Social Science that Matters: Pérez Sáinz on Latin America’s Inequalities

By Eric Hershberg

Image courtesy of FLACSO-Costa Rica

Latin America has made important advances dealing with income inequality over the past decade, but sustaining this modest progress requires a deeper grasp of its underlying causes.  Since Princeton sociologists Miguel Centeno and Kelly Hoffman in 2003 published their provocative article “The Lopsided Continent” probing Latin America’s infelicitous distinction as the region with the most unequal income distribution, the GINI coefficients – indicators of the gap between rich and poor – have declined in a number of Latin American countries.  Most of the advances, which admittedly appear tenuous and were slowed by the Great Recession of 2008-2009, can be traced to the expansion of secondary education and, particularly in countries governed by the left, unprecedented investments in social programs that have benefited the most disadvantaged sectors of the population.  Even now, however, income distribution in the region remains as unequal as anywhere on the planet – sapping productivity by depriving populations of opportunities to upgrade skills that could be deployed in knowledge-intensive economic activities.  Inequality also provokes social dislocations that undermine the welfare of the poor and non-poor alike, place burdens on over-extended state institutions and generate pathologies, such as crime, that undermine economic performance.  Moreover, the task of sustaining democratic political regimes is rendered much more difficult.

A new book by Juan Pablo Pérez Sáinz, a sociologist at the Latin American Faculty of Social Sciences (FLACSO) in Costa Rica, takes a fresh look at the dynamics of unequal power that influence how the fruits of economic activity become concentrated in some individuals and social groups – and remain beyond the reach of large swathes of a country’s inhabitants.  MERCADOS Y BÁRBAROS: La persistencia de las desigualdades de excedente en América Latina is in my view a landmark contribution to the sociological literature, and it identifies four intertwined processes that account for the disempowerment of important segments of the population, often characterized by subordinate status associated with gender, race, ethnicity or region.

  • The prevalence of precarious employment in labor markets, as a result of which people are condemned to toil endlessly but never enjoy the benefits of having a stable job.
  • The impossibility for most small-landholders or petty entrepreneurs to accumulate capital that might enable them to invest in the future of themselves, their families and their communities.
  • The weakness or absence of state institutions that might contribute to forging social citizenship encompassing all of a country’s inhabitants, the result of which is that vulnerable individuals and communities are left to fend entirely for themselves.
  • The overwhelming weight in Latin America of social categorizations – motivated by pervasive sexism, racism, ethnocentrism and xenophobia – that define excluded populations as less deserving of rights and opportunities than others.

If societies are to be expected to invest in social science, then it is reasonable to expect that social scientists strive to illuminate the underlying roots of their greatest challenges, such as the yawning inequalities in Latin America, and the sources of their persistence over time.  Through his historically informed and empirically rich analysis, drawing on theoretical insights from Marxian traditions and from the work of sociologists such as the late Charles Tilly, Pérez Sáinz has made an invaluable contribution to intellectual debates about inequality which should inform efforts to consolidate the modest gains we have seen in Latin America and thus help the region outgrow its enduring legacy of debilitating inequality.

December 4, 2014

The Open Veins of Latin America: Disowned?

By Núria Vilanova

tintincai / Flickr / CC BY-NC 2.0

tintincai / Flickr / CC BY-NC 2.0

Forty-three years after its publication, the emblematic and widely read Latin American anti-colonialist bestseller The Open Veins of Latin America has been disowned by its creator, 74-year-old Eduardo Galeano – but its literary message remains vital.  Interviewed last May about the book often called the “Bible of the Latin American Left,” Galeano said, “I don’t regret having written it, but it belongs to a time that to me has been overcome.”  His words left a sense of abandonment and deceit among many, who asked:  What had happened to the bleeding veins of Latin America drained by European and U.S. colonial powers?  Hadn’t the region been sacrificed since Columbus to profit diabolic foreign interests?  When Venezuelan President Hugo Chávez gave President Obama a copy of the book in 2009, was he clinging to an interpretation of Latin American history no longer embraced by the region’s leading thinkers?  Others asked, however well-deserved a denunciation of the exploitation and oppression laid out in the book was, were they to be blamed for all of the damage inflicted in the region?

