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The Hemispheric Divide

March 2, 2009 Regions: Americas Tags: DiplomacyKosovoCommunismWar In Afghanistan

The Hemispheric Divide

Mini Teaser: The United States is no longer the master of its hemispheric domain. Gone are the days when Washington could expect Latin America to bow down to its interests. After years of failed foreign and domestic policies, the United States will have to she

by Author(s): Julia E. Sweig

Trade, too, has become a domestic issue, all the more so in times of recession. In addition to the labor and human-rights concerns around which trade unions have mobilized, hefty government subsidies and tariffs benefiting American food growers, corn-based ethanol producers and others belie the notion that "free trade" automatically levels the competitive playing field. Today, it remains very tough for farm and alternative-energy products from Latin America to compete in the U.S. market, even as many of the former enter the United States tariff-free under a temporary renewable trade-preference regime tied to counternarcotics cooperation. Between organized labor, the farm lobby and the energy industry, a socially and environmentally sustainable liberalization of trade and energy cooperation will remain more the province of domestic political actors than Washington's foreign-policy architects.

 

HOWEVER, FOR all the United States' foreign-policy missteps and domestic political constraints, and for all of the rhetorical and real dissonance in the regional dialogue, North and South remain, simply put, stuck with one another. And so new policies, new alliances and better accommodations will have to be crafted in an increasingly diverse neighborhood where both problems and positive outcomes (by dint of sheer proximity) necessarily matter not only for U.S. interests, but for all of us.

Perhaps nothing demonstrates the continued interdependence between the United States and Latin America as clearly as the economy. Although the relative weight and influence of the United States in the Americas (whether vis-à-vis regional actors or other foreign powers) may be less than in recent memory, commercial and human ties between the two regions are paradoxically wider and deeper in scale than ever before. To cite one example, Latin America's total trade volume with China is certainly growing much more rapidly than comparable trade ties to the United States, reaching all-time highs of $100 billion in 2007. Yet the total volume of trade between the United States and Latin America continues to grow, albeit more slowly, and dwarfs the Chinese presence at a whopping $560 billion in 2007. Admittedly, more than half of this volume is exchanged with Mexico. Even so, the remainder doubles Chinese trade with the entire region.

Latin America likewise remains central to U.S. energy security, and the American consumer is a major source of revenue for the region. Today, it is the Western Hemisphere (including Canada), not the Middle East, that provides the largest percentage of U.S. oil imports. Moreover, other than Brazil's internal market in biofuels and more traditional fuel sources, the United States is also the largest consumer of Latin American energy products. Such linkages testify to the continued connections that bind the United States to Latin America. Not only do they remind us that what happens in Washington and New York still does matter a great deal for the region, but they highlight the critical importance of the United States seeking to restore an active, thriving U.S.-Latin America relationship in the future. There is no escaping these mutual dependencies-in sickness and in health.

Though many in Latin America were convinced for most of 2008 that the region would remain somewhat insulated from the burgeoning economic crisis in the United States, they were incorrect. The conventional wisdom held that the region was in a better position to confront economic turmoil than in the past. Between 2004 and 2008, Latin America had registered its best economic performance in nearly half a century, fueled primarily by a global drive for natural resources, as well as agricultural and industrial commodities (particularly from China). Trade and investment ties had been diversified. Regionally, international reserves had tripled since 2002, and foreign borrowing as a percentage of GDP stood at 22 percent, down from 44.1 percent seven years ago. Countries such as Chile, Brazil, Mexico, Colombia and Peru had even earned investment-grade ratings. With few exceptions (principally, Argentina, Bolivia and Venezuela), governments across the political spectrum had pursued sound financial strategies (ironically often preached by the United States in the past) and been able to build infrastructure, provide education and health care, and make a dent in poverty and inequality numbers. Moreover, Latin American banks were not nearly as compromised by U.S.-based mortgage-backed assets gone sour.

