Pandemic Relief for Latino-Owned Businesses: Lessons from the Washington DC Metropolitan Area

By Robert Albro and Eric Hershberg*

Latina microenterprise in Washington DC/ Credit: Liz Albro

While the impacts of the pandemic and public health measures to contain it have been widespread across all demographic groups in the United States, minority-owned businesses have been disproportionately affected, with Latino-owned enterprises hit the hardest. A newly released CLALS study describes steps taken by local jurisdictions to ameliorate these impacts, identifies challenges experienced by Latino business owners in accessing pandemic relief, and offers recommendations to better support minority enterprises in anticipation of future crises.

  • By June of 2020, a Stanford Latino Entrepreneurship Initiative pulse survey reported that 83 percent of Latino businesses had experienced a negative impact from COVID‑19, and the National Bureau of Economic Research reported that the number of Latino business owners nationwide had declined 32 percent.
  • In the Washington Metropolitan Area, Latino business owners surveyed by CLALS during the same time period reported catastrophic losses of customers and sales, pressures on liquidity, employee layoffs, and dramatic disruptions of their day-to-day business operations.
  • In many cases the industries in which Latino businesses are concentrated made them more vulnerable. The onset of the pandemic had an immediate negative impact on Latino front-line workers in essential industries and on restaurants and retail establishments that rely heavily on foot traffic, forcing widespread closures. An estimated 25 percent of Latino businesses nationwide are either permanently shuttered or remain temporarily closed.

Nearly all Latino business owners CLALS surveyed in mid-2020 – 94 percent – ranked as most important the need for greater access to financial assistance to survive the crisis. However, the pandemic has exacerbated long-standing disparities between Latino-owned and other businesses, with Latinos among those receiving the least support to help weather the economic catastrophe.

  • According to a 2021 Federal Reserve report, Latino businesses were less than half as likely as White-owned firms to be approved for a loan during the COVID‑19 emergency. And the U.S. Small Business Administration reported only 7 percent of Latino businesses that applied received Paycheck Protection Program funding in 2020, compared to 83 percent for White-owned enterprises.
  • Latino small business owners experienced multiple barriers to access, including in many cases not having a relationship with a bank or professional financial service provider, lack of access to timely Spanish-language information about programs, immigration status, and inadequate accounting that left them ineligible for government relief.

CLALS’s study documents all federal, state, and local pandemic relief programs in the DC-metro region, and concludes that outreach by assistance providers did not always reach Latino business owners because local governments did not necessarily seek to engage them through preferred channels and familiar institutional counterparts. It further concludes that cities and counties striving to improve support for businesses in historically underserved communities in advance of the next crisis can be more inclusive and effective by discussing challenges and sharing best practices among each other,  targeting aid sooner to specific industries and business types, coordinating at the outset with trusted community ambassadors with strong local knowledge, and improving their awareness of how and where to best engage minority and Latino business owners, both in-person and through the right channels of communication.  

Nationwide Latinos are the most likely to start a business of any group, and they are also the fastest growing population in the Washington Metropolitan Area. Our region’s economic prosperity is increasingly connected to the success of its Latino entrepreneurs. How well its business ecosystem supports new Latino start-ups, business growth and stability, during normal economic periods but also the next inevitable crisis, will be a big part of sustaining any such prosperity. But this, in turn, will depend upon applying key lessons learned from the present pandemic crisis, including further institutionalizing the advantages of inter-jurisdictional collaboration and information-sharing, and the need to better support non-governmental and community-based institutions other than banks – which effectively channeled information, financial and technical assistance to Latino and minority enterprises throughout the crisis – as mediators between local jurisdictions and often hard-to-reach Latino business owners.

September 21, 2021

* Robert Albro is a Research Associate Professor in American University’s Center for Latin American and Latino Studies. Eric Hershberg is the Center’s Director and a Professor in American University’s School of Public Affairs. This report is part of an ongoing Center research program examining Latino Entrepreneurship.

China in Latin America: Influential But Not Liked

By Andrei Serbin and Luiza Duarte*

President Michelle Bachelet participates in a document-signing ceremony with the President of the People’s Republic of China, Xi Jinping./ Government of Chile/ FlickrCreative Commons License

An on-line survey of Latin American international relations experts reveals that China is viewed as having great influence in regional commerce, surpassing the United States and Europe, but that its engagement with the region is perceived as relatively negative. Although Chinese media have been increasing efforts to enter the information landscape in Latin America, they are not perceived to be a significant source of news for Latin American opinion leaders and do not appear to have significant influence on public opinion.

The questionnaire was administered by CLALS and CRIES last May and June as part of a broader project to assess the role of China and its communication strategies in Latin America and the Caribbean. It targeted academics and other thought leaders throughout Latin America. Some 379 experts responded.

