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.
PRESIDENT JOE Biden’s virtual summit of democracies in December 2021 was a timely initiative highlighting the intensifying battle for the future of global governance while seeking ways to build and promote democratic practice worldwide. That includes the Americas where democracy is clearly on the defensive and, in some cases, retreat. But even more than invitations to the December event, supporting regional democracy effectively will require the United States to pay heed to hemispheric policy after years of underinvestment. As China and other authoritarians actively seek to enhance their global positions, Washington should pursue a robust post-Covid-19 agenda that focuses on the strategic value of Latin America to the United States and strengthens democratic governance against the gravitational pull of less salubrious alternatives.
DEMOCRACY HAS demonstrably lost ground in the Americas over the past generation—and the trend is accelerating. At the first Summit of the Americas, a periodic gathering of all regional democracies held in Miami in 1994, only one leader—Cuba’s dictator, Fidel Castro—was not invited. The next time the United States will host the Summit of the Americas, in 2022, at least three nations—Cuba, Nicaragua, and Venezuela—will not meet basic conditions of democratic eligibility. And soon there may be even more. In the twenty-seven years between U.S.-hosted Summits of the Americas, the map of regional democracies has gone from monochromatic to variegated, including some nations which remain democratic today but where national executives are actively disregarding democratic responsibilities and requirements and trendlines are unfavorable.
It’s the old story. U.S. foreign policy elites generally ignore the Western Hemisphere until they can’t, and then they scramble to catch up. Policy tends to move from crisis to crisis, with officials and strategists never really investing the time and effort necessary to build enduring relationships to head off crises before they occur or manage them effectively when they do. Usually, that means whenever regional developments impinge upon domestic politics, such as migrant surges as seen in 2021 or during election cycles when politicians seek to improve their standing with Hispanic voters, who now make up almost 20 percent of the total U.S. population and account for around half of total population growth over the past decade. Drug trafficking and trade also break onto the domestic agenda from time to time; energy too, particularly during periods of global energy insecurity.
But efforts to mainstream the Americas in Washington’s broader global strategic calculus have largely failed. To the extent there are no nuclear weapons in Latin America or significant threats of cross-border terrorism, that can be forgiven. To the extent it is due to hidebound, uncritical thinking or a misunderstanding of what is really at stake, it can’t. Indeed, the region is often considered irrelevant strategically and, if discussed at senior levels, only as a footnote to more consequential matters. There are exceptions, of course, but only those that prove the rule. Emblematic of bipartisan neglect, even as the hemisphere has been headed in the wrong direction, is that numerous embassies, including Brazil and Argentina, remain without ambassadors, and there was no Senate-confirmed assistant secretary of state for Western Hemisphere Affairs, the top regional diplomat, between August 2019 and September 2021—a stunning lapse. It’s not new, and it begins at the top: Henry Kissinger, considered by some to be America’s greatest living statesman, thought of Latin America as little more than a dagger pointed at the heart of Antarctica. This sort of thinking has long infused the worldview of the foreign policy establishment.
But times change rapidly, even if attitudes don’t, and the region has changed fundamentally since the Miami Summit. The increasingly fraught condition of hemispheric governance, undermined by our own democratic missteps, and the raging Covid-19 pandemic, Venezuela’s grinding humanitarian crisis, and, to the upside, opportunities for clean energy development and other efforts to reduce climate change, among other priorities, cry out for significant, sustained engagement. Yet regrettably, U.S. grand strategy continues to downplay the significance of the region and the importance of meaningful, visionary steps that promote win-win solutions, as the Chinese like to say, with regional partners. We are in a global battle for hearts and minds, where decisions are being made today that will lock in relationships for the longer term. But Washington doesn’t think in those terms, and continues to layer on obligations and expectations for the region without offering meaningful additional benefits. Even close regional allies are often heard to lament that it costs a lot politically to be friends with Washington, but the benefits are limited because little of consequence is on offer at this point in history. That is not a sustainable equation for political or economic partnership.
It adds up to a significant problem, because the Western Hemisphere has emerged at the forefront of the accelerating global competition between governance systems, between some version of market-led liberal democracy and Chinese-enabled authoritarian populism or even worse. 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. As the Covid-19 pandemic rages on, individual nations are beginning to face fundamental questions of what sort of societies they wish to be and how to develop realistic means to achieve their goals. They need support, and lots of it, and will forge lasting relationships with those nations that recognize the region’s needs and actively take steps to meet them.
THE CORONAVIRUS pandemic has been a regional disaster beyond even the direst of predictions. Latin America has seen almost one-third of Covid-19-related deaths worldwide despite having only 8 percent of the world’s population, and vaccination rates remain low. As the virus continues to tear across the hemisphere, including the tourism-dependent Caribbean, it has crushed economies and exacerbated social inequalities that were already the world’s highest.