Galeano’s interview signaled a refocussing of his analysis rather than wholesale rejection of it.  He said Open Veins was too boring and written in a tedious style and with the doctrinal tone of the traditional left.  He added that in those early days of his career he did not know enough politics and economics to write a book of such reach.  What Galeano has demonstrated by this unassuming recognition is that he has evolved through the years and, like many others, realizes that the dependentista paradigm, with its rejection of western capitalism, that fueled his book had important shortcomings, and overlooked other key problems.  He underestimated the impact of weak institutions – anticipated by Bolívar in the early 19th Century – and internal political and economic issues such as government corruption and the unwillingness of the ruling classes to contribute to the development of more democratic and egalitarian societies, as Marx himself would argue when writing about Southern countries.

The real – and not insignificant – value of Open Veins today lies in its literary character.  Its capacity to capture the spirit, the hope and the rage of those turbulent times in the region lives on.  Filled with metaphors and symbolism, it is an essay, whose literary dimension makes it current and ageless.  Stemming from a deep Latin American tradition, the book crosses the blurred borders between literature and history, sociology, politics and other disciplines alike.  Like José Martí, Ricardo Palma and Octavio Paz, Galeano attempted to transgress the boundaries between literature – subjectivity, imagination and hyperbole – and disciplines based on empiricism and factuality.  This practice can lead to challenges over facts, but the messages remain compelling.  Elizabeth Burgos’s testimonial account of Mayan activist Rigoberta Menchú in I Rigoberta Menchú (1984) was criticized for alleged inaccuracies, yet it is difficult for anyone to deny that the suffering of the Mayan Quiché community in the 70s and 80s was at least as cruel as Rigoberta depicted in the book.  Carlos Fuentes once said that reality will always overpower fiction, no matter how hard writers tried.  The intellectual evolution that Galeano has displayed is welcome, and it is also an inspiration to reread Open Veins and Latin America with much-needed fresh eyes.

December 2, 2014

U.S. Elections: Latino Vote Not Decisive

By Eric Hershberg and Fulton Armstrong

Rob Boudon / Flickr / CC BY-NC 2.0

Rob Boudon / Flickr / CC BY-NC 2.0

Preliminary estimates indicate that Latino voter participation and support for Democratic Party candidates on Tuesday were similar to the 2010 mid-terms – but not enough to overcome the Republicans’ gains across the broader population.  Before Tuesday, Latino observers were excited that 1.2 million Latinos had registered to vote since the last mid-term elections (2010) and, with an estimated 66,000 American Latinos turning 18 each day, they would have some new clout.  Latino Decisions, the leading polling organization focused on Latinos, found that two-thirds of Latino voters in Texas supported Democrats in House races on Tuesday, and 74 percent in Georgia supported Democrats.  Their broader impact as a bloc, moreover, is hard to assess because most of the competitive races for the U.S. Senate and House of Representatives were not in states with concentrated Hispanic populations.  Gerrymandering also blunted their impact on House races, and new voter identification laws appear to have discouraged participation as well.  The Dallas Morning News reported last weekend that Texas state officials estimated that the laws would render more than 600,000 registered black and Latino voters unable to cast ballots (without breaking out the size of each group).