Key findings:

  • China was perceived by 80 percent of the experts to have a “high” level of influence in Latin America, and only 5 percent said it was low. According to respondents, China’s influence was surpassed only by that of the United States. Madrid and Moscow scored slightly lower than Beijing.
  • The specific areas of Chinese influence were not homogeneous across the region. Asked about Beijing’s role in culture, the economy, health care, and technology, about 90 percent of respondents cited the economy as top area, followed by technology and medicine. (In each of these three categories, it was surpassed only by the United States.) Fewer than 5 percent named culture – higher than Russia and India but lower than six other countries on the list.
  • On the positive or negative impact of that influence, fewer than 10 percent said they had a “very good” opinion of the Asian power, while a little more than a quarter said they had a “good” opinion. About one-third said they had an “intermediate” opinion of Beijing, and the final third had a “bad” or “very bad” estimation. When asked to compare China with other world or regional powers, respondents ranked it among the lowest. A little more than one third view it negatively, 32 percent as neutral, and a little more than 25 percent positively. Germany, Japan, and Spain scored highest as “very good” and “good,” even if they’re ranked as having a lower level of influence. The United States scored somewhat lower, but China and Russia had stronger negatives and weaker positives. Only Russia’s influence is perceived more negatively than China’s.
  • Most of the experts felt the principal priority for having relations with China should be commercial, followed by foreign direct investment and other financial ties. International security ranked as their lowest priority – even lower than multilateral cooperation and human rights. Importantly, this order of priorities is the same as with U.S. relations – with the only statistically significant difference being a preference for cooperation on international security with Washington.

Important among the findings of the survey is that China is failing in its efforts to use media tools to create a positive image for the country and its government. Beijing has made significant investments in establishing a media presence, principally through its China Global Television Network (CGTN).

China’s state broadcaster launched CGTN Español in 2007, and it has significatively expanded operations worldwide in the past decade, multiplying platforms, newsrooms and crew. CGTN doesn’t have a Portuguese-language TV channel, but content in that language is produced by other Chinese media outlets, such as Xinhua, Radio China International, and People’s Daily.

  • Despite these efforts, fewer than 4 percent of those interviewed say Beijing’s influence was “high” or “very high,” while 38.8 percent say it was “low,” and 30 percent say it was “very low.” U.S. media influence, on the other hand, is high. More than 70 percent of the experts said CNN, for example, has “high” or “very high” impact. China’s CGTN international television network also ranked lower than the United Kingdom’s BBC, Venezuela’s Telesur, Russia’s RT, and France24.
  • According to most of the experts consulted, CGTN’s influence is principally “neutral,” but 33 percent of them said they didn’t know how to characterize it. That said, a greater percentage of them say its effect on China’s image is “positive” (about 20 percent) than “negative” (about 12 percent). In this regard, CGTN’s impact is similar to that of CNN (which is not a government entity tasked with burnishing the United States’ image) and RT, and much better than Telesur. But BBC and France24 reflect more positively on the British and French governments.
  • Even if findings indicate that Chinese media have “low” influence among Latin American leaders, a growing number of media-sharing agreements are facilitating the distribution of Chinese content through local media in Latin America. The influence of this indirect consumption has yet to be measured.

September 17, 2021

Luiza Duarte is a journalist, has a PhD in Political Science, and is a Research Fellow at CLALS, the Brazil Institute, and the Wilson Center. Andrei Serbin Pont is the Director of CRIES and an International Relations PhD candidate at the Universidad Complutense de Madrid. The survey is part of a CLALS project on China’s Messaging in Latin America and the Caribbean, supported by the Institute for War & Peace Reporting with funding from the U.S. Department of State

Brazil: Where Will Bolsonaro Ramp Up Tensions Next?

By Matthew Taylor*

Demonstration in Support of Bolsonaro/ Editorial J/ Flickr/ Creative Commons License

Brazil’s September 7 holiday brought supporters of President Bolsonaro out in droves to hear him – standing next to his Defense Minister and his vice president (a retired general) – threaten the country’s Supreme Court, which he accused of politicization and abuse, and Congress, which has angered him by failing to pass his pet electoral legislation replacing electronic polling with paper ballots. Although the day’s events did not lead to significant violence, they portend further tensions and perhaps major disruptions ahead.

Great trepidation preceded the Independence Day confrontations. Some observers even worried that the demonstrations might become a rehearsal for an “auto-golpe,” triggering violence that might provide the excuse for a military intervention. The fact that the demonstrations (and counter-protests) came off without significant violence was cause for a collective sigh of relief.

  • While the crowds in Brasília, São Paulo, and a few other cities were energetic, they were – with a few exceptions – peaceful. Although small skirmishes with the police broke out, the police did not escalate matters, join demonstrators, allow conflict to escalate between protestors and counter-protestors, or otherwise create conditions that might generate excuses for the re-imposition of “law and order.” Even though many of Bolsonaro’s supporters carried messages calling for an end to the high court and for military intervention, and a few uniformed officers wandered through the crowds, both state police forces and the military chose to remain on the sidelines.

Nonetheless, the fact that reasonable observers worry that September 7 could become a breaking point is itself a sign of how bad things have become. Indeed, the question now is less one of whether Bolsonaro will further ramp up tensions, but of how he will do so.

  • The weak president, whose net popularity rating has been in the negative double digits since March appears to be trying to seize back public attention after a series of embarrassing scandals enveloped his family and his administration. His recent statement, repeated to demonstrators on September 7, that he would only leave office “under arrest, dead, or victorious” suggests he is willing to heighten tensions to protect his self-interest.
  • Bolsonaro may have further isolated himself politically this week, alienating legislative allies from the transactional and fickle Centrão parties that back his administration. They are likely to melt away as the 2022 elections approach, looking to back a winner. Impeachment murmurings in Congress also picked up yesterday. His record shows that, as his hold on power evaporates, he will be increasingly willing to push matters to hold onto office.

