From Opportunity to Disruption: What Is Next for Latin America?

From Opportunity to Disruption: What Is Next for Latin America?

The Western Hemisphere has emerged at the forefront of the accelerating global competition between governance systems, and Latin America’s future direction is now open for discussion in a way not seen since the last inflection point toward the end of the Cold War.

The Northern Triangle of Central America—composed of El Salvador, Guatemala, and Honduras—is a miasma of corruption, insecurity, drug trafficking, and migration surges. Hondurans just elected as their new president the leftist wife of a deposed president who was close to Castro and Chavez, replacing the outgoing president who is alleged to be involved with drug trafficking. El Salvador’s duly elected president is exhibiting authoritarian tendencies, now seeking to “amend” the constitution in a manner plainly favorable to his personal interests. He is a social media personality, using the medium effectively to rally the people to end-around democratic institutions. Guatemala continues to face challenges with deeply rooted corruption, as indeed the others do, too. On her first trip to the region, U.S. vice president Kamala Harris met only with Guatemalan leader Alejandro Giammattei, judging the other two to be politically toxic.

Even the dictatorial Left faces unrest. Cuba, headed by an uncharismatic non-Castro, is responding with violence and intimidation to the loudest, most widespread protests since the 1959 revolution, touched off on July 11 by a population sick and tired of being sick and tired. Chavismo has turned Venezuela, once Latin America’s wealthiest nation, into an economic basket case, spawning the hemisphere’s worst humanitarian crisis in modern history. As the Maduro regime systematically loots the nation, millions of Venezuelans have fled to neighboring countries with limited capacity to absorb them. Hunger stalks those who remain despite the world’s largest proven oil reserves. Nicaragua’s Daniel Ortega jailed every viable presidential candidate and other influencers to guarantee his own November 7, 2021 “re-election” to a fourth term while cementing his wife as vice president and the regime’s animating figure. A generation after the contras, the region has proven unable or unwilling to arrest Nicaragua’s slide. And on and on.

It was not supposed to be like this. In 2011, the Inter-American Development Bank issued a manuscript by its then-president, Luis Alberto Moreno, entitled, “The Decade of Latin America and the Caribbean: A Real Opportunity.” It reflected the optimism, even triumphalism, of so many observers just a few short years after the region had weathered the worst effects of the global financial crisis. A roll call of leaders of the time, from Venezuela’s Hugo Chavez to Argentina’s Cristina Fernandez de Kirchner, Bolivia’s Evo Morales, Brazil’s Luiz Inacio Lula da Silva, and others, conjures now-faded images of a new regional consensus to promote state-led economic growth and redistribution, promote concern for the downtrodden as a means to solidify political support, and intentional decoupling from the United States and equally intentional diversification toward China (an Anti-Washington Consensus, as it were). It was an alluring vision for many voters who repeatedly returned populists to office. It was also based on the false hope that prices for Latin America’s primary goods would remain high forever and that easy money would continue to flow, rather than the reality that commodities markets are cyclical or that populist leaders would become identified with breathtaking corruption. One pundit wrote a blurb for the Moreno manuscript averring that, “Going forward, it will be difficult to discuss the future of the region without making reference to this book.” Indeed, but maybe not for the anticipated reasons.

TEN YEARS later, we have the returns. As commodities markets turned down, economies that had increasingly become one-dimensional were exposed as lacking the ability to adjust to changing market conditions. Despite loud warnings about significant vulnerabilities to downturn, the region threw itself the mother of all parties, with populist leaders bolstering their own fortunes, both political and financial, during the boom years. But the party eventually faded and the bill came due, and voters began to ask where all the money went. Corruption became a rallying point and anti-corruption outsiders were subsequently elected, including Brazil’s Jair Bolsonaro, Mexico’s Obrador, El Salvador’s Nayib Bukele, and others. Even Bolivia’s long-time ruler, Evo Morales, was tossed out of office, having been exposed attempting to steal elections that he should not have even been running in the first place. Angry voters are motivated voters. Nicolas Maduro escaped a similar fate, despite the fabulous corruption of his regime. He manipulated the 2018 Venezuelan elections so grotesquely that the international community refused to accept the result, recognizing Juan Guaido as interim president when Maduro’s previous term expired in January 2019. Of course, that has made little difference to Maduro, who refuses to depart, continuing on with the destruction of Venezuela's economy, political system, social fabric, and vast swathes of the Amazonian environment seeking ill-gotten gain.