Economically, Covid-19 birthed Latin America’s deepest recession since record keeping began in the early 1900s. Regional growth collapsed by over 6 percent in 2020 and estimates suggest that 2019 levels will not return until 2023, which was itself no great year for growth compared to global peers. Millions of jobs in the formal economy have been lost, perhaps never to return. Now, one-third of the total population of just over 650 million is in extreme poverty, not even living on $2 per day, according to the World Bank—and that was before the Delta variant hit. Coming out of the pandemic, whenever that occurs, even well-managed economies will be further stressed, with reduced fiscal space for other priorities, increased debt loads, and higher global interest rates required to service them. Over the longer term, the region will be severely impacted by the disruption of schooling with limited options to recapture lost learning. Insufficient access to quality education has long been the region’s Achilles’ Heel, both on an absolute and relative basis, and the burden of significant educational disruption caused by Covid-19 continues to fall most heavily on the underclass and many of those in the middle class whom are threatened with renewed economic insecurity. The losses will potentially last generations.
UNSURPRISINGLY, POLITICS in country after country are unsettled. Nobody seems to have any answers. Prior to the onset of the pandemic, the region had already seen waves of protest and discontent, some of it amplified by Cuba, Venezuela, and Russia. The pandemic forced protesters indoors but did not address the issues, which have only become more urgent. As a result, when they have an opportunity, voters are registering discontent at the election tables.
Peru’s recently elected president is a former village school teacher allegedly sympathetic to the Maoist Sendero Luminoso movement; He is close to advisers who take their bearings from the late Hugo Chavez, and has promised the transformation of Peruvian society. Whether or not he achieves it, investors are wary, and the country, despite being one of Latin America’s fastest-growing economies over the past decade, faces years of continued polarization and political upheaval.
Mexican voters recently clipped the wings somewhat of their own president, Andres Manuel Lopez Obrador, returning a smaller majority in midterm elections and decisively rejecting a referendum he supported, making it more difficult for the executive to impose a more radical policy agenda. But his term won’t expire until 2024, giving him ample time for further political and economic disruption; Rather than taking steps to make Mexico’s economy more attractive for investment and the capture of supply chains relocating from Asia to the Western Hemisphere, he is doing just the opposite, particularly in the energy sector.
Chile, Latin America’s standout nation since the return of democracy there in 1989, with solid economic growth, dramatic poverty reduction, and stable politics, sent two candidates from the political extremes to a presidential runoff on December 19, 2021. The new president, coupled with a 2022 constitutional plebiscite demanded by protesters, could potentially undo the political stability that has prevailed for over thirty years. Colombia, arguably Washington’s staunchest regional ally, faces elections in May 2022. Politics are roiled; It has weathered a massive influx of refugees from collapsing next-door Venezuela, along with a resurgence of illegal drug trafficking, guerrilla conflict, and civic protesters destroying police stations and demanding broader economic opportunities. In a first for the country, voters may decide to give a chance to an avowed leftist with active ties to Cuba. Brazil’s outsider president is exhibiting anti-democratic tendencies in the run-up to the October 2022 elections, which he is busy undermining in case he loses. Society is bitterly polarized, and a close or disputed election could devolve into mutual recrimination and, potentially, violence.
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.
Finally, with democratic governance itself under siege, the United States must be willing to engage in a frank, ongoing dialogue in support of democratic institutionality, finding new ways to work with allies to celebrate democracy where it is healthy, support democracy where it is challenged, and restore democracy where it has been strangled. Democracy is no fragile flower, as Ronald Reagan told the British parliament, but it does require tending, and both the United States and the nations of the Americas could use a refresher. Unless the United States stands for democracy across the region, however, no one else will be likely to do so, either. With the United States as the main pole upholding the circus tent, others in the region can find shelter, and China will have much less of a toehold in capturing the hearts and minds of the region. In so doing, the nations of the Americas will also be meeting the commitments they made by signing the Inter-American Democratic Charter in Lima, Peru, on the same day, and at the same time, as vandals were attacking the Twin Towers and the Pentagon and seeking to attack the U.S. capitol some twenty years ago.
Should Washington tarry, Beijing has developed its own summit process, the China-Community of Latin America and Caribbean States Forum, a periodic consultation between China and the nations of the Western Hemisphere that purposefully excludes the United States and Canada. It is a primary vehicle for China to remain engaged with regional leaders, exuding high symbolic value and important public announcements that continuously promote China as a close friend for Latin American and Caribbean nations.
Latin America is in trouble, and the region needs help. Democracy itself is at risk unless it can deliver improving results to meet the needs of a majority of people across the region. China is betting it can’t, and is ready with an alternative. People are questioning everything, including political systems, values, and alliances. Unless the United States is newly prepared to contend for the Americas, strategic interests are at risk. Recognition of the strategic importance of the hemisphere would be the first step. Beijing gets it. Does Washington?
Eric Farnsworth is Vice President of the Council of the Americas.
Image: Reuters.