The Independence Day crowds were impressive enough that Bolsonaro’s appetite for adulation may be sated for now, but his supporters remain an angry minority bent on defending their leader. The 13 months between Independence Day and the October 2022 elections will be marked by significant tension, exacerbated by the President himself, along with any of his allies in the military and police who are willing to be dragged along. 

  • An analytical survey by Wendy Hunter and Diego Vega points to a number of worrisome factors within the military, including a three-fold increase in the number of military personnel in appointed positions between 2014 and 2020; Bolsonaro’s decision to increase military salaries and budgets (against a general context of fiscal austerity); and his calls to deploy the military to “defend civil liberties” against those calling for a vaccine mandate. The military has “become more assertive in engaging in political debates” and “leverage[d] the relationship to advance their own interest.” Yet Hunter and Vega also note that the military high command has growing reservations about propping up an increasingly unpopular president, and they “do not anticipate a democratic breakdown through an institutional military intervention, a traditional coup or even an incumbent takeover.”
  • A possibly greater challenge to democracy may emerge from Brazil’s truculent state police forces. The run-up to September 7 suggested that Bolsonaro’s appeal among the police might be even more widespread than within the military, and high-ranking police officers in São Paulo state in particular have been worryingly active in national politics in recent weeks. A number of high-profile police officers who were elected to public office during the 2018 elections were present in the September 7 demonstrations. The increasing politicization of police forces is particularly perturbing because of their potential to disrupt street-level politics. But so far, police discipline has held, with only small groups of police, many of whom are retired, actively backing the President.
  • With the police and the military seemingly on the sidelines, one possibility is that Bolsonaro may encourage supporters to target the courts. It is no mistake that a weakened Bolsonaro has chosen the vulnerable Supreme Court as his foil, and one of his most frightening bits of bluster on September 7 was the threat not to comply with the Court’s decisions. It is not hard to imagine a scenario in which the Court pushes Bolsonaro into a corner, ordering another ally to jail, for example – with the President and his allies responding with flagrant disobedience and heated rhetoric about the court’s alleged partisanship and illegitimacy.

September 8, 2021

* Matthew Taylor is Associate Professor at the School of International Service at American University. This article updates one published on the Brazil Research Initiative blog.

Latin America: Enduring Less Drastic Declines in Remittances than Predicted

By Gabriel Cabañas*

Ria Money Transfer/ Adam Fagen/ Flickr/ Creative Commons License

The decline in remittances during the COVID-19 pandemic has been less severe than predicted for Latin American and Caribbean countries because many migrants are in essential jobs and industries benefitting from generous U.S. income-protection measures, and a good U.S. recovery suggests positive trends will continue.

  • In April 2020, a month after the World Health Organization declared the pandemic, the World Bank estimated the resulting economic shock would cause remittances globally to drop by around 20 percent over the year – the greatest single year drop ever recorded. The Bank said the decline hinged on the fall of wages and employment of migrant workers. Other factors loomed large, such as China’s announcement that its economy had contracted 6.8 percent in the first quarter of 2020, and Europe, especially Italy, faced growing cases of the coronavirus.

More recent data tell a different story. The pandemic reduced global economic growth to -4.5 percent to -6 percent, which, while devastating, was cushioned by good performance in numerous sectors and industries. Contrary to the prediction of a 20 percent decline in 2020, remittances experienced only a 7 percent drop. Some remittance-receiving countries, including Mexico, actually reported growth in remittances from 2019 to 2020.

  • Generous stimulus programs, which the World Bank could not have predicted, preserved an income flow for companies in “essential” industries employing migrant workers, and those losing jobs received generous unemployment benefits.
  • A shift to digital remittances also made it easier and less costly for migrant workers to send money to their families. Western Union, which is the largest single remittance handler (with 10 to 20 percent of the market), reported that revenues increased 16 to 20 percent in 2020. Other channels appear to be growing even faster. The impact of remittances from migrant workers in the United States was further increased by currency devaluations in emerging economies hit hard by COVID.

Policymakers and academics have traditionally viewed remittances as having marginal positive impact on the economies of recipient countries – judging that foreign direct investment (FDI) has a much deeper impact – but that assessment is changing. A report published last year examined 538 estimates of the impact and found that 40 percent showed a positive correlation, 20 percent showed a negative correlation, and the remaining 40 percent were neutral. Observers increasingly think that remittances used by recipient families for consumption are often their optimal use. During periods of income shock, such as environmental catastrophe, increases in remittances replace roughly 60 percent of lost income, according to some estimates. During the Great Recession (2008-09) FDI dropped 39.7 percent, but remittances only dropped 5.2 percent. For a select group of remittance-receiving countries, including El Salvador, remittances have grown to provide more than 20 percent of GDP.

  • In 1970 remittances worldwide totaled less than $50 billion (in 2018 dollars), and in 2018 they exceeded $600 billion – surpassing all overseas development assistance and, in 2019, all FDI (except Chinese investment). Some experts claim much of this growth is a function of measurement error – caused by how banks track remittances – but the fact that remittances have been steadily growing since the 1970s is no illusion.
  • The hemisphere’s continuing challenges emerging from the pandemic raises questions about the future, but – as long as generous stimulus plans, essential work protection, and a strong dollar continue – remittances to Latin America and the Caribbean appear likely to allow recipient countries some continued reprieve from the economic devastation caused by COVID-19 and help them achieve an earlier economic recovery.