Latino Decisions had warned before the elections that enthusiasm for Democratic candidates was 11 percent lower than it was during the general elections two years ago.  Many Latinos were angry that President Obama backed off his plan to use executive authority to begin immigration reform, while at the same time, ironically, they were frustrated that the Democrats saw them as a one-issue constituency and did not include them on other issues.  Indeed, Voto Latino, a voting rights organization, and others have been warning that Latinos care as much or more about the economy, health care, and women’s rights but feel ignored.  (The polls show that Latinos feel even more shut out by the Republicans.)  The great pool of young voting-age Latinos has been “hardest to reach,” according to Voto Latino, because they are busy and turned off by the stereotyping.  The Democrats also seem to have communicated priorities poorly.  Colorado Senator Mark Udall played up his support for comprehensive immigration reform, but Latino Decisions says only 46 percent of Latino voters there knew it.  On the other hand, Nevada Governor-elect Brian Sandoval – a Republican – attracted Latino voters with a platform emphasizing Medicaid expansion, English-learning education initiatives, while downplaying his party’s rhetoric on immigration.

The margin of Republican victory was wide enough that even high Latino turnout wouldn’t have flipped the outcome in places like Colorado, North Carolina, and Georgia.  Tuesday’s results notwithstanding, however, polls by Latino Decisions and other research indicate that the Latino voice at the polls will grow and, when mobilized, be potentially decisive.  Despite strains with the Democrats, it’s hard to see Latinos jumping to the Republican Party unless it significantly shifts policies on immigration, social programs, voter-ID laws, and the economy.  It would be unfair to blame President Obama alone for the lack of a Latino surge this year, but his decision to back off on immigration clearly hurt his party badly.  He wanted to take heat off vulnerable Democratic senators but helped neither the candidates nor his party’s ability to mobilize Latinos.  Latino Decision’s data on low enthusiasm and dismay about the delay of executive action mean that if the administration doesn’t take real action soon – and work to build Latinos’ enthusiasm over the course of the next two years – it will diminish prospects for the Democrats to have a big Latino edge in the presidential race in 2016.  With a Republican-controlled Senate, Obama faces the same dilemma as before – to risk the Senate’s wrath by taking executive action on immigration or continue to alienate a key constituency – but the answer should be clearer in view of Tuesday’s results. 

November 7, 2014

Argentine Debt and the U.S. Dollar

By Leslie Elliott Armijo

Images Money / Flickr / Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0)

Multiple economic and political challenges have called into question the future status of the U.S. dollar as the world’s dominant reserve currency, but backlash from Argentina’s recent spat with the United States over defaulted bonds appears to be fueling interest in reforms that may have beneficial implications.  According to the IMF, some 61 percent of the world’s known foreign exchange reserves held by central banks around the world remain in low-yielding dollar-denominated assets, mainly U.S. Treasury bonds.  The United Nations Conference on Trade and Development (UNCTAD), China, and heavyweights in the Global South, including Brazil, are calling for international trade agreements that would give emerging economies “policy space” – allowing national governments to impose capital controls, fund exports, subsidize local industry, and keep financial services national.  Private U.S. banks, however, claim that continued U.S. dominance of world capital markets – a crucial pillar of continued reserve currency status – requires ever more open trade in financial services.  The BRICS complain about the U.S. government’s “exorbitant privilege” as the reserve currency country, with some of the sharpest complaints coming from joint statements by Brazil, Russia, India, China and South Africa. Chinese officials, though, worried about their own large dollar investments and ambivalent about the implications of renminbi internationalization, more than once have pulled the group toward a softer tone.

Argentina’s ongoing sovereign debt negotiations provide a different window onto the dollar’s reserve currency status.  Like most countries, Argentina has held a large chunk of its government’s savings in the U.S. and hired private U.S. financial institutions as its international bankers.  Today it is trying to extricate itself from U.S. markets and do its saving and financial intermediation elsewhere. Iran and Russia are doing the same, but Argentina has no foreign policy quarrel with the Obama Administration – and is not subject to U.S. financial sanctions over nuclear or military adventurism.  Buenos Aires is among those who chafe at U.S. power through the dollar, but it is primarily motivated by the U.S. Supreme Court’s decision in July to let stand a lower court judgment in favor of investors holding bonds from Argentina’s $82 billion sovereign debt default in December 2001.  Although 92 percent of the original bondholders accepted the Argentine government’s restructured (lower value) bonds in 2005 and 2010, New York Federal District Court Judge Thomas P. Griesa ruled that Argentina’s failure to settle with the holdouts means that any U.S. financial institutions, or their international affiliates, that intermediate funds enabling Argentina to stay current on payments to the majority will themselves be in contempt of court.  This has sent Argentina into “technical default.” Argentina is suing the U.S. in the International Court of Justice (whose jurisdiction the U.S. refuses to recognize) and in the court of global public opinion – pushing, for example, a recent proposal for global financial reform before the U.N. General Assembly. It has also welcomed an $11 billion currency swap agreement with China, and Chinese state banks have since pledged $6.8 billion in new infrastructure loans.  Some observers speculate that the very first loan of the New Development Bank, newly organized by the BRICS countries, could go to Argentina.

