not have much of a presence, but as it is, the group can divide the region whenever cooperation is needed to negotiate an international agreement, particularly if the US is involved. It was the ALBA vision that frustrated negotiations for a Free Trade Area of the Americas, the principal proposal for hemispheric cooperation under President George W. Bush.

On the other side of the line is a group of Latin America’s most successful free-enterprise market economies—Mexico, Colombia, Peru, and Chile—where private capitalism goes hand in hand with political pluralism, free elections, and an independent media. These countries, all facing the Pacific, have recently formed a free-trade alliance that promises to become a major bridge for trade and investment between Latin America and Southeast Asia. The US has close ties to all four countries through bilateral free-trade agreements and political affinities. These Pacific Alliance countries are growing faster than the rest of Latin America, with a total GNP equal to Brazil’s, the largest national economy in the region ($2.5 trillion in 2012). As this group consolidates, it will exercise an important moderating influence on political radicalism in the region. It might even attract some ALBA countries, like Ecuador and Bolivia, which form part of the Pacific rim of South America and could benefit from collective negotiations with Pacific and Asian countries.

Another older grouping is Mercosur, which began in 1992 with the ambitious aim of creating a customs union between Brazil and Argentina to serve as the basis for an integrated regional economy including Uruguay, Paraguay, and eventually Chile and Bolivia. This “common market of the south” has fallen far short of its potential because of the chronic inability of the major partners to implement the common external tariff required by a customs union. Little progress has been made in developing joint ventures and a regional infrastructure for energy and transportation. Chile has remained an observer and rejects the protectionist tariffs designed to attract foreign investments. Argentina’s chaotic economic management, based on nationalist populism, has sidetracked attempts by Mercosur to negotiate regional trade agreements with the European community. On the other hand, Venezuela was accepted as a Mercosur member in 2012 and became a major customer for imported food products, like sugar, beef, and wheat from Brazil and Argentina. As a result, Venezuela, the ALBA radical, got its foot in the door of Latin America’s largest regional trade group, which set aside a treaty requirement that members be legitimate constitutional democracies to curry favor with Hugo Chávez. This stimulates trade and favors Brazilian industrial exporters who sell cars and trucks to Venezuela, but it does nothing to pull Venezuela back from its authoritarian politics.

 

The dream of regional economic integration has never been realized, in part, because many influential Latin American thinkers with Iberian and Roman Catholic roots were more drawn to French than English civilization and viewed the United States as a menace to their cultural identity. Combined with Marxist tirades against American “imperialism¨ masquerading as capitalism in Latin America, these ideological currents inspired the ALBA vision, which has the fixed idea of excluding the United States from what was once known as Uncle Sam’s backyard. “The Monroe Doctrine was imposed on us for two hundred years, now that is over,” declared Hugo Chávez in 2007 when he christened an organization called Commonwealth of Latin American and Caribbean states (CELAC), excluding the US and Canada, but embracing Cuba. Piling one regional organization on top of another called UNASUR (Union of South American Nations), a meeting between the heads of state of CELAC and the European community drew sixty delegations in January 2013 to Santiago, Chile, where rhetoric on cooperation between the North-South regions flowed along with the red wine, but little of substance was accomplished because no fixed agenda had been prepared. The European Community and Mercosur have been negotiating fruitlessly for ten years on a free-trade agreement, so Angela Merkel of Germany showed up but had nothing to offer and David Cameron of the United Kingdom didn’t even show up. The most noticed foreign figure was President Raúl Castro of Cuba, which was chosen to stage the next CELAC-EU summit, although Cuba’s role in intra-regional trade is minuscule.

Within weeks of the CELAC-EU conclave, the Latin American participants received a reality check. President Obama, in his State of the Union speech, declared that the US and the European Community—the world’s two biggest economic units—had agreed to open bilateral negotiations on a free-trade area that would cover fifty percent of world trade by 2015. This was seen immediately as a threat to Latin America’s international trade relations because a US-EU deal would involve concessions and non-tariff arrangements unavailable to countries outside the new trade area, which is more important for Latin America than China. The perspective of Brazil, which represents forty percent of Latin American trade, was critically summed up by Sergio Amaral, a career diplomat who was minister of economic development, industry, and commerce under President Fernando Henrique Cardoso:

Where does Brazil come out in the global expansion of regional preferences? We do not participate in any of the blocs in formation. Our efforts are concentrated in Latin America and they are not obtaining advances. Trade between Latin American countries represents only eighteen percent of the total trade of the region. South America is divided by three distinct visions of integration: the Free Trade Area of the Americas (ALCA), the Bolivarian Alliance for the Americas (ALBA), and the Common Market of the South (Mercosul). Mercosul is paralyzed institutionally and retreats in economic terms, representing today only twelve percent of the trade in the sub-region after having reached seventeen percent.