September 3, 2021

* Gabriel Cabañas is studying international relations and economics in the School of International Service.

Central American Youth Migrants Show Signs of PTSD and Stress

By Daniel Jenks and Ernesto Castañeda*

Central American migrants/ Peter Haden/ Flickr/ Creative Commons License

The trauma experienced by Central American minors before, during, and after their unaccompanied journeys to the United States puts them at high risk of post-traumatic stress disorder (PTSD) and other mental health problems, creating further obstacles to their success in school and broader integration into U.S. society. New research into results from the CLALS Pilot Project Household Contexts and School Integration of Resettled Migrant Youth, which included interviews and qualitative surveys (including a validated PHQ-9 Modified for Teens and the Child PTSD Symptom Scale, CPSS), revealed that about one-third of unaccompanied minors from El Salvador, Honduras, and Guatemala show symptoms of moderate to severe PTSD — significantly higher than the general population.

  • The study team interviewed or administered surveys to more than 100 subjects, including youths who arrived in Maryland before 2017, their parents, and social service providers, teachers, and local officials. At least 20 percent of the youth respondents exhibited symptoms of mild or moderate depression, and 38 percent said that they felt sad or depressed most days during the last year.

Many of the youths suffered deeply from separation from parents who preceded them in traveling to the United States, sometimes blaming them for problems and abuses they suffered back home, but they generally fared better than those whose parents had not emigrated. Those most deeply harmed were forced from their homes by gang violence, police corruption, and other symptoms of low state capacity, and suffered trauma along the journey to the United States. They were able to come to the U.S. and escape those problems because they had family in the United States.

  • Carlos, who migrated when he was 15 years old, left El Salvador because he was facing death threats from local gangs because he refused to join. He was scared to go to home and school. Other youths experienced pre-migration trauma that included natural disasters, war, gang violence, victimization, witnessing a crime, physical and sexual abuse, or attacks based on their sexual orientation or gender identity. (Other studies document the particular abuses faced by girls and young women.)
  • Migrating from Honduras at 13 years old, Samantha was on a bus near the Guatemala-Mexico border when gangs barricaded its door and threatened to set it on fire if they were not given a hefty fee. For the rest of the trip through Mexico, the coyotes gave her and others enough to eat only once a day. Indeed, the increased risk of undernutrition, dehydration, assault, kidnapping, and other forms of violence was common for unaccompanied youths.

Inside the United States, many face the stresses of family reunification and issues of acculturation, although our research indicates that the resulting anxiety is less severe than from the in-country and en-route traumas they experience. One mitigating factor is having access and feeling welcome to use supportive social services, education, healthcare, and employment opportunities.

  • Resentment toward parents who “abandoned” them in Central America — even those parents who were loving, reliable providers — is often deep. School challenges, language struggles, and stress related to their own legal status or that of their family further tax mental health. Complex, intimidating legal proceedings, threats of deportation, and prolonged forced separation from family get many youths off to a stressful start. Many also experience discrimination and hate crimes, becoming more aware of them as they learn English. Real or perceived lack of access to social services exacerbates stresses, and fear of dealing with authorities means that many problems go unreported.
  • Some learn to prosper. Diana, a 16-year-old from El Salvador, was scared and apprehensive when she started school in Maryland, but she found friends whom she could trust and could help her in school, and her mood improved drastically for the better.

We found that the psychological distress and disorders experienced by Central American youths in a troubling number of cases can exacerbate existing obstacles to integration, family reunification, and success in school. These obstacles, in turn, can create new stressors that exacerbate PTSD, depression, and anxiety.

  • Dealing with the traumas that plague youths in Central America is a massive undertaking that, rhetorically at least, the United States and Central American governments are addressing. Inside the United States, successful cases show that the cycle of further trauma exposure, depression, and PTSD can be overcome by making migrant processing more humane, increasing access to mental health services and education, and providing guarantees of protection to those who seek help – reforms that will be very challenging. The underlying problems are deep-rooted, and even when the Executive or Legislative branch pushes particular elements of reform, change will be hard to implement because of institutional and cultural barriers.

August 26, 2021

* Ernesto Castañeda directs the Immigration Lab and teaches sociology at American University, and Daniel Jenks is the Lab’s deputy director. This article is adapted from their full study published in Trauma Care journal.

Caribbean: Need for Overhauling Regional Maritime Transport

By Ryan Sullivan*

Container ship in freeport, Bahamas/ Corey Seeman/ Flickr/ Creative Commons License

A lack of coordinated policy and overreliance on a one-size-fits-all trade structure have long hindered the development of the maritime transport infrastructure that the Small Island Developing States (SIDS) of the Caribbean need to build a stable system for moving goods to and from the islands. The region’s current infrastructure, which carries more than 90 percent of its goods, is vulnerable to disruptions and inefficiencies.