The Argentine bond case harms the perceived fairness and credibility of U.S. financial markets and, by extension, the strength of the U.S. dollar because the recent legal judgments seem capricious to many.  Senior figures at the IMF have long supported the routine inclusion in all international sovereign bond issues of a so-called “collective action clause,” which would make any restructuring accepted by two-thirds of bondholders binding on all.  The European Union already has ruled that sovereign bonds issued within the EU, including many for troubled Eastern or Southern European governments, must contain such clauses.  Moreover, the International Capital Markets Association, representing more than 400 of the world’s largest private investment institutions, has just issued a position paper endorsing obligatory collective action clauses, placing it on the same side of this issue as non-governmental organizations advocating financial architecture reform such as the New Rules for Global Finance and the Jubilee Debt Campaign.  This would give taxpayers in emerging economies – the ultimate backstop of the creditworthiness of their governments – the same bankruptcy rights as firms and households.  It is not in the interest of Latin American and other emerging economies for U.S. currency and financial dominance to end anytime soon – a tripolar reserve currency system based on the dollar, euro, and reniminbi does not yet appear able to sustain the worldwide growth and prosperity of recent decades and may in fact entail significant risks – but fairer rules for sovereign financing would benefit everyone.

* Leslie Elliott Armijo is a Visiting Scholar at Portland State University and a Research Fellow at CLALS.  She has just published The Financial Statecraft of Emerging Powers: Shield and Sword in Asia and Latin America (London: Palgrave, 2014).

September 23, 2014

El Salvador: The Maras, Community Action, and Social Exclusion

By Mario Zetino Duarte, Larissa Brioso, and Margarita Montoya

Photo Courtesy of FLACSO-El Salvador

Photo Courtesy of FLACSO-El Salvador

Maras and gangs in El Salvador have become social actors with great power in communities suffering from a high level of social exclusion. They have been linked to violence and organized crime, and they have been blamed for the highest number of homicides, organized criminal actions, and the generalized insecurity in which the country lives. They have brought a sense of isolation to the communities in which they live, as well as a reputation that increases the communities’ exclusion. According to a study being conducted in crime-ridden communities of Santa Tecla (near San Salvador) and Sonsonate (64 km. west of the capital), the maras’ power derives from their ability to cause fear and terror among inhabitants as a result of their effective and organized criminal actions. Their influence has a strong psychological impact and broad influence over people’s lives. The criminal activities of the gangs in the community are generally rejected by inhabitants because they put families at risk, make neighborhoods the target of police operations, and taint both the community and its residents socially – making it hard for people to get or keep jobs.

Nonetheless, many citizens in these communities have a positive assessment of the maras when it comes to providing important neighborhood security, due to a lack of national or local authority. In Santa Tecla and Sonsonate, the Salvadoran government, the municipality, international organizations, and other institutions have invested heavily in programs to stem the tide of mara violence, with mixed results. These communities suffer from low levels of employment, education, and social security, particularly among women. Afraid of retribution, citizens in these communities do not turn to state institutions to report crimes or to request protection, and they instead approach the maras to take actions regarding conflicts with neighbors and situations related to domestic violence. The void in institutional services, which has been permanent in some communities, is being filled by the maras and their members, making them the primary support for the local Asociaciones de Desarrollo and implementers of development plans.