Yet whatever sense of relative security existed has long since disappeared, as strong spillover effects from struggling financial markets in the West have proven inescapable. Correcting those rosy earlier estimates, the UN Economic Commission for Latin America and the Caribbean recently projected that GDP growth regionwide will slow from 4.6 percent in 2008 to a dismal 1.9 percent in 2009. Particularly vulnerable are those economies that remain most closely linked to the United States, such as Mexico's, which faces a quadruple whammy of declining oil revenues, declining manufacturing exports (typically directed toward the United States), a growing trade deficit (largely the result of the first two) and, for the first time in many years, declining remittance flows from the millions of Mexicans living in the United States. But even those countries that epitomized Latin America's potential "decoupling" from the U.S. market have been hit hard. In Brazil, for example, declining commodity prices and ebbing external demand have led to quickly falling exports of primary products and manufactured goods, leading the country's once-robust trade surplus to contract significantly. Capital, stock and financial markets too have weakened, as they have across the hemisphere. According to one estimate, the region lost at least 40 percent of its financial wealth in 2008. As a result, key industrial- and infrastructure-expansion projects have been put on hold. Currencies have depreciated. Declines in overall foreign direct investment are forecasted for 2009, and some economists estimate that over $250 billion may be required to help the region service existing debts and support domestic budgets. And while the inflationary pressures of last year have decidedly cooled in most places, stable prices are hardly sufficient consolation as job losses mount and inventories of unsold goods pile up.

Further, these ties that bind Latin America and the United States do not end with a basic calculus of GDPs. And neither do the costs (and benefits) to both worlds. Mexicans, Central Americans, Venezuelans, Cubans, Colombians, Dominicans and Brazilians have established communities now in every state of the union over successive generations. As a result, Latinos today account for 15 percent of the U.S. population (surpassing African-Americans as the largest ethnic minority), nearly 50 percent of U.S. population growth and 13 percent of the U.S. labor force. Such a sustained cultural and demographic transformation is in no way smooth or easy, but the United States has absorbed millions of people from lands far more foreign than the Americas and emerged healthier and stronger in every way. Still, what distinguishes Latin American migrants from those of Europe or Asia before them is the ease of staying connected to families and cultures left behind, whether through remittances (often critically important to Latin American economies), family visits or the ubiquitous Spanish-language media.

Integration also has its dark side. Porous borders, the dispersion of national communities across states and the connectivity offered by globalization can facilitate small- and large-scale violent transnational criminal networks, whether between the United States and Latin America or within the region. Mexico now bears the brunt of U.S. drug habits and lax gun-control laws, even as it has become, though at more modest levels, a consuming country itself. Meanwhile, Colombia and Bolivia provide much of the cocaine trafficked and consumed in countries such as Brazil and Argentina, fueling organized crime and severe urban insecurity. In Central America, cyclical human flows and strong commercial ties with the United States combine with weak state institutions to fuel the region's vulnerability to transnational gangs.

These inevitable human, cultural and economic links have not yet translated into regional cooperation to mitigate their negative effects. The United States has struggled to talk to its neighbors about shared problems without reigniting old suspicions of hegemonic intentions. Moreover, the unilatateralism and bellicosity of recent American foreign policy globally and the special resonance that torture, illegal detentions and military intervention have with Latin Americans further diminishes the United States' moral authority. This inhibits Washington's ability to offer prescriptions to Latin Americans on the merits of their economic or social order.

 

THE UNITED States can no longer expect the region to automatically genuflect to American interests in this new state of nature, either in bilateral or multilateral settings, even though most Latin Americans see the merits of respectful ties and commerce with the United States. Their declaration of independence will translate into challenges to American influence and ideas, not only from the most directly antagonistic (at least for now Venezuela and Bolivia) but also at times from those countries that seek a more strategic form of cooperation with Washington, such as Brazil and Mexico. In this environment, can the United States forge an agenda with the region that delivers results? Indeed, American security priorities in the Middle East, Iraq, Iran, Afghanistan and Pakistan will eat up the lion's share of the Obama administration's foreign-policy energies. So, to run through the usual laundry list of policies for assuring the rule of law, open markets, democratic governance, human rights, freer and fairer trade, less drug production, judicial independence, police reform and a military firmly in its barracks would at best only reinforce prevailing skepticism of U.S. leadership, inflate expectations and set the United States up for failure. Instead, President Obama and Secretary Clinton should focus their leadership and resources on only five pressing issues in the hemisphere, embracing the mantra of "less is more."

Essay Types: Essay