  • Data published by the United Nations Conference on Trade and Development (UNCTAD) show the SIDS of most of the Caribbean have the lowest Liner Shipping Connectivity Index (LSCI) in the world (The Bahamas, Jamaica, and Trinidad and Tobago are the exceptions). LSCI was established to measure a country’s port connection to global markets by applying factors such as the number of regularly scheduled shipping services, the reach of these services, and vessel capacity. Connectivity in the Caribbean has been an issue for decades because global shipping companies believe the economies of scale and distance to major shipping routes make carrying goods in the region an unprofitable endeavor.
  • The growth in global container shipping has amplified connectivity issues. The shipping companies have steadily increased container capacity and employed advanced technology on vessels to the point that the port infrastructure in the region – the age of most port infrastructures in the Caribbean averages 50 years – is inadequate. Mega container ships call on only large transshipment hubs from which smaller, feeder ships pick up containers for delivery to islands – creating an indirect path to and from global markets that has been estimated to increase the costs of goods by 7 percent compared to the world average. In addition, shipping cartels have consolidated the power of these multinational shipping companies to the detriment of local companies dependent on their services.
  • The COVID-19 pandemic has created shockwaves across supply chains, affecting both developed and developing economies. UNCTAD reports note that SIDS were among the most affected by supply chain shocks, highlighting their trade dependency for critical foodstuffs and medical supplies.

Proposed solutions have mostly looked at encouraging free trade agreements to reduce costs of trade and at encouraging foreign investment to increase capital flows and drive demand for cargo capacity. But none addresses the inherent lack of connectivity and high costs involved in this critical mode of transportation. U.S. President Biden recently issued an executive order that has empowered the Federal Maritime Commission to actively investigate unfair competition and enforce antitrust laws in the maritime sector. This signals a failure in the current trade structure since companies are being bullied as they attempt to bring their goods to the global market.

  • These challenges have raised questions about the wisdom of continuing to rely solely on private shipping companies to provide logistics, fueling policy reviews aimed at increasing coordination among the governments of the Caribbean, with assistance from international development banks, to promote a network of interisland transport services and increase investment in infrastructure upgrades. Governments are seeking unprecedented cooperation in digitalizing customs document processes and streamlining delivery of vital goods to their destinations.
  • Some SIDS experts point to the European experience in subsidizing short sea transport services. Greece created a network of ferries with a hub-and-spoke model of logistics centered at the Port of Piraeus to transport passengers and cargo to and from islands in the Aegean Sea. However, the service has seen no profits and is only viable under a single trade regime without the headache of various customs laws. Other proposals have not led to action due to resistance from maritime nations to easing cabotage measures meant to protect their maritime industries. Using Europe as an example for coordinating a secure interisland transport system would provide a unified policy approach that the Caribbean governments have so far been unable to reach.

While technology has advanced operational processes, the major impediment for Caribbean SIDS is the lack of willingness, at least so far, to coordinate policy in establishing a resilient and sustainable maritime transportation network of their own. The Caribbean Community (CARICOM), whose 15 member states and five associate members bill themselves as the oldest surviving integration movement in the developing world, would be the best platform to promote comprehensive, strategic solutions, but there’s little sign of progress ahead.

  • One solution would be to encourage a multinational public-private partnership to create capacity for businesses to ship less-than-container-loads (LCL). The smallest container size available on the market currently is a 20-foot container. Most businesses are unable to fill one but are still obligated to pay tariffs of a full-container-load (FCL). The old one-size-fits-all approach is unrealistic for island logistics, and it imposes extra cost per good for the shipper and capacity issues for feeder ships. Additionally, efforts to streamline customs processes through digitalization should continue to be a priority beyond the pandemic, and concrete customs policies for seamless interisland trade would promote an environment for secure supply lines. Once the friction in interisland trade is reduced and capital and goods flow, the conversation can move toward developing a permanent maritime infrastructure – such as a regularly scheduled transport service with the sole purpose of serving the needs of the small islands of the Caribbean.

August 18, 2021

* Ryan Sullivan is a master’s candidate in the School of International Service, specializing in International Trade Relations.

Latin America’s Head-First Dive Toward E-Commerce

By Alexander Borushek*

Left: Tech Park/ Sebastian Bassi/ Flickr/ Creative Commons License (modified)
Right: Informal work/ Alba Sud Fotografia/ Flickr/ Creative Commons License (modified)

The boom in e-commerce during the COVID‑19 pandemic has been stronger in Latin America than in most other regions, presenting profound consequences for traditional informal economies as well as for citizens previously disconnected from formalized economic and financial networks. Since March 2020, long-lasting and recurrent lockdowns have upended informal economies by forcing people away from face-to-face – and often cash-based – transactions. In response, retailers and consumers have been pivoting toward new online alternatives.

  • The growth in e‑commerce has also been a bright spot in an overall bleak economic landscape, with sales growing by an astonishing 63 percent in 2020, topping $100 billion. Not only did this far exceed estimates from prior to the pandemic (12.5 percent projected in November 2019) or in its early days (19.4 percent in June 2020); it was the largest percentage increase of any region in the world.
  • Latin American consumers appear quite content with the shift. More than 80 percent of the region’s first-time online shoppers say they plan on continuing to do so after the pandemic. This is good news for established entities like Argentina’s e-commerce giant MercadoLibre – which already accounted for about half of all online sales in Latin America and saw 2020 revenues double – and international competitors such as U.S.-based Amazon, Singaporean conglomerate Shopee, and China’s Alibaba subsidiary AliExpress, which are looking to make inroads in the region.