Changes in the community philosophy of the National Civilian Police (PNC) in one of the communities of the study offers a useful example of how new approaches can help improve citizens’ lives. The PNC’s new approach to the community and its underlying social and security problems has also led to the evolution of the maras’ role as community actors and their legitimacy in the people’s eyes, primarily based on the fear they instill. This has benefited some communities.  Likewise, international cooperation – which has played an essential role – and the recent implementation of community policing practices as a model within the national security strategy to reduce gang criminality have driven debate on how communities can confront violence and crime in a sustained manner. The problems are far from resolved, but the gangs, the police, and the state each appear to be redefining strategies and roles. It remains to be seen whether these actions are sustainable and applicable in other territories – and whether the maras’ involvement in development programs can help create conditions for citizens to cope with the violence and social exclusion that plague their communities.

* Mario Zetino Duarte, Larissa Brioso, and Margarita Montoya are researchers at FLACSO-El Salvador.  Their study is funded by the International Development Research Centre.

Nicaragua’s Canal: Great Leap (of Faith) Forward?

By CLALS Staff

Mike and Karen / Flickr / Creative Commons Attribution 2.0 Generic (CC BY 2.0)

Mike and Karen / Flickr / Creative Commons Attribution 2.0 Generic (CC BY 2.0)

The Nicaraguan government and a Chinese telecom tycoon took a big step on Monday toward the country’s long-held dream of having its own canal, but their prediction of supertanker traffic starting as soon as 2020 seems a bit far-fetched.  The project will cost $40 billion and, according to government officials, will create 50,000 jobs immediately, 1 million jobs over the life of the project, and will help lift another 400,000 people out of poverty.  President Daniel Ortega’s supporters claim the economy – currently projected to grow at 4.5 percent a year until 2020 without the project – will grow as much as 15 percent a year with it. The Chinese company, HKND, will enjoy a 100-year lease on the canal, with 1 percent of it reverting back to Nicaragua each year.  The proposed route for the canal is 278 kilometers long – about three times longer than the Panama Canal – and will be deep and wide enough to handle ships much larger than the “New Panamax” vessels.  Officials say the canal would “complement” the Panama waterway, which they say will be overcapacity even after its current expansion, and will save shippers some 800 miles on their way to the U.S. east coast.

Opposition from some politicians and environmentalists has been strong.  According to media reports, Nicaragua’s Supreme Council for Private Enterprise (COSEP) and other business organizations are generally positive but skeptical, with one leader calling Monday’s press conference “just an initial flow of information.”  Congressman Eliseo Núñez of the Independent Liberal Party (PLI), however, has been widely quoted as calling Monday’s announcement a “propaganda game” and blamed the media for generating “false hopes for the Nicaraguan people.”  Former Vice President Sergio Ramírez says that handing over national territory for development is a violation of the country’s sovereignty, and other critics claim the project violates 32 provisions of the Constitution.  Concerns about damage to Lake Nicaragua, an important source of fresh water that is already polluted, remain. Chinese investor Wang Jing told the press that avoiding environmentally sensitive areas was a major factor in determining the route, and he has promised that a full environmental impact study will be conducted before construction starts.  Opponents of the project doubt he will make the report public.

Ortega’s statement last year that a Nicaraguan canal “will bring wellbeing, prosperity, and happiness to the Nicaraguan people” may well be right – if the project gets off the ground and so many jobs are created.  However romantic that vision is, construction is still far from certain to begin this December, as claimed, or even within the next year or so.  Wang says that he has lined up “first-class investors,” but none has been identified yet.  In addition, criticism of his business record – opponents say his telecom company is poorly run – has hurt his credibility. And accusations that he’s a stalking horse for the Chinese government, which he says has had “no involvement,” will be difficult to dispel in view of Beijing’s other interests in the region and in shipping.  Equally troubling, as the ongoing expansion in Panama has shown, the shadow that corruption and inefficiency cast over any major project tempers optimism and argues against premature celebration.