The staggering economic potential of Latin America, mitigated by the complex realities of its politics, contains an action agenda as well as a wake-up call for the US. American policy needs to be premised on support for regional economic integration pacts based on free-market principles without necessarily insisting that Washington participate in the negotiations. The Free Trade Area of the Americas can’t be revived while ALBA persists in its anti-American vision, but new arrangements, such as the Alliance of the Pacific, provide opportunities for economic cooperation that could lead to freer trade, direct investments, and capital market development. It follows that the US should give support to Latin American integration that is the opposite of ALBA’s rejectionism.

A decline of ALBA’s influence can be expected with the demise of Hugo Chávez as the Venezuelan strongman and the coming of “biological succession” in the Cuban leadership as the Castro brothers face mortality. At the same time, a series of elections this year and next, in the fluid conditions of democracy now prevailing in Latin America, mean some countries, particularly Argentina, may move politically away from ALBA, while others, such as Chile and Colombia, are facing “populist” challenges that could favor the organization, at least temporarily. The Obama administration needs to speak with a very clear voice on the democratic values it holds to be essential for the Western hemisphere if it is to set hemispheric benchmarks in political freedom and human rights. Where necessary, as in Paraguay and Honduras, the US has to stand up against ALBA’s aggressive hostility against legitimate opposition to its designs.

Another premise that should guide US policy is that Latin America has a critical role to play in feeding the world as the global population grows toward a predicted nine billion by 2050. The “southern cone” of South America, where farmlands extend from Argentina, Uruguay, and Paraguay to the central plateaus of western Brazil and eastern Bolivia, is now producing more soybeans and grass-fed cattle than the United States. These granaries and pastures are feeding consumers in China, India, Russia, Western Europe, and the Middle East. This expansion has taken place because South American farmers and ranchers have become very advanced technologically, particularly in mastering the challenges of tropical agriculture. Their food output has been accompanied by a growing production of bioenergy from sugarcane and oil seeds that provide ethanol and diesel fuel. This recent development places the onetime backyard of the Americas in a prominent global role. No serious discussion of global food security and alternative energy sources can any longer take place without the engagement of South America’s big producers.

Alysson Paulinelli, Brazil’s former minister of agriculture and sponsor of EMBRAPA, the Brazilian research organization that pioneered the scientific studies that revolutionized tropical agriculture, has prepared a study that notes: “Between new areas and increased productivity the world needs to add twenty-five million hectares equivalent of corn producing seven tons per hectare and ten million more hectares of soybeans at 3.5 tons per hectares. For rice and wheat we will need twenty million hectares more.”

Paulinelli concludes that the principal areas for such an expansion are in South America and Africa, where underused lands are awaiting the managerial inputs, transportation infrastructure, and scientific investments to raise productivity.

The US Department of Agriculture agrees that Brazil and Argentina are going to dominate global soybean exports by 2020. China will continue to be the primary importer of soybeans, and sees South America as its main supplier. These global trade flows involve considerable commercial competition, but all parties appear to recognize that global food security requires cooperation between producers in responding to demand, particularly when droughts and other climate irregularities reduce production. It is a challenge that offers opportunities for the US and South American producers to work more closely on cooperation for food security through increased global production, particularly in Africa. The main advantage of tropical farming is the availability of abundant water in areas without a winter freeze, where two crops can be harvested each year. But benign rainfall cycles require protection of forests in conservation units that will preserve soil against erosion and favor the water cycle through evapotranspiration. This puts ecological management of tropical forests high on the list of areas for international cooperation. Friends of the US in Latin America believe that it should do much more to develop and support effective forms of management of land, water, and forests as South American countries increase their own attention to climate issues.

Latin America has long criticized the United States for taking Latin America for granted and assigning secondary importance to the region in its global relations. This myth grew out of a dependent mentality in Latin America that is now being replaced by a more self-assertive view that reflects Latin America’s increasing economic strength and diversified international trade. As the Obama administration continues to hit reset buttons in its relations with countries around the world, it should think about reconceiving the area south of its border not merely as a source of annoying problems but as a land of considerable promise.

Juan de Onis is a former foreign correspondent for the New York Times and Los Angeles Times. He is a New Yorker who now lives in Brazil. His website is Brazil Value Added.

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