Record sales also highlight the region’s urgent need to address the deficiencies that separate its e-commerce sector from the larger and more sophisticated ones in the United States, Western Europe, and the Asia-Pacific.

  • Of particular importance is infrastructure. Beyond underinvestment in bridges, ports, and highways, the region suffers from significant bottlenecks in the logistics planning processes that affect how and at what speed products are delivered.
  • Larger crossborder synergies are hampered in part by a lack of uniform importing schemes, in contrast to the ease with which products pass through borders of the European Union or into the United States. Another obstacle is the chronically low quality, reliability, and “relevance” of the region’s postal services, according to the Universal Postal Union. In its report last October, the UPU concluded that “compared with its level of economic development, the region has the worst relative [postal] performance worldwide.” Moreover, 60 percent of the “last-mile” delivery industry is made up of either small, often informal, businesses or independently contracted drivers who use their own vehicles. This results in a huge lack of cohesive route optimization. MercadoLibre and other big players are trying to build out independent fulfillment networks, but a lot of work remains.

The e-commerce ecosystem is giving other investors, retailers, and consumers a general sense of optimism that positive change can occur.

  • Millions of citizens have been brought into the banking system since the pandemic, often through nimble fintech platforms like MercadoPago or Brazil’s NuBank (the latter having seen record numbers of new users). Coupled with widespread smartphone ownership and the already-high penetration of mobile internet and data, more people than ever are shopping and will be able to purchase items online.
  • International investor interest in the sector is also high. Recently the U.S. e-commerce firm Etsy announced that it had acquired its Brazilian counterpart Elo7 in a $217 million deal. Additionally, SoftBank’s Latin America Fund has at present five e-commerce ventures in its portfolio, including the Colombian super-app Rappi.

While Latin America’s e-commerce sector has yet to display the speed of Amazon Prime or offer the panoply of services available in China, it is highly unlikely to be just a temporary byproduct of the pandemic. Recurring pandemic scares might just provide the momentum the e-commerce industry needs to consolidate its role as an integral piece of the post-COVID economic equation – helping societies address deep-rooted problems that plagued the people simultaneously dependent on the informal economy and most likely to benefit from increased access to banks and other formalized financial networks.

August 10, 2021

* Alexander Borushek is a graduate of American University’s School of International Service and currently a Business Development Representative for Envoy Global, a tech firm that works in immigration and global mobility.

El Salvador: Exploiting Superpower Competition

By Jeffrey Hallock and Christopher Kambhu*

Government of El Salvador / Creative Commons License

Salvadoran President Nayib Bukele is taking advantage of superpower competition between the United States and China to get vaccines for his country and boost his domestic image as a strong, independent national leader. Hours after the United States announced a donation of 1.5 million Moderna doses to El Salvador in early July, China announced its own 1.5 million dose donation – and Bukele touted his successes on Twitter. In securing and administering vaccines for millions of Salvadorans, Bukele has achieved a domestic political victory; 44 percent of adults have received one vaccine dose as of last month, well above the regional average.

  • China’s relations with El Salvador center on its longstanding policy goal to weaken international support for Taiwan. China has expanded its influence in El Salvador since the country switched diplomatic recognition from Taiwan in 2018. During the COVID-19 pandemic, moreover, Beijing has donated a wide variety of medical supplies to El Salvador, and sold it 2 million doses of Sinovac vaccine last spring. For Beijing, vaccine diplomacy is a short-term soft-power and public relations victory that lays the groundwork for future economic deals.
  • Policymakers in Washington primarily view El Salvador through the lens of domestic migration politics. Fleeing gang violence and seeking better economic opportunities, Salvadorans form part of successive waves of migration to the United States from the Northern Triangle (which also includes Guatemala and Honduras). President Joe Biden seeks to address the root causes of migration through anticorruption and good governance initiatives, including denying visas to several senior officials in the Bukele government accused of corruption. This focus has increased tensions with Bukele.

Bukele’s superpower manipulation coincides with increasingly authoritarian tendencies at home since his inauguration in June 2019. With an approval rating well over 80 percent, he is among the most popular leaders in the world. His Nuevas Ideas party and its allies secured a legislative supermajority in February’s elections. Recently, Bukele and his legislative allies have acted aggressively to consolidate power, replacing the Attorney General and all five Constitutional Chamber of the Supreme Court magistrates with loyalists and preventing oversight of pandemic spending. Bukele also shuttered the OAS-backed anticorruption commission CICIES, which his campaign had supported. Numerous observers believe Bukele’s iron grip on the three branches of government will undermine El Salvador’s democratic institutions.

When Biden first took office, Bukele appeared likely to mimic the delicate dance choreographed by other Northern Triangle presidents: pledge to reduce migration flows to the United States in exchange for leeway on domestic affairs. However, the Biden Administration has not looked the other way as Bukele has violated democratic norms and lashed out at critics, including a Twitter spat with U.S. Congresswoman Norma Torres of California. When the Biden Administration recently released a list of corrupt politicians that included several Bukele allies, he strongly criticized the list while publicly praising additional Chinese aid and vaccines.