Building State Capacity in Brazil

By Katherine Bersch, Sérgio Praça, and Matthew M. Taylor*

Photo Credit: Metrix X / Foter / Creative Commons Attribution-NonCommercial-NoDerivs 2.0 Generic (CC BY-NC-ND 2.0)

Photo Credit: Metrix X / Foter / Creative Commons Attribution-NonCommercial-NoDerivs 2.0 Generic (CC BY-NC-ND 2.0)

As the World Cup fades out and Brazilians turn their focus to the October elections, public debate will shift back to economic growth, social services, corruption, and – central to them all – the role of the state.  Is the federal government too big, inefficient and meddlesome, as the opposition argues, or does it need to be strengthened to play a leading role in Brazil’s state capitalist economy, as the incumbent Workers Party has sought?  In a recent paper (click here for draft), based on publicly available data of about 326,000 civil servants working within the 95 most important federal agencies in Brazil, we found a very diverse federal government, with agencies distributed widely on both capacity and autonomy.

Our findings empirically confirm a long literature that highlights the coexistence of so-called “islands of excellence,” with high capacity and high autonomy, alongside low-capacity, low-autonomy laggards.  “Islands of excellence” include Brazil’s Foreign Ministry (Itamaraty), the Central Bank, the Finance Ministry, the Justice Ministry, and the relatively young Comptroller General’s Office (CGU), created in 2001.  Laggards include almost all of the infrastructure agencies, as well as the Ministry of Sports, perhaps helping to explain the recent World Cup construction snafus.  Also interesting are the agencies with high capacity and low autonomy (such as the Federal Highway Police, which most state governors seek to empower and control within their own states), as well as agencies with low capacity and high autonomy, which few politicians seek to control (such as the Public Defenders Office).

We found solid evidence that agency corruption – one of the driving forces behind last year’s political angst and popular protests – is correlated with lower capacity and lower autonomy.  This finding could help frame debate in the upcoming campaigns and beyond: the keys to reducing corruption are to build agencies’ capacity and increase their autonomy from political partisans.  The debate over the role of the state has been ongoing since the return to democracy in the 1980s.  No matter who wins the October elections, the expansion of this data set and measurement effort will provide useful empirical data to more realistically evaluate the evolving performance of the Brazilian state, as well as to recognize the enormous differences and best practices within that state. 

*Katherine Bersch is a doctoral candidate at the University of Texas at Austin.  Sérgio Praça teaches Public Policy at the Federal University of the ABC in São Paulo.  Matthew Taylor, a regular contributor to AULABLOG, teaches at American University.

El Salvador’s Former Guerrilla – and New Commander in Chief

By Héctor Silva Ávalos

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Salvadoran President Salvador Sanchez Ceren with Secretary of State John Kerry during his visit to Washington, D.C. [State Department photo/ Public Domain]

Twenty-two years after participating in the signing ceremony of the UN-brokered peace accord that ended El Salvador’s civil war, Salvador Sánchez Cerén, one of the FMLN’s top guerrilla commanders, was sworn-in as president last Sunday.  The political reforms mandated by the Chapultapec agreement launched the country onto a sometimes tumultuous path toward a new democratic landscape that, at least on paper, included the alternation of power: for 20 years the ARENA party, representing the hard-right, ruled the country; in 2009, moderate Mauricio Funes, a popular TV journalist, and the FMLN established an alliance that took them to the Presidential Palace.  Through the prism of Sánchez Cerén’s recent victory, Funes’s was a transitional government.  El Salvador now begins its first period under the rule of the former guerrilla party that fought an insurrectional war against the allies of Ronald Reagan´s Washington during the last years of the Cold War.

Sánchez Cerén and the FMLN’s challenges are many – a stagnant economy; a private sector not used to a political system that doesn’t respond resolutely to its economic interests; a dysfunctional fiscal system; and one of the worst security situations in the world – with 14 homicides a day, growing gangs, and a reign of impunity inherited from the war years and perpetuated by organized crime’s success infiltrating state and political institutions.