Popular pressure for change had already built up across the region even prior to the pandemic. But Covid-19 has changed the game. Hope is evaporating and democratic challenges are accelerating in the face of the inability to deliver improved results. Institutions and entire governing classes have been delegitimized. Indeed, protesters across the region haven’t been demanding improvements or greater efficiencies for the system, but rather to change altogether a system that is broadly perceived to be stacked against their interests in favor of the politically connected and economically secure.

The region lacks leadership, direction, and self-confidence. People are willing to question just about everything and take larger risks, on the theory that what has already been attempted has not worked so why not try something totally different?

IT’S A scenario tailor-made for China, already well-established economically across the region. And now, during the pandemic, Beijing is looking to solidify its political position and grow its strategic influence. The strategy is simple: provide what Latin America needs in the current moment, including vaccines and promises of investment and financial support for ailing economies. And in so doing, build the argument that China’s system is at least equal to the West because it delivers better results without the chaos. Moving Latin America toward equal acceptance of the Chinese and Western systems would be a significant strategic victory for Beijing.

China is in full regional hot pursuit, with a bundle of money to dispense, few demands regarding how nations conduct their own affairs, and a compelling narrative of a rising China and declining West. And even though most Latin Americans have no particular organic attraction to China (although China is busily attempting to change that through ambitious educational, cultural, and people-to-people diplomacy and the projection of state media into the region), they will increasingly be tempted to tilt toward Beijing’s worldview to the extent the United States offers little competing alternative.

In contrast, U.S. messaging during the pandemic has been limited, uncoordinated, and ineffective, which is why the 2022 Summit of the Americas, already postponed a year due to the pandemic, looms so large. To regain ground that is quickly being lost, policymakers must seize the moment to lay out an ambitious yet realistic vision for the Americas. In the first instance, they need to see the summit as an important opportunity to set a new agenda for a new Americas. The region has changed, and old bromides and more-of-the-same policy approaches no longer suffice. But they must also see it as a significant risk; Without an ambitious, actionable, attractive agenda, the region will perceive little reason not to continue its drift toward viewing the United States and China as nations to play off each other without regard for political systems and values.

Urgency is required. At the summit, it is essential that the United States, if it has not by then already done so, launch the Vaccinate the Americas program to prioritize procurement, delivery, and administration of Covid-19 vaccines as widely and quickly to the region as possible. Doing so would improve public health, assist with regional economic reopening, restore travel and family ties, and show the world that democracies working in concert are able to address the most pressing issues together. Democracy must deliver, and delivery of vaccines to beat back a galloping global pandemic is a great place to begin.

But that is just the first step. Lecturing regional leaders, yet again, on corruption, global climate change, or anything else that puts them on the defensive, must be accompanied by a serious proposal for financial support and increased economic ties. Massive liquidity will be required for the region coming out of Covid-19, with debt forbearance and new lending, particularly as global interest rates begin to rise. It won’t be easy, but without it, the region will be tempted to pursue financial support—and the greater political reliance that it will create—from Beijing.

THE REGION will also require greater opportunities to grow its way out of economic difficulty, which export-led growth through increased trade opportunities can provide. Specifically, the regional trade agenda is ripe for renewal, particularly given the recent overwhelming, bipartisan passage of the United States-Mexico-Canada Agreement that was essentially a Democratic trade bill negotiated among Congressional leaders by the current U.S. Trade Representative. If ever there was a confluence of political actors behind the current approach to international trade, this is it, and the strategic moment for such an initiative for the region is compelling. Latin American and Caribbean nations are desperate for an opportunity to bolster growth through sustainable trade relations and newly resilient supply chains. Only the United States has the ability to convene such an agenda. Due to the nature of its trade relations with Latin America, China cannot play the same game. This is a major U.S. comparative advantage, and we must pursue it.