  • The recent U.S. vaccine donation reflects Washington’s concern about China’s regional influence and acknowledges that the lofty goals of good governance can be overshadowed by other geopolitical considerations. The U.S. retains strong economic leverage over El Salvador through remittances from Salvadoran migrants (some 200,000 of whom are dependent on continued U.S. Temporary Protected Status), but the Biden administration is wary of pushing El Salvador too close to China.
  • While Bukele’s maneuvering has provided him a domestic political victory, diplomatic challenges remain. China’s foreign policy is transactional in nature, and Beijing will likely ask something of Bukele in exchange for its pandemic diplomacy. It is difficult to see what El Salvador can offer China since it already dropped recognition of Taiwan. Perhaps Bukele is betting he can avoid the difficult concessions which plague other nations’ Chinese relations. El Salvador’s strong economic and cultural ties with the U.S. will endure, but for the moment, Bukele is reaping the benefits of instigating great power rivalry.

*Jeffrey Hallock is a doctoral student at American University’s School of International Service. Christopher Kambhu is a Program Coordinator at CLALS.

August 5, 2021

Ecuador’s Return to the Past

By John Polga-Hecimovich and Francisco Sánchez*

Inauguration of the President of Ecuador, Guillermo Lasso/ Asamblea Nacional del Ecuador/ Flickr/ Creative Commons License

Ecuador’s underlying political and economic pathologies bode ill for its governability and democratic stability as President Guillermo Lasso, inaugurated in May, attempts a return to the neoliberalism, fiscal austerity, and minority government that marked the contentious politics of the 1990s and 2000s.

  • This “return to the past” is the result of successive governments’ inability to resolve longstanding structural deficiencies. The Revolución Ciudadana of President Rafael Correa (2007‑17) reflected an illusory stability that depended on favorable political-economic conditions. Correa promised political, economic, and social transformation; promulgated a new Constitution to achieve it; and touted a national plan of buen vivir. He survived 10 years in office, more than double any other president in Ecuador’s history, but his change was not fundamental or durable – a consequence of the inefficiency, centralization, and personalization of decision-making under one man.
  • Under the Lenín Moreno government (2017‑21), Ecuador’s pathologies reemerged salient as ever. Correa’s acolyte in the recent presidential election, Andrés Arauz, lost in the runoff against Lasso, who campaigned on a platform of fiscal austerity that was hardly an attractive proposition for an electorate battered by the COVID‑19 pandemic and years of slow economic growth.

While breaking with one version of its past – correísmo – the electorate seems to have resigned itself to another. Ecuador’s longstanding political dysfunction, driven by multiple factors, looms large.

  • Ever-changing rules of play. Since independence from Spain in 1820, Ecuador has had 20 constitutions and myriad electoral rules. In moments of crisis, especially since Ecuador’s democratic transition (1978‑79), elites have generally sought to alter the formal rules of the game – as a kind of restart button. Although Correa proclaimed that the Constitution he pushed through would endure for 300 years, it was modified 23 times in nine years to correct errors and alter citizens’ rights.
  • Weak rule of law and persistent corruption. “Extractive elites” siphon resources from the people and often support institutions and policies inimical to sustained economic growth. Stories abound of the cultivation of party adherents and votes through clientelism, and corruption has politicized the judiciary. Correa created a breeding ground for scandal. In 2017, the court sentenced him in absentia to eight years in prison and banned him from politics for 25 years, whereby he fled to exile in Belgium.
  • Fragmented parties. Ecuador’s party system is one of the most fragmented and weakly institutionalized in the world. Since returning to civilian rule, the parties have proven unable to sustain electoral support – most last only a handful of elections before they disappear. Despite high party turnover in the legislature, voters lack clear institutional channels of representation.
  • Slow growth and surging debt. Since the mid-2010s, economic, political, and social crises have reversed many of the gains made during the greatest economic boom in the country’s history. Correa’s large investments in infrastructure, such as roads, hydroelectric plants, schools, and health facilities, reduced political pressures. But the average annual deficit jumped to 3.5 percent of GDP between 2007 and 2017, and total foreign debt jumped from $10.5 billion to $31.5 billion, and reached $40 billion by 2020, while domestic debt grew fourfold. President Moreno’s efforts to change course provoked outrage and social unrest.
  • Significant interbranch conflict. Ecuadorian executives have been politically weak despite an institutional structure that strengthens the presidency relative to the legislature. They have to build coalitions through the distribution of pork and other perks, leading to weak and corrupt governance.

These factors drastically reduce Lasso’s policy options. In legislative elections held last February, moreover, his Creando Oportunidades (CREO) party won only 12 of the 137 seats in the National Assembly. His 4.8-point margin of victory in the second presidential round gives a false sense of a popular mandate. It was a case of “outcome inversion” – when the first-round winner is defeated in the runoff – in a context of low party-system institutionalization.

  • Another challenge is that the country’s long-standing pathologies and the turmoil they cause have undermined Ecuadorians’ support for democracy, which fell from 66.7 percent in 2014 to 54.4 percent in 2019, a trend that is mirrored in several other Latin American states. Satisfaction with how democracy works in Ecuador, peaking at 68.8 percent in 2014, has once again become a minority position.