The new leadership will also have to deal with the interests of El Salvador’s most powerful neighbor and ally, the United States.  The Obama administration sent a third-level delegation to Sánchez Cerén’s inauguration, and Secretary of State John Kerry did receive him in Washington before that.  Among the first items on the bilateral agenda is El Salvador’s access to funds in a second compact with the Millennium Challenge Corporation (MCC), a $400 million program aimed at bringing fresh money to the underdeveloped and poor coastal areas.  The program is on hold because MCC is not satisfied with the country’s Anti-Money Laundering and Asset Law and because San Salvador has not yet caved to pressure from the U.S. Trade Representative to buy agricultural products – mainly seeds – within the CAFTA region, which would favor U.S. producers.  Washington’s reluctance to work with FMLN officers in law enforcement and security issues is another obstacle.

So far, Sánchez Cerén and his cabinet have tried to play the U.S. relationship smart.  But managing ties is not going to be a walk in the park.  Despite public winks and carefully worded statements, neither side really trusts the other.  But the bilateral connection is important to both.  Roughly one third of all Salvadorans live in the United States, and, in the last several decades, Washington has appreciated El Salvador’s importance in a region where it is losing influence.  The new government has sent a number of signals to Washington by visiting the State Department, engaging in most of the Treasury’s and USTR’s conditions on the MCC compact and launching an early dialogue with the international financial institutions.  But Sánchez Cerén has made it clear that he will also heed El Salvador’s natural allies, albeit for practical rather than ideological reasons.  Just this week, El Salvador requested formal acceptance to Petrocaribe, the Venezuelan economic and financial aid program.  Dealing with violence, insecurity and financial problems will require fresh resources that the government will welcome wherever their origin.  But it also seems possible that the new commander in chief´s patience with Washington’s style of diplomacy – such as pressure tactics to buy American agricultural goods – could be much shorter than that of his predecessors.  

Trans-Pacific Partnership: A Framework for U.S.-Latin America Relations?

By Eric Hershberg


President Obama’s desire to move forward with the Trans-Pacific Partnership (TPP) appears likely to founder amidst Congressional resistance to granting him “fast-track” authority, but it does signal a noteworthy initiative by an administration eager to grow trade relations with some Latin American countries.  Originally formed by Chile, New Zealand, Brunei and Singapore in 2006, TPP is currently negotiating the accession of five new members, including the United States and Peru.  Mexico, Colombia, Costa Rica, Panama, Canada, and Japan are also considering joining.  U.S. Undersecretary for International Trade Francisco Sanchez said last year that agreement on a framework for the United States to join TPP represents “a landmark accomplishment because it contains all of the elements of a modern trade accord.”  It eliminates all tariff and non-tariff trade barriers; takes a regional approach to promote development of production and supply chains; and eases regulatory red tape.  The White House’s senior official responsible for Latin America has also emphasized the importance of the Partnership.

The Administration for the most part has tried to sell the pact as a domestic economic issue – the argument being that more trade and harmonized regulations translate into more jobs – or as integral to a strategic focus on strengthening economic ties to the dynamic economies of Asia, rather than as a policy that has the potential to redefine economic relations with Latin America.  But lobbying on Capitol Hill has so far been ineffective, and Obama’s own Democratic Party has denied him the “fast-track authority” needed for an effective negotiation.  The Administration’s diplomatic strategy has not progressed smoothly either.  During Obama’s recent four-nation swing through Asia, he and Japanese Prime Minister Abe failed to sign an agreement widely seen as crucial for moving ahead with TPP.  Negotiators from all 12 TPP countries met in Vietnam last week, and – despite claims of progress – press reports generally suggest a gloomy prognosis for progress soon.

President Obama has made much of his “pivot” to Asia, and the push for TPP situates Latin America relations in Washington’s wider foreign policy agenda.  The emphasis on the TPP signals that liberalizing trade remains the core principle guiding U.S. thinking about economic relations in the hemisphere, in effect continuing a paradigm that has reigned for decades and that is embodied by proposals such as the now-abandoned Free Trade Area of the Americas.  Unable to secure broad South American buy-in for that U.S.-minted vision for economic cooperation, the administration seems to have settled on trying to work with a “coalition of the willing” comprised of Chile, Colombia, Mexico and Peru.  For governments elsewhere in the region, however, the not-so-particularly-new approach has elicited scant enthusiasm.  One could imagine ambitious proposals from Washington for hemispheric cooperation around energy, climate, infrastructure, technological innovation or even, eventually, labor market integration. But that would require visionary leadership, a commodity that is in strikingly short supply nowadays in the U.S. capital.  Rather than leading the articulation of a novel, shared agenda for a 21st century economic transformation of the Americas, Washington has chosen for now to repackage the last century’s prioritization of trade.

Mujica’s Liberal Experiment: Model for the Latin American Left?

By Robert Albro

President José Mujica on stage with SIS Dean James Goldgeier

President José Mujica on stage with SIS Dean James Goldgeier

Uruguayan President José “Pepe” Mujica, whose recent trip to Washington included a stop at American University, is doubtless Latin America’s most unconventional president.  A former leftist guerrilla who spent 14 years in prison, Mujica gives away 90 percent of his salary, refuses to live in the presidential mansion, grows chrysanthemums, and has twice been nominated for the Nobel Peace Prize.  He was elected in 2009 as candidate of the center-left Frente Amplio, and his accomplishments have transformed him into an international figure – and turned Uruguay into an intriguing experiment in social liberalism.  He has avoided the populist tendencies and overt anti-Americanism of other Latin American leftists, while promoting programs of social inclusion alongside a pro-business economic agenda.  Under Mujica, Uruguay has enacted an affirmative action law, legalized abortion in the first trimester, and legalized gay marriage. Most discussed has been his administration’s controversial launch this year of a legal government-licensed and -regulated marijuana market.

Mujica is notably less popular at home than abroad, however.  After plunging to 36 percent in late 2012, his approval rating has since hovered around 47 percent.  With national elections (in which he cannot run) looming in October, a poll last month showed the Frente Amplio losing significant ground to the opposition.  Mujica has consistently dismissed the polls.  He went ahead with legalizing pot, for example, despite a September 2013 poll indicating that 63 percent of Uruguayans still did not support the measure.  His asylum offer for up to six Guantanamo detainees, based on humanitarian concerns, has also not been popular, with only 23 percent of Uruguayans approving.  Uruguay ranks among the safest countries in the Americas, with 5.9 homicides per 100,000 people, and yet the perception of insecurity is widespread.  In a 2012 poll 56 percent of Uruguayans still reported crime and violence to be the country’s most pressing problem.  If celebrated by advocates of social liberalism, Mujica’s policy measures often appear out of kilter with popular perceptions and priorities.

Mujica is often cited as offering a potential alternative to the Bolivarian brand of “21st century socialism.”  But, in what is arguably Latin America’s most socially liberal country, the former Marxist has governed as a pragmatist.  Uruguay has a lot going for it, including: a stable banking system, free and secular education, low levels of corruption and social inequality, robust press freedoms, and stable governance with functional political parties.  It is second in South America behind Argentina on International Living’s quality of life index.  It has the third highest GDP per capita – triple that of Ecuador and Bolivia – and under Mujica has sustained stable economic and wage growth, and increased foreign investment in farming, forestry and pulp mills.  However, while he gets points for his international celebrity, austere lifestyle, and colorful persona, Mujica risks alienating the many citizens who care more about unemployment, inflation, crime and insecurity than about the environment, cannabis and gay marriage.  It is not clear whether over time Uruguayans will support Mujica’s particular left-liberal pragmatic brand of governance and whether his is a model embraced by other Latin American leaders. 

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