After the promises of reformist leaders, stability, and favorable economic conditions, Ecuador – like much of Latin America – seems to have returned to, or to never have actually escaped from, the volatility of its past. Its social, political, and economic weaknesses are mutually reinforcing. Economic hardship exacerbates the highly transactional and patrimonial nature of the political system and weakens the party system as lawmakers switch allegiances and votes based on whichever political broker can offer more.

  • Limited political and economic resources handicap Lasso’s efforts to address urgent problems, including the pandemic, that would sorely challenge even an experienced leader. Without a team with public-sector know-how, inexperienced politicians often end up absorbed by the pathologies of a political system that make their weaknesses more acute. From a historical perspective, there is no evidence to suggest that Lasso will succeed where previous presidents have failed.

July 27, 2021

* John Polga-Hecimovich is associate professor of political science at the U.S. Naval Academy, and Francisco Sánchez is professor of political science and administration and director of the Iberoamérica Institute at the University of Salamanca. This article is adapted from their recent essay in the July issue of Journal of Democracy.

Temporary Protected Status: Prospects Under the Biden Administration

By Hannah Bossert and Jayesh Rathod*

National TPS Alliance holding a press conference and vigil in Washington, DC/ uusc4all/ Flickr/ Creative Commons License

In the swell of immigration reform discussions in Washington, Temporary Protected Status (TPS), one form of humanitarian protection, has received significant attention from policymakers and advocates, but the Administration of U.S. President Joe Biden has yet to signal its intended action for significant TPS decisions arising later this year and next.

  • Codified in U.S. immigration law, TPS provides relief from removal and work authorization for nationals of designated countries affected by ongoing armed conflict, natural disaster, or other extraordinary and temporary conditions. The Secretary of Homeland Security makes TPS designations for anywhere from six to 18 months, with no legal limit to the number of renewals. When conditions allow for a safe return, the federal government may choose to terminate the designations.
  • As part of its agenda set on restricting immigration, the Trump Administration attempted to end TPS for six countries (including four in Latin America), prompting litigation that has extended the designations while courts review the legality of the terminations.

The Biden Administration has only begun to formulate its policies regarding TPS, which will have a major political and economic impact on immigrant communities in the United States and on the region as a whole. Twelve countries worldwide have been TPS-designated, protecting approximately 320,000 individuals, for a number of years. In March, the Administration extended protection to an estimated 323,000 eligible Venezuelans, and designated Burma in May. But pending decisions include the following:

  • Today nearly 200,000 nationals of El Salvador are protected by a designation made in 2001. Designations in 1999 for Honduras and Nicaragua currently protect around 60,350 and 3,200 persons, respectively. Thanks to federal court injunctions, these work permits and protections from removal remain valid through October 4. The Biden Administration recently agreed to participate in settlement discussions to resolve the pending litigation. The White House might find a way to extend work authorization for the existing beneficiaries; alternatively, it might re-designate these countries for TPS, which would offer protection to tens of thousands who arrived after the initial designation dates. Given the roadblocks that many Central American migrants face in advancing asylum claims, re-designation could be the more attractive option as it would alleviate immigration court backlogs and would not require Congressional authorization.
  • Re-designation was the Biden Administration’s preferred course of action for Haiti, which was also subject to a Trump-era termination effort. On May 22, DHS Secretary Alejandro Mayorkas re-designated Haiti for 18 months, expanding coverage to 100,000-150,000 new arrivals and providing an opportunity for those nearly 41,000 Haitians deriving status from the earlier designation to re-apply. The devastating effects of COVID‑19 and the instability surrounding the recent assassination of President Moïse both complicate return for Haitian nationals.
  • Members of Congress recently penned a bicameral letter urging the Administration to consider TPS designations or redesignation for 17 countries, including El Salvador, Honduras, and Nicaragua, as well as the Bahamas and Guatemala. A Guatemala designation, recently re-requested by the country’s government in the wake of severe hurricane damage, would change its decades-long outlier status when compared to its Central American neighbors.

Despite its name, TPS has enabled decades-long residency for hundreds of thousands of migrants, allowing them to build lives and families in the United States. TPS beneficiaries from El Salvador, Haiti, and Honduras alone contribute roughly $4.5 billion to the U.S. economy, including an average yearly contribution of over $691 million to Medicare and Social Security. Despite past stagnation in considering longer-term relief for TPS holders, the reality of TPS has prompted new advocacy in Congress aimed at creating pathways to citizenship for beneficiaries via proposed legislation such as the American Dream and Promise Act of 2021 and U.S. Citizenship Act, as well as calls to enshrine these efforts within the budgetary process, as in Senator Bernie Sanders’s Budget Reconciliation Bill.

  • Congressional action has become even more critical given the Supreme Court’s recent unanimous decision in Sanchez v. Mayorkas, which cut off the primary pathway to lawful permanent residence for TPS holders who had entered the United States without permission. This decision, absent  Congressional action, leaves hundreds of thousands in a prolonged and uncertain status. Given the current political climate in Washington, the path forward remains unclear.

July 21, 2021

* Hannah Bossert is  a second-year law student at the Washington College of Law and Dean’s Fellow for the Immigrant Justice Clinic, and Jayesh Rathod is Professor of Law and Director of the Immigrant Justice Clinic at the Washington